Exhibit 10.4

 

Execution Version

 

August 11, 2020

 

FS Development Corp.

600 Montgomery Street, Suite 4500

San Francisco, California 94111

 

Re: Initial Public Offering

 

Ladies and Gentlemen:

 

This letter (this “Letter Agreement”) is being delivered to you in accordance
with the Underwriting Agreement (the “Underwriting Agreement”) entered into by
and between FS Development Corp., a Delaware corporation (the “Company”), and
Jefferies LLC, as underwriter (the “Underwriter”), relating to an underwritten
initial public offering (the “Public Offering”), of up to 12,075,000 shares of
the Company’s Class A common stock, par value $0.0001 per share (including up to
1,575,000 shares that may be purchased to cover over-allotments, if any) (the
“Class A Common Stock”). The Class A Common Stock will be sold in the Public
Offering pursuant to a registration statement on Form S-1 and prospectus (the
“Prospectus”) filed by the Company with the U.S. Securities and Exchange
Commission (the “Commission”) and the Company has applied to have the Class A
Common Stock listed on The Nasdaq Capital Market. Certain capitalized terms used
herein are defined in paragraph 11 hereof.

 

In order to induce the Company and the Underwriter to enter into the
Underwriting Agreement and to proceed with the Public Offering and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each of FS Development Holdings, LLC (the “Sponsor”) and the
undersigned individuals, each of whom is a member of the Company’s board of
directors and/or management team (each of the undersigned individuals, an
“Insider” and collectively, the “Insiders”), hereby agrees with the Company as
follows:

 

1. The Sponsor and each Insider agrees that if the Company seeks stockholder
approval of a proposed Business Combination, then in connection with such
proposed Business Combination, it, he or she shall (i) vote any shares of Common
Stock (as defined below) owned by it, him or her in favor of any proposed
Business Combination and (ii) not redeem any shares of Common Stock owned by it,
him or her in connection with such stockholder approval. If the Company seeks to
consummate a proposed Business Combination by engaging in a tender offer, the
Sponsor and each Insider agrees that it, he or she will not sell or tender any
shares of Common Stock owned by it, him or her in connection therewith.

 

2. The Sponsor and each Insider hereby agrees that in the event that the Company
fails to consummate a Business Combination within 24 months from the closing of
the Public Offering, or such later period approved by the Company’s stockholders
in accordance with the Company’s amended and restated certificate of
incorporation (as it may be amended from time to time, the “Charter”), the
Sponsor and each Insider shall take all reasonable steps to cause the Company to
(i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem
100% of the shares of Class A Common Stock sold in the Public Offering (the
“Offering Shares”), at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the Trust Account (as defined below),
including interest earned on the funds held in the Trust Account and not
previously released to the Company to pay its taxes (less up to $100,000 of
interest to pay dissolution expenses), divided by the number of then outstanding
Offering Shares, which redemption will completely extinguish all Public
Stockholders’ (as defined below) rights as stockholders (including the right to
receive further liquidating distributions, if any), and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of the
Company’s remaining stockholders and the Company’s board of directors, liquidate
and dissolve, subject in each case to the Company’s obligations under Delaware
law to provide for claims of creditors and other requirements of applicable law.
The Sponsor and each Insider agrees to not propose any amendment to the Charter
to modify the substance or timing of the Company’s obligation to redeem 100% of
the Offering Shares if the Company does not complete a Business Combination
within the required time period set forth in the Charter or with respect to any
other material provisions relating to stockholders’ rights or pre-initial
business combination activity, unless the Company provides its Public
Stockholders with the opportunity to redeem their Offering Shares upon approval
of any such amendment at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the Trust Account, including interest earned
on the funds held in the Trust Account and not previously released to the
Company to pay its taxes, divided by the number of then outstanding Offering
Shares.

 

 

 

 

The Sponsor and each Insider acknowledges that it, he or she has no right,
title, interest or claim of any kind in or to any monies held in the Trust
Account or any other asset of the Company as a result of any liquidation of the
Company with respect to the Founder Shares held by it, him or her. The Sponsor
and each Insider hereby further waives, with respect to any shares of Common
Stock held by it, him or her, if any, any redemption rights it, he or she may
have in connection with (A) the consummation of a Business Combination,
including, without limitation, any such rights available in the context of a
stockholder vote to approve such Business Combination, or (B) a stockholder vote
to approve an amendment to the Charter to modify the substance or timing of the
Company’s obligation to redeem 100% of the Offering Shares if the Company has
not consummated a Business Combination within the time period set forth in the
Charter or with respect to any other material provisions relating to
stockholders’ rights or pre-initial business combination activity or in the
context of a tender offer made by the Company to purchase Offering Shares
(although the Sponsor, the Insiders and their respective affiliates shall be
entitled to redemption and liquidation rights with respect to any Offering
Shares it or they hold if the Company fails to consummate a Business Combination
within the time period set forth in the Charter).

