Company: SCLXW
Filing Date: 2025-05-07
Form Type: POS AM
Source: 0001193125-25-115095
Chunk: 430

Company: Scilex Holding Co
Filing Date: 2025-05-07
Form: POS AM
Chunk 430
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 SPAC Warrant

Except as discussed below (with respect to the cashless exercise of a SPAC Warrant), a U.S. Holder generally will not recognize taxable gain or loss upon the exercise of a SPAC Warrant for cash. The U.S. Holder’s initial tax basis in the share of our Common Stock received upon exercise of the SPAC Warrant will generally be an amount equal to the sum of the U.S. Holder’s acquisition cost of the SPAC Warrant and the exercise price of such SPAC Warrant. It is unclear whether a U.S. Holder’s holding period for the Common Stock received upon exercise of the SPAC Warrant would commence on the date of exercise of the SPAC Warrant or the day following the date of exercise of the SPAC Warrant; however, in either case the holding period will not include the period during which the U.S. Holder held the SPAC Warrants.

The tax consequences of a cashless exercise of a SPAC Warrant are not clear under current tax law. A cashless exercise may be nontaxable, either because the exercise is not a realization event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either situation, a U.S. Holder’s initial tax basis in the Common Stock received generally should equal the holder’s adjusted tax basis in the SPAC Warrant. If the cashless exercise were treated as not being a realization event, it is unclear whether a U.S. Holder’s holding period for the Common Stock would commence on the date of exercise of the SPAC Warrant or the day following the date of exercise of the SPAC Warrant; in either case, the holding period would not include the period during which the U.S. Holder held the SPAC Warrant. If, instead, the cashless exercise were treated as a recapitalization, the holding period of the Common Stock generally would include the holding period of the SPAC Warrant.

It is also possible that a cashless exercise of a SPAC Warrant could be treated in part as a taxable exchange in which gain or loss is recognized. In such event, a U.S. Holder could be deemed to have surrendered a portion of the SPAC Warrants being exercised having a value equal to the exercise price of such SPAC Warrants in satisfaction of such exercise price. Although not free from doubt, such U.S. Holder generally should recognize capital gain or loss in an amount equal to the difference between the fair market