Document:

srne-ex1023_14.htm

Exhibit 10.23

 

Binding Term Sheet 

for the Acquisition of ACEA Therapeutics, Inc. by 

Sorrento Therapeutics, Inc. 

October 14, 2020

 

This Term Sheet (“Term Sheet”) sets forth certain non-binding understandings and certain binding agreements regarding the proposed acquisition of ACEA Therapeutics, Inc. (“ACEA”) by Sorrento Therapeutics, Inc. (“Sorrento”).  Collectively ACEA and Sorrento are “Parties”.    

As promptly as practicable following the acceptance, execution and delivery of this Term Sheet by Sorrento, the Parties would expect to commence negotiations to enter into a definitive agreement regarding the Transaction (as defined below) (the “Definitive Agreement”).

Upon execution by Sorrento of this Term Sheet, the Sections numbered 1 and 4 through 6 of this Term Sheet (collectively, the “Nonbinding Provisions”) reflect the Parties’ mutual understanding of the matters described in such sections.  Each Party acknowledges that the Nonbinding Provisions are not intended to, and do not, create or constitute any legally binding obligation between Sorrento and ACEA.  The Parties do not intend to be bound by any agreement, and neither Sorrento nor ACEA shall have any liability to the other Party with respect to the Nonbinding Provisions, until the Definitive Agreement is executed and delivered by and between all Parties.  Upon execution by Sorrento of this Term Sheet, the Sections numbered 2, 3 and 7 through 15 of this Term Sheet (collectively, the “Binding Provisions”) will constitute the legally binding and enforceable agreements of Sorrento and ACEA in recognition of the significant costs to be borne by each in pursuing the Transaction and further in consideration of their mutual undertakings as to the matters described herein. 

 

		
	
Section
	
 

	
1.   Acquisition
	
Sorrento would acquire 100% of the outstanding equity securities of ACEA by means of a reverse triangular merger in which a newly-formed subsidiary of Sorrento would be merged with and into ACEA (the “Transaction”). As a result of the Transaction, ACEA would become a wholly owned subsidiary of Sorrento.  

The Parties recognize the structure of the Transaction is subject to continuing review and analysis and that it may be necessary or appropriate to change the structure as a result of tax, accounting or other considerations, as may be mutually agreed.

 

 

		
	
Section
	
 

	
2.   Merger Consideration 
	
The consideration payable by Sorrento shall be comprised of a $38 million upfront payment upon completion of the Transaction, License Agreement Payments (as defined below), Royalty Payments (as defined below) and $265 million in additional milestone-based contingent value rights. 

Sorrento shall acquire all outstanding equity interests of ACEA on a fully-diluted basis. 

For the purposes of this Term Sheet, fully-diluted basis means all outstanding shares of common and preferred stock of ACEA and assuming the exercise of all options, warrants and rights to exercise or convert outstanding securities of ACEA, if any, at the effective 

time of the proposed merger (whether or  not then exercisable or vested).  All such shares, options, warrants, and other rights shall be canceled and converted into the right to receive a portion of the merger consideration, less the exercise price thereof (if applicable).  

Except as otherwise provided herein, Sorrento may, in its sole and absolute discretion, elect to make any payments referenced herein, including the Upfront Payments (as defined below) and settlement of any of the CVRs (as defined below), in either cash or shares of Sorrento common stock or a combination of cash and shares of Sorrento common stock, based on an exchange ratio to be agreed by the Parties.

If Sorrento elects to satisfy any such payments, including the Upfront Payments and settlement of any of the CVRs, in shares of Sorrento common stock, then following any such issuance, Sorrento shall file a resale registration statement with the Securities and Exchange Commission to register for resale such shares of Sorrento common stock.  In the event Sorrento satisfies all or a portion of the foregoing consideration payments through the delivery to ACEA’s equityholders of shares of Sorrento common stock (the “Consideration Shares”), the price per share of the Consideration Shares (the “Consideration Per-Share Price”) used for calculating the number of the Consideration Shares to be issued to ACEA’s equityholders shall be the volume weighted average price of the shares of common stock of Sorrento traded on The NASDAQ Stock Market LLC for ten (10) trading days ending on the date that is three (3) trading days prior to the applicable date of issuance. If the Consideration Per-Share Price is greater than the closing price per share of Sorrento common stock, as reported on The Nasdaq Stock Market LLC on the date that is six (6) months after the date of issuance of Consideration Shares (the “Consideration Payment 6-Month Price”), as applicable, Sorrento shall reimburse ACEA’s equityholders for the difference in value through (a) the payment of cash, (b) the delivery of additional shares of Sorrento common stock valued at the Consideration Payment 6-Month Price or (c) a combination of the foregoing. 

 

	
 
	
Upfront Payment

Sorrento shall make the following payments within ten (10) days of closing the Transaction (collectively, the “Upfront Payments”):

(1)$36 million, in respect of existing shareholder loans to be paid directly to the bridge lenders, which shall be paid in shares of Sorrento common stock; and

(2)the remainder of the consideration shall be payable to ACEA’s  equityholders.

 

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Section
	
 

	
 
	
Contingent Value Rights

The ACEA equityholders will also receive contingent value rights (“CVRs”) representing the right to receive the License Agreement Payments, Royalty Payments and Milestone Payments (each as defined below). 

Sorrento will pay equityholders of ACEA all amounts that would be due to ACEA under the License Agreement, dated July 13, 2020, between Sorrento and ACEA (the (“License Agreement Payments”) as if the payment obligations of Sorrento thereunder will continue in full force and effect until the expiration of such License Agreement even after the closing of the Transaction.  The License Agreement would be terminated at the closing of the merger and the License Agreement Payments will instead be set forth in the Definitive Agreement.

