Cero Therapeutics Holdings, Inc S-1/A, filed Sep 28, 2021
Cero Therapeutics Holdings, Inc. (CERO)
As filed with the United States Securities and Exchange Commission on September 28, 2021.
Registration No. 333-259491
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PHOENIX BIOTECH ACQUISITION CORP.
(Exact name of registrant as specified in its charter)
| Delaware | 6770 | 87-1088814 | ||
| (State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
2201 Broadway,
Suite 705
Oakland, CA
94612
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Chris Ehrlich
Chief Executive Officer
2201 Broadway, Suite 705
Oakland, CA 94612
(215) 731-9450
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
| Mark E. Rosenstein, Esq. Derick Kauffman, Esq. Ledgewood, PC 2001 Market Street, Suite 3400 Philadelphia, PA 19103 (215) 731-9450 |
Douglas S. Ellenoff, Esq. Stuart Neuhauser, Esq. Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas, 11th Floor New York, New York 10105 (212) 370-1300 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of the registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
| Emerging Growth company | ☒ | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
|
| ||||||||
| Title of Each Class of Securities to be Registered |
Amount to be Registered(1) |
Proposed Maximum |
Proposed Maximum Offering Price(1) |
Amount of Registration Fee | ||||
| Units, each consisting of one share of Class A common stock, $.0001 par value, and one-half of one Warrant(2)(4) |
17,825,000 | $10.00 | $178,250,000 | $19,448 | ||||
| Shares of Class A common stock included as part of the Units(2)(4) |
17,825,000 | — | — | —(3) | ||||
| Warrants included as part of the Units(2)(4) |
8,912,500 | — | — | —(3) | ||||
| Total |
$178,250,000 | $19,448(5) | ||||||
|
| ||||||||
|
| ||||||||
| (1) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o). See “Underwriting.” |
| (2) | Includes 2,325,000 units, and 2,325,000 shares of Class A common stock and 1,162,500 warrants underlying such units, which may be issued upon exercise of a 45-day option granted to the underwriters to cover overallotments, if any. |
| (3) | No fee pursuant to Rule 457(g). |
| (4) | Pursuant to Rule 416, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions. |
| (5) | Previously paid. |
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
EXPLANATORY NOTE
This amendment is being filed solely to file an exhibit to the Registration Statement.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The estimated expenses payable by us in connection with the offering described in this registration statement (other than the underwriting discount and commissions) will be as follows:
| SEC filing fee |
$ | 19,448 | ||
| FINRA filing fee |
27,238 | |||
| Accounting fees and expenses |
45,000 | |||
| Printing and engraving expenses |
40,000 | |||
| Legal fees and expenses |
250,000 | |||
| NASDAQ Global Market fees |
75,000 | |||
| Travel and roadshow |
20,000 | |||
| Miscellaneous expenses(1) |
23,314 | |||
|
|
|
|||
| Total |
$ | 500,000 | ||
|
|
|
| (1) | This amount represents additional expenses that may be incurred by us in connection with the offering over and above those specifically listed above, including distribution and mailing costs, transfer agent fees, warrant agent fees and trustee fees. |
Item 14. Indemnification of Directors and Officers.
Our amended and restated bylaws will provide that all of our directors, officers, employees and agents will be entitled to be indemnified by us to the fullest extent permitted by Section 145 of the Delaware General Corporation Law.
Section 145 of the Delaware General Corporation Law concerning indemnification of officers, directors, employees and agents is set forth below.
Section 145. Indemnification of officers, directors, employees and agents; insurance.
| (a) | A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust account or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful. |
II-1
| (b) | A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust account or other enterprise against expenses including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. |
| (c) | To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith. |
| (d) | Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders. |
| (e) | Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate. |
| (f) | The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. |
| (g) | A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust account or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section. |
| (h) | For purposes of this section, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a |
II-2
| consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. |
| (i) | For purposes of this section, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the corporation” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this section. |
| (j) | The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. |
| (k) | The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation’s obligation to advance expenses (including attorneys’ fees). |
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The Corporation, to the full extent permitted by Section 145 of the DGCL, as amended from time to time, shall indemnify all persons whom it may indemnify pursuant thereto. Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative, or investigative action, suit or proceeding for which such officer or director may be entitled to indemnification hereunder shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized hereby.
