Item 9A. Controls and Procedures
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2021. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that a material weakness in our internal control over financial reporting exists related to the Company’s accounting for complex financial instruments. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. As such, the Company’s disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were not effective as of December 31, 2021.
Management’s Report on Internal Controls over Financial Reporting
This Annual Report on Form 10-K does not include a report of management's assessment regarding internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.
Changes in Internal Control over Financial Reporting
During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. In light of the Company’s material weakness identified in its financial reporting period ended December 31, 2021, we plan to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
Item 9B. Other Information.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
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Part III
Item 10. Directors, Executive Officers and Corporate Governance
Our officers and directors are as follows:
Name
Age
Position
Thompson Dean
63
Executive Chairman and Director
David Burgstahler
53
President, Chief Executive Officer and Director
Sriram Venkataraman
49
Executive Vice President
Robert Girardi
40
Executive Vice President
Amanda Heravi
47
Investor Relations Officer
John Cafasso
49
Chief Financial Officer
Benjamin Silbert
51
General Counsel
William E. Klitgaard
69
Director
Lâle White
66
Director
Wendel Barr
60
Director
Thompson Dean has served as a Director since our inception and as the Executive Chairman of our board of directors since February 12, 2021. Mr. Dean is a Managing Partner and Chairman of Avista and has served in various capacities at Avista since its founding in 2005. From 1995 to 2005, Mr. Dean served as Co-Managing Partner of DLJMB and was Chairman of the investment committees of DLJMB I, DLJMB II, DLJMB III and DLJ Growth Capital Partners. Mr. Dean currently serves on the board of directors of Cooper Consumer Health, National Spine & Pain Centers, eMolecules, Probo Medical and Vision Healthcare. Mr. Dean previously served on the board of directors of Acino International AG, Charles River Laboratories, ConvaTec Group, Fisher Scientific, Nycomed, Trimb Healthcare, VWR and Zest Dental Solutions. Mr. Dean is a former trustee of Choate Rosemary Hall and The Eaglebrook School. Mr. Dean received a B.A. from the University of Virginia, where he was an Echols Scholar, and an M.B.A. with high distinction from Harvard Business School, where he was a Baker Scholar. We believe that Mr. Dean’s executive level management experience at Avista, board and advisory experience with other companies in and outside of the healthcare industry and his extensive experience in the areas of finance, strategy, international business transactions and mergers and acquisitions makes him well-qualified to serve as a member of our board of directors.
David Burgstahler has served as a Director since our inception and as our President and Chief Executive Officer since February 12, 2021. Mr. Burgstahler is a Managing Partner and Chief Executive Officer of Avista and has served in various capacities at Avista since its founding in 2005. Prior to forming Avista, he was a Partner of DLJMB from 2004 to 2005 and served in various capacities at DLJMB and its affiliates from 1995 to 2005. Prior to DLJMB, Mr. Burgstahler worked at Andersen Consulting (now known as Accenture) and McDonnell Douglas (now known as Boeing). He currently serves as on the board of directors of Cosette Pharmaceuticals, Inform Diagnostics, RVL Pharmaceuticals (NASDAQ: RVL), United BioSource Corporation, XIFIN and other private company boards. Mr. Burgstahler also previously served on the board of directors of AngioDynamics (NASDAQ: ANGO), Acino International AG, Armored AutoGroup, BioReliance Corp., ConvaTec Group, Focus Diagnostics, Inc., INC Research Holdings (NASDAQ: INCR), Lantheus Holdings, MPI Research, Inc., Strategic Partners, LLC, Visant Corp., WideOpenWest (NYSE: WOW) and Warner Chilcott PLC (NASDAQ: WCRX). Mr. Burgstahler received a B.S. in Aerospace Engineering from the University of Kansas and an M.B.A. from Harvard Business School. We believe that Mr. Burgstahler’s extensive experience serving as a director for a diverse group of private and public companies, including those in the healthcare industry, makes him well-qualified to serve as a member of our board of directors.
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Sriram Venkataraman has been our Executive Vice President since February 12, 2021. Mr. Venkataraman is currently a Partner at Avista and originally joined Avista in 2007. Prior to joining Avista, Mr. Venkataraman was a Vice President in the Healthcare Investment Banking group at Credit Suisse which he joined in 2001. Prior to Credit Suisse, Mr. Venkataraman worked at GE Healthcare ( formerly known as GE Medical Systems). Mr. Venkataraman currently serves on the board of directors of Cosette Pharmaceuticals, eMolecules, Inform Diagnostics, National Spine & Pain Centers, Probo Medical, RVL Pharmaceuticals (NASDAQ: RVL), Solmetex and XIFIN and has previously served as s director of AngioDynamics (NASDAQ: ANGO), Lantheus Holdings (NASDAQ: LNTH), OptiNose (NASDAQ: OPTN) and Zest Dental Solutions. Mr. Venkataraman received a M.S. in Electrical Engineering from the University of Illinois, Urbana- Champaign and an M.B.A. with honors from The Wharton School at the University of Pennsylvania.
Robert Girardi has been our Executive Vice President since February 12, 2021. Mr. Girardi is currently a Partner at Avista and originally joined Avista in 2010. Prior to joining Avista, Mr. Girardi was a Senior Associate at Quadrangle Group where he focused on private equity investments in the media and communications industries. Prior to joining Quadrangle, Mr. Girardi was an Associate at Bear Stearns Merchant Banking where he focused on private equity investments across a range of industries. Mr. Girardi also worked as an Analyst in the investment banking division at J.P. Morgan. Mr. Girardi currently serves on the board of directors of GCM Holding Corporation, ACP Northern Holdings and United BioSource Corporation and previously served on the board of directors of Arcadia Consumer Healthcare, DataBank Holdings, MPI Research, Inc. and Telular Corporation. Mr. Girardi received a B.S. with highest distinction in business administration from the University of North Carolina at Chapel Hill and an M.B.A. with honors from The Wharton School at the University of Pennsylvania, where he was a Palmer Scholar.
Amanda Heravi has been our Investor Relations Officer since February 12, 2021. Ms. Heravi is the Head of Investor Relations at Avista and was one of the founding members of Avista in 2005. Prior to Avista, Ms. Heravi was the Director of Finance and Administration at Dorset Capital Management, which she joined in 1999, where she was responsible for investor relations and the financial, operational and administrative aspects of the fund. Prior to Dorset, Ms. Heravi worked at Montgomery Securities. Ms. Heravi received a B.A. from the University of California, Berkeley.
