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Form 425 Avista Public Acquisitio Filed by: Avista Public Acquisition Corp. II

March 24, 2022 10:36 AM EDT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

 

 

 

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): March 23, 2022

 

AVISTA PUBLIC ACQUISITION CORP. II

(Exact name of registrant as specified in its charter)

 

Cayman Islands 001-40720 98-1584818
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
incorporation)    

 

65 East 55th Street
18th Floor
New York, New York 10022
(
Address of Principal Executive Offices, including zip code)

 

(212) 593-6900
(Registrant’s telephone number, including area code)

 

Not Applicable
(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

x     Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨     Pre-commencements communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading
Symbols
  Name of each exchange on
which registered
Units, each consisting of one share of Class A ordinary share and one-third of one redeemable warrant   AHPAU   Nasdaq Capital Market
         
Class A common ordinary shares, par value $0.0001 per share   AHPA   Nasdaq Capital Market
         
Redeemable warrants, each whole warrant exercisable for one Class A ordinary share at an exercise price of $11.50 per share   AHPAW   Nasdaq Capital Market

 

x Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
   
¨ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 

 

 

 

Item 1.01Entry Into a Material Agreement

 

On March 23, 2022, Avista Public Acquisition Corp. II, a Cayman Islands exempted company (“APAC”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among APAC, Ligand Pharmaceuticals Incorporated, a Delaware corporation (“Ligand”), OmniAb, Inc., a Delaware corporation and wholly-owned subsidiary of Ligand (“OmniAb” and, together with Ligand, collectively, the “Companies”), and Orwell Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of APAC (“Merger Sub”), pursuant to which APAC will combine with OmniAb, Ligand’s antibody discovery business (the “OmniAb Business”), in a Reverse Morris Trust transaction. Also on March 23, 2022, and in connection with the execution of the Merger Agreement, (a) APAC, Ligand, OmniAb and Merger Sub entered into that certain Employee Matters Agreement (the “Employee Matters Agreement”), (b) OmniAb and Avista Acquisition LP II (the “Sponsor”) entered into that certain sponsor insider letter agreement (the “Sponsor Insider Agreement”) with APAC and certain insiders of APAC (the “Insiders”) and (c) APAC amended and restated that certain previously disclosed forward purchase agreement, dated August 9, 2021, by entering into the amended and restated forward purchase agreement (the “A&R FPA”), by and among APAC, the Sponsor and OmniAb.

 

Immediately prior to the Merger (as defined below) and pursuant to a Separation and Distribution Agreement, dated as of March 23, 2022, among APAC, Ligand and OmniAb (the “Separation Agreement”), Ligand will, among other things and subject to the terms and conditions of the Separation Agreement, transfer the OmniAb Business, including certain related subsidiaries of Ligand, to OmniAb (the “Reorganization”) and, in connection therewith, will distribute (the “Distribution”) to Ligand stockholders 100% of the common stock of OmniAb, par value $0.001 (the “OmniAb Common Stock”), as further described below.

 

Immediately following the Distribution, in accordance with and subject to the terms and conditions of the Merger Agreement, Merger Sub will merge with and into OmniAb (the “Merger”), with OmniAb continuing as the surviving company in the Merger and as a wholly-owned subsidiary of APAC.

 

Transaction Documents

 

Agreement and Plan of Merger

 

The Merger Agreement, along with the Separation Agreement and the other transaction documents to be entered into in connection therewith, provides for, among other things, the consummation of the following transactions (collectively, the “Business Combination”): (i) APAC will redomicile by way of continuation from the Cayman Islands to Delaware and domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law and with Section 206 of the Cayman Islands Companies Act (As Revised) at least one business day prior to the closing of the Business Combination (the “Domestication”), (ii) Ligand will transfer the OmniAb Business (the “Separation”) to its wholly-owned subsidiary, OmniAb, and contribute $15 million in capital thereto (less certain transaction-related and other expenses), and (iii) following the Separation, Ligand will distribute 100% of the shares of OmniAb Common Stock, to Ligand stockholders by way of the Distribution. Following the completion of the foregoing transactions and subject to the satisfaction or waiver of certain other conditions set forth in the Merger Agreement, the parties shall consummate the Merger. The Distribution and Merger are intended to qualify as “tax-free” transactions.

 

Upon consummation of the Business Combination, and after the Domestication, APAC will have one class of common stock, par value $0.0001 per share (the “APAC Common Stock”), which will be listed on the Nasdaq Capital Market (“Nasdaq”) under the ticker symbol “OABI”. The outstanding warrants of APAC will be listed on Nasdaq under the ticker symbol “OABIW”.

 

 

 

 

Consideration Paid

 

At the time the Business Combination is effected (the “Closing”), each share of OmniAb Common Stock outstanding after the Distribution and immediately prior to the effective time of the Merger will be converted into a number of shares of APAC Common Stock based on an exchange ratio determined by reference to a pre-money equity value for OmniAb of $850 million. Holders of OmniAb options, restricted stock units and performance stock units (determined after the Distribution and the division of Ligand equity awards into both Ligand equity awards and OmniAb equity awards pursuant to the Employee Matters Agreement, as described below) will have their awards rolled over into APAC equity awards and adjusted pursuant to the exchange ratio.

 

In addition, at the Closing, holders of OmniAb Common Stock and equity awards will also receive earnout consideration in the form of an additional 15 million shares of APAC Common Stock (the “OmniAb Earnout Shares”), with 50% of such earnout shares vesting upon the combined company’s achievement of a post-transaction volume-weighted average price (“VWAP”) of $12.50 per share of APAC Common Stock for any 20 trading days over a consecutive 30 trading-day period, and the remainder vesting upon achievement of a post-transaction VWAP of $15 per share of APAC Common Stock for any 20 trading days over a consecutive 30 trading-day period, in each case provided such vesting occurs during the five-year period following the Closing.

 

Effect of Domestication on APAC Ordinary Shares

 

In connection with the Business Combination, upon the Domestication (i) all issued and outstanding APAC Class A ordinary shares and Class B ordinary shares will convert automatically, on a one-for-one basis, into shares of APAC Common Stock, (ii) all issued and outstanding warrants of APAC will convert automatically into warrants to acquire shares of APAC Common Stock and (iii) all issued and outstanding units of APAC will separate and convert automatically into one share of APAC Common Stock and one-third of one warrant to purchase APAC Common Stock.

 

Representations and Warranties & Covenants

 

Pursuant to the Merger Agreement, APAC, OmniAb and Ligand each made customary representations and warranties for transactions of this type regarding themselves and their respective businesses. The representations and warranties made pursuant to the Merger Agreement will not survive the Closing. In addition, the parties to the Merger Agreement agreed to be bound by certain covenants that are customary for transactions of this type. The covenants made under the Merger Agreement generally will not survive the Closing, with the exception that certain covenants and agreements that by their terms are to be performed in whole or in part after the Closing, which will survive in accordance with the terms of the Merger Agreement.

 

Conditions to Closing

 

The consummation of the Business Combination is subject to customary conditions for transactions involving special purpose acquisition companies, including, among others: (i) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (ii) receipt of required consents and approvals from certain governmental authorities, (iii) no agreement between Ligand or APAC and any governmental authority pursuant to which Ligand or APAC has agreed not to consummate the Business Combination shall have been effected, (iv) no governmental authority of competent jurisdiction shall have enacted, issued or granted any law (whether temporary, preliminary or permanent), in each case that is in effect and which has the effect of restraining, enjoining or prohibiting the consummation of the transaction, (v) APAC shall have at least $5,000,001 of net tangible assets as of the Closing, (vi) the APAC Common Stock issuable pursuant to the Business Combination shall have been approved for listing on NASDAQ, subject to official notice of issuance, (vii) Ligand, OmniAb, APAC and Merger Sub shall each have performed and complied in all material respects with the obligations, covenants and agreements required by the Agreement and Plan of Merger to be performed or complied with by it at or prior to filing, or a later date as agreed to by the parties, (viii) customary bring down conditions related to the accuracy of the parties’ respective representations, warranties and pre-Closing covenants in the Merger Agreement, (ix) the consummation of the Distribution, Reorganization and other transactions contemplated by the Separation and Distribution Agreement, (x) each of APAC’s and OmniAb’s registration statements to be filed with the SEC shall have become effective, (xi) APAC’s shareholder approval shall have been obtained and (xii) the receipt by Ligand and APAC of certain tax opinions. In addition, the respective obligations of OmniAb and Ligand to consummate the Business Combination is conditioned upon, among other items, the completion of the Forward Purchase and the Redemption Backstop (each as defined below), the resignation of all directors and all executive officers of APAC and the occurrence of the Domestication. APAC’s obligation to consummate the Business Combination is also conditioned on there having been no “Material Adverse Effect” on OmniAb since the date of the Merger Agreement.

 

 

 

 

Termination

 

The Merger Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing, including (i) by the mutual written consent of APAC and Ligand, (ii) by APAC or Ligand, if the Closing shall not have occurred on or before the nine-month anniversary of the signing date, (iii) by APAC or Ligand, if any law is passed that would make the transaction illegal, (iv) by APAC or Ligand, if APAC has not obtained the requisite approval from its shareholders, (v) by APAC or Ligand if the other party breaches certain representations, warranties, or covenants, as specified in the Merger Agreement, and that breach is unable to be cured, or is not cured, within 30 days, (vi) by Ligand if the Forward Purchase and the Redemption Backstop are not consummated or (vii) by Ligand on or prior to the earlier of (i) 180 days after the date of the Merger Agreement or (ii) the date on which the APAC registration statement on Form S-4 in respect of the Business Combination is declared effective, in order to enter into a business combination agreement in respect of at least 75% of Ligand in a transaction conditioned on the termination of the MergerAgreement, provided that Ligand has paid APAC a termination fee of between $40.0 million and $70.0 million, dependent upon when termination occurs (the “Termination Fee”), reimbursed APAC for its transaction expenses in an amount up to $7.5 million and paid the Sponsor a termination fee in an amount up to $12.5 million in connection with the termination of the A&R FPA.

 

A copy of the Merger Agreement is filed with this Current Report on Form 8-K (this “Current Report”) as Exhibit 2.1, and is incorporated herein by reference, and the foregoing description of the Merger Agreement is qualified in its entirety by reference thereto.

 

Separation and Distribution Agreement

 

On March 23, 2022, in connection with the execution of the Merger Agreement, APAC entered into the Separation Agreement with OmniAb and Ligand, pursuant to which, among other things, (i) Ligand will undertake a series of internal reorganization and restructuring transactions to effect the transfer of its (direct or indirect) ownership of the OmniAb Business to OmniAb in the Separation and (ii) immediately prior to the Merger and after the Separation, Ligand will distribute 100% of the outstanding shares of OmniAb Common Stock to Ligand’s stockholders in the Distribution.

 

The Separation Agreement also sets forth other agreements among Ligand and OmniAb related to the Separation, including provisions concerning the termination and settlement of intercompany accounts and the obtaining of necessary governmental approvals and third-party consents. The Separation Agreement also sets forth agreements that will govern certain aspects of the relationship between Ligand and OmniAb after the Distribution, including provisions with respect to release of claims, indemnification, access to financial and other information and access to and provision of records.

 

Consummation of the Distribution is subject to a number of conditions, including, among others, (i) the completion of the Separation, (ii) Ligand’s receipt of certain tax opinions and (iii) the satisfaction or waiver of all conditions under the Merger Agreement (other than those conditions that are to be satisfied substantially contemporaneously with the Distribution and/or the Merger, provided that such conditions are capable of being satisfied at such time).

 

A copy of the Separation Agreement is filed with this Current Report as Exhibit 2.2, and is incorporated herein by reference, and the foregoing description of the Separation Agreement is qualified in its entirety by reference thereto.

 

 

 

 

Employee Matters Agreement

 

On March 23, 2022, in connection with the execution of the Merger Agreement, APAC, Ligand, OmniAb and Merger Sub entered into the Employee Matters Agreement, which will provide for employee-related matters in connection with the transaction, including allocation of benefit plan assets and liabilities between Ligand and OmniAb, treatment of incentive equity awards in the Distribution and the Business Combination and related covenants and commitments of the parties. Each existing Ligand equity award will generally be split into (i) a new Ligand equity award and (ii) a new OmniAb equity award, with any accrued value in the original Ligand equity award split between such awards based on the relative post-Closing values of Ligand and OmniAb.

 

A copy of the Employee Matters Agreement is filed with this Current Report as Exhibit 10.1, and is incorporated herein by reference, and the foregoing description of the Employee Matters Agreement is qualified in its entirety by reference thereto.

 

Sponsor Insider Agreement

 

On March 23, 2022, in connection with the execution of the Merger Agreement, OmniAb and the Sponsor entered into the Sponsor Insider Agreement with APAC and the Insiders, pursuant to which, among other things, the Insiders agreed to vote any APAC securities held by them to approve the Business Combination and the other APAC shareholder matters required pursuant to the Merger Agreement, and not to seek redemption of any of their APAC securities in connection with the consummation of the Business Combination. Pursuant to the Sponsor Insider Agreement, the Sponsor also agreed to subject up to 1,916,667 Earnout Founder Shares (as defined in the Sponsor Insider Agreement), to the same price-based vesting conditions as the OmniAb Earnout Shares.

 

A copy of the Sponsor Insider Agreement is filed with this Current Report as Exhibit 2.3, and is incorporated herein by reference, and the foregoing description of the Sponsor Insider Agreement is qualified in its entirety by reference thereto.

 

Amended and Restated Forward Purchase Agreement

 

On March 23, 2022, in connection with the execution of the Merger Agreement, APAC entered into the A&R FPA with the Sponsor and OmniAb. Pursuant to the A&R FPA, APAC has agreed that, in connection with the consummation of the Business Combination, it will issue and sell to the Sponsor 1,500,000 shares of APAC Common Stock and warrants to acquire 1,666,667 shares of APAC Common Stock for an aggregate purchase price of $15.0 million with such purchases to be consummated immediately following the Domestication and prior to the Business Combination (the “Forward Purchase”). In addition to the Forward Purchase, the Sponsor has agreed to purchase up to an additional 10,000,000 shares of APAC Common Stock (the “Redemption Backstop”) and up to an additional 1,666,667 APAC warrants, for an aggregate additional purchase price of up to $100.0 million, in order to backstop shareholder redemptions to the extent such redemptions would result in the cash proceeds to be received by OmniAb stockholders from APAC’s trust account to be less than $100.0 million. The A&R FPA also provides that in the event the Merger Agreement is terminated by Ligand under circumstances in which the Termination Fee would be payable under the Merger Agreement, Ligand shall pay Sponsor a termination fee of $12.5 million in connection therewith.

 

 

 

 

A copy of the A&R FPA is filed with this Current Report as Exhibit 2.4, and is incorporated herein by reference, and the foregoing description of the A&R FPA is qualified in its entirety by reference thereto.

 

Certain Other Transaction Documents

 

Certain additional agreements will be entered into in connection with the transactions contemplated by the Merger Agreement, the Separation Agreement and the other agreements described above, including, among others:

 

a Tax Matters Agreement by and among Ligand, OmniAb and APAC, which governs, among other things, Ligand’s, OmniAb’s and APAC’s respective rights, responsibilities and obligations with respect to taxes, tax attributes and the preparation and filing of tax returns and responsibility for and preservation of the expected tax-free status of the transactions contemplated by the Separation Agreement and the Merger Agreement; and certain other tax matters;

 

an Amended and Restated Registration and Stockholder Rights Agreement by and among APAC, the Sponsor and the other parties signatory thereto, pursuant to which APAC’s original registration rights agreement will be amended and restated in order to, among other things, provide certain equityholders of OmniAb as of immediately prior to the Closing of the Business Combination with customary registration rights;

 

a Transition Services Agreement by and between Ligand and OmniAb, pursuant to which Ligand will, on a transitional basis, provide OmniAb with certain support services and other assistance after the Closing; and

 

a Transition Services Agreement by and between Ligand and OmniAb, pursuant to which OmniAb will, on a transitional basis, provide Ligand with certain support services and other assistance after the Closing.

 

The Merger Agreement, the Separation Agreement, the Employee Matters Agreement, the Sponsor Insider Agreement and the A&R FPA have each been filed as exhibits to this Current Report, and the above descriptions have been included, to provide investors and security holders with information regarding the terms of such agreements. They are not intended to provide any other factual information about APAC, the Sponsor, Merger Sub, Ligand, OmniAb, any of their respective subsidiaries or affiliates, or the OmniAb Business. The Merger Agreement, the Separation Agreement and the Employee Matters Agreement each contain representations and warranties that Ligand and/or OmniAb, on the one hand, and APAC and/or Merger Sub, on the other hand, have made to each other as of specific dates and/or times. The assertions embodied in those representations and warranties were made solely for purposes of the contract(s) between the parties to such agreements and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating the terms of such agreements. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a contractual standard of materiality different from those generally applicable to stockholders, or may have been used for the purpose of allocating risk between the parties rather than establishing matters as facts. For the foregoing reasons, such representations and warranties should not be relied upon as statements of factual information. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in APAC’s public disclosures.

 

Item 3.02Unregistered Sales of Equity Securities.

 

The information set forth above in Item 1.01 of this Current Report under the heading “Amended and Restated Forward Purchase Agreement” is incorporated by reference herein. The shares of APAC Common Stock to be issued in connection with the Amended and Restated Forward Purchase Agreement and the transactions contemplated thereby will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

 

 

 

 

Important Information and Where to Find It

 

In connection with the Business Combination and the Distribution, OmniAb will file with the SEC a registration statement on Form 10 (the “Form 10”) registering shares of OmniAb Common Stock and APAC will file with the SEC a registration statement on Form S-4 (the “Form S-4”) registering shares of APAC Common Stock, warrants and certain equity awards. The Form S-4 to be filed by APAC will include a proxy statement/prospectus in connection with the APAC shareholder vote required in connection with the Business Combination. The Form 10 to be filed by OmniAb will include the Form S-4 filed by APAC, which will serve as an information statement/prospectus in connection with the spin-off of OmniAb. This communication does not contain all the information that should be considered concerning the Business Combination. This communication is not a substitute for the registration statements that OmniAb and APAC will file with the SEC or any other documents that APAC or OmniAb may file with the SEC, or that APAC, Ligand or OmniAb may send to stockholders in connection with the Business Combination. It is not intended to form the basis of any investment decision or any other decision in respect to the Business Combination. APAC’s shareholders and Ligand’s stockholders and other interested persons are advised to read, when available, the preliminary and definitive registration statements, and documents incorporated by reference therein, as these materials will contain important information about APAC, OmniAb and the Business Combination. The proxy statement/prospectus contained in APAC’s registration statement will be mailed to APAC’s shareholders as of a record date to be established for voting on the Business Combination.

 

The registration statements, proxy statement/prospectus and other documents (when they are available) will also be available free of charge, at the SEC’s website at www.sec.gov, or by directing a request to: Avista Public Acquisition Corp. II, 65 East 55th Street, 18th Floor, New York, NY 10022.

 

Participants in the Solicitation

 

APAC, Ligand and OmniAb, and each of their respective directors, executive officers and other members of their management and employees may be deemed to be participants in the solicitation of proxies from APAC’s shareholders in connection with the Business Combination. Shareholders are urged to carefully read the proxy statement/prospectus regarding the Business Combination when it becomes available, because it will contain important information. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of APAC’s shareholders in connection with the Business Combination will be set forth in the registration statement when it is filed with the SEC. Information about APAC’s executive officers and directors and OmniAb’s management and directors also will be set forth in the registration statement relating to the Business Combination when it becomes available.

 

No Solicitation or Offer

 

This communication shall neither constitute an offer to sell nor the solicitation of an offer to buy any securities, or the solicitation of any proxy, vote, consent or approval in any jurisdiction in connection with the Business Combination, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to any registration or qualification under the securities laws of any such jurisdictions. This communication is restricted by law; it is not intended for distribution to, or use by any person in, any jurisdiction where such distribution or use would be contrary to local law or regulation.

 

 

 

 

Forward-Looking Statements

 

This communication contains forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. All statements other than statements of historical facts contained in this communication, including statements regarding the expected timing and structure of the Business Combination, the ability of the parties to complete the Business Combination, the expected benefits of the Business Combination, the tax consequences of the Business Combination, the amount of gross proceeds expected to be available to OmniAb after the Closing and giving effect to any redemptions by APAC shareholders, OmniAb’s future results of operations and financial position, business strategy and its expectations regarding the application of, and the rate and degree of market acceptance of, the OmniAb technology platform and other technologies, OmniAb’s expectations regarding the addressable markets for our technologies, including the growth rate of the markets in which it operates, the potential for and timing of receipt of milestones and royalties under OmniAb’s license agreements with partners, are forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the control of Ligand, OmniAb and APAC, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include, but are not limited to: the risk that the transactions may not be completed in a timely manner or at all, which may adversely affect the price of Ligand’s or APAC’s securities; the risk that APAC shareholder approval of the Business Combination is not obtained; the inability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, the amount of funds available in APAC’s trust account following any redemptions by APAC’s shareholders; the failure to receive certain governmental and regulatory approvals; the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement; changes in general economic conditions, including as a result of the COVID 19 pandemic or the conflict between Russia and Ukraine; the outcome of litigation related to or arising out of the Business Combination, or any adverse developments therein or delays or costs resulting therefrom; the effect of the announcement or pendency of the transactions on Ligand’s, OmniAb’s or APAC’s business relationships, operating results, and businesses generally; the ability to continue to meet Nasdaq’s listing standards following the consummation of the Business Combination; costs related to the Business Combination; that the price of APAC’s or Ligand’s securities may be volatile due to a variety of factors, including Ligand’s, APAC’s or OmniAb’s inability to implement their business plans or meet or exceed their financial projections and changes in the combined capital structure; the ability to implement business plans, forecasts, and other expectations after the completion of the Business Combination, and identify and realize additional opportunities; and the ability of OmniAb to implement its strategic initiatives.

 

The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of APAC’s registration statement on Form S-1 (File No. 333-257177), the registration statement on Form S-4, the registration statement on Form 10, the proxy/information statement/prospectus and certain other documents filed or that may be filed by APAC, Ligand or OmniAb from time to time with the SEC following the date hereof. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Ligand, OmniAb and APAC assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

 

None of Ligand, OmniAb, or APAC gives any assurance that Ligand, OmniAb or APAC will achieve their expectations.

 

 

 

 

Market and Industry Data

 

This communication also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about the antibody industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions, and estimates of OmniAb’s future performance and the future performance of the markets in which OmniAb operates are necessarily subject to a high degree of uncertainty and risk.

 

 

 

 

Item 9.01.Financial Statements and Exhibits.

 

(d)Exhibits.

 

Exhibit
No.
  Description
2.1*   Agreement and Plan of Merger, dated as of March, 23, 2022, by and among Avista Public Acquisition Corp. II, Ligand Pharmaceuticals Incorporated, OmniAb, Inc. and Orwell Merger Sub Inc.
2.2*   Separation and Distribution Agreement, dated as of March 23, 2022, by and among Avista Public Acquisition Corp. II, Ligand Pharmaceuticals Incorporated and OmniAb, Inc.
2.3   Sponsor Insider Agreement, dated March 23, 2022, by and among OmniAb, Inc., Avista Public Acquisition Corp. II and the other parties signatory thereto.
2.4   Amended and Restated Forward Purchase Agreement, dated March 23, 2022, by and among Avista Public Acquisition Corp. II, Avista Acquisition LP II and OmniAb, Inc.
10.1*   Employee Matters Agreement, dated as of March 23, 2022, by and among Ligand Pharmaceuticals Incorporated, Avista Public Acquisition Corp. II, OmniAb, Inc. and Orwell Merger Sub Inc.
104   Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

*Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. Avista Public Acquisition Corp. II agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request.

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

  Avista Public Acquisition Corp. II
   
   
Date: March 24, 2022 By: /s/ Benjamin Silbert
  Name: Benjamin Silbert
  Title: General Counsel

 

 

 

Exhibit 2.1

 

EXECUTION VERSION

 

AGREEMENT AND PLAN OF MERGER

 

DATED AS OF MARCH 23, 2022

 

by and among

 

LIGAND PHARMACEUTICALS INCORPORATED,

 

OMNIAB, INC.,

 

AVISTA PUBLIC ACQUISITION CORP. II

 

and

 

ORWELL MERGER SUB INC.

 

 -i- 

 

 

TABLE OF CONTENTS

 

    Page
     
Article I DEFINITIONS 4
Section 1.1 Definitions 4
Section 1.2 Cross References 23
Section 1.3 Interpretation 24
     
Article II THE MERGER 26
Section 2.1 The Merger 26
Section 2.2 Closing 26
Section 2.3 Closing Deliverables; Effective Time 27
Section 2.4 Certificate of Incorporation and Bylaws of the Surviving Corporation; Directors and Officers of the Surviving Corporation 28
Section 2.5 Governance Matters 29
     
Article III CONVERSION OF SHARES 29
Section 3.1 Effect on Capital Stock 29
Section 3.2 Surrender and Payment 31
Section 3.3 Earnout 34
Section 3.4 Appraisal Rights 36
Section 3.5 Treatment of SpinCo Equity Awards 36
     
Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY RELATING TO THE COMPANY 36
Section 4.1 Organization of the Company 36
Section 4.2 Due Authorization 36
Section 4.3 Governmental Consents 37
Section 4.4 No Conflict 37
Section 4.5 Litigation and Proceedings 37
Section 4.6 Brokers’ Fees 38
Section 4.7 Internal Controls 38
Section 4.8 Company Equity Awards 38

 

 -ii- 

 

 

Article V REPRESENTATIONS AND WARRANTIES OF THE COMPANY RELATING TO SPINCO 39
Section 5.1 Organization of SpinCo 39
Section 5.2 Due Authorization 39
Section 5.3 Capitalization of SpinCo 40
Section 5.4 Subsidiaries 40
Section 5.5 Capitalization of Subsidiaries 41
Section 5.6 Governmental Consents 41
Section 5.7 No Conflict 41
Section 5.8 Sufficiency of the SpinCo Assets 42
Section 5.9 Financial Statements 42
Section 5.10 No Undisclosed Liabilities 42
Section 5.11 Litigation and Proceedings 43
Section 5.12 Real Property 43
Section 5.13 Tax Matters 43
Section 5.14 Absence of Changes 44
Section 5.15 Material Contracts 44
Section 5.16 Labor Relations 47
Section 5.17 Compliance with Law; Permits 48
Section 5.18 SpinCo Benefit Plans 49
Section 5.19 Intellectual Property 50
Section 5.20 Environmental Matters 54
Section 5.21 Affiliate Matters 54
Section 5.22 Brokers’ Fees 54
Section 5.23 Proxy Statement; Registration Statements 54
Section 5.24 Board and Shareholder Approval 55
Section 5.25 Parent Capital Stock 55
Section 5.26 Healthcare Regulatory Matters 55
Section 5.27 Data Privacy 56
Section 5.28 Anti-Bribery, Anti-Corruption and Anti-Money Laundering 57
Section 5.29 Sanctions, Import, and Export Controls 58
Section 5.30 No Other Representations and Warranties 58
     
Article VI REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB 59
Section 6.1 Organization of Parent and Merger Sub 59
Section 6.2 Due Authorization 60
Section 6.3 Capital Stock and Other Matters 61
Section 6.4 Governmental Consents 62
Section 6.5 No Conflict 62
Section 6.6 Internal Controls; Listing; Financial Statements 63
Section 6.7 No Undisclosed Liabilities 64
Section 6.8 Litigation and Proceedings 64
Section 6.9 Tax Matters 64
Section 6.10 Absence of Changes 65
Section 6.11 Brokers’ Fees 66
Section 6.12 Proxy Statement; Registration Statements 66
Section 6.13 SEC Filings 66
Section 6.14 Trust Account. 67
Section 6.15 Investment Company Act; JOBS Act. 67
Section 6.16 Indebtedness 67
Section 6.17 Stock Market Quotation 67
Section 6.18 Business Activities 68
Section 6.19 Section 280G 69
Section 6.20 No Other Representations and Warranties 69

 

 -iii- 

 

 

Article VII COVENANTS 70
Section 7.1 Conduct of Business by Parent and Merger Sub Pending the Merger 70
Section 7.2 Conduct of SpinCo Business Pending the Merger 71
Section 7.3 Tax Matters 75
Section 7.4 Preparation of the Registration Statements and Prospectus; Parent Shareholders Meeting 76
Section 7.5 Modification in Recommendation 79
Section 7.6 Reasonable Best Efforts 80
Section 7.7 [Intentionally Omitted] 81
Section 7.8 Access to Information 82
Section 7.9 Exclusivity 83
Section 7.10 Public Announcements 85
Section 7.11 Defense of Litigation 85
Section 7.12 Section 16 Matters 85
Section 7.13 Control of Other Party’s Business 85
Section 7.14 SpinCo Share Issuance 86
Section 7.15 Domestication 86
Section 7.16 Transaction Documents 86
Section 7.17 NASDAQ Listing 87
Section 7.18 Takeover Statutes 87
Section 7.19 Obligations of Merger Sub and SpinCo 87
Section 7.20 Further Assurances 87
Section 7.21 Sole Shareholder Approvals 88
Section 7.22 Financial Information 88
     
Article VIII CONDITIONS TO THE MERGER 89
Section 8.1 Conditions to the Obligations of SpinCo, the Company, Parent and Merger Sub to Effect the Merger 89
Section 8.2 Additional Conditions to the Obligations of the Company and SpinCo 90
Section 8.3 Additional Conditions to the Obligations of Parent and Merger Sub 91
     
Article IX TERMINATION 92
Section 9.1 Termination 92
Section 9.2 Effect of Termination 94
Section 9.3 Termination Fee. 94
Section 9.4 Fees and Expenses 95

 

 -iv- 

 

 

Article X MISCELLANEOUS 96
Section 10.1 Trust Account Waiver 96
Section 10.2 Non-Survival of Representations, Warranties and Agreements 96
Section 10.3 Governing Law; Jurisdiction 97
Section 10.4 Notices 98
Section 10.5 Headings 98
Section 10.6 Entire Agreement 98
Section 10.7 Amendments and Waivers 99
Section 10.8 Assignment; Parties in Interest; Non-Parties 99
Section 10.9 Specific Performance 99
Section 10.10 WAIVER OF JURY TRIAL 100
Section 10.11 Severability 101
Section 10.12 Counterparts 101
Section 10.13 Disclosure Schedules 101
Section 10.14 Conflicts and Privilege 101

 

EXHIBITS  
Exhibit A Separation and Distribution Agreement
Exhibit B Form of Tax Matters Agreement
Exhibit C Employee Matters Agreement
Exhibit D-1 Form of Transition Services Agreement (Company-Provided)
Exhibit D-2 Form of Transition Services Agreement (SpinCo-Provided)
Exhibit E Form of A&R Registration Rights Agreement
Exhibit F Form of Sponsor Insider Agreement
Exhibit G Form of Parent Charter
Exhibit H Form of Parent Bylaws
Exhibit I A&R Forward Purchase Agreement

 

 -v- 

 

 

AGREEMENT AND PLAN OF MERGER

 

This AGREEMENT AND PLAN OF MERGER, dated as of March 23, 2022, is entered into by and among Ligand Pharmaceuticals Incorporated, a Delaware corporation (the “Company”), OmniAb, Inc., a Delaware corporation and wholly owned Subsidiary of the Company (“SpinCo”), Avista Public Acquisition Corp. II, a Cayman Islands exempted company (which will migrate to and domesticate as a Delaware corporation prior to the Closing (as defined below)) (“Parent”), and Orwell Merger Sub Inc., a Delaware corporation and wholly owned Subsidiary of Parent (“Merger Sub”). Each of the foregoing parties is referred to herein as a “Party” and collectively as the “Parties.”

 

WHEREAS:

 

(1)            Parent is a blank check company incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities;

 

(2)            At least one day prior to the Effective Time (as defined below), as the first step in the consummation of the Transactions and subject to the conditions set forth in this Agreement, Parent shall migrate to and domesticate as a Delaware corporation (the “Domestication”) in accordance with Section 388 of the Delaware General Corporation Law, as amended (the “DGCL”) and the Cayman Islands Companies Act (As Revised) (the “CICA”);

 

(3)            Concurrently with the Domestication, Parent shall file a certificate of incorporation with the Secretary of State of the State of Delaware and adopt bylaws substantially in the forms attached as Exhibits G and H hereto, respectively, with such changes as may be agreed in writing by Parent and the Company;

 

(4)            In connection with the Domestication, (i) each then issued and outstanding share of Parent Class A Common Stock (as defined below) shall convert automatically, on a one-for-one basis, into one share of common stock, par value $0.0001, per share of Parent (after its domestication as a corporation incorporated in the State of Delaware) (the “Domesticated Parent Common Stock”); (ii) each then issued and outstanding share of Parent Class B Common Stock (as defined below) shall convert automatically, on a one-for-one basis, into one share of Domesticated Parent Common Stock; (iii) each then issued and outstanding Parent Warrant (as defined below) shall convert automatically into a warrant to acquire one share of Domesticated Parent Common Stock (each, a “Domesticated Parent Warrant”), pursuant to the Warrant Agreement (as defined below); and (iv) each then issued and outstanding unit of Parent (the “Parent Units”) shall separate and convert automatically into one share of Domesticated Parent Common Stock and one-third of one Domesticated Parent Warrant;

 

(5)            SpinCo is a wholly owned, direct Subsidiary of the Company;

 

(6)            Contemporaneously with the execution of this Agreement, the Company, SpinCo and Parent are entering into the Separation and Distribution Agreement, pursuant to which the Company will, upon the terms and conditions set forth therein and in accordance with the Internal Reorganization, separate the SpinCo Business such that, after giving effect to the Separation (as defined in the Separation and Distribution Agreement), the SpinCo Business is held by the SpinCo Entities (each foregoing capitalized term as defined below);

 

  

 

 

(7)            Prior to the Distribution (as defined below), in accordance with the Separation and Distribution Agreement, the Company will make the Contribution (as defined below) to SpinCo;

 

(8)            Upon the terms and subject to the conditions set forth in the Separation and Distribution Agreement, on the Distribution Date (as defined below), the Company will distribute all of the shares of SpinCo Common Stock (as defined below) to the Company stockholders without consideration on a pro rata basis as set forth in the Separation and Distribution Agreement (the “Distribution”);

 

(9)            Following the Domestication and the Distribution, at the Effective Time, (i) the Parties will effect the merger of Merger Sub with and into SpinCo, with SpinCo continuing as the surviving corporation (the “Merger”), upon the terms and subject to the conditions set forth herein and (ii) Parent will change its name to “OmniAb, Inc.”;

 

(10)            Pursuant to the Merger, shares of SpinCo Common Stock will be exchanged for shares of Domesticated Parent Stock (as defined below), on the terms and subject to the conditions set forth herein;

 

(11)            The board of directors of Parent (the “Parent Board”) unanimously has (a) determined that the terms of this Agreement and the Transactions (as defined below) are in the best interests of Parent, (b) approved and declared advisable the execution, delivery and performance of this Agreement and the consummation of the Transactions, on the terms and subject to the conditions set forth herein, (c) resolved to recommend that the shareholders of Parent approve the Transaction Proposals (as defined below), on the terms and subject to the conditions set forth herein (the “Parent Board Recommendation”), and (d) directed that each of the Transaction Proposals be submitted to a vote at a meeting of Parent’s shareholders;

 

(12)            The board of directors of Merger Sub has determined that the Merger and this Agreement are advisable, has approved this Agreement and the Transactions, including the Merger, and has recommended the approval of this Agreement and the Merger to the sole stockholder of Merger Sub;

 

(13)            Parent, as the sole stockholder of Merger Sub, immediately following the execution and delivery of this Agreement, will approve and adopt this Agreement and the Transactions;

 

(14)            The board of directors of the Company (the “Company Board”) unanimously has approved this Agreement and the Transactions, subject to such further action by the Company Board required to establish the Record Date and the Distribution Date (each as defined below), and the declaration of the Distribution by the Company Board (the effectiveness of which is subject to the satisfaction or, to the extent permitted by applicable Law, waiver of the conditions set forth in the Separation and Distribution Agreement);

 

(15)            The board of directors of SpinCo (the “SpinCo Board”) has determined that the Merger and this Agreement are advisable, has approved this Agreement and the Transactions and has recommended the approval of this Agreement and the Merger to the sole stockholder of SpinCo;

 

 -2- 

 

 

(16)            The Company, as the sole stockholder of SpinCo, immediately following the execution and delivery of this Agreement, will approve and adopt this Agreement and the Transactions;

 

(17)            In accordance with the terms of this Agreement, Parent shall provide an opportunity to holders of the Parent Class A Common Stock to have their outstanding shares redeemed on the terms and subject to the conditions set forth in this Agreement and Parent’s Governing Documents (as defined below) in connection with obtaining the Parent Shareholder Approval (as defined below);

 

(18)            Concurrently with the execution and delivery of this Agreement, Parent entered into the A&R Forward Purchase Agreement (as defined below) with the Sponsor (as defined below) pursuant to which, and on the terms and subject to the conditions of which, Sponsor has agreed to purchase from Parent the shares of Domesticated Parent Common Stock and Domesticated Parent Warrants described therein, such purchases to be consummated following the Domestication and immediately prior to the Distribution;

 

(19)            At the Effective Time, Parent, the Sponsor, the independent directors of Parent, and the other Persons named as parties therein shall amend and restate that certain Registration and Shareholder Rights Agreement, dated August 9, 2021, by and among Parent, the Sponsor and the other Persons party thereto, substantially in the form attached hereto as Exhibit E (as so amended and restated, and with such further changes as may be agreed in writing by Parent and the Company, the “A&R Registration Rights Agreement”), to, among other things, include a three (3) month lockup on shares issued to directors and officers of the Company and SpinCo;

 

(20)            Concurrently with the execution and delivery of this Agreement, the Sponsor, Parent and the other Persons named as parties therein have entered into that certain sponsor insider letter agreement (the “Sponsor Insider Agreement”), pursuant to which, among other things, in connection with the Closing, the Sponsor shall subject the shares of Domesticated Parent Common Stock described therein to potential forfeiture in the event that certain funding and/or share price targets are not achieved, upon the terms and subject to the conditions set forth therein; and

 

(21)            It is the intention of the Parties that, for U.S. federal income Tax purposes: (a) the Domestication qualify as a “reorganization” under Section 368(a)(1)(F) of the Code, (b) the Contribution and the Distribution, taken together, qualify as a “reorganization” under Sections 368(a)(1)(D) and 355(a) of the Code; (c) the Merger qualify as a “reorganization” within the meaning of Section 368(a) of the Code; and (d) each of this Agreement and the Separation and Distribution Agreement constitute a “plan of reorganization” for purposes of Section 368 of the Code.

 

 -3- 

 

 

NOW, THEREFORE:

 

In consideration of the premises and mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

Article I

 

DEFINITIONS

 

Section 1.1      Definitions. As used herein, the following terms have the following meanings; provided, that terms that are defined by reference to a defined term in the Separation and Distribution Agreement and include herein the term “SpinCo” shall be understood to be referring to the correlative defined term for “SpinCo” used in the Separation and Distribution Agreement:

 

(1)            A&R Forward Purchase Agreement” means the Amended and Restated Forward Purchase Agreement, dated as of the date hereof, by and among Parent, the Sponsor and the Company.

 

(2)            A&R Registration Rights Agreement” has the meaning set forth in the Recitals.

 

(3)            Action” means any claim, action, suit, litigation, arbitration, mediation, inquiry, investigation or other proceeding, in each case, by any Person or Governmental Authority, in each case, before, heard by or otherwise involving any Governmental Authority.

 

(4)            Actual Fraud” means, with respect to a Party, an actual and intentional fraud with respect to the making of the representations and warranties pursuant to Article IV, Article V or Article VI (as applicable); provided, that such actual and intentional fraud shall only be deemed to exist if the applicable representations and warranties were, to the Knowledge of the Company or SpinCo, in the case of Article IV or Article V, or to the Knowledge of Parent, in the case of Article VI, actually breached when made.

 

(5)            Adjusted Parent Equity Award” has the meaning set forth in the Employee Matters Agreement.

 

(6)            Adjusted Parent Option” has the meaning set forth in the Employee Matters Agreement.

 

(7)            Adjusted Parent PSU Award” has the meaning set forth in the Employee Matters Agreement.

 

(8)            Adjusted Parent RSU Award” has the meaning set forth in the Employee Matters Agreement.

 

(9)            Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person, through one or more intermediaries or otherwise. For the avoidance of doubt, following the Effective Time, Affiliates of Parent shall include the SpinCo Entities.

 

 -4- 

 

 

(10)            Aggregate Common Consideration Shares” means the quotient of (i) the sum of (a) $850,000,000, plus (b) an amount equal to the aggregate exercise price of SpinCo Options that are issued and outstanding as of immediately prior to the Effective Time, divided by (ii) $10; provided, that if the Aggregate Common Consideration Shares as so calculated (together with the number of Included SpinCo Shares, calculated including shares underlying SpinCo Options, as applicable) would result in the product of (x) the Base Exchange Ratio, multiplied by (y) $10, being less than the exercise price of any of the SpinCo Options issued and outstanding as of immediately prior to the Effective Time, then the calculation described in this definition shall be repeated by excluding the exercise price of all of the SpinCo Options with the highest exercise price per share from the calculation of the aggregate exercise price described in clause (i)(b) of this definition and excluding any shares underlying such SpinCo Options from the calculation of Included SpinCo Shares, in each case, on an iterative basis until the resulting calculations of Aggregate Common Consideration Shares and Included SpinCo Shares causes the product of (I) the Base Exchange Ratio and (II) $10 to be equal to or in excess of the exercise price of all of the SpinCo Options included in such calculations, and the number of Aggregate Common Consideration Shares so calculated shall be the “Aggregate Common Consideration Shares” for the purposes of this Agreement.

 

(11)            Agreement” means this Agreement and Plan of Merger, including all Annexes, Exhibits and Schedules hereto (including the SpinCo Disclosure Schedule, the Company Disclosure Schedule and the Parent Disclosure Schedule), as it may be amended, restated, modified or supplemented from time to time in accordance with its terms.

 

(12)            Antitrust Laws” means the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, the HSR Act and all other applicable Laws issued by a Governmental Authority that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition.

 

(13)            Balance Sheet Date” means December 31, 2021.

 

(14)            Base Exchange Ratio” means the quotient of (i) the Aggregate Common Consideration Shares, divided by (ii) the number of Included SpinCo Shares.

 

(15)            Benefit Plan” has the meaning given to such term in the Employee Matters Agreement.

 

(16)            BLA” means a biologics license application submitted to the FDA pursuant to 42 U.S.C. § 262 and 21 C.F.R. Part 601, and all supplements, amendments, variations, extensions and renewals thereto.

 

(17)            Business Combination” has the meaning set forth in Parent’s Governing Documents as in effect on the date hereof.

 

 -5- 

 

 

(18)            Business Day” means any day that is not a Saturday, a Sunday or other day on which banking institutions in New York, New York or Governmental Authorities in the Cayman Islands (for so long as Parent remains domiciled in the Cayman Islands) are authorized or obligated by Law to be closed.

 

(19)            Cayman Registrar” means the Registrar of Companies of the Cayman Islands.