Our amended and restated bylaws will provide for the indemnification of our directors, officers or other persons, and permit us to secure insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit such indemnification. We will purchase a policy of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors.
II-3
We will enter into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification provided for in our amended and restated certificate of incorporation.
Pursuant to the Underwriting Agreement, a form of which is filed as Exhibit 1.1 to this Registration Statement, we have agreed to indemnify the underwriters, and the underwriters have agreed to indemnify us, against certain civil liabilities that may be incurred in connection with this offering, including certain liabilities under the Securities Act.
Item 15. Recent Sales of Unregistered Securities.
In June 2021, our sponsor purchased 4,598,750 founder shares for an aggregate purchase price of $25,000, or approximately $0.0054 per share. In September 2021, we effected a 0.0174775754 for 1 stock dividend for each share of Class B common stock outstanding, and, as a result, our sponsor holds 4,679,125 founder shares as of the date of this prospectus. The number of founder shares issued was determined based on the expectation that the founder shares would represent 20% of our issued and outstanding shares of common stock upon completion of this offering. Such securities were issued in connection with our organization pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. Our sponsor is an accredited investor for purposes of Rule 501 of Regulation D.
In addition, our sponsor, Cantor and CCM have committed to purchase an aggregate of 845,000 placement units (or 891,500 if the over-allotment option is exercised in full), at a price of $10.00 per placement unit, or $8,450,000 in the aggregate ($8,915,000 if the over-allotment option is exercised in full). Of those 845,000 placement units (or up to 891,500 placement units if the over-allotment option is exercised in full), our sponsor has committed to purchase 663,263 placement units (or 683,025 placement units if the over-allotment option is exercised), Cantor has committed to purchase an aggregate of 155,000 placement units (or 178,250 placement units if the over-allotment option is exercised in full), and CCM, has committed to purchase an aggregate of 26,737 placement units (or 30,225 placement units if the over-allotment option is exercised in full). These purchases will take place on a private placement basis simultaneously with the completion of our initial public offering. This issuance will be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
No underwriting discounts or commissions were paid with respect to such sales.
In addition, if we increase the size of the offering pursuant to Rule 462(b) under the Securities Act, we may effect a stock dividend immediately prior to the consummation of the offering in such amount as to maintain our sponsor’s collective ownership of founder shares at 20% of the aggregate of our founder shares and our public shares upon consummation of the offering. If we decrease the size of the offering, we expect to effect a reverse split of our common stock immediately prior to the consummation of the offering in such amount as to maintain our sponsor’s collective ownership of founder shares at 20% of the aggregate of our founder shares and our public shares upon the date of the prospectus. Any such increased number of shares will be subject to forfeiture in the event that the underwriter’s overallotment option is not exercised in full. Any such decreased number of shares will be forfeited, with the remainder subject to forfeiture in the event that the underwriter’s overallotment option is not exercised in full.
Item 16. Exhibits and Financial Statement Schedules.
| Exhibit No. |
Description | |
| 1.1 | Form of Underwriting Agreement.* | |
| 3.1(a) | Certificate of Incorporation filed June 8, 2021.* | |
| 3.1(b) | Form of Amended and Restated Certificate of Incorporation.* | |
| 3.2(a) | Bylaws.* | |
II-4
| * | Previously filed |
| ** | Filed herewith |
Item 17. Undertakings.
| (a) | The undersigned hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser. |
II-5
| (b) | Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. |
| (c) | The undersigned registrant hereby undertakes that: |
| (1) | For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
| (2) | For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (3) | For the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
| (4) | For the purpose of determining liability of a registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of an undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by an undersigned registrant; |
| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
II-6
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Oakland, State of California on this 28th day of September, 2021.