 

3. Notwithstanding the provisions set forth in paragraphs in 7(a) and 7(b),
during the period commencing on the effective date of the Underwriting Agreement
and ending 180 days after such date, the Sponsor and each Insider shall not,
without the prior written consent of the Underwriter, (i) sell, offer to sell,
contract or agree to sell, hypothecate, pledge, grant any option to purchase or
otherwise dispose of or agree to dispose of, directly or indirectly, or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of
the Commission promulgated thereunder, with respect to shares of Common Stock
(including, but not limited to, Founder Shares) or any securities convertible
into, or exercisable, or exchangeable for, shares of Common Stock owned by it,
him or her, (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
shares of Common Stock (including, but not limited to, Founder Shares) or any
securities convertible into, or exercisable, or exchangeable for, shares of
Common Stock owned by it, him or her, whether any such transaction is to be
settled by delivery of such securities, in cash or otherwise, or (iii) publicly
announce any intention to effect any transaction specified in clause (i) or
(ii); provided, however, all of the foregoing does not apply to the forfeiture
of any Founder Shares pursuant to their terms or any transfer of Founder Shares
to any current or future independent director of the company (as long as such
current or future independent director transferee is subject to this Letter
Agreement or executes an agreement substantially identical to the terms of this
Letter Agreement, as applicable to directors and officers at the time of such
transfer; and as long as, to the extent any Section 16 reporting obligation is
triggered as a result of such transfer, any related Section 16 filing includes a
practical explanation as to the nature of the transfer). Each of the Insiders
and the Sponsor acknowledges and agrees that, prior to the effective date of any
release or waiver, of the restrictions set forth in this paragraph 3 or
paragraph 7 below, the Company may announce the impending release or waiver by
press release through a major news service at least two business days before the
effective date of the release or waiver. The provisions of this paragraph will
not apply if the release or waiver is effected solely to permit a transfer not
for consideration and the transferee has agreed in writing to be bound by the
same terms described in this Letter Agreement to the extent and for the duration
that such terms remain in effect at the time of the transfer.

 

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4. In the event of the liquidation of the Trust Account upon the failure of the
Company to consummate its initial Business Combination within the time period
set forth in the Charter, the Sponsor (the “Indemnitor”) agrees to indemnify and
hold harmless the Company against any and all loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all legal or other
expenses reasonably incurred in investigating, preparing or defending against
any litigation, whether pending or threatened) to which the Company may become
subject as a result of any claim by (i) any third party for services rendered
(other than the independent registered public accounting firm) or products sold
to the Company or (ii) any prospective target business with which the Company
has entered into a written letter of intent, confidentiality or other similar
agreement or Business Combination agreement (a “Target”); provided, however,
that such indemnification of the Company by the Indemnitor (x) shall apply only
to the extent necessary to ensure that such claims by a third party for services
rendered (other than the independent registered public accounting firm) or
products sold to the Company or a Target do not reduce the amount of funds in
the Trust Account to below the lesser of (i) $10.00 per Offering Share and (ii)
the actual amount per Offering Share held in the Trust Account as of the date of
the liquidation of the Trust Account, if less than $10.00 per Offering Share is
then held in the Trust Account due to reductions in the value of the trust
assets, less taxes payable, (y) shall not apply to any claims by a third party
or a Target which executed a waiver of any and all rights to the monies held in
the Trust Account (whether or not such waiver is enforceable) and (z) shall not
apply to any claims under the Company’s indemnity of the Underwriter against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended. The Indemnitor shall have the right to defend against any such claim
with counsel of its choice reasonably satisfactory to the Company if, within 15
days following written receipt of notice of the claim to the Indemnitor, the
Indemnitor notifies the Company in writing that it shall undertake such defense.