In addition to the License Agreement Payments, Sorrento shall make the following the royalty payments on the Net Sales of the Royalty-Bearing Products (as defined below) and milestone payments to the equityholders of ACEA with respect to the following ACEA assets:  Abivertinib (China), AC0058 (worldwide) and AC0939 (worldwide): 

Royalty Payments: During the Royalty Term (to be defined in the Definitive Agreement in a manner consistent in all material respects with such term as defined in the License Agreement) Sorrento will, on a Royalty-Bearing Product-by-Royalty-Bearing Product and country-by-country basis, pay equityholders of ACEA 5% of the annual Net Sales (to be defined in the Definitive Agreement in a manner consistent in all material respects with such term as defined in the License Agreement) of all products of Sorrento incorporating Abivertinib (China), AC0058 (worldwide) and AC0939 (worldwide) (such products, collectively, the “Royalty Bearing Products” and such payments, the “Royalty Payments”).  The Definitive Agreement will include ordinary and customary royalty step down and royalty stacking provisions consistent in all material respects with those set forth in the License Agreement. 

Milestone Payments: In addition to the foregoing License Agreement Payments, Sorrento shall make the following milestone payments (collectively, the “Milestone Payments”) to the equityholders of ACEA within ten (10) days of the achievement of the designated milestone events with respect to the following ACEA assets: 

(1)   $25 million, upon the first regulatory approval (including accelerated regulatory approval) based on the Phase 2 clinical study data of Abivertinib (described below) in China for the treatment of non-small cell lung cancer (NSCLC) within two (2) years from the closing of the Transaction; 

(2)   In addition to the milestone payment in (1), $50 million, upon the first regulatory approval of Abivertinib for any indication in China; 

(3)   $50 million, upon the first regulatory approval of AC0058 (described below) for any indication in any one of the following territories: US, Europe, Japan  and China;

(4)   $40 million, upon the first regulatory approval of AC0939 (described below) for any indication in any one of the following territories: US, Europe, Japan, and China; 

(5)   $10 million, upon aggregate Net Sales in a given calendar year of all Royalty-Bearing Products being equal to or greater than $200 million;  

(6)   $30 million, upon aggregate Net Sales in a given calendar year of all Royalty-Bearing Products being equal to or greater than $500 million; and 

(7)   $60 million, upon aggregate Net Sales in a given calendar year of all Royalty-Bearing Products being greater than $1 billion.

The Merger Consideration and the Transaction (including the plan of merger required pursuant to Cayman Islands law) is subject to the approval of the requisite number of ACEA shareholders as may be required by law or ACEA’s charter documents, which approval shall be obtained prior to the signing of the Definitive Agreement. 

	
3.   Existing Bank Loan and Accounts Payable
	
Sorrento will be responsible for existing bank loans (China, 11 million USD and US PPP loans 560K USD), Accounts Payable (5 million USD), and the Agilent loan (27 million USD).

	
4.   Principal ACEA Assets
	
•   Abivertinib (AC0010): A selective TKI for EGFR and BTK (Phase III) for Lung cancer and CLL

•   AC0058: Second generation BTK inhibitor (Phase Ib/IIa) for autoimmune diseases

•   AC0939: Second generation TKI for AML, and solid tumor (IND Enabling)

•   cGMP Manufacturing Facility in China 

•   Small molecule drug discovery platform including 1 million small molecule compound library, drug screening platform and drug discovery platform and CMC development platform

•   Intellectual property (IP) portfolio, including but not limited to patents, trademarks, trade secrets and know-how.

 

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Section
	
 

	
5.   Additional Provisions
	
The Definitive Agreement will contain, among others, the following provisions, as are customary and appropriate for a transaction of this nature:

•   certain adjustments to the merger consideration for net working capital, cash, indebtedness and transaction expenses;

•   representations and warranties of the Parties;

•   pre-closing and post-closing covenants of the Parties; 

•   no-shop; and

•   customary indemnification of Sorrento by the ACEA equityholders as well as an escrow that shall serve as security for the obligations of the ACEA equityholders, subject to certain limitations, such as deductibles and caps to be determined during due diligence.  

	
6.   Certain Conditions to Closing
	
The closing of the transaction shall be subject to the satisfaction of conditions customary for a transaction of this nature, including, among other conditions:  

•   receipt by the Parties of any necessary third party consents, including any governmental consents or clearances;

•   accuracy of representations and warranties and compliance with covenants;

•   receipt of all necessary lender approvals; 

•   absence of any material adverse change to the operations of ACEA; and

•   other conditions that, in the reasonable judgment of both Parties, are appropriate for a transaction of this kind.

	
7.   Noncompetition Agreements
	
Prior to the signing of the Definitive Agreement, certain employees of ACEA, to be specified by Sorrento prior to the signing of a Definitive Agreement, shall enter into non-competition agreements to be effective as of the effective time of the merger.

ACEA’s Chief Executive Officer’s future arrangement and compensation with Sorrento will be transparent to ACEA’s Board of Directors and stockholders.

	
8.   Confidentiality; Publicity
	
Each Party recognizes that this Term Sheet is confidential and that disclosure of the provisions contained herein would cause irreparable harm to the other Party. Accordingly, each Party agrees that the terms, conditions and contents of this Term Sheet will be kept confidential and will not be published or disclosed, other than to a Party’s advisors and consultants who have a need to know and who are subject to obligations of confidentiality, or as may be required by applicable law, rule or regulation.

The Parties have entered into a Mutual Confidentiality Disclosure Agreement dated February 24, 2020.  Each Party acknowledges and agrees that such agreement shall remain in full force and effect following execution of this Term Sheet and hereby ratifies and confirms their obligations thereunder.

Neither party will make any public disclosure related to this Term Sheet without the prior written consent of the other party, except that Sorrento shall be permitted (without the prior written consent of ACEA), to make such public disclosure, announcements and filings as may be required by applicable law or by applicable rules of any stock exchange on which Sorrento lists or trades securities.  

 

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Section
	
 

	
9.   Costs
	
Each of Sorrento and ACEA will pay its own direct costs and expenses, including the fees of attorneys, accountants, investment bankers and other advisors, incurred at any time in 

connection with the Transaction; provided, however, that any fees and expenses incurred by the Parties in submitting any regulatory filings shall be borne one-half by Sorrento and one-half by ACEA.

	
10.   Exclusivity
	
For the period commencing on the date on which both Parties have executed this Term Sheet (the “Effective Date”) and ending at 5:00 p.m. San Diego, California local time on the date that is 90 days from the Effective Date (the “Exclusivity Period”), ACEA (including its directors, officers, managers, employees and professional advisors) will negotiate exclusively and in good faith with Sorrento with respect to entering into the Definitive Agreement and the other matters contemplated by this Term Sheet.  During the Exclusivity Period, ACEA (including its directors, officers, managers, employees and professional advisors) will not, directly or indirectly, solicit, initiate, seek, entertain, knowingly encourage, knowingly facilitate or support any inquiry, proposal or offer from, furnish any information to, or participate in any discussions or negotiations with, any person or entity other than Sorrento and its representatives with respect to any sale or other disposition of any equity securities of ACEA, or any merger, consolidation, business combination or similar transaction, any sale, license, lease or other disposition of all or substantially all of the assets of ACEA (a “Competing Proposal”), or enter into any agreement with any such other person or entity concerning such a transaction.  ACEA further covenants and agrees to terminate any such discussions or negotiations in respect of a Competing Proposal in progress as of the Effective Date.  If ACEA (including any of its directors, officers, managers, employees or professional advisors) receives an offer or expression of interest to make an offer for a Competing Proposal from a third party, ACEA will promptly (but in any event within 24 hours) notify Sorrento in writing of the terms and conditions of such offer and the identity of the person or entity making such offer.

	
11.   Termination
	
This Term Sheet, including the Binding Provisions, (i) will terminate, without further action by either Sorrento or ACEA, at 5:00 p.m. San Diego, California local time on the last day of the Exclusivity Period, if the Definitive Agreement has not been executed by that date, and (ii) may be terminated by Sorrento upon written notice delivered to ACEA if Sorrento determines that it does not desire in its sole discretion to proceed with the Transaction.  Upon termination, the Parties shall have no further obligations hereunder, except that the provisions of Sections 8, 9 and 14 shall survive any such termination.

	
12.   Amendment
	
Any waiver, amendment, modification or supplement of or to any term or condition of the Binding Provisions shall be effective only if in writing and signed by Sorrento and ACEA, and the Parties hereby waive the right to amend the provisions of this Section 12 orally.

	
13.   Non-Assignment
	
This Term Sheet is not, and the Definitive Agreement will not be, assignable by Sorrento or ACEA without the prior written consent of the other Party.

 

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Section
	
 

	
14.   Choice of Law; Venue
	
The Binding Provisions will be construed and enforced in accordance with the laws of the State of Delaware without regard to conflicts of law principles.  Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Term Sheet may be brought against any Party in the federal and state courts of the State of Delaware and each Party consents to the jurisdiction of such courts in any such action or proceeding and waives any objection to venue laid therein.  Process in any action or proceeding referred to in the preceding sentence may be served on any Party anywhere in the world.

	
15.   Counterparts
	
This Term Sheet may be executed in one or more counterparts, each of which will be deemed to be an original and all of which, when taken together, will be deemed to constitute one and the same document.

 

Note: Solely with respect to the Milestone Payments, Sorrento will pay ACEA’s equityholders all such payments due, even if completed clinical trials are not conducted because of the purchased assets receiving a Fast Track or Breakthrough Therapy designation, and/or receiving Accelerated Approval by the U.S. Food and Drug Administration or the equivalent  governing body in the applicable jurisdiction.

[Signature Page Follows]

 

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Agreed and Accepted:

	
 

	
ACEA THERAPEUTICS, Inc.

	
 

	
By:
	
/s/ Xiao Xu

	
 
	
 

	
Name:
	
 Xiao Xu

	
 
	
 

	
Title:
	
President

	
 
	
 

	
Date:
	
October 14, 2020

 

	
SORRENTO THERAPEUTICS, Inc.

	
 

	
By:
	
/s/ Henry Ji, Ph.D.

	
 
	
 

	
Name:
	
 Henry Ji, Ph.D.

	
 
	
 

	
Title:
	
President & CEO

	
 
	
 

	
Date:
	
October 14, 2020

 

 

7Exhibit 10.1

 

INVESTMENT MANAGEMENT TRUST AGREEMENT

 

This Investment Management
Trust Agreement (this “Agreement”) is made effective as of February 16, 2021 by and between FS Development
Corp. II, a Delaware corporation (the “Company”), and Continental Stock Transfer & Trust Company,
a New York corporation (the “Trustee”).

 

WHEREAS, the Company’s
registration statements on Form S-1, File Nos. 333-252435 and 333-253182, (together, the “Registration Statement”)
and prospectus (the “Prospectus”) for the initial public offering (the “Offering”)
of shares of the Company’s Class A common stock, par value $0.0001 per share (“Common Stock”),
has been declared effective as of the date hereof by the U.S. Securities and Exchange Commission; and

 

WHEREAS, the Company
has entered into an Underwriting Agreement (the “Underwriting Agreement”) with Jefferies LLC, as representative
of the several underwriters named therein (the “Underwriters”); and

 

WHEREAS, as described
in the Prospectus, $175,000,000 of the net proceeds of the Offering and sale of the Private Placement Shares (as defined in the
Underwriting Agreement) (or $201,250,000 if the Underwriters’ over-allotment option is exercised in full) will be, after
deducting $3,500,000 in underwriting discounts and commissions payable upon the closing of this offering (or $4,025,000 if the
Underwriters’ over-allotment option is exercised in full) and an aggregate of $2.0 million to pay fees and expenses in connection
with the closing of this offering and for working capital following the closing of this offering, delivered to the Trustee to be
deposited and held in a segregated trust account located at all times in the United States (the “Trust Account”)
for the benefit of the Company and the holders of the Common Stock issued in the Offering as hereinafter provided (the amount to
be delivered to the Trustee (and any interest subsequently earned thereon) is referred to herein as the “Property,”
the stockholders for whose benefit the Trustee shall hold the Property will be referred to as the “Public Stockholders,”
and the Public Stockholders and the Company will be referred to together as the “Beneficiaries”); and

 

WHEREAS, pursuant to
the Underwriting Agreement, a portion of the Property equal to $6,125,000, or $7,043,750 if the Underwriters’ over-allotment
option is exercised in full, is attributable to deferred underwriting discounts and commissions that will be payable by the Company
to the Underwriters upon and concurrently with the consummation of the Business Combination (as defined below) (the “Deferred
Discount”); and

 

WHEREAS, the Company
and the Trustee desire to enter into this Agreement to set forth the terms and conditions pursuant to which the Trustee shall hold
the Property.

 

NOW THEREFORE, IT IS
AGREED:

 

		1.	Agreements and Covenants of Trustee. The Trustee hereby agrees and covenants to:

 

(a) Hold
the Property in trust for the Beneficiaries in accordance with the terms of this Agreement in the Trust Account established by
the Trustee in the United States at J.P. Morgan Chase Bank, N.A. (or at another U.S. chartered commercial bank with consolidated
assets of $100 billion or more), maintained by the Trustee and at a brokerage institution selected by the Trustee that is reasonably
satisfactory to the Company;

 

(b) Manage,
supervise and administer the Trust Account subject to the terms and conditions set forth herein;

 

     

     

    

 

(c) In
a timely manner, upon the written instruction of the Company, invest and reinvest the Property solely in United States government
securities within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, having a maturity of 185 days
or less, or in money market funds meeting the conditions of paragraphs (d)(1), (d)(2), (d)(3) and (d)(4) of Rule 2a-7 promulgated
under the Investment Company Act of 1940, as amended (or any successor rule), which invest only in direct U.S. government treasury
obligations, as determined by the Company; it being understood that the Trust Account will earn no interest while account funds
are uninvested awaiting the Company’s instructions hereunder and the Trustee may earn bank credits or other consideration;

 

(d) Collect
and receive, when due, all interest or other income arising from the Property, which shall become part of the “Property,”
as such term is used herein;

 

(e) Promptly
notify the Company and Jefferies LLC of all communications received by the Trustee with respect to any Property requiring action
by the Company;

 

(f) Supply
any necessary information or documents as may be requested by the Company (or its authorized agents) in connection with the Company’s
preparation of the tax returns relating to assets held in the Trust Account or in connection with the Company’s preparation
or completion of an audit of the Company’s financial statements;

 

(g) Participate
in any plan or proceeding for protecting or enforcing any right or interest arising from the Property if, as and when instructed
by the Company to do so;

 

(h) Render
to the Company monthly written statements of the activities of, and amounts in, the Trust Account reflecting all receipts and disbursements
of the Trust Account;

 

(i) Commence
liquidation of the Trust Account only after and promptly after (x) receipt of, and only in accordance with, the terms of a letter
from the Company (“Termination Letter”) in a form substantially similar to that attached hereto as either
Exhibit A or Exhibit B, as applicable, signed on behalf of the Company by its Chief Executive Officer, Chief Financial
Officer, President, Executive Vice President, Vice President, Secretary or Chairman of the board of directors of the Company (the
“Board”“) or other authorized officer of the Company, and complete the liquidation
of the Trust Account and distribute the Property 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 (less up to $100,000 of interest to pay dissolution expenses),
only as directed in the Termination Letter and the other documents referred to therein, or (y) upon the date which is, the later
of (1) 24 months after the closing of the Offering and (2) such later date as may be approved by the Company’s stockholders
in accordance with the Company’s amended and restated certificate of incorporation, as amended from time to time, if a Termination
Letter has not been received by the Trustee prior to such date, in which case the Trust Account shall be liquidated in accordance
with the procedures set forth in the Termination Letter attached as Exhibit B and the Property 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 (less up to
$100,000 of interest to pay dissolution expenses), shall be distributed to the Public Stockholders of record as of such date;

 

(j) Upon
written request from the Company, which may be given from time to time in a form substantially similar to that attached hereto
as Exhibit C (a “Tax Payment Withdrawal Instruction”), withdraw from the Trust Account
and distribute to the Company the amount of interest earned on the Property requested by the Company to cover any tax obligation
owed by the Company as a result of assets of the Company or interest or other income earned on the Property, which amount shall
be delivered directly to the Company by electronic funds transfer or other method of prompt payment, and the Company shall forward
such payment to the relevant taxing authority, so long as there is no reduction in the principal amount per share initially deposited
in the Trust Account; provided, however, that to the extent there is not sufficient cash in the Trust Account to
pay such tax obligation, the Trustee shall liquidate such assets held in the Trust Account as shall be designated by the Company
in writing to make such distribution (it being acknowledged and agreed that any such amount in excess of interest income earned
on the Property shall not be payable from the Trust Account). The written request of the Company referenced above shall constitute
presumptive evidence that the Company is entitled to said funds, and the Trustee shall have no responsibility to look beyond said
request;

 

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(k) Upon
written request from the Company, which may be given from time to time in a form substantially similar to that attached hereto
as Exhibit D (a “Stockholder Redemption Withdrawal Instruction”), the Trustee shall distribute
on behalf of the Company the amount requested by the Company to be used to redeem shares of Common Stock from Public Stockholders
properly submitted in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate
of incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of shares of Common Stock sold
in the Offering (the ‘“public shares”) if the Company has not consummated an initial Business
Combination within such time as is described in the Company’s amended and restated certificate of incorporation or with respect
to any other material provisions relating to stockholders’ rights or pre-initial Business Combination activity. The written
request of the Company referenced above shall constitute presumptive evidence that the Company is entitled to distribute said funds,
and the Trustee shall have no responsibility to look beyond said request; and

 

(l) Not
make any withdrawals or distributions from the Trust Account other than pursuant to Section 1(i), (j) or (k)
above.

 

		2.	Agreements and Covenants of the Company. The Company hereby agrees and covenants to:

 

(a) Give
all instructions to the Trustee hereunder in writing, signed by the Company’s Chairman of the Board, Chief Executive Officer,
Chief Financial Officer, President, Executive Vice President, Vice President or Secretary. In addition, except with respect to
its duties under Sections 1(i), 1(j) and 1(k) hereof, the Trustee shall be entitled to rely on, and shall
be protected in relying on, any verbal or telephonic advice or instruction which it, in good faith and with reasonable care, believes
to be given by any one of the persons authorized above to give written instructions, provided that the Company shall promptly confirm
such instructions in writing;

 

(b) Subject
to Section 4 hereof, hold the Trustee harmless and indemnify the Trustee from and against any and all expenses, including
reasonable counsel fees and disbursements, or losses suffered by the Trustee in connection with any action taken by it hereunder
and in connection with any action, suit or other proceeding brought against the Trustee involving any claim, or in connection with
any claim or demand, which in any way arises out of or relates to this Agreement, the services of the Trustee hereunder, or the
Property or any interest earned on the Property, except for expenses and losses resulting from the Trustee’s gross negligence,
fraud or willful misconduct. Promptly after the receipt by the Trustee of notice of demand or claim or the commencement of any
action, suit or proceeding, pursuant to which the Trustee intends to seek indemnification under this Section 2(b), it shall
notify the Company in writing of such claim (hereinafter referred to as the “Indemnified Claim”).
The Trustee shall have the right to conduct and manage the defense against such Indemnified Claim; provided that the Trustee
shall obtain the consent of the Company with respect to the selection of counsel, which consent shall not be unreasonably withheld.
The Trustee may not agree to settle any Indemnified Claim without the prior written consent of the Company, which such consent
shall not be unreasonably withheld. The Company may participate in such action with its own counsel;

 

(c) Pay
the Trustee the fees set forth on Schedule A hereto, including an initial acceptance fee, annual administration fee, and
transaction processing fee which fees shall be subject to modification by the parties from time to time. It is expressly understood
that the Property shall not be used to pay such fees unless and until it is distributed to the Company pursuant to Sections
1(i) through 1(j) hereof. The Company shall pay the Trustee the initial acceptance fee and the first annual administration
fee at the consummation of the Offering. The Company shall not be responsible for any other fees or charges of the Trustee except
as set forth in this Section 2(c), Schedule A and as may be provided in Section 2(b) hereof;

 

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(d) In
connection with any vote of the Company’s stockholders regarding a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination involving the Company and one or more businesses (the “Business
Combination”), provide to the Trustee an affidavit or certificate of the inspector of elections for the stockholder
meeting verifying the vote of such stockholders regarding such Business Combination;

 

(e) Provide
Jefferies LLC with a copy of any Termination Letter(s) and/or any other correspondence that is sent to the Trustee with respect
to any proposed withdrawal from the Trust Account promptly after it issues the same;

 

(f) Unless
otherwise agreed between the Company and the Underwriters, ensure that any Instruction Letter (as defined in Exhibit A)
delivered in connection with a Termination Letter in the form of Exhibit A expressly provides that the Deferred Discount
is paid directly to the account or accounts directed by Jefferies LLC prior to any transfer of the funds held in the Trust Account
to the Company or any other person;

 

(g) Instruct
the Trustee to make only those distributions that are permitted under this Agreement, and refrain from instructing the Trustee
to make any distributions that are not permitted under this Agreement; and

 

(h) Within
four (4) business days after the Underwriter exercises the over-allotment option (or any unexercised portion thereof) or such over-allotment
option expires, provide the Trustee with a notice in writing of the total amount of the Deferred Discount.

 

		3.	Limitations of Liability. The Trustee shall have no responsibility or liability to:

 

(a) Imply
obligations, perform duties, inquire or otherwise be subject to the provisions of any agreement or document other than this Agreement
and that which is expressly set forth herein;

 

(b) Take
any action with respect to the Property, other than as directed in Section 1 hereof, and the Trustee shall have no liability
to any third party except for liability arising out of the Trustee’s gross negligence, fraud or willful misconduct;

 

(c) Institute
any proceeding for the collection of any principal and income arising from, or institute, appear in or defend any proceeding of
any kind with respect to, any of the Property unless and until it shall have received instructions from the Company given as provided
herein to do so and the Company shall have advanced or guaranteed to it funds sufficient to pay any expenses incident thereto;

 

(d) Refund
any depreciation in principal of any Property;

 

(e) Assume
that the authority of any person designated by the Company to give instructions hereunder shall not be continuing unless provided
otherwise in such designation, or unless the Company shall have delivered a written revocation of such authority to the Trustee;

 

(f) The
other parties hereto or to anyone else for any action taken or omitted by it, or any action suffered by it to be taken or omitted,
in good faith and in the Trustee’s best judgment, except for the Trustee’s gross negligence, fraud or willful misconduct.
The Trustee may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice
of counsel (including counsel chosen by the Trustee, which counsel may be the Company’s counsel), statement, instrument,
report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also
as to the truth and acceptability of any information therein contained) which the Trustee believes, in good faith and with reasonable
care, to be genuine and to be signed or presented by the proper person or persons. The Trustee shall not be bound by any notice
or demand, or any waiver, modification, termination or rescission of this Agreement or any of the terms hereof, unless evidenced
by a written instrument delivered to the Trustee, signed by the proper party or parties and, if the duties or rights of the Trustee
are affected, unless it shall give its prior written consent thereto;

 

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(g) Verify
the accuracy of the information contained in the Registration Statement;

 

(h) Provide
any assurance that any Business Combination entered into by the Company or any other action taken by the Company is as contemplated
by the Registration Statement;

 

(i) File
information returns with respect to the Trust Account with any local, state or federal taxing authority or provide periodic written
statements to the Company documenting the taxes payable by the Company, if any, relating to any interest income earned on the Property;

 

(j) Prepare,
execute and file tax reports, income or other tax returns and pay any taxes with respect to any income generated by, and activities
relating to, the Trust Account, regardless of whether such tax is payable by the Trust Account or the Company, including, but not
limited to, tax obligations, except pursuant to Section 1(j) hereof; or

 

(k) Verify
calculations, qualify or otherwise approve the Company’s written requests for distributions pursuant to Sections 1(i),
1(j) or 1(k) hereof.

 

4. Trust
Account Waiver. The Trustee has no right of set-off or any right, title, interest or claim of any kind (“Claim”)
to, or to any monies in, the Trust Account, and hereby irrevocably waives any Claim to, or to any monies in, the Trust Account
that it may have now or in the future. In the event the Trustee has any Claim against the Company under this Agreement, including,
without limitation, under Section 2(b) or Section 2(c) hereof, the Trustee shall pursue such Claim solely against
the Company and its assets outside the Trust Account and not against the Property or any monies in the Trust Account.

 

		5.	Termination. This Agreement shall terminate as follows:

 

(a) If
the Trustee gives written notice to the Company that it desires to resign under this Agreement, the Company shall use its reasonable
efforts to locate a successor trustee, pending which the Trustee shall continue to act in accordance with this Agreement. At such
time that the Company notifies the Trustee that a successor trustee has been appointed and has agreed to become subject to the
terms of this Agreement, the Trustee shall transfer the management of the Trust Account to the successor trustee, including but
not limited to the transfer of copies of the reports and statements relating to the Trust Account, whereupon this Agreement shall
terminate; provided, however, that in the event that the Company does not locate a successor trustee within ninety
(90) days of receipt of the resignation notice from the Trustee, the Trustee may submit an application to have the Property deposited
with any court in the State of New York or with the United States District Court for the Southern District of New York and upon
such deposit, the Trustee shall be immune from any liability whatsoever; or

 

(b) At
such time that the Trustee has completed the liquidation of the Trust Account and its obligations in accordance with the provisions
of Section 1(i) hereof and distributed the Property in accordance with the provisions of the Termination Letter, this Agreement
shall terminate except with respect to Section 2(b).

 

    5

     

    

 

		6.	Miscellaneous.

 

(a) The
Company and the Trustee each acknowledge that the Trustee will follow the security procedures set forth below with respect to funds
transferred from the Trust Account. The Company and the Trustee will each restrict access to confidential information relating
to such security procedures to authorized persons. Each party must notify the other party immediately if it has reason to believe
unauthorized persons may have obtained access to such confidential information, or of any change in its authorized personnel. In
executing funds transfers, the Trustee shall rely upon all information supplied to it by the Company, including, account names,
account numbers, and all other identifying information relating to a Beneficiary, Beneficiary’s bank or intermediary bank.
Except for any liability arising out of the Trustee’s gross negligence, fraud or willful misconduct, the Trustee shall not
be liable for any loss, liability or expense resulting from any error in the information or transmission of the funds.

 

(b) This
Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York. This Agreement
may be executed in several original or facsimile counterparts, each one of which shall constitute an original, and together shall
constitute but one instrument.

 

(c) This
Agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter hereof. Subject
to Section 6(d) hereof, this Agreement or any provision hereof may only be changed, amended or modified (other than to correct
a typographical error) by a writing signed by each of the parties hereto.

 

(d) This
Agreement or any provision hereof may only be changed, amended or modified pursuant to Section 6(c) hereof with the Consent
of the Stockholders. For purposes of this Section 6(d), the “Consent of the Stockholders” means receipt by the
Trustee of a certificate from the inspector of elections of the stockholder meeting certifying that the Company’s stockholders
of record as of a record date established in accordance with Section 213(a) of the Delaware General Corporation Law, as amended
(“DGCL”) (or any successor rule), who hold sixty-five percent (65%) or more of all then outstanding shares of
the Common Stock and Class B common stock, par value $0.0001 per share, of the Company voting together as a single class, have
voted in favor of such change, amendment or modification. No such amendment will affect any Public Stockholder who has otherwise
indicated his election to redeem his shares of Common Stock in connection with a stockholder vote sought to amend this Agreement
or the amended and restated certificate of incorporation to modify the substance or timing of the Company’s obligation to
redeem 100% of the public shares if the Company does not complete its initial Business Combination within the time frame specified
in the Company’s amended and restated certificate of incorporation or with respect to any other material provisions relating
to stockholders’ rights or pre-initial Business Combination activity. Except for any liability arising out of the Trustee’s
gross negligence, fraud or willful misconduct, the Trustee may rely conclusively on the certification from the inspector or elections
referenced above and shall be relieved of all liability to any party for executing the proposed amendment in reliance thereon.

 

(e) The
parties hereto consent to the jurisdiction and venue of any state or federal court located in the City of New York, State of New
York, for purposes of resolving any disputes hereunder. AS TO ANY CLAIM, CROSS-CLAIM OR COUNTERCLAIM IN ANY WAY RELATING TO THIS
AGREEMENT, EACH PARTY WAIVES THE RIGHT TO TRIAL BY JURY.