| PHOENIX BIOTECH ACQUISITION CORP. | ||
| By: | /s/ Chris Ehrlich | |
| Name: |
Chris Ehrlich | |
| Title: |
Chief Executive Officer | |
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
| Name |
Position |
Date | ||
| /s/ Chris Ehrlich Chris Ehrlich |
Chief Executive Officer and Director (Principal Executive Officer) |
September 28, 2021 | ||
| * Daniel Geffken |
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
September 28, 2021 | ||
| * /s/ Chris Ehrlich Name: Chris Ehrlich |
|
| ||
Attorney -in-Fact
II-7
Exhibit 10.10
3 Columbus Circle, 24th Floor
New York, New York 10019
| CONFIDENTIAL | ||
| September [__], 2021 | ||
Chris Ehrlich
Chief Executive Officer
Phoenix Biotech Acquisition Corp.
| Re: | Engagement of Services |
Dear Mr. Ehrlich:
This will confirm the basis upon which Phoenix Biotech Acquisition Corp. (“Client”) has engaged Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC (“CCM”) to provide consulting and advisory services (this “Engagement”) in connection with Client’s special purpose acquisition company (“SPAC”) initial public offering (“IPO”) of its securities (the “Transaction”). Such services include:
| • | Evaluating the feasibility of Client pursuing a potential SPAC IPO transaction, including evaluation of current SPAC market conditions, advising on Client’s Sponsor promote structure and terms, and counseling Client as to strategy and tactics for a potential Transaction; |
| • | Strategic advice and guidance with respect to fee and economics recommendations; |
| • | Advice with respect to broad categories of prospective investors that may be interested in the Transaction (although CCM will not identify specific prospective investors and will not have direct or indirect contact with, or otherwise be involved in soliciting, prospective investors as part of the Transaction); |
| • | Marketing message development, including, advice and support on positioning as well as “testing the waters” activities; |
| • | Review of Transaction-related material prepared by Client and/or the underwriters; |
| • | Book-building analysis; |
| • | Deal size analysis; and |
| • | Review of share allocations. |
In addition, following the successful completion of the SPAC’s IPO and as part of this Engagement, CCM will provide consulting and advisory services in support of the SPAC’s initial business combination. Such services will include evaluation of potential targets and related due diligence support, strategic advice and guidance on transaction structuring, review of informational and investor materials and consultations on marketing materials and investor relations activities.
In connection with the SPAC’s IPO, CCM hereby commits to purchase an aggregate of 26,737 private placement units in the SPAC (or an aggregate of 30,225 private placement units if the over-allotment option is exercised in full) pursuant to the form of Placement Unit Subscription Agreement between the SPAC and CCM, substantially in the form attached to the Registration Statement on Form S-1 filed by the SPAC to effectuate the IPO.
The parties acknowledge that CCM is being retained solely to provide the services set forth herein, and that CCM is not being retained to act as an underwriter or member of any selling syndicate in connection with the Transaction. Client agrees that CCM shall serve as an “independent financial adviser” as defined in FINRA Rule 5110(j)(9) (a) provide the services set forth herein independently of the underwriter(s); (b) have no liability to Client, its affiliates or its securities holders for any actions or omissions of the underwriter(s); and (c) have no responsibility or liability to the underwriter(s) in connection with the services set forth herein. Further, CCM is providing the services set forth herein solely in an advisory capacity, and Client retains full discretion as to whether or not to follow such advice. For the avoidance of doubt, CCM will not participate (as defined in FINRA Rule 5110(j)(16)) in the Transaction, the execution of the Transaction (including, but not limited to, structuring of the IPO, solicitation of prospective investors, and negotiation of the terms of the IPO) will be the responsibility of the underwriter(s). CCM will not advise on the proposed price range for the offered securities or the key SPAC terms or structure for which securities are offered in the Transaction.