 

(20)            Change of Control” means any transaction or series of transactions (a) in which the holders of all of the outstanding voting securities of Parent immediately prior to the consummation of such transaction do not directly or indirectly (including through Affiliates) own beneficially or of record immediately upon the consummation of such transaction a majority of the combined outstanding voting securities of the surviving entity in such transaction or of a parent of the surviving entity in such transaction, (b) in which a majority of Parent’s voting securities (outstanding after such transaction) are transferred to or acquired by any Person, or any two or more Persons acting as a “group” (as defined in the Exchange Act), and all Affiliates of such Person or Persons (each, a “Group”), (c) constituting a merger, consolidation, reorganization or other business combination, however effected, following which any Person or Group of Persons (other than Parent, SpinCo or any of their respective Subsidiaries) has direct or indirect beneficial ownership of securities (or rights convertible into or exchangeable into securities) representing fifty percent (50%) or more of the voting power of or economic rights or interests in Parent or SpinCo or the surviving Person after such merger, consolidation, reorganization or combination or (d) the result of which is a sale of all or substantially all of the assets of Parent or SpinCo to any Person (other than Parent, SpinCo or any of their respective Subsidiaries).

 

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

 

(22)            Company Benefit Plan” has the meaning given to such term in the Employee Matters Agreement.

 

(23)            Company Common Stock” means the common stock, par value $0.001 per share, of the Company.

 

(24)            Company Distribution Tax Representations” means the representations of an officer of the Company and/or SpinCo, dated as of the Closing Date, in form and substance reasonably satisfactory to LW, delivered to LW in connection with the Company Distribution Tax Opinion.

 

(25)            Company Disclosure Schedule” means the Disclosure Schedule delivered by the Company to Parent on the date hereof and identified as such.

 

(26)            Company Equity Award” has the meaning given to such term in the Employee Matters Agreement.

 

(27)            Company Material Adverse Effect” means any Effect that has, or would reasonably be expected to, individually or in the aggregate, materially impair, materially delay or otherwise have a material adverse effect on the ability of the Company to perform its obligations hereunder or under the other Transaction Documents or to consummate the Transactions, including the Separation and the Distribution, or prevent it from performing such obligations or consummating such Transactions.

 

 -6- 

 

 

(28)            Company Option” has the meaning given to such term in the Employee Matters Agreement.

 

(29)            Company PSU Award” has the meaning given to such term in the Employee Matters Agreement.

 

(30)            Company Real Property” means any real property owned, leased, subleased, licensed or otherwise occupied by the Company or any of its Subsidiaries (other than the SpinCo Entities), in each case, that is used in connection with the SpinCo Business as it is currently conducted or contemplated to be conducted in the future.

 

(31)            Company RSU Award” has the meaning given to such term in the Employee Matters Agreement.

 

(32)            Company SEC Documents” means all forms, reports, Schedules, statements and other documents required to be filed or furnished by the Company or SpinCo with the SEC since January 1, 2019.

 

(33)            Company Service Provider” has the meaning given to such term in the Employee Matters Agreement.

 

(34)            Company Tax Opinions” means the Company Distribution Tax Opinion and the Company Merger Tax Opinion.

 

(35)            Confidentiality Agreement” means that certain Confidentiality Agreement, by and between Parent and the Company, dated as of February 21, 2022.

 

(36)            Consent” means any consent, clearance, expiration or termination of a waiting period, approval, exemption, waiver, authorization, filing, registration or notification.

 

(37)            Contract” means any legally binding contract, agreement, understanding, arrangement, loan or credit agreement, note, bond, indenture, lease, warranty, purchase order, sublicense or license or other instrument.

 

(38)            Contribution” has the meaning set forth in the Separation and Distribution Agreement.

 

(39)            COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions or mutations thereof or related or associated epidemics, pandemics or disease outbreaks.

 

(40)            COVID-19 Measures” means any quarantine, “shelter in place,” “stay at home,” social distancing, shut down, closure, sequester, workplace safety or similar Law, directive, guidelines or recommendations promulgated by any industry group or any Governmental Authority, including the Centers for Disease Control and Prevention and the World Health Organization, in each case, in connection with or in response to COVID-19, including the CARES Act and Families First Coronavirus Response Act.

 

 -7- 

 

 

(41)            DGCL” has the meaning set forth in the Recitals.

 

(42)            Distribution Date” has the meaning set forth in the Separation and Distribution Agreement.

 

(43)            Distribution Time” has the meaning set forth in the Separation and Distribution Agreement.

 

(44)            Domesticated Parent Common Stock” has the meaning set forth in the Recitals.

 

(45)            Domesticated Parent Stock” means the Domesticated Parent Common Stock and the Earnout Shares.

 

(46)            Domesticated Parent Warrant” has the meaning set forth in the Recitals.

 

(47)            Earnout Exchange Ratio” means the quotient of (i) 15,000,000, divided by (ii) the number of Fully Diluted SpinCo Shares.

 

(48)            Effect” means any change, event, development, condition, occurrence or effect.

 

(49)            Employee Matters Agreement” means the Employee Matters Agreement, dated as of the date hereof, by and among Parent, the Company and SpinCo, attached as Exhibit C to this Agreement.

 

(50)            Entity” means any Person that is a legal entity; provided, that when used in reference to Parent or SpinCo, “Entity” means Parent or SpinCo, in each case together with its respective Subsidiaries, taken as a whole.

 

(51)            Environmental Laws” means any Law relating to pollution or protection of the environment, natural resources, or human health and safety (to the extent related to exposure to Hazardous Materials or hazardous conditions).

 

(52)            ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated and rulings issued thereunder.

 

(53)            ERISA Affiliate” means, with respect to any entity, trade or business, any other entity, trade or business that is a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes the first entity, trade or business, or that is a member of the same “controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.

 

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

 

(55)            EY” means Ernst & Young LLP.

 

(56)            FDA” means the United States Food and Drug Administration.

 

 -8- 

 

 

(57)            FDCA” means the Food, Drug and Cosmetic Act, 21 U.S.C. § 301 et seq., as amended.

 

(58)            Foreign Benefit Plan” means any Company Benefit Plan or SpinCo Benefit Plan that is maintained (i) primarily for the benefit of employees outside the United States or (ii) pursuant to the Laws of a country other than the United States.

 

(59)            Former Company Service Provider” has the meaning given to such term in the Employee Matters Agreement.

 

(60)            Fully Diluted SpinCo Shares” means, without duplication, the sum of (a) the aggregate number of issued and outstanding shares of SpinCo Common Stock as of immediately prior to the Effective Time, plus (b) the aggregate number of shares of SpinCo Common Stock issuable upon the exercise of all SpinCo Options (whether vested or unvested) as of immediately prior to the Effective Time, plus (c) the aggregate number of shares of SpinCo Common Stock issuable upon the vesting of all SpinCo RSU Awards as of immediately prior to the Effective Time, plus (d) the aggregate number of shares of SpinCo Common Stock issuable upon the vesting of all SpinCo PSU Awards as of immediately prior to the Effective Time.

 

(61)            GAAP” means generally accepted accounting principles in the United States.

 

(62)            Good Clinical Practices” means the then current requirements of Law for the conduct of clinical trials (including all applicable requirements relating to protection of human subjects), as set forth in the FDCA and applicable regulations promulgated thereunder, as amended from time to time, and such applicable regulations for the conduct of human clinical trials (including all applicable requirements relating to protection of human subjects) as are enforced by any Regulatory Authority in any countries other than the United States in which the SpinCo Products are the subject of clinical trials.

 

(63)            Good Laboratory Practices” means the then current requirements of Law for conducting nonclinical laboratory studies, as set forth in the FDCA and applicable regulations promulgated thereunder, as amended from time to time, and such applicable regulations governing the conduct of nonclinical laboratory studies as are enforced by Regulatory Authorities in any country other than the United States in which the SpinCo Products are studied in nonclinical laboratory studies to which requirements apply.

 

(64)            Governing Documents” means the legal document(s) by which any Person (other than an individual) establishes its legal existence or which govern its internal affairs. For example, the “Governing Documents” of a corporation are its certificate of incorporation and by-laws, the “Governing Documents” of a limited partnership are its limited partnership agreement and certificate of limited partnership, the “Governing Documents” of a limited liability company are its operating agreement and certificate of formation and the “Governing Documents” of an exempted company are its memorandum and articles of association (in each case, as amended, restated, amended and restated or otherwise modified from time to time).

 

(65)            Governmental Authority” means any federal, state, local, transnational, supranational or foreign government, any Person exercising executive, legislative, judicial, regulatory or administrative function of or pertaining to government or Law, including any regulatory, self-regulatory or quasi-regulatory authority, agency, commission, body, department or other instrumentality, and any court, arbitral body or tribunal of competent jurisdiction.

 

 -9- 

 

 

(66)            Government Official” means any officer or employee of a Governmental Authority or any department, agency, or instrumentality thereof, including any political subdivision thereof or any corporation or other Person owned or controlled in whole or in part by any Governmental Authority or any sovereign wealth fund, or of a public international organization, or any Person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality, or for or on behalf of any such public international organization, or any political party, party official, or candidate thereof.

 

(67)            Hazardous Material” means any toxic, reactive, corrosive, ignitable or flammable chemical or chemical compound, or hazardous or toxic substance, material or waste, or any pollutant or contaminant, whether solid, liquid or gas, or any other substance, material or waste that is subject to regulation, control or remediation or for which liability or standards of care are imposed under any Environmental Law, including petroleum (including crude oil or any fraction thereof), radon, asbestos, radioactive materials, per- and polyfluoroalkyl substances and polychlorinated biphenyls.

 

(68)            Healthcare Laws” means (a) the FDCA, and the regulations promulgated thereunder, (b) the Public Health Service Act (42 U.S.C. 201 et seq.), and the regulations promulgated thereunder, (c) all federal and state fraud and abuse Laws, including the Federal Anti-Kickback Statute, the civil False Claims Act, the Anti-Inducement Law, the exclusion Laws, and the regulations promulgated pursuant to such statutes, (d) the Health Insurance Portability and Accountability Act of 1996, and the regulations promulgated thereunder, and comparable state Laws, (e) Titles XVIII and XIX of the Social Security Act, and the regulations promulgated thereunder and (f) all other applicable healthcare Laws, rules and regulations, ordinances, judgments, decrees, orders, writs and injunctions administered by Regulatory Authorities, each of clause (a) through (f), as may be amended from time to time.

 

(69)            HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

 

(70)            INAD” means an investigational new animal drug exemption pursuant to 21 C.F.R. Part 511.

 

(71)            Included SpinCo Shares” means, without duplication, the sum of (a) the aggregate number of issued and outstanding shares of SpinCo Common Stock as of immediately prior to the Effective Time, plus (b) the aggregate number of shares of SpinCo Common Stock issuable upon the exercise of all SpinCo Options (whether vested or unvested) as of immediately prior to the Effective Time, other than SpinCo Options excluded from the definition of Aggregate Common Consideration Shares pursuant to the proviso thereto, plus (c) the aggregate number of shares of SpinCo Common Stock issuable upon the vesting of all SpinCo RSU Awards as of immediately prior to the Effective Time, plus (d) the aggregate number of shares of SpinCo Common Stock issuable upon the vesting of all SpinCo PSU Awards as of immediately prior to the Effective Time.

 

 -10- 

 

 

(72)            IND” means an investigational new drug application submitted to the FDA pursuant to 21 C.F.R. Part 312 to permit the introduction of an investigational drug into interstate commerce in the United States for the purposes of conducting human clinical trials, and all supplements, amendments, variations, extensions and renewals thereof.

 

(73)            Intellectual Property” has the meaning set forth in the Separation and Distribution Agreement.

 

(74)            Interests” means shares, partnership interests, limited liability company interests or any other equity interest in any Person.

 

(75)            Internal Reorganization” has the meaning set forth in the Separation and Distribution Agreement.

 

(76)            Intervening Event” means any Effect that (i) was not known to or reasonably foreseeable by the Parent Board as of the date of this Agreement and (ii) does not relate to (A) any Business Combination (other than the Merger or the other Transactions) or (B) clearance of the Transaction by any Governmental Authority, including Effects relating to actions taken pursuant to or required to be taken pursuant to Section 7.6; provided, that (1) any change in the price or trading volume of Parent Common Stock shall not be taken into account for purposes of determining whether an Intervening Event has occurred and (2) the Company’s, SpinCo’s or any of their respective Subsidiaries’ meeting, failing to meet or exceeding projections (in and of itself, but not the underlying causes thereof) shall not be taken into account for purposes of determining whether an Intervening Event has occurred.

 

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

 

(78)            IRS” means the United States Internal Revenue Service.

 

(79)            IT Assets” has the meaning set forth in the Separation and Distribution Agreement.

 

(80)            Knowledge” means (a) with respect to the Company, the actual knowledge of the persons set forth in Section 1.1(a) of the Company Disclosure Schedule, after reasonable investigation, (b) with respect to SpinCo, the knowledge of the persons set forth in Section 1.1(a) of the SpinCo Disclosure Schedule, after reasonable investigation and (c) with respect to Parent, the actual knowledge of the persons set forth in Section 1.1(a) of the Parent Disclosure Schedule, after reasonable investigation.

 

(81)            Law” means, with respect to any Person, any law, statute, code, ordinance, order, decree, award, directive, judgment, ruling, rule, regulation or similar requirement issued, promulgated, enforced or enacted by or under the authority of a Governmental Authority that is binding upon or applicable to such Person.

 

(82)            Liability” means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, whether direct or indirect, and whether due or to become due).

 

 -11- 

 

 

(83)            Lien” means any mortgage, deed of trust, pledge, hypothecation, encumbrance, easement, encroachment, license, option, right of first refusal, security interest or other lien or restriction of any kind.

 

(84)            Ligand Retained Assets” has the meaning set forth in the Separation and Distribution Agreement.

 

(85)            Ligand Retained Business” has the meaning set forth in the Separation and Distribution Agreement.

 

(86)            Losses” means any and all Liabilities, claims, losses, damages, costs, expenses, interest, awards, judgments and penalties (including reasonable attorneys’ and consultants’ fees and expenses).

 

(87)            LW” means Latham & Watkins LLP.

 

(88)            Merger Tax Opinions” means the Company Merger Tax Opinion and the Parent Merger Tax Opinion.

 

(89)            Multiemployer Plan” means any “multiemployer plan” within the meaning of Section 3(37) or Section 4001(a)(3) of ERISA.

 

(90)            NADA” means a new animal drug application submitted to the FDA pursuant to 21 U.S.C. § 360b to market a new animal drug in the United States, and all supplements, amendments, variations, extensions and renewals thereto.

 

(91)            NASDAQ” means the Nasdaq Capital Market.

 

(92)            NDA” means a new drug application submitted to the FDA pursuant to 21 U.S.C. § 355(b), and all amendments or supplements thereto.

 

(93)            Parent Business Combination Proposal” means any inquiry, offer, proposal or indication of interest (whether written or oral, binding or non-binding, and other than an inquiry, offer, proposal or indication of interest made or submitted by Parent to the Company or by the Company to Parent) contemplating or otherwise relating to any potential Business Combination (other than the Merger or the other Transactions).

 

(94)            Parent Class A Common Stock” means the Class A ordinary fully paid shares, par value $0.0001 each per share in the capital of Parent prior to the Domestication.

 

(95)            Parent Class B Common Stock” means the Class B ordinary fully paid shares, par value $0.0001 each per share in the capital of Parent prior to the Domestication.

 

(96)            Parent Common Stock” means the Parent Class A Common Stock and the Parent Class B Common Stock.

 

(97)            Parent Disclosure Schedule” means the Disclosure Schedule delivered by Parent to the Company and SpinCo on the date hereof and identified as such.

 

 -12- 

 

 

(98)            Parent Distribution Tax Representations” means the representations of an officer of Parent, dated as of the Closing Date, in form and substance reasonably satisfactory to LW, delivered to LW in connection with the Company Distribution Tax Opinion.

 

(99)            Parent Equity Plan” has the meaning set forth in the Employee Matters Agreement.

 

(100)            Parent ESPP” has the meaning set forth in the Employee Matters Agreement.

 

(101)            Parent Material Adverse Effect” means any Effect that (a) has, or would reasonably be expected to have, individually or in the aggregate with any other Effects, a material adverse effect on the business or financial condition of the Parent or Merger Sub, taken as a whole; provided, that none of the following shall be deemed in themselves, either alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there has been or would reasonably be expected to be, individually or in the aggregate, a Parent Material Adverse Effect for purposes of this clause (a): (i) any changes resulting from general market, economic, financial, capital markets or regulatory conditions, (ii) any general changes in the credit, debt, financial or capital markets or changes in interest or exchange rates, (iii) any changes in applicable Law or GAAP (or, in each case, authoritative interpretations thereof), (iv) any changes resulting from any natural disaster, including any hurricane, storm, flood, tornado, volcanic eruption, earthquake, other weather-related events, or other comparable events, or any worsening thereof, (v) any changes resulting from local, national or international political conditions, including the outbreak or escalation of any military conflict, declared or undeclared war, armed hostilities, acts of foreign or domestic terrorism or civil unrest, (vi) any changes generally affecting the industries in which the Parent conducts its businesses, (vii) any changes directly resulting from the execution of this Agreement or the Transaction Documents or the announcement or the pendency of the Merger or the Transactions, including actions of suppliers, landlords, distributors, partners or Governmental Authorities and any loss of employees, relationships or customers resulting from the transactions contemplated by this Agreement (provided, that this clause (vii) shall not apply to any representation or warranty to the extent the purpose of such representation or warranty is to address, as applicable, the consequences resulting from the execution of this Agreement or the Separation and Distribution Agreement or the announcement or the pendency of the Merger or the Separation), (viii) any changes resulting from any action required to be taken by the terms of this Agreement or at the request or direction of the Company, (ix) the failure to meet any internal or analysts’ expectations, projections or results of operations (but not, in each case, the underlying cause of any such changes, unless such underlying cause would otherwise be excepted by another clause of this definition), (x) any changes resulting from any epidemics, pandemics or disease (including COVID-19 or any COVID-19 Measures or any change in COVID-19 Measures following the date hereof) or (xi) elections to redeem shares of Parent Class A Common Stock in connection with the Parent Shareholders Meeting as required by Parent’s Governing Documents; provided, that in the case of clauses (i), (ii), (iii), (iv), (v), (vi) and (x), if such Effect disproportionately impacts the Parent or Merger Sub, taken as a whole, as compared to other participants in similar industries to the industries in which Parent operates, the incremental disproportionate impact thereof may be taken into account in determining whether a Parent Material Adverse Effect has occurred or would reasonably be expected to occur; or (b) has, or would reasonably be expected to, individually or in the aggregate, materially impair or materially delay the ability of Parent to perform its obligations hereunder or under the Separation and Distribution Agreement, or to consummate the Transactions, including the Merger and the Separation, or prevent it from performing such obligations or consummating the Transactions.

 

 -13- 

 

 

(102)            Parent Merger Tax Representations” means the representations of an officer of Parent, dated as of the Closing Date, in form and substance reasonably satisfactory to LW and Weil, delivered to LW and Weil in connection with the Merger Tax Opinions.

 

(103)            Parent Private Placement Warrant” means a warrant to purchase one (1) share of Parent Class A Common Stock at an exercise price of eleven dollars fifty cents ($11.50) issued to the Sponsor prior to consummation of Parent’s initial public offering.

 

(104)            Parent Public Warrant” means a warrant to purchase one (1) share of Parent Class A Common Stock at an exercise price of eleven dollars fifty cents ($11.50), a fraction equal to one-third of which was included in each unit sold as part of Parent’s initial public offering.

 

(105)            Parent Registration Statement” means the registration statement on Form S-4 to be filed by Parent with the SEC (as amended and supplemented from time to time) to effect the registration under the Securities Act of the issuance of (a) the shares of Domesticated Parent Common Stock and the Earnout Shares that will be issued to holders of SpinCo Common Stock and holders of SpinCo Equity Awards pursuant to the Merger, (b) the shares of Domesticated Parent Common Stock and the Domesticated Parent Warrants that will be issued to holders of Parent Common Stock and Parent Public Warrants in the Domestication and the shares of Domesticated Parent Common Stock underlying such Domesticated Parent Warrants and (c) the Adjusted Parent Equity Awards into which the SpinCo Equity Awards are converted pursuant to the Merger and the shares of Domesticated Parent Common Stock underlying such Adjusted Parent Equity Awards.

 

(106)            Parent SEC Documents” means all forms, reports, schedules, statements and other documents required to be filed or furnished by Parent with the SEC since August 12, 2021.

 

(107)            Parent Share Issuance” means the issuance of shares of Domesticated Parent Stock pursuant to the Domestication, the PIPE Investment, the Redemption Backstop and the Merger.

 

(108)            Parent Share Redemption” means the election of an eligible holder of Parent Class A Common Stock (as determined in accordance with Parent’s Governing Documents) to redeem all or a portion of the shares of Parent Class A Common Stock held by such holder at a per-share price, payable in cash, equal to the pro rata share of the aggregate amount on deposit in the Trust Account (including any interest earned on the funds held in the Trust Account) represented by such redeemed shares (as determined in accordance with Parent’s Governing Documents and the Trust Agreement) in connection with the Transaction Proposals.

 

(109)            Parent Share Redemption Amount” means the aggregate amount payable with respect to all Parent Share Redemptions.

 

 -14- 

 

 

(110)            Parent Shareholder Approval” means the approval of (i) those Transaction Proposals identified in clauses (A), (B) and (C) of Section 7.4(e)(ii), in each case, by a special resolution under the CICA (being the affirmative vote of the holders of at least two-thirds (2/3) of the ordinary shares who, being present and entitled to vote at the Parent Shareholders Meeting, vote at the Parent Shareholders Meeting), (ii) those Transaction Proposals identified in clauses (D), (E), (F) and (I) of Section 7.4(e)(ii), in each case, by an ordinary resolution under the CICA (being the affirmative vote of the holders of a majority of the ordinary shares who, being present and entitled to vote at the Parent Shareholders Meeting, vote at the Parent Shareholders Meeting) and (iii) those Transaction Proposals identified in clauses (G) and (H) of Section 7.4(e)(ii), in each case, by an affirmative vote of the number of holders of Parent Common Stock required to approve such Transaction Proposals under applicable Law and the Governing Documents of Parent.

 

(111)            Parent Subsidiaries” means all direct and indirect Subsidiaries of Parent. For the avoidance of doubt, following the Effective Time, the Parent Subsidiaries shall include the SpinCo Entities.

 

(112)            “Parent Tax Opinions” means the Parent Domestication Tax Opinion and the Parent Merger Tax Opinion.

 

(113)            Parent Tax Representations” means the Parent Distribution Tax Representations and the Parent Merger Tax Representations.

 

(114)            Parent Trading Price” means the share price equal to the volume weighted average closing sale price of one share of Domesticated Parent Common Stock as reported on NASDAQ (or the exchange on which the shares of Domesticated Parent Common Stock are then listed) for a period of at least 20 days out of 30 consecutive trading days ending on the trading day immediately prior to the date of determination (as adjusted as appropriate to reflect any stock splits, reverse stock splits, stock dividends (including any dividend or distribution of securities convertible into Domesticated Parent Common Stock), extraordinary cash dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change or transaction with respect to Domesticated Parent Common Stock).

 

(115)            Parent Unit” has the meaning set forth in the Recitals.

 

(116)            Parent Warrant” means any Parent Private Placement Warrant or Parent Public Warrant.

 

(117)            Patent” has the meaning set forth in the Separation and Distribution Agreement.

 

(118)            Permits” means licenses, franchises, permits, certificates, approvals and authorizations from Governmental Authorities.

 

 -15- 

 

 

(119)            Permitted Liens” means (a) statutory Liens arising by operation of Law with respect to a Liability incurred in the ordinary course of business and which is not delinquent; (b) requirements and restrictions of zoning, licensing, permitting, building and other similar land-use Laws which are not violated by the present use or occupancy of the real property subject thereto; (c) Liens for Taxes or mechanics’, materialmen’s and similar Liens arising or incurred in the ordinary course of business and with respect to any amounts, in each case (i) not yet due and payable or (ii) which are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP; (d) non-exclusive licenses of Intellectual Property granted to customers in the ordinary course of business consistent with past practice; (e) all encroachments, overlaps, overhangs, variations in area or measurement, rights of parties in possession, servitudes or easements (including conservation easements and public trust easements, rights-of-way, road use Contracts, covenants, conditions, restrictions, reservations, licenses, Contracts and other similar non-monetary matters) of public record or any other similar matters not of record which would be disclosed by an accurate survey or physical inspection of the applicable real property; provided, that such Liens, individually or in the aggregate, do not or would not reasonably be expected to materially impair or interfere with the operation or use of such real property in the ordinary course operation of the respective businesses of SpinCo and its Subsidiaries or Parent and its Subsidiaries, as applicable, in each case, as currently conducted thereon; (f) with respect to any real property, (i) the interests and rights of the respective lessors with respect thereto, including any statutory landlord liens and any Lien on the lessor’s interest therein and (ii) any Liens encumbering the underlying fee title of the real property; provided, that such Liens, individually or in the aggregate, do not or would not reasonably be expected to materially impair or interfere with the operation or use of such real property in the ordinary course operation of the respective businesses of SpinCo and its Subsidiaries or Parent and its Subsidiaries, as applicable, in each case, as currently conducted thereon; (g) any real property Liens that do not, individually or in the aggregate, result in a Parent Material Adverse Effect or SpinCo Material Adverse Effect, as applicable; (h) reversionary rights in favor of landlords under any real property leases with respect to any of the buildings or other improvements owned by SpinCo, Parent or any of their Subsidiaries, as applicable; provided, that such Liens, individually or in the aggregate, do not or would not reasonably be expected to materially impair or interfere with the operation or use of such real property in the ordinary course operation of the respective businesses of SpinCo and its Subsidiaries or Parent and its Subsidiaries, as applicable, in each case, as currently conducted thereon; (i) purchase money Liens and Liens securing rental payments under capital lease agreements; (j) pledges or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security (other than pursuant to Section 303(k) or 4068 of ERISA or Section 430(k) of the Code) or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, performance and return of money bonds and similar obligations; (k) liens arising under conditional sales Contracts and equipment leases with third parties entered into in the ordinary course of business to the extent not subject to any default; (l) pledges or deposits to secure public or statutory obligations unrelated to any default or violation of any Law; (m) Liens arising under or created by this Agreement or any Transaction Document (other than as a result of a breach or default under such Contracts); (n) Liens securing the Financing; (o) Liens described on Section 1.1(b) of the SpinCo Disclosure Schedule or Section 1.1(b) of the Parent Disclosure Schedule, as applicable; and (p) Liens (other than Liens on Intellectual Property) that do not, individually or in the aggregate, materially affect or disrupt the ordinary course operation of the respective businesses of SpinCo and its Subsidiaries or Parent and its Subsidiaries, as applicable, in each case, taken as a whole.

 

(120)            Person” means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or other organization or entity of any kind.

 

 -16- 

 

 

(121)            Personal Information” means all information in any form or media that identifies or could be used to identify an individual person (including any current, prospective, or former customer, end user or employee), in addition to any definition for “personal information” or any similar term provided by applicable Law or by the Company or SpinCo in any of its privacy policies, notices or contracts (e.g., “personal data,” “personally identifiable information” or “PII”).

 

(122)            PIPE Investment” means the purchase of shares of Domesticated Parent Common Stock and Domesticated Parent Warrants pursuant to the A&R Forward Purchase Agreement with a purchase price equal to the PIPE Investment Amount.

 

(123)            PIPE Investment Amount” means the aggregate gross purchase price of $15,000,000 payable to Parent prior to or substantially concurrently with the Effective Time for shares of Domesticated Parent Common Stock and Domesticated Parent Warrants in the PIPE Investment.

 

(124)            PIPE Investor” means Sponsor or any Person to whom such right and obligation is assigned by Sponsor as permitted by the terms of the A&R Forward Purchase Agreement.

 

(125)            Privacy Laws” means applicable Laws, and self-regulatory guidelines (including of any applicable foreign jurisdiction) relating to the receipt, collection, compilation, use, storage, processing, sharing, safeguarding, security (technical, physical or administrative), disposal, destruction, disclosure or transfer (including cross-border) of any Personal Information, including the Federal Trade Commission Act, California Consumer Privacy Act (CCPA), Payment Card Industry Data Security Standard (PCI-DSS), EU General Data Protection Regulation (GDPR), any and all applicable Laws relating to breach notification, the use of biometric identifiers, and the use of Personal Information for marketing purposes.

 

(126)            Privacy Requirements” means all applicable Privacy Laws and all of the Company’s and SpinCo’s policies, notices, and contractual obligations relating to the receipt, collection, compilation, use, storage, processing, sharing, safeguarding, security (technical, physical and administrative), disposal, destruction, disclosure, or transfer (including cross-border) of Personal Information.

 

(127)            Proxy Statement” means the proxy statement to be mailed to the shareholders of Parent relating to the Parent Shareholders Meeting, including any amendments or supplements thereto.

 

(128)            Qualified SpinCo Common Stock” means SpinCo Common Stock received by holders of Company Common Stock pursuant to the Distribution, except for any SpinCo Common Stock that is acquired, directly or indirectly, pursuant to a plan (or series of related transactions) that includes the Distribution, within the meaning of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder. This definition (and the application thereof) is intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly.

 

 -17- 

 

 

(129)            Record Date” means 5:00 p.m. New York time on the date determined by the Company Board as the record date for determining stockholders of the Company entitled to receive shares of SpinCo Common Stock in the Distribution.

 

(130)            Redemption Backstop” means the purchase of up to 10,000,000 shares of Domesticated Parent Common Stock at a purchase price of $10.00 per share pursuant to the A&R Forward Purchase Agreement, excluding the Domesticated Parent Common Stock subject to the PIPE Investment.

 

(131)            Regulatory Authority” means the FDA or any other comparable Governmental Authority.

 

(132)            Regulatory Authorizations” means any approvals, clearances, authorizations, registrations, certifications, licenses, exemptions and permits granted by any Regulatory Authority, including any INDs, NDAs, BLAs, NADAs, and INADs.

 

(133)            Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, depositing, escaping, leaching, disposing or dumping into the environment.

 

(134)            Representative” means, with respect to any Person, such Person’s directors, managers, members, officers, employees, agents, partners, attorneys, financial advisors, financing sources, consultants, advisors or other Persons acting on behalf of such Person.

 

(135)            Requisite Regulatory Approvals” means the expiration or termination of the applicable waiting period under the HSR Act (and any extension thereof under the HSR Act) and all regulatory authorizations, consents, clearances, orders, approvals or expirations of applicable waiting periods set forth on Section 1.1(c) of the Parent Disclosure Schedule.

 

(136)            Securities Act” means the Securities Act of 1933, as amended.

 

(137)            Separation and Distribution Agreement” means that Separation and Distribution Agreement, dated as of the date hereof, by and among the Company, Parent and SpinCo, attached as Exhibit A to this Agreement.

 

(138)            Software” has the meaning set forth in the Separation and Distribution Agreement.

 

(139)            SpinCo Affiliate Contract” means any Contract, whether or not in writing, (a) between any SpinCo Entity, on the one hand, and any present or former officer or director of the SpinCo Entities or “immediate family member” thereof (as defined in Rule 16a-1 under the Exchange Act), on the other hand, or (b) between any SpinCo Entity, on the one hand, and the Company and/or any of its Subsidiaries (other than a SpinCo Entity), on the other hand.

 

(140)            SpinCo Assets” has the meaning set forth in the Separation and Distribution Agreement.

 

 -18- 

 

 

(141)            SpinCo Benefit Plan” has the meaning set forth in the Employee Matters Agreement.

 

(142)            SpinCo Business” has the meaning set forth in the Separation and Distribution Agreement.

 

(143)            SpinCo Common Stock” means the common stock, par value $0.001 per share, of SpinCo.

 

(144)            SpinCo Contract” has the meaning set forth in the Separation and Distribution Agreement.

 

(145)            SpinCo Datasite” means the datasite established by the Company for purposes of due diligence of the SpinCo Entities and the SpinCo Business.

 

(146)            SpinCo Disclosure Schedule” means the Disclosure Schedule delivered by the Company and SpinCo to Parent on the date hereof and identified as such.

 

(147)            SpinCo Entities” means SpinCo and the SpinCo Subsidiaries, after giving effect to (or assuming the effect of, as applicable) the Internal Reorganization.

 

(148)            SpinCo Employee” has the meaning set forth in the Employee Matters Agreement.

 

(149)            SpinCo Equity Award” has the meaning set forth in the Employee Matters Agreement.

 

(150)            SpinCo Financial Statements” means, collectively, the draft, combined statements of operations of the SpinCo Business for the fiscal years ended December 31, 2019, December 31, 2020 and December 31, 2021, and the draft, combined balance sheets of the SpinCo Business for the fiscal years ended December 31, 2020 and December 31, 2021, attached to Section 5.9 of the SpinCo Disclosure Schedules.

 

(151)            SpinCo IT Systems” means all IT Assets owned, leased or used by or on behalf of (i) as of the date hereof, the Company or any of its Subsidiaries with respect to the SpinCo Business, and (ii) as of the Distribution, any of the SpinCo Entities, including, in each case, all IT Assets included in the SpinCo Assets.

 

(152)            “SpinCo Independent Contractor” has the meaning set forth in the Employee Matters Agreement.

 

(153)            SpinCo Licensed Intellectual Property” means all Intellectual Property licensed from a third party pursuant to a written Contract to, (a) as of the date hereof, the Company or any of its Subsidiaries with respect to the SpinCo Business, and (b) as of the Distribution, any of the SpinCo Entities, that, in each case of clauses (a) and (b), is used, practiced or held for use or practice by or on behalf of (i) as of the date hereof, the Company or any of its Subsidiaries with respect to the SpinCo Business, and (ii) as of the Distribution, any of the SpinCo Entities.

 

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(154)            SpinCo Material Adverse Effect” means any Effect that (a) has, or would reasonably be expected to have, individually or in the aggregate with any other Effects, a material adverse effect on the business, financial condition or results of operations of the SpinCo Business, taken as a whole; provided, that none of the following shall be deemed in themselves, either alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there has been or would reasonably be expected to be, individually or in the aggregate, a SpinCo Material Adverse Effect for purposes of this clause (a): (i) any changes resulting from general market, economic, financial, capital markets or regulatory conditions, (ii) any general changes in the credit, debt, financial or capital markets or changes in interest or exchange rates, (iii) any changes in applicable Law or GAAP (or, in each case, authoritative interpretations thereof), (iv) any changes resulting from any natural disaster, including any hurricane, storm, flood, tornado, volcanic eruption, earthquake, other weather-related events, or other comparable events, or any worsening thereof, (v) any changes resulting from local, national or international political conditions, including the outbreak or escalation of any military conflict, declared or undeclared war, armed hostilities, acts of foreign or domestic terrorism or civil unrest, (vi) any changes generally affecting the industries in which the SpinCo Entities conduct their businesses, (vii) any changes directly resulting from the execution of this Agreement or the Separation and Distribution Agreement or the announcement or the pendency of the Merger or the Separation, including actions of suppliers, landlords, distributors, partners or Governmental Authorities and any loss of employees, relationships or customers resulting from the transactions contemplated by this Agreement (provided, that this clause (vii) shall not apply to any representation or warranty to the extent the purpose of such representation or warranty is to address, as applicable, the consequences resulting from the execution of this Agreement or the Separation and Distribution Agreement or the announcement or the pendency of the Merger or the Separation), (viii) any changes resulting from any action required to be taken by the terms of this Agreement (other than the first sentence of Section 7.2) or at the request or direction of Parent or Merger Sub, (ix) the failure to meet any internal or analysts’ expectations, projections or results of operations (but not, in each case, the underlying cause of any such changes, unless such underlying cause would otherwise be excepted by another clause of this definition), or (x) any changes resulting from any epidemics, pandemics or disease (including COVID-19 or any COVID-19 Measures or any change in COVID-19 Measures following the date hereof); provided, that in the case of clauses (i), (ii), (iii), (iv), (v), (vi) and (x), if such Effect disproportionately impacts the SpinCo Entities or the SpinCo Business, taken as a whole, as compared to other participants in similar industries to the industries in which the SpinCo Business operates, the incremental disproportionate impact thereof may be taken into account in determining whether a SpinCo Material Adverse Effect has occurred or would reasonably be expected to occur; or (b) has, or would reasonably be expected to, individually or in the aggregate, materially impair or materially delay the ability of SpinCo to perform its obligations hereunder or under the Separation and Distribution Agreement, or to consummate the Transactions, including the Merger and the Separation, or prevent it from performing such obligations or consummating the Transactions.

 

(155)            SpinCo Merger Tax Representations” means the representations of an officer of SpinCo, dated as of the Closing Date, in form and substance reasonably satisfactory to LW and Weil, delivered to LW and Weil in connection with the Merger Tax Opinions.

 

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(156)            SpinCo Option” has the meaning given to such term in the Employee Matters Agreement.

 

(157)            SpinCo Owned Intellectual Property” means all Intellectual Property owned or purported to be owned by any of the SpinCo Entities as of the Distribution, including the SpinCo Intellectual Property (as defined in the Separation and Distribution Agreement).

 

(158)            SpinCo Products” means any investigational animal created, used, provided, or otherwise made available by or on behalf of the SpinCo Business, and any antibodies or other products derived from such animals by the SpinCo Business; provided, that “SpinCo Products” shall not include any such products or product candidates to the extent developed, tested, marketed, manufactured, advertised, promoted or commercialized by customers of the SpinCo Business, in each case, that are not proprietary to, or owned or purported to be owned by, (i) as of the date hereof, the Company or any of its Subsidiaries with respect to the SpinCo Business, or (ii) as of the Distribution, any of the SpinCo Entities.

 

(159)            SpinCo PSU Award” has the meaning given to such term in the Employee Matters Agreement.

 

(160)            SpinCo Registration Statement” means the registration statement on Form 10 to be filed by SpinCo with the SEC to effect the registration under the Exchange Act of the shares of SpinCo Common Stock in connection with the Distribution, as such registration statement may be amended or supplemented from time to time prior to the Distribution Time.

 

(161)            SpinCo RSU Award” has the meaning given to such term in the Employee Matters Agreement.

 

(162)            SpinCo Service Provider” has the meaning given to such term in the Employee Matters Agreement.

 

(163)            SpinCo Subsidiaries” means all direct and indirect Subsidiaries of SpinCo, after giving effect to the Internal Reorganization.

 

(164)            Sponsor” means Avista Acquisition LP II, a Cayman Islands exempted limited partnership and an Affiliate of Parent.

 

(165)            Sponsor Insider Agreement” has the meaning set forth in the Recitals.

 

(166)            Subsidiary” means, with respect to any Person, a corporation or other entity of which more than 50% of the voting power of the equity securities or Interests that by their terms have ordinary voting power to elect a majority of the board of directors or other similar body is owned or controlled, directly or indirectly, by such Person, or any organization of which such Person or any of its Subsidiaries is, directly or indirectly, a general partner or managing member or holds a similar role.

 

(167)            Tax Matters Agreement” has the meaning set forth in the Separation and Distribution Agreement.

 

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(168)            Tax Returns” has the meaning set forth in the Tax Matters Agreement.

 

(169)            Taxes” has the meaning set forth in the Tax Matters Agreement.

 

(170)            Trade Secret” has the meaning set forth in the Separation and Distribution Agreement).

 

(171)            Trademark” has the meaning set forth in the Separation and Distribution Agreement.

 

(172)            Transaction Documents” means the Separation and Distribution Agreement, the Employee Matters Agreement, the Tax Matters Agreement, the Transition Services Agreements, the A&R Forward Purchase Agreement, the Sponsor Insider Agreement and the A&R Registration Rights Agreement, in each case, including all annexes, Exhibits, Schedules, attachments and appendices thereto, and any certificate or other instrument delivered by any Party to any other Party pursuant to this Agreement or any of the foregoing.

 

(173)            Transaction Process” means all matters relating to the separation, disposition or sale of the SpinCo Business and the review of strategic alternatives with respect to the SpinCo Business (including the potential spin-off of the SpinCo Business), including matters relating to (a) the solicitation of proposals from and negotiations with third parties in connection with the disposition or sale of the SpinCo Business or SpinCo Assets or (b) the drafting, negotiation or interpretation of any of the provisions of this Agreement or the other Transaction Documents, or the determination of the allocation of any assets or Liabilities pursuant to the foregoing agreements or the transactions contemplated thereby.

 

(174)            Transactions” shall mean the Domestication, the Separation, the Distribution, the Merger and the other transactions contemplated by this Agreement and the Transaction Documents.

 

(175)            Transition Services Agreements” has the meaning set forth in the Separation and Distribution Agreement.

 

(176)            Treasury Regulations” means the regulations promulgated by the U.S. Treasury Department under the Code.

 

(177)            Trust Amount” means the amount of cash available in the Trust Account following the Parent Shareholders Meeting, after deducting the amount required to satisfy the Parent Share Redemption Amount (prior to payment of any unpaid transaction expenses).

 

(178)            Warrant Agreement” means the Warrant Agreement, dated as of August 9, 2021, between Parent and Continental Stock Transfer & Trust Company.

 

(179)            Weil” means Weil, Gotshal & Manges LLP.

 

(180)            Willful Breach” means, with respect to any obligation, covenant or agreement of a Party in this Agreement, any material breach of or material failure to perform such obligation, covenant or agreement that such Party intentionally takes (or intentionally fails to take or perform) with actual knowledge that such action or omission or failure to perform would, or would reasonably be expected to, cause or result in a material breach of this Agreement.

 

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(181)            Working Capital Loans” means any loan made to Parent by any of the Sponsor, any Affiliate of the Sponsor, or any of Parent’s officers or directors, and evidenced by a promissory note, for the purpose of financing working capital or costs incurred in connection with a Business Combination.

 

Section 1.2      Cross References. Each of the following terms is defined in the Section set forth opposite such term:

 

Term     Section 
A&R Registration Rights Agreement   Recitals
Antitrust Division   Section 7.6(b)
Certificate of Merger   Section 2.3(d)
Chosen Courts   Section 10.3
CICA   Recitals
Class A Merger Consideration   Section 3.1(a)(i)
Closing   Section 2.2
Closing Date   Section 2.2
COBRA   Section 5.18(h)
Company   Preamble
Company Board   Recitals
Company Distribution Tax Opinion   Section 7.3(b)
Company Group   Section 10.14(b)
DGCL   Recitals
Distribution   Recitals
Distribution Documents   Section 5.23
Domesticated Parent Common Stock   Recitals
Domesticated Parent Warrant   Recitals
Domestication   Recitals
Effective Time   Section 2.3(d)
Evaluation Material   Section 10.2
Exchange Agent   Section 3.2(b)
Exchange Agent Agreement   Section 3.2(b)
Exchange Fund   Section 3.2(b)
FTC   Section 7.6(b)
Government Contract   Section 5.15(a)(xiv)
Interim Period   Section 7.1
Investment   Section 6.3(f)
JOBS Act   Section 6.6(a)
Merger   Recitals
Merger Consideration   Section 3.1(a)(i)
Merger Sub   Preamble
Merger Sub Common Stock   Section 3.1(a)(vi)
Merger Sub Shareholder Approval   Section 7.21
Modification in Recommendation   Section 7.5

 

 -23- 

 

 

Term   Section 
Outside Date   Section 9.1(b)
Parent   Preamble
Parent Board   Recitals
Parent Board Recommendation   Recitals
Parent Bylaws   Section 7.15
Parent Charter   Section 7.15
Parent Domestication Tax Opinion   Section 7.3(d)
Parent SEC Filings   Section 6.13
Parent Securities   Section 6.3(a)
Parent Shareholders Meeting   Section 7.4(e)(i)
Parent Units   Recitals
Party   Preamble
Personnel IP Contract   Section 5.19(h)
Prospectus   Section 10.1
Remedies Exception   Section 4.2
SpinCo   Preamble
SpinCo Board   Recitals
SpinCo CBA   Section 5.16(c)
SpinCo Material Contracts   Section 5.15(a)
SpinCo Proposal   Section 7.9(a)
SpinCo Real Property Lease   Section 5.15(a)(ix)
SpinCo Registered Intellectual Property   Section 5.19(a)
SpinCo Shareholder Approval   Section 5.24
SpinCo Voting Debt   Section 5.3(b)
Sponsor Insider Agreement   Recitals
Subsequent Audited Annual SpinCo Financial Statements   Section 7.22(a)
Subsequent Period SpinCo Financial Statements   Section 7.22(a)
Subsequent Unaudited SpinCo Financial Statements   Section 7.22(a)
Surviving Corporation   Section 2.1
Tax-Free Status   Section 7.3(a)
Transaction Litigation   Section 7.11
Transaction Proposals   Section 7.4(e)(ii)
Trust Account   Section 10.1
Unpaid Transaction Expenses   Section 2.3(c)
WARN   Section 5.16(e)

 

Section 1.3      Interpretation.