 

5. To the extent that the Underwriter does not exercise its over-allotment
option to purchase up to an additional 1,575,000 shares of Class A Common Stock
within 45 days from the date of the Prospectus (and as further described in the
Prospectus), the Sponsor agrees to forfeit, at no cost, a number of Founder
Shares in the aggregate equal to 393,750 multiplied by a fraction, (i) the
numerator of which is 1,575,000 minus the number of Class A Common Stock
purchased by the Underwriter upon the exercise of their over-allotment option,
and (ii) the denominator of which is 1,575,000. The forfeiture will be adjusted
to the extent that the over-allotment option is not exercised in full by the
Underwriter so that the Founder Shares will represent an aggregate of 20.0% of
the Company’s issued and outstanding shares of Class A Common Stock after the
Public Offering (not including Private Placement Shares (as defined below)). The
Sponsor further agrees that to the extent that the size of the Public Offering
is increased or decreased, the Company will purchase or sell Class A Common
Stock or effect a share repurchase or share capitalization, as applicable,
immediately prior to the consummation of the Public Offering in such amount as
to maintain the number of Founder Shares at 20.0% of its issued and outstanding
shares of Class A Common Stock upon the consummation of the Public Offering. In
connection with such increase or decrease in the size of the Public Offering,
then (A) the references to 1,575,000 in the numerator and denominator of the
formula in the first sentence of this paragraph shall be changed to a number
equal to 15% of the number of shares of Class A Common Stock issued in the
Public Offering and (B) the reference to 393,750 in the formula set forth in the
first sentence of this paragraph shall be adjusted to such number of Founder
Shares that the Sponsor would have to surrender to the Company in order for the
number of Founder Shares to equal an aggregate of 20.0% of the Company’s issued
and outstanding shares of Class A Common Stock after the Public Offering (not
including Private Placement Shares).

 

6. The Sponsor and each Insider hereby agrees and acknowledges that: (i) the
Underwriter and the Company would be irreparably injured in the event of a
breach by such Sponsor or an Insider of its, his or her obligations under
paragraphs 1, 2, 3, 4, 5, 7(a), 7(b) and 9, as applicable, of this Letter
Agreement (ii) monetary damages may not be an adequate remedy for such breach
and (iii) the non-breaching party shall be entitled to injunctive relief, in
addition to any other remedy that such party may have in law or in equity, in
the event of such breach.

 

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7. (a) The Sponsor and each Insider agrees that it, he or she shall not Transfer
any Founder Shares (or any shares of Class A Common Stock issuable upon
conversion thereof) until the earlier of (A) one year after the completion of
the Company’s initial Business Combination and (B) subsequent to the Business
Combination, (x) if the closing price of the Class A Common Stock equals or
exceeds $12.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading days within
any 30-trading day period commencing at least 150 days after the Company’s
initial Business Combination or (y) the date on which the Company completes a
liquidation, merger, capital stock exchange, reorganization or other similar
transaction that results in all of the Company’s stockholders having the right
to exchange their shares of Class A Common Stock for cash, securities or other
property (the “Founder Shares Lock-up Period”).

 

(b) The Sponsor and each Insider agrees that it, he or she shall not Transfer
any Private Placement Shares, until 30 days after the completion of a Business
Combination (the “Private Placement Shares Lock-up Period”, together with the
Founder Shares Lock-up Period, the “Lock-up Periods”).

 

(c) Notwithstanding the provisions set forth in paragraphs 7(a) and (b),
Transfers of the Founder Shares, Private Placement Shares and shares of Class A
Common Stock issued or issuable upon the conversion of the Founder Shares that
are held by the Sponsor, any Insider or any of their permitted transferees (that
have complied with this paragraph 7(c)), are permitted (a) to the Company’s
officers or directors, any affiliate or family member of any of the Company’s
officers or directors, any affiliate of the Sponsor or to any members of the
Sponsor or any of their affiliates; (b) in the case of an individual, by gift to
a member of such individual’s immediate family or to a trust, the beneficiary of
which is a member of such individual’s immediate family, an affiliate of such
individual or to a charitable organization; (c) in the case of an individual, by
virtue of laws of descent and distribution upon death of such individual; (d) in
the case of an individual, pursuant to a qualified domestic relations order; (e)
by private sales or transfers made in connection with any forward purchase
agreement or similar arrangement or in connection with the consummation of an
initial Business Combination at prices no greater than the price at which the
securities were originally purchased; (f) in the event of the Company’s
liquidation prior to the completion of an initial Business Combination; (g) by
virtue of the laws of the State of Delaware or the Sponsor’s limited liability
company agreement upon dissolution of the Sponsor; or (h) in the event of the
Company’s liquidation, merger, capital stock exchange or other similar
transaction which results in all of the Company’s stockholders having the right
to exchange their shares of Class A Common Stock for cash, securities or other
property subsequent to the Company’s completion of an initial Business
Combination; provided, however, that in the case of clauses (a) through (e) or
(g), these permitted transferees must enter into a written agreement with the
Company agreeing to be bound by the transfer restrictions herein and the other
restrictions contained in this Agreement (including provisions relating to
voting, the Trust Account and liquidating distributions).

 

8. The Sponsor and each Insider represents and warrants that it, he or she has
never been suspended or expelled from membership in any securities or
commodities exchange or association or had a securities or commodities license
or registration denied, suspended or revoked. Each Insider’s biographical
information furnished to the Company (including any such information included in
the Prospectus) is true and accurate in all respects and does not omit any
material information with respect to the Insider’s background. The Sponsor and
each Insider’s questionnaire furnished to the Company is true and accurate in
all respects. The Sponsor and each Insider represents and warrants that: it, he
or she is not subject to or a respondent in any legal action for, any
injunction, cease-and-desist order or order or stipulation to desist or refrain
from any act or practice relating to the offering of securities in any
jurisdiction; it, he or she has never been convicted of, or pleaded guilty to,
any crime (i) involving fraud, (ii) relating to any financial transaction or
handling of funds of another person, or (iii) pertaining to any dealings in any
securities and it, he or she is not currently a defendant in any such criminal
proceeding.

 

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9. Except as disclosed in the Prospectus, neither the Sponsor nor any officer,
nor any affiliate of the Sponsor or any officer, nor any director of the
Company, shall receive from the Company any finder’s fee, reimbursement,
consulting fee, non-cash payments, monies in respect of any repayment of a loan
or other compensation prior to, or in connection with any services rendered in
order to effectuate, the consummation of the Company’s initial Business
Combination (regardless of the type of transaction that it is), other than the
following, none of which will be made from the proceeds held in the Trust
Account prior to the completion of the initial Business Combination: repayment
of a loan and advances up to an aggregate of $200,000 made to the Company by the
Sponsor; payments to the Sponsor for certain office space, secretarial and
administrative services as may be reasonably required by the Company of $10,000
per month; reimbursement for any reasonable out-of-pocket expenses related to
identifying, investigating, negotiating and completing an initial Business
Combination, and repayment of loans, if any, and on such terms as to be
determined by the Company from time to time, made by the Sponsor or an affiliate
of the Sponsor or any of the Company’s officers or directors to finance
transaction costs in connection with an intended initial Business Combination,
provided, that, if the Company does not consummate an initial Business
Combination, a portion of the working capital held outside the Trust Account may
be used by the Company to repay such loaned amounts so long as no proceeds from
the Trust Account are used for such repayment. Up to $1,500,000 of such loans
may be convertible into shares of Class A Common Stock at a price of $10.00 per
share at the option of the lender. Such shares of Class A Common Stock would be
identical to the Private Placement Shares.

 

10. The Sponsor and each Insider has full right and power, without violating any
agreement to which it is bound (including, without limitation, any
non-competition or non-solicitation agreement with any employer or former
employer), to enter into this Letter Agreement and, as applicable, to serve as
an officer and/or director on the board of directors of the Company and hereby
consents to being named in the Prospectus as an officer and/or director of the
Company.

 

11. As used herein, (i) “Business Combination” shall mean a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar
business combination, involving the Company and one or more businesses; (ii)
“Common Stock” shall mean the Class A common stock and Class B common stock;
(iii) “Founder Shares” shall mean the 3,018,750 shares of Class B common stock
issued and outstanding (up to 393,750 Shares of which are subject to complete or
partial forfeiture if the over-allotment option is not exercised by the
Underwriter); (iv) “Initial Stockholders” shall mean the Sponsor and any Insider
that holds Founder Shares; (v) “Private Placement Shares” shall mean the 410,000
Shares (or 441,500 Shares if the over-allotment option is exercised in full)
that the Sponsor has agreed to purchase for an aggregate purchase price of
$4,100,000 (or $4,415,000 if the over-allotment option is exercised in full), or
$10.00 per Share, in a private placement that shall occur simultaneously with
the consummation of the Public Offering; (vi) “Shares” shall mean the Private
Placement Shares and public share; (vii) “Public Stockholders” shall mean the
holders of securities issued in the Public Offering; (viii) “Trust Account”
shall mean the trust fund into which a portion of the net proceeds of the Public
Offering and the sale of the Private Placement Shares shall be deposited; and
(ix) “Transfer” shall mean the (a) sale of, offer to sell, contract or agreement
to sell, hypothecate, pledge, grant of any option to purchase or otherwise
dispose of or agreement to dispose of, directly or indirectly, or establishment
or increase of a put equivalent position or liquidation with respect to or
decrease of a call equivalent position within the meaning of Section 16 of the
Exchange Act, and the rules and regulations of the Commission promulgated
thereunder with respect to, any security, (b) entry into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of any security, whether any such transaction is to be
settled by delivery of such securities, in cash or otherwise, or (c) public
announcement of any intention to effect any transaction specified in clause (a)
or (b).

 

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12. The Company will maintain an insurance policy or policies providing
directors’ and officers’ liability insurance, and each Director shall be covered
by such policy or policies, in accordance with its or their terms, to the
maximum extent of the coverage available for any of the Company’s directors or
officers.

 

13. This Letter Agreement constitutes the entire agreement and understanding of
the parties hereto in respect of the subject matter hereof and supersedes all
prior understandings, agreements, or representations by or among the parties
hereto, written or oral, to the extent they relate in any way to the subject
matter hereof or the transactions contemplated hereby. This Letter Agreement may
not be changed, amended, modified or waived (other than to correct a
typographical error) as to any particular provision, except by a written
instrument executed by all parties hereto.

 

14. No party hereto may assign either this Letter Agreement or any of its
rights, interests, or obligations hereunder without the prior written consent of
the other parties. Any purported assignment in violation of this paragraph shall
be void and ineffectual and shall not operate to transfer or assign any interest
or title to the purported assignee. This Letter Agreement shall be binding on
the Sponsor and each Insider and their respective successors, heirs and assigns
and permitted transferees.

 

15. Nothing in this Letter Agreement shall be construed to confer upon, or give
to, any person or corporation other than the parties hereto any right, remedy or
claim under or by reason of this Letter Agreement or of any covenant, condition,
stipulation, promise or agreement hereof. All covenants, conditions,
stipulations, promises and agreements contained in this Letter Agreement shall
be for the sole and exclusive benefit of the parties hereto and their
successors, heirs, personal representatives and assigns and permitted
transferees.

 

16. This Letter Agreement may be executed in any number of original or facsimile
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.

 

17. This Letter Agreement shall be deemed severable, and the invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of this Letter Agreement or of any other term or provision
hereof. Furthermore, in lieu of any such invalid or unenforceable term or
provision, the parties hereto intend that there shall be added as a part of this
Letter Agreement a provision as similar in terms to such invalid or
unenforceable provision as may be possible and be valid and enforceable.

 

18. This Letter Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York. The parties hereto (i) all
agree that any action, proceeding, claim or dispute arising out of, or relating
in any way to, this Letter Agreement shall be brought and enforced in the courts
of New York City, in the State of New York, and irrevocably submit to such
jurisdiction and venue, which jurisdiction and venue shall be exclusive and (ii)
waive any objection to such exclusive jurisdiction and venue or that such courts
represent an inconvenient forum.

 

19. Any notice, consent or request to be given in connection with any of the
terms or provisions of this Letter Agreement shall be in writing and shall be
sent by express mail or similar private courier service, by certified mail
(return receipt requested), by hand delivery or facsimile transmission.

 

20. This Letter Agreement shall terminate on the earlier of (i) the expiration
of the Lock-up Periods or (ii) the liquidation of the Company; provided,
however, that this Letter Agreement shall earlier terminate in the event that
the Public Offering is not consummated and closed by December 31, 2020; provided
further that paragraph 4 of this Letter Agreement shall survive such
liquidation.

 

[Signature Page Follows]

 

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  Sincerely,         FS DEVELOPMENT HOLDINGS, LLC               By: /s/ Dennis
D. Ryan     Name: Dennis D. Ryan     Title: Chief Financial Officer

 

  /s/ Jim Tananbaum   Name: Jim Tananbaum       /s/ Dennis D. Ryan   Name:
Dennis D. Ryan       /s/ Michael Rome   Name: Michael Rome       /s/ Vikram
Bajaj   Name: Vikram Bajaj       /s/ Robert Carey   Name: Robert Carey       /s/
Daniel Dubin   Name: Daniel Dubin       /s/ Deepa Pakianathan   Name: Deepa
Pakianathan

 

Acknowledged and Agreed:   FS DEVELOPMENT CORP.       By: /s/ Jim Tananbaum    
Name: Jim Tananbaum     Title: Chief Executive Officer