John Cafasso has been our Chief Financial Officer since February 12, 2021. Mr. Cafasso joined Avista in 2011. Prior to joining Avista, Mr. Cafasso was in the asset management division of Credit Suisse from 2001 to 2011, where he was responsible for the accounting and reporting for Credit Suisse’s direct private equity funds. Prior to joining Credit Suisse, Mr. Cafasso was a Manager at KPMG, LLP in the financial services practice. Mr. Cafasso is a Certified Public Accountant and received a B.B.A. degree from Hofstra University.
Benjamin Silbert has been our General Counsel and Secretary since February 12, 2021. Mr. Silbert is the Chief Administrative Officer and General Counsel at Avista and was one of the founding members of Avista in 2005. Prior to joining Avista, Mr. Silbert was at DLJMB from 2001 to 2005. While at DLJMB, Mr. Silbert acted as internal counsel on a number of investments and divestitures, in addition to fund and partnership matters. Prior to joining DLJMB, Mr. Silbert was a lawyer in the private equity and mergers and acquisitions practice groups of Morgan, Lewis & Bockius LLP, which he joined in 1996. Mr. Silbert received a B.A. from Haverford College and a J.D. from Columbia Law School.
William E. Klitgaard has served as a Director since the completion of our Public Offering. Mr. Klitgaard is an operating executive at Avista, where was retained in 2020. Mr. Klitgaard has over two decades of experience leading and advising healthcare businesses in the Healthcare IT and outsourced pharma services space. Mr. Klitgaard most recently served as President of Enlighten Health, a division of LabCorp (NYSE:LH) that focuses on innovation and creation of new information-based services utilizing core assets of LabCorp and Covance, Inc. Previously, he spent 19 years at Covance, one of the world’s largest contract research organizations, where he served for three years as Corporate Senior Vice President and Chief Information Officer, and nearly twelve years as Corporate Senior Vice President and Chief Financial Officer. Prior to his time at Covance, Mr. Klitgaard held finance leadership positions at Kenetech Corporation, a wind turbine manufacturer, and Consolidated Freightways, Inc., a freight service and logistics company. Mr. Klitgaard currently serves as a director and chairman of the audit committee of Syneos Health, Inc. (NASDAQ: SYNH), since March 2017, as a director of Inform Diagnostics, since December 2019 and as a director of XIFIN, Inc. (“XIFIN”) since January 2020. Mr. Klitgaard previously served as a director of Liaison Technologies, Bioclinica, Inc. and Certara, L.P. Mr. Klitgaard earned a B.A. in economics from the University of California at Berkeley, and a Master’s degree from the Sloan Management School, Massachusetts Institute of Technology. We believe that Mr. Klitgaard’s extensive experience leading and advising healthcare businesses makes him well- qualified to serve as a member of our board of directors.
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Lâle White has served as a Director since the completion of our Public Offering. Ms. White is the Executive Chairman, Chief Executive Officer and founder of XIFIN, a health information technology company that leverages diagnostic information to improve the quality and economics of healthcare. Ms. White founded XIFIN in 1997 and has over 25 years of experience in information systems development and medical billing. Ms. White lectures extensively on these topics and has consulted for major laboratories and laboratory associations throughout the U.S. Ms. White worked with HCFA and the U.S. Office of the Inspector General to develop the first OIG Model Compliance Program. She has chaired the state and federal contractor committees for California Clinical Laboratory Association for years, maintaining a working relationship with the Medicare Administrative Contractors and Department of Health and Human Services. Ms. White was previously Vice President of Finance of Laboratory Corporation of America, one of the largest clinical reference laboratories in the United States, and its predecessor National Health Laboratories, where she led the software development of several accounts receivable, inventory, cost accounting and financial management systems for the laboratory industry. Ms. White currently serves as a director of Cardiff Oncology, Inc. (NASDAQ: CRDF) and previously served as a director of bioTheranostics while it was a BioMerieux subsidiary and CombiMatrix Corporation, until its acquisition by Invitae Corporation in 2017. Ms. White has a B.A. in finance and an M.B.A. from Florida International University. We believe that Ms. White’s extensive executive experience with the strategic, financial and operational requirements of healthcare organizations makes her well-qualified to serve as a member of our board of directors.
Wendel Barr has served as a Director since the completion of our Public Offering. Mr. Barr has over 25 years of experience on the leading edge in the medical devices and life sciences industries. From September 2017 through November 2019, Mr. Barr was the Chief Executive Officer, President and director of Vium, Inc., a translational medicine and biotechnology company focused on improving the success of drug development through the creation of more precise and reproducible disease models. Prior to Vium, Mr. Barr was the Chief Executive Officer and director of Synteract, Inc., a full service, global contract research organization dedicated to the clinical research needs of biotechnology, medical device and pharmaceutical companies. Prior to Synteract, Mr. Barr was at Covance from 2000 through 2011, where he had multiple roles, including Chief Operating Officer and Executive Vice President. Prior to Covance, Wendel Barr was Vice President and General Manager at Marconi Medical Systems and also held several positions of increasing responsibility with GE Healthcare including General Manager from 1984 to 1999. Mr. Barr earned a B.S. in Electronics Engineering from DeVry University and a M.B.A. from National University. We believe that Mr. Barr’s extensive experience leading companies in the medical devices and life sciences space makes him well-qualified to serve as a member of our board of directors.
Number and terms of office of officers and directors
Our board of directors consists of five members. Holders of our founder shares will have the right to elect all of our directors prior to consummation of our Business Combination and holders of our Public Shares will not have the right to vote on the appointment of directors during such time. These provisions of our amended and restated memorandum and articles of association may only be amended if approved by holders of at least 90% of our outstanding ordinary shares entitled to vote thereon. Each of our directors holds office for a two-year term. Subject to any other special rights applicable to the shareholders, any vacancies on our board of directors may be filled by the affirmative vote of a majority of the remaining directors of our board or by a majority of the holders of our ordinary shares (or, prior to our Business Combination, a majority of the holders of our founder shares).
Pursuant to an agreement entered into in connection with the Public Offering, our sponsor, upon and following consummation of a Business Combination, will be entitled to nominate three individuals for appointment to our board of directors, as long as the sponsor holds any securities covered by the registration and shareholder rights agreement.
Our officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our amended and restated memorandum and articles of association as it deems appropriate. Our amended and restated memorandum and articles of association provides that our officers may consist of one or more chairman of the board, chief executive officer, president, chief financial officer, vice presidents, secretary, treasurer and such other offices as may be determined by the board of directors.