1. Fee. Client shall pay CCM a transaction fee in an amount equal to 0.30% of the aggregate proceeds of the IPO (including proceeds from the overallotment option if exercised), after deducting the reasonable out-of-pocket expenses incurred by the underwriters (the “Advisor IPO Fee”), in connection with Transaction. CCM agrees to defer the portion of the Advisor IPO Fee resulting from the exercise of the overallotment option until the consummation of the SPAC’s initial business combination. The portion of the Advisor IPO Fee resulting from the base deal shall be payable at the closing of the IPO. In addition, Client shall pay CCM a transaction fee in an amount equal to 0.75% of the aggregate proceeds of the IPO (including proceeds from the overallotment option if exercised), after deducting the reasonable out-of-pocket expenses incurred by the underwriters (the “Advisor IBC Fee” and together with the Advisor IPO Fee, the “Advisor Fees”), in connection with CCM’s consulting and advisory services in support of the SPAC’s initial business combination. The Advisor IBC Fee will be payable at the closing of the SPAC’s initial business combination. If the IPO does not occur during the Term, then no Advisor Fees shall be payable to CCM. CCM shall provide a written invoice to Client at least two business days prior to the required payment of any portion of the Advisor Fees.
The fees described in this paragraph 1 are compensation for the Engagement, which consists of work directly related to the Engagement. Any work outside of the scope of the Engagement shall be subject to additional compensation as separately agreed by the parties hereto.
2. Term of Engagement. This letter agreement shall remain in force for a period of eighteen (18) months from the date hereof (the “Term”). The Term may be extended upon written mutual agreement of the parties hereto. The Term may be terminated by either CCM or Client at any time prior to its expiration with ten (10) days’ advance written notice to the other. Expiration or termination of this letter agreement shall not affect CCM’s right to indemnification or contribution or payment of the Advisor Fee in accordance with the terms of this letter agreement if the closing of the IPO occurs within twelve (12) months following the expiration of the Term or the earlier termination of this letter agreement; provided that no Advisor Fee shall be payable in the event this letter agreement has been terminated by Client due to CCM’s bad faith, willful misconduct or gross negligence. Without limiting the foregoing, notwithstanding the expiration or termination of this letter agreement, the provisions of this letter agreement shall survive and remain operative in accordance with their respective terms.
3. Scope of Liability. Neither CCM nor any of its control persons, members, managers, officers, employees, or agents shall be liable to Client or to any other person claiming through Client for any error of judgment or for any claim, loss or expense suffered by Client or any such other person in connection with the matters to which the Engagement relates except to the extent a claim, loss or expense arises out of or is based upon any action or failure to act by CCM or any of its control persons, members, managers, officers, employees, or agents that is found in a final judicial determination (or a settlement tantamount thereto) to constitute bad faith, willful misconduct or gross negligence on the part of CCM or any such other person.
4. Indemnity and Contribution. Subject to Section 8 below and recognizing that transactions of the type contemplated by the Engagement sometimes result in litigation and that CCM’s role is limited to acting in the capacities described herein, Client agrees to indemnify CCM and its control persons, members, managers, officers, employees, and agents (each, including CCM, an “Indemnified Person”) to the full extent lawful against any and all claims, losses and expenses as incurred (including all reasonable fees and disbursements of each such Indemnified Person’s counsel and all reasonable travel and other out-of-pocket expenses incurred by each such Indemnified Person in connection with investigation of and preparation for any such pending or threatened claims and any litigation or other proceedings arising therefrom) arising out of any actual or proposed Transaction or the Engagement; provided; however, that there shall be excluded from such indemnification any such claim, loss or expense to the extent that such claim, loss or expense arises out of, or is related to, any action or failure to act by any Indemnified Person that is found in a final judicial determination (or a settlement tantamount thereto) to constitute bad faith, willful misconduct or gross negligence on the part of any Indemnified Person.