 

(a)            Unless the context of this Agreement otherwise requires:

 

(i)            (a) words of any gender include each other gender and neuter form; (b) words using the singular or plural number also include the plural or singular number, respectively; (c) derivative forms of defined terms will have correlative meanings; (d) the terms “hereof,” “herein,” “hereby,” “hereto,” “herewith,” “hereunder” and derivative or similar words refer to this entire Agreement; (e) the terms “Article,” “Section,” “Annex,” “Exhibit,” “Schedule,” and “Disclosure Schedule” refer to the specified Article, Section, Annex, Exhibit, Schedule or Disclosure Schedule of this Agreement and references to “paragraphs” or “clauses” shall be to separate paragraphs or clauses of the Section or subsection in which the reference occurs; (f) the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”; and (g) the word “or” shall be disjunctive but not exclusive;

 

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(ii)            any Law defined or referred to in this Agreement or in any agreement or instrument that is referred to herein means such Law as from time to time amended, modified or supplemented, including (in the case of statutes) by succession of comparable successor Laws and the related regulations thereunder and published interpretations thereof, and references to any Contract or instrument are to that Contract or instrument as from time to time amended, modified or supplemented; provided, that for purposes of any representations and warranties contained in this Agreement that are made as of a specific date or dates, references to any Law shall be deemed to refer to such Law, as amended, and the related regulations thereunder and published interpretations thereof, in each case, as of such date or dates.

 

(iii)            references to any federal, state, local, or foreign statute or Law shall include all regulations promulgated thereunder; and

 

(iv)            references to any Person include references to such Person’s successors and permitted assigns, and in the case of any Governmental Authority, to any Person succeeding to its functions and capacities.

 

(b)            The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent. The Parties acknowledge that each Party and its attorney has reviewed and participated in the drafting of this Agreement and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting Party, or any similar rule operating against the drafter of an agreement, shall not be applicable to the construction or interpretation of this Agreement.

 

(c)            Nothing herein (including the SpinCo Disclosure Schedule, Company Disclosure Schedule and the Parent Disclosure Schedule) shall be deemed an admission by any Party or any of its Affiliates, in any Action, that such Party or any such Affiliate, or any third party, is or is not in breach or violation of, or in default in, the performance or observance of any term or provisions of any Contract or any Law.

 

(d)            Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. If any action is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action may be deferred until the next Business Day.

 

(e)            When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day.

 

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(f)            The phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.”

 

(g)            The term “writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form.

 

(h)            All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP, unless the context otherwise requires.

 

(i)            All monetary figures shall be in United States dollars unless otherwise specified.

 

(j)            No reference in this Agreement to dollar amount thresholds shall be deemed to be evidence of a SpinCo Material Adverse Effect, Company Material Adverse Effect or Parent Material Adverse Effect, as applicable, or materiality.

 

(k)            The phrases “furnished,” “provided,” “delivered” or “made available” when used with respect to information or documents means that such information or documents have been (i) physically or electronically delivered to the relevant Party (and includes such information or documents that have been furnished to its Representatives acting on its behalf or posted to the SpinCo Datasite) or (ii) are otherwise Parent SEC Reports or Company SEC Reports and made publicly available on the SEC’s EDGAR website by Parent or the Company, as applicable, in each case, not later than forty eight hours prior to the execution of this Agreement.

 

Article II

 

THE MERGER

 

Section 2.1      The Merger. At the Effective Time and upon the terms and subject to the conditions of this Agreement, Merger Sub shall be merged with and into SpinCo in accordance with the applicable provisions of the DGCL, the separate existence of Merger Sub shall cease and SpinCo shall continue as the surviving corporation of the Merger (sometimes referred to herein as the “Surviving Corporation”) and shall succeed to and assume all the rights, powers and privileges and be subject to all of the obligations of Merger Sub in accordance with the DGCL. As a result of the Merger, SpinCo shall become a direct, wholly owned Subsidiary of Parent. References herein to “SpinCo” with respect to the period from and after the Effective Time shall be deemed to be references to the Surviving Corporation. At the Effective Time, the effects of the Merger shall be as provided in this Agreement, the Certificate of Merger and the applicable provisions of the DGCL.

 

Section 2.2      Closing. Unless the Transactions shall have been abandoned and this Agreement terminated pursuant to Section 9.1, the closing of the Merger (the “Closing”) shall take place at 10:00 a.m., New York City time, on the third Business Day after the conditions set forth in Article VIII (other than those, including the Distribution, that are to be satisfied at or immediately prior to the Closing, but subject to the satisfaction or, to the extent permitted by applicable Law, waiver of such conditions at the Closing) have been satisfied or, to the extent permitted by applicable Law, waived, by electronic exchange of documents and signatures or at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153, unless another date, time or place is agreed to in writing by the Company and Parent. The date on which the Closing actually occurs is hereinafter referred to as the “Closing Date.“

 

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Section 2.3      Closing Deliverables; Effective Time.

 

(a)            At the Closing, the Company or SpinCo, as applicable, will deliver or cause to be delivered:

 

(i)            to Parent, a certificate signed by an authorized officer of the Company, dated as of the Closing Date, certifying that, to the knowledge and belief of such authorized officer, the conditions specified in Section 8.3(a), (b), (c), and (e) have been satisfied;

 

(ii)            to Parent, the A&R Registration Rights Agreement, duly executed by the parties set forth on Section 2.3(a)(ii) of the Company Disclosure Schedule;

 

(iii)            to Parent, a certificate on behalf of SpinCo, prepared in a manner consistent and in accordance with the requirements of Treasury Regulations Sections 1.897-2(g), (h) and 1.1445-2(c)(3), certifying that no interest in the Company is, or has been during the relevant period specified in Section 897(c)(1)(A)(ii) of the Code, a “U.S. real property interest” within the meaning of Section 897(c) of the Code, and a form of notice to the Internal Revenue Service prepared in accordance with the provisions of Treasury Regulations Section 1.897-2(h)(2), together with written authorization for Parent to deliver such documentation to the Internal Revenue Service on behalf of SpinCo after the Closing;

 

(iv)            to Parent, copies of resolutions and actions taken by the Company’s and SpinCo’s board of directors and stockholders in connection with the approval of this Agreement and the Transactions; and

 

(v)            to Parent, all other documents, instruments or certificates required to be delivered by the Company at or prior to the Closing pursuant to Section 8.3.

 

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(b)            At the Closing, Parent will deliver or cause to be delivered:

 

(i)            to the Exchange Agent, the shares of Domesticated Parent Stock to be paid in respect of shares of SpinCo Common Stock in accordance with Section 3.1(a), for further distribution to such holders pursuant to Section 3.2;

 

(ii)            to the Company, a certificate signed by an authorized officer of Parent, dated the Closing Date, certifying that, to the knowledge and belief of such authorized officer, the conditions specified in Section 8.1(f) and Section 8.2(a), (b) and (d) have been satisfied;

 

(iii)            to the Company, the A&R Registration Rights Agreement, duly executed by a duly authorized representative of Parent and the Sponsor;

 

(iv)            to the Company, the written resignations of all of the directors and officers of Parent (other than those Persons identified as the initial directors and officers, respectively, of Parent after the Effective Time, in accordance with the provisions of Section 2.5), effective as of the Effective Time;

 

(v)            to the Company, copies of resolutions and actions taken by Parent’s and Merger Sub’s board of directors and stockholders (or managers, as applicable) in connection with the approval of this Agreement and the Transactions; and

 

(vi)            to the Company, all other documents, instruments or certificates required to be delivered by Parent at or prior to the Closing pursuant to Section 8.2.

 

(c)            On the Closing Date, concurrently with the Effective Time, Parent shall pay or cause to be paid by wire transfer of immediately available funds, all accrued transaction expenses of Parent and those incurred, accrued, paid or payable by Parent’s Affiliates on Parent’s behalf as set forth on a written statement to be delivered to the Company not less than two (2) Business Days prior to the Closing Date (“Unpaid Transaction Expenses”), which shall include the respective amounts and wire transfer instructions for the payment thereof, together with corresponding invoices for the foregoing.

 

(d)            On the Closing Date, SpinCo and Merger Sub shall file a certificate of merger relating to the Merger (the “Certificate of Merger”) with the Secretary of State of the State of Delaware in accordance with the relevant provisions of the DGCL and shall make all other filings or recordings required under the DGCL. The Merger shall become effective at the time the Certificate of Merger shall have been duly filed with the Secretary of State of the State of Delaware, or such later time as Parent and SpinCo shall agree and specify in the Certificate of Merger (such time as the Merger becomes effective being the “Effective Time”).

 

(e)            For the avoidance of doubt, the Closing and the Effective Time shall occur no sooner than the date that is the day after the completion of the Domestication.

 

Section 2.4      Certificate of Incorporation and Bylaws of the Surviving Corporation; Directors and Officers of the Surviving Corporation.

 

(a)            The certificate of incorporation of Merger Sub in effect immediately prior to the Effective Time shall be the certificate of incorporation of the Surviving Corporation until amended in accordance with applicable Law, except the name of the Surviving Corporation shall be as provided in Section 2.4(b) and the reference to the incorporator shall be deleted.

 

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(b)            The bylaws of Merger Sub in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation until amended in accordance with applicable Law, except the name of the Surviving Corporation shall be such name as selected by SpinCo in its absolute discretion.

 

(c)            From and after the Effective Time, until successors are duly elected or appointed and qualified in accordance with applicable Law, (i) the directors of SpinCo as of immediately prior to the Effective Time shall be the directors of the Surviving Corporation and (ii) the officers of SpinCo as of immediately prior to the Effective Time shall be the officers of the Surviving Corporation.

 

Section 2.5      Governance Matters.

 

(a)            The Parties shall use reasonable best efforts to ensure that the individuals listed on Section 2.5(a) of the Company Disclosure Schedule are nominated and elected as directors of Parent effective immediately after the Closing, and the identities of such individuals shall be made publicly available as promptly as practicable following the date hereof (but in any event prior to the date on which the Parent Registration Statement is filed with the SEC in definitive form).

 

(b)            Subject to the terms of Parent’s Governing Documents, Parent shall take all such action within its power as may be necessary or appropriate such that immediately following the Effective Time (i) the Parent Board shall have a majority of “independent” directors for purposes of NASDAQ and (ii) the initial officers of Parent shall be as set forth on Section 2.5(b) of the Company Disclosure Schedule, in each case, each of whom shall serve in such capacity in accordance with the terms of Parent’s Governing Documents following the Effective Time.

 

Article III

 

CONVERSION OF SHARES

 

Section 3.1      Effect on Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of any party to this Agreement or any holder of the capital stock of the Company, SpinCo, Merger Sub or Parent:

 

(a)            SpinCo Common Stock and Merger Sub Common Stock.

 

(i)            Each share of SpinCo Common Stock issued and outstanding as of immediately prior to the Effective Time (other than shares canceled in accordance with Section 3.1(a)(ii)) shall be automatically converted into the right to receive (A) a number of fully paid and non-assessable shares of Domesticated Parent Common Stock equal to the Base Exchange Ratio, subject to adjustment in accordance with Section 3.1(a)(iv), with cash paid in lieu of fractional shares of Domesticated Parent Common Stock in accordance with Section 3.2(e) (the “Class A Merger Consideration”) and (B) a number of fully paid and non-assessable Earnout Shares equal to the Earnout Exchange Ratio, subject to adjustment in accordance with Section 3.1(a)(iv) (together with the Class A Merger Consideration, the “Merger Consideration”).

 

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(ii)            Each share of SpinCo Common Stock held by SpinCo as treasury stock or by Parent or Merger Sub, in each case, as of immediately prior to the Effective Time shall automatically be canceled and shall cease to exist and no stock or other consideration shall be issued or delivered in exchange therefor or in respect thereof.

 

(iii)            Each share of SpinCo Common Stock issued and outstanding as of immediately prior to the Effective Time, when converted in accordance with this Section 3.1, shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of such shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration as provided in Section 3.1(a)(i) and any dividends or distributions and other amounts payable in accordance with Section 3.2(d).

 

(iv)            The Base Exchange Ratio and the Earnout Exchange Ratio shall be adjusted to the extent appropriate to reflect the effect of any stock split, split-up, reverse stock split, stock dividend or distribution of Parent Common Stock, or securities convertible into any such securities, reorganization, recapitalization, reclassification or other like change (any such change, an “Equity Adjustment”) with respect to Parent Common Stock having a record date occurring on or after the date of this Agreement and prior to the Effective Time; provided, that nothing in this Section 3.1(a)(iv) shall be construed to permit Parent to take or to permit any of its Subsidiaries to take any action with respect to its securities that is prohibited by the terms of this Agreement.

 

(v)            If the conditions set forth in Section 8.2(h) would be unable to be satisfied because immediately after the Effective Time, the percentage of outstanding shares of Domesticated Parent Common Stock to be received by the former holders of SpinCo Common Stock with respect to Qualified SpinCo Common Stock would be less than 50.1% (the “Threshold Percentage”) of all of the stock of Parent (excluding Earnout Shares and, including (i) any other instruments that are treated as stock for U.S. federal income Tax purposes; and (ii) any other stock that may be issued after the Effective Time that may be regarded as having been acquired or issued as part of a “plan” of which the Distribution is a part within the meaning of Section 355(e) of the Code), then (x) SpinCo shall promptly provide notice to Parent setting forth in detail the reasons the condition set forth in Section 8.2(h) would be unable to be satisfied, (y) SpinCo shall consider in good faith any comments provided by Parent, (z) (A) at the Company’s sole option, the Company may contribute the necessary additional capital to SpinCo to increase, dollar-for-dollar, the pre-money equity valuation of SpinCo and, in such event, the Aggregate Common Consideration Shares, the Base Exchange Ratio and the aggregate number of shares of Domesticated Parent Common Stock into which the shares of SpinCo Common Stock are converted pursuant to this Section 3.1 shall be increased to take into account such additional capital contribution such that the number of shares of Domesticated Parent Common Stock to be received by the former holders of SpinCo Common Stock with respect to Qualified SpinCo Common Stock equals the Threshold Percentage, or (B) if the Company does not elect to make the capital contribution in clause (A), at Parent’s sole option, Parent may elect to increase, with no additional capital contribution by the Company, the aggregate number of shares of Domesticated Parent Common Stock into which the shares of SpinCo Common Stock are converted pursuant to this Section 3.1, such that the number of shares of Domesticated Parent Common Stock to be received by the former holders of SpinCo Common Stock with respect to Qualified SpinCo Common Stock equals the Threshold Percentage.

 

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(vi)            At the Effective Time, all of the shares of common stock, par value $0.01 per share, of Merger Sub (“Merger Sub Common Stock”) issued and outstanding immediately prior to the Effective Time shall be automatically converted into one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

 

(b)            Parent Securities. Each share of Domesticated Parent Stock and each Domesticated Parent Warrant that is issued and outstanding immediately prior to and at the Effective Time shall remain outstanding immediately following the Effective Time.

 

Section 3.2      Surrender and Payment.

 

(a)            Pursuant to Section 3.2 of the Separation and Distribution Agreement, the Exchange Agent shall hold, for the account of the relevant SpinCo stockholders, book-entry shares representing all of the outstanding shares of SpinCo Common Stock distributed in the Distribution.

 

(b)            Prior to the Effective Time, Parent shall designate a nationally recognized commercial bank or trust company reasonably acceptable to the Company to act as agent (the “Exchange Agent”) for the benefit of the holders of shares of SpinCo Common Stock and SpinCo Equity Awards whose shares of SpinCo Common Stock and/or SpinCo Equity Awards are exchanged in accordance with this Section 3.2(b), Section 3.3 or Section 3.5. At or substantially concurrently with the Effective Time, Parent shall deposit, or shall cause to be deposited, with the Exchange Agent, for the benefit of the holders of shares of SpinCo Common Stock and/or SpinCo Equity Awards, for exchange in accordance with this Section 3.2(b), Section 3.3 or Section 3.5 promptly after the Effective Time, book-entry shares representing (i) the Merger Consideration issuable to holders of shares of SpinCo Common Stock as of immediately prior to the Effective Time pursuant to Section 3.1(a)(i) and/or (ii) the Earnout Shares issuable to holders of SpinCo Equity Awards immediately prior to the Effective Time pursuant to Section 3.3 and Section 3.5 (in the case of each of clauses (i) and (ii), without duplication) (such book-entry shares of Domesticated Parent Stock, together with any cash received by the Exchange Agent in respect of dividends or distributions with respect thereto pursuant to Section 3.2(d), as applicable, and other amounts payable in accordance with Section 3.2(e), the “Exchange Fund”). The Exchange Agent shall, following the Effective Time, pursuant to irrevocable instructions from Parent, deliver the Merger Consideration to be issued pursuant to this Article III out of the Exchange Fund. The cash portion, if any, of the Exchange Fund shall be invested by the Exchange Agent as directed by Parent; provided, that (i) no such investment of or losses thereon shall relieve Parent from making or causing to be made the payments required by this Section 3.2 or elsewhere in this Article III, or affect the amount payable in respect of the shares of SpinCo Common Stock and/or SpinCo Equity Awards outstanding as of immediately prior to the Effective Time, (ii) to the extent the Exchange Fund is insufficient at any time to make such payments, Parent shall promptly provide additional funds to the Exchange Agent in the amount of any such deficiency and (iii) no such investment shall have maturities that would reasonably be expected to prevent or delay the payments to be made pursuant to this Section 3.2. Any interest or other income from such investments shall be paid to and become the property of Parent. The Exchange Fund shall not be used for any purpose other than as specified in this Section 3.2(b). No later than five (5) Business Days prior to the Effective Time, Parent shall enter into an agreement with the Exchange Agent, in form and substance reasonably satisfactory to the Company, to effect the applicable terms of this Agreement (the “Exchange Agent Agreement”).

 

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(c)            As promptly as practicable after the Effective Time, Parent shall cause the Exchange Agent to deliver to each holder of shares of SpinCo Common Stock and/or SpinCo Equity Awards as of immediately prior to the Effective Time, from the Exchange Fund, the shares of Domesticated Parent Stock issuable in respect of such shares of SpinCo Common Stock and/or SpinCo Equity Awards pursuant to the Merger, which shares shall, for the sake of clarity, be delivered to the same Persons who received shares of SpinCo Common Stock and/or SpinCo Equity Awards in the Distribution. Each holder of shares of SpinCo Common Stock and/or SpinCo Equity Awards as of immediately prior to the Effective Time shall be entitled to receive in respect of such shares of SpinCo Common Stock and/or SpinCo Equity Awards held by such Person (i) a book-entry authorization representing the number of whole shares of Domesticated Parent Common Stock that such holder has the right to receive pursuant to Section 3.1(a)(i)(A) (and cash in lieu of fractional shares of Domesticated Parent Common Stock, as contemplated by Section 3.2(e), and any dividends or distributions and other amounts pursuant to Section 3.2(d)) and/or (ii) a book-entry authorization representing the number of Earnout Shares that such holder has the right to receive pursuant to Section 3.1(a)(i)(B), Section 3.3 and Section 3.5, in each case, without duplication. The Exchange Agent shall not be entitled to vote or exercise any rights of ownership with respect to Domesticated Parent Stock held by it from time to time hereunder or under the Exchange Agent Agreement.

 

(d)            Distributions After the Effective Time. Subject to the following sentence, no dividends or other distributions declared after the Effective Time with respect to Domesticated Parent Common Stock shall be paid with respect to any shares of Domesticated Parent Stock that are not able to be delivered by the Exchange Agent promptly after the Effective Time, whether due to a legal impediment to such delivery or otherwise. Subject to the effect of abandoned property, escheat, Tax or other applicable Laws, following the delivery of any such previously undelivered shares of Domesticated Parent Stock, there shall be paid to the record holder of such shares of Domesticated Parent Common Stock, without interest, at the time of delivery, to the extent not previously paid, (i) the amount of cash payable in lieu of a fractional share of Domesticated Parent Common Stock to which such holder is entitled pursuant to Section 3.2(e) and (ii) the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of Domesticated Parent Stock.

 

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(e)            No Fractional Shares.

 

(i)            No certificates or scrip representing fractional shares of Domesticated Parent Stock or book-entry credit of the same shall be issued on conversion of SpinCo Common Stock and/or SpinCo Equity Awards, and such fractional share interests will not entitle the owner thereof to vote, or to any other rights of a stockholder of Parent. All fractional shares of Domesticated Parent Common Stock that a holder of shares of SpinCo Common Stock would otherwise be entitled to receive as a result of the Merger shall be aggregated by the Exchange Agent. The Exchange Agent shall cause the whole shares obtained thereby to be sold on behalf of such holders that would otherwise have been entitled to receive a fractional share of Domesticated Parent Common Stock pursuant to the Merger in the open market (or otherwise as reasonably directed by Parent), in each case at then-prevailing market prices as soon as reasonably practicable and in no case later than ten (10) Business Days after the Effective Time. The Exchange Agent shall make available the net proceeds thereof, subject to the deduction of the amount of any withholding Taxes as contemplated in Section 3.2(j) and brokerage charges, commissions and conveyance and similar Taxes, to the holders of SpinCo Common Stock that would otherwise have been entitled to receive a fractional share of Domesticated Parent Common Stock pursuant to the Merger (after the aggregation contemplated by this Section 3.2(e)) on a pro rata basis based on such fractional interest, without interest, as soon as practicable thereafter. The payment of cash in lieu of fractional shares is solely for the purpose of avoiding the expense and inconvenience of issuing fractional shares and does not represent separately bargained-for consideration.

 

(ii)            Notwithstanding anything to the contrary herein, no fraction of an Earnout Share will be issued by virtue of the Merger, and each holder of SpinCo Common Stock and/or SpinCo Equity Awards who would otherwise be entitled to a fraction of an Earnout Share (after aggregating all fractional Earnout Shares that otherwise would be received by such holder of SpinCo Common Stock and/or SpinCo Equity Awards) shall not receive from Parent any shares of Domesticated Parent Stock or other consideration in lieu of any such fractional share.

 

(f)            No Further Ownership Rights in SpinCo Common Stock. All shares of Domesticated Parent Stock issued in respect of shares of SpinCo Common Stock and/or SpinCo Equity Awards in accordance with the terms of this Section 3.2 (including any cash paid pursuant to Section 3.2(d) or Section 3.2(e)) shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of SpinCo Common Stock and/or SpinCo Equity Awards.

 

(g)            Termination of Exchange Fund. Any portion of the Exchange Fund made available to the Exchange Agent that remains undistributed to the former holders of SpinCo Common Stock and/or SpinCo Equity Awards on the one-year anniversary of the Effective Time shall be delivered to Parent, and any former holders of SpinCo Common Stock and/or SpinCo Equity Awards who have not received shares of Domesticated Parent Stock in accordance with this Article III shall thereafter look only to Parent for (i) in the case of former holders of SpinCo Common Stock, the Merger Consideration to which they are entitled pursuant to Section 3.1(a)(i), any cash in lieu of fractional shares of Domesticated Parent Common Stock to which they are entitled pursuant to Section 3.2(e) and any dividends or other distributions with respect to the Domesticated Parent Common Stock to which they are entitled pursuant to Section 3.2(d) (subject to any applicable abandoned property, escheat or similar Law) and (ii) in the case of former holders of SpinCo Equity Awards, the Earnout Shares to which they are entitled pursuant to Section 3.3 and Section 3.5 and any dividends or other distributions with respect to the Earnout Shares to which they are entitled pursuant to Section 3.2(d) or Section 3.3(g).

 

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(h)            No Liability. None of the Company, the Surviving Corporation, Parent, Merger Sub, the Exchange Agent or any other Person shall be liable to any holder of SpinCo Common Stock, Company Common Stock, SpinCo Equity Awards or Company Equity Awards for shares of Domesticated Parent Stock (or dividends or distributions with respect thereto or with respect to SpinCo Common Stock) or cash properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

 

(i)            Closing of Transfer Books. From and after the Effective Time, the stock transfer books of SpinCo shall be closed and no transfer shall be made of any shares of capital stock of SpinCo that were outstanding as of immediately prior to the Effective Time.

 

(j)            Tax Withholding. Parent, the Company, SpinCo, Merger Sub and the Exchange Agent shall each be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of SpinCo Common Stock or any holder of SpinCo Equity Awards such amounts as are required to be deducted and withheld with respect to the making of such payment under the Code, or under any provision of state, local or foreign Tax Law (including, for the avoidance of doubt, any withholding to be made in respect of any Merger Consideration delivered to SpinCo Service Providers through payroll). To the extent that amounts are so deducted or withheld and paid over to the appropriate Governmental Authority, such deducted or withheld amounts will be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction or withholding was made.

 

Section 3.3      Earnout.

 

(a)            Pursuant to the Merger, there shall be issued to each holder of a share of SpinCo Common Stock and each holder of a SpinCo Equity Award, their pro rata portion, as determined in accordance with the terms of Section 3.1(a) and the Employee Matters Agreement, as applicable, of an aggregate of 15,000,000 shares of Domesticated Parent Common Stock (without duplication), subject to the forfeiture provisions set forth in Section 3.3(d) (the “Earnout Shares”).

 

(b)            The Earnout Shares shall be subject to the following vesting conditions:

 

(i)            If, at any time during the period commencing on the Closing Date and ending on the date that is five years after the Closing Date (the “Earnout Period”), the Parent Trading Price is greater than or equal to $12.50, 50% of the Earnout Shares held by each holder of Earnout Shares shall immediately vest and no longer be subject to the forfeiture conditions provided in Section 3.3(d).

 

(ii)            If, at any time during the Earnout Period, the Parent Trading Price is greater than or equal to $15.00, the remaining 50% of the Earnout Shares held by each holder of Earnout Shares shall immediately vest and no longer be subject to the forfeiture conditions provided in Section 3.3(d).

 

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(c)            For the avoidance of doubt, if the vesting conditions applicable to more than one of the provisions of Section 3.3(b) have been satisfied at any one time, then all of the Earnout Shares subject to such satisfied vesting conditions shall immediately vest and no longer be subject to the forfeiture conditions provided in Section 3.3(d).

 

(d)            If, upon the expiration of the Earnout Period, the vesting of any of the Earnout Shares has not occurred, then the applicable Earnout Shares that failed to vest pursuant to Section 3.3(b), as applicable, shall be automatically forfeited and deemed transferred to Parent for cancellation for no consideration, and no Person (other than Parent) shall have any further right with respect thereto.

 

(e)            If, during the Earnout Period, the Domesticated Parent Common Stock outstanding as of immediately following the Merger Effective Time shall have been changed into a different number of shares or a different class, by reason of any Equity Adjustment, or any similar event shall have occurred, then the applicable Parent Trading Price specified in Section 3.3(b) shall be equitably adjusted to reflect such change.

 

(f)            If, during the applicable portion of the Earnout Period, there is a Change of Control that will result in the holders of Domesticated Parent Common Stock receiving a per share price equal to or in excess of the applicable Parent Trading Price required in connection with an applicable vesting event (an “Acceleration Event”), then immediately prior to the consummation of such Change of Control, any applicable Earnout Shares that have not previously been vested shall be deemed vested; provided, that such Earnout Shares shall be deemed vested (and such vesting event achieved) only (x) if such Change of Control has been approved by a majority of the independent directors on the Parent Board and (y) to the extent the price per share of Domesticated Parent Common Stock in the Change of Control equals or exceeds the applicable Parent Trading Price required in connection with such vesting event. For the avoidance of doubt, in the event of a Change of Control, including where the consideration payable is other than a specified price per share, for purposes of determining whether a Parent Trading Price required in connection with an applicable vesting event has been achieved, the price paid per share of Domesticated Parent Common Stock shall be calculated taking into account all of the Earnout Shares (whether or not then vested).

 

(g)            For so long as any Earnout Shares remains subject to the vesting and forfeiture conditions specified in Section 3.3(b) and Section 3.3(d), the holder thereof shall be entitled to (i) exercise the voting rights carried by such Earnout Shares and (ii) receive any dividends or other distributions in respect of such Earnout Shares. For the avoidance of doubt, prior to vesting in accordance with the terms of this Section 3.3, holders of the Earnout Shares shall not be entitled to transfer such shares, and such shares shall bear a legend prohibiting transfer until such time as the vesting conditions with respect to such share have been satisfied (the “Transfer Restriction”). Any attempted transfer in violation of the Transfer Restriction shall be void ab initio. For the avoidance of doubt, the Company, Parent, SpinCo and any other applicable withholding agent shall each be entitled to deduct and withhold from any amounts payable or distributions made in respect of the Earnout Shares.

 

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Section 3.4      Appraisal Rights. In accordance with Section 262 of the DGCL, no appraisal rights shall be available to the holders of SpinCo Common Stock in connection with the Merger.

 

Section 3.5      Treatment of SpinCo Equity Awards. Each SpinCo Equity Award that is outstanding as of the Effective Time shall be treated as set forth in the Employee Matters Agreement.

 

Article IV

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY RELATING TO THE COMPANY

 

Except as otherwise disclosed or identified in (a) the Company SEC Documents filed and publicly available on the SEC’s EDGAR database at least two (2) Business Days prior to the date hereof (excluding any disclosures of factors or risks contained or references therein under the captions “Risk Factors” or “Forward-Looking Statements” to the extent they are forward-looking statements and any other similar general, predictive or cautionary statements) or (b) the Company Disclosure Schedule (to the extent that it is reasonably apparent on the face of such disclosure that it is relevant to or applies to such representation or warranty of the Company under this Article IV), the Company hereby represents and warrants to Parent and Merger Sub as follows:

 

Section 4.1      Organization of the Company. The Company has been duly incorporated and is validly existing and in good standing as a Delaware corporation. The Company has all requisite corporate power and authority to own, lease and operate its properties and assets in the manner in which such assets and properties are now owned, leased and operated and to conduct its business as it is now being conducted. The Company has made available to Parent and Merger Sub true and complete copies of the Governing Documents of the Company as in effect on the date hereof. The Company is duly licensed or qualified and in good standing (or equivalent status as applicable) in each jurisdiction in which the assets owned or leased by it or the character of its activities require it to be so licensed or qualified or in good standing (or equivalent status as applicable), except as would not, individually or in the aggregate, have a Company Material Adverse Effect.

 

Section 4.2      Due Authorization. The Company has all requisite corporate power and authority to execute and deliver this Agreement and the Transaction Documents to which it is or will be a party and to consummate the Transactions, except for such further action of the Company Board required, if applicable, to establish the Record Date and the Distribution Date, and the declaration of the Distribution by the Company Board (the effectiveness of which is subject to the satisfaction or, to the extent permitted by applicable Law, waiver, of the conditions set forth in the Separation and Distribution Agreement). The execution and delivery by the Company of this Agreement and the Transaction Documents to which it is or will be a party as of the Effective Time and the consummation of the Transactions have been duly authorized by all necessary and proper corporate action on its part, and no other corporate action on the part of the Company is necessary to authorize this Agreement or the Transaction Documents to which it is or will be a party as of the Effective Time or, subject to such further action of the Company Board required, if applicable, to establish the Record Date and the Distribution Date, and the declaration of the Distribution by the Company Board (the effectiveness of which is subject to the satisfaction or, to the extent permitted by applicable Law, waiver of the conditions set forth in the Separation and Distribution Agreement), consummate the Transactions. Each of this Agreement and the Transaction Documents to which the Company is or will be a party as of the Effective Time has been or will be duly and validly executed and delivered by it and (assuming that this Agreement or such other applicable Transaction Documents to which each of Parent and Merger Sub is or will be a party as of the Effective Time constitutes a legal, valid and binding obligation of each of Parent and Merger Sub (as applicable)), constitutes or will when executed and delivered constitute the legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity (collectively, the “Remedies Exception”).

 

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Section 4.3      Governmental Consents. No Consent of, with or to any Governmental Authority is required to be obtained or made by the Company in connection with the execution or delivery by the Company of this Agreement or the Transaction Documents to which it is or will be a party or the consummation by the Company of the Transactions, except for or in compliance with (a) any Premerger Notification and Report Form required under and compliance with the HSR Act or other filings in connection with the Requisite Regulatory Approvals; (b) the filing of the Certificate of Merger and the Parent Charter with the Secretary of State of the State of Delaware pursuant to the provisions of the DGCL; (c) the rules and regulations of NASDAQ; (d) applicable requirements of state securities or “blue sky” Laws, the Securities Act and the Exchange Act; (e) Consents described in Section 5.6 and Consents set forth on Section 4.3 of the SpinCo Disclosure Schedule; and (f) Consents the failure of which to be made or obtained would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect or a SpinCo Material Adverse Effect.

 

Section 4.4      No Conflict. Subject to the receipt of the Consents set forth in Section 4.3, the execution and delivery by the Company of this Agreement and the Transaction Documents to which it is or will be a party as of the Effective Time and the consummation by the Company of the Transactions (for the avoidance of doubt, including performance of the Transaction Documents following the Closing) do not and will not as of the Effective Time, (a) violate any provision of, or result in the breach of, any Law applicable to the Company or by which any of its assets or properties is bound; (b) with or without lapse of time or the giving of notice or both, require a consent or approval under, conflict with, result in a violation or breach of, or constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate or cancel any Contract to which the Company is a party or by which its assets or properties are bound; or (c) breach or violate any provision of the Governing Documents of the Company, except, in the case of each of clauses (a) and (b), as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

 

Section 4.5      Litigation and Proceedings. (a) There are no Actions pending or, to the Knowledge of the Company, threatened before or by any Governmental Authority against the Company or any Company Subsidiary that, individually or in the aggregate, would reasonably be expected to result in a Company Material Adverse Effect, and (b) neither the Company nor any of its Subsidiaries is subject to any judgment, decree, injunction or order of any Governmental Authority that, in each case, would reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect.

 

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Section 4.6      Brokers’ Fees. No broker, investment banker, or other Person is entitled to any brokerage fee, finders’ fee or other similar commission for which Parent or any of its Subsidiaries, including Merger Sub, the Surviving Corporation or the SpinCo Entities, would be liable in connection with the transactions contemplated by this Agreement based on arrangements made on behalf of the Company or any of its Affiliates (other than the SpinCo Entities).

 

Section 4.7      Internal Controls. The Company has established and maintains a system of internal controls over financial reporting (as defined in Rule 13a-l5(f) or 15d-15(f), as applicable, under the Exchange Act (collectively, “Internal Controls”)) that are designed to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Internal Controls are overseen by the audit committee of the Company Board (the “Company Audit Committee”). Since January 1, 2019, the Company’s principal executive officer and its principal financial officer have disclosed to the Company’s independent auditor and the Company Audit Committee (a) any significant deficiency or material weakness in the Company’s Internal Controls and (b) any fraud involving management or other employees who have a significant role in the Company’s Internal Controls. Since January 1, 2019, neither the Company nor any Company Subsidiary has received any material, unresolved complaint, allegation, assertion or claim regarding the impropriety of any accounting or auditing practices, procedures, methodologies or methods of the Company or any Company Subsidiary or their respective internal accounting controls.

 

Section 4.8      Company Equity Awards. Section 4.8 of the Company Disclosure Schedule sets forth a true, correct and complete list of all Company Options, Company RSU Awards and Company PSU Awards that are outstanding as of the date hereof and any other rights to purchase or receive shares of Company Common Stock, and, for each such award or other right, (i) the number of shares of Company Common Stock or any of its Subsidiaries subject thereto, (ii) the equity plan under which the award is governed, (iii) the terms of vesting (including the extent to which it will become accelerated as a result of the consummation of the Transactions) and vesting status, (iv) the grant and expiration dates, (v) the exercise price, if applicable, (vi) the name of the holder thereof, (vii) whether such award or other right is intended to be an “incentive stock option” as defined in Section 422 of the Code or a non-qualified stock option, and (viii) whether such Company Equity Award is held by a Company Service Provider, Former Company Service Provider or SpinCo Service Provider. All Company Options were granted with an exercise price per share no lower than the fair market value of one (1) share of stock underlying such Company Equity Award on the date of the corporate action effectuating the applicable grant and are exempt under Section 409A of the Code. All Company Equity Awards were granted in accordance with the applicable equity plan under which such award is governed, the applicable award agreement, and applicable Law in all material respects.

 

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Article V

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY RELATING TO SPINCO

 

Except as otherwise disclosed or identified in (a) the Company SEC Documents filed and publicly available on the SEC’s EDGAR database at least two (2) Business Days prior to the date hereof (excluding any disclosures of factors or risks contained or references therein under the captions “Risk Factors” or “Forward-Looking Statements” to the extent they are forward-looking statements and any other similar general, predictive or cautionary statements) or (b) the corresponding section or subsection of the SpinCo Disclosure Schedule (it being understood that each such disclosure shall also apply to each other representation and warranty contained in this Article V to the extent that it is reasonably apparent on the face of such disclosure that it is relevant to or applies to such representation or warranty), the Company hereby represents and warrants to Parent and Merger Sub as follows:

 

Section 5.1      Organization of SpinCo. SpinCo has been duly incorporated and is validly existing and in good standing as a Delaware corporation and has all requisite corporate power and authority to own, lease and operate its assets in the manner in which such assets are now (or as of the Effective Time will be) owned, leased or operated and to conduct its business as it is now being conducted. SpinCo has made available to Parent and Merger Sub true and complete copies of the Governing Documents of SpinCo. SpinCo is duly licensed or qualified and in good standing (or equivalent status as applicable) in each jurisdiction in which the assets owned or leased by it or the character of its activities require it to be so licensed or qualified or in good standing (or equivalent status as applicable), except as would not, individually or in the aggregate, reasonably be expected to have a SpinCo Material Adverse Effect.

 

Section 5.2      Due Authorization. SpinCo has all requisite corporate power and authority to execute and deliver this Agreement and the Transaction Documents to which it is or will be a party at the Effective Time and to consummate the Transactions (subject, in the case of the Merger, to the SpinCo Shareholder Approval, which will occur immediately after the execution of this Agreement), and except for such further action of the Company Board required, if applicable, to establish the Record Date and the Distribution Date, and the effectiveness of the declaration of the Distribution by the Company (which is subject to the satisfaction or, to the extent permitted by applicable Law, waiver of the conditions set forth in the Separation and Distribution Agreement). The execution and delivery by SpinCo of this Agreement and the Transaction Documents to which it is or will be a party at the Effective Time and the consummation by SpinCo of the Transactions have been duly and validly authorized and approved by all necessary and proper corporate action on its part and, except for the SpinCo Shareholder Approval, no other corporate action on the part of SpinCo is necessary to authorize this Agreement or the Transaction Documents to which it is or will be a party at the Effective Time. Each of this Agreement and the Transaction Documents to which it is or will be a party at the Effective Time has been, or when executed and delivered will be, duly and validly executed and delivered by SpinCo and (assuming that this Agreement or such other applicable Transaction Document to which Parent or Merger Sub is or will be a party at the Effective Time constitutes a legal, valid and binding obligation of Parent or Merger Sub (as applicable)) constitutes or will constitute a legal, valid and binding obligation of SpinCo, enforceable against SpinCo in accordance with its terms, subject to the Remedies Exception.

 

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Section 5.3      Capitalization of SpinCo.

 

(a)            As of the date hereof, (i) the authorized capital stock of SpinCo consists of 1,000 shares of SpinCo Common Stock, (ii) the issued and outstanding shares of capital stock of SpinCo consists of 1,000 shares of SpinCo Common Stock, and (iii) no shares of SpinCo Common Stock are being held by SpinCo in its treasury. All of the issued and outstanding shares of SpinCo Common Stock are, as of the date hereof (and as of immediately prior to the Distribution will be), owned, of record and beneficially, by the Company and have been duly authorized and validly issued, are fully paid and nonassessable and have not been issued in violation of any preemptive or similar rights. Immediately prior to the Effective Time, there will be outstanding a number of shares of SpinCo Common Stock determined in accordance with Section 7.14.

 

(b)            No bonds, debentures, notes or other indebtedness of any SpinCo Entity having the right to vote (or convertible into or exercisable for securities having the right to vote) on any matters on which holders of shares of capital stock of SpinCo (including SpinCo Common Stock) may vote (“SpinCo Voting Debt”) are issued or outstanding.

 

(c)            There are no (i) outstanding options, warrants, rights or other securities convertible into or exchangeable or exercisable for shares of capital stock of SpinCo, or any other commitments or agreements providing for the issuance, sale, repurchase or redemption of shares of capital stock of SpinCo, (ii) agreements of any kind which may obligate SpinCo to issue, purchase, redeem or otherwise acquire any of its shares of capital stock or (iii) voting trusts, proxies or other agreements or understandings with respect to the voting shares of capital stock of SpinCo.

 

Section 5.4      Subsidiaries.

 

(a)            Section 5.4(a) of the SpinCo Disclosure Schedule sets forth a list of the SpinCo Subsidiaries (after giving effect to the Internal Reorganization) and their respective jurisdictions of organization as of the date hereof. Each SpinCo Subsidiary has been, or will be at the Closing, duly organized and is, or will be at the Closing, validly existing and in good standing (to the extent applicable under the Laws of its jurisdiction of formation) under the Laws of its jurisdiction of organization and has all requisite organizational power and authority to own, lease and operate its assets in the manner such assets are now (or as of the Effective Time will be) owned, leased, or operated and to conduct its business as it is now being conducted.

 

(b)            Each SpinCo Subsidiary is, or will be at the Closing, duly licensed or qualified and in good standing (or equivalent status as applicable) in each jurisdiction in which the assets owned or leased by it or the character of its activities require it to be so licensed or qualified or in good standing (or equivalent status as applicable), as applicable, except as would not, individually or in the aggregate, reasonably be expected to have a SpinCo Material Adverse Effect. Other than the SpinCo Subsidiaries set forth on Section 5.4(a) of the SpinCo Disclosure Schedule, as of the date hereof (giving effect to the Internal Reorganization), SpinCo does not own or hold, directly or indirectly, any Interest in any other Person.

 

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Section 5.5      Capitalization of Subsidiaries. The issued and outstanding Interests of each of the SpinCo Subsidiaries have been, or will be at the Closing, duly authorized and are (or will then be) validly issued and, as applicable, fully paid and nonassessable. SpinCo, directly or indirectly, owns, or will own at the Closing, of record and beneficially, all the issued and outstanding Interests of the SpinCo Subsidiaries, free and clear of any Liens (other than those set forth in their respective Governing Documents or arising pursuant to applicable securities Laws or created by this Agreement). There are no outstanding options, warrants, rights or other securities exercisable or exchangeable for Interests of such SpinCo Subsidiaries, any other commitments or agreements providing for the issuance, sale, repurchase or redemption of Interests of such SpinCo Subsidiaries, and there are no agreements of any kind which may obligate any SpinCo Subsidiary to issue, purchase, redeem or otherwise acquire any of its Interests.