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Director Independence
Nasdaq listing standards require that a majority of our board of directors be independent. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s board of directors , would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Our board of directors has determined that Mr. Klitgaard and Mr. Barr are “independent directors” as defined in the Nasdaq listing standards applicable SEC rules. Our independent directors have regularly scheduled meetings at which only independent directors are present.
Committees of the Board of Directors
Our board of directors has three standing committees: an audit committee, a nominating committee and a compensation committee. Subject to phase-in rules and a limited exception, the rules of Nasdaq and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors. Subject to phase-in rules and a limited exception, the rules of Nasdaq require that the compensation committee and the nominating committee of a listed company be comprised solely of independent directors. Under Rule 10A-3(b)(1)(iv)(A) under the Exchange Act and Nasdaq listing rule 5615(b)(1), a company listing in connection with its initial public offering is permitted to phase in its compliance with the independent committee requirements. We intend to rely on the phase-in exceptions set forth in Rule 10A-3(b)(1)(iv)(A) under the Exchange Act and Nasdaq listing rule 5615(b)(1).
Audit committee
Mr. Klitgaard, Mr. Barr and Ms. White serve as members of our audit committee. Our board of directors has determined that each of Mr. Klitgaard and Mr. Barr are independent under the Nasdaq listing standards and applicable SEC rules. Mr. Klitgaard serves as the Chairman of the audit committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least three members of the audit committee, all of whom must be independent within one year of the listing of our Class A ordinary shares. Each member of the audit committee is financially literate and our board of directors has determined that each of Mr. Klitgaard and Mr. Barr qualify as an “audit committee financial expert” as defined in applicable SEC rules.
The audit committee is responsible for:
● meeting with our independent registered public accounting firm regarding, among other issues, audits, and adequacy of our accounting and control systems;
● monitoring the independence of the independent registered public accounting firm;
● verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law;
● inquiring and discussing with management our compliance with applicable laws and regulations;
● pre- approving all audit services and permitted non-audit services to be performed by our independent registered public accounting firm, including the fees and terms of the services to be performed;
● appointing or replacing the independent registered public accounting firm;
● determining the compensation and oversight of the work of the independent registered public accounting firm (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;
● establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies;
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● monitoring compliance on a quarterly basis with the terms of the Public Offering and, if any noncompliance is identified, immediately taking all action necessary to rectify such noncompliance or otherwise causing compliance with the terms of the Public Offering; and
● reviewing and approving all payments made to our existing shareholders, executive officers or directors and their respective affiliates. Any payments made to members of our audit committee will be reviewed and approved by our board of directors, with the interested director or directors abstaining from such review and approval.
Nominating committee
The members of our nominating committee are Mr. Klitgaard, Mr. Barr and Ms. White. Mr. Klitgaard serves as chairman of the nominating committee. Under the Nasdaq listing standards, we are required to have a nominating committee composed entirely of independent directors or select director nominees by independent directors constituting a majority of the board’s independent directors in a vote in which only independent directors participate. Our board of directors has determined that each of Mr. Klitgaard and Mr. Barr are independent.
The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors. The nominating committee considers persons identified by its members , management, shareholders, investment bankers and others.
Guidelines for selecting director nominees
The guidelines for selecting nominees, which are specified in a charter adopted by us, generally will provide that persons to be nominated:
·
should have demonstrated notable or significant achievements in business, education or public service;
·
should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and
·
should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the shareholders.
The nominating committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on the board of directors. The nominating committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The nominating committee does not distinguish among nominees recommended by shareholders and other persons.
Compensation committee
The members of our compensation committee are Mr. Klitgaard, Mr. Barr and Ms. White. Mr. Klitgaard serves as chairman of the compensation committee.
Under the Nasdaq listing standards, we are required to have a compensation committee composed entirely of independent directors. Our board of directors has determined that each of Mr. Klitgaard and Mr. Barr are independent. We adopted a compensation committee charter, which details the principal functions of the compensation committee, including:
·
reviewing and approving on an annual basis the corporate goals and objectives relevant to our President’s, Chief Financial Officer’s and Chief Executive Officer’s compensation, evaluating our President’s, Chief Financial Officer’s and Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our President, Chief Financial Officer and Chief Executive Officer based on such evaluation;
·
reviewing and approving the compensation of all of our other Section 16 executive officers;
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·
reviewing our executive compensation policies and plans;
·
implementing and administering our incentive compensation equity-based remuneration plans;
·
assisting management in complying with our proxy statement and annual report disclosure requirements;
·
approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees;
·
producing a report on executive compensation to be included in our annual proxy statement; and
·
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.
Compensation committee interlocks and insider participation
Aside from Mr. Burgstahler and Mr. Venkataraman, who sit on the compensation committee of XIFIN, where Ms. White serves as the Chief Executive Officer, none of our executive officers currently serves, and in the past year has not served, (i) as a member of the compensation committee of another entity, one of whose executive officers served on our compensation committee, or (ii) as a member of the compensation committee of another entity, one of whose executive officers served on our board of directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our officers, directors and persons who beneficially own more than ten percent of our ordinary shares to file reports of ownership and changes in ownership with the SEC. Based solely upon a review of such forms, we believe that during the year ended December 31, 2021 there were no delinquent filers with the following exception: Mr. Cafasso failed to file a Form 3 on the effective date of the registration statement first registering our securities under Section 12 of the Exchange Act and such form was filed on the next day.
Code of Ethics
We have adopted a Code of Ethics applicable to our directors, officers and employees. A copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.
Conflicts of Interest
Under Cayman Islands law , directors and officers owe the following fiduciary duties:
·
duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole;
·
duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose;
·
directors should not improperly fetter the exercise of future discretion;
·
duty to exercise powers fairly as between different sections of shareholders;
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·
duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests; and
·
duty to exercise independent judgment.
In addition to the above, directors also owe a duty of care which is not fiduciary in nature. This duty has been defined as a requirement to act as a reasonably diligent person having both the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and the general knowledge skill and experience of that director.
As set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in self-dealing, or to otherwise benefit as a result of their position. However, in some instances what would otherwise be a breach of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors. This can be done by way of permission granted in the amended and restated memorandum and articles of association or alternatively by shareholder approval at general meetings.