CCM shall notify Client in writing if any action, suit or investigation (an “Action”) is commenced against CCM within five (5) days after CCM or any other Indemnified Person shall have been served with a summons or other first legal process, but failure so to notify Client shall not relieve Client from any liability that it may have hereunder, except to the extent that such failure so to notify Client materially prejudices Client’s rights. Client may assume, at its own expense, the defense of any Action exercisable upon written notice to CCM and any such Indemnified Person(s), if applicable, within 15 days of notice by CCM or such Indemnified Person provided pursuant to the preceding sentence, and such defense shall be conducted by counsel chosen by Client and reasonably satisfactory to CCM and such Indemnified Person(s), if applicable. The Indemnified Person shall have the right to participate in the defense of any Action with counsel selected by it subject to the Client’s right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Person, provided, that if in the reasonable opinion of counsel to the Indemnified Person, there exists a
conflict of interest between the Client and the Indemnified Person that cannot be waived, the Client shall be liable for the documented, out-of-pocket reasonable fees and expenses of counsel to the Indemnified Person in each jurisdiction for which the Indemnified Person determines counsel is required. If the Client elects not to compromise or defend such Action, fails to promptly notify the Indemnified Person in writing of its election to defend as provided in this letter agreement, or fails to diligently prosecute the defense of such Action (and such failure to diligently prosecute is judicially determined), the Indemnified Person may, subject to the next paragraph, pay, compromise, defend such Action and seek indemnification for any and all damages, expenses, liabilities and losses based upon, arising from or relating to such Action. The parties hereto shall cooperate with each other in all reasonable respects in connection with the defense of any Action.
Notwithstanding any other provision of this letter agreement, Client shall not enter into any settlement of any Action without the prior written consent of the Indemnified Person, which consent will not be unreasonably withheld or delayed, except as provided in this paragraph. If a firm offer is made to settle an Action without any liability for any Indemnified Person and without permitting or leading to further claims, losses, liability or expense or the creation of a financial or other obligation on the part of the Indemnified Person and provides, in customary form, for the unconditional release of each Indemnified Person from all liabilities and obligations in connection with such Action, and Client desires to accept and agree to such offer, Client shall give written notice to that effect to the Indemnified Person. If the Indemnified Person fails to consent to such firm offer within ten (10) days after its receipt of such notice, the Indemnified Person may continue to contest or defend such Action and in such event, the maximum liability of the Client as to such Action shall not exceed the amount of such settlement offer plus the Indemnified Person’s costs and expenses (including reasonable fees and disbursements of counsel and other out-of-pocket expenses) through the end of such ten (10) day period. If the Indemnified Person fails to consent to such firm offer and also fails to assume defense of such Action, the Client may settle the Action upon the terms set forth in such firm offer to settle such Action. If the Indemnified Person has assumed the defense pursuant to the previous paragraph, it shall not agree to any settlement without the written consent of Client (which consent shall not be unreasonably withheld or delayed).
In the event that the foregoing indemnity is unavailable or insufficient to hold such Indemnified Person(s) harmless, then subject to Section 8 below, Client shall contribute to amounts paid or payable by such Indemnified Person(s) in respect of such claims, losses and expenses in such proportion as appropriately reflects the relative benefits received by, and fault of, Client and such Indemnified Person(s) in connection with the matters as to which such claims, losses and expenses relate and other equitable considerations.
5. Information Provided to CCM. In performing the services described above, Client agrees to furnish or cause to be furnished to CCM such information as CCM reasonably believes appropriate to permit CCM to provide the services contemplated by this letter agreement to or for Client (all such information so furnished being the “Information”). Client represents and covenants that all Information furnished by Client or its agents will be complete and correct in all material respects, to Client’s knowledge, and that Client will advise CCM promptly of the occurrence of any event or any other change known by Client or its agents which results in the Information ceasing to be complete and correct in all material respects. Client also represents and warrants that any projections or forecasts that it provides to CCM will be prepared
in good faith and will be based upon assumptions which the management of Client believes in light of the circumstances in which they are made, are reasonable. Client recognizes and confirms that CCM (a) will use and rely primarily on the Information and on information available from generally recognized public sources in performing the services contemplated hereby without having independently verified any of the same, (b) does not assume responsibility for the accuracy or completeness of the Information and such other information, and (c) will not make any appraisal of any of the assets or liabilities of Client.