 

(f) Any
notice, consent or request to be given in connection with any of the terms or provisions of this 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 by electronic mail:

 

if to the Trustee, to:

 

Continental Stock Transfer &
Trust Company

1 State Street, 30th Floor

New York, New York 10004

Attn: Francis Wolf and Celeste
Gonzalez

Email: cgonzalez@continentalstock.com

 

    6

     

    

 

Email: fwolf@continentalstock.com

if to the Company, to:

 

FS Development Corp. II

600 Montgomery Street, Suite 4500

San Francisco, California 94111

Attn: Jim Tananbaum

Email: jim@foresitecapital.com

in each case, with copies to:

 

White & Case LLP

1221 Avenue of the Americas

New York, New York 10020

Attn: Joel L. Rubinstein

Email: joel.rubinstein@whitecase.com

 

and

 

Jefferies LLC

520 Madison Avenue

New York, NY 10022

Attn.: General Counsel

Facsimile: (646) 619-4437

 

and

 

Skadden, Arps, Slate, Meagher &
Flom LLP

525 University Avenue, Suite 1400

Palo Alto, California 94301

Attn.: Gregg Noel

Email: gregg.noel@skadden.com

 

(g) Each
of the Company and the Trustee hereby represents that it has the full right and power and has been duly authorized to enter into
this Agreement and to perform its respective obligations as contemplated hereunder. The Trustee acknowledges and agrees that it
shall not make any claims or proceed against the Trust Account, including by way of set-off, and shall not be entitled to any funds
in the Trust Account under any circumstance.

 

(h) This
Agreement is the joint product of the Trustee and the Company and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of such parties and shall not be construed for or against any party hereto.

 

(i) This
Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts
shall together constitute one and the same instrument. Delivery of a signed counterpart of this Agreement by facsimile or electronic
transmission shall constitute valid and sufficient delivery thereof.

 

(j) Each
of the Company and the Trustee hereby acknowledges and agrees that Jefferies LLC is a third- party beneficiary of this Agreement.

 

(k) Except
as specified herein, no party to this Agreement may assign its rights or delegate its obligations hereunder to any other person
or entity.

 

[Signature Page Follows]

 

    7

     

    

 

IN WITNESS WHEREOF,
the parties have duly executed this Investment Management Trust Agreement as of the date first written above.

 

	 	CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Trustee
	 	 	 	 
	 	By: 	/s/ Francis Wolf
	 	 	Name:	 Francis Wolf
	 	 	Title:	 Vice President
	 	 	 	 
	 	FS DEVELOPMENT CORP. II
	 	 	 	 
	 	By: 	/s/ Jim Tananbaum
	 	 	Name: 	 Jim Tananbaum
	 	 	Title:	 Chief Executive Officer

 

[Signature Page to Investment Management Trust Agreement]

 

     

     

    

 

SCHEDULE A

 

	Fee Item	 	Time and method of payment	 	Amount	 
	 	 	 	 	 	 
	Initial set-up fee	 	Initial closing of Offering by wire transfer.	 	$	3,500.00	 
	Trustee administration fee	 	Payable annually. First year fee payable, at initial closing of Offering by wire transfer, thereafter by wire transfer or check.	 	$	10,000.00	 
	Transaction processing fee for disbursements to Company under Sections 1 and 2	 	Billed to Company following disbursement made to Company under Sections 1 and 2.	 	$	250.00	 
	Paying Agent services as required pursuant to Sections 1(i) and 1(k)	 	Billed to Company upon delivery of service pursuant to Sections 1(i) and 1(k).	 	 	Prevailing rates	 

 

 

     

     

    

 

EXHIBIT A

 

[Letterhead of Company]

 

[Insert date]

 

Continental Stock Transfer & Trust
Company

1 State Street, 30th Floor

New York, New York 10004

Attn: Francis Wolf and Celeste Gonzalez

 

Re: Trust Account
- Termination Letter

 

Dear Mr. Wolf and Ms. Gonzalez:

 

Pursuant to Section
1(i) of the Investment Management Trust Agreement between FS Development Corp. II (the “Company”)
and Continental Stock Transfer & Trust Company (the “Trustee”), dated as of February 16, 2021
(the “Trust Agreement”), this is to advise you that the Company has entered into an agreement
with (the “Target Business”) to consummate a business combination with the Target Business (the “Business
Combination”) on or about [insert date]. The Company shall notify you at least seventy-two (72) hours in advance
of the actual date (or such shorter period as you may agree) of the consummation of the Business Combination (the “Consummation
Date”). Capitalized terms used but not defined herein shall have the meanings set forth in the Trust Agreement.

 

In accordance with
the terms of the Trust Agreement, we hereby authorize you to commence to liquidate all of the assets of the Trust Account and to
transfer the proceeds to a segregated account held by you on behalf of the Beneficiaries to the effect that, on the Consummation
Date, all of the funds held in the Trust Account at JPMorgan Chase Bank, N.A., will be immediately available for transfer to the
account or accounts that the Company shall direct on the Consummation Date (including as directed to it by Jefferies LLC (with
respect to the Deferred Discount)).

 

On the Consummation
Date (i) counsel for the Company shall deliver to you written notification that the Business Combination has been consummated,
or will be consummated concurrently with your transfer of funds to the accounts as directed by the Company (the “Notification”),
and (ii) the Company shall deliver to you (a) a certificate by the Chief Executive Officer, Chief Financial Officer, Chairman or
Vice Chairman, which verifies that the Business Combination has been approved by a vote of the Company’s stockholders, if
a vote is held and (b) a joint written instruction signed by the Company and Jefferies LLC with respect to the transfer of the
funds held in the Trust Account, including payment of amounts owed to public stockholders who have properly exercised their redemption
rights and payment of the Deferred Discount directly to the account or accounts directed by Jefferies LLC from the Trust Account
(the “Instruction Letter”). You are hereby directed and authorized to transfer the funds held
in the Trust Account immediately upon your receipt of the Notification and the Instruction Letter, in accordance with the terms
of the Instruction Letter. In the event that certain deposits held in the Trust Account may not be liquidated by the Consummation
Date without penalty, you will notify the Company in writing of the same and the Company shall direct you as to whether such funds
should remain in the Trust Account and be distributed after the Consummation Date to the Company. Upon the distribution of all
the funds, net of any payments necessary for reasonable unreimbursed expenses related to liquidating the Trust Account, your obligations
under the Trust Agreement shall be terminated.

 

In the event that the
Business Combination is not consummated on the Consummation Date described in the notice thereof and we have not notified you on
or before the original Consummation Date of a new Consummation Date, then upon receipt by the Trustee of written instructions from
the Company, the funds held in the Trust Account shall be reinvested as provided in Section 1(c) of the Trust Agreement
on the business day immediately following the Consummation Date as set forth in such notice as soon thereafter as possible.

 

	 	Very truly yours,
	 	 	 
	 	FS Development Corp. II
	 	 	 
		By:	               
	 	 	Name:
	 	 	Title:

 

cc: Jefferies LLC

 

     

     

    

 

EXHIBIT B

 

[Letterhead of Company]

 

[Insert date]

 

Continental Stock Transfer & Trust
Company

1 State Street, 30th Floor

New York, New York 10004

Attn: Francis Wolf and Ms. Gonzalez

 

Re: Trust Account
- Termination Letter

 

Dear Mr. Wolf and Ms. Gonzalez:

 

Pursuant to Section
1(i) of the Investment Management Trust Agreement between FS Development Corp. II (the “Company”)
and Continental Stock Transfer & Trust Company (the “Trustee”), dated as of February 16, 2021
(the “Trust Agreement”), this is to advise you that the Company has been unable to effect a business
combination with a Target Business (the “Business Combination”) within the time frame specified in the
Company’s amended and restated certificate of incorporation, as described in the Company’s Prospectus relating to the
Offering. Capitalized terms used but not defined herein shall have the meanings set forth in the Trust Agreement.

 

In accordance with
the terms of the Trust Agreement, we hereby authorize you to liquidate all of the assets in the Trust Account and to transfer
the total proceeds into a segregated account held by you on behalf of the Beneficiaries to await distribution to the Public Stockholders.
The Company has selected1 as the effective date for the purpose of determining when the Public Stockholders will be
entitled to receive their share of the liquidation proceeds. You agree to be the Paying Agent of record and, in your separate
capacity as Paying Agent, agree to distribute said funds directly to the Company’s Public Stockholders in accordance with
the terms of the Trust Agreement and the amended and restated certificate of incorporation of the Company. Upon the distribution
of all the funds, net of any payments necessary for reasonable unreimbursed expenses related to liquidating the Trust Account,
your obligations under the Trust Agreement shall be terminated, except to the extent otherwise provided in Section 1(i)
of the Trust Agreement.

 

	 	Very truly yours,
	 	 	 
	 	FS Development Corp. II
	 	 	 
		By:	               
	 	 	Name:
	 	 	Title:

 

cc: Jefferies LLC

 

 

		1	24 months from the closing of the Offering or such later date as may be approved by the Company’s
stockholders in accordance with the Company’s amended and restated certificate of incorporation.

 

     

     

    

 

EXHIBIT C

 

[Letterhead of Company]

 

[Insert date]

 

Continental Stock Transfer & Trust
Company

1 State Street, 30th Floor

New York, New York 10004

Attn: Francis Wolf and Ms. Gonzalez

 

Re: Trust Account
- Tax Payment Withdrawal Instruction

 

Dear Mr. Wolf and Ms. Gonzalez:

 

Pursuant to Section
1(j) of the Investment Management Trust Agreement between FS Development Corp. II (the “Company”)
and Continental Stock Transfer & Trust Company (the “Trustee”), dated as of February 16, 2021
(the “Trust Agreement”), the Company hereby requests that you deliver to the Company

$of the interest income earned on the Property as of the date hereof. Capitalized terms used but not defined herein shall have
the meanings set forth in the Trust Agreement.

 

The Company needs such
funds to pay for the tax obligations as set forth on the attached tax return or tax statement. In accordance with the terms of
the Trust Agreement, you are hereby directed and authorized to transfer (via wire transfer) such funds promptly upon your receipt
of this letter to the Company’s operating account at:

 

[WIRE INSTRUCTION INFORMATION]

 

	 	Very truly yours,
	 	 	 
	 	FS Development Corp. II
	 	 	 
		By:	               
	 	 	Name:
	 	 	Title:

 

cc: Jefferies LLC

 

     

     

    

 

EXHIBIT D

 

[Letterhead of Company]

 

[Insert date]

 

Continental Stock Transfer & Trust
Company

1 State Street, 30th Floor

New York, New York 10004

Attn: Francis Wolf and Ms. Gonzalez

 

Re: Trust Account
- Stockholder Redemption Withdrawal Instruction

 

Dear Mr. Wolf and Ms. Gonzalez:

 

Pursuant to Section
1(k) of the Investment Management Trust Agreement between FS Development Corp. II (the “Company”)
and Continental Stock Transfer & Trust Company (the “Trustee”), dated as of February 16, 2021
(the “Trust Agreement”), the Company hereby requests that you deliver to the redeeming Public
Stockholders of the Company $ of the principal and interest income earned on the Property as of the date hereof to a segregated
account held by you on behalf of the Beneficiaries. Capitalized terms used but not defined herein shall have the meanings set forth
in the Trust Agreement.

 

The Company needs such
funds to pay its Public Stockholders who have properly elected to have their shares of Common Stock redeemed by the Company in
connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation
to modify the substance or timing of the Company’s obligation to redeem 100% of the public shares if the Company has not
consummated an initial Business Combination within such time as is described in the Company’s amended and restated certificate
of incorporation or with respect to any other material provisions relating to stockholders’ rights or pre-initial Business
Combination activity. As such, you are hereby directed and authorized to transfer (via wire transfer) such funds promptly upon
your receipt of this letter to a segregated account held by you on behalf of the Beneficiaries.

 

	 	Very truly yours,
	 	 	 
	 	FS Development Corp. II
	 	 	 
		By:	               
	 	 	Name:
	 	 	Title:

 

cc: Jefferies LLC

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