Avista manages several investment vehicles, and we expect that Avista will raise additional funds and/or successor funds in the future, which may be during the period in which we are seeking our Business Combination. The Avista funds and their portfolio companies may compete with us for acquisition opportunities. In particular, Avista funds currently manage 16 portfolio companies focused on the healthcare industry. These portfolio companies may be seeking acquisition opportunities and related financing at any time. We may compete with any one or more of them on any given acquisition. However, we do not expect to directly compete with these Avista entities in seeking our Business Combination, primarily due to the anticipated differences in the expected size of the equity investment by any such Avista entity in an acquisition and by us in our Business Combination; the later stage of Avista's investment in many of these entities; and the public nature of our acquisition strategy. In addition, all of our officers and certain of our directors have fiduciary and contractual duties to Avista. As a result, these officers and directors may have a duty to offer acquisition opportunities to certain Avista funds or their portfolio companies subject to their fiduciary duties as a matter of Cayman Islands law. If these funds decide to pursue any such opportunity, we may be precluded from pursuing such opportunities. In addition, investment ideas generated within Avista may be suitable for both us and for a current or future Avista fund or portfolio company and may be directed to such fund or portfolio company rather than to us, subject to applicable fiduciary duties. Neither Avista nor members of our management team who are also employed by Avista have any obligation to present us with any opportunity for a potential Business Combination of which they become aware solely in their capacities as officers or managing directors of Avista. Avista and/or our management, in their capacities as officers or managing directors of Avista or in their other endeavors, may choose to present potential business combinations to the related entities described above, current or future Avista investment vehicles, or third parties, before they present such opportunities to us, subject to applicable fiduciary duties. Avista will determine which entity will be allocated any such business opportunity based on a number of factors, including the size of the target business and potential synergies with existing businesses. We do not expect these duties to present a significant conflict of interest with our search for a Business Combination. Avista's traditional private equity activities typically involve investing in private companies, and while Avista will often take companies public, it typically invests in those entities several years prior to an initial public offering, not at the time of such offering.
Certain of our officers and directors presently have, and any of them in the future may have additional, fiduciary and contractual duties to other entities. As a result, if any of our officers or directors becomes aware of a Business Combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, then, subject to their fiduciary duties under Cayman Islands law, he or she will need to honor such fiduciary or contractual obligations to present such Business Combination opportunity to such entity, before we can pursue such opportunity. If these other entities decide to pursue any such opportunity, we may be precluded from pursuing the same. However, we do not expect these duties to materially affect our ability to complete our Business Combination. Our amended and restated memorandum and articles of association provide that, to the fullest extent permitted by applicable law: (i) no individual serving as a director or an officer shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as us; and (ii) we renounce any interest or expectancy in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for any director or officer, on the one hand, and us, on the other.
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Below is a table summarizing the entities to which our executive officers and directors currently have fiduciary duties, contractual obligations or other material management relationships :
Individual
Entity
Entity’s business
Affiliation
Thompson Dean
Avista Capital Holdings, L.P.
Cooper Consumer Health
eMolecules
National Spine & Pain Centers
Probo Medical
Vision Healthcare N.V.
Lenox Hill Neighborhood Association
Museum of the City of New York
Investments
Consumer Healthcare
Tech Enabled Chemicals
Procurement Platform
Pain Management
Healthcare
Nonprofit
Nonprofit
Managing Partner and Chairman
Director
Director
Director
Director
Director
Director
David Burgstahler
Avista Capital Holdings, L.P.
Cosette Pharmaceuticals
Inform Diagnostics, Inc.
RVL Pharmaceuticals
United BioSource Corporation
XIFIN, Inc.
Investments
Pharmaceuticals
Healthcare Diagnostics
Pharmaceuticals
Pharmaceuticals
Healthcare Information
Technology
Managing Partner and Chief
Executive Officer
Director
Director
Director
Director
Director
Sriram Venkataraman
Avista Capital Holdings, L.P.
Cosette Pharmaceuticals
eMolecules
Inform Diagnostics, Inc.
National Pain & Spine Centers
Probo Medical
RVL Pharmaceuticals
Solmetex
XIFIN, Inc.
Investments
Pharmaceuticals
Tech Enabled Chemicals
Procurement Platform
Healthcare Diagnostics
Pain Management
Healthcare
Pharmaceuticals
Dental Medical Devices
Healthcare Information
Technology
Partner
Director
Director
Director
Director
Director
Director
Director
Director
Robert Girardi
Avista Capital Holdings, L.P.
ACP Northern Holdings
GCM Holding Corporation
United BioSource Corporation
Investments
Pharmaceutical Research
Manufacturing
Pharmaceuticals
Partner
Director
Director
Director
Amanda Heravi
Avista Capital Holdings, L.P.
Investments
Head of Investor Relations
John Cafasso
Avista Capital Holdings, L.P.
Investments
Chief Financial Officer
Benjamin Silbert
Avista Capital Holdings, L.P.
Investments
General Counsel and Chief
Administrative Officer
William E. Klitgaard
Avista Capital Holdings, L.P.
Syneos Health, Inc.
Inform Diagnostics, Inc.
XIFIN, Inc.
Investments
Healthcare
Healthcare Diagnostics
Healthcare Information
Technology
Operating Executive
Director
Director
Director
Lâle White
XIFIN, Inc.
Cardiff Oncology
Healthcare Information
Technology
Oncology Therapeutics
Chief Executive Officer and
Chairman of the Board of Directors
Director
Wendel Barr
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Potential investors should also be aware of the following other potential conflicts of interest:
·
Our executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for a Business Combination and their other businesses. We do not intend to have any full- time employees prior to the completion of our Business Combination. Each of our executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our executive officers are not obligated to contribute any specific number of hours per week to our affairs.
·
Our sponsor subscribed for founder shares prior to the Public Offering and purchased Private Placement Warrants in a transaction that closed simultaneously with the Public Offering.
·
Our sponsor and each member of our management team have entered into an agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and Public Shares held by them in connection with (i) the completion of our Business Combination and (ii) a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our Business Combination or to redeem 100% of our Public Shares if we do not complete our Business Combination within 18 months from the IPO Closing Date or (B) with respect to any other provision relating to the rights of holders of our Class A ordinary shares. Additionally, our sponsor has agreed to waive its rights to liquidating distributions from the Trust Account with respect to its founder shares if we fail to complete our Business Combination within the prescribed time frame. If we do not complete our Business Combination within the prescribed time frame, the Private Placement Warrants will expire worthless. Except as described herein, our sponsor and our directors and executive officers have agreed not to transfer, assign or sell any of their founder shares until the earliest of (A) one year after the completion of our Business Combination and (B) subsequent to our Business Combination, (x) if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our Business Combination, or (y) the date on which we complete a liquidation, merger, share exchange or other similar transaction that results in all of our public shareholders having the right to exchange their ordinary shares for cash, securities or other property. Except as described herein, the Private Placement Warrants will not be transferable until 30 days following the completion of our Business Combination. Because each of our executive officers and directors will own ordinary shares or Warrants directly or indirectly, they may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our Business Combination.