 

Section 5.6      Governmental Consents. No Consent of, with or to any Governmental Authority is required to be obtained or made by any SpinCo Entity in connection with the execution or delivery by SpinCo of this Agreement or the Transaction Documents to which SpinCo is or will be a party at the Effective Time or the consummation by SpinCo of the Transactions, except for: (a) applicable requirements of the HSR Act (b) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the provisions of the DGCL; (c) applicable requirements of state securities or “blue sky” Laws, the Securities Act and the Exchange Act; (d) Consents described in Section 4.3 and Consents set forth on Section 5.6 of the SpinCo Disclosure Schedule; and (f) Consents the failure of which to be made or obtained would not reasonably be expected to, individually or in the aggregate, have a SpinCo Material Adverse Effect.

 

Section 5.7      No Conflict. Subject to the receipt of the Consents described in Section 5.6, the execution and delivery by SpinCo of this Agreement and the Transaction Documents to which SpinCo is or will be a party at the Effective Time and the consummation by SpinCo of the Transactions (for the avoidance of doubt, including performance of the Transaction Documents following the Closing by the SpinCo Entities) do not and will not: (a) violate any provision of, or result in the material breach of, any Law applicable to any SpinCo Entity or by which any of its assets or properties is bound; (b) with or without lapse of time or the giving of notice or both, require a consent or approval under, conflict with, result in a violation or breach of, or constitute a default under, result in the acceleration of, or create in any party the right to accelerate, terminate or cancel any Contract to which a SpinCo Entity is a party or by which their assets or properties is (or will at the Closing be) bound; (c) result in the creation of any Lien upon any of the properties or assets of SpinCo or any of SpinCo’s Subsidiaries; or (d) violate any provision of the Governing Documents of the SpinCo Entities, except, in the case of clauses (a), (b) and (c), as would not, individually or in the aggregate, reasonably be expected to have a SpinCo Material Adverse Effect.

 

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Section 5.8      Sufficiency of the SpinCo Assets.

 

(a)            As of the Effective Time (assuming receipt of all consents, approvals and authorizations relating to the matters set forth in Section 4.3 and Section 5.6), after giving effect to the Internal Reorganization, the SpinCo Assets owned by the SpinCo Entities will, taking into account all Transaction Documents (including the services available under the Transition Services Agreements and the other Transaction Documents), constitute all of the assets, properties and rights reasonably necessary for Parent and the SpinCo Entities to conduct the SpinCo Business immediately following the Closing in all material respects in the same manner as it is conducted on the date hereof.

 

(b)            Except for Permitted Liens or Liens created by or through Parent or Merger Sub, SpinCo and the Company collectively have, and at the Closing (after giving effect to the Internal Reorganization and the other Transactions) the SpinCo Entities shall have, good, valid and marketable title to, or a valid leasehold in, license to or other legal right to use, as the case may be, all of the material SpinCo Assets, free and clear of any Liens.

 

Section 5.9      Financial Statements.

 

(a)            Set forth on Section 5.9 of the SpinCo Disclosure Schedule are copies of the SpinCo Financial Statements. Each of the SpinCo Financial Statements fairly presents, in all material respects, the financial condition and results of operations and cash flows of the SpinCo Business, as of the dates indicated therein and for the periods referred to therein; provided, that the SpinCo Financial Statements and the representations and warranties in this Section 5.9(a) are qualified by the fact that (i) the SpinCo Business has not operated on a separate standalone basis and has historically been reported within the Company’s combined financial statements, (ii) the SpinCo Financial Statements assume certain allocated charges and credits, which do not necessarily reflect amounts that would have resulted from arm’s-length transactions or that the SpinCo Business would incur on a standalone basis, including after the Closing and (iii) the SpinCo Financial Statements are subject to changes prior to the provision of final audited SpinCo Financial Statements, none of which are expected to be material. The SpinCo Financial Statements were prepared based on the accrual basis of accounting consistently applied by the Company during the periods involved and were derived from the financial reporting systems and the consolidated financial statements of the Company, which consolidated financial statements were prepared in accordance with GAAP.

 

(b)            As of the date hereof, neither SpinCo nor any of its Subsidiaries is required to file or furnish any form, report, registration statement, prospectus or other document with the SEC.

 

Section 5.10      No Undisclosed Liabilities. There is no Liability of the SpinCo Entities or related to the SpinCo Business (excluding any Liabilities related or attributable to Taxes) whether or not of a type required to be reflected or reserved for on a consolidated balance sheet of the SpinCo Business or in the notes thereto prepared in accordance with GAAP, except for (a) Liabilities reflected or reserved for in the combined balance sheets as of December 31, 2021 included in the SpinCo Financial Statements; (b) Liabilities that have arisen since the Balance Sheet Date in the ordinary course of the operation of the SpinCo Business; (c) Liabilities arising out of or in connection with this Agreement, the Transaction Documents and the Transactions; or (d) Liabilities that, individually or in the aggregate, would not reasonably be expected to be material to the SpinCo Entities taken as a whole.

 

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Section 5.11      Litigation and Proceedings. As of the date hereof, there are no Actions pending or, to the Knowledge of the Company or SpinCo, threatened before or by any Governmental Authority against any SpinCo Entity or with respect to the SpinCo Business, and neither the Company nor any of its Subsidiaries (solely as they relate to the SpinCo Business or any SpinCo Entity) is subject to any judgment, decree, injunction or order of or investigation or inquiry by any Governmental Authority, except, in each case, as would not reasonably be expected, individually or in the aggregate, to be material to the SpinCo Entities taken as a whole.

 

Section 5.12      Real Property.

 

(a)            The SpinCo Entities do not own and at no time previously have owned, any real property. With respect to the Company Real Property, (i) the Company or its applicable Subsidiary has good and valid title (or the applicable local equivalent) or a valid and enforceable leasehold interest, as applicable, in such Company Real Property, free and clear of any Liens, subject to the Remedies Exception and other than Permitted Liens, and (ii) neither the Company nor any of its Subsidiaries has received written notice of any pending condemnation, expropriation, eminent domain or similar Action affecting all or any portion of such Company Real Property (to the extent relating to or affecting the SpinCo Business).

 

(b)            Subject to the terms of the Transaction Documents, including the Separation and Distribution Agreement, the SpinCo Entities have, or will have at the Effective Time, a valid and enforceable leasehold interest in the SpinCo Real Property, except as has not and would not reasonably be expected, individually or in the aggregate, to result in any material Liability to the SpinCo Business, taken as a whole. Other than the SpinCo Real Property Leases set forth on Section 5.15(a)(viii) of the SpinCo Disclosure Schedule, there are no Contracts granting to any Person (other than any SpinCo Entity or any landlord of such property pursuant to a SpinCo Real Property Lease and other than any Person who would be entitled to access any such property in the ordinary course of business in accordance with the applicable SpinCo Real Property Lease) the right of use or occupancy of any SpinCo Real Property.

 

Section 5.13      Tax Matters.

 

(a)            Except as would not, individually or in the aggregate, have a SpinCo Material Adverse Effect:

 

(i)            (A) All Tax Returns required to be filed by or with respect to a SpinCo Entity or the SpinCo Business have been timely filed (taking into account applicable extensions), (B) all such Tax Returns are true, correct and complete, and (C) all Taxes, whether or not shown as due on such Tax Returns, in respect of each SpinCo Entity and the SpinCo Business have been paid, in the case of each of clauses (A) through (C), except to the extent adequate reserves therefor in accordance with GAAP have been provided on the SpinCo Financial Statements;

 

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(ii)            (A) No Governmental Authority has asserted any written claim, assessment or deficiency for Taxes against any SpinCo Entity or the SpinCo Business (and, to the Knowledge of the Company and SpinCo, no such claim, assessment or deficiency has been threatened or proposed in writing), except for deficiencies which have been satisfied by payment, settled or withdrawn and (B) no claim, audit or other proceeding by any Governmental Authority is pending or threatened in writing with respect to any Taxes of any SpinCo Entity or the SpinCo Business;

 

(iii)            No SpinCo Entity has any Liability for Taxes of any other Person (other than the Company or any of its subsidiaries) under Treasury Regulations section 1.1502-6 (or any similar provision of state, local or non-U.S. Law), as a transferee or successor or by contract or operation of Law or otherwise;

 

(iv)            Other than in connection with the Separation, within the past two years, no SpinCo Entity has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code;

 

(v)            No SpinCo Entity has participated in, or is currently participating in, a “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(2); and

 

(vi)            There are no Liens for Taxes (other than Permitted Liens) upon the assets of any SpinCo Entity or the SpinCo Business.

 

(b)            Neither the Company nor any of its Subsidiaries has taken or agreed to take any action or knows of any fact, agreement, plan or other circumstance that could reasonably be expected to prevent or impede (i) the Domestication from qualifying as a “reorganization” within the meaning of Section 368(a)(1)(F), (ii) the Tax-Free Status, (iii) the Company from receiving the Company Tax Opinions or (iv) Parent from receiving the Parent Tax Opinions.

 

(c)            The representations and warranties set forth in this Section 5.13 and, to the extent relating to Tax matters, Section 5.18, constitute the sole and exclusive representations and warranties of the Company regarding Tax matters.

 

Section 5.14      Absence of Changes. Since the Balance Sheet Date until the date of this Agreement, (a) there has not been any SpinCo Material Adverse Effect and (b) except in connection with the Transaction Process or as contemplated by this Agreement and the other Transaction Documents, since the Balance Sheet Date and through the date hereof, the Company and its Subsidiaries, including the SpinCo Entities, have, in all material respects, conducted the SpinCo Business in the ordinary course of business.

 

Section 5.15      Material Contracts.

 

(a)            Except as set forth in Section 5.15(a) of the SpinCo Disclosure Schedule and except for Contracts that do not constitute SpinCo Assets or SpinCo Liabilities, as of the date hereof, neither the Company nor any of its Subsidiaries (other than the SpinCo Entities) (solely with respect to the SpinCo Business), or any of the SpinCo Entities, is party to or otherwise bound by or subject to Contracts of the following types (together with any SpinCo Affiliate Contracts, the “SpinCo Material Contracts”):

 

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(i)            any Contract that relates to the purchase or sale of goods or services pursuant to which the SpinCo Business has received more than $2,000,000 or paid more than $2,000,000 in the past twelve (12) months;

 

(ii)            any Contract that limits or purports to limit in any material respect the ability of the SpinCo Business to compete with any Person or in any line of business or in any geographic region in the world;

 

(iii)            any Contract that grants exclusive rights to a customer or a supplier or (to the extent material to the SpinCo Business) any other commercial counterparty that will relate to or affect the SpinCo Business after the Closing;

 

(iv)            any Contract that requires any future capital expenditures by the SpinCo Business in excess of $2,000,000 that will not be paid prior to the Closing;

 

(v)            any Contract that requires any milestone, earn out or similar payments to be made by the SpinCo Business in excess of $2,000,000 that will not be paid prior to the Closing;

 

(vi)            any Contract that relates to the creation, incurrence, assumption or guarantee of any indebtedness for borrowed money or any bonds, debentures, notes or similar instruments, in each case, in excess of $2,000,000;

 

(vii)            any Contract pursuant to which (A) any Person grants to any of the SpinCo Entities or, with respect to the SpinCo Business, to the Company or any of its Subsidiaries other than the SpinCo Entities, any license, right, permission, consent, non-assertion or release with respect to any Intellectual Property that is material to the SpinCo Business, other than (1) non-exclusive click-wrap, shrink-wrap or off-the-shelf Software licenses that are commercially available on standard and reasonable terms to the public generally with license, maintenance, support and other fees of less than $200,000 in any twelve (12)-month period, (2) non-disclosure agreements entered into in the ordinary course of business consistent with past practice and (3) non-exclusive licenses granted by any suppliers or service providers to any of the SpinCo Entities in the ordinary course of business consistent with past practice solely for the receipt of services from such supplier or service provider, and solely where such licenses are ancillary to the primary purpose of such Contract, or (B) any of the SpinCo Entities or, with respect to the SpinCo Business, the Company or any of its Subsidiaries other than the SpinCo Entities, grants any license, right, permission, consent, non-assertion or release with respect to any Intellectual Property that is material to the SpinCo Business, other than (1) non-exclusive licenses granted to customers of any of the SpinCo Entities in the ordinary course of business consistent with past practice, (2) non-exclusive licenses granted to any suppliers or service providers by any of the SpinCo Entities in the ordinary course of business consistent with past practice solely for the benefit of such SpinCo Entity and (3) non-disclosure agreements entered into in the ordinary course of business consistent with past practice;

 

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(viii)            any Contract to which any of the SpinCo Entities or, with respect to the SpinCo Business, the Company or any of its Subsidiaries other than the SpinCo Entities, is a party with any Governmental Authority or any university, college, research institute, or other educational institution that provides for the provision of funding by or to any of the SpinCo Entities or the Company or any of its Subsidiaries, in each case, for any research or development activities involving the invention, creation, conception or development of any Intellectual Property that is material to the SpinCo Business;

 

(ix)            any lease, sublease, occupancy agreement or license for real property (each, a “SpinCo Real Property Lease”);

 

(x)            any Contract that is a settlement, conciliation or similar agreement with any Governmental Authority or that otherwise involves any settled or threatened claim, action, suit or proceeding pursuant to which the SpinCo Business has (or will have after the Closing) any monetary or other material outstanding obligation;

 

(xi)            any Contract that contains “most favored nation” pricing provisions for the benefit of the relevant counterparty that will relate to or affect the SpinCo Business after the Closing;

 

(xii)            any joint venture, strategic alliance, joint development, partnership or similar arrangement;

 

(xiii)            any Contract relating to the acquisition or disposal or divestiture of, or investment in, any joint venture, partnership or similar arrangement or any material assets or businesses;

 

(xiv)            any prime contract, subcontract, purchase order, task order, delivery order, teaming agreement, joint venture agreement, strategic alliance agreement, basic ordering agreement, pricing agreement, letter contract or other similar arrangement of any kind where the counterparty or the ultimate customer is, or the work performed under such contract was funded by, a Governmental Authority (each a “Government Contract”); and

 

(xv)            any Contract not otherwise described in any other subsection of this Section 5.15(a) that would be required to be filed by SpinCo as a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) if SpinCo were subject to the reporting requirements of the Exchange Act as of the date hereof.

 

The Company has made available to Parent copies of each SpinCo Material Contract that are correct and complete. Each SpinCo Material Contract is valid and binding on the Company or its applicable Subsidiary, including any applicable SpinCo Entity and, to the Knowledge of the Company or SpinCo, the counterparty thereto, and is in full force and effect and enforceable in accordance with its terms, subject to the Remedies Exception. Neither the Company nor its applicable Subsidiary, including any SpinCo Entity is, and to the Knowledge of the Company or SpinCo, no counterparty thereto is, in breach of, or default under, any SpinCo Material Contract in any material respect.

 

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Section 5.16      Labor Relations.

 

(a)            Section 5.16(a) of the SpinCo Disclosure Schedules sets forth a true and complete list of all SpinCo Employees, and includes each SpinCo Employee’s name, title, work location, status (e.g., full- or part-time or temporary), overtime classification (e.g., exempt or non-exempt), rate of base salary or hourly wage, target annual bonus opportunity or other cash incentive opportunity, the amount of accrued but unused paid time off, and whether the employee is on leave (and if so, the category of leave, the date on which such leave commenced and the date of expected return to work). As of the date hereof, all SpinCo Employees are employed by the Company.

 

(b)            Section 5.16(b) of the SpinCo Disclosure Schedules sets forth a true and complete list of all SpinCo Independent Contractors. The Company has made available to Parent and Merger Sub true and complete copies of each services agreement with each SpinCo Independent Contractor.

 

(c)            Neither the Company nor any of its Subsidiaries, including any SpinCo Entity, is a party to any agreement with any trade union, works council, employee representative body or labor organization (covered by the National Labor Relations Act) that represents (or that otherwise governs or relates to the employment of) any of the SpinCo Employees(each, a “SpinCo CBA”). To the Knowledge of the Company or SpinCo, (i) no petition for recognition of a labor organization or other body for the representation of the SpinCo Employees is pending or threatened, and (ii) there has not during the last five (5) years been any (or threat of any), there are no pending and no Person has threatened to commence any, strike, slowdown, work stoppage, lockout, job action, picketing, labor dispute, question concerning representation, union organizing activity, or any threat thereof, or any similar activity or dispute, affecting the Company or any of its Subsidiaries (with respect to the SpinCo Business) or any of the SpinCo Entities.

 

(d)            There are no pending, or to the Knowledge of the Company or SpinCo, anticipated or threatened, unfair labor or other employment-related practice charges, complaints or other grievances or Actions by or before any Governmental Authority, arising under any applicable Law governing labor or employment (or pursuant to any SpinCo CBA), SpinCo Service Providers or other Persons (in respect of which any SpinCo Entity will have any material Liability at the Effective Time).

 

(e)            For the past three (3) years, the Company has been in compliance in all material respects with all Laws relating to terms and conditions of employment, employment practices, employment discrimination and harassment, civil rights, the Worker Adjustment and Retraining Notification Act (“WARN”) and any similar state or local plant closures and mass layoffs Laws, wages (including minimum wage and overtime), hours of work, meal and rest breaks, withholdings and deductions, classification and payment of employees, independent contractors and consultants, employment equity, collective bargaining, occupational health and safety, workers’ compensation, immigration, child labor, employment equity, workforce reduction and all other labor or employment related matters with respect to any SpinCo Service Provider. During the prior three (3) years, there has been no “mass layoff” or “plant closing” (as defined by WARN) with respect to the Company or any of its Subsidiaries.

 

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(f)            The execution, delivery and performance of this Agreement and the consummation of the Transactions do not require the Company or any of its Subsidiaries, including any SpinCo Entity, to seek or obtain any consent, engage in consultation with, or issue any notice to or make any filing with (as applicable) any unions, labor organizations, or groups of employees of the Company, or any Governmental Authority, with respect to any SpinCo Employee.

 

(g)            No judgment, consent decree, or arbitration award imposes continuing remedial obligations or otherwise limits or affects the Company’s or any of its Subsidiaries’, including any SpinCo Entity’s, ability to manage the SpinCo Service Providers.

 

(h)            Except as would not reasonably be expected to result in material Liability to the SpinCo Business (taken as a whole), for the past three (3) years, neither the Company nor any of its Subsidiaries, including any SpinCo Entity, has incurred, and no circumstances exist under which the Company or any of its Subsidiaries would reasonably be expected to incur with respect to any SpinCo Service Provider, any liability arising from (i) the failure to pay wages (including overtime wages), (ii) the misclassification of employees as independent contractors or (iii) the misclassification of employees as exempt from the requirements of the Fair Labor Standards Act or similar state Laws.

 

Section 5.17      Compliance with Law; Permits.

 

(a)            Except for Environmental Laws (which are addressed exclusively as set forth in Section 5.20), the Company and the Company’s Subsidiaries (in each case, solely with respect to the SpinCo Business) and the SpinCo Entities are, and, during the past two (2) years the SpinCo Entities and, solely with respect to their conduct and operation of the SpinCo Business, the Company and its other Subsidiaries (i) have been in compliance with all applicable Laws, except where noncompliance has not been and would not reasonably be expected to be material to the SpinCo Business, taken as a whole, and (ii) have not received notice from any Governmental Authority alleging any material non-compliance with or possible material violation of any applicable Law or that the Company or any of its Subsidiaries (with respect to the SpinCo Business) or the SpinCo Entities, is subject to any inspection, investigation, survey, audit or other review.

 

(b)            Except with respect to Permits required under applicable Environmental Laws (which are addressed exclusively in Section 5.20), and except, in each case, as would not reasonably be expected to have, individually or in the aggregate, a SpinCo Material Adverse Effect, (i) the Company and its Subsidiaries (with respect to the SpinCo Business) and the SpinCo Entities hold all Permits necessary to conduct the SpinCo Business substantially as conducted as of the date hereof and in compliance with applicable Law and (ii) such Permits are valid and in full force and effect and the Company or its applicable Subsidiary or the applicable SpinCo Entity is in compliance with the terms thereof.

 

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Section 5.18      SpinCo Benefit Plans.

 

(a)            Section 5.18(a) of the SpinCo Disclosure Schedule sets forth a list of each material Company Benefit Plan. As of the date hereof, there are no SpinCo Benefit Plans or Foreign Benefit Plans.

 

(b)            As applicable with respect to each of the Company Benefit Plans and SpinCo Benefit Plans, the Company has made available to Parent true and complete copies of (i) the applicable plan document (including all amendments thereto), (ii) the most recent summary plan description including any summary of material modifications provided to participants, (iii) the last filed Form 5500 series and all schedules thereto, and (iv) the most recent determination, opinion or advisory letter issued by the IRS and (v) any material, non-routine communications with any Governmental Authority in the past three years.

 

(c)            Each SpinCo Benefit Plan and Company Benefit Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS (or is entitled to rely upon a favorable opinion letter issued by the IRS), and no such determination or opinion letter has been revoked nor, to the Knowledge of the Company, has any fact or circumstance occurred that could reasonably be expected to cause the loss of such qualification or the imposition of material Liability to the SpinCo Business (taken as a whole).

 

(d)            Each of the Company Benefit Plans and SpinCo Benefit Plans has been operated, funded and administered in all material respects in accordance with its terms and in compliance with applicable Law, including ERISA and the Code. Except as would not reasonably be expected to result in material Liability to the SpinCo Business (taken as a whole), there are no pending or, to the Knowledge of the Company, threatened claims, actions, investigations or audits (other than routine claims for benefits) involving any Company Benefit Plan or SpinCo Benefit Plan.

 

(e)            Within the last six (6) years, neither any Company Benefit Plan nor any SpinCo Benefit Plan has been, and none of the Company, SpinCo nor any of their ERISA Affiliates has maintained, established, sponsored, participated in, contributed to, or had liability in respect of, an employee benefit plan subject to Section 302 or Title IV of ERISA or Section 412, 430 or 4971 of the Code. None of the Company, SpinCo nor any of their ERISA Affiliates has, at any time during the preceding six (6) years, contributed to, been obligated to contribute to or had any liability (including any contingent liability) with respect to, any Multiemployer Plan or a plan that has two (2) or more contributing sponsors, at least two (2) of whom are not under common control, within the meaning of Section 4063 of ERISA.

 

(f)            Except as would not reasonably be expected to result in material Liability to the SpinCo Business (taken as a whole), no Action with respect to the administration or the investment of the assets of any SpinCo Benefit Plan or Company Benefit Plan (other than routine claims for benefits) is pending, or to the Knowledge of the Company or SpinCo, threatened. Except as would not reasonably be expected to result in material Liability to the SpinCo Business (taken as a whole), with respect to each SpinCo Benefit Plan and Company Benefit Plan, (i) all required contributions have been made or properly accrued, (ii) there have been no “prohibited transactions” (as that term is defined in Section 406 of ERISA or Section 4975 of the Code) and (iii) all reports, returns, and similar documents required to be filed with any Governmental Authority or distributed to any SpinCo Benefit Plan or Company Benefit Plan participant have been timely filed or distributed. The Company and SpinCo have complied in all material respects with their respective obligations under any plan, program or arrangement that is sponsored, maintained or administered by any Governmental Authority.

 

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(g)            Except as set forth in this Agreement or the Employee Matters Agreement, the consummation of the Transactions shall not, either alone or in combination with another event: (i) entitle any current or former SpinCo Service Provider, to severance pay, unemployment compensation or any other benefits or payments; or (ii) accelerate the time of payment, funding or vesting, or increase the amount of any payments or benefits due to any SpinCo Service Provider.

 

(h)            Except as set forth in Section 5.18(h) of the SpinCo Disclosure Schedule, no Company Benefit Plan or SpinCo Benefit Plan provides for, and SpinCo does not have any current or contingent Liability in respect of, post-retirement or other postemployment health or welfare benefits, other than health care continuation coverage as required by Section 4980B of the Code or any similar state Law (“COBRA”) or ERISA.

 

(i)            Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby or by the Transaction Documents shall, either alone or in combination with any other event(s), result in the payment of any amount to any SpinCo Service Provider or any other current or former employee, director, officer or independent contractor of any SpinCo Entity that could, individually or in combination with any other such payment, constitute an “excess parachute payment” as defined in Section 280G(b)(1) of the Code.

 

(j)            Each Company Benefit Plan that is (and each SpinCo Benefit Plan that will be) a “nonqualified deferred compensation plan” (as such term is defined in Section 409A(d)(1) of the Code and the guidance thereunder) is (or will be, as applicable) in material compliance in both form and operation with Section 409A of the Code, and no Taxes are owed (or will be owed, as applicable) under Section 409A(a)(1) for any such plan or arrangement. No SpinCo Entity is under the obligation to gross up any Taxes, including under Section 409A of the Code or Sections 280G or 4999 of the Code.

 

Section 5.19      Intellectual Property.

 

(a)            Section 5.19(a) of the SpinCo Disclosure Schedule sets forth a list of, as of the date hereof, all SpinCo Owned Intellectual Property that is the subject of any registration, issuance, or application for registration or issuance, with any Governmental Authority or Internet domain name registrar (specifying for each such item (i) the record owner (and, if different from the record owner, the beneficial owner), (ii) the jurisdiction in which such item has been issued, registered or filed, (iii) the issuance, registration or application date and (iv) the issuance, registration or application number) (any Intellectual Property set forth or required to be set forth on Section 5.19(a) of the SpinCo Disclosure Schedule, collectively, the “SpinCo Registered Intellectual Property”).

 

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(b)            All SpinCo Registered Intellectual Property that is material to the SpinCo Business is subsisting, and, to the Knowledge of the Company or SpinCo, valid and enforceable. Except as scheduled in Section 5.19(b) of the SpinCo Disclosure Schedule, to the Knowledge of the Company or SpinCo, none of the SpinCo Registered Intellectual Property has been or is subject to any interference, derivation, reexamination, (including ex parte reexamination, inter partes reexamination, inter partes review, post grant review or Covered Business Method (CBM) review), cancellation or opposition proceeding.

 

(c)            As of the date hereof, to the Knowledge of the Company or SpinCo, the Company and each of its Subsidiaries, and, as of the Distribution, each of the SpinCo Entities, have prepared and are preparing to file patent applications for all potentially patentable inventions included in the SpinCo Owned Intellectual Property that are material to the SpinCo Business as currently conducted and as currently proposed to be conducted, except, where in the exercise of reasonable business judgment, the Company, such Subsidiary or such SpinCo Entity has decided not to file or has decided to defer filing a patent application on a potentially patentable invention. The Company, each of its Subsidiaries, and each of the SpinCo Entities has complied and does comply in all material respects with all Laws regarding the duty of disclosure, candor and good faith in connection with each Patent included in the SpinCo Registered Intellectual Property. To the Knowledge of the Company or SpinCo, no public disclosure bar by the Company, any of its Subsidiaries, or any of the SpinCo Entities has occurred, nor has any on-sale bar by the Company, any of its Subsidiaries, or any of the SpinCo Entities arisen, which has rendered any Patent included in the SpinCo Registered Intellectual Property that is material to the SpinCo Business, invalid, unenforceable or unpatentable.

 

(d)            As of the date hereof, (i) the Company and its Subsidiaries solely and exclusively own, and as of the Distribution, a SpinCo Entity solely and exclusively owns, all rights, title and interest in and to the SpinCo Owned Intellectual Property, in each case, free and clear of all Liens (other than Permitted Liens) and (ii) to the Knowledge of the Company or SpinCo the Company or one of its Subsidiaries has, and, as of the Distribution, a SpinCo Entity has, valid and enforceable rights to use and exploit, pursuant to a written SpinCo Contract, all other Intellectual Property (except for such other Intellectual Property in the public domain for which no license is necessary) used or practiced by the SpinCo Business that is material to the SpinCo Business. The SpinCo Owned Intellectual Property and such SpinCo Licensed Intellectual Property collectively constitute all Intellectual Property used in, and necessary and sufficient for, the conduct and operation of the SpinCo Business, as currently conducted; provided, that the foregoing representation shall not in any way be construed as a representation of non-infringement or other violation of the Intellectual Property rights of any Person.

 

(e)            To the Knowledge of the Company or SpinCo, in the past six (6) years with respect to Patents or in the past three (3) years with respect to all other Intellectual Property, none of the SpinCo Entities or, with respect to the SpinCo Business, the Company or any of its Subsidiaries other than the SpinCo Entities, the conduct of the SpinCo Business, or any SpinCo Owned Intellectual Property has infringed, misappropriated (or constituted or resulted from a misappropriation of), diluted or otherwise violated, or is infringing, misappropriating (or constitutes or results from the misappropriation of), diluting or otherwise violating any Intellectual Property of any Person. To the Knowledge of the Company or SpinCo, none of the SpinCo Entities or, with respect to the SpinCo Business, the Company or any of its Subsidiaries other than the SpinCo Entities, has received from any Person in the past three (3) years any written notice, charge, complaint, claim or other assertion: (i) of any infringement, misappropriation, dilution or other violation of any Intellectual Property of any Person or (ii) challenging the ownership, use, validity or enforceability of any SpinCo Owned Intellectual Property that is material to the SpinCo Business as currently conducted and as currently proposed to be conducted.

 

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(f)            To the Knowledge of the Company or SpinCo, no other Person has infringed, misappropriated, diluted or violated, or is infringing, misappropriating, diluting or violating, any SpinCo Owned Intellectual Property or any SpinCo Licensed Intellectual Property exclusively licensed to the Company, any of its Subsidiaries, or any of the SpinCo Entities, in each case, that is material to the SpinCo Business. No such claims have been made in writing or, to the Knowledge of the Company or SpinCo, otherwise made against any Person by any of the SpinCo Entities or, with respect to the SpinCo Business, the Company or any of its Subsidiaries other than the SpinCo Entities in the past three (3) years.

 

(g)            To the Knowledge of the Company or SpinCo, each of the SpinCo Entities and, with respect to the SpinCo Business, the Company and each of its Subsidiaries other than the SpinCo Entities, have taken and currently takes adequate and commercially reasonable steps to maintain the secrecy and confidentiality of all Trade Secrets included in the SpinCo Owned Intellectual Property and all Trade Secrets of any Person to whom any of the SpinCo Entities or, with respect to the SpinCo Business, the Company or any of its Subsidiaries other than the SpinCo Entities, has a confidentiality obligation with respect to such Trade Secrets. No Trade Secret material to the SpinCo Business has been authorized by the Company, any of its Subsidiaries, or any of the SpinCo Entities to be disclosed (or, to the Knowledge of the Company or SpinCo, has been disclosed) to any Person other than (i) pursuant to a written agreement adequately restricting the disclosure and use of such Trade Secret or (ii) to a Person who otherwise has a duty to protect such Trade Secret.

 

(h)            Each of the past and present employees, consultants and independent contractors of the Company, any of its Subsidiaries, or any of the SpinCo Entities who has been or is engaged in inventing, creating, conceiving or developing any Intellectual Property that is material to the SpinCo Business as currently conducted and as currently proposed to be conducted for any of the SpinCo Entities or, with respect to the SpinCo Business, the Company or any of its Subsidiaries other than the SpinCo Entities has executed and delivered to the Company or such Subsidiary or SpinCo Entity, as applicable, a written agreement, pursuant to which such Person has (x) agreed to hold all confidential information of the SpinCo Business in confidence both during and after such Person’s employment or retention, as applicable, and (y) presently assigned to the Company, such Subsidiary, or such SpinCo Entity, as applicable, all of such Person’s rights, title and interest in and to all Intellectual Property invented, created, conceived or developed in the course of such Person’s employment or engagement thereby (each, a “Personnel IP Contract”). To the Knowledge of the Company or SpinCo, there is no uncured breach by any such Person with respect to any Intellectual Property that is material to the SpinCo Business as currently conducted and as currently proposed to be conducted under any such Personnel IP Contract.

 

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(i)            No funding, facilities or personnel of any Governmental Authority or any university, college, research institute or other educational institution has been or is being used to invent, create, conceive or develop, in whole or in part, (i) any SpinCo Owned Intellectual Property or (ii) to the Knowledge of the Company or SpinCo any SpinCo Licensed Intellectual Property exclusively licensed to the Company, any of its Subsidiaries, or any of the SpinCo Entities, in each case of clauses (i) and (ii), that is material to the SpinCo Business as currently conducted and as currently proposed to be conducted, except for any such funding or use of facilities or personnel that (A) does not result in such Governmental Authority, university, college, research institute or other educational institution obtaining or retaining, or having the right to obtain or retain ownership of, or use rights to (except for use rights during the term of the applicable SpinCo Contract with such Governmental Authority, university, college, research institute or other educational institution), any SpinCo Owned Intellectual Property, or (B) does not require or otherwise obligate the Company, any of its Subsidiaries, or any of the SpinCo Entities to grant or offer to any Governmental Authority, university, college, research institute or other educational institution any license or other right to, or covenant not to assert with respect to, any SpinCo Owned Intellectual Property (except for use rights during the term of the applicable SpinCo Contract with such Governmental Authority, university, college, research institute or other educational institution).

 

(j)            As of the date hereof, none of the Company or any of its Subsidiaries owns or purports to own any Software included in the SpinCo Owned Intellectual Property that is material to the SpinCo Business, and, as of the Distribution, none of the SpinCo Entities owns or purports to own any Software included in the SpinCo Owned Intellectual Property that is material to the SpinCo Business.

 

(k)            To the Knowledge of the Company or SpinCo, (i) as of the date hereof, the Company or one of its Subsidiaries, and (ii) as of the Distribution, a SpinCo Entity, owns or has a valid right to access and use pursuant to a written SpinCo Contract, all SpinCo IT Systems in the manner in which they are currently accessed or used in the conduct of the SpinCo Business. To the Knowledge of the Company or SpinCo, except for the IT Assets utilized by Company to provide services to SpinCo pursuant to the applicable Transition Services Agreement, the SpinCo IT Systems are adequate in all material respects for the operation and conduct of the SpinCo Business as currently conducted. To the Knowledge of the Company or SpinCo, the SpinCo IT Systems have not materially malfunctioned or failed for the past three (3) years. To the Knowledge of the Company or SpinCo, during the past three (3) years, there has been no unauthorized access to or use of, or breach or other violation of, any SpinCo IT Systems, in each case, that has had, individually or in the aggregate, a material adverse effect on the SpinCo Business or the SpinCo IT Systems.

 

(l)            Neither the execution of this Agreement or any of the other Transaction Documents nor the consummation of the Transaction Process will result in (i) the loss or impairment of, or any Lien on, any material SpinCo Owned Intellectual Property or material SpinCo Licensed Intellectual Property; (ii) the release, disclosure or delivery of any source code included in the SpinCo Owned Intellectual Property to any Person; or (iii) the payment of any additional consideration to, or the reduction of any amount(s) payable from, any Person, in each case, with respect to any SpinCo Owned Intellectual Property or SpinCo Licensed Intellectual Property, and where the applicable consideration or amount(s) exceeds $200,000.

 

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Section 5.20      Environmental Matters.

 

(a)            Except as would not otherwise reasonably be expected to have, individually or in the aggregate, a SpinCo Material Adverse Effect:

 

(i)            With respect to their operation of the SpinCo Business, the Company and its Subsidiaries are, and during the past three (3) years the Company and its Subsidiaries have been, in compliance with applicable Environmental Laws, which compliance includes obtaining, maintaining, and complying with all Permits required under Environmental Laws for the operation of the SpinCo Business, all of which Permits are in full force and effect;

 

(ii)            With respect to their operation of the SpinCo Business, the Company and its Subsidiaries have not received notice from any Governmental Authority or Person alleging any non-compliance with or Liability under any applicable Environmental Law by the Company or any of its Subsidiaries;

 

(iii)            No Actions pursuant to any Environmental Law to the extent affecting the SpinCo Business or any SpinCo Assets are pending or threatened in writing or, to the Knowledge of the Company or SpinCo, threatened orally against the Company or any of its Subsidiaries; and

 

(iv)            Neither the Company nor any of its Subsidiaries nor, to the Knowledge of the Company or SpinCo, any other Person has Released Hazardous Materials at, on, upon, into or from any SpinCo Real Property at concentrations or under conditions that would result in the Company or any Subsidiary incurring Liability under Environmental Laws.

 

Section 5.21      Affiliate Matters. Except for Contracts solely between or among the SpinCo Entities or Contracts for employment, compensation or benefit agreements or arrangements with directors, officers and employees made in the ordinary course of business or as set forth in Section 5.21 of the SpinCo Disclosure Schedule, no SpinCo Entity is party to any SpinCo Affiliate Contract.

 

Section 5.22      Brokers’ Fees. No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other similar commission, for which Parent, Merger Sub or any of the SpinCo Entities would be liable in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of any SpinCo Entity.

 

Section 5.23      Proxy Statement; Registration Statements. None of the information regarding any of the Company or any of its Subsidiaries (including the SpinCo Entities), the SpinCo Business, or the Transactions to be provided by the Company or SpinCo or any of their respective Subsidiaries specifically for inclusion in, or incorporation by reference into, the Proxy Statement, the Parent Registration Statement, the SpinCo Registration Statement or the documents relating to the Distribution that are filed with the SEC and/or distributed to Company stockholders or Parent shareholders (the “Distribution Documents”) will, in the case of the Proxy Statement and the Distribution Documents or any amendment or supplement thereto, at the time of the first mailing of the Proxy Statement and the Distribution Documents and of any amendment or supplement thereto, or, in the case of the Parent Registration Statement or the SpinCo Registration Statement, at the time such registration statement becomes effective, on the date of the Parent Shareholders Meeting, at the Distribution Time or at the Effective Time, contain an untrue or false statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not false or misleading. The SpinCo Registration Statement will comply as to form in all material respects with the provisions of the Securities Act, except that no representation is made by the Company or SpinCo with respect to information provided by Parent specifically for inclusion in, or incorporation by reference into, the SpinCo Registration Statement.

 

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Section 5.24      Board and Shareholder Approval. Each of the Company Board and the SpinCo Board, at a meeting duly called and held or by written consent, has by unanimous vote of all directors present or unanimous consent, (a) approved this Agreement, the Separation and Distribution Agreement and the other Transaction Documents and authorized and approved the execution, delivery and performance hereof and thereof and the consummation of the Transactions, including the Merger and the Separation, and (b) declared each of them advisable, fair to and in the best interests of the Company, SpinCo and their respective stockholders. As of the date hereof, the sole shareholder of SpinCo is (and as of immediately prior to the Distribution the sole shareholder of SpinCo will be) the Company. Immediately after the execution of this Agreement, the Company will approve and adopt, as SpinCo’s sole shareholder, this Agreement and the Transaction Documents and the Transactions, including the Merger (the “SpinCo Shareholder Approval”). The SpinCo Shareholder approval is the only approval of the shareholders of the Company or any of its Subsidiaries required to approve the Transactions.

 

Section 5.25      Parent Capital Stock. Neither the Company nor any of its Subsidiaries, including SpinCo owns (directly or indirectly, beneficially or of record) or will own on the Closing Date nor is a party to any Contract for the purpose of acquiring, holding, voting or disposing of, in each case, any shares of capital stock of Parent (other than as contemplated by this Agreement).

 

Section 5.26      Healthcare Regulatory Matters.

 

(a)            SpinCo and its Subsidiaries are, and for the past three (3) years have been, in compliance with all applicable Healthcare Laws, except where such failure to so comply would not reasonably be expected, individually or in the aggregate, to have a material impact on the SpinCo Business. Neither SpinCo nor any of its Subsidiaries has received any written notice or other written communication from any Regulatory Authority alleging any material violation of any applicable Healthcare Law that remains unresolved. There are no investigations, suits, claims, actions or proceedings pending or, to the Knowledge of the Company, threatened against SpinCo or any of its Subsidiaries with respect to any of the SpinCo Products or alleging any material violation by SpinCo or the SpinCo Products of any such applicable Healthcare Law.

 

(b)            Neither SpinCo nor any of its Subsidiaries holds any Regulatory Authorization, or has any such application for a Regulatory Authorization pending with the FDA or any other applicable Regulatory Authority or, to the Knowledge of the Company, has at any time in the past three (3) years has been required to hold a Regulatory Authorization in connection with the SpinCo Products or operations.

 

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(c)            Neither SpinCo nor any of its Subsidiaries is conducting or sponsoring, and during the past three (3) years, has not conducted or sponsored, any pre-clinical studies or clinical trials that are or were required under any applicable Healthcare Laws to be conducted in compliance with Good Laboratory Practices or Good Clinical Practices.

 

(d)            None of the SpinCo Entities or, to the Knowledge of the Company, any person acting on behalf of any SpinCo Entity has during the past three (3) years, with respect to any SpinCo Product: (i) been subject to a shutdown or import or export prohibition imposed by any Regulatory Authority; or (ii) received any FDA Form 483, or other written notice of inspectional observations, “warning letters,” “untitled letters” or any similar written correspondence from any Regulatory Authority in respect of such SpinCo Entity or its business operations, alleging or asserting material noncompliance with any applicable Healthcare Law or Regulatory Authorization, and, to the Knowledge of the Company, no Regulatory Authority has threatened such action.

 

(e)            None of the SpinCo Entities has (i) made an untrue statement of a material fact or fraudulent statement to any Regulatory Authority, (ii) failed to disclose a material fact required to be disclosed to any Regulatory Authority or (iii) committed an act, made a disclosure, or failed to commit an act or make a disclosure, including with respect to any scientific data or information, that, at the time of such action, failure to act, disclosure or failure to disclose (as applicable), would reasonably be expected to provide a basis for the FDA to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities”, set forth in 56 Fed. Reg. 46191 (September 10, 1991), and any amendments thereto, or for the FDA or any other Regulatory Authority to invoke any similar policy. None of SpinCo or, to the Knowledge of SpinCo, any of its officers, employees or agents has been convicted of any crime or engaged in any conduct that has resulted in, or would reasonably be expected to result in, debarment from participation in any program related to pharmaceutical products pursuant to 21 U.S.C. Section 335a (a) or (b) or exclusion from participation in any federal health care program.

 

Section 5.27      Data Privacy.

 

(a)            (i) SpinCo and its Subsidiaries (and, with respect to the SpinCo Business, the Company and each of its Subsidiaries other than the SpinCo Entities) are, and have for the past three (3) years been, in material compliance with all Privacy Requirements. During the past three (3) years, neither SpinCo nor any of its Subsidiaries (and, with respect to the SpinCo Business, neither the Company nor any of its Subsidiaries other than the SpinCo Entities) has received any written notice of any claims, charges, investigations, or regulatory inquiries related to or alleging the violation of any Privacy Requirements.

 

(b)            Each of the SpinCo Entities (and, with respect to the SpinCo Business, the Company and each of its Subsidiaries other than the SpinCo Entities), has (i) implemented, and for the past three (3) years has maintained, commercially reasonable technical and organizational safeguards to protect Personal Information and other confidential data in its possession or under its control, and (ii) taken commercially reasonable steps to ensure that any third party with access to any Personal Information collected by or on behalf of any of the SpinCo Entities (or, with respect to the SpinCo Business, the Company or any of its Subsidiaries other than the SpinCo Entities) has implemented and maintained commercially reasonable safeguards.

 

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(c)            During the past three (3) years: (i) there have been no material breaches, security incidents, misuse of or unauthorized access to or disclosure of any Personal Information (“Security Incident”) maintained by SpinCo or any of its Subsidiaries (or, with respect to the SpinCo Business, the Company or any of its Subsidiaries other than the SpinCo Entities); nor (ii) to the Knowledge of the Company or SpinCo, has any Person processing Personal Information on behalf of the SpinCo Entities (and, with respect to the SpinCo Business, the Company or any of its Subsidiaries other than the SpinCo Entities) experienced any Security Incidents with respect to such Personal Information. SpinCo and its Subsidiaries (and, with respect to the SpinCo Business, the Company and its Subsidiaries other than the SpinCo Entities) have implemented reasonable disaster recovery and business continuity plans.

 

(d)            To the Knowledge of the Company or SpinCo, the transfer of Personal Information in connection with the Transactions will not violate in any material respect any Privacy Requirements.

 

Section 5.28      Anti-Bribery, Anti-Corruption and Anti-Money Laundering. None of the Company or the Company’s Subsidiaries (in each case, with respect to the SpinCo Business), the SpinCo Entities, or any of their respective directors, officers, employees, agents, or any other Person acting for or on behalf of the SpinCo Business or SpinCo Entities has, directly or indirectly, for the previous five (5) years, (a) made, offered, or promised to make or offer any payment, loan, or transfer of anything of value, including any reward, advantage, or benefit of any kind, to or for the benefit of any Government Official, candidate for public office, political party, or political campaign, for the purpose of (i) influencing any act or decision of such Government Official, candidate, party or campaign, (ii) inducing such Government Official, candidate, party or campaign to do or omit to do any act in violation of a lawful duty, (iii) obtaining or retaining business for or with any Person, (iv) expediting or securing the performance of official acts of a routine nature, or (v) otherwise securing any improper advantage; (b) paid, offered, or promised to pay or offer any bribe, payoff, influence payment, kickback, unlawful rebate, or other similar unlawful payment of any nature; (c) made, offered or promised to make or offer any unlawful contributions, gifts, entertainment, or other unlawful expenditures; (d) established or maintained any unlawful fund of corporate monies or other properties; (e) created or caused the creation of any false or inaccurate books and records of the Company or the Company’s Subsidiaries (in each case, with respect to the SpinCo Business) or the SpinCo Entities; or (f) otherwise violated any provision of the Foreign Corrupt Practices Act of 1977, 15 U.S.C. §§ 78dd-1, et seq., the Money Laundering Control Act, the Currency and Foreign Transactions Reporting Act, The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or any other Laws relating to corruption, bribery, or money laundering, in each case of clauses (a)-(e), in a manner that would result in a violation of any of the Laws described in clause (f). Within the past five (5) years, none of the Company, the Company’s Subsidiaries, or the SpinCo Entities has made any voluntary disclosure to any Governmental Authority relating to corruption, bribery, or money laundering Laws; been the subject of any investigation or inquiry regarding compliance with such Laws; or been assessed any fine or penalty under such Laws.

 

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Section 5.29      Sanctions, Import, and Export Controls. None of the Company or the Company’s Subsidiaries (in each case, with respect to the SpinCo Business), the SpinCo Entities, or any of their respective directors, officers, employees, agents, or any other Person acting for or on behalf of the SpinCo Business or SpinCo Entities (a) is a Person with whom transactions are prohibited or limited under any economic sanctions Laws, including those administered by the U.S. government (including, without limitation, the Department of the Treasury’s Office of Foreign Assets Control, the Department of State, or the Department of Commerce), the United Nations Security Council, the European Union, or Her Majesty’s Treasury, or (b) has violated any Laws relating to economic sanctions within the last five (5) years. The Company and the Company’s Subsidiaries (in each case, with respect to the SpinCo Business) and the SpinCo Entities are and for the past five (5) years have been in possession of and in compliance with any and all licenses, registrations, and permits that may be required for their lawful conduct under economic sanctions, import, and export control Laws, including without limitation the Export Administration Regulations, 15 C.F.R. § 730 et seq. Within the past five (5) years, none of the Company, the Company’s Subsidiaries, or the SpinCo Entities has made any voluntary disclosure to any Governmental Authority relating to sanctions, import, or export control Laws; been the subject of any investigation or inquiry regarding compliance with such Laws; or been assessed any fine or penalty under such Laws.

 

Section 5.30      No Other Representations and Warranties. Except as expressly set forth in Article VI or in any Transaction Document, (a) the Company and SpinCo each acknowledges and agrees that neither Parent, Merger Sub nor any of their Affiliates, nor any of their respective Representatives has made, or is making, any express or implied representation or warranty whatsoever with respect to Parent, Merger Sub or any of its Affiliates, or any of their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects, and (b) the Company and SpinCo each further acknowledges and agrees that neither Parent nor any of its Affiliates shall be liable in respect of the accuracy or completeness of any information provided to the Company, SpinCo or any of its respective Affiliates or Representatives. Without limiting the generality of the foregoing, except as expressly set forth in Article VI or in any Transaction Document, each of the Company and SpinCo acknowledges and agrees that no representations or warranties are made with respect to any projections, forecasts, estimates or budgets with respect to Parent or any of its Subsidiaries that may have been made available to the Company, SpinCo or any of their Representatives, and expressly disclaim reliance on any other representations, warranties, statements, information or inducements, oral or written, express or implied, or as to the accuracy or completeness of any statements or other information, made to, or made available to, itself or any of its Representatives, in each case with respect to, or in connection with, the negotiation, execution or delivery of this Agreement, any instrument or other document delivered pursuant to this Agreement or the transactions contemplated by this Agreement, and notwithstanding the distribution, disclosure or other delivery to the Company, SpinCo or any of their Representatives of any document or other information with respect to any one or more of the foregoing, and waive any claims or causes of actions relating thereto, other than those for Actual Fraud. Without limiting the generality of the foregoing, it is understood that any cost estimates, financial or other projections or other predictions that may be contained or referred to in this Agreement (including the Parent Disclosure Schedule), any information, documents or other materials (including any such materials reviewed by the Company, SpinCo or any of their respective Affiliates or Representatives) or management presentations that have been or shall hereafter be provided to the Company, SpinCo or any of their respective Affiliates or Representatives are not and will not be deemed to be representations or warranties of Parent or Merger Sub, and no representation or warranty is made as to the accuracy or completeness of any of the foregoing except as expressly set forth in Article VI (including the Disclosure Schedule) of this Agreement or in any Transaction Document. In entering into this Agreement, the Company and SpinCo acknowledge and agree that they have relied solely upon their own investigation and analysis; and the Company and SpinCo acknowledge and agree, to the fullest extent permitted by Law, that Parent, Merger Sub and their Affiliates and their respective Representatives shall not have any Liability or responsibility whatsoever to the Company or SpinCo or any of their respective Representatives on any basis (including in contract or tort, under federal or state securities Laws or otherwise) based upon any information provided or made available, or statements made (or any omissions therefrom), to the Company or SpinCo or their Affiliates or any of their respective Representatives, including in respect of the specific representations and warranties set forth in Article VI of this Agreement or any Transaction Document, except as and only to the extent expressly set forth herein or therein with respect to such representations and warranties and subject to the limitations and restrictions contained herein or therein.

 

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Article VI

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Except as otherwise disclosed or identified in (a) the Parent SEC Documents filed and publicly available on the SEC’s EDGAR database at least two (2) Business Days prior to the date hereof (excluding any disclosures of factors or risks contained or references therein under the captions “Risk Factors” or “Forward-Looking Statements” to the extent they are forward-looking statements and any other similar general, predictive or cautionary statements) or (b) the corresponding section or subsection of the Parent Disclosure Schedule (it being understood that each such disclosure shall also apply to each other representation and warranty contained in this Article VI to the extent that it is reasonably apparent on the face of such disclosure that it is relevant to or applies to such representation or warranty), Parent and Merger Sub hereby represent and warrant to the Company and SpinCo as follows:

Section 6.1             Organization of Parent and Merger Sub.

(a)            Parent has been duly incorporated and is validly existing and in good standing as a Cayman Islands exempted company and has all requisite corporate power and authority to own, lease and operate its assets in the manner in which such assets are now owned, leased and operated and to conduct its business as it is now being conducted. Parent has made available to the Company true and complete copies of the Governing Documents of Parent. Parent is duly licensed or qualified and in good standing (or equivalent status as applicable) in each jurisdiction in which the assets owned or leased by it or the character of its activities require it to be so licensed or qualified or in good standing (or equivalent status as applicable), except as would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect.

(b)            Merger Sub is a corporation duly incorporated, validly existing and in good standing under the Laws of Delaware. Merger Sub is a wholly owned Subsidiary of Parent. The copies of the Governing Documents of Merger Sub which were previously furnished or made available to the Company are true and complete copies of such documents as in effect on the date of this Agreement.

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Section 6.2             Due Authorization.

(a)            Each of Parent and Merger Sub has all requisite corporate power and authority to execute and deliver this Agreement and the Transaction Documents to which it is or will be a party at the Effective Time and (subject to the receipt of the Consents described in Section 6.4, the Parent Shareholder Approval and the Merger Sub Shareholder Approval) to consummate the Transactions. The execution and delivery by each of Parent and Merger Sub of this Agreement and the Transaction Documents to which it is or will be a party at the Effective Time and the consummation by each of Parent and Merger Sub of the Transactions have been duly and validly authorized and approved by all necessary and proper corporate action on its part, and, except for the Parent Shareholder Approval and the Merger Sub Shareholder Approval, no other corporate action on the part of Parent or Merger Sub is necessary to authorize this Agreement or the Transaction Documents to which it is or will be a party at the Effective Time. Each of this Agreement and the Transaction Documents to which it is or will be a party at the Effective Time has been, or when executed and delivered will be, duly and validly executed and delivered by Parent and (assuming that this Agreement or such other applicable Transaction Documents to which each of the Company or SpinCo is or will be a party at the Effective Time constitutes a legal, valid and binding obligation of each of the Company and SpinCo (as applicable)) constitutes or will constitute a legal, valid and binding obligation of Parent and Merger Sub (as applicable), enforceable against Parent and Merger Sub (as applicable) in accordance with its terms, subject to the Remedies Exception.

(b)            Assuming that a quorum (as determined pursuant to Parent’s Governing Documents) is present:

(i)            each of those Transaction Proposals identified in clauses (A), (B) and (C) of Section 7.4(e)(ii) shall require approval by a special resolution under the CICA (being the affirmative vote of the holders of at least two-thirds of the ordinary shares who, being present and entitled to vote at the Parent Shareholders Meeting, vote at the Parent Shareholders Meeting);

(ii)           each of those Transaction Proposals identified in clauses (D), (E), (F) and (I), of Section 7.4(e)(ii), in each case, shall require approval by an ordinary resolution (being the affirmative vote of the holders of a majority of the ordinary shares who, being present and entitled to vote at the Parent Shareholders Meeting, vote at the Parent Shareholders Meeting); and

(iii)          each of those Transaction Proposals identified in clauses (G) and (H), of Section 7.4(e)(ii), in each case, shall require approval by the number of holders of Parent Common Stock required to approve such Transaction Proposals under applicable Law and the Governing Documents of Parent.

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(c)            The foregoing votes are the only votes of any of Parent’s share capital necessary in connection with entry into this Agreement by Parent and Merger Sub and the consummation of the Transactions, including the Closing.

(d)            At a meeting duly called and held, the Parent Board has unanimously approved the Transactions as a Business Combination.

Section 6.3             Capital Stock and Other Matters.

(a)            As of the date of this Agreement, the authorized share capital of Parent is 555,000,000 shares, divided into (i) 500,000,000 shares of Parent Class A Common Stock, 23,000,000 of which are issued and outstanding as of the date of this Agreement, (ii) 50,000,000 shares of Parent Class B Common Stock, of which 5,750,000 shares are issued and outstanding as of the date of this Agreement, and (iii) 5,000,000 preferred shares of par value $0.0001 each, of which no shares are issued and outstanding as of the date of this Agreement ((i), (ii) and (iii) collectively, the “Parent Securities”). The foregoing represents all of the issued and outstanding Parent Securities as of the date of this Agreement. All issued and outstanding Parent Securities (i) have been duly authorized and validly issued and are fully paid and non-assessable; (ii) have been offered, sold and issued in compliance with applicable Law, including federal and state securities Laws, and all requirements set forth in (1) Parent’s Governing Documents, and (2) any other applicable Contracts governing the issuance of such securities; and (iii) are not subject to, nor have they been issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, Parent’s Governing Documents or any Contract to which Parent is a party or otherwise bound.

(b)            Subject to the terms of conditions of the Warrant Agreement, the Domesticated Parent Warrants will be exercisable after giving effect to the Merger for one share of Domesticated Parent Common Stock at an exercise price of eleven Dollars fifty cents ($11.50) per share. As of the date of this Agreement, 7,666,667 Parent Common Warrants and 8,233,333 Parent Private Placement Warrants are issued and outstanding. The Parent Warrants are not exercisable until the later of (x) August 12, 2022 and (y) thirty (30) days after the Closing. All outstanding Parent Warrants (i) have been duly authorized and validly issued and constitute valid and binding obligations of Parent, enforceable against Parent in accordance with their terms, subject to the Remedies Exemption; (ii) have been offered, sold and issued in compliance with applicable Law, including federal and state securities Laws, and all requirements set forth in (1) Parent’s Governing Documents and (2) any other applicable Contracts governing the issuance of such securities; and (iii) are not subject to, nor have they been issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, Parent’s Governing Documents or any Contract to which Parent is a party or otherwise bound. Except for the A&R Forward Purchase Agreement, Parent’s Governing Documents and this Agreement, there are no outstanding Contracts of Parent to repurchase, redeem or otherwise acquire any Parent Securities.

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(c)            Except as set forth in this Section 6.3 or as contemplated by this Agreement or the other documents contemplated hereby, and other than in connection with the PIPE Investment and the Redemption Backstop, Parent has not granted any outstanding options, stock appreciation rights, warrants, rights or other securities convertible into or exchangeable or exercisable for Parent Securities, or any other commitments or agreements providing for the issuance of additional shares, the sale of treasury shares, for the repurchase or redemption of any Parent Securities or the value of which is determined by reference to the Parent Securities, and there are no Contracts of any kind which may obligate Parent to issue, purchase, redeem or otherwise acquire any of its Parent Securities.

(d)            Subject to obtaining the Parent Shareholder Approval, the shares of Domesticated Parent Stock comprising the Merger Consideration, when issued in accordance with the terms hereof, shall be duly authorized and validly issued, fully paid and non-assessable and issued in compliance with all applicable state and federal securities Laws and not subject to, and not issued in violation of, any Lien, purchase, option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of applicable Law, Parent’s Governing Documents, or any Contract to which Parent is a party or otherwise bound.

(e)            On or prior to the date of this Agreement, Parent has entered into the A&R Forward Purchase Agreement with the Sponsor, pursuant to which, and on the terms and subject to the conditions of which, Sponsor has agreed, subject to the terms and conditions therein and in connection with the Transactions, to make the PIPE Investment and the Redemption Backstop.

(f)            Parent has no Subsidiaries apart from Merger Sub, and does not own, directly or indirectly, any Interest or other interest or investment (whether equity or debt) in any Person, whether incorporated or unincorporated (each, an “Investment”). Parent is not party to any Contract that obligates Parent to invest money in, loan money to or make any capital contribution to any other Person.

Section 6.4             Governmental Consents. No consent, waiver, approval or authorization of, or designation, declaration or filing with, or notification to, any Governmental Authority or other Person is required on the part of Parent or Merger Sub with respect to Parent’s or Merger Sub’s execution or delivery of this Agreement or the consummation of the Transactions, except for (i) applicable requirements of the HSR Act, (ii) in connection with the Domestication, the applicable requirements and required approval of the Cayman Registrar, and (iii) as otherwise disclosed on Section 6.4 of the Parent Disclosure Schedule.

Section 6.5             No Conflict. Subject to the receipt of the Consents described in Section 6.4 and the Parent Shareholder Approval, the execution and delivery by each of Parent and Merger Sub of this Agreement and the other Transaction Documents to which it is or will be a party at the Effective Time and the consummation by Parent and Merger Sub of the Transactions (for the avoidance of doubt, including performance of the Transaction Documents following the Closing by Parent and the Parent Subsidiaries, other than the SpinCo Entities) do not and will not as of the Effective Time: (a) violate any provision of, or result in the material breach of, any Law applicable to Parent and the Parent Subsidiaries or by which any of its assets or properties is bound; (b) with or without lapse of time or the giving of notice or both, require a consent or approval under, conflict with, result in a violation or breach of, or constitute a default under, result in the acceleration of, or create in any party the right to accelerate, terminate or cancel any Parent Material Contract; or (c) violate any provision of the Governing Documents of Parent, or Merger Sub, except, in the case of clauses (a) and (b), as would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect.

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Section 6.6             Internal Controls; Listing; Financial Statements.

(a)            Except as not required in reliance on exemptions from various reporting requirements by virtue of Parent’s status as an “emerging growth company” within the meaning of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), Parent has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act). Such disclosure controls and procedures are designed to ensure that material information relating to Parent, including its consolidated Subsidiaries, if any, is made known to Parent’s principal executive officer and its principal financial officer by others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared. To Parent’s Knowledge, such disclosure controls and procedures are effective in timely alerting Parent’s principal executive officer and principal financial officer to material information required to be included in Parent’s periodic reports required under the Exchange Act. Parent has established and maintained a system of internal controls over financial reporting (as defined in Rule 13a-15 under the Exchange Act) that, to Parent’s Knowledge, are sufficient to provide reasonable assurance regarding the reliability of Parent’s financial reporting and the preparation of Parent’s financial statements for external purposes in accordance with GAAP and there have been no significant deficiencies or material weakness in Parent’s internal control over financial reporting (whether or not remediated) and no change in Parent’s control over financial reporting that has materially affected, or is reasonably likely to materially affect Parent’s internal control over financial reporting.

(b)            As of the date hereof, each director and executive officer of Parent has filed with the SEC on a timely basis all statements required by Section 16(a) of the Exchange Act and the rules and regulations promulgated thereunder. Parent has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.

(c)            The Parent Class A Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is listed for trading on NASDAQ. There is no Action pending or, to the Knowledge of Parent, threatened against Parent by NASDAQ or the SEC with respect to any intention by such entity to deregister the Parent Class A Common Stock or prohibit or terminate the listing of Parent Class A Common Stock on NASDAQ.

(d)            The financial statements and notes contained or incorporated by reference in the Parent SEC Filings fairly present in all material respects the financial condition and the results of operations, changes in stockholders’ equity and cash flows of Parent as at the respective dates of, and for the periods referred to, in such financial statements, all in accordance with: (i) GAAP; and (ii) Regulation S-X or Regulation S-K, as applicable, subject, in the case of interim financial statements, to normal recurring year-end adjustments (the effect of which will not, individually or in the aggregate, be material) and the omission of notes to the extent permitted by Regulation S-X or Regulation S-K, as applicable. Parent has no off-balance sheet arrangements that are not disclosed in the Parent SEC Filings. No financial statements other than those of Parent are required by GAAP to be included in the consolidated financial statements of Parent.

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(e)            There are no outstanding loans or other extensions of credit made by Parent to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of Parent. Parent has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.

(f)            Neither Parent (including any employee thereof) nor Parent’s independent auditors has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by Parent, (ii) any Actual Fraud, whether or not material, that involves Parent’s management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by Parent or (iii) any claim or allegation regarding any of the foregoing.

Section 6.7             No Undisclosed Liabilities. Except for any fees and expenses payable by Parent or Merger Sub as a result of or in connection with the consummation of the Transactions, there is no liability, debt or obligation of or claim or judgment against Parent or Merger Sub (whether direct or indirect, absolute or contingent, accrued or unaccrued, known or unknown, liquidated or unliquidated, or due or to become due), except for liabilities and obligations (i) reflected or reserved for on the financial statements or disclosed in the notes thereto included in Parent SEC Filings, (ii) that have arisen since the date of the most recent balance sheet included in the Parent SEC Filings in the ordinary course of business of Parent and Merger Sub, or (iii) which would not be, or would not reasonably be expected to be, material to Parent.

Section 6.8             Litigation and Proceedings. As of the date of this Agreement, there are no pending or, to the Knowledge of Parent, threatened Actions against Parent or Merger Sub, their respective properties or assets, or, to the Knowledge of Parent, any of their respective directors, managers, officers or employees (in their capacity as such). As of the date of this Agreement, there are no investigations or other inquiries pending or, to the Knowledge of Parent, threatened by any Governmental Authority, against Parent or Merger Sub, their respective properties or assets, or, to the Knowledge of Parent, any of their respective directors, managers, officers or employees (in their capacity as such). As of the date of this Agreement, there is no outstanding Governmental Order imposed upon Parent or Merger Sub, nor are any assets of Parent or Merger Sub’s respective businesses bound or subject to any Governmental Order the violation of which would, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect. From their respective dates of inception to the date of this Agreement, Parent and Merger Sub have not received any written notice of or been charged with the violation of any Laws, except where such violation has not been, individually or in the aggregate, that would reasonably be expected to have a Parent Material Adverse Effect.

Section 6.9             Tax Matters.

(a)            Except as would not, individually or in the aggregate, have a Parent Material Adverse Effect:

(i)            (A) All Tax Returns required to be filed by Parent or Merger Sub have been timely filed (taking into account applicable extensions), (B) all such Tax Returns are true, correct and complete, and (C) all Taxes, whether or not shown as due on such Tax Returns, have been paid, in the case of each of clauses (A) through (C), except to the extent adequate reserves therefor in accordance with GAAP have been provided on the financial statements of Parent contained in the Parent SEC Documents;

 

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(ii)           (A) No Governmental Authority has asserted any written claim, assessment or deficiency for Taxes against Parent or any Parent Subsidiary (and, to the Knowledge of Parent, no such claim, assessment or deficiency has been threatened or proposed in writing), except for deficiencies which have been satisfied by payment, settled or withdrawn and (B) no claim, audit or other proceeding by any Governmental Authority is pending or threatened in writing with respect to any Taxes of Parent or Merger Sub;

(iii)          Neither Parent nor any Parent Subsidiary has any Liability for Taxes of any other Person (other than Parent or any Parent Subsidiary) under Treasury Regulations section 1.1502-6 (or any similar provision of state, local or non-U.S. Law), as a transferee or successor or by contract or operation of Law or otherwise;

(iv)          Within the past two years, neither Parent nor any Parent Subsidiary has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code;

(v)           Neither Parent nor any Parent Subsidiary has participated in, or is currently participating in, a “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(2); and

(vi)          There are no Liens for Taxes (other than Permitted Liens) upon the assets of Parent or Merger Sub.

(b)            Neither Parent nor Merger Sub has taken or agreed to take any action or knows of any fact, agreement, plan or other circumstance that could reasonably be expected to prevent or impede (i) the Domestication from qualifying as a “reorganization” within the meaning of Section 368(a)(1)(F), (ii) the Tax-Free Status, (iii) the Company from receiving the Company Tax Opinions or (iv) Parent from receiving the Parent Tax Opinions.

(c)            Merger Sub was formed solely for the purpose of engaging in the Merger, and does not have any assets and has not engaged in any business activities or conducted any operations other than in connection with the Merger.

(d)            The representations and warranties set forth in this Section 6.9 constitute the sole and exclusive representations and warranties of Parent regarding Tax matters.

Section 6.10             Absence of Changes. Since the Balance Sheet Date until the date of this Agreement, (a) there has not been any event or occurrence that has had, or would not reasonably be expected to have, individually or in the aggregate a Parent Material Adverse Effect and (b) except as set forth in Section 6.10 of the Parent Disclosure Schedule, Parent and Merger Sub have, in all material respects, conducted their business and operated their properties in the ordinary course of business consistent with past practice.

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Section 6.11             Brokers’ Fees. No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other similar commission, for which Parent, Merger Sub or the SpinCo Entities would be liable in connection with the transactions contemplated by this Agreement based upon arrangements made by Parent or any Parent Subsidiary.

Section 6.12             Proxy Statement; Registration Statements. None of the information regarding Parent, Merger Sub or the Transactions to be provided by Parent specifically for inclusion in, or incorporation by reference into, the Proxy Statement, the Parent Registration Statement, the SpinCo Registration Statement or the Distribution Documents will, in the case of the Proxy Statement and the Distribution Documents or any amendment or supplement thereto, at the time of the first mailing of the Proxy Statement and the Distribution Documents and of any amendment or supplement thereto, or, in the case of the Parent Registration Statement and the SpinCo Registration Statement, at the time such registration statement becomes effective, on the date of the Parent Shareholders Meeting, at the Distribution Time and at the Effective Time, contain an untrue or false statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not false or misleading. The Proxy Statement and the Parent Registration Statement will comply as to form in all material respects with the provisions of the Securities Act and the Exchange Act, as the case may be, except that no representation is made by Parent with respect to information provided by the Company or SpinCo specifically for inclusion in, or incorporation by reference into, the Proxy Statement or the Parent Registration Statement.

Section 6.13             SEC Filings. Parent has timely filed or furnished all statements, prospectuses, registration statements, forms, reports and documents required to be filed by it with the SEC since August 12, 2021, pursuant to the Exchange Act or the Securities Act (collectively, as they have been amended since the time of their filing through the date hereof, the “Parent SEC Filings”). Each of the Parent SEC Filings, as of the respective date of its filing (or if amended or superseded by a filing prior to the date of this Agreement or the Closing Date, then on the date of such filing), complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act, the Sarbanes-Oxley Act and any rules and regulations promulgated thereunder applicable to the Parent SEC Filings. As of the respective date of its filing (or if amended or superseded by a filing prior to the date of this Agreement or the Closing Date, then on the date of such filing), the Parent SEC Filings did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. As of the date hereof, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to the Parent SEC Filings. To the Knowledge of Parent, none of the Parent SEC Filings filed on or prior to the date hereof is subject to ongoing SEC review or investigation as of the date hereof.

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Section 6.14             Trust Account. As of the date of this Agreement, Parent has at least $235,750,000 in the Trust Account (including an aggregate of approximately $8,050,000 of deferred underwriting commissions and other fees being held in the Trust Account), such monies invested in United States government securities or money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act pursuant to the Investment Management Trust Agreement, dated as of August 9, 2021, between Parent and Continental Stock Transfer & Trust Company, as trustee (the “Trustee”) (the “Trust Agreement”). There are no separate Contracts, side letters or other arrangements or understandings (whether written or unwritten, express or implied) that would cause the description of the Trust Agreement in the Parent SEC Filings to be inaccurate or that would entitle any Person (other than the Parent Shareholders holding shares of Parent Common Stock sold in Parent’s initial public offering who shall have elected to redeem their shares of Parent Common Stock pursuant to Parent’s Governing Documents and the underwriters of Parent’s initial public offering with respect to deferred underwriting commissions) to any portion of the proceeds in the Trust Account. Prior to the Closing, none of the funds held in the Trust Account may be released other than (i) to pay Taxes and (ii) payments with respect to all Parent Share Redemptions. There are no claims or proceedings pending or, to the Knowledge of Parent, threatened with respect to the Trust Account. Parent has performed all material obligations required to be performed by it to date under, and is not in material default, breach or delinquent in performance or any other respect (claimed or actual) in connection with, the Trust Agreement, and no event has occurred which, with due notice or lapse of time or both, would constitute such a default or breach thereunder. As of the Effective Time, the obligations of Parent to dissolve or liquidate pursuant to Parent’s Governing Documents shall terminate, and as of the Effective Time, Parent shall have no obligation whatsoever pursuant to Parent’s Governing Documents to dissolve and liquidate the assets of Parent by reason of the consummation of the Transactions. To Parent’s Knowledge, as of the date hereof, following the Effective Time, no shareholder of Parent shall be entitled to receive any amount from the Trust Account except to the extent such shareholder of Parent is exercising a Parent Share Redemption. As of the date hereof, assuming the accuracy of the representations and warranties of the Company contained herein and the compliance by the Company and SpinCo with its obligations hereunder and under the other Transaction Documents, neither Parent or Merger Sub have any reason to believe that any of the conditions to the use of funds in the Trust Account will not be satisfied or funds available in the Trust Account will not be available to Parent and Merger Sub on the Closing Date.

Section 6.15             Investment Company Act; JOBS Act. Parent is not an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company”, in each case within the meaning of the Investment Company Act. Parent constitutes an “emerging growth company” within the meaning of the JOBS Act.

Section 6.16             Indebtedness. Section 6.16 of the Parent Disclosure Schedule sets forth the principal amount of all of the outstanding Indebtedness, as of the date hereof, of Parent and Merger Sub.

Section 6.17             Stock Market Quotation. As of the date hereof, the Parent Class A Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is listed for trading on NASDAQ under the symbol “AHPA”. As of the date hereof, the Public Parent Warrants are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on NASDAQ under the symbol “AHPAW.” As of the date hereof, the Parent Units are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on NASDAQ under the symbol “AHPAU.” There is no Action or proceeding pending or, to the Knowledge of Parent, threatened against Parent by NASDAQ or the SEC with respect to any intention by such entity to deregister the Parent Class A Common Stock or Parent Warrants or terminate the listing of Parent Class A Common Stock or Parent Warrants on NASDAQ. None of Parent, Merger Sub or their respective Affiliates has taken any action in an attempt to terminate the registration of the Parent Class A Common Stock or Parent Warrants under the Exchange Act except as contemplated by this Agreement.

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Section 6.18            Business Activities.

(a)            Since formation, neither Parent nor Merger Sub have conducted any business activities other than activities related to Parent’s initial public offering or directed toward the accomplishment of a Business Combination. Except as set forth in Parent’s Governing Documents or as otherwise contemplated by this Agreement or the Transaction Documents and the Transactions and thereby, there is no agreement, commitment, or Governmental Order binding upon Parent or Merger Sub or to which Parent or Merger Sub is a party which has or would reasonably be expected to have the effect of prohibiting or impairing any business practice of Parent or Merger Sub or any acquisition of property by Parent or Merger Sub or the conduct of business by Parent or Merger Sub as currently conducted or as contemplated to be conducted as of the Closing, other than such effects, individually or in the aggregate, which have not been and would not reasonably be expected to have a Parent Material Adverse Effect.

(b)            Except for Merger Sub and the Transactions, Parent does not own or have a right to acquire, directly or indirectly, any Investment in any corporation, partnership, joint venture, business, trust or other entity. Except for this Agreement and the Transaction Documents and the Transactions and thereby, Parent has no material interests, rights, obligations or Liabilities with respect to, and is not party to, bound by or has its assets or property subject to, in each case whether directly or indirectly, any Contract or transaction which is, or would reasonably be interpreted as constituting, a Business Combination. Except for the Transactions, Merger Sub does not own or have a right to acquire, directly or indirectly, any Investment in any corporation, partnership, joint venture, business, trust or other entity.

(c)            Merger Sub was formed solely for the purpose of effecting the Transactions and has not engaged in any business activities or conducted any operations other than incident to the Transactions and has no, and at all times prior to the Effective Time, except as expressly contemplated by this Agreement, the Transaction Documents and the other documents and Transactions, will have no, assets, liabilities or obligations of any kind or nature whatsoever other than those incident to its formation.

(d)            As of the date hereof and except for this Agreement, the Transaction Documents and the other documents and Transactions (other than with respect to expenses and fees incurred in connection therewith and the Business Combination), neither Parent nor Merger Sub are party to any Contract with any other Person that would require payments by Parent or any of its Subsidiaries after the date hereof in excess of $150,000 in the aggregate with respect to any individual Contract, other than Working Capital Loans. Section 6.18(d) of the Parent Disclosure Schedule sets forth a true and complete list of all outstanding Working Capital Loans as of the date hereof.

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Section 6.19             Section 280G. Neither the execution and delivery of this Agreement nor the consummation of the Transactions contemplated hereby or by the Transaction Documents shall, either alone or in connection with any other event(s), result in the payment of any amount to any current or former employee, officer, director or independent contractor of Parent or other Person that could, individually or in the aggregate, or in combination with any other such payment, constitute an “excess parachute payment” as defined in Section 280G(b)(1) of the Code.

Section 6.20             No Other Representations and Warranties. Except as expressly set forth in Article IV and Article V or in any Transaction Document, (a) each of Parent and Merger Sub acknowledges and agrees that neither the Company nor any of its Affiliates (including the SpinCo Entities), nor any of their respective Representatives has made, or is making, any representation or warranty whatsoever to with respect to the Company or any of its Affiliates (including the SpinCo Entities), or any of their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects, and (b) each of Parent and Merger Sub further acknowledges and agrees that neither the Company nor any of its Affiliates shall be liable in respect of the accuracy or completeness of any information provided to Parent, Merger Sub or any of its respective Affiliates or Representatives. Without limiting the generality of the foregoing, except as expressly set forth in Article IV or Article V or in any Transaction Document, each of Parent and Merger Sub acknowledges and agrees that no representations or warranties are made with respect to any projections, forecasts, estimates or budgets with respect to the Company, SpinCo, any of the SpinCo Entities or the SpinCo Business that may have been made available, in the SpinCo Datasite or otherwise, to Parent, Merger Sub or any of their Representatives, and expressly disclaim reliance on any other representations, warranties, statements, information or inducements, oral or written, express or implied, or as to the accuracy or completeness of any statements or other information, made to, or made available to, itself or any of its Representatives, in each case with respect to, or in connection with, the negotiation, execution or delivery of this Agreement, any instrument or other document delivered pursuant to this Agreement or the transactions contemplated by this Agreement, and notwithstanding the distribution, disclosure or other delivery to Parent, Merger Sub or any of their Representatives of any document or other information with respect to any one or more of the foregoing, and waive any claims or causes of actions relating thereto, other than those for Actual Fraud. Without limiting the generality of the foregoing, it is understood that any cost estimates, financial or other projections or other predictions that may be contained or referred to in this Agreement (including the SpinCo Disclosure Schedule), any information, documents or other materials (including any such materials contained in the SpinCo Datasite or otherwise reviewed by Parent, Merger Sub or any of their respective Affiliates or Representatives) or management presentations that have been or shall hereafter be provided to Parent, Merger Sub or any of their respective Affiliates or Representatives are not and will not be deemed to be representations or warranties of the Company or SpinCo, and no representation or warranty is made as to the accuracy or completeness of any of the foregoing except as expressly set forth in Article IV or Article V of this Agreement or in any Transaction Document. In entering into this Agreement, Parent and Merger Sub acknowledge and agree that they have relied solely upon their own investigation and analysis; and Parent and Merger Sub acknowledge and agree, to the fullest extent permitted by Law, that the Company, the SpinCo Entities and their Affiliates and their respective Representatives shall not have any Liability or responsibility whatsoever to Parent or its Subsidiaries or any of their respective Representatives on any basis (including in contract or tort, under federal or state securities Laws or otherwise) based upon any information provided or made available, or statements made (or any omissions therefrom), to Parent or its Subsidiaries or any of their respective Representatives, including in respect of the specific representations and warranties set forth in Article IV or Article V of this Agreement or any Transaction Document, except as and only to the extent expressly set forth herein or therein with respect to such representations and warranties and subject to the limitations and restrictions contained herein or therein.

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Article VII

COVENANTS

Section 7.1             Conduct of Business by Parent and Merger Sub Pending the Merger. From the date hereof and prior to the Effective Time (or the earlier termination of this Agreement) (the “Interim Period”), except as (i) required or otherwise contemplated by this Agreement (including as set forth in Section 7.1 of the Parent Disclosure Schedule), the Transaction Documents, the PIPE Investment, the Redemption Backstop or in connection with the Domestication, (ii) as consented to by the Company in writing (which consent shall not be unreasonably withheld, conditioned, delayed or denied) or (iii) as required by applicable Law, Parent shall, and shall cause its Subsidiaries, including Merger Sub, as applicable, to, conduct its operations in the ordinary course of business in all material respects. During the Interim Period, Parent shall, and shall cause its Subsidiaries, including Merger Sub, to comply with, and continue performing under, as applicable, the Governing Documents of Parent, the Trust Agreement and all other agreements or Contracts to which Parent or its Subsidiaries may be a party. Without limiting the generality of the foregoing, during the Interim Period, except as (i) required or otherwise contemplated by this Agreement (including as set forth in Section 7.1 of the Parent Disclosure Schedule), the Transaction Documents, the PIPE Investment or in connection with the Domestication, (ii) as consented to by the Company in writing (which consent shall not be unreasonably withheld, conditioned, delayed or denied, other than with respect to subsection (b), with respect to which consent may be withheld at the Company’s sole discretion) or (iii) as required by applicable Law, Parent shall not, and shall cause its Subsidiaries, including Merger Sub, as applicable, not to:

(a)            seek any approval from the Parent Shareholders to amend, modify, restate, waive, rescind or otherwise change the Trust Agreement or the Governing Documents of Parent or Merger Sub (other than as contemplated by the Transaction Proposals);

(b)            (i) make or declare any dividend or distribution to the Parent Shareholders or make any other distributions in respect of any of Parent’s equity interests or Merger Sub capital stock, share capital or equity interests, (ii) split, combine, reclassify or otherwise amend any terms of any shares or series of Parent’s equity interests or Merger Sub capital stock or equity interests, or (iii) 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 Parent or Merger Sub, other than a redemption of shares of Parent Class A Common Stock made as part of the Parent Share Redemptions;

(c)            make, change or revoke any material Tax election or (ii) settle or compromise any material Tax liability;

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(d)            enter into, renew or amend in any material respect, any transaction or Contract with an Affiliate of Parent or Merger Sub (including, for the avoidance of doubt, (i) the Sponsor and (ii) any Person in which the Sponsor has a direct or indirect legal, contractual or beneficial ownership interest of 5% or greater);

(e)            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 the Company or any of the Company’s Subsidiaries or guaranty any debt securities of another Person, other than any indebtedness (x) for borrowed money or guarantee from its Affiliates and stockholders in order to meet its reasonable capital requirements, with any such loans to be made only as reasonably required by the operation of Parent in due course on a non-interest basis and otherwise on arm’s-length terms and conditions and repayable at the Closing, and in any event in an aggregate amount not to exceed $100,000 (or, in the case of Working Capital Loans, up to $150,000), or (y) incurred between Parent and Merger Sub;

(f)            (i) issue any Parent Securities or securities exercisable for or convertible into Parent Securities, other than issuances contemplated by the Transactions, (ii) grant any options, warrants or other equity-based awards with respect to Parent Securities not outstanding on the date hereof or (iii) amend, modify or waive any of the material terms or rights set forth in any Parent Warrant or the Warrant Agreement, including any amendment, modification or reduction of the warrant price set forth therein; or

(g)            enter into any agreement to do any action prohibited under this Section 7.1.

Section 7.2             Conduct of SpinCo Business Pending the Merger. During the Interim Period (solely with respect to the SpinCo Entities or the SpinCo Business), except as (i) required or otherwise contemplated by this Agreement (including as set forth in Section 7.2 of the SpinCo Disclosure Schedule), the Internal Reorganization or the Transaction Documents, (ii) as consented to by Parent in writing (which consent shall not be unreasonably withheld, conditioned or delayed) or (iii) as required by applicable Law or any COVID-19 Measures, the Company and the SpinCo Entities shall, and shall cause and ensure that their respective Subsidiaries (including the SpinCo Entities), to (x) conduct the SpinCo Business in the ordinary course of business in all material respects, (y) use commercially reasonable efforts to manage the SpinCo Business’ working capital and maintain the books and records related to the SpinCo Business consistent with past practice and (z) use commercially reasonable efforts to maintain their respective relations and goodwill with all material suppliers, material customers and other material commercial counterparties and Governmental Authorities (in each case, as related to the SpinCo Business). Without limiting the generality of Section 7.2(a), during the Interim Period (solely with respect to the SpinCo Entities or the SpinCo Business), except as (A) required or contemplated by this Agreement (including as set forth in Section 7.2 of the SpinCo Disclosure Schedule), the Internal Reorganization or the Transaction Documents, (B) as consented to by Parent in writing (which consent shall not be unreasonably withheld, conditioned or delayed, other than with respect to subsection (b) or (c), with respect to which consent may be withheld at the Company’s sole discretion) or (C) as required by applicable Law or any COVID-19 Measures, the Company and SpinCo shall not, and each shall cause its respective Subsidiaries not to (in each case solely with respect to the SpinCo Entities or the SpinCo Business):

(a)            amend, modify, restate, waive, rescind or otherwise change the Governing Documents of any of the SpinCo Entities, other than an amendment to the certificate of incorporation of SpinCo to increase the number of authorized or outstanding shares of SpinCo Common Stock in connection with the Distribution in accordance with this Agreement and the Transaction Documents;

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(b)            other than as required for the Distribution, (i) declare, set aside or pay any dividends on or make other distributions in respect of any of the Interests of any of the SpinCo Entities (whether in cash, securities or property), except for the declaration and payment of cash dividends or distributions paid on or with respect to a class of Interests of any SpinCo Entity that is wholly owned directly or indirectly by SpinCo, (ii) split, combine, subdivide, reduce, or reclassify any of the Interests of any of the SpinCo Entities or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, Interests of the SpinCo Entities or (iii) redeem, repurchase or otherwise acquire, or permit any Subsidiary to redeem, repurchase or otherwise acquire, any Interests (including any securities convertible or exchangeable into such Interests) (except for the acquisition by the Company or any of its Subsidiaries of any shares of capital stock, membership interests or other equity interests of the Company or its Subsidiaries in connection with the forfeiture of any Company Equity Awards, in each case, in accordance with their respective terms as in effect as of the date hereof);

(c)            other than as contemplated by the Distribution, issue, sell, pledge, dispose of, grant, transfer or encumber, any shares of capital stock of, any other Interests in, or any SpinCo Voting Debt of, any of the SpinCo Entities of any class, or securities convertible into, or exchangeable or exercisable for, any shares of such capital stock or other Interests in any of the SpinCo Entities, or any options, warrants, stock units, or other rights of any kind to acquire any shares of capital stock or other Interests or such convertible or exchangeable securities, or any other ownership interest (including any such interest represented by Contract right), or any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock based performance rights, in each case, of the SpinCo Entities, other than (i) the issuance by a SpinCo Entity that is a wholly owned Subsidiary of SpinCo of its capital stock or other Interests to SpinCo or another wholly owned Subsidiary of SpinCo or (ii) the issuance of capital stock or other Interests upon the exercise, vesting or settlement of Company Equity Awards outstanding as of the date hereof and, in each case, in accordance with their respective terms as in effect as of the date hereof;

(d)            sell, assign, transfer, convey, lease, license, abandon, mortgage, pledge or permit any Lien on (other than a Permitted Lien) or otherwise dispose of any SpinCo Assets (excluding Intellectual Property, which is the subject of Section 7.2(e) below);

(e)            (i) purchase, sell, license, sublicense, lease, pledge, covenant not to assert, assign, transfer, abandon, cancel, let lapse or expire, or otherwise dispose, transfer or grant any other rights in or with respect to any Intellectual Property (other than with respect to (A) immaterial or obsolete SpinCo Owned Intellectual Property or (B) the grant of non-exclusive licenses of SpinCo Owned Intellectual Property in the ordinary course of business consistent with past practice); or (ii) disclose any material Trade Secrets of the SpinCo Business to any other Person (other than in the ordinary course of business consistent with past practice to a Person bound by adequate and enforceable use restrictions and confidentiality obligations with respect to such Trade Secrets);

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(f)            receive, collect, use, store, process, share, safeguard, secure (technically, physically or administratively), dispose of, destroy, disclose, or transfer (including cross-border) any Personal Information (or fail to do any of the foregoing, as applicable) in material violation of any Privacy Requirements;

(g)            merge, combine or consolidate (pursuant to a plan of merger or otherwise) any of the SpinCo Entities with any Person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of any of the SpinCo Entities;

(h)            acquire (including by merger, consolidation, or acquisition of shares or assets), lease or license, (i) any interest in any Person or (ii) any assets of any Person that would be an asset of the SpinCo Entities at the Effective Time, other than, in the case of clause (ii), (A) in the ordinary course of business with respect to assets having a value not exceeding $2,000,000, individually, or $4,000,000, in the aggregate, the purchase price for which will be paid by the Company or any of its Subsidiaries prior to the Distribution Date;

(i)            repurchase, repay, prepay, refinance or incur any indebtedness for borrowed money, issue any debt securities, engage in any securitization transactions or similar arrangements or assume, guarantee or endorse, or otherwise as an accommodation become responsible for (whether directly, contingently or otherwise), the obligations of any Person for borrowed money other than in the ordinary course of business consistent with past practice and in an aggregate amount not to exceed $500,000;

(j)            make any material loans, material capital contributions or material investments in, or advances of money to, in each case, in excess of $2,000,000 individually or $4,000,000 in the aggregate, any Person (other than the SpinCo Entities), in each case, except for (i) advances to employees or officers of any SpinCo Entity for expenses incurred in the ordinary course of the SpinCo Business consistent with past practice and in accordance with the Company’s and its Subsidiaries’ policies in respect thereof or (ii) extended payment terms for customers in the ordinary course of the SpinCo Business consistent with past practice;

(k)            (A) amend or modify in any material respect, terminate (excluding any expiration in accordance with its terms), or waive any material right, benefit or remedy under, any SpinCo Material Contract or (B) enter into any Contract that if entered into prior to the date hereof would be required to be listed on Section 5.7 or Section 5.15(a) of the SpinCo Disclosure Schedule;

(l)             Except as contemplated by the Transaction Documents, as required by applicable Law or as required by any existing Company Benefit Plan, or in the ordinary course of business consistent with past practice, (i) adopt, enter into, amend or alter in any respect or terminate any Company Benefit Plan in respect of any SpinCo Service Provider (other than the grant of equity awards in the ordinary course of business consistent with past practice), or any SpinCo Benefit Plan, (ii) grant or agree to grant any material increase in the wages, salary, bonus or other compensation, remuneration or benefits of any SpinCo Service Provider, or that would result in any material Liability to any SpinCo Entity, (iii) grant or provide any change-in-control, severance, termination, retention or similar payments or benefits to any SpinCo Service Provider, or that would result in any material Liability to any SpinCo Entity, (iv) hire or engage, or make an offer to hire or engage, any officer, employee, service provider or individual independent contractor of any SpinCo Entity whose annual base pay exceeds $250,000, or (v) terminate (without cause) the employment of any SpinCo Employee or engagement of any SpinCo Independent Contractor whose annual base pay or retainer exceeds $250,000;

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(m)           except as required or permitted by GAAP, make any material change to any financial accounting principles, methods or practices of any SpinCo Entity or with respect to the SpinCo Business;

(n)            waive, release, settle, compromise or otherwise resolve any Action, litigation or other proceedings, except where such waivers, releases, settlements or compromises involve only the payment of monetary damages in an amount less than $375,000 in the aggregate;

(o)            (i) make, change or revoke any material Tax election in respect of the SpinCo Business that would bind any SpinCo Entity for periods following the Effective Time (other than an election reasonably required in connection with the Separation) or (ii) settle or compromise any material Tax liability for which a SpinCo Entity would be responsible under any Transaction Document;

(p)            make or commit to make any capital expenditures, on an annualized basis, in the aggregate, in excess of $2,000,000, in the aggregate;

(q)            enter into any collective bargaining agreement or other similar Contract with a labor union, works’ council, employee representative body or labor organization that would constitute a SpinCo CBA or in respect of which Parent or its Subsidiaries will have any Liability or obligations following the Effective Time, or amend or modify any SpinCo CBA;

(r)            disclose or agree to disclose to any Person (other than Parent or any of its representatives) any material Trade Secret or any other material confidential or proprietary information, know-how or process of the Company or any of its Subsidiaries, in each case other than in the ordinary course of business consistent with past practice and pursuant to customary contractual obligations or fiduciary or professional duty to maintain the confidentiality thereof;

(s)            terminate without replacement or fail to use reasonable efforts to maintain any license or permit that is material to the conduct of the business of the Company and its Subsidiaries, taken as a whole;

(t)            waive the restrictive covenant obligations of any current officer of the Company or any of the SpinCo Entities;

(u)            (i) limit the right of the Company or any of the SpinCo Entities 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 or (ii) grant any exclusive or similar rights to any Person, in each case, except where such limitation or grant does not, and would not be reasonably likely to, individually or in the aggregate, materially and adversely affect, or materially disrupt, the ordinary course operation of the businesses of the Company or any of the SpinCo Entities, taken as a whole;

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(v)            terminate without replacement or amend in a manner materially detrimental to the Company and its Subsidiaries, taken as a whole, any insurance policy insuring the business of the Company or any of the SpinCo Entities; or

(w)           authorize or enter into any Contract to do any of the foregoing or otherwise agree or make any commitment to do any of the foregoing.

Section 7.3             Tax Matters.

(a)            This Agreement is intended to constitute a “plan of reorganization” for purposes of Section 368 of the Code and the Parties hereby adopt it as such. From and after the date of this Agreement and until the Effective Time, each Party shall use its reasonable best efforts to (A) ensure that (i) the Domestication will qualify as a “reorganization” within the meaning of Section 368(a)(1)(F), (ii) the Contribution and Distribution, taken together, will qualify as a “reorganization” within the meaning of Sections 368(a)(1)(D) and 355(a) of the Code, (iii) the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and (iv) the Merger (taking into account the PIPE Investment) will not cause Section 355(e) of the Code to apply to the Distribution (with respect clauses (ii)-(iv), the “Tax-Free Status”) and (B) not take any action, cause or permit any action to be taken, fail to take any action or cause any action to fail to be taken, which action or failure to act could prevent (i) the Domestication from qualifying as a “reorganization” within the meaning of Section 368(a)(1)(F) or (ii) the Tax-Free Status. Following the Effective Time, none of the Company, Parent or any of their respective Affiliates shall take any action, cause or permit any action to be taken, fail to take any action or cause any action to fail to be taken, which action or failure to act could prevent the Tax-Free Status.

(b)            Each of the Company, SpinCo and Parent shall cooperate with one another and shall use its reasonable best efforts for the Company to obtain a written opinion of LW, reasonably satisfactory in form and substance to the Company (the “Company Distribution Tax Opinion”), dated as of the Closing Date, to the effect that, on the basis of the facts, customary representations and assumptions set forth or referred to in such opinion, (i) the Contribution and Distribution, taken together, will qualify as a “reorganization” within the meaning of Sections 368(a)(1)(D) and 355(a) of the Code and (ii) the Merger will not cause Section 355(e) of the Code to apply to the Distribution. In delivering the Company Distribution Tax Opinion, LW shall be entitled to receive and rely upon the Parent Distribution Tax Representations and the Company Distribution Tax Representations.

(c)            Company and SpinCo, on the one hand, and Parent, on the other hand, shall cooperate with one another in obtaining, and shall use their respective reasonable best efforts to obtain, a written opinion of LW (the “Company Merger Tax Opinion”), in the case of Company and SpinCo, and a written opinion of Weil (the “Parent Merger Tax Opinion”), in the case of Parent, reasonably satisfactory in form and substance to the Company and Parent, respectively, dated as of the Closing Date, to the effect that, on the basis of the facts, customary representations and assumptions set forth or referred to in such opinion, the Merger will be treated as a “reorganization” within the meaning of Section 368(a) of the Code. In delivering the Company Merger Tax Opinion and the Parent Merger Tax Opinion, LW and Weil shall both be entitled to receive and rely upon the SpinCo Merger Tax Representations and the Parent Merger Tax Representations.

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(d)            Company and SpinCo, on the one hand, and Parent, on the other hand, shall cooperate with one another in obtaining, and Parent shall use its reasonable best efforts to obtain a written opinion of Weil (the “Parent Domestication Tax Opinion”) reasonably satisfactory in form and substance to Parent, dated as of the Closing Date, to the effect that, on the basis of the facts, customary representations and assumptions set forth or referred to in such opinion, the Domestication will qualify as a “reorganization” under Section 368(a)(1)(F) of the Code. In delivering the Parent Domestication Tax Opinion, Weil shall be entitled to receive and rely upon representations, as necessary, of an officer of each of the Company, SpinCo and Parent dated as of the Closing Date, in form and substance reasonably satisfactory to Weil and delivered to Weil in connection with the Domestication. For the avoidance of doubt, the receipt of the Parent Domestication Tax Opinion is not a condition to closing under Article VIII.

(e)            The Company and SpinCo, on the one hand, and Parent, on the other hand, shall cooperate with each other in obtaining, and shall use their respective reasonable best efforts to obtain, any Tax opinions required to be filed with the SEC in connection with the filing of the Parent Registration Statement and shall each use its respective reasonable best efforts to cause such opinions to be timely filed.

(f)            Parent will promptly notify the Company if, before the Effective Time, it knows or has reason to believe that Parent is not reasonably expected to be able to obtain the Parent Merger Tax Opinion.

(g)            The Company will promptly notify Parent if, before the Effective Time, it knows or has reason to believe that the Company is not reasonably expected to be able to obtain any of the Company Tax Opinions.

Section 7.4             Preparation of the Registration Statements and Prospectus; Parent Shareholders Meeting.

(a)            As promptly as practicable after the execution of this Agreement, to the extent such filings are required by Law in connection with the transactions contemplated by this Agreement: (i) Parent, the Company and SpinCo shall jointly prepare and Parent shall file with the SEC the Parent Registration Statement; (ii) Parent, the Company and SpinCo shall jointly prepare and SpinCo shall file with the SEC the SpinCo Registration Statement; (iii) Parent, the Company and SpinCo shall jointly prepare and Parent shall file with the SEC the Proxy Statement (which Proxy Statement may form a part of the Parent Registration Statement); and (iv) the Parties shall jointly prepare and cause to be filed such other filings required under applicable securities Laws in connection with the Transactions.

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(b)            Each of Parent, the Company and SpinCo shall use its reasonable best efforts to have the Parent Registration Statement and the SpinCo Registration Statement declared effective as promptly as practicable after such filing (including by responding to comments of the SEC) and to keep such registration statements effective for as long as is necessary to consummate the Transactions, and, prior to the effective date of the Parent Registration Statement and the SpinCo Registration Statement, each of Parent, the Company and SpinCo shall take all action reasonably required (other than qualifying to do business in any jurisdiction in which it is not now so qualified or filing a general consent to service of process in any such jurisdiction) to be taken under any applicable securities Laws in connection with the Parent Share Issuance and the Distribution. As promptly as practicable after the Parent Registration Statement and the SpinCo Registration Statement shall have become effective, each of the Company and Parent, as applicable, shall cause the Distribution Documents or the Parent Registration Statement (which shall include the Proxy Statement), as applicable, to be mailed or made available to the Company’s stockholders or the Parent’s stockholders, as applicable, in each case, pursuant to applicable Law. No filing of, or amendment or supplement to, the Parent Registration Statement or the Proxy Statement will be made by Parent without providing the Company and SpinCo with a reasonable opportunity to review and comment thereon (and such comments shall be reasonably considered by Parent in good faith). No filing of, or amendment or supplement to, the SpinCo Registration Statement will be made by the Company or SpinCo without providing Parent with a reasonable opportunity to review and comment thereon (and such comments shall be reasonably considered by the Company in good faith). Each Party (as applicable) will use its reasonable best efforts to cause the Distribution Documents and the Parent Registration Statement to comply in all material respects with the applicable requirements of U.S. federal securities Laws.

(c)            Each of Parent, the Company and SpinCo shall ensure that none of the information supplied by or on its behalf for inclusion or incorporation by reference in (A) the Parent Registration Statement or SpinCo Registration Statement will, at the time filed with the SEC, at each time at which it is amended and at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, not misleading, (B) the Proxy Statement will, at the date it is first mailed or made available to the Parent’s shareholders and at the time of the Parent Shareholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading or (C) the Distribution Documents will, at the date they are mailed or made available to the Company’s stockholders, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

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(d)            If, at any time prior to the Effective Time, any information relating to Parent, the Company or SpinCo, or any of their respective Affiliates, directors or officers, should be discovered by Parent, the Company or SpinCo, which should be set forth in an amendment or supplement to the Parent Registration Statement, the Proxy Statement or the SpinCo Registration Statement, so that any such document would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Party that discovers such information shall promptly notify the other Party and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC, and, to the extent required by Law, disseminated to the shareholders of Parent or the Company, as applicable. Each Party shall notify the other Party promptly of the time when the Parent Registration Statement or the SpinCo Registration Statement has become effective and of the issuance of any stop order or suspension of the qualification of the shares of Domesticated Parent Stock issuable pursuant to the Merger or shares of SpinCo Common Stock issuable in the Distribution for offering or sale in any jurisdiction. In addition, each Party agrees to provide the other Party and their respective counsel promptly with copies of any written comments or requests for amendments or supplements, and shall promptly inform the other Party of any oral comments or requests for amendments or supplements, that such Party or its counsel may receive from time to time from the SEC with respect to the Parent Registration Statement, the Proxy Statement or the SpinCo Registration Statement promptly after receipt of such comments, and shall provide the other Party with copies of any written or oral responses or correspondence between it or its Affiliates and the SEC related thereto. Each Party and their respective counsel shall be given a reasonable opportunity to review in advance any such written responses and to participate in any discussions or oral material communications with the SEC, and each Party shall reasonably consider in good faith the additions, deletions, comments or changes suggested thereto by the other Party and its counsel.

(e)            Parent Shareholders Meeting.

(i)            Parent shall call, give notice of, convene and hold a general meeting (the “Parent Shareholders Meeting”) as promptly as reasonably practicable following the date on which the Parent Registration Statement is declared effective, and in any case, no later than thirty (30) Business Days thereafter, for the purpose of obtaining the Parent Shareholder Approval; provided, that subject to the requirements of any applicable Law, Parent may (and, in the case of clause (C) on up to two (2) occasions upon the reasonable request of the Company (and for no more than five (5) Business Days each) shall) postpone or adjourn the Parent Shareholders Meeting (A) if a quorum has not been established; (B) after consultation with the Company, to allow reasonable additional time for the filing and mailing of any supplement or amendment to the Proxy Statement as may be required under applicable Law and for such supplement or amendment to be disseminated and reviewed by Parent’s shareholders sufficiently in advance of the Parent Shareholders Meeting; (C) to allow reasonable additional time to solicit additional proxies, if and to the extent the requisite Parent Shareholder Approval would not otherwise be obtained; (D) after consultation with the Company, if otherwise required by applicable Law; or (E) with the prior written consent of the Company; provided, that the Parent Shareholders’ Meeting will not be adjourned to a date that is more than thirty (30) days after the date for which the Parent Shareholders’ Meeting was originally scheduled (excluding any adjournments required by applicable Law). Parent shall advise the Company upon request on a daily basis during each of the last five (5) Business Days prior to the date of the Parent Shareholders Meeting as to the aggregate tally of proxies received by Parent with respect to the Parent Shareholder Approval and at additional times upon the reasonable request of the Company. Parent agrees that it shall provide the holders of shares of Parent Class A Common Stock the opportunity to elect redemption of such shares of Parent Class A Common Stock in connection with the Parent Shareholders’ Meeting, as required by Parent’s Governing Documents.

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(ii)           Parent shall, through the Parent Board, unanimously recommend to its shareholders (A) adoption and approval of the Domestication and change in the jurisdiction of incorporation of Parent from the Cayman Islands to the State of Delaware, (B) amendment and restatement of Parent’s existing Governing Documents in connection with the Domestication, including any separate or unbundled proposals as are required to implement the foregoing and the change of Parent’s name to OmniAb, Inc. as set forth in the Parent Charter, (C) adoption and approval of this Agreement, the Transaction Documents and the Transactions contemplated hereby and thereby, in each case, in accordance with applicable Law and exchange rules and regulations, (D) approval of the issuance of shares of Domesticated Parent Stock in connection with the Domestication, the PIPE Investment, the Redemption Backstop and the Merger, (E) approval of the adoption by Parent of the Parent Equity Plan and Parent ESPP, each as described in the Employee Matters Agreement, (F) election of directors to the Parent Board effective as of the Closing as contemplated by this Agreement, (G) adoption and approval of any other proposals as the SEC (or staff thereof) may indicate are necessary in its comments to the Proxy Statement or the Parent Registration Statement or correspondence related thereto, (H) adoption and approval of any other proposals as reasonably agreed by Parent and the Company to be necessary or appropriate in connection with the Transactions and (I) adjournment of the Parent Shareholders Meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to constitute a quorum or approve and adopt any of the foregoing (such proposals in (A) through (I), together, the “Transaction Proposals”), and include such Parent Board Recommendation in the Proxy Statement (subject to Section 7.5) and, provided there has been no Modification in Recommendation in response to an Intervening Event in accordance with Section 7.5, use its reasonable best efforts to (1) solicit from its shareholders proxies in favor of the approval of the proposals required under the Parent Shareholder Approval, and (2) take all other action necessary or advisable to secure the Parent Shareholder Approval. Except as expressly permitted by Section 7.5, neither the Parent Board nor any committee thereof shall effect a Modification in Recommendation.

Section 7.5             Modification in Recommendation. The Parent Board shall not withdraw, amend, qualify or modify its recommendation to the Parent Shareholders that they vote in favor of the Transaction Proposals (together with any withdrawal, amendment, qualification or modification of its recommendation to the Parent Shareholders, a “Modification in Recommendation”); provided, that the Parent Board may make a Modification in Recommendation if it determines in good faith, after consultation with its outside legal counsel, in response to an Intervening Event, that a failure to make a Modification in Recommendation would be inconsistent with its fiduciary obligations to the Parent Shareholders under applicable Law; provided, further, that: (i) Parent shall have delivered written notice to the Company of its intention to make a Modification in Recommendation at least five (5) Business Days prior to the taking of such action by Parent, (ii) during such period and prior to making a Modification in Recommendation, if requested by the Company, Parent shall have negotiated in good faith with the Company regarding any revisions or adjustments proposed by the Company to the terms and conditions of this Agreement as would enable the Parent Board to reaffirm its recommendation and not make such Modification in Recommendation and (iii) if the Company requested negotiations in accordance with clause (ii), Parent may make a Modification in Recommendation only if the Parent Board, after considering in good faith any revisions or adjustments to the terms and conditions of this Agreement that the Company shall have, prior to the expiration of the five (5) Business Day period, offered in writing to Parent, continues to determine in good faith that failure to make a Modification in Recommendation would be inconsistent with its fiduciary duties to the Parent Shareholders under applicable Law. To the fullest extent permitted by applicable Law, Parent’s obligations to establish a record date for, duly call, give notice of, convene and hold the Parent Shareholders Meeting shall not be affected by any Modification in Recommendation and Parent agrees to establish a record date for, duly call, give notice of, convene and hold the Parent Shareholders Meeting and submit for approval the Transaction Proposals irrespective of whether a Modification in Recommendation has occurred.

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Section 7.6             Reasonable Best Efforts.

(a)            Subject to the terms of Section 7.20, which shall govern with respect to the subject matter thereof, each of Parent, the Company and their respective Subsidiaries shall use its reasonable best efforts to promptly take, or cause to be taken, all actions, and to promptly do, or cause to be done, and to assist and cooperate with the other in doing, all things reasonably necessary, proper or advisable under applicable Laws to consummate and make effective the Merger and the other transactions contemplated by this Agreement and the other Transaction Documents, as promptly as practicable and in any event prior to the Outside Date, including (i) the obtaining of all necessary actions or nonactions, waivers, consents, clearances, approvals, and expirations or terminations of waiting periods, from Governmental Authorities and the making of all necessary registrations and filings in connection therewith, and (ii) using its commercially reasonable efforts to obtain all necessary consents, approvals or waivers from third parties; provided, that in no event shall the Company, Parent or their respective Subsidiaries be required to pay any fee, penalty or other consideration to any third party for any consent or approval required for the consummation of the transactions contemplated by this Agreement under any Contract.

(b)            The Company and Parent shall (i) promptly, but in no event later than ten (10) Business Days after the date hereof, file (or cause to be filed) any and all required pre-merger notification and report forms under the HSR Act with respect to the Merger, and (ii) make, as promptly as practicable and advisable, any appropriate filings with other Governmental Authorities, if necessary or advisable, pursuant to any other Antitrust Law. The Company and Parent shall (and, to the extent required, shall cause its Affiliates to) request early termination of any applicable waiting periods under the Antitrust Laws (if available) and shall respectively use their reasonable best efforts to cause the expiration or termination of such waiting periods, and shall supply to the Antitrust Division of the United States Department of Justice (the “Antitrust Division”) or the United States Federal Trade Commission (the “FTC”) as promptly as reasonably practicable and advisable any additional information or documents that may be requested pursuant to any Law or by any of them.

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(c)            In furtherance of the covenants of the parties contained in this Section 7.6 (i) if any administrative or judicial action or proceeding, including any proceeding by a private party, is instituted (or threatened to be instituted) challenging the Merger as violative of any Antitrust Law, each of the parties hereto shall take all action required to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction, or other order, whether temporary, preliminary or permanent, that results from such action or proceeding and that prohibits, prevents or restricts consummation of the Merger on or before the Outside Date and (ii) Parent and the Company each shall take all such further action as may be necessary to avoid or eliminate each and every impediment under any Antitrust Law so as to enable the Closing to occur as promptly as practicable (and in any event no later than the Outside Date), including proposing, negotiating, committing and effecting, by consent decree, hold separate order, or otherwise, to (x) sell, divest, license, dispose of or otherwise hold separate (including by establishing a trust or otherwise), any of the businesses, assets or properties of Parent, the SpinCo Entities or any of their respective Subsidiaries (other than the Company and its Subsidiaries following the Closing), including the SpinCo Business and the SpinCo Assets, (y) terminate, amend or assign any existing Contracts or relationships of Parent, the SpinCo Entities or any of their respective Subsidiaries (other than the Company and its Subsidiaries following the Closing), including the SpinCo Business and the SpinCo Assets, and (z) otherwise take or commit to take actions that after the Closing would limit such Party’s freedom of action with respect to, or its ability to operate and/or retain any of the businesses, assets or properties of Parent, the SpinCo Entities or any of their respective Subsidiaries (other than the Company and its Subsidiaries following the Closing), including the SpinCo Business and the SpinCo Assets; provided, that neither Parent nor the Company shall be required to take any action under this Section 7.6 that would materially impact Parent’s or the Company’s expected benefits resulting from the Transactions. Notwithstanding anything in this Agreement to the contrary, the Company and its Subsidiaries shall not be obligated to take or agree or commit to take any action (A) that is not conditioned on the Closing or (B) that relates to any Ligand Retained Assets or the Ligand Retained Business.

(d)            Parent and the Company shall cooperate and consult with each other in connection with the making of all filings, notifications, communications, submissions, and any other actions pursuant to this Section 7.6, and, subject to applicable legal limitations and the instructions of any Governmental Authority, Parent and the Company shall keep each other apprised on a current basis of the status of matters relating to the completion of the Transactions, including promptly furnishing the other with copies of notices or other communications received by Parent and the Company, as the case may be, or any of their respective Subsidiaries or Affiliates, from any third party and/or any Governmental Authority with respect to such Transactions. Subject to applicable Law relating to the exchange of information, Parent and the Company shall permit counsel for the other party reasonable opportunity to review in advance, and consider in good faith the views of the other party in connection with, any proposed notifications or filings and any substantive written communications or submissions to any Governmental Authority; provided, that materials may be redacted (i) to remove references concerning the valuation of the SpinCo Business and the SpinCo Assets or information concerning the Transaction Process, or proposals from third parties with respect thereto, (ii) as necessary to comply with contractual agreements, and (iii) as necessary to address reasonable privilege or confidentiality concerns. Parent and the Company agree not to participate in any pre-scheduled meeting or discussion, either in person, by video conference, or by telephone, with any Governmental Authority in connection with the Transactions unless it consults with the other party in advance and, to the extent not prohibited by such Governmental Authority, gives the other party a reasonable opportunity to attend and participate.

Section 7.7             [Intentionally Omitted].

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Section 7.8             Access to Information.

(a)            The Company shall, and shall cause its Subsidiaries, on the one hand, and Parent shall, and shall cause its Subsidiaries, on the other hand, to afford to the other Party and to its respective Representatives, reasonable access, during normal business hours and subject to bona fide policies and procedures established by the other Party (including in response to COVID-19), during the Interim Period, in such manner as to not interfere with Parent’s and its Subsidiaries’ business’s or the SpinCo Business’s (as applicable) normal operations, the properties, books and records and appropriate senior-level officers and employees of Parent and its Subsidiaries or the Company and its Subsidiaries (including the SpinCo Entities) that are related to the SpinCo Business (as applicable), and shall furnish such Party and its Representatives with such accounting (including accountants’ work papers), financial and operating data and other information concerning the affairs of Parent and its Subsidiaries or the SpinCo Business or the SpinCo Entities (as applicable), in each case, as such Party and its Representatives may reasonably request for the purposes of furthering the Transactions or for purposes of preparing for the operation of Parent and the Surviving Corporation post-Closing; provided, that (x) such investigation shall only be upon reasonable notice and at the sole cost and expense of the investigating Party; and (y)  nothing in this Agreement shall require any Party to permit any inspection or disclose any information to any other Party that (i) would unreasonably interfere with the conduct of such Party’s business or result in damage to property (other than immaterial damage), except with such other Party’s prior written consent (which may be withheld or denied at its sole discretion), (ii) would cause a violation of any Law, privacy policy or any confidentiality obligations and similar restrictions that may be applicable to such information, or (iii) would jeopardize the attorney-client privilege or other disclosure privilege or protection to such Party; provided, that the Party that would otherwise be required to disclose information to the other shall take any and all reasonable action necessary to permit such disclosure without such loss of privilege or violation of agreement, policy, Law or other restriction, including through the use of commercially reasonable efforts to obtain any required consent or waiver to the disclosure of such information from any third party and through the implementation of appropriate and mutually agreeable “clean room” or other similar procedures designed to limit any such adverse effect of sharing such information by each Party). Notwithstanding anything in this Section 7.8 to the contrary, (but without limiting the Company’s obligations under this Agreement, including Section 7.4), the Company and SpinCo shall not be required to provide access to, or make any disclosure with respect to, any information of or relating to the Company, any of its Affiliates or any of their respective businesses, other than information relating to the SpinCo Business, the SpinCo Entities, the SpinCo Assets or the SpinCo Liabilities. All requests for such access to any Party shall be made to such Party or its designated Representative.

(b)            The Parties hereby agree that the provisions of the Confidentiality Agreement shall apply to all information and material furnished by any Party or its Representatives thereunder and hereunder. The Confidentiality Agreement shall survive any termination of this Agreement.

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Section 7.9             Exclusivity.

(a)            The Company shall immediately cease, and shall cause its Subsidiaries and shall use reasonable best efforts to cause its Representatives to immediately cease, any discussions or negotiations with any Person (other than Parent or its Affiliates) that may be ongoing with respect to a SpinCo Proposal, or any inquiry, proposal or offer that would reasonably be expected to lead to a SpinCo Proposal, and shall promptly request that each Person that has been provided with any confidential information in connection with any SpinCo Proposal prior to the date of this Agreement promptly return or destroy such information, including promptly terminating any access by any Person to any physical or electronic data room relating to any SpinCo Proposal (as defined below). From the date hereof until the earlier to occur of (a) the termination of this Agreement pursuant to Article IX and (b) the Effective Time, the Company shall not, and shall cause its Subsidiaries and shall use reasonable best efforts to cause its Representatives not to: (i) solicit, initiate, knowingly encourage or knowingly facilitate (including by way of furnishing information that has not been previously publicly disseminated) any proposal from or on behalf of a third party relating to, directly or indirectly, any acquisition (whether by merger, purchase of Interests, purchase of assets or otherwise), exclusive license, joint venture, partnership, recapitalization, liquidation, dissolution or other transaction involving any portion of the business or assets of the Company and its Subsidiaries that, individually or in the aggregate, constitutes 15% or more of the net revenues, net income or assets of the SpinCo Business (taken as a whole) (any of the foregoing, a “SpinCo Proposal”), or any inquiry, proposal or offer which would reasonably be expected to lead to a SpinCo Proposal, (ii) engage in any discussions or negotiations regarding, or furnish to any Person any nonpublic information relating to the SpinCo Business, SpinCo Assets or SpinCo Entities in connection with, any SpinCo Proposal or any inquiry, proposal, effort or attempt related to or that would reasonably be expected to lead to, a SpinCo Proposal, (iii) adopt, approve or recommend, or publicly propose to adopt, approve or recommend, any SpinCo Proposal or (iv) approve or authorize, or cause or permit the Company or any Company Subsidiary to enter into, any merger agreement, acquisition agreement, reorganization agreement, letter of intent, memorandum of understanding, agreement in principle, option agreement, joint venture agreement, partnership agreement or similar agreement or document relating to, or providing for, any SpinCo Proposal; provided, that nothing in this Section 7.9 shall limit the Company’s ability to pursue or engage in any transaction relating to substantially all of the business of the Company and its Subsidiaries, taken as a whole (as opposed to solely the SpinCo Business), so long as such transaction would not prevent or materially impair or materially delay the Company’s ability to comply with its obligations hereunder and under the Separation and Distribution Agreement or to consummate the Transactions; provided, further, that the foregoing shall not affect any of the obligations of the Company and SpinCo or the SpinCo Entities under this Agreement or any other Transaction Document.

(b)            Notwithstanding the terms of Section 7.9(a), at any time prior to the earlier of (i) 180 days after the date of this Agreement or (ii) the Parent Registration Statement being declared effective by the SEC, the Company may: (x) furnish information in response to a request therefor (including nonpublic information regarding the Company or any of its Subsidiaries) to any Person or its Representatives who makes an unsolicited proposal to acquire all or at least seventy-five percent (75%) of the voting securities of the Company or at least seventy-five (75%) of the assets of the Company and its Subsidiaries, taken as a whole, that is conditioned on the termination of this Agreement (any such proposal, a “Company Acquisition Proposal”), in each case, provided, that prior to furnishing any such information, the Person making such Company Acquisition Proposal enters into a confidentiality agreement with the Company at least as restrictive as the Confidentiality Agreement; and (y) engage or participate in any discussions or negotiations with any Person regarding such Company Acquisition Proposal.

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(c)            The Company shall promptly (and, in any event, within two (2) Business Days) give notice to Parent if any Company Acquisition Proposal is received by the Company, setting forth in such notice the material terms and conditions of any such proposals or offers. Parent shall keep such information confidential pursuant to the terms of the Confidentiality Agreement.

(d)            Notwithstanding anything to the contrary set forth in this Section 7.9, at any time prior to the earlier of (i) 180 days after the date of this Agreement or (ii) the Parent Registration Statement being declared effective by the SEC, the Company may elect to terminate this Agreement pursuant to and subject to the terms of Section 9.1(i) and Section 9.3 in order to enter into a definitive agreement with respect to a Company Acquisition Proposal; provided, that, prior to entering into any such definitive agreement with respect to a Company Acquisition Proposal, (x) the Company must have delivered notice to the Parent of its intention to enter into such definitive agreement at least five (5) Business Days prior to the taking of such action by the Company and (y) during such five (5) Business-Day period and prior to entering into such definitive agreement, if requested by Parent, the Company shall negotiate in good faith with Parent regarding any revisions or adjustments proposed by Parent to the terms and conditions of this Agreement.

(e)            Parent shall immediately cease and shall use reasonable best efforts to cause its Representatives to immediately cease, any discussions or negotiations with any Person (other than the Company or its Affiliates) that may be ongoing with respect to a Parent Business Combination Proposal, or any inquiry, proposal or offer that would reasonably be expected to lead to a Parent Business Combination Proposal. From the date hereof until the earlier to occur of (i) the termination of this Agreement pursuant to Article IX and (ii) the Effective Time, Parent shall not and shall use reasonable best efforts to cause its Representatives not to: (w) solicit, initiate, knowingly encourage or knowingly facilitate (including by way of furnishing information that has not been previously publicly disseminated) any proposal from or on behalf of a third party relating to, directly or indirectly, any Business Combination, or any inquiry, proposal or offer which would reasonably be expected to lead to a Parent Business Combination Proposal, (x) engage in any discussions or negotiations regarding, or exchange with any Person any nonpublic information in connection with, any Parent Business Combination Proposal or any inquiry, proposal, effort or attempt related to or that would reasonably be expected to lead to, a Parent Business Combination Proposal, (y) adopt, approve or recommend, or publicly propose to adopt, approve or recommend, any Parent Business Combination Proposal or (z) approve or authorize, or cause or permit Parent to enter into, any merger agreement, acquisition agreement, reorganization agreement, letter of intent, memorandum of understanding, agreement in principle, option agreement, joint venture agreement, partnership agreement or similar agreement or document relating to, or providing for, any Parent Business Combination Proposal.

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Section 7.10             Public Announcements. Except (a) as otherwise expressly contemplated by this Agreement, (b) in connection with any press release, public statement or filing to be issued or made by Parent with respect to any Modification in Recommendation, and (c) for the separate or joint press releases to be issued by the Parties in the forms agreed by the Parties (or any public statement or disclosure that contains or reflects only such information previously disclosed in press releases or other public disclosures made in accordance with this Section 7.10), neither Parent nor the Company will, and each of Parent and the Company will cause its Subsidiaries not to, issue any press release or otherwise make any public statements or disclosure with respect to the Transactions without the prior written consent of the other Party. Notwithstanding the foregoing, to the extent such disclosure is required by applicable Law or the rules of any stock exchange, the Party seeking to make such disclosure will promptly notify the other Party thereof and the Party making such statement will use efforts reasonable under the circumstances to consult in good faith with the other Party thereto prior to making such disclosure in order to allow a mutually agreeable release or announcement to be issued. Notwithstanding the foregoing, any Party may make statements that are consistent with previous public releases made by such Party in compliance with this Section 7.10.

Section 7.11             Defense of Litigation. Parent and the Company shall provide the other Party prompt notice in writing of any Action brought by any shareholder or purported shareholder of such Party against it, any of its Subsidiaries or any of their respective directors and officers (including, with respect to the Company, SpinCo) relating to this Agreement, the Transactions, the Transaction Documents and any of the matters contemplated hereby or thereby (collectively, “Transaction Litigation”), and shall keep the other Party informed on a reasonably current basis with respect to the status thereof and consider any comments or suggestions made by the other Party with respect to the strategy therefor; provided, that prior to the Effective Time, no Party shall compromise, settle, come to an arrangement regarding or agree to compromise, settle or come to an arrangement regarding any Action arising or resulting from the Transactions or consent to the same, without the prior written consent of the other Party to the extent (a) such Action includes the other Party or any of its Subsidiaries, directors or officers as named defendants or (b) such compromise, settlement or arrangement would reasonably be expected to prevent, materially impair, materially delay or otherwise have a material adverse effect on the ability of the Parties to perform their respective obligations hereunder, or to consummate the Transactions in a timely manner.

Section 7.12             Section 16 Matters. Prior to the Effective Time, each of Parent, the Company and SpinCo shall take all such steps as may be required (to the extent permitted by applicable Law) to cause any dispositions of SpinCo Common Stock (including derivative securities with respect to SpinCo Common Stock) or acquisitions of Parent Common Stock or Domesticated Parent Stock resulting from the Transactions, including the Distribution, directly or indirectly, by each individual, if any, who is subject to Section 16(a) of the Exchange Act with respect to Parent or SpinCo, as applicable, as an officer or director thereof to be exempt under Rule 16b-3 promulgated under the Exchange Act, such steps to be taken in accordance with (and to the extent permitted by) applicable SEC rules and regulations and interpretations of the SEC staff.

Section 7.13             Control of Other Party’s Business. Nothing contained in this Agreement shall give the Company or SpinCo, directly or indirectly, the right to control or direct Parent’s operations prior to the Effective Time. Nothing contained in this Agreement shall give Parent, directly or indirectly, the right to control or direct the operations of the Company, including the SpinCo Business, prior to the Effective Time. Prior to the Effective Time, each of the Company, SpinCo and Parent shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its respective operations.

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Section 7.14             SpinCo Share Issuance. Prior to the Effective Time, SpinCo will take all actions necessary to authorize the issuance of a number of, or stock split of, shares of SpinCo Common Stock such that the total number of shares of SpinCo Common Stock outstanding immediately prior to the Effective Time will equal the number of shares of Company Common Stock entitled to receive the Distribution outstanding immediately prior to the Effective Time in accordance with the terms of the Separation and Distribution Agreement. Each of the Company and SpinCo shall effect such amendments, filings or other actions with respect to its respective Governing Documents as are necessary to effect the Distribution in accordance with the terms of this Agreement and the Separation and Distribution Agreement.

Section 7.15             Domestication. Subject to receipt of the Parent Shareholder Approval, no later than the date that is one day prior to the Effective Time, Parent shall cause the Domestication to become effective, including by (a) filing with the Secretary of State of the State of Delaware a Certificate of Domestication with respect to the Domestication, in form and substance reasonably acceptable to Parent and the Company, together with the Parent Charter substantially in the form attached as Exhibit G hereto (with such changes as may be agreed in writing by Parent and the Company, the “Parent Charter”), in each case, in accordance with the provisions thereof and applicable Law, (b) completing, making and procuring all those filings required to be made with the Cayman Registrar in connection with the Domestication and (c) obtaining a certificate of de-registration from the Cayman Registrar. In accordance with applicable Law, the Domestication shall provide that at the effective time of the Domestication, by virtue of the Domestication, and without any action on the part of any shareholder of Parent, (i) each then issued and outstanding share of Parent Class A Common Stock shall convert automatically, on a one-for-one basis, into a share of Domesticated Parent Common Stock; (ii) each then issued and outstanding share of Parent Class B Common Stock shall convert automatically, on a one-for-one basis, into a share of Domesticated Parent Common Stock; (iii) each then issued and outstanding Parent Warrant shall convert automatically into a Domesticated Parent Warrant, pursuant to the Warrant Agreement; (iv) each then issued and outstanding Parent Unit shall separate and convert automatically into one share of Domesticated Parent Common Stock and one-third of one Domesticated Parent Warrant; and (v) Parent’s bylaws from and after the effective time of the Domestication shall be substantially in the form attached as Exhibit H hereto (with such changes as may be agreed in writing by Parent and the Company, the “Parent Bylaws”).

Section 7.16             Transaction Documents. Parent shall, or shall cause its applicable Subsidiaries to, execute and deliver to the Company at or prior to the Closing each of the Transaction Documents to which it or any such Subsidiary is or will be a party at the Effective Time. The Company shall, or shall cause its applicable Subsidiaries to, execute and deliver to Parent at or prior to the Closing each of the Transaction Documents to which it or any such Subsidiary is or will be a party at the Effective Time.

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Section 7.17             NASDAQ Listing. From the date hereof through the Effective Time, Parent shall use its reasonable best efforts to maintain the listing of the Parent Class A Common Stock on NASDAQ, and shall prepare and submit to NASDAQ a listing application, if required under NASDAQ rules, covering the shares of Domesticated Parent Stock issuable in the Merger and the Domestication, and shall use its reasonable best efforts to cause the shares of Domesticated Parent Stock issuable pursuant to the Transactions to be approved for listing on the NASDAQ, subject to official notice of issuance, as promptly as practicable after the date of this Agreement, and in any event prior to the Effective Time.

Section 7.18             Takeover Statutes. If any “fair price,” “moratorium,” “control share acquisition,” “business combination” or other form of antitakeover Law shall become applicable to the Transactions, Parent, Merger Sub and their respective boards of directors shall use all reasonable efforts to grant such approvals and take such actions as are reasonably necessary so that the Transactions may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of such statute or regulation on the Transactions.

Section 7.19             Obligations of Merger Sub and SpinCo. Parent shall take all action necessary to cause Merger Sub to perform its obligations and take any actions contemplated or required under this Agreement or the Transaction Documents or to consummate the Transactions, including the Merger, upon the terms and subject to the conditions set forth in this Agreement. The Company shall take all action necessary prior to the Effective Time to cause SpinCo to perform its obligations and to take any actions contemplated or required to be taken by SpinCo under this Agreement or the Transaction Documents to consummate the Transactions, including the Merger, upon the terms and subject to the conditions set forth in this Agreement and the Separation and Distribution Agreement.

Section 7.20             Further Assurances. Except as otherwise expressly provided in this Agreement, the Parties shall, and shall cause their respective Affiliates to, use their respective commercially reasonable efforts to take, or cause to be taken, all appropriate action, to do, or cause to be done, and to assist and cooperate with the other Parties in doing, all things necessary, proper or advisable under this Agreement, any other Transaction Document or applicable Law as may be required to carry out the provisions of this Agreement or such other Transaction Document, as applicable, and to consummate and make effective the Merger and the other Transactions (other than with respect to the matters covered in Section 7.6, which shall be governed by the provisions of Section 7.6 and any consents required in connection with the Separation, which shall solely be governed by the Separation and Distribution Agreement). In furtherance and not in limitation of the foregoing, each Party shall use commercially reasonable efforts to obtain all consents, approvals or waivers from third parties necessary in connection with the Merger (other than with respect to the matters covered in Section 7.6, which shall be governed by the provisions of Section 7.6 and any consents required in connection with the Separation, which shall solely be governed by the Separation and Distribution Agreement); provided, that no Party or any of its Affiliates shall be required to commence any litigation, offer or pay any money, or otherwise grant any accommodation (financial or otherwise) to any third party with respect to the foregoing. The failure to obtain any consents, approvals or waivers from third parties shall not in and of itself constitute a breach of this Agreement.

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Section 7.21           Sole Shareholder Approvals. Immediately after the execution of this Agreement, (a) the Company will deliver the SpinCo Shareholder Approval to Parent, and (b) Parent, as the sole shareholder of Merger Sub, acting by written consent, will adopt this Agreement and approve the consummation of the Transactions, upon the terms and subject to the conditions stated herein and in accordance with the applicable provisions of the DGCL (the “Merger Sub Shareholder Approval”) and deliver a copy of the Merger Sub Shareholder Approval to the Company.

Section 7.22           Financial Information.

(a)            The Company shall, from the date hereof until the Closing Date, prepare and deliver to Parent, (i) as promptly as reasonably practicable and no later than seventy-five (75) calendar days after the end of any fiscal quarter, the unaudited combined balance sheet of the SpinCo Business as of the end of such fiscal quarter and the related unaudited combined statements of income, comprehensive income, equity and cash flows of the SpinCo Business for such fiscal quarter, together with comparable financial statements for the corresponding periods of the prior fiscal years, in each case, to the extent required to be included or incorporated by reference in the Parent Registration Statement (including the Proxy Statement), SpinCo Registration Statement or Distribution Documents (collectively, the “Subsequent Unaudited SpinCo Financial Statements”) and (ii) if necessary, as promptly as reasonably practicable and no later than one-hundred (100) calendar days after the end of any fiscal year, the audited combined balance sheet of the SpinCo Business as of the end of such fiscal year of SpinCo and the related audited combined statements of income, comprehensive income, equity and cash flows of the SpinCo Business for such fiscal year, together with comparable financial statements for the prior fiscal years, in each case, to the extent required to be included or incorporated by reference in the Parent Registration Statement (including the Proxy Statement), SpinCo Registration Statement or Distribution Documents (collectively, the “Subsequent Audited Annual SpinCo Financial Statements” and, together with the Subsequent Unaudited SpinCo Financial Statements, the “Subsequent Period SpinCo Financial Statements”). The Subsequent SpinCo Financial Statements shall be prepared from the books and records of the Company and its Subsidiaries and in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may otherwise be required under GAAP) and the applicable rules and regulations of the SEC, including the requirements of Regulation S-X. The Subsequent Unaudited SpinCo Financial Statements shall have been reviewed by the independent accountant for SpinCo in accordance with the procedures specified by the Public Company Accounting Oversight Board (United States) in AU Section 722 and each of the Subsequent Audited Annual SpinCo Financial Statements shall be accompanied by an audit report, without qualification or exception from the independent accountant for SpinCo. When delivered, the Subsequent Period SpinCo Financial Statements shall present fairly in all material respects the combined financial position and combined and consolidated results of operations of the SpinCo Business as of the dates and for the periods shown therein.

(b)            The Company agrees to use reasonable best efforts to provide Parent as promptly as practicable after the date of this Agreement, audited financial statements, including combined balance sheets as of December 31, 2021 and December 31, 2020 and combined statements of income and comprehensive income, equity and cash flows of the SpinCo Business for the fiscal years ended December 31, 2021, December 31, 2020 and December 31, 2019, in each case, prepared in accordance with GAAP and Regulation S-X and audited in accordance with the auditing standards of the PCAOB; provided, that such audited financial statements shall not be required to include a signed audit opinion, which signed audit opinion shall be delivered immediately prior to the initial filing of the SpinCo Registration Statement with the SEC. During the Interim Period and from and after the Closing, the Company shall use reasonable best efforts, in connection with the filing of the SpinCo Registration Statement and any other applicable SEC filings, to (i) cooperate with Parent to prepare pro forma financial statements that comply with the rules and regulations of the SEC to the extent required for SEC filings, including the requirements of Regulation S-X, and (ii) provide and make reasonably available upon reasonable notice, the senior management employees of the Company to discuss the materials prepared and delivered pursuant to this Section 7.22(b).

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Article VIII

CONDITIONS TO THE MERGER

Section 8.1             Conditions to the Obligations of SpinCo, the Company, Parent and Merger Sub to Effect the Merger. The respective obligations of each Party to consummate the Merger shall be subject to the fulfillment (or, to the extent permitted by applicable Law, waiver by the Company and Parent) at or prior to the Closing of the following conditions:

(a)            (i) the waiting period (or any extension thereof) under the HSR Act with respect to the Merger shall have expired or been terminated pursuant to the HSR Act; (ii) all other Requisite Regulatory Approvals shall have been obtained and shall remain in full force and effect and all statutory waiting periods (and any extensions thereof) in respect thereof shall have expired or been terminated; and (iii) there shall not be in effect any voluntary agreement between the Parent or the Company and any Governmental Authority pursuant to which Parent or the Company has agreed not to consummate the Transactions for any period of time;

(b)            the Internal Reorganization, the Contribution and the Distribution and the other transactions contemplated by the Separation and Distribution Agreement shall have been consummated in accordance with the Separation and Distribution Agreement;

(c)            (i) each of the Parent Registration Statement and the SpinCo Registration Statement shall have become effective in accordance with the Securities Act or the Exchange Act, as applicable, and neither shall be the subject of any stop order by the SEC or actual or threatened proceedings by a Governmental Authority seeking such a stop order; and (ii) the applicable notice periods required by applicable stock exchange rules or securities Laws in connection with the Distribution, if any, shall have expired;

(d)            the Parent Shareholder Approval shall have been obtained;

(e)            no Governmental Authority of competent jurisdiction shall have enacted, issued or granted any Law (whether temporary, preliminary or permanent), in each case that is in effect and which has the effect of restraining, enjoining or prohibiting the consummation of the Transactions;

(f)            Parent shall have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act); and

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(g)            the shares of Domesticated Parent Stock issuable pursuant to the Transactions shall have been approved for listing on NASDAQ, subject to official notice of issuance.

Section 8.2             Additional Conditions to the Obligations of the Company and SpinCo. The obligation of the Company and SpinCo to consummate the Merger shall be subject to the fulfillment (or, to the extent permitted by applicable Law, waiver by the Company) at or prior to the Closing of the following additional conditions:

(a)            Parent and Merger Sub shall each have performed and complied in all material respects with the obligations, covenants and agreements required by this Agreement to be performed or complied with by it at or prior to the Effective Time;

(b)            all representations and warranties made by Parent and Merger Sub set forth in Article VI (other than the representations and warranties referenced in the second and third sentences of this Section 8.2(b)), without giving effect to materiality, Parent Material Adverse Effect or similar qualifications, shall be true and correct in all respects at and as of the date hereof and as of the Closing Date as though such representations and warranties were made at and as of the Closing Date (except in the case of any representation or warranty that by its terms addresses matters only as of another specified date, which shall be so true and correct only as of such specified date), except to the extent the failure of such representations and warranties to be true and correct (without giving effect to materiality, Parent Material Adverse Effect or similar qualifications) would not have, individually or in the aggregate, a Parent Material Adverse Effect. The representations and warranties made by Parent set forth in Section 6.1(a), the first and third sentences of Section 6.1(b), the entirety of Section 6.2, Section 6.3 (other than the first two sentences of Section 6.3(a) and the second sentence of Section 6.3(b)) and Section 6.11 shall be true and correct in all material respects at and as of the date hereof and as of the Closing Date as though such representations and warranties were made at and as of the Closing Date (except in the case of any representation or warranty that by its terms addresses matters only as of another specified date, which shall be so true and correct only as of such specified date). The representations and warranties made by Parent set forth in Section 6.10(a), the first two (2) sentences of Section 6.3(a) and the second sentence of Section 6.3(b) shall be true and correct in all respects at and as of the date hereof and as of the Closing Date as though such representations and warranties were made at and as of the Closing Date (other than for de minimis deviations in the case of the representations and warranties set forth in the first two (2) sentences of Section 6.3(a) and the second sentence of Section 6.3(b), and except in the case of any representation or warranty that by its terms addresses matters only as of another specified date, which shall be so true and correct only as of such specified date);

(c)            Parent shall have delivered to the Company the certificate referenced in Section 2.3(b)(ii) dated as of the Closing Date signed by an authorized officer of Parent certifying that each of the conditions set forth in Section 8.1(f) and Section 8.2(a), (b) and (d) have been satisfied;

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(d)            Parent and Merger Sub shall have executed and delivered the applicable Transaction Documents, and to the extent applicable, performed and complied with the obligations, covenants and agreements thereunder required to be performed by them prior to the Effective Time in all material respects, and each such agreement shall be in full force and effect;

(e)            the Domestication shall have been completed as provided in Section 7.15 and a time-stamped copy of the certificate issued by the Secretary of State of the State of Delaware in relation thereto shall have been delivered to the Company;

(f)            the PIPE Investment and the Redemption Backstop shall have been consummated in accordance with the terms of the A&R Forward Purchase Agreement;

(g)            other than those Persons identified as continuing directors on Section 8.2(g) of the Company Disclosure Schedule, all members of the Parent Board and all executive officers of Parent shall have executed and delivered written resignations effective as of the Effective Time; and

(h)            The Company shall have received the Company Tax Opinions from LW and a copy of the Parent Merger Tax Opinion.

Section 8.3             Additional Conditions to the Obligations of Parent and Merger Sub. The obligation of Parent and Merger Sub to consummate the Merger shall be subject to the fulfillment (or, to the extent permitted by applicable Law, waiver by Parent) at or prior to the Closing of the following additional conditions:

(a)            Each of SpinCo and the Company shall each have performed and complied in all material respects with the obligations, covenants and agreements required by this Agreement to be performed or complied with by it at or prior to the Effective Time;

 

(b)            all representations and warranties made by the Company set forth in Article IV and Article V (other than the representations and warranties referenced in the second and third sentences of this Section 8.3(b)), without giving effect to materiality, “Company Material Adverse Effect”, “SpinCo Material Adverse Effect” or similar qualifications, shall be true and correct in all respects at and as of the date hereof and as of the Closing Date as though such representations and warranties were made at and as of the Closing Date (except in the case of any representation or warranty that by its terms addresses matters only as of another specified date, which shall be so true and correct only as of such specified date), except to the extent the failure of such representations and warranties to be true and correct (without giving effect to materiality, “Company Material Adverse Effect”, “SpinCo Material Adverse Effect” or similar qualifications) would not have, individually or in the aggregate, a SpinCo Material Adverse Effect, solely with respect to the representations and warranties set forth in Article V, or Company Material Adverse Effect, solely with respect to the representations and warranties set forth in Article IV. The representations and warranties made by the Company set forth in the first three (3) sentences of Section 4.1, Section 4.2, Section 4.6, Section 4.7, Section 5.1, the entirety of Section 5.2, Section 5.3 (other than the first sentence of Section 5.3(a) and the entirety of each of Section 5.3(b) and Section 5.3(c)), Section 5.5 and Section 5.22 shall be true and correct in all material respects at and as of the date hereof and as of the Closing Date as though such representations and warranties were made at and as of the Closing Date (except in the case of any representation or warranty that by its terms addresses matters only as of another specified date, which shall be so true and correct only as of such specified date). The representations and warranties made by the Company set forth in the first sentence of Section 5.3(a) and the entirety of each of Section 5.3(c) and Section 5.24 shall be true and correct in all respects at and as of the date hereof and as of the Closing Date as though such representations and warranties were made at and as of the Closing Date (other than for de minimis deviations in the case of the representations and warranties set forth in the first sentence of Section 5.3(a) and Section 5.3(c), and except in the case of other than in the case of any representation or warranty that by its terms addresses matters only as of another specified date, which shall be so true and correct only as of such specified date);

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(c)            No SpinCo Material Adverse Effect shall have occurred between the date of this Agreement and the Closing Date that is continuing;

(d)            The Company shall have delivered to Parent the certificate referenced in Section 2.3(a)(i) dated as of the Closing Date signed by an authorized officer of the Company certifying that each of the conditions set forth in Section 8.1(b) and Section 8.3(a), (b), (c) and (e) have been satisfied;

(e)            SpinCo and the Company (or such other applicable Subsidiary of the Company) shall have executed and delivered each of the applicable Transaction Documents, and to the extent applicable, performed and complied with the obligations, covenants and agreements to be performed thereunder by them prior to the Effective Time in all material respects, and each such agreement shall be in full force and effect;

(f)            Parent shall have received the Parent Merger Tax Opinion from Weil and a copy of the Company Tax Opinions; and

(g)            The Company shall have, or shall have caused SpinCo to have, delivered to Parent the certificate and other documents described in Section 2.3(a)(iii).

Article IX

TERMINATION

Section 9.1             Termination. This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Effective Time, whether before or after the Parent Shareholder Approval:

(a)            by mutual written agreement of the Company and Parent;

(b)            by the Company or Parent, if the Closing shall not have occurred on or prior to the date that is nine (9) months after the date of this Agreement (the “Outside Date”); provided, that the right to terminate this Agreement pursuant to this Section 9.1(b) shall not be available to any Party whose action or failure to comply with its obligations under this Agreement or any of the other Transaction Documents has been the primary cause of, or has primarily resulted in, the failure of the Closing to occur on or prior to such date;

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(c)            by the Company or Parent, if any Law shall have been promulgated, entered, enforced, enacted or issued and in effect or shall have been deemed to be applicable to the Merger or the other Transactions, including the Internal Reorganization and the Distribution, by any Governmental Authority of competent jurisdiction which permanently prohibits, restrains or makes illegal the consummation of the Merger or the other Transactions, and such Law shall have become final and non-appealable; provided, that the right to terminate this Agreement pursuant to this Section 9.1(c) shall not be available to any Party whose action or failure to perform any of its obligations under this Agreement or any of the Transaction Documents is the primary cause of, or primarily resulted in, the enactment or issuance of any such Law;

(d)            by Parent upon written notice to the Company, in the event of a breach of any representation, warranty, covenant or agreement on the part of the Company or SpinCo, such that the conditions specified in Section 8.3(a) or Section 8.3(b) would not be satisfied at the Closing, and which, (i) with respect to any such breach that is capable of being cured, is not cured by the Company or SpinCo by the earlier of: (x) thirty (30) days after receipt of written notice thereof; or (y) the Outside Date, or (ii) is incapable of being cured prior to the Outside Date; provided, that Parent shall not have the right to terminate this Agreement pursuant to this Section 9.1(d) if Parent or Merger Sub is then in breach of any of its representations, warranties, covenants or agreements set forth in this Agreement to the extent such breach or breaches would give rise to the failure of a condition set forth in Section 8.2(a) or Section 8.2(b);

(e)            by the Company upon written notice to Parent, in the event of a breach of any representation, warranty, covenant or agreement contained in this Agreement on the part of Parent or Merger Sub such that the conditions specified in Section 8.2(a) or Section 8.2(b) would not be satisfied at the Closing, and which, (i) with respect to any such breach that is capable of being cured, is not cured by Parent by the earlier of: (x) thirty (30) days after receipt of written notice thereof; or (y) the Outside Date, or (ii) is incapable of being cured prior to the Outside Date; provided, that the Company shall not have the right to terminate this Agreement pursuant to this Section 9.1(e) if the Company or SpinCo is then in breach of any of its representations, warranties, covenants or agreements set forth in this Agreement to the extent such breach or breaches would give rise to the failure of a condition set forth in Section 8.3(a) or Section 8.3(b);

(f)            by the Company or Parent, if the Parent Shareholder Approval shall not have been obtained upon a vote taken thereon at the Parent Shareholders Meeting, duly convened therefor, or at any adjournment or postponement thereof; provided, that the right to terminate this Agreement pursuant to this Section 9.1(f) shall not be available to Parent if Parent’s actions or failure to perform any of its obligations under this Agreement is the primary cause of, or primarily resulted in, the failure to obtain such approval;

(g)            by the Company, if the Parent Board shall have effected a Parent Adverse Recommendation Change prior to the Parent Shareholders Meeting;

(h)            by the Company, if all of the conditions to Closing set forth in Article VIII have been met (other than those conditions that by their terms are to be satisfied at Closing) other than the condition specified in Section 8.2(f); and

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(i)             by the Company, prior to the earlier of (i) 180 days after the date of this Agreement or (ii) the Parent Registration Statement being declared effective by the SEC, in order to accept a Company Acquisition Proposal and enter into, immediately following such termination, a binding and definitive written Contract with respect to such Company Acquisition Proposal; provided, that (x) the Company has materially complied with its covenants and agreements under Section 7.9, (y) the Company pays the Termination Fee to Parent in accordance with Section 9.3(a) and (z) the Company pays the FPA Termination Fee to Sponsor pursuant to the terms of the A&R Forward Purchase Agreement.

Section 9.2             Effect of Termination. In the event of termination of this Agreement pursuant to Section 9.1, this Agreement shall forthwith become null and void and have no effect, without any Liability on the part of any Party; provided, that no such termination shall relieve any Party of any liability or damages resulting from Actual Fraud or Willful Breach; provided, further, that Section 7.8(b), this Section 9.2, Section 9.4 and Article X hereof shall survive any termination of this Agreement. The Confidentiality Agreement shall not be affected by any termination of this Agreement.

Section 9.3             Termination Fee.

(a)            In the event that this Agreement is terminated pursuant to Section 9.1(i), concurrently with such termination, the Company shall be obligated to pay Parent or its designee(s) a termination fee of (i) if terminated within 60 days of the date of this Agreement, $40,000,000, (ii) if terminated between 61 and 120 days after the date of this Agreement, $50,000,000, and (iii) if terminated between 121 and 180 days after the date of this Agreement, $70,000,000 (each such amount, the “Termination Fee”), by wire transfer of immediately available funds to an account designated by Parent in writing.

(b)            In addition to payment of the Termination Fee, in the event that this Agreement is terminated pursuant to Section 9.1(i), the Company also shall pay the Parent Expenses (the “Parent Expenses Reimbursement”) by wire transfer of immediately available funds to an account designated by Parent in writing no later than two (2) Business Days after the date on which Parent delivers to the Company a written invoice for the Parent Expenses. As used herein, “Parent Expenses” means the amount of all reasonable and documented out-of-pocket fees and expenses, but not to exceed $7,500,000, incurred or paid by Parent and its Affiliates in connection with this Agreement and the Transactions, including fees and expenses of law firms, accounting firms, financial advisors, outside experts and consultants.

(c)            Notwithstanding anything to the contrary set forth in this Agreement, except in the case of Actual Fraud or Willful Breach, if the Termination Fee and the Parent Expenses Reimbursement are paid pursuant to Section 9.3(a) and Section 9.3(b), respectively, such payment(s) shall constitute the sole and exclusive remedy of Parent, Merger Sub, any of their respective Subsidiaries or any of their respective former, current or future general or limited partners, shareholders, Representatives or assignees against the Company, SpinCo, any of their respective Subsidiaries and any of their respective former, current or future general or limited partners, shareholders, Representatives or assignees (together with the Company, collectively, the “Company Related Parties”) for all losses and damages suffered as a result of the failure of the Transactions to be consummated or for a breach or failure to perform hereunder or otherwise, and none of the Company Related Parties shall have any further liability or obligation relating to or arising out of this Agreement or the Transactions.

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(d)            If the Company fails to pay promptly any amount due under this Section 9.3, as applicable, and in order to obtain such payment, the Parent commences an Action that results in a judgment against the Company for any amount owed thereby under this Section 9.3, as applicable, the Company shall reimburse Parent for its reasonable and documented costs and expenses (including reasonable and documented attorneys’ fees) in connection with such Action, together with interest on such amount at a rate equal to (x) the prime rate as published in The Wall Street Journal in effect on the date such payment was required to be made through the date such payment was actually received, plus (y) five percent (5%).

(e)            Each of the Parties acknowledges that (i) the agreements contained in this Section 9.3 are an integral part of the Transactions, (ii) without these agreements, the Parties would not enter into this Agreement and (iii) the Termination Fee does not constitute a penalty, but rather is liquidated damages in a reasonable amount that will compensate Parent for the efforts and resources expended and opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the Transactions, which amount would otherwise be impossible to calculate with precision.

Section 9.4             Fees and Expenses. Except as otherwise provided in the Separation and Distribution Agreement or this Agreement, including this Section 9.4, and except for filing fees payable to any Governmental Authority in connection with the approvals required under Section 7.5(b), which shall be borne equally by the Company and Parent in the event that this Agreement is terminated in accordance with its terms and by SpinCo in the event that the Closing occurs, all fees and expenses incurred by the Parties shall be borne solely by the Party that has incurred such fees and expenses, whether or not the Merger is consummated.

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Article X

MISCELLANEOUS

Section 10.1             Trust Account Waiver. The Company acknowledges that Parent is a blank check company with the powers and privileges to effect a Business Combination. The Company further acknowledges that, as described in the prospectus dated August 9, 2021 (the “Prospectus”) available at www.sec.gov, substantially all of Parent’s assets consist of the cash proceeds of Parent’s initial public offering and private placements of its securities and substantially all of those proceeds have been deposited in a trust account for the benefit of Parent, certain of its public stockholders and the underwriters of Parent’s initial public offering (the “Trust Account”). The Company acknowledges that it has been advised by Parent that, except with respect to interest earned on the funds held in the Trust Account that may be released to Parent to pay its franchise Tax, income Tax and similar obligations, the Trust Agreement provides that cash in the Trust Account may be disbursed only (i) if Parent completes one or more transactions that constitute a Business Combination, then to those Persons and in such amounts as described in the Prospectus; (ii) if Parent fails to complete a Business Combination within the allotted time period and liquidates, subject to the terms of the Trust Agreement, to Parent in limited amounts to permit Parent to pay the costs and expenses of its liquidation and dissolution, and then to Parent’s public stockholders; and (iii) if Parent holds a shareholder vote to amend Parent’s amended and restated memorandum and articles of association to modify the substance or timing of the obligation to redeem 100% of the shares of Parent Common Stock if Parent fails to complete a Business Combination within the allotted time period, then for the redemption of any shares of Parent Common Stock properly tendered in connection with such vote. For and in consideration of Parent entering into this Agreement, the receipt and sufficiency of which are hereby acknowledged, the Company hereby irrevocably waives any right, title, interest or claim of any kind it has or may have in the future in or to any monies in the Trust Account (including any distributions therefrom) and agrees not to seek recourse against the Trust Account or any funds distributed therefrom as a result of, or arising out of, this Agreement and any negotiations, Contracts or agreements with Parent; provided, (x) that nothing herein shall serve to limit or prohibit the Company’s right to pursue a claim against Parent for legal relief against monies or other assets held outside the Trust Account, for specific performance or other equitable relief in connection with the consummation of the Transactions (including a claim for Parent to specifically perform its obligations under this Agreement and cause the disbursement of the balance of the cash remaining in the Trust Account (after giving effect to the Parent Share Redemptions) to Parent in accordance with the terms of this Agreement and the Trust Agreement) so long as such claim would not affect Parent’s ability to fulfill its obligation to effectuate the Parent Share Redemptions, and (y) nothing herein shall serve to limit or prohibit any claims the Company may have in the future against Parent’s assets or funds that are not held in the Trust Account (including any funds that have been released from the Trust Account to Parent and any assets that have been purchased or acquired with any such funds). The Company agrees and acknowledges that such irrevocable waiver is material to this Agreement and specifically relied upon by Parent to induce it to enter in this Agreement, and the Company further intends and understands such waiver to be valid, binding and enforceable under applicable Law. To the extent the Company commences any Action or proceeding based upon, in connection with, relating to or arising out of any matter relating to Parent, which proceeding seeks, in whole or in part, monetary relief against Parent, the Company hereby acknowledges and agrees that its sole remedy shall be against funds held outside of the Trust Account and that such claim shall not permit the Company (or any party claiming on the Company’s behalf or in lieu of the Company) to have any claim against the Trust Account (including any distributions therefrom) or any amounts contained therein. In the event that the Company commences any Action or proceeding based upon, in connection with, relating to or arising out of any matter relating to Parent, which proceeding seeks, in whole or in part, relief against the Trust Account (including any distributions therefrom) or the holders of Parent Common Stock, whether in the form of money damages or injunctive relief, the prevailing party shall be entitled to recover from the other party the associated legal fees and costs in connection with any such Action.

Section 10.2             Non-Survival of Representations, Warranties and Agreements. The obligations, covenants and agreements that by their terms are to be performed following the Closing pursuant to any Transaction Document, including the Separation and Distribution Agreement, or this Agreement shall survive the Effective Time in accordance with their terms and all other obligations, covenants and agreements herein and therein shall terminate and shall not survive the Closing. None of the representations or warranties in this Agreement or in any certificate or instrument delivered pursuant to this Agreement shall survive the Effective Time. The Confidentiality Agreement shall survive the execution and delivery of this Agreement and any termination of this Agreement, and the provisions of the Confidentiality Agreement shall apply to all information and material furnished by any Party or its Representatives thereunder or hereunder; provided, that, following the Effective Time, Parent shall have no obligations under the Confidentiality Agreement with respect to information related solely to the SpinCo Entities, the SpinCo Business or the SpinCo Assets, which information shall no longer be considered “Evaluation Material” for purposes thereof.

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Section 10.3             Governing Law; Jurisdiction. This Agreement, and all claims, disputes, controversies or causes of action (whether in contract, tort, equity or otherwise) that may be based upon, arise out of or relate to this Agreement (including any schedule or exhibit hereto) or the negotiation, execution or performance of this Agreement (including any claim, dispute, controversy or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), shall be governed by and construed in accordance with the Laws of the State of Delaware, without regard to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware; provided, that the Domestication shall be effected in accordance with both the DGCL and the CICA (as applicable), without giving effect to principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction. Each of the Parties agrees that any Action related to this agreement shall be brought exclusively in the Court of Chancery of the State of Delaware or, if under applicable Law, exclusive jurisdiction over such matter is vested in the federal courts, any federal court in the State of Delaware and any appellate court from any thereof (the “Chosen Courts”). By executing and delivering this Agreement, each of the Parties irrevocably: (i) accepts generally and unconditionally submits to the exclusive jurisdiction of the Chosen Courts for any Action relating to this Agreement, including any Action brought for any remedy contemplated by Section 10.9; (ii) waives any objections which such party may now or hereafter have to the laying of venue of any such Action contemplated by this Section 10.3 and hereby further irrevocably waives and agrees not to plead or claim that any such Action has been brought in an inconvenient forum; (iii) agrees that it will not attempt to deny or defeat the personal jurisdiction of the Chosen Courts by motion or other request for leave from any such court; (iv) agrees that it will not bring any Action contemplated by this Section 10.3 in any court other than the Chosen Courts; (v) agrees that service of all process, including the summons and complaint, in any Action may be made by registered or certified mail, return receipt requested, to such party at their respective addresses provided in accordance with Section 10.4 or in any other manner permitted by Law; and (vi) agrees that service as provided in the preceding clause (v) is sufficient to confer personal jurisdiction over such party in the Action, and otherwise constitutes effective and binding service in every respect. Each of the parties hereto agrees that a final judgment in any Action in a Chosen Court as provided above may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law, and each party further agrees to the non-exclusive jurisdiction of the Chosen Courts for the enforcement or execution of any such judgment.

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Section 10.4             Notices. All notices and other communications among the Parties shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when delivered after posting in the national mail having been sent registered or certified mail return receipt requested, postage prepaid, (c) when delivered by FedEx or other internationally recognized overnight delivery service or (d) when delivered by facsimile (solely if receipt is confirmed) or email (so long as the sender of such email does not receive an automatic reply from the recipient’s email server indicating that the recipient did not receive such email), addressed as follows:

if to the Company or SpinCo, to:

Ligand Pharmaceuticals Incorporated

with a copy (which shall not constitute notice) to:

Latham & Watkins, LLP

12670 High Bluff Dr.

San Diego, CA 92130

Attention:                Matthew Bush

Scott Shean

Email:                       [email protected]

[email protected]

if to Parent, to:

Avista Public Acquisition Corp. II

with a copy (which shall not constitute notice) to:

Weil, Gotshal & Manges LLP

767 5th Avenue

New York, NY 10153

Attention:                Jaclyn L. Cohen, Esq.

Raymond O. Gietz, Esq.

Email:                      [email protected]

[email protected]

or to such other address or addresses as the Parties may from time to time designate in writing by like notice.

Section 10.5             Headings. The headings contained in this Agreement are inserted for convenience only and shall not be considered in interpreting or construing any of the provisions contained in this Agreement.

Section 10.6             Entire Agreement. This Agreement (including the Exhibits and Schedules hereto), the Confidentiality Agreement and the Transaction Documents constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings between the Parties with respect to such subject matter; provided, that for the sake of clarity, it is understood that this Agreement shall not supersede the terms and provisions of the Confidentiality Agreement, which shall survive and remain in effect until expiration or termination thereof in accordance with its respective terms (subject to Section 10.2).

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Section 10.7             Amendments and Waivers.

(a)            Any Party may, at any time prior to the Closing, by action taken by its board of directors, or officers thereunto duly authorized, waive any of the terms or conditions of this Agreement or (without limiting Section 10.7(b)) agree to an amendment or modification to this Agreement by an agreement in writing executed in the same manner (but not necessarily by the same Persons) as this Agreement. No waiver by any of the Parties of any breach hereunder shall be deemed to extend to any prior or subsequent breach hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. No waiver by any of the Parties of any of the provisions hereof shall be effective unless explicitly set forth in writing and executed by the Party sought to be charged with such waiver.

(b)            This Agreement may be amended or modified, in whole or in part, only by a duly authorized agreement in writing executed by the Parties in the same manner (but not necessarily by the same Persons) as this Agreement, and which makes reference to this Agreement.

Section 10.8             Assignment; Parties in Interest; Non-Parties.

(a)            No Party may assign its rights or delegate its duties under this Agreement without the prior written consent of the other Parties. Any attempted assignment or delegation in breach of this Section 10.8 shall be null and void. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns. Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the Parties, any rights or remedies under or by reason of this Agreement, except as provided in Section 10.8(b) (which is intended to be for the benefit of the Persons covered thereby and may be enforced by such Persons).

(b)            Notwithstanding anything to the contrary in this Agreement, it is hereby agreed and acknowledged that this Agreement may only be enforced against, and any claims of action that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement may only be made against, the Parties hereto, and no former, current or future Affiliates, officers, directors, managers, employees, equityholders, lenders, financing sources, managers, members, partners, agents or representatives of any Party, in each case, who is not a Party to this Agreement, shall have any liability for any obligations of the Parties hereto or for any claim based on, in respect of, or by reason of, the Transactions.

Section 10.9             Specific Performance.

(a)            The Parties agree and acknowledge that the failure to perform under this Agreement will cause an actual, immediate and irreparable harm and injury and that the Parties would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, it is agreed that, (i) each of the Parties shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement by any other Party and to specifically enforce the terms and provisions of this Agreement, and (ii) prior to the Closing or any termination of this Agreement in accordance with Section 9.1, damages shall be awarded only in a case where a court of competent jurisdiction shall have determined that, notwithstanding the Parties’ intention for specific performance to be the applicable remedy prior to termination or the Closing, such specific performance is not available or otherwise will not be granted as a remedy.

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(b)            The Parties further agree that (i) by seeking the remedies provided for in this Section 10.9, a Party shall not in any respect waive its right to seek any other form of relief that may be available to a party under this Agreement, including monetary damages, subject to the terms hereof, (ii) nothing contained in this Section 10.9 shall require any Party to institute any proceeding for (or limit any Party’s right to institute any proceeding for) specific performance under this Section 10.9 before exercising any termination right under Section 9.1 (and pursuing damages after such termination), nor shall the commencement of any Action pursuant to this Section 10.9 or anything contained in this Section 10.9 restrict or limit any Party’s right to terminate this Agreement in accordance with the terms of Section 9.1 or to pursue any other remedies under this Agreement that may be available then or thereafter and (iii) no Person shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 10.9, and each Party irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.

(c)            To the extent either party hereto brings any Action to enforce specifically the performance of the terms and provisions of this Agreement in accordance with this Section 10.9, the Outside Date shall automatically be extended by (i) the amount of time during which such Action is pending, plus twenty (20) Business Days, or (ii) such other time period established by the court presiding over such Action.

Section 10.10        WAIVER OF JURY TRIAL. THE PARTIES HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVE THEIR RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDING IN ANY COURT RELATING TO ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF, RELATING TO OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT (INCLUDING ANY SCHEDULE OR EXHIBIT HERETO AND THERETO) OR THE BREACH, TERMINATION OR VALIDITY OF SUCH AGREEMENTS OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF SUCH AGREEMENTS. NO PARTY TO THIS AGREEMENT SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION PROCEDURE BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY RELATED INSTRUMENTS. NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EACH PARTY TO THIS AGREEMENT CERTIFIES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT OR INSTRUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS SET FORTH ABOVE IN THIS SECTION 10.10. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION 10.10 WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

 -100- 

 

 

Section 10.11          Severability. If any provision of this Agreement or any Transaction Document, or the application of any such provision to any Person or circumstance, shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof. The Parties further agree that if any provision contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the Parties.

Section 10.12          Counterparts. This Agreement may be executed in two or more counterparts (including by electronic or .pdf transmission), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of any signature page by facsimile, electronic or .pdf transmission shall be binding to the same extent as an original signature page.

Section 10.13          Disclosure Schedules. The Company Disclosure Schedule, the SpinCo Disclosure Schedule and the Parent Disclosure Schedule (each, a “Disclosure Schedule” and, collectively, the “Disclosure Schedules”) (including, in each case, any section thereof) referenced herein are a part of this Agreement as if fully set forth herein. All references herein to the Company Disclosure Schedule, SpinCo Disclosure Schedule and Parent Disclosure Schedule (including, in each case, any section thereof) shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. Certain information set forth in the Disclosure Schedules is included solely for informational purposes and may not be required to be disclosed pursuant to this Agreement. The disclosure of any information in any Disclosure Schedule shall not be deemed to constitute in itself an acknowledgment that such information is required to be disclosed in connection with this Agreement, nor shall such information be deemed to establish a standard of materiality.

Section 10.14         Conflicts and Privilege.

(a)            Parent, SpinCo and the Company, on behalf of their respective successors and assigns (in the case of Parent, including, after the Closing, each of the SpinCo Entities), hereby agree that, in the event a dispute with respect to this Agreement or the Transactions arises after the Closing between or among the Sponsor, Parent, the shareholders or holders of other equity interests of Parent or the Sponsor or any of their respective directors, members, partners, officers, employees or Affiliates of any of the foregoing (including any of the SpinCo Entities) (collectively, the “Parent Group”), on the one hand, and the Company or any other member of the Company Group (as defined below), on the other hand, any legal counsel (including Weil) that represented Parent or the Sponsor prior to the Closing may represent the Sponsor or any other member of the Parent Group in such dispute, regardless of whether the interests of any such Persons may be directly adverse to Parent or the applicable member of the Parent Group, and even though such counsel may have represented Parent or another member of the Parent Group in a matter substantially related to such dispute, or may be handling ongoing matters for Parent, the Sponsor or any other member of the Parent Group. Parent, SpinCo and the Company further agree that, as to all legally privileged communications prior to the Closing between or among any legal counsel (including Weil) that represented Parent, the Sponsor or any other member of the Parent Group prior to the Closing, on the one hand, and any one or more of such Persons, on the other hand, that relate in any way to this Agreement or the Transactions, the attorney/client privilege and the expectation of client confidence belongs to the Parent Group, shall be controlled by the Parent Group, and shall not pass to or be claimed or controlled by the Company or any of its Subsidiaries (after giving effect to the Closing). Notwithstanding the foregoing, any privileged communications or information shared prior to the Closing by the Company or any of its Subsidiaries (other than the SpinCo Entities), on the one hand, with Parent, the Sponsor or any other member of the Parent Group (other than the SpinCo Entities) (in any capacity), on the other hand, under a common interest agreement shall remain the privileged communications or information of the Company Group.

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(b)            Parent, SpinCo and the Company, on behalf of their respective successors and assigns (in the case of Parent, including, after the Closing, each of the SpinCo Entities) hereby agree that, in the event a dispute with respect to this Agreement or the Transactions arises after the Closing between or among the Company, any Subsidiary of the Company (other than any of the SpinCo Entities), the shareholders or holders of other equity interests of the Company, any Subsidiary of the Company (other than any of the SpinCo Entities) or any of their respective directors, members, partners, officers, employees or Affiliates of any of the foregoing (collectively, the “Company Group”), on the one hand, and the Surviving Corporation or any other member of the Parent Group, on the other hand, any legal counsel (including LW) that represented the Company or any other member of the Company Group prior to the Closing may represent any member of the Company Group in such dispute, regardless of whether the interests of any such Persons may be directly adverse to the Surviving Corporation or any other member of the Parent Group, and even though such counsel may have represented Parent or any other member of the Parent Group in a matter substantially related to such dispute, or may be handling ongoing matters for the Surviving Corporation or any other member of the Parent Group. Parent, SpinCo and the Company further agree that, as to all legally privileged communications prior to the Closing between or among any legal counsel (including LW) that represented the Company or any other member of the Company Group prior to the Closing, on the one hand, and any one or more of such Persons, on the other hand, that relate in any way to this Agreement or the Transactions, the attorney/client privilege and the expectation of client confidence belongs to the Company Group, shall be controlled by the Company Group, and shall not pass to or be claimed or controlled by Parent or any other member of the Parent Group. Notwithstanding the foregoing, any privileged communications or information shared prior to the Closing by Parent or any other member of the Parent Group, on the one hand, with any member of the Company Group, on the other hand, under a common interest agreement shall remain the privileged communications or information of the SpinCo Entities and, following the Closing, the Parent Group.

[Signature page follows.]

 -102- 

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

  

  LIGAND PHARMACEUTICALS INCORPORATED
     
  By: /s/ Matthew Korenberg
    Name: Matthew Korenberg
    Title: Executive Vice President, Finance and Chief Financial Officer
     
  OMNIAB, INC.
     
  By: /s/ Matthew W. Foehr
    Name: Matthew W. Foehr
    Title: President and Chief Executive Officer
     
  AVISTA PUBLIC ACQUISITION CORP. II
     
  By: /s/ Benjamin Silbert
    Name: Benjamin Silbert
    Title: General Counsel
     
  ORWELL MERGER SUB INC.
     
  By: /s/ David Burgstahler
    Name: David Burgstahler
    Title: President

 

   

 

 

 

Exhibit A to the Merger Agreement

 

 

 

 

Execution Version

 

SEPARATION AND DISTRIBUTION AGREEMENT

 

by and among

 

LIGAND PHARMACEUTICALS INCORPORATED,

 

OMNIAB, INC.

 

and

 

AVISTA PUBLIC ACQUISITION CORP. II

 

Dated as of March 23, 2022

 

 

 

 

TABLE OF CONTENTS

 

    Page
     
Article I DEFINITIONS AND INTERPRETATION 2
     
Section 1.1 General 2
Section 1.2 References; Interpretation 21
     
Article II THE SEPARATION 21
     
Section 2.1 General 21
Section 2.2 Restructuring: Transfer of Assets; Assumption of Liabilities 21
Section 2.3 Treatment of Shared Contracts 23
Section 2.4 Intercompany Accounts, Loans and Agreements 24
Section 2.5 Limitation of Liability; Intercompany Contracts 25
Section 2.6 Transfers Not Effected at or Prior to the Distribution Time; Transfers Deemed Effective as of the Distribution Time 25
Section 2.7 Conveyancing and Assumption Instruments 27
Section 2.8 Further Assurances; Ancillary Agreements 28
Section 2.9 Novation of Liabilities; Indemnification 29
Section 2.10 Guarantees; Credit Support Instruments 30
Section 2.11 Disclaimer of Representations and Warranties 31
Section 2.12 Cash Management; Consideration 32
     
Article III completion of the distribution 33
     
Section 3.1 Actions Prior to the Distribution 33
Section 3.2 Effecting the Distribution 34
Section 3.3 Conditions to the Distribution 35
     
Article IV CERTAIN COVENANTS 35
     
Section 4.1 Cooperation 35
Section 4.2 Retained Names 36
Section 4.3 Ligand Limited License 37
Section 4.4 No Restriction on Competition 37
     
Article V INDEMNIFICATION 38
     
Section 5.1 Release of Pre-Distribution Claims 38
Section 5.2 Indemnification by Ligand 41
Section 5.3 Indemnification by OmniAb and APAC 42
Section 5.4 Procedures for Indemnification 42
Section 5.5 Cooperation in Defense and Settlement 45
Section 5.6 Indemnification Payments 46

 

 

 

Section 5.7 Indemnification Obligations Net of Insurance Proceeds and Other Amounts 46
Section 5.8 Contribution 46
Section 5.9 Additional Matters; Survival of Indemnities 47
     
Article VI PRESERVATION OF RECORDS; ACCESS TO INFORMATION; CONFIDENTIALITY; PRIVILEGE 47
     
Section 6.1 Preservation of Corporate Records 47
Section 6.2 Access to Information 47
Section 6.3 Auditors and Audits 48
Section 6.4 Witness Services 49
Section 6.5 Reimbursement; Other Matters 49
Section 6.6 Confidentiality 49
Section 6.7 Privilege Matters 51
Section 6.8 Ownership of Information 52
Section 6.9 Processing of Personal Information 52
Section 6.10 Other Agreements 52
     
Article VII DISPUTE RESOLUTION 52
     
Section 7.1 Negotiation 52
Section 7.2 Relief in Court 52
Section 7.3 Continuity of Service and Performance 53
     
Article VIII INSURANCE 53
     
Section 8.1 Insurance Matters 53
     
Article IX MISCELLANEOUS 54
     
Section 9.1 Entire Agreement; Construction 54
Section 9.2 Ancillary Agreements 54
Section 9.3 Counterparts 54
Section 9.4 Survival of Agreements 54
Section 9.5 Expenses 55
Section 9.6 Notices 55
Section 9.7 Consents 56
Section 9.8 Assignment 56
Section 9.9 Successors and Assigns 57
Section 9.10 Termination and Amendment 57
Section 9.11 Payment Terms 57
Section 9.12 Subsidiaries 57
Section 9.13 Third Party Beneficiaries 58
Section 9.14 Title and Headings 58
Section 9.15 Exhibits and Schedules 58
Section 9.16 Governing Law and Venue; Submission to Jurisdiction; Selection of Forum; Waiver of Trial by Jury 58
Section 9.17 Specific Performance 59
Section 9.18 Severability 59
Section 9.19 Interpretation 59
Section 9.20 No Duplication; No Double Recovery 59
Section 9.21 Tax Treatment of Payments 59
Section 9.22 No Waiver 59
Section 9.23 No Admission of Liability 59

 

ii 

 

 

List of Schedules

 

1.1(75) Ligand Retained Liabilities  
1.1(76) Ligand Retained Names  
1.1(86)(ii) OmniAb Assets – General  
1.1(86)(v) OmniAb Assets – Leases/Subleases  
1.1(86)(vi) OmniAb Assets – Contracts  
1.1(86)(vii) OmniAb Assets – Intellectual Property  
1.1(86)(x) OmniAb Assets – IT Assets  
1.1(97)(ii) OmniAb Liabilities – General  
1.1(97)(vii) OmniAb Liabilities – Actions  
2.3(a)  Shared Contracts  
2.10(a)(i) Guarantees Provided by OmniAb Group  
2.10(a)(ii) Guarantees Provided by Ligand Group  
2.12(c) Other Reimbursable Expenses  

 

List of Exhibits

 

Exhibit A            Reorganization Plan 

Exhibit B            Illustrative Adjustments pursuant to Section 2.12(c)

 

iii 

 

 

Final Form

 

SEPARATION AND DISTRIBUTION AGREEMENT

 

This SEPARATION AND DISTRIBUTION AGREEMENT (this “Agreement”), dated as of March 23, 2022, is entered into by and among Ligand Pharmaceuticals Incorporated, a Delaware corporation (“Ligand”), OmniAb, Inc., a Delaware corporation and a wholly owned subsidiary of Ligand (“OmniAb”), and Avista Public Acquisition Corp. II, a Cayman Islands exempted company (which will migrate to and domesticate as a Delaware corporation prior to the Closing (the “Domestication”)) (“APAC”). “Party” or “Parties” means Ligand or OmniAb, individually or collectively, as the case may be. Capitalized terms used and not defined herein shall have the meaning set forth in Section 1.1.

 

W I T N E S S E T H:

 

WHEREAS, Ligand owns 100% of the common stock, par value $0.001 per share, of OmniAb (the “OmniAb Stock”);

 

WHEREAS, Ligand, acting through its direct and indirect Subsidiaries, currently conducts the Ligand Retained Business and the OmniAb Business;

 

WHEREAS, the Board of Directors of Ligand (the “Ligand Board”) has determined that it is appropriate, desirable and in the best interests of Ligand and its stockholders to separate Ligand into two separate companies, one for each of (i) the Ligand Retained Business, which shall be owned and conducted, directly or indirectly, by Ligand and its Subsidiaries (other than OmniAb and its Subsidiaries) and (ii) the OmniAb Business, which shall be owned and conducted, directly or indirectly, by OmniAb and its Subsidiaries (the “Separation”);

 

WHEREAS, in order to effect the Separation, the Ligand Board has determined that it is appropriate, desirable and in the best interests of Ligand and its stockholders for Ligand to undertake the Internal Reorganization and, in connection therewith, effect the Contribution to OmniAb;

 

WHEREAS, the Ligand Board has further determined that it is appropriate and desirable, on the terms and conditions contemplated hereby, following such separation to make a distribution of the OmniAb Business to the holders of common stock, par value $0.001 per share, of Ligand (the “Ligand Stock”) on the Record Date through the distribution of all of the outstanding shares of OmniAb Stock to holders of Ligand on the Record Date on a pro rata basis in accordance with a distribution ratio to be determined by the Ligand Board (the “Distribution”), in each case, on the terms and conditions set forth in this Agreement;

 

WHEREAS, immediately following the Distribution, Ligand will hold none of the outstanding shares of OmniAb Stock;

 

WHEREAS, the Ligand Board has further determined that it is appropriate and desirable, on the terms and conditions contemplated in the Agreement and Plan of Merger, dated as of the date hereof (the “Merger Agreement”), among Ligand, OmniAb, APAC and Orwell Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of APAC (“Merger Sub”), following the Domestication, Separation and Distribution, Merger Sub will merge with and into OmniAb, with OmniAb continuing as the surviving corporation (the “Merger”);

 

 

 

 

WHEREAS, pursuant to the Merger, shares of OmniAb Stock will be exchanged for shares of Domesticated Parent Common Stock, on the terms and conditions set forth in the Merger Agreement;

 

WHEREAS, Ligand and OmniAb will prepare, and OmniAb will file with the SEC, the Form 10, which will include the Information Statement and will set forth certain disclosure concerning OmniAb, the Separation, the Distribution and the Merger;

 

WHEREAS, (i) the Ligand Board has (x) determined that the transactions contemplated by this Agreement, the Merger Agreement and the Ancillary Agreements have a valid business purpose, are in furtherance of and consistent with its business strategy and are in the best interests of Ligand and its stockholders and (y) approved this Agreement, the Merger Agreement and each of the Ancillary Agreements and (ii) the Board of Directors of OmniAb (the “OmniAb Board”) has approved this Agreement, the Merger Agreement and each of the Ancillary Agreements (to the extent OmniAb is a party thereto);

 

WHEREAS, the board of directors of APAC has approved this Agreement and the Merger Agreement;

 

WHEREAS, the Parties and APAC desire to set forth the principal corporate transactions required to effect the Separation and the Distribution, and certain other agreements relating to the relationship of Ligand and OmniAb and their respective Subsidiaries following the Distribution;

 

WHEREAS, it is the intention of the Parties and APAC that the (i) Contribution and Distribution, together with certain related transactions, will qualify as a “reorganization” under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “Code;”) and (ii) the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code; and

 

WHEREAS, this Agreement is intended to be, and is hereby adopted as, a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a).

 

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants contained in this Agreement, the Parties and APAC hereby agree as follows:

 

Article I
DEFINITIONS AND INTERPRETATION

 

Section 1.1      General. As used in this Agreement, the following terms shall have the following meanings:

 

(1)            Action” shall mean any demand, action, claim, suit, countersuit, arbitration, inquiry, subpoena, case, litigation, proceeding or investigation (whether civil, criminal, administrative or investigative) by or before any court or grand jury, any Governmental Entity or any arbitration or mediation tribunal.

 

(2)            Affiliate” shall mean, when used with respect to a specified Person and at a point in, or with respect to a period of, time, a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person at such point in or during such period of time. For the purposes of this definition, “control”, when used with respect to any specified Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by Contract or otherwise. It is expressly agreed that, from and after the Distribution Time, solely for purposes of this Agreement, (i) no member of the OmniAb Group shall be deemed an Affiliate of any member of the Ligand Group and (ii) no member of the Ligand Group shall be deemed an Affiliate of any member of the OmniAb Group.

 

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(3)            Agent” means Computershare Trust Company, N.A., as the distribution agent appointed by Ligand to distribute to the stockholders of Ligand all of the outstanding shares of OmniAb Stock pursuant to the Distribution.

 

(4)            Agreement” shall have the meaning set forth in in the Preamble.

 

(5)            Amended Financial Report” shall have the meaning set forth in Section 6.3(b).

 

(6)            Ancillary Agreements” shall mean the Transition Services Agreements, the Employee Matters Agreement, the Tax Matters Agreement, any Continuing Arrangements, any and all Conveyancing and Assumption Instruments, and any other agreements to be entered into by and between any member of the Ligand Group, on one hand, and any member of the OmniAb Group, on the other hand, at, prior to or after the Distribution Time in connection with the Separation, the Distribution and the other transactions contemplated by this Agreement.

 

(7)            APAC” shall have the meaning set forth in the Preamble.

 

(8)            APAC Released Liabilities” shall have the meaning set forth in Section 5.1(a)(iii).

 

(9)            Assets” shall mean all rights (including Intellectual Property), title and ownership interests in and to all properties, claims, Contracts, businesses, or assets (including goodwill), wherever located (including in the possession of vendors or other third parties or elsewhere), of every kind, character and description, whether real, personal or mixed, tangible or intangible, whether accrued, contingent or otherwise, in each case, whether or not recorded or reflected on the books and records or financial statements of any Person. Except as otherwise specifically set forth herein, in the Employee Matters Agreement or in the Tax Matters Agreement, the rights and obligations of the Parties with respect to Taxes shall be governed by the Tax Matters Agreement and, therefore, Tax assets (including any Tax items, attributes or rights to receive any Refunds (as defined in the Tax Matters Agreement)) shall not be treated as Assets.

 

(10)            Asset Transferors” shall mean the entities transferring Assets to OmniAb or one of its Subsidiaries in order to consummate the transactions contemplated hereby.

 

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(11)            Assume” shall have the meaning set forth in Section 2.2(c); and the terms “Assumed” and “Assumption” shall have their correlative meanings.

 

(12)            Business” shall mean the Ligand Retained Business or the OmniAb Business, as applicable.

 

(13)            Business Day” shall mean any day other than Saturday or Sunday and any other day on which commercial banking institutions located in New York, New York are required, or authorized by Law, to remain closed.

 

(14)            Business Entity” shall mean any corporation, partnership, limited liability company, joint venture or other entity which may legally hold title to Assets.

 

(15)            Cash Equivalents” shall mean (i) cash and (ii) checks, certificates of deposit having a maturity of less than one year, money orders, marketable securities, money market funds, commercial paper, short-term instruments and other cash equivalents, funds in time and demand deposits or similar accounts, and any evidence of indebtedness issued or guaranteed by any Governmental Entity, minus the amount of any outbound checks, plus the amount of any deposits in transit. For the purposes of Section 2.12, “Cash Equivalents” shall not include any cash in transit at the Distribution Time.

 

(16)            Chosen Courts” shall have the meaning set forth in Section 9.16(b).

 

(17)            Closing” shall have the meaning set forth in the Merger Agreement.

 

(18)            Code” shall have the meaning set forth in the Recitals.

 

(19)            Commission” shall mean the United States Securities and Exchange Commission.

 

(20)            Confidential Information” shall mean all non-public, confidential or proprietary Information to the extent concerning a Party, its Group and/or its Subsidiaries or with respect to OmniAb, the OmniAb Business, any OmniAb Assets or any OmniAb Liabilities or with respect to Ligand, the Ligand Retained Business, any Ligand Retained Assets or any Ligand Retained Liabilities, including any such Information that was acquired by any Party after the Distribution Time pursuant to Article VI or otherwise in accordance with this Agreement, or that was provided to a Party by a third party in confidence, including (a) any and all technical information relating to the design, operation, testing, test results, development, and manufacture of any Party’s products, compounds, technologies or biological, chemical or other materials or that of a Party’s partners (including specifications and documentation; engineering, design, and manufacturing drawings, diagrams, layouts, maps and illustrations; formulations and material specifications; laboratory studies and benchmark tests; preclinical and clinical data; quality assurance policies, procedures and specifications; evaluation and validation studies; process control and/or shop-floor control strategy, logic or algorithms; assembly code, Software, firmware, programming data, databases, and all information referred to in the same); costs, margins and pricing; as well as product marketing studies and strategies; all other methodologies, procedures, techniques and Know-How related to discovery, research, engineering, development and manufacturing; (b) information, documents and materials relating to the Party’s financial condition, management and other business conditions, prospects, plans, procedures, partners, infrastructure, security, information technology procedures and systems, and other business or operational affairs; (c) pending unpublished patent applications and Trade Secrets; and (d) any other data or documentation resident, existing or otherwise provided in a database or in a storage medium, permanent or temporary, intended for confidential, proprietary and/or privileged use by a Party; except for any Information that is (i) in the public domain or known to the public through no fault of the receiving Party or its Subsidiaries, (ii) lawfully acquired after the Distribution Time by such Party or its Subsidiaries from other sources not known to be subject to confidentiality obligations with respect to such Information or (iii) independently developed by the receiving Party after the Distribution Time without reference to any Confidential Information. As used herein, by example and without limitation, Confidential Information shall include any information of a Party intended or marked as confidential, proprietary and/or privileged.

 

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(21)            Consents” shall mean any consents, waivers, notices, reports or other filings to be obtained from or made, including with respect to any Contract, or any registrations, licenses, permits, authorizations to be obtained from, or approvals from, or notification requirements to, any third parties, including any third party to a Contract and any Governmental Entity.

 

(22)            Continuing Arrangements” shall mean:

 

(i)            this Agreement and the Ancillary Agreements (and each other Contract expressly contemplated by this Agreement or any Ancillary Agreement to be entered into or continued by any of the Parties or any of the members of their respective Groups); and

 

(ii)            any Contracts or intercompany accounts solely between or among members of the OmniAb Group.

 

(23)            Contract” shall mean any agreement, contract, subcontract, obligation, binding understanding, note, indenture, instrument, option, lease, promise, arrangement, release, warranty, license, sublicense, insurance policy, benefit plan, purchase order or legally binding commitment or undertaking of any nature (whether written or oral and whether express or implied).

 

(24)            Contribution” shall mean (i) the Transfer, directly or indirectly, of the capital stock of or membership or other equity interests in the Transferred Entities and the other OmniAb Assets from Ligand or its Subsidiaries to OmniAb or its Subsidiaries, (ii) the contribution by Ligand to OmniAb of $15,000,000 (fifteen million dollars) in cash, decreased by the amount of Reimbursable Transaction-related Expenses and Other Reimbursable Expenses, and increased by the amount of any Specific Milestone Payments, and (iii) the Assumption of Liabilities, directly or indirectly, by OmniAb or its Subsidiaries pursuant to the Internal Reorganization or otherwise relating to, arising out of or resulting from the transactions contemplated by this Agreement.

 

(25)            Conveyancing and Assumption Instruments” shall mean, collectively, the various Contracts, including the related local asset transfer agreements and local stock transfer agreements, and other documents entered into prior to the Distribution Time and to be entered into to effect the Transfer of Assets and the Assumption of Liabilities in the manner contemplated by this Agreement, or otherwise relating to, arising out of or resulting from the transactions contemplated by this Agreement, in such form or forms as the applicable Parties thereto agree.

 

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(26)            Covered Matter” shall have the meaning set forth in Section 8.1(i).

 

(27)            Credit Support Instruments” shall mean any letters of credit, performance bonds, surety bonds, bankers acceptances, or other similar arrangements.

 

(28)            Dispute Notice” shall have the meaning set forth in Section 7.1.

 

(29)            Disputes” shall have the meaning set forth in Section 7.1.

 

(30)            Distribution” shall have the meaning set forth in the Recitals.

 

(31)            Distribution Date” shall mean the date on which Ligand, through the Agent, distributes all of the issued and outstanding shares of OmniAb Stock to holders of Ligand Stock in the Distribution, and “Distribution Time” shall mean the time at which the Distribution occurs on the Distribution Date, which shall be deemed to be 12:01 a.m., New York time on the Distribution Date.

 

(32)            Domesticated Parent Common Stock” shall have the meaning set forth in the Merger Agreement.

 

(33)            Domestication” shall have the meaning set forth in the Merger Agreement.

 

(34)            Effective Time” shall have the meaning set forth in the Merger Agreement.

 

(35)            Employee Matters Agreement” shall mean that certain Employee Matters Agreement to be entered into between Ligand and OmniAb or any members of their respective Groups in connection with the Separation, the Distribution, the Merger or the other transactions contemplated by this Agreement, as such agreement may be modified or amended from time to time in accordance with its terms.

 

(36)            Environmental Laws” shall mean all Laws relating to pollution or protection of human health or safety or the environment, including Laws relating to the exposure to, or Release, threatened Release or the presence of Hazardous Substances, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, transport or handling of Hazardous Substances and all Laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Substances, and all laws relating to endangered or threatened species of fish, wildlife and plants and the management or use of natural resources.

 

(37)            Environmental Liabilities” shall mean Liabilities relating to Environmental Law or the Release or threatened Release of or exposure to Hazardous Substances, including, without limitation, the following: (i) actual or alleged violations of or non-compliance with any Environmental Law, including a failure to obtain, maintain or comply with any Environmental Permits; (ii) obligations arising under or pursuant to any applicable Environmental Law or Environmental Permit; (iii) the presence of Hazardous Substances or the introduction of Hazardous Substances to the environment at, in, on, under or migrating from any of the building, facility, structure or real property, including Liabilities relating to, resulting from or arising out of the investigation, remediation, or monitoring of such Hazardous Substances; (iv) natural resource damages, property damages, personal or bodily injury or wrongful death relating to the presence of or exposure to Hazardous Substances (including asbestos-containing materials), at, in, on, under or migrating to or from any building, facility, structure or real property; (v) the transport, disposal, recycling, reclamation, treatment or storage, Release or threatened Release of Hazardous Substances at Off-Site Locations; and (vi) any agreement, decree, judgment, or order relating to the foregoing. The term “Environmental Liabilities” does not include Liabilities arising in connection with claims for injuries to persons or property from products sold by or services provided by the OmniAb Group, the Ligand Group or their predecessors.

 

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(38)            Environmental Permit” shall mean any permit, license, approval or other authorization under any applicable Law or of any Governmental Entity relating to Environmental Laws or Hazardous Substances.

 

(39)            Exchange Act” shall mean the United States Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

 

(40)            Excluded Environmental Liabilities” shall mean any and all Environmental Liabilities whether arising before, at or after the Distribution Time, to the extent relating to, resulting from, or arising out of the past, present or future operation, conduct or actions of any Ligand Retained Business.

 

(41)            Final Determination” shall have the meaning set forth in the Tax Matters Agreement.

 

(42)            Form 10” means the registration statement on Form 10 filed by OmniAb with the SEC to effect the registration of the OmniAb Stock pursuant to Section 12(b) or 12(g) of the Exchange Act in connection with the Distribution, including any amendments or supplements thereto.

 

(43)            Former Business” shall mean any corporation, partnership, entity, division, business unit or business (in each case, including any assets and liabilities comprising the same) that has been sold, conveyed, assigned, transferred, spun-off, split-off or otherwise disposed of or divested (in whole or in part) to a Person or Persons that is not a member of the OmniAb Group or the Ligand Group or the operations, activities or production of which has been discontinued, abandoned, completed or otherwise terminated (in whole or in part), in each case, prior to the Distribution Time.

 

(44)            Governmental Approvals” shall mean any notices or reports to be submitted to, or other registrations or filings to be made with, or any consents, approvals, licenses, permits or authorizations to be obtained from, any Governmental Entity.

 

(45)            Governmental Filing” shall have the meaning set forth in Section 5.5(c).

 

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(46)            Governmental Entity” shall mean any nation or government, any state, municipality or other political subdivision thereof and any entity, body, agency, commission, department, board, bureau or court, whether domestic, foreign, multinational, or supranational exercising executive, legislative, judicial, regulatory, self-regulatory or administrative functions of or pertaining to government and any executive official thereof.

 

(47)            Group” shall mean (i) with respect to Ligand, the Ligand Group and (ii) with respect to OmniAb, the OmniAb Group.

 

(48)            Hazardous Substance” shall mean (a) any substances defined, listed, classified or regulated as “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “contaminants,” “pollutants,” “wastes,” “radioactive materials,” “petroleum,” “oils” or designations of similar import under any Environmental Law, or (b) any other chemical, material or substance that is regulated or for which liability can be imposed under any Environmental Law.

 

(49)            Indebtedness” shall mean, with respect to any Person, (i) the principal amount, prepayment and redemption premiums and penalties (if any), unpaid fees and other monetary obligations in respect of any indebtedness for borrowed money, whether short term or long term, and all obligations evidenced by bonds, debentures, notes, other debt securities or similar instruments, (ii) any indebtedness arising under any capital leases (excluding, for the avoidance of doubt, any real estate leases), whether short term or long term, (iii) all liabilities secured by any Security Interest on any assets of such Person, (iv) all liabilities under any interest rate, currency, commodity or other swap, collar, cap or other hedging or similar agreements or arrangements, (v) all liabilities under any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement or other similar agreement designed to protect such Person against fluctuations in interest rates, (vi) all interest bearing indebtedness for the deferred purchase price of property or services, (vii) all liabilities under any Credit Support Instruments, (viii) all interest, fees and other expenses owed with respect to indebtedness described in the foregoing clauses (i) through (vii), and (ix) without duplication, all guarantees of indebtedness referred to in the foregoing clauses (i) through (viii), excluding in each case any obligations related to Taxes.

 

(50)            Indemnifiable Loss” and “Indemnifiable Losses” shall mean any and all damages, losses, deficiencies, Liabilities, obligations, penalties, judgments, settlements, claims, payments, fines, interest, costs and expenses (including the costs and expenses of any and all Actions and demands, assessments, judgments, settlements and compromises relating thereto and the costs and expenses of attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder).

 

(51)            Indemnifying Party” shall have the meaning set forth in Section 5.4(a).

 

(52)            Indemnitee” shall have the meaning set forth in Section 5.4(a).

 

(53)            Indemnity Payment” shall have the meaning set forth in Section 5.7(a).

 

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(54)            Information” shall mean information, content and data (including Personal Information) in written, oral, electronic, computerized, digital or other tangible or intangible media, including (i) books and records, whether accounting, legal or otherwise, ledgers, studies, reports, surveys, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, marketing plans, customer names and information (including prospects), technical information relating to the design, operation, testing, test results, development, and manufacture of any Party’s or its Group’s, or any of their partners’, products, compounds, technologies or biological, chemical or other materials or facilities (including specifications and documentation; engineering, design and manufacturing drawings, diagrams, layouts, maps and illustrations; formulations and material specifications; laboratory studies and benchmark tests; preclinical and clinical data; quality assurance policies, procedures and specifications; evaluation and validation studies; process control and/or shop-floor control strategy, logic or algorithms; assembly code, Software, firmware, programming data, databases, and all information referred to in the same); costs, margins and pricing; as well as product marketing studies and strategies; all other methodologies, procedures, techniques and Know-How related to discovery, research, engineering, development and manufacturing; communications, correspondence, materials, product literature, artwork, files, documents; and (ii) financial and business information, including earnings reports and forecasts, macro-economic reports and forecasts, all cost information (including partner and supplier records and lists), sales and pricing data, business plans, market evaluations, surveys, credit-related information, and other such information as may be needed for reasonable compliance with reporting, disclosure, filing or other requirements, including under applicable securities laws or regulations of securities exchanges.

 

(55)            Information Statement” shall mean the Information Statement attached as an exhibit to the Form 10 and any related documents to be provided to the holders of Ligand Stock in connection with the Distribution, including any potential revision of such Information Statement to be a combined proxy statement, prospectus and/or information statement in connection with the Merger, and including any amendment or supplement thereto.

 

(56)            Insurance Proceeds” shall mean those monies: (a) received by an insured Person from any insurer, insurance underwriter, mutual protection and indemnity club or other risk collective; or (b) paid on behalf of an insured Person by any insurer, insurance underwriter, mutual protection and indemnity club or other risk collective, on behalf of the insured, in either such case net of any costs or expenses incurred in the collection thereof; provided, however, that with respect to a captive insurance arrangement, Insurance Proceeds shall only include net amounts received by the captive insurer from a Third Party in respect of any captive reinsurance arrangement.

 

(57)            Intellectual Property” shall mean all U.S. and foreign rights, title and interest (whether statutory, common law or otherwise) in or relating to any intellectual property, including all: (i) trademarks, trade dress, service marks, certification marks, logos, slogans, design rights, names, corporate names, trade names, brand names and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing, and all applications, registrations, renewals and extensions of any of the foregoing (collectively, “Trademarks”); (ii) patents and patent applications, and all related national or international counterparts thereto, including any divisionals, continuations, continuations-in-part, reissues, reexaminations, substitutions provisionals, renewals, extensions, patents of addition, supplementary protection certificates, utility models, inventors’ certificates, or the like, and any foreign equivalents of any of the foregoing (including certificates of invention and any applications therefor) and all rights to claim priority from any of the foregoing (collectively, “Patents”); (iii) copyrights and copyrightable subject matter, whether or not registered or published, and all applications, registrations, reversions, extensions and renewals of any of the foregoing, and all moral rights, however denominated; (iv) trade secrets, and all other confidential or proprietary information, ideas, technology, Software, compositions, discoveries, improvements, know-how, inventions, designs, processes, techniques, formulae, models, and methodologies, in each case, whether or not patentable or copyrightable, but excluding issued Patents (collectively, “Know-How,” and trade secrets together with confidential Know-How, “Trade Secrets”); (v) Internet domain names and social media accounts and addresses, and all registrations for any of the foregoing (collectively, “Domain Names”); and (vi) rights and remedies with respect to any past, present, or future infringement, misappropriation, or other violation of any of the foregoing in clauses (i) through (v).

 

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(58)            Intellectual Property Documentation” shall mean: (i) all correct and complete physical and electronic copies of all prosecution and maintenance files and dockets, registration certificates, litigation files and related opinions of counsel and correspondence for all issued, registered and applied-for items of OmniAb Intellectual Property; (ii) all litigation files to the extent relating to any Actions brought for the infringement, dilution, misappropriation or other violation of any of the OmniAb Intellectual Property; (iii) all books, records, files, ledgers or similar documentation used to track, organize or maintain any of the OmniAb Intellectual Property; and (iv) copies of all acquisition agreements relating to the acquisition of any of the OmniAb Intellectual Property.

 

(59)            Internal Reorganization” shall mean the allocation and transfer or assignment of Assets and Liabilities, including by means of the Conveyancing and Assumption Instruments, resulting in (i) the OmniAb Group owning and operating the OmniAb Business, and (ii) the Ligand Group continuing to own and operate the Ligand Retained Business, as described in the internal reorganization plan attached hereto as Exhibit A (the “Reorganization Plan”), as may be amended prior to the Distribution Date only by written consent of Ligand, OmniAb and APAC.

 

(60)            IT Assets” shall mean all information technology, Software, computers, computer systems, communication systems, telecommunications equipment, databases, internet protocol addresses, data rights and documentation, reference, resource and training materials relating to any of the foregoing, and all Contracts (including Contract rights) relating to any of the foregoing (including Software license agreements, source code escrow agreements, support and maintenance agreements, electronic database access contracts, Domain Name registration agreements, website hosting agreements, Software or website development agreements, outsourcing agreements, service provider agreements, interconnection agreements, governmental permits, radio licenses and telecommunications agreements).

 

(61)            Joint Claim” shall mean any claim or series of related claims under any insurance policy that results or could reasonably be expected to result in the payment of Insurance Proceeds to or for the benefit of both one or more members of the Ligand Group and one or more members of the OmniAb Group.

 

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(62)            Law” shall mean any applicable U.S. or non-U.S. federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, income tax treaty, order, requirement or rule of law (including common law) or other binding directives promulgated, issued, entered into or taken by any Governmental Entity.

 

(63)            Liabilities” shall mean any and all Indebtedness, liabilities, costs, expenses, interest and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, known or unknown, reserved or unreserved, or determined or determinable, including those arising under any Law (including Environmental Law), Action, whether asserted or unasserted, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Entity and those arising under any Contract or any fines, damages or equitable relief which may be imposed and including all costs and expenses related thereto. Except as otherwise specifically set forth herein, in the Employee Matters Agreement or in the Tax Matters Agreement, the rights and obligations of the Parties with respect to Taxes shall be governed by the Tax Matters Agreement and, therefore, Taxes shall not be treated as Liabilities governed by this Agreement other than for purposes of indemnification related to the Spin-off Disclosure Documents.

 

(64)            Liable Party” shall have the meaning set forth in Section 2.9(b).

 

(65)            Ligand” shall have the meaning set forth in the Preamble.

 

(66)            Ligand Board” shall have the meaning set forth in the Recitals.

 

(67)            Ligand CSIs” shall have the meaning set forth in Section 2.10(d).

 

(68)            Ligand Former Business” shall mean any Former Business (other than the OmniAb Business or the OmniAb Former Businesses) that, at the time of sale, conveyance, assignment, transfer, disposition, divestiture (in whole or in part) or discontinuation, abandonment, completion or termination of the operations, activities or production thereof, was primarily managed by or associated with the Ligand Retained Business as then conducted.

 

(69)            Ligand Group” shall mean (i) Ligand, the Ligand Retained Business and each Person that is a direct or indirect Subsidiary of Ligand as of immediately following the Distribution Time and (ii) each Business Entity that becomes a Subsidiary of Ligand after the Distribution Time.

 

(70)            Ligand Indemnitees” shall mean each member of the Ligand Group and each of their respective Affiliates from and after the Distribution Time and each member of the Ligand Group’s and such Affiliates’ respective current, former and future directors, officers, employees and agents (solely in their respective capacities as current, former and future directors, officers, employees or agents of any member of the Ligand Group or their respective Affiliates) and each of the heirs, executors, successors and assigns of any of the foregoing, except, for the avoidance of doubt, the OmniAb Indemnitees.

 

(71)            Ligand Released Liabilities” shall have the meaning set forth in Section 5.1(a)(i).

 

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(72)            Ligand Retained Assets” shall mean:

 

(i)            any and all Assets that are expressly contemplated by this Agreement or any Ancillary Agreement as Assets to be retained by Ligand or any other member of the Ligand Group, including for the avoidance of doubt all Ligand Retained IP;

 

(ii)            any and all Assets that are owned, leased or licensed, at or prior to the Distribution Time, by Ligand and/or any of its Subsidiaries, that are not OmniAb Assets; and

 

(iii)            any and all Assets that are acquired or otherwise become an Asset of the Ligand Group after the Distribution Time.

 

(73)            Ligand Retained Business” shall mean (i) those businesses operated by the Ligand Group prior to the Distribution Time other than the OmniAb Business, (ii) those Business Entities or businesses acquired or established by or for any member of the Ligand Group after the Distribution Time, and (iii) any Ligand Former Business; provided that Ligand Retained Business shall not include any OmniAb Former Business or OmniAb Former Real Property.

 

(74)            Ligand Retained IP” shall mean (i) all Intellectual Property owned or controlled by the Ligand Group other than OmniAb Intellectual Property and (ii) the Ligand Retained Names.

 

(75)            Ligand Retained Liabilities” shall mean:

 

(i)            any and all Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement as Liabilities to be retained or assumed by Ligand or any other member of the Ligand Group, and all agreements, obligations and other Liabilities of Ligand or any member of the Ligand Group under this Agreement or any of the Ancillary Agreements, including as set forth in Section 2.12(c)(ii);

 

(ii)            any and all Liabilities of a member of the Ligand Group to the extent relating to, arising out of or resulting from any Ligand Retained Assets (other than Liabilities arising under any Shared Contracts to the extent such Liabilities relate to the OmniAb Business);

 

(iii)            the Liabilities listed on Schedule 1.1(75); and

 

(iv)            any and all Liabilities of Ligand and each of its Subsidiaries that are not OmniAb Liabilities.

 

Notwithstanding the foregoing, the Ligand Retained Liabilities shall not include any Liabilities for Taxes that are governed by the Tax Matters Agreement or the Employee Matters Agreement.

 

(76)            Ligand Retained Names” shall mean the names and marks set forth in Schedule 1.1(76), and any Trademarks containing or comprising any of such names or marks, and any Trademarks derivative thereof or confusingly similar thereto, or any telephone numbers or other alphanumeric addresses or mnemonics containing any of the foregoing names or marks.

 

(77)            Ligand Stock” shall have the meaning set forth in the Recitals.

 

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(78)            Litigation Hold” shall have the meaning set forth in Section 6.1.

 

(79)            Merger” shall have the meaning set forth in the Recitals.

 

(80)            Merger Agreement” shall have the meaning set forth in the Recitals.

 

(81)            Merger Sub” shall have the meaning set forth in the Recitals.

 

(82)            Negotiation Period” shall have the meaning set forth in Section 7.1.

 

(83)            Off-Site Location” shall mean any third party location that is not now nor has ever been owned, leased or operated by the Ligand Group or the OmniAb Group or any of their respective predecessors. “Off-Site Location” does not include any property that is adjacent to or neighboring any property formerly, currently or in the future owned, leased or operated by the Ligand Group, the OmniAb Group, or their respective predecessors that has been impacted by any Release of a Hazardous Substance from such properties.

 

(84)            OmniAb” shall have the meaning set forth in the Preamble.

 

(85)            OmniAb Asset Transferee” shall mean any Business Entity that is or will be a member of the OmniAb Group or a Subsidiary of OmniAb to which OmniAb Assets shall be or have been transferred at or prior to the Distribution Time, or which is contemplated by the Internal Reorganization or this Agreement or the Ancillary Agreements to occur after the Distribution Time, by an Asset Transferor in order to consummate the transactions contemplated hereby.

 

(86)            OmniAb Assets” shall mean, without duplication:

 

(i)            all interests in the capital stock of, or membership or other equity interests in, the members of the OmniAb Group (other than OmniAb) held, directly or indirectly, by Ligand immediately prior to the Distribution Time;

 

(ii)            the Assets set forth on Schedule 1.1(86)(ii) (which for the avoidance of doubt is not a comprehensive listing of all OmniAb Assets and is not intended to limit other clauses of this definition of OmniAb Assets);

 

(iii)            any and all Assets that are expressly contemplated by this Agreement or any Ancillary Agreement as Assets which have been or are to be Transferred to or retained by any member of the OmniAb Group;

 

(iv)            any and all Assets (other than Cash Equivalents, which shall be governed solely by Section 2.12) reflected on the OmniAb Balance Sheet or the accounting records supporting such balance sheet and any Assets acquired by or for OmniAb or any member of the OmniAb Group subsequent to the date of the OmniAb Balance Sheet which, had they been so acquired on or before such date and owned as of such date, would have been reflected on the OmniAb Balance Sheet if prepared on a consistent basis, subject to any dispositions of any of such Assets subsequent to the date of the OmniAb Balance Sheet;

 

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(v)            all rights, title and interest in, to and under the leases or subleases of the real property set forth on Schedule 1.1(86)(v) and other leases exclusively related to the OmniAb Business, including, to the extent provided for in such leases or subleases, any land and land improvements, structures, buildings and building improvements, other improvements and appurtenances (the “OmniAb Leased Real Property”);

 

(vi)            all Contracts set forth on Schedule 1.1(86)(vi) and all other Contracts exclusively related to the OmniAb Business or the OmniAb Intellectual Property and any rights or claims arising under any of the foregoing (the “OmniAb Contracts”);

 

(vii)            all Intellectual Property exclusively used, exclusively practiced, exclusively held for the use or practice, or otherwise exclusively related to the OmniAb Business, including the Intellectual Property applications, registrations and issuances set forth on Schedule 1.1(86)(vii) (the “OmniAb Intellectual Property”), and all Intellectual Property Documentation relating to any of the foregoing;

 

(viii)            all licenses, permits, registrations, approvals and authorizations which have been issued by any Governmental Entity and are held by a member of the OmniAb Group, or to the extent transferable, relate exclusively to or, are used exclusively in the OmniAb Business (other than to the extent that any member of the Ligand Group benefits from such licenses, permits, registrations, approvals and authorizations in connection with the Ligand Retained Business);

 

(ix)            all Information exclusively related to, or exclusively used in, the OmniAb Business;

 

(x)            excluding any OmniAb Intellectual Property (which is addressed in Section 1.1(86)(vii) above), all IT Assets listed on Schedule 1.1(86)(x) and other IT Assets exclusively used or exclusively held for use in the OmniAb Business;

 

(xi)            all goodwill exclusively related to the OmniAb Business;

 

(xii)            all office equipment and furnishings located at the physical site of which the ownership or a leasehold or sub leasehold interest is being transferred to or retained by a member of the OmniAb Group, and which as of the Distribution Time is not subject to a lease or sublease back to a member of the Ligand Group (excluding any office equipment and furnishings owned by persons other than Ligand and its Subsidiaries);

 

(xiii)            subject to Article VIII, any rights of any member of the OmniAb Group under any insurance policies held solely by one or more members of the OmniAb Group and which provide coverage solely to one or more members of the OmniAb Group (excluding any insurance policies issued by any captive insurance company of the Ligand Group); and

 

(xiv)            all other Assets (other than Assets that are of the type that would be listed in clauses (v), (vii), (viii), (x), (xii) and (xiii)) that are held by the OmniAb Group or the Ligand Group immediately prior to the Distribution Time and that are exclusively used and exclusively held for use in the OmniAb Business as conducted immediately prior to the Distribution Time (the intention of this clause (xiv) is only to rectify an inadvertent omission of transfer or assignment of any Asset that, had the Parties given specific consideration to such Asset as of the date of this Agreement, would have otherwise been classified as an OmniAb Asset based on the principles of this Section 1.1(86)); provided that no Asset shall be an OmniAb Asset solely as a result of this clause (xiv) unless a written claim with respect thereto is made by OmniAb on or prior to the date that is twenty-four (24) months after the Distribution Time.

 

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Notwithstanding anything to the contrary herein, the OmniAb Assets shall not include (i) any Assets that are expressly contemplated by this Agreement or by any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be retained by or Transferred to any member of the Ligand Group (including all Ligand Retained Assets), or (ii) any Assets governed by the Tax Matters Agreement or Employee Matters Agreement.

 

(87)            OmniAb Balance Sheet” shall mean OmniAb’s unaudited pro forma combined condensed balance sheet, including the notes thereto, as of December 31, 2021, as included in the Form 10.

 

(88)            OmniAb Board” shall have the meaning set forth in the Recitals.

 

(89)            OmniAb Business” shall mean the businesses comprising the OmniAb Group, including the businesses and operations conducted prior to the Distribution Time by any member of the OmniAb Group and any other businesses or operations conducted primarily through the use of the OmniAb Assets, as such businesses are described in the Form 10, or established by or for OmniAb or any of its Subsidiaries after the Distribution Time and shall include the OmniAb Former Businesses; provided that the OmniAb Business shall not include any Ligand Former Business.

 

(90)            OmniAb Debt Obligations” shall mean all Indebtedness of OmniAb or any other member of the OmniAb Group.

 

(91)            OmniAb Disclosure” shall mean any form, statement, schedule or other material (other than the Spin-off Disclosure Documents) filed with or furnished to the Commission, including in connection with OmniAb’s obligations under the Securities Act and the Exchange Act, any other Governmental Entity, or holders of any securities of any member of the OmniAb Group, in each case, on or after the Distribution Time by or on behalf of any member of the OmniAb Group in connection with the registration, sale, or distribution of securities or disclosure related thereto (including periodic disclosure obligations).

 

(92)            OmniAb Environmental Liabilities” shall mean any and all Environmental Liabilities, whether arising before, at or after the Distribution Time, to the extent relating to or resulting from or arising out of (i) the past, present or future operation, conduct or actions of the OmniAb Group, OmniAb Business or the past, present or future use of the OmniAb Assets or (ii) the OmniAb Former Businesses or OmniAb Former Real Property, including, without limitation, any agreement, decree, judgment, or order relating to the foregoing entered into by Ligand or any Affiliate of Ligand prior to the Distribution Time, but in any event excluding the Excluded Environmental Liabilities.

 

(93)            OmniAb Former Businesses” shall mean any Former Business that, at the time of sale, conveyance, assignment, transfer, disposition, divestiture (in whole or in part) or discontinuation, abandonment, completion or termination of the operations, activities or production thereof, was (a) primarily managed by or associated with the OmniAb Business as then conducted or (b) part of a business the majority of which as of the Distribution Time is or was transferred to OmniAb.

 

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(94)            OmniAb Former Real Property” shall mean any real property that at the time of sale, conveyance, assignment, transfer, disposition, divestiture (in whole or in part) or discontinuation, abandonment, completion or termination of the operations, activities or production thereof, was primarily owned, leased or operated in connection with the OmniAb Business or any of the OmniAb Former Businesses.

 

(95)            OmniAb Group” shall mean OmniAb and each Person that is a direct or indirect Subsidiary of OmniAb as of the Distribution Time (but after giving effect to the Internal Reorganization) including the Transferred Entities, and each Person that becomes a Subsidiary of OmniAb after the Distribution Time; provided, however, that for the avoidance of doubt, no member of the Ligand Group shall be treated as a member of the OmniAb Group.

 

(96)            OmniAb Indemnitees” shall mean each member of the OmniAb Group and each of their respective Affiliates from and after the Distribution Time and each member of the OmniAb Group’s and such respective Affiliates’ respective current, former and future directors, officers, employees and agents (solely in their respective capacities as current, former and future directors, officers, employees or agents of any member of the OmniAb Group or their respective Affiliates) and each of the heirs, administrators, executors, successors and assigns of any of the foregoing, except, for the avoidance of doubt, the Ligand Indemnitees.

 

(97)            OmniAb Liabilities” shall mean:

 

(i)            any and all Liabilities to the extent relating to, arising out of or resulting from (a) the operation or conduct of the OmniAb Business, as conducted at any time prior to, at or after the Distribution Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority) of the OmniAb Group and any and all Liability relating to, arising out of or resulting from any unclaimed property); (b) the operation or conduct of any business conducted by any member of the OmniAb Group at any time after the Distribution Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority) of the OmniAb Group and any and all Liability relating to, arising out of or resulting from any unclaimed property); or (c) any OmniAb Asset, whether arising before, at or after the Distribution Time (including any Liability relating to, arising out of or resulting from OmniAb Contracts, Shared Contracts (to the extent such Liability relates to the OmniAb Business) and any real property and leasehold interests):

 

(ii)            the Liabilities set forth on Schedule 1.1(97)(ii) and any and all other Liabilities that are expressly provided by this Agreement or any of the Ancillary Agreements as Liabilities to be assumed by OmniAb or any other member of the OmniAb Group, and all agreements, obligations and Liabilities of OmniAb or any other member of the OmniAb Group under this Agreement or any of the Ancillary Agreements;

 

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(iii)            any and all Liabilities reflected on the OmniAb Balance Sheet or the accounting records supporting such balance sheet and any Liabilities incurred by or for OmniAb or any member of the OmniAb Group subsequent to the date of the OmniAb Balance Sheet which, had they been so incurred on or before such date, would have been reflected on the OmniAb Balance Sheet if prepared on a consistent basis, subject to any discharge of any of such Liabilities subsequent to the date of the OmniAb Balance Sheet;

 

(iv)            any and all Liabilities to the extent relating to, arising out of, or resulting from, whether prior to, at or after the Distribution Time, any infringement, misappropriation or other violation of any Intellectual Property of any other Person related to the conduct of the OmniAb Business;

 

(v)            any and all OmniAb Environmental Liabilities;

 

(vi)            any and all Liabilities (including under applicable federal and state securities Laws) relating to, arising out of or resulting from (A) the Spin-off Disclosure Documents or (B) any OmniAb Disclosure;

 

(vii)            for the avoidance of doubt, and without limiting any other matters that may constitute OmniAb Liabilities, any Liabilities resulting from any Action to the extent relating to, arising out of or resulting from the OmniAb Business, including all Actions listed on Schedule 1.1(97)(vii);

 

(viii)            all Liabilities relating to, arising out of or resulting from any Indebtedness of any member of the OmniAb Group or any Indebtedness secured exclusively by any of the OmniAb Assets; and

 

(ix)            any and all other Liabilities that are held by the OmniAb Group or the Ligand Group immediately prior to the Distribution Time that were inadvertently omitted or assigned that, had the parties given specific consideration to such Liability as of the date of this Agreement, would have otherwise been classified as an OmniAb Liability based on the principles set forth in this Section 1.1(97); provided, that no Liability shall be an OmniAb Liability solely as a result of this clause (ix) unless a claim with respect thereto is made by Ligand on or prior to the date that is twenty-four (24) months after the Distribution Time.

 

Notwithstanding the foregoing, the OmniAb Liabilities shall not include any Liabilities that are (A) expressly contemplated by this Agreement or by any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be Assumed by any member of the Ligand Group, (B) expressly discharged pursuant to Section 2.4 of this Agreement, (C) Ligand Retained Liabilities or (D) for Taxes that are governed by the Tax Matters Agreement or Employee Matters Agreement.

 

(98)            OmniAb Released Liabilities” shall have the meaning set forth in Section 5.1(a)(ii).

 

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(99)            OmniAb Stock” shall have the meaning set forth in the Recitals.

 

(100)            Other Party” shall have the meaning set forth in Section 2.9(a).

 

(101)            Other Reimbursable Expenses” shall have the meaning set forth in Section 2.12(c).

 

(102)            Party” and “Parties” shall have the meanings set forth in the Preamble.

 

(103)            Person” shall mean any natural person, firm, individual, corporation, business trust, joint venture, association, bank, land trust, trust company, company, limited liability company, partnership, or other organization or entity, whether incorporated or unincorporated, or any Governmental Entity.

 

(104)            Personal Information” shall mean any data or information that identifies, relates to, describes, is reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular natural person or household (including any information related to the health of a person) and any information derived from any of the foregoing, in addition to any definition for “personal information” or any similar term provided by applicable Law or by the applicable Party’s privacy policies, notices or contracts (e.g., “personal data,” “personally identifiable information” or “PII”).

 

(105)            Policies” or “Policy” shall mean insurance policies and insurance contracts of any kind, including primary, excess and umbrella, comprehensive general liability, fiduciary, directors and officers, automobile, products, workers’ compensation, employee dishonesty, property and crime insurance policies and self-insurance and captive insurance arrangements, and interests in insurance pools and programs held in the name of Ligand or any of its Affiliates, together with the rights, benefits and privileges thereunder.

 

(106)            Prime Rate” shall mean the rate last quoted as of the time of determination by The Wall Street Journal as the “Prime Rate” in the United States or, if the Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate as of such time, or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by Ligand) or any similar release by the Federal Reserve Board (as determined by Ligand).

 

(107)            Privacy Laws” shall mean any and all applicable Laws, legal requirements and self-regulatory guidelines (including of any applicable foreign jurisdiction) relating to the Processing of any Personal Information.

 

(108)            Privacy Requirements” shall mean all applicable Privacy Laws and all applicable policies, notices, and contractual obligations relating to the Processing of any Personal Information.

 

(109)            Privilege” shall have the meaning set forth in Section 6.7(a).

 

(110)            Privileged Information” shall have the meaning set forth in Section 6.7(a).

 

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(111)            Processing” shall mean any operation or set of operations which is performed on any Personal Information or on any sets of any Personal Information, whether or not by automated means, such as, without limitation: receipt; collection; compilation; use; disposal; destruction; disclosure or transfer (including cross-border); recording; organization; structuring; safeguarding; storage; security (technical, physical and/or administrative); sharing; adaptation or alteration; retrieval; consultation; disclosure by transmission, dissemination or otherwise making available; alignment or combination; restriction; erasure; and/or destruction.

 

(112)            Record Date” shall mean 5:00 p.m. New York time on the date to be determined by the Ligand Board as the record date for determining stockholders of Ligand entitled to receive shares of OmniAb Stock in the Distribution.

 

(113)            Record Holders” shall mean the holders of record of Ligand Stock as of the Record Date.

 

(114)            Reimbursable Transaction-related Expenses” shall have the meaning set forth in Section 9.5.

 

(115)            Release” shall mean any release, spill, emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration into the indoor or outdoor environment (including ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property, including the movement of Hazardous Substances through or in the air, soil, surface water, groundwater or property.

 

(116)            Securities Act” shall mean the Securities Act of 1933, together with the rules and regulations promulgated thereunder.

 

(117)            Security Interest” shall mean any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-entry, covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever, excluding restrictions on transfer under securities Laws.

 

(118)            Separation” shall have the meaning set forth in the Recitals.

 

(119)            Shared Contract” shall have the meaning set forth in Section 2.3(a).

 

(120)     &