6. Confidentiality. In the event of the consummation and public disclosure of any Transaction, CCM shall have the right to disclose its advisory role in the Transaction by listing the client name and logo on its website and in its marketing materials.
No analysis, information or advice, whether communicated in written, electronic, oral or other form, provided by CCM or its affiliates to Client or to its Client Representatives (as such term is defined below) in connection with the Engagement (the “CCM Information”) shall be disclosed by Client or such Client Representatives, in whole or in part, to any third party, or circulated or referred to publicly, or used for any purpose other than in connection with the Engagement and the Transaction without the prior written consent of CCM. Except as required by applicable securities laws, neither party may disclose to any third party the existence or terms of this letter agreement without the prior written consent of the other party. Notwithstanding anything herein to the contrary, the fact of CCM’s Engagement may be disclosed by Client to its affiliates and its directors, officers, accountants, legal and financial advisors and employees (the “Client Representatives”) and to its underwriters to the extent required for the exclusive purpose of the Engagement or as required by law, rule or regulation. Client may disclose CCM Information to its Client Representatives solely for purposes directly related to the Engagement and the Transaction and shall cause each of its Client Representatives to whom the CCM Information is disclosed to commit to keeping such CCM Information confidential as provided by this Section 6. Client shall be responsible for any direct damages to CCM to the extent caused by breaches of this Section 6 by any of its Client Representatives.
CCM agrees to keep confidential all nonpublic information provided to it by or on behalf of Client, including without limitation trade information, business practices, trade secrets, and other proprietary information (the “Client Information”). Notwithstanding any provision herein to the contrary, CCM may disclose Client Information to its affiliates, members, officers, accountants, agents, legal advisors and employees (the “CCM Representatives”) to the extent required for the exclusive purpose of the Engagement. CCM shall cause each of its CCM Representatives to whom the Client Information is disclosed to commit to keeping such Client Information confidential as provided by this Section 6. CCM shall be responsible for any direct damages to Client to the extent caused by breaches of this Section 6 by any of its CCM Representatives.
Client Information and CCM Information shall be considered public and not protected by this letter agreement if (a) it is or becomes generally available to the public other than as a result of a disclosure by the receiving party or a representative of the receiving party in breach of the terms of this Section 6, (b) it becomes available to the receiving party on a non-confidential basis from a source not known by the receiving party to be under a duty of confidentiality to the disclosing party, or (c) if it is already known to the receiving party at the time of disclosure.
Nothing in this letter agreement shall obligate either party to refrain from disclosure of CCM Information or Client Information (as the case may be, “Confidential Information”) hereunder to the extent such disclosure is required by law, regulation or judicial process or at the request of a regulatory authority. In the event that any Confidential Information is required to be disclosed by law, including without limitation, pursuant to the terms of a subpoena or similar document or in connection with litigation or other legal proceedings, the receiving party of such information hereby agrees, to the extent permitted by applicable law or regulation, to notify the disclosing party promptly of the existence, terms and circumstances surrounding such request. To the extent permitted by applicable law or regulation, the receiving party shall allow the disclosing party, in its sole discretion and at its sole expense, to contest the disclosure of Confidential Information on the disclosing party’s behalf, and the receiving party will reasonably cooperate with the disclosing party in such efforts to contest such disclosure at disclosing party’s expense.