·
Our officers and directors may have a conflict of interest with respect to evaluating a particular Business Combination if the retention or resignation of any such officers and directors is included by a target business as a condition to any agreement with respect to our Business Combination.
We are not prohibited from pursuing a Business Combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our Business Combination with a company that is affiliated with our sponsor or any of our officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm that is a member of FINRA or another independent entity that commonly renders valuation opinions that such Business Combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
Furthermore, in no event will our sponsor or any of our existing officers or directors, or their respective affiliates, be paid by us any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the completion of our Business Combination. Further, commencing on the date our securities are first listed on Nasdaq, we will also reimburse our sponsor for office space, secretarial and administrative services provided to us in the amount of $10,000 per month. We cannot be certain that any of the above mentioned conflicts will be resolved in our favor.
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If we seek shareholder approval of our Business Combination, we will complete our Business Combination only if we obtain the approval of an ordinary resolution under Cayman Islands law, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the company. In such case, our sponsor and each member of our management team have agreed to vote their founder shares and Public Shares in favor of our Business Combination.
Limitation on Liability and Indemnification of Officers and Directors
Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against willful default, willful neglect, civil fraud or the consequences of committing a crime. Our amended and restated memorandum and articles of association provides for indemnification of our officers and directors to the maximum extent permitted by law, including for any liability incurred in their capacities as such, except through their own actual fraud, willful default or willful neglect. We entered into agreements with our directors and officers to provide contractual indemnification in addition to the indemnification provided for in our amended and restated memorandum and articles of association. We purchased 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.
Our officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in the Trust Account, and have agreed to waive any right, title, interest or claim of any kind they may have in the future as a result of, or arising out of, any services provided to us and will not seek recourse against the Trust Account for any reason whatsoever (except to the extent they are entitled to funds from the Trust Account due to their ownership of Public Shares). Accordingly, any indemnification provided will only be able to be satisfied by us if (i) we have sufficient funds outside of the Trust Account or (ii) we consummate a Business Combination.
Our indemnification obligations may discourage shareholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our shareholders. Furthermore, a shareholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions. We believe that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.
Item 11. Executive Compensation.
None of our executive officers or directors have received any cash compensation for services rendered to us. Since the IPO Closing Date and until the earlier of consummation of our Business Combination and our liquidation, we will reimburse our sponsor for office space, secretarial and administrative services provided to us in the amount of $10,000 per month. In addition, our sponsor, executive officers and directors, or their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations. Our audit committee reviews on a quarterly basis all payments that were made by us to our sponsor, executive officers or directors, or their affiliates. Any such payments prior to a Business Combination will be made using funds held outside the trust account. Other than quarterly audit committee review of such reimbursements, we do not expect to have any additional controls in place governing our reimbursement payments to our directors and executive officers for their out-of-pocket expenses incurred in connection with our activities on our behalf in connection with identifying and consummating a Business Combination. Other than these payments and reimbursements, no compensation of any kind, including finder’s and consulting fees, will be paid by the company to our sponsor, executive officers and directors, or their respective affiliates, prior to completion of our Business Combination.
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After the completion of our Business Combination, directors or members of our management team who remain with us may be paid consulting or management fees from the combined company. All of these fees will be fully disclosed to shareholders, to the extent then known, in the proxy solicitation materials or tender offer materials furnished to our shareholders in connection with a proposed Business Combination. We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation will be known at the time of the proposed Business Combination, because the directors of the post-combination business will be responsible for determining executive officer and director compensation. Any compensation to be paid to our executive officers will be determined, or recommended to the board of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our board of directors.
We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our Business Combination, including the proposed OmniAb Business Combination, although it is possible that some or all of our executive officers and directors may negotiate employment or consulting arrangements to remain with us after our Business Combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of our Business Combination will be a determining factor in our decision to proceed with any Business Combination, including the proposed OmniAb Business Combination. We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of employment.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth information available to us as of March 25, 2022 with respect to our ordinary shares held by:
·
each person known by us to be the beneficial owner of more than 5% of our issued and outstanding ordinary shares;
·
each of our executive officers and directors; and
·
all our executive officers and directors as a group.
Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all of our ordinary shares beneficially owned by them. The following table does not reflect record or beneficial ownership of the Private Placement Warrants as they are not exercisable within 60 days of March 25, 2022.
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Number of
shares beneficially
Percentage of Outstanding
Name and address of beneficial owner(1)
owned(2)
Ordinary Shares
Avista Acquisition LP II (our sponsor)(2)
5,645,000
(3)
19.6
%
Thompson Dean(2)
5,645,000
(3)
19.6
%
David Burgstahler(2)
5,645,000
(3)
19.6
%
Beryl Capital Management LLC(4)
1,716,936
(4)
7.5
%
Polar Asset Management Partners Inc.(5)
1,549,998
(5)
6.7
%
Citadel Advisors LLC(6)
1,417,784
(6)
6.2
%
HGC Investment Management Inc.(7)
1,386,830
(7)
6.0
%
Integrated Core Strategies (US) LLC(8)
1,269,543
(8)
5.5
%
Sriram Venkataraman
—
—
Robert Girardi
—
—
Amanda Heravi
—
—
John Cafasso
—
—
Benjamin Silbert
—
—
William E. Klitgaard(2)
35,000
*
Lâle White(2)
35,000
*
Wendel Barr(2)
35,000
*
All officers, directors and director nominees as a group (10 individuals)
5,750,000
20
%
* Less than one percent.
(1)
Unless otherwise noted, the business address of each of our shareholders is 65 East 55th Street, 18th Floor, New York, NY 10022.
(2)
Interests shown consist solely of founder shares, classified as Class B ordinary shares. Such shares will automatically convert into Class A ordinary shares at the time of our Business Combination. Excludes Class A ordinary shares issuable pursuant to the forward purchase agreement, as such shares will only be issued concurrently with the closing of our Business Combination.
(3)
The shares reported above are held in the name of our sponsor. Mr. Dean and Mr. Burgstahler may be deemed to beneficially own shares held by our sponsor by virtue of their shared control over Avista Acquisition GP LLC II, which is the general partner of our sponsor. Each of Messrs. Dean and Burgstahler disclaims beneficial ownership of our ordinary shares held by our sponsor.
(4)
Based solely on the Amendment No. 1 to the Schedule 13G filed jointly on February 14, 2022, by (i) Beryl Capital Management LLC (“Beryl”), (ii) Beryl Capital Management LP (“Beryl GP”), (iii) Beryl Capital Partners II LP (only 1,525,428 shares) (the “Partnership”) and (iv) David A. Witkin (collectively, the “Filers”). Each filer has shared voting and dipositive power of the shares held (except for the Partnership which only shares voting and dispositive control over 1,525,428 shares). Each Filer disclaims beneficial ownership of the shares except to the extent of that person’s pecuniary interest therein. The address of the shareholder, as reported in the Schedule 13G is 1611 S. Catalina Ave., Suite 309, Redondo Beach, CA 90277.
(5)
Based solely on the Schedule 13G filed on February 7, 2022 by Polar Asset Management Partners Inc., a company incorporated under the laws of Ontario, Canada, which serves as the investment advisor to Polar Multi-Strategy Master Fund, a Cayman Islands exempted company (“PMSMF”) and certain managed accounts (together with PMSMF, the “Polar Vehicles”) with respect to the Shares (as defined below) directly held by the Polar Vehicles. The business address of Polar Asset Management Partners Inc. is 16 York Street, Suite 2900, Toronto, ON, Canada M5J 0E6.
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(6)
Based solely on the Amendment No. 1 to the Schedule 13G jointly filed on February 14, 2022, by Citadel Advisors LLC (“Citadel Advisors”), Citadel Advisors Holdings LP (“CAH”), Citadel GP LLC (“CGP”), Citadel Securities LLC (“Citadel Securities”), CALC IV LP (“CALC4”), Citadel Securities GP LLC (“CSGP”) and Mr. Kenneth Griffin with respect to the Company’s Class A ordinary shares owned by Citadel Multi-Strategy Equities Master Fund Ltd., a Cayman Islands company (“CM”), and Citadel Securities. Citadel Advisors is the portfolio manager for CM. CAH is the sole member of Citadel Advisors. CGP is the general partner of CAH. CALC4 is the non-member manager of Citadel Securities. CSGP is the general partner of CALC4. Mr. Griffin is the President and Chief Executive Officer of CGP, and owns a controlling interest in CGP and CSGP. The business address for all reporting persons is 131 S. Dearborn Street, 32nd Floor, Chicago, Illinois 60603.
(7)
Based solely on the Schedule 13G filed on February 14, 2022 by HGC Investment Management Inc., a company incorporated under the laws of Canada, which serves as the investment manager to The HGC Fund LP, an Ontario limited partnership (the “Fund”), with respect to the Shares held by HGX Investment Management Inc. on behalf of the Fund. The business address for HGC Investment Management Inc. is 1073 Yonge Street, 2nd Floor, Toronto, Ontario M4W 2L2, Canada.
(8)
Based solely on the Schedule 13G filed jointly on August 16, 2021 by (i) Integrated Core Strategies (US) LLC, a Delaware limited liability company (“Integrated Core Strategies”), beneficial owner of 250,000 of the Company’s Class A ordinary shares; (ii) Riverview Group LLC, a Delaware limited liability company (“Riverview Group”), beneficial owner of 650,000 of the Company’s Class A ordinary shares; and (iii) ICS Opportunities, Ltd., an exempted company organized under the laws of the Cayman Islands (“ICS Opportunities”), beneficial owner of 369,543 of the Company’s Class A ordinary shares, which together with the Class A ordinary shares beneficially owned by Integrated Core Strategies and Riverview Group represented 1,269,543 of the Company’s Class A ordinary shares outstanding. Millennium International Management LP, a Delaware limited partnership (“Millennium International Management”), is the investment manager to ICS Opportunities and may be deemed to have shared voting control and investment discretion over securities owned by ICS Opportunities. Millennium Management LLC, a Delaware limited liability company (“Millennium Management”), is the general partner of the managing member of Integrated Core Strategies and Riverview Group and may be deemed to have shared voting control and investment discretion over securities owned by Integrated Core Strategies and Riverview Group. Millennium Management is also the general partner of the 100% owner of ICS Opportunities and may also be deemed to have shared voting control and investment discretion over securities owned by ICS Opportunities. Millennium Group Management LLC, a Delaware limited liability company (“Millennium Group Management”), is the managing member of Millennium Management and may also be deemed to have shared voting control and investment discretion over securities owned by Integrated Core Strategies and Riverview Group. Millennium Group Management is also the general partner of Millennium International Management and may also be deemed to have shared voting control and investment discretion over securities owned by ICS Opportunities. The managing member of Millennium Group Management is a trust of which Israel A. Englander, a United States citizen (“Mr. Englander”), currently serves as the sole voting trustee. Therefore, Mr. Englander may also be deemed to have shared voting control and investment discretion over securities owned by Integrated Core Strategies, Riverview Group and ICS Opportunities. The address of the principal business office of each of Integrated Core Strategies, Riverview Group, ICS Opportunities, Millennium International Management, Millennium Management, Millennium Group Management, and Mr. Englander is 399 Park Avenue, New York, New York 10022.
Our sponsor and initial shareholders beneficially own 20% of the issued and outstanding ordinary shares and have the right to appoint all of our directors prior to our Business Combination. Holders of our Public Shares will not have the right to appoint any directors to our board of directors prior to our Business Combination. Because of this ownership block, our sponsor may be able to effectively influence the outcome of all other matters requiring approval by our shareholders, including amendments to our amended and restated memorandum and articles of association and approval of significant corporate transactions including our Business Combination.
Our sponsor has agreed (a) to vote any founder shares and Public Shares held by it in favor of any proposed Business Combination and (b) not to redeem any founder shares or Public Shares held by it in connection with a shareholder vote to approve a proposed Business Combination.
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In connection with the consummation of the Public Offering, we entered into a forward purchase agreement with our sponsor, which provides for the purchase of an aggregate of 10,000,000 Class A ordinary shares plus an aggregate of 3,333,333 redeemable warrants to purchase Class A ordinary shares at $11.50 per share, for an aggregate purchase price of $100,000,000, in a private placement to occur concurrently with the closing of our Business Combination. The obligations under the forward purchase agreement do not depend on whether any Class A ordinary shares are redeemed by our public shareholders. The forward purchase securities will be issued only in connection with the closing of the Business Combination. The proceeds from the sale of forward purchase securities may be used as part of the consideration to the sellers in our Business Combination, expenses in connection with our Business Combination or for working capital in the post-transaction company.