Each party hereto acknowledges and agrees that irreparable damage may occur to the other in the event any of the provisions of this Section 6 were not performed in accordance with their specific terms or were otherwise breached and monetary damages may not be a sufficient remedy for any such non-performance or breach. Accordingly, each party shall be entitled to seek specific performance of the terms of this Section 6, including, without limitation, an injunction or injunctions to prevent breaches of the provisions of this Section 6 and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction in the State of New York and of the United States of America located in the Borough of Manhattan, New York City (and appellate courts therefrom) in addition to any other remedy to which such party may be entitled at law or in equity.
The parties hereto agree that the provisions of this Section 6 will survive the expiration or termination of this letter agreement for one (1) year after such expiration or termination.
7. Governing Law. This letter agreement shall be governed and construed in accordance with the laws of the State of New York, without regard to conflicts-of-law principles that would result in the application of the laws of another jurisdiction. Each party hereby irrevocably and unconditionally (a) consents to submit to the exclusive jurisdiction of the courts of the State of New York and of the United States of America located in the Borough of Manhattan, New York City (and appellate courts therefrom) for any action, suit or proceeding arising out of or relating to this this letter agreement (and each party hereby irrevocably and unconditionally agrees not to commence any such action, suit, or proceeding except in such courts), (b) waives any objection to the laying of venue of any such action, suit or proceeding in any such courts, and (c) waives and agrees not to plead or claim that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT. To the extent permitted by applicable law, Client hereby waives rights of setoff, and the right to interpose counterclaims in any lawsuit with respect to, in connection with or arising out of this Engagement, or any other claim or dispute relating to the engagement of CCM arising between the parties hereto. The provisions of this letter agreement shall be binding solely upon and inure to the benefit of the Parties hereto and their respective successors and assigns.
8. Trust Account Waiver. CCM acknowledges it has read the Draft Registration Statement prospectus of the Client and understands that the Client will establish the trust account referred to in the prospectus for the benefit of the public stockholders of the Client (“Trust Account”) and that, except for a portion of the interest earned on the amounts held in the Trust Account, the Client may disburse monies from the trust account only (a) to the public stockholders in the event they elect to redeem shares of the Client’s common stock in connection with the consummation of a business combination, (b) to the public stockholders if the Client fails to consummate a business combination within the time period set forth in the Client’s organizational documents, as disclosed in the prospectus, or (c) to the Client after or concurrently with the consummation of a business combination. CCM hereby agrees that, notwithstanding anything to the contrary in this letter agreement, CCM does not now, nor shall at any time hereafter, have any right, title, interest or claim of any kind in or to any monies in the Trust Account, or make any claim against the Trust Account, in connection with or relating to this letter agreement, the Engagement or the Transaction, regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (collectively, the “Released Claims”); provided, however, that the foregoing waiver will not limit or prohibit CCM from pursuing (i) a claim against Client, the Public Stockholders or any other person for legal relief against monies or other assets of Client held outside of the Trust Account (including any funds that have been released from the Trust Account and any asset that have been purchased or acquired with any such funds) or for specific performance or other equitable relief in connection with a claim for Client to specifically perform its obligations under this letter agreement or for fraud or (ii) a claim CCM may have with respect to its ownership of the SPACs public securities (the “Retained Claims”). CCM hereby irrevocably waives any Released Claims that CCM may have against the Trust Account now or in the future as a result of, or arising out of this letter agreement, the Engagement or the Transaction and will not seek recourse against the Trust Account for any Released Claims; provided, however, that CCM does not waive any Retained Claims.
9. Miscellaneous.
(a) Client acknowledges and agrees that the services to be provided pursuant to the Engagement will not include any accounting, tax or legal advice.
(b) All notices or other communications to be given hereunder shall be in writing and shall be sent by delivery in person, by courier service, by electronic mail transmission (including, for the avoidance of doubt, by electronic mail transmission containing an electronic link to a communication or notification that is electronically accessible) or telecopy or by registered or certified mail (postage prepaid, return receipt requested) addressed as follows or such other address as may be substituted by notice as herein provided:
If to Client:
Phoenix Biotech Acquisition Corp.