Our sponsor and our officers and directors are deemed to be our “promoters” as such term is defined under the federal securities laws. See “Item 13. Certain Relationships and Related Party Transactions, and Director Independence” below for additional information regarding our relationships with our promoters .
Item 13. Certain Relationships and Related Transactions, and Director Independence
Founder Shares
Prior to the Public Offering, on February 12, 2021, our sponsor paid $25,000 to cover certain expenses on our behalf in consideration for issuance of 5,750,000 Class B ordinary shares, or approximately $0.004 per share. In July 2021, our sponsor transferred 35,000 Class B ordinary shares to each of William E. Klitgaard, Lâle White and Wendel Barr, each of whom serve on our board of directors. The number of Founder Shares issued was determined based on the expectation that such founder shares would represent 20% of the issued and outstanding shares upon completion of the Public Offering. The founder shares (including the Class A ordinary shares issuable upon exercise thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder.
The Founder Shares are identical to the Class A ordinary shares included in the Units sold in the Public Offering except that the Founder Shares are subject to certain rights and transfer restrictions, as described in further detail below, and are automatically converted into Class A ordinary shares at the time of a Business Combination on a one-for-one basis, subject to adjustment pursuant to the anti-dilution provisions contained in the Company's amended and restated memorandum and articles of association.
Private Placement Warrants
Simultaneously with the closing of the Public Offering, our sponsor purchased an aggregate of 8,233,333 Private Placement Warrants for a purchase price of $1.50, or $12,350,000 in the aggregate. Each Private Placement Warrant entitles the holder to purchase one Class A ordinary share at $11.50 per share, subject to adjustment. The Private Placement Warrants (including the Class A ordinary shares issuable upon exercise thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder until 30 days after the completion of our initial Business Combination.
If the Company does not complete a Business Combination within 18 months after the IPO Closing Date, the proceeds of the sale of the Private Placement Warrants will be used to fund the redemption of the Company's Class A ordinary shares, subject to the requirements of applicable law, and the Private Placement Warrants will expire worthless.
Forward Purchase Agreement
In connection with the consummation of the Public Offering, we entered into a forward purchase agreement with our sponsor, which provides for the purchase of an aggregate of 10,000,000 Class A ordinary shares plus an aggregate of 3,333,333 redeemable warrants to purchase Class A ordinary shares at $11.50 per share, for an aggregate purchase price of $100,000,000, in a private placement to occur concurrently with the closing of our Business Combination. The obligations under the forward purchase agreement do not depend on whether any Class A ordinary shares are redeemed by our public shareholders. The forward purchase securities will be issued only in connection with the closing of the Business Combination. The proceeds from the sale of forward purchase securities may be used as part of the consideration to the sellers in our Business Combination, expenses in connection with our Business Combination or for working capital in the post-transaction company.
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Registration Rights
Holders of the Founder Shares and Private Placement Warrants hold registration rights pursuant to a registration rights agreement, dated as of August 9, 2021 (the “Registration Rights Agreement”). The holders of these securities are entitled to make up to three demands that the Company register under the Securities Act the Private Placement Warrants and the Class A ordinary shares underlying the Private Placement Warrants and the Class B ordinary shares. In addition, the holders have certain "piggy-back" registration rights with respect to registration statements filed by the Company subsequent to its completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the Registration Rights Agreement provides that that Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable Lock-Up Period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
In connection with the transactions contemplated by the Merger Agreement, at the Closing the Registration Rights Agreement will be amended and restated in order to, among other things, provide certain equityholders of OmniAb, as of immediately prior to the consummation of the proposed OmniAb Business Combination, with customary registration rights.
Pursuant to the forward purchase agreement, we have agreed to use reasonable best efforts (i) to file within 30 days after the closing of the initial Business Combination a registration statement with the SEC for a secondary offering of the forward purchase securities, (ii) to cause such registration statement to be declared effective promptly thereafter but in no event later than sixty (60) days after the initial filing, (iii) to maintain the effectiveness of such registration statement until the earliest of (A) the date on which our sponsor or its assignees cease to hold the securities covered thereby, and (B) the date all of the securities covered thereby can be sold publicly without restriction or limitation under Rule 144 under the Securities Act and (iv) after such registration statement is declared effective, cause us to conduct firm commitment underwritten offerings, subject to certain limitations. In addition, the forward purchase agreement provides for certain “piggy-back” registration rights to the holders of forward purchase securities to include their securities in other registration statements filed by us. We will bear the cost of registering these securities.
On March 23, 2022, in connection with the execution of the Merger Agreement, we entered into the A&R FPA with our sponsor and OmniAb. Pursuant to the A&R FPA, we have agreed that, in connection with the consummation of the proposed OmniAb Business Combination, we will issue and sell to our sponsor 1,500,000 shares of APAC Common Stock and warrants to acquire 1,666,667 shares of APAC Common Stock for an aggregate purchase price of $15.0 million with such purchases to be consummated immediately following the Domestication and prior to the proposed OmniAb Business Combination (the “Forward Purchase”). In addition to the Forward Purchase, our sponsor has agreed to purchase up to an additional 10,000,000 shares of APAC Common Stock (the “Redemption Backstop”) and up to an additional 1,666,667 warrants, for an aggregate additional purchase price of up to $100.0 million, in order to backstop shareholder redemptions to the extent such redemptions would result in the cash proceeds to be received by OmniAb stockholders from the Trust Account to be less than $100.0 million. The A&R FPA also provides that in the event the Merger Agreement is terminated by Ligand under circumstances in which the Termination Fee (as defined in the Merger Agreement) would be payable under the Merger Agreement, Ligand shall pay our sponsor a termination fee of $12.5 million in connection therewith.
Administrative Services Agreement
On August 9, 2021, the Company entered into an Administrative Services Agreement to pay monthly recurring expenses of $10,000 for office space, administrative and support services to an affiliate of our Sponsor. The agreement terminates upon the earlier of the completion of a Business Combination or the liquidation of the Company.
Related Party Notes
Between Inception and the IPO Closing Date, our sponsor loaned the Company $300,000 in unsecured promissory notes. The funds were used to pay up-front expenses associated with the Public Offering. These notes were non-interest bearing and were repaid in full to our sponsor at the IPO Closing Date.
Our sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable Business Combination opportunities. Our audit committee will review on a quarterly basis all payments that were made to our
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sponsor, officers, directors or our or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
In addition, in order to finance transaction costs in connection with our Business Combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that our Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $2,000,000 of such loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants. The terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.
After our Business Combination, members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to our shareholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable, furnished to our shareholders. It is unlikely the amount of such compensation will be known at the time of distribution of such tender offer materials or at the time of a shareholder meeting held to consider our Business Combination, as applicable, as it will be up to the directors of the post-combination business to determine executive and director compensation.
Director Independence
Nasdaq listing standards require that a majority of our board of directors be independent. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company's board of directors, would interfere with the director's exercise of independent judgment in carrying out the responsibilities of a director. Our board of directors has determined that Mr. Klitgaard and Mr. Barr are “independent directors” as defined in Rule 10A-3 of the Exchange Act and the rules of Nasdaq. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Item 14. Principal Accounting Fees and Services.
For the Year
Ended December
31, 2021
Audit Fees(1)
$
72,312
Audit-Related Fees(2)
—
Tax Fees(3)
—
All Other Fees(4)
—
Total
$
72,312
1)
Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings.
2)
Audit-Related Fees. Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our year-end financial statements and are not reported under "Audit Fees." These services include attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards.
3)
Tax Fees. Tax fees consist of fees billed for professional services relating to tax compliance, tax planning and tax advice.
4)
All Other Fees. All other fees consist of fees billed for all other services.
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Policy on Board Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Auditors
The audit committee is responsible for appointing, setting compensation and overseeing the work of the independent auditors. In recognition of this responsibility, the audit committee shall review and, in its sole discretion, pre-approve all audit and permitted non-audit services to be provided by the independent auditors as provided under the audit committee charter.
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PART IV
Item 15. Exhibits.
(a) The following documents are filed as part of this Annual Report on Form 10-K:
Financial Statements: See “Index to Financial Statements” at “Item 8. Financial Statements and Supplementary Data” herein.
(b) Exhibits: The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Annual Report on Form 10-K.
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EXHIBIT INDEX
2.1†
Agreement and Plan of Merger, dated as of March, 23, 2022, by and among Avista Public Acquisition Corp. II, Ligand Pharmaceuticals Incorporated, OmniAb, Inc. and Orwell Merger Sub Inc. (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed with the SEC on March 24, 2022).
2.2
Separation and Distribution Agreement, dated as of March 23, 2022, by and among Avista Public Acquisition Corp. II, Ligand Pharmaceuticals Incorporated and OmniAb, Inc. (incorporated by reference to Exhibit 2.2 of the Company’s Current Report on Form 8-K filed with the SEC on March 24, 2022).
3.1
Amended and Restated Memorandum and Articles of Association (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the SEC on August 12, 2021).
4.1
Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-1 filed by the Company on July 28, 2021).
4.2
Specimen Class A Ordinary Share Certificate (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-1 filed by the Company on July 28, 2021).
4.3
Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-1 filed by the Company on July 28, 2021).
4.4*
Description of Securities.
10.1
Warrant Agreement, dated August 9, 2021, between the Company and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on August 12, 2021).
10.2
Investment Management Trust Agreement, dated August 9, 2021, between the Company and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 10. of the Company’s Current Report on Form 8-K filed with the SEC on August 12, 2021).
10.3
Registration Rights Agreement, dated August 9, 2021, among the Company, the Sponsor and certain other security holders named therein (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on August 12, 2021).
10.4
Private Placement Warrants Purchase Agreement, dated August 9, 2021, between the Company and the Sponsor (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the SEC on August 12, 2021).
10.5
Administrative Services Agreement, dated August 9, 2021, between the Company and an affiliate of the Sponsor (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the SEC on August 12, 2021).
10.6
Form of Letter Agreements, dated August 9, 2021, between the Company and each of its officers and directors and the Sponsor (incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K filed with the SEC on August 12, 2021).
10.7
Form of Indemnity Agreements, dated August 9, 2021, between the Company and each of its officers and directors and the Sponsor (incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K filed with the SEC on August 12, 2021).
10.8
Forward Purchase Agreement, dated August 9, 2021, between the Company and the Sponsor (incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K filed with the SEC on August 12, 2021).
10.9
Securities Subscription Agreement, dated February 12, 2021, between the Registrant and the Sponsor (incorporated by reference to Exhibit 10.7 to the Registration Statement on Form S-1 filed by the Company on July 28, 2021).
10.10
Promissory Note, dated as of March 14, 2022, issued by the Company to the Sponsor (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on March 14, 2022).
10.11
Sponsor Insider Agreement, dated March 23, 2022, by and among OmniAb, Inc., Avista Public Acquisition Corp. II and the other parties signatory thereto (incorporated by reference to Exhibit 2.3 of the Company’s Current Report on Form 8-K filed with the SEC on March 24, 2022).
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10.12
Amended and Restated Forward Purchase Agreement, dated March 23, 2022, by and among Avista Public Acquisition Corp. II, Avista Acquisition LP II and OmniAb, Inc. (incorporated by reference to Exhibit 2.4 of the Company’s Current Report on Form 8-K filed with the SEC on March 24, 2022).
10.13†
Employee Matters Agreement, dated as of March 23, 2022, by and among Ligand Pharmaceuticals Incorporated, Avista Public Acquisition Corp. II, OmniAb, Inc. and Orwell Merger Sub Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on March 24, 2022).
31.1*
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
* Filed herewith.
** Furnished herewith.
† Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request.
Item 16. Form 10–K Summary.
Not applicable.
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SIGNATURES
Pursuant to e requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized in New York City, New York on the 25th day of March, 2022.
AVISTA PUBLIC ACQUISITION CORP. II
By:
/s/ David Burgstahler
Name: David Burgstahler
Title: President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
Name
Position
Date
/s/ David Burgstahler
President and Chief Executive Officer,
David Burgstahler
Director
March 25, 2022
(Principal Executive Officer)
/s/ John Cafasso
Chief Financial Officer
John Cafasso
(Principal Financial and Accounting Officer)
March 25, 2022
/s/ Thompson Dean
Thompson Dean
Executive Chairman
March 25, 2022
/s/ William E. Kiltgaard
William E. Klitgaard
Director
March 25, 2022
/s/ Lâle White
Lâle White
Director
March 25, 2022
/s/ Wendel Barr
Wendel Barr
Director
March 25, 2022
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.