2201 Broadway
Suite 705
Oakland, CA 94612
If to CCM:
Cohen & Company Capital Markets
3 Columbus Circle, 24th Floor
New York, NY 10019
Attention: General Counsel
Electronic Mail: gc@cohenandcompany.com
Any notice given hereunder shall be deemed to have been given upon the earliest of: (i) receipt, (ii) three (3) days after being deposited in the U.S. mail, postage prepaid, registered or certified mail, return receipt requested and (iii) one (1) day after being sent by Federal Express or other recognized overnight delivery service, return receipt requested. In the case of notices to and from the U.S. to any other country, such notices shall be deemed to have been given upon the earlier of (A) receipt and (B) two (2) days after being sent by Federal Express or other recognized courier service, return receipt requested. In the case of notices sent by electronic mail transmission or telecopy, such notices shall be deemed to have been given when sent.
(c) The parties understand that CCM is being engaged hereunder as an independent contractor to provide the services described above solely to Client, and that CCM is not acting as a fiduciary of Client, the security holders or creditors of Client or any other persons in connection with the Engagement.
(d) Client understands and acknowledges that CCM and its affiliate Cohen & Company Inc. (collectively, the “CCM Group”), engage in providing a wide variety of financial consulting services and other investment banking products and services to a wide range of institutions and individuals. In the ordinary course of business, the CCM Group and certain of its employees, as well as investment funds in which they may have financial interests, may acquire, hold or sell, long or short positions, or trade or otherwise effect transactions, in debt, equity, and other securities and financial instruments (including bank loans and other obligations) of, or investments in, a party that may be involved in the matters contemplated by this letter agreement. With respect to any such securities, financial instruments and/or investments, all rights in respect of such securities, financial instruments and investments, including any voting rights, will be exercised by the holder of the rights, in its sole discretion. In addition, the CCM Group may currently, and may in the future, have relationships with parties other than Client, including parties that may have interests with respect to Client, the Transaction or other parties involved in the Transaction, from which conflicting interests or duties may arise; provided that CCM’s obligations under Section 6 of this letter agreement shall apply. Although the CCM Group in the course of such other activities and relationships may acquire information about Client, the Transaction or such other parties, the CCM Group shall have no obligation to, and may not be contractually permitted to, disclose such information, or the fact that the CCM Group is in possession of such information, to Client or to use such information on the Client’s behalf.
(e) If any term or provision of this letter agreement or the application thereof to any person or circumstances shall be held invalid or unenforceable, the remaining terms and provisions hereof and the application of such term or provision to any person or circumstances other than those to which it is held invalid or unenforceable shall not be affected thereby.
(f) It is understood and agreed among the parties that this letter agreement and the covenants made herein are made expressly and solely for the benefit of the parties hereto, and that no other person, other than an Indemnified Person, shall be entitled or be deemed to be entitled to any benefits or rights hereunder, nor be authorized or entitled to enforce any rights, claims or remedies hereunder or by reason hereof.
(g) This letter agreement incorporates the entire agreement, and supersedes all prior agreements, arrangements or understandings (whether oral or written), between the parties with respect to the subject matter hereof, and may not be amended or modified except in writing signed by each party hereto.
(h) This letter agreement may be executed in two or more counterparts, each of which will be deemed to be an original and all of which together will be deemed to be one and the same document.
—SIGNATURE PAGE FOLLOWS—
If you are in agreement with the foregoing, please sign and return the attached copy of this letter agreement, whereupon this letter agreement shall become effective as of the date hereof.
| Very truly yours, | ||
| Cohen & Company Capital Markets | ||
| By: J.V.B. Financial Group, LLC | ||
| By: |
| |
| Name: Lester Brafman | ||
| Title: CEO | ||
| Acknowledged and Agreed: | ||
| Phoenix Biotech Acquisition Corp. | ||
| By: |
| |
| Name: Chris Ehrlich | ||
| Title: Chief Executive Officer | ||
Date: