ATAI LIFE SCIENCES AG
	Signature:	/s/ Anne Johnson
	Print Name:	Anne Johnson
	Title:	Chief Financial Officer

Conformed copy (through SecondThird Amendment to Loan and Security Agreement)

 

LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT is made and dated as of August 9, 2022 and is entered into by and among ATAI LIFE SCIENCES N.V., a public limited liability company (naamloze vennootschap) incorporated under the laws of the Netherlands, having its corporate seat (statutaire zetel) in Amsterdam, the Netherlands, its registered office at 10117 Berlin, Federal Republic of Germany, c/o Mindspace Krausenstraβe 9-10 and registered with the trade register of the Chamber of Commerce (handelsregister van de Kamer van Koophandel) under number 80299776 (“Parent”), ATAI LIFE SCIENCES AG, a stock corporation (Aktiengesellschaft) incorporated under the laws of Germany and registered with the commercial register of the local court of Munich under HRB 239201, with business address at Krausenstraße 9-10, c/o Mindspace, 10117 Berlin (“ATAI Germany”, and together with Parent, ATAI Germany and each other Person party hereto as a borrower from time to time, individually or collectively, as the context may require, “Borrower”), ATAI LIFE SCIENCES US, INC., a Delaware corporation (“ATAI US”), INTROSPECT DIGITAL THERAPEUTICS, INC., a Delaware corporation (“IntroSpect”), Viridia Life SciencesAtai Therapeutics, Inc., a Delaware corporation (“Viridia”)Atai Therapeutics”), Atai Holdco, Inc., a Delaware corporation (“Atai Holdco”), Atai Therapeutics Holdings, Inc., a Delaware corporation (“Atai Therapeutics Holdings”), EmpathBio, Inc., a Delaware corporation (“Empath”), Invyxis, Inc., a Delaware corporation (“Invyxis), and Revixia Life Sciences, Inc., a Delaware corporation (“Revixia”, and together with ATAI US, IntroSpect, Viridia, Empath, Invyxis,Atai Therapeutics, Atai Holdco, Atai Therapeutics Holdings, and any other Person party hereto from time to time as a guarantor, collectively, the “Guarantors” and each a “Guarantor”), the several banks and other financial institutions or entities from time to time parties to this Agreement (collectively, referred to as the “Lenders”) and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and the Lenders (in such capacity, the “Agent”).

 

RECITALS

 

A.          Borrower has requested the Lenders make available to Borrower loans in an aggregate principal amount of up to One Hundred and Seventy Five Million Dollars ($175,000,000) (the “Term Loans”); and

 

B.          The Lenders are willing to make the Term Loans on the terms and conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, Loan Parties, Agent and the Lenders agree as follows:

 

“Account Control Agreement(s)” means any agreement entered into by and among the Agent, any Loan Party and a third party bank or other institution (including a Securities Intermediary) in which any Loan Party maintains a Deposit Account or an account holding Investment Property (in any case, excluding the Excluded Accounts) and which grants Agent a perfected first priority security interest in the subject account or accounts.

 

“ACH Authorization” means the ACH Debit Authorization Agreement in substantially the form of Exhibit H, which account numbers shall be redacted for security purposes if and when filed publicly by the Borrower.

 

“Advance(s)” means a Term Loan Advance.

 

“Advance Date” means, with respect to a given Advance, the funding date of any such Advance.

 

“Advance Request” means a request for an Advance submitted by Borrower to Agent in substantially the form of Exhibit A, which account numbers shall be redacted for security purposes if and when filed publicly by the Borrower.

 

“Affiliate” means any Person that directly or indirectly controls, is controlled by, or is under common control with the Person in question.  As used in the definition of “Affiliate,” the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

“AG’s Shareholder Obligations” shall have the meaning set forth in section 12.9.

 

 “Agreement” means this Loan and Security Agreement, as amended from time to time.

 

“Amortization Date” means initially, March 1, 2025; provided that if the Extension Condition One is satisfied, such date shall be extended to September 1, 2025; provided further, that if the Extension Condition Two is satisfied, such date shall be extended to March 1, 2026.

 

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to a Loan Party or any of its Affiliates from time to time concerning or relating to bribery or corruption, including without limitation the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010 and other similar legislation in any other jurisdictions.

 

“Anti‑Terrorism Laws” means any laws, rules, regulations or orders relating to terrorism or money laundering, including without limitation Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, and the laws administered by OFAC.

 

“AVF LLC” means AVF, LLC, a Delaware limited liability company.

 

“Blocked Person” means any Person:  (a) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (b) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (c) a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224, or (e) a Person that is named a “specially designated national” or “blocked person” on the most current list published by OFAC or other similar list.

 

“Borrower Representative” means Parent.

 

“Borrower’s Books” means Borrower’s or any of its Subsidiaries’ books and records including ledgers, federal, state, local and foreign tax returns, records regarding Borrower’s or its Subsidiaries’ assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.

 

“Business Day” means any day other than Saturday, Sunday and any other day on which banking institutions in the State of California or New York are closed for business.

 

“Business Strategy” means (i) Parent’s then current business strategies and practices stated in Parent’s public filings from time to time, solely to the extent that such business strategies and practices are reasonably related or incidental to, or represent a reasonable expansion of, Parent’s business strategies and practices stated in Parent’s public filings as of the Closing Date, in each case, as confirmed by Agent in its reasonable discretion, (ii) the business strategies and practices described in Exhibit G, and (iii)  such other business practices and strategies of Parent approved by Agent in writing in its reasonable discretion.

 

“Cash” means all cash, cash equivalents and liquid funds.

 

 

“Closing Date” means the date of this Agreement.

 

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Collateral Agent” means the Agent or any successor.

 

“Collateral Agent Parallel Debt Claim” shall have the meaning set forth in Section 10.7.

 

“Compass” means Compass Pathways plc, a company incorporated under the laws of England and Wales with company number 12696098.

 

“Compliance Certificate” means a compliance certificate in the form of Exhibit E to this Agreement.

 

“Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any Indebtedness, lease, dividend, letter of credit or other obligation of another, including any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business.  The amount of any Contingent Obligation shall be deemed, without duplication of the primary obligation, to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement. Notwithstanding the foregoing, no Permitted Bond Hedge Transaction or Permitted Warrant Transaction will be considered a Contingent Obligation of the Borrower.

 

“Controlled Entity” means each (i) Controlled Variable Interest Entity, (ii) Wholly-Owned Operating Company, (iii) Non-Operating Subsidiary and (iv) other Subsidiary (including the Specified UK Subsidiary and the Specified AU Subsidiary and AVF LLC) that is not a Wholly-Owned Operating Company or a Non-Operating Subsidiary, excluding, for the avoidance of doubt any Non-Controlled Entity.

 

 “Controlled Variable Interest Entity” means a Platform Company with respect to which Parent consolidates (including, because Parent has (i) the power to direct the activities that most significantly impact such Platform Company’s economic performance, (ii) the obligation to absorb losses that could potentially be significant to such Platform Company, or (iii) the right to receive benefits from such Person that could potentially be significant to such Platform Company), the accounts of such Platform Company with those of Parent pursuant to Accounting Standards Codification 810 (Consolidation under GAAP) (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect), as reasonably determined by Parent in good faith and designated as a “Controlled Variable Interest Entity”, “Controlled VIE”, “Controlled VOE” or other similar or analogous term in Parent’s financial statements. For the avoidance of doubt, a Subsidiary of a Person is not a Controlled Variable Interest Entity of such Person. As of the Closing Date, each Controlled Variable Interest Entity is identified as such on Schedule 1 hereto. After the Closing Date, Borrower shall deliver written updates to Schedule 1 concurrently with the delivery of a Compliance Certificate if the Borrower desires to modify the designation of a Platform Company set forth under the heading “Type” on Schedule 1 (including for the avoidance of doubt, any modification which would designate a Controlled Entity as a Non-Controlled Entity).

 

“Copyright License” means any written agreement granting any right to use any Copyright or Copyright registration, now owned or hereafter acquired by any Loan Party or Controlled Entity or in which any Loan Party or Controlled Entity now holds or hereafter acquires any interest.

 

“Copyrights” means all copyrights, whether registered or unregistered, held pursuant to the laws of the United States of America, any State thereof, or of any other country.

 

“Corresponding Obligations” means all obligations of a Loan Party towards a Lender (or a Secured Party) as they may exist from time to time, other than the Collateral Agent Parallel Debt Claim.

 

“Deposit Accounts” means any “deposit account,” as such term is defined in the UCC, and includes any checking account, savings account, or certificate of deposit.

 

“Due Diligence Fee” means Fifty Thousand Dollars ($50,000), which fee has been paid to the Lenders prior to the Closing Date, and shall be deemed fully earned on such date regardless of the early termination of this Agreement.

 

“Dutch Deed of Pledge” means the Dutch law governed omnibus deed of pledge between the Parent and Agent, in form and substance reasonably satisfactory to Agent, including all exhibits and schedules thereto and any notices, consents, registrations or filings made pursuant thereto, and any Dutch translation thereof, in each case, as amended, restated, supplemented or otherwise modified, from time to time.

 

“Dutch Security Documents” means, collectively, (i) the Dutch Deed of Pledge and (ii) any other security agreement, pledge agreement, mortgage, trust deed or other document or instrument governed by  Dutch law entered into to pledge, grant and/or perfect the Lien (or the equivalent under Dutch law) on any property of any Loan Party, in each case, in form and substance satisfactory to Agent, including all exhibits and schedules thereto and any notices, consents, registrations or filings made pursuant thereto, and any Dutch translation thereof, in each case, as amended, restated, supplemented or otherwise modified, from time to time.

 

“English Security Documents” means, collectively, (i) the English Share Charge (Specified UK Subsidiary), and (ii) any other security agreement, pledge agreement, mortgage, trust deed or other document or instrument governed by  English law entered into to pledge, grant and/or perfect the Lien (or the equivalent under English law) on any property of any Loan Party, in each case, in form and substance satisfactory to Agent, including all exhibits and schedules thereto and any notices, consents, registrations or filings made pursuant thereto, in each case, as amended, restated, supplemented or otherwise modified, from time to time.

 

“English Share Charge (Specified UK Subsidiary)” means an English law governed share charge between ATAI Germany and the Agent, in form and substance reasonably satisfactory to the Agent, granting security over the shares of the Specified UK Subsidiary, including all exhibits and schedules thereto and any notices, consents, registrations or filings made pursuant thereto, in each case, as amended, restated, supplemented or otherwise modified, from time to time.

 

“Equity Documents” means any agreement entered into in connection with an equity financing or otherwise among holders of the Equity Interests of a Person or otherwise binding upon the holders of the Equity Interests of such Person.

 

“Equity Interests” means, with respect to any Person, the capital stock, partnership or limited liability company interest, or other equity securities or equity ownership interests of such Person.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

 

“Excluded Accounts” means (a) any Deposit Account that is used solely as a payroll account for the employees of any Loan Party or any of its Subsidiaries or the funds in which consist solely of funds held in trust for any director, officer or employee of such Loan Party or Subsidiary or any employee benefit plan maintained by such Loan Party or Subsidiary or funds representing deferred compensation for the directors and employees of such Loan Party or Subsidiary, collectively not to exceed 150% of the amount to be paid in the ordinary course of business in the then-next payroll cycle, (b) escrow accounts, Deposit Accounts and trust accounts, in each case holding assets that are pledged or otherwise encumbered pursuant to clause (vi) of the definition of Permitted Liens (but only to the extent required to be excluded pursuant to the underlying documents entered into in connection with such Permitted Liens in the ordinary course of business), (c) accounts containing no (zero) balance, (d) any Deposit Account with a balance less than, together with any other Deposit Account excluded pursuant to this clause (d), in the aggregate One Million Dollars ($1,000,000) and (e) solely to the extent the Loan Parties have complied with its obligations set forth in Part A, Section 1 of Schedule 4.4, the Specified Excluded Accounts.

 

“Excluded Assets” means (i) motor vehicles and other equipment subject to a certificate of title statute, (ii) assets subject to a Lien permitted by clause (vii) of the definition of Permitted Liens for purchase money debt obligations, in each case in favor of a Person other than the Loan Parties and its Subsidiaries and permitted hereunder, if the contract or other agreement in which such Lien is granted prohibits the creation of any other Lien on such assets or creates a right of termination in favor of such Person (other than to the extent that any such prohibition would be rendered ineffective pursuant to the UCC of any relevant jurisdiction or any other applicable law); provided that upon the termination of such prohibition, such property shall automatically be deemed included in the Collateral, (iii) any governmental licenses or state or local franchises, charters and authorizations, to the extent a security interest in any such license, franchise, charter or authorization is prohibited or restricted thereby (other than to the extent that any such prohibition or restriction would be rendered ineffective pursuant to the UCC of any relevant jurisdiction or any other applicable law) (iv) nonassignable licenses or contracts, which by their terms require the consent of the licensor thereof or another party (other than to the extent that any such prohibition would be rendered ineffective pursuant to the UCC of any relevant jurisdiction or any other applicable law); provided, that upon the lapse of such prohibition or such consent being provided with respect to any license or contract, such license or contract shall automatically be included in the Collateral, (v) any Excluded Accounts (vi) any Intellectual Property, (vii) [reserved], (viii) any assets of the Specified UK Subsidiary (but excluding, for the avoidance of doubt, any Equity Interests in the Specified UK Subsidiary); provided that such exclusion shall no longer apply if the Specified UK Subsidiary is a Loan Party hereunder pursuant to Section 7.24, (ix) any assets of the Specified AU Subsidiary (but excluding, for the avoidance of doubt, any Equity Interests in the Specified AU Subsidiary); provided that such exclusion shall no longer apply if the Specified AU Subsidiary is a Loan Party hereunder pursuant to Section 7.24, (x) any assets (including Equity Interests) to the extent a security interest in such asset is reasonably expected to result in material adverse tax consequences as reasonably determined by Parent and approved by Agent in its reasonable discretion, (xi) voting rights or interests with respect to Equity Interests not fully paid for or held in escrow; provided, that upon payment in full or release from escrow, such voting rights or interests with respect to such Equity Interests shall automatically be included in the Collateral and (xii) solely to the extent the InnarisBio Consent has not been obtained, Equity Interests of ATAI Germany in InnarisBio, Inc.; provided that such exclusion shall no longer apply if the InnarisBio consent has been obtained.

 

“InnarisBio Consent” means a written consent in form and substance satisfactory to Agent that the pledge of the Equity Interests of InnarisBio, Inc. by ATAI Germany is not restricted or subject in any respect to the right of first refusal in favor of Uniquest Pty Ltd abn 19 010 529 898 under Section 2.1 of that certain right of first refusal and co-sale agreement, dated March 1, 2021 by and among InnarisBio, Inc., a Delaware corporation, Uniquest Pty Ltd abn 19 010 529 898 and Atai Life Sciences AG.

 

 

“Extension Condition Two” means the satisfaction of the following conditions: (i) no Event of Default shall have occurred and be continuing under any of the Loan Documents, and (ii) Extension Condition One shall have been satisfied, and (iii) receipt by the Agent of evidence satisfactory to Agent in its reasonable discretion that Parent has raised [***] of unrestricted (including not subject to any clawback, redemption, escrow or similar contractual restrictions) new net cash proceeds (not including proceeds from the conversion or cancellation of Indebtedness) from the issuance of Equity Interests of Parent, Permitted Convertible Debt of Parent or upfront proceeds from strategic business development partnerships expressly permitted under this Agreement, during the period commencing on the Closing Date and ending prior to December 15June 30, 20242025, which proceeds shall be promptly deposited in a Deposit Account or securities account of Borrower subject to an Account Control Agreement in favor of Agent.

 

“Foreign Deposit Account Pledge Requirement” means, with respect to a Deposit Account of a Loan Party located outside of the United States, the occurrence of each of the following, in each case, in form and substance reasonably acceptable to Agent (A) the applicable Foreign Security Document with respect to such Deposit Account has been executed and delivered to Agent and is in full force and effect, (B) the Agent has received copies of all executed closing deliverables required pursuant to the terms of such Foreign Security Document, and all other documents and instruments reasonably required by Agent to effectuate the transactions contemplated by such Foreign Security Document, and (C) the Agent maintains a perfected first priority security interest in such Deposit Account.

 

“Foreign Security Document” means, collectively, (i) the Dutch Security Documents, (ii) the German Security Documents , (iii) the English Security Documents and (iv) each other security agreement, pledge agreement, mortgage, trust deed or other document or instrument which is governed by laws other than the laws of the United States, any state thereof or the District of Columbia or Dutch law or English Law or German law, and which is executed and delivered pursuant to the terms hereof or any other Loan Document, to pledge, grant and/or perfect the Lien (or the equivalent under applicable foreign law) on any property of any Loan Party, in each case, in form and substance reasonably satisfactory to Agent.

 

 “GAAP” means generally accepted accounting principles in the United States of America, Germany, and if applicable, IFRS, as in effect from time to time, or, to the extent applicable, generally accepted accounting principles in the jurisdiction of incorporation or establishment (as the case may be) of the relevant Loan Party.

 

 “German Account Pledge Agreement” means any German law account pledge agreement(s) in favor of the Agent in relation to a Loan Party’s Deposit Accounts located in Germany or accounts located in Germany holding Investment Property, in form and substance satisfactory to Agent, including all exhibits and schedules thereto and any notices, consents, registrations or filings made pursuant thereto, and any German translation thereof, in each case, as amended, restated, supplemented or otherwise modified, from time to time.

 

“German Global Assignment Agreement” means a German law global assignment agreement between ATAI Germany and the Agent in relation to all third party and intercompany receivables of ATAI Germany, in form and substance satisfactory to Agent, including all exhibits and schedules thereto and any notices, consents, registrations or filings made pursuant thereto, and any German translation thereof, in each case, as amended, restated, supplemented or otherwise modified, from time to time.

 

“German Security Documents” means, collectively, (i) the German Account Pledge Agreement, (ii) the German Global Assignment Agreement, (iii) the German Stock Pledge Agreement, and (iv) any other security agreement, pledge agreement, mortgage, trust deed, security transfer agreement or other document or instrument governed by the laws of Germany entered into to pledge, grant and/or perfect the Lien (or the equivalent under German law) on any property of any Loan Party, in each case, in form and substance satisfactory to Agent, including all exhibits and schedules thereto and any notices, consents, registrations or filings made pursuant thereto, and any German translation thereof, in each case, as amended, restated, supplemented or otherwise modified, from time to time.

 

“German Stock Pledge Agreement” means a German law stock pledge agreement between Parent and the Agent in relation to all shares of the Parent in ATAI Germany, in form and substance reasonably satisfactory to Agent, including all exhibits and schedules thereto and any notices, consents, registrations or filings made pursuant thereto, and any German translation thereof, in each case, as amended, restated, supplemented or otherwise modified, from time to time.

 

“Governmental Approval” means any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority, including for the testing, manufacturing, marketing and sales of a Product.

 

“Governmental Authority” means the government of any nation, any political subdivision thereof, whether state, local, territory, province or otherwise, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, any securities exchange and any self-regulatory organization.

 

 “Indebtedness” means indebtedness of any kind, including (a) all indebtedness for borrowed money or the deferred purchase price of property or services (excluding trade credit entered into in the ordinary course of business due within one hundred eighty (180) days), including reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, (d) equity securities of any Person subject to repurchase or redemption other than at the sole option of such Person, (e) non-contingent obligations to reimburse any bank or Person in respect of amounts paid under a letter of credit, banker’s acceptance or similar instrument, and (f) all Contingent Obligations.

 

“Indirect RDTI Subsidiary” means any Subsidiary that is (a) not a Platform Company and (b) formed in connection with strategic tax structuring, including each entity designated as an “RDTI Subsidiary” on Schedule 1.

 

“Initial Facility Charge” means Three Hundred Thousand Dollars ($300,000), which is payable to the Lenders in accordance with Section 4.1(g).

 

“Intellectual Property” means all of each Loan Party’s and Controlled Entity’s Copyrights; Trademarks; Patents; Licenses; trade secrets and inventions; mask works; each Loan Party’s and Controlled Entity’s applications therefor and reissues, extensions, or renewals thereof; and each Loan Party’s and Controlled Entity’s goodwill associated with any of the foregoing, together with each Loan Party’s and Controlled Entity’s rights to sue for past, present and future infringement of Intellectual Property and the goodwill associated therewith.

 

“Investment” means (a) any beneficial ownership (including stock, partnership, limited liability company interests, or other securities) of or in any Person, (b) any loan, advance or capital contribution to any Person (c) the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person or assets constituting a business unit, line of business or division of such Person or (d) the purchase or other acquisition (in one transaction or a series of transactions) of, or the right to use, develop or sell (in each case, including through licensing), any material product, product line or Intellectual Property of or from any other Person).

 

 “IRS” means the United States Internal Revenue Service.

 

“Joinder Agreements” means for each Subsidiary required to be a Loan Party hereunder, a completed and executed Joinder Agreement in substantially the form attached hereto as Exhibit F.

 

“License” means any Copyright License, Patent License, Trademark License or other license of rights or interests.

 

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other title retention agreement, and any lease in the nature of a security interest.

 

“Loan” means the Advances made under this Agreement.

 

“Loan Documents” means this Agreement, the promissory notes (if any), the ACH Authorization, the Account Control Agreements, the Joinder Agreements, all UCC Financing Statements, each Foreign Security Document, and any other documents executed in connection with the Secured Obligations or the transactions contemplated hereby, as the same may from time to time be amended, modified, supplemented or restated.

 

“Loan Party” means each Borrower and each Guarantor.

 

“Market Capitalization” means, as of any date of determination, the product of (a) an amount equal to the total number of outstanding shares of common stock publicly disclosed as of the date of the most recent filing of Parent with the SEC (or such other more recent number of outstanding shares as may be reasonably determined in good faith by the Parent and for which supporting documentation shall be provided to Agent, upon request, and subject to Agent’s reasonable verification) as outstanding on such date of determination and (b) the closing price of Parent’s common stock (as quoted on Bloomberg L.P.’s page or any successor page thereto of Bloomberg L.P. or if such page is not available, any other commercially available source).

 

“Material Adverse Effect” means a material adverse effect upon: (i) the business, operations, properties, assets or financial condition of the Loan Parties and the Controlled Entities taken as a whole; or (ii) the ability of any Loan Party to perform or pay the Secured Obligations in accordance with the terms of the Loan Documents, or the ability of Agent or the Lenders to enforce any of its rights or remedies with respect to the Secured Obligations; or (iii) the Collateral or Agent’s Liens on the Collateral or the priority of such Liens.

 

“Material Platform Company” means any Platform Company in which a Loan Party directly owns or controls (i) 50% or more of the outstanding voting securities of such Platform Company or (ii) 10% or more of the outstanding voting securities of such Platform Company and such voting securities have, as of the date of determination, a fair market value in excess of $20,000,000, as reasonably determined by Parent in accordance with GAAP. As of the Closing Date, each Material Platform Company is identified as such on Schedule 1 hereto.

 

“Material Platform Company Change in Control” means, solely with respect to a Platform Company constituting a Material Platform Company pursuant to clause (i) of the definition of Material Platform Company, at any time, the Loan Parties fail to be the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d) 5 under the Exchange Act), directly or indirectly, of fifty percent (50.0%) or more of the ordinary voting power for the election of directors (determined on a fully diluted basis), other than by the sale of such Material Platform Company’s equity securities (a) in a public offering, or (b) to non-Affiliated venture capital or private equity investors in connection with a bona-fide equity financing transaction so long as the Loan Parties identify to Agent and the Lenders the venture capital or private equity investors at least seven (7) Business Days prior to the closing of the transaction and provide to Agent and the Lenders a description of the material terms of the transaction.

 

“Maximum Term Loan Amount” means One Hundred and Seventy Five Million Dollars ($175,000,000).

 

“Non-Controlled Entity” means any Platform Company which is not a Controlled Entity. As of the Closing Date, each Non-Controlled Entity is identified as such on Schedule 1 hereto. After the Closing Date, Borrower shall deliver written updates to Schedule 1 concurrently with the delivery of a Compliance Certificate if the Borrower desires to modify the designation of a Platform Company set forth under the heading “Type” on Schedule 1 (including for the avoidance of doubt, any modification which would designate an existing Non-Controlled Entity as a Controlled Entity); provided that, any such updates or modifications to Schedule 1 shall be subject to Agent’s reasonable verification.

 

“Non-Operating Subsidiary” means a Subsidiary of a Loan Party other an Operating Company, and including, for avoidance of doubt, any alternative investment vehicle or other special purpose entity which holds, directly or indirectly, Investments of or on behalf of Parent, or any other Subsidiary primarily in the business of investing, reinvesting, holding or trading in securities. As of the Closing Date, each Non-Operating Subsidiary is identified as such on Schedule 1 hereto.

 

“OFAC” is the U.S. Department of Treasury Office of Foreign Assets Control.

 

“OFAC Lists” are, collectively, the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other restricted Persons maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Executive Orders.

 

“Operating Company” means a Person (i) which is predominately in the business of research, development, manufacturing, sale or marketing of products and activities related thereto or (ii) holding assets, including without limitation Intellectual Property, that are useful for a Person that is predominately in the line of business described in the foregoing clause (i) and in anticipation of such Person commencing operations in such line of business and which a Loan Party or any Controlled Entity intends to cause to commence operations.

 

“Participant Register” has the meaning specified in Section 11.8.

 

“Patent License” means any written agreement granting any right with respect to any invention on which a Patent is in existence or a Patent application is pending, in which agreement any Loan Party or Controlled Entity now holds or hereafter acquires any interest.

 

“Patents” means all letters patent of, or rights corresponding thereto, in the United States of America or in any other country, all registrations and recordings thereof, and all applications for letters patent of, or rights corresponding thereto, in the United States of America or any other country.

 

  “Permitted Indebtedness” means:

“Permitted Warrant Transaction” means any call option, warrant or right to purchase (or substantively equivalent derivative transaction) relating to common stock (or other securities or property following a merger event or other change of the common stock) and/or cash (in an amount determined by reference to the price of such common stock) sold by Parent substantially concurrently with any purchase by Parent of a related Permitted Bond Hedge Transaction and as may be amended in accordance with its terms; provided that (x) that the terms, conditions and covenants of each such call option transaction are customary for agreements of such type, as determined in good faith by Parent and (y) such call option transaction would be classified as an equity instrument in accordance with GAAP.

 

“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, other entity or government.

 

“Platform Company Transaction Documents” means the agreements identified on Schedule 1D hereto, in each case, as in effect on the Closing Date and as may be amended, restated, supplemented or otherwise modified in a manner that is not materially adverse to the interests of Agent or Lender.

 

“Products” means all pharmaceuticals, therapeutics, R&D platforms, products, software, service offerings, technical data or technology currently being designed, manufactured or sold by a Loan Party or a Controlled Entity or which any Loan Party or Controlled Entity intends to sell, license, or distribute in the future including any products or service offerings under development, collectively, together with all pharmaceuticals, therapeutics, R&D platform, products, software, service offerings, technical data or technology that have been sold, licensed or distributed by a Loan Party or a Controlled Entity since its organization.

 

“Qualified Cash” means (i) the amount of the Loan Parties’ unrestricted Cash held in Deposit Accounts in the United States subject to an Account Control Agreement in favor of Agent and (ii) solely to the extent that the Foreign Deposit Account Pledge Requirement has been satisfied with respect to a Deposit Account located outside of the United States, the amount of the Loan Parties’ unrestricted Cash held in such Deposit Account located outside of the United States.

 

“Qualified Cash A/P Amount” means the amount of the Loan Parties’ accounts payable that have not been paid within one hundred eighty (180) days from the invoice date of the relevant account payable (other than accounts that are subject to good faith disputes and for which the Loan Parties maintain adequate reserves in accordance with GAAP).

 

“Receivables” means (a) all of each Loan Party’s Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter of credit, and Letter of Credit Rights, and (b) all customer lists, software, and business records related thereto.

 

“Redemption Conditions” means, with respect to any payment of cash in respect of the principal amount of any Permitted Convertible Debt, satisfaction of each of the following events: (a) no Default or Event of Default shall exist or result therefrom, and (b) both immediately before and at all times after such redemption, Borrower’s Qualified Cash shall be no less than 150% of the outstanding Secured Obligations.

 

“Register” has the meaning specified in Section 11.7.

 

 

“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or by the United Nations Security Council, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person.

 

“Specified Excluded Accounts” means, collectively, the applicable Loan Parties’ deposit account with JPMorgan Chase Bank as listed in Exhibit D as of the Closing Date.

 

“Specified Platform Company” means (i) each Material Platform Company and (ii) solely to the extent a Loan Party directly owns greater than 5% of outstanding voting securities of Compass, Compass.

 

“Specified AU Subsidiary” means ATAI Life Sciences Australia Pty Ltd., an Australian limited company, solely to the extent that such Person is not a Loan Party hereunder.

 

“Specified UK Subsidiary” means ATAI Life Sciences UK Ltd, a limited liability company incorporated under the laws of England and Wales with company number 13277632, solely to the extent that such Person is not a Loan Party hereunder.

 

 “Subordinated Indebtedness” means Indebtedness subordinated to the Secured Obligations in amounts and on terms and conditions satisfactory to Agent in its sole discretion and subject to a subordination agreement in form and substance satisfactory to Agent in its sole discretion.  For the avoidance of doubt Permitted Convertible Debt shall not constitute Subordinated Indebtedness.

 

“Subsidiary” means an entity, whether a corporation, partnership, limited liability company, joint venture or otherwise, in which any Loan Party owns or controls, either directly or indirectly, 50% or more of the outstanding voting securities, including each entity listed on Schedule 1 hereto.

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, and including any interest or linkage paid in connection therewith, additions to tax or penalties applicable thereto.

 

“Term Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to the Borrower in a principal amount not to exceed the amount set forth under the heading “Term Commitment” opposite such Lender’s name on Schedule 1.1.

 

“Term Loan Advance” means each of the Tranche 1A Advance, Tranche 1B Advance, Tranche 1C Advance, Tranche 1D Advance, Tranche 2 Advance and Tranche 3 Advance and any other Term Loan funds advanced under this Agreement.

 

“Term Loan Interest Rate” means for any day a per annum rate of interest equal to the greater of either (i) the prime rate as reported in The Wall Street Journal plus 4.554.30%, and (ii) 8.559.05%; provided that if the Extension Condition Two is satisfied, the rate of interest in the foregoing clause (i) shall be the prime rate as reported in The Wall Street Journal plus 4.05%.

 

“Trademark License” means any written agreement granting any right to use any Trademark or Trademark registration, now owned or hereafter acquired by any Loan Party or Controlled Entity or in which any Loan Party now holds or hereafter acquires any interest.

 

“Trademarks” means all trademarks (registered, common law or otherwise) and any applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States of America, any State thereof or any other country or any political subdivision thereof.

 

“Tranche” means with respect to the Tranche 1A Commitment, the Tranche 1A Advance; with respect to the Tranche 1B Commitment, all Tranche 1B Advances; with respect to the Tranche 1C Commitment, all Tranche 1C Advances; with respect to the Tranche 1D Commitment, all Tranche 1D Advances; with respect to the Tranche 2 Commitment, all Tranche 2 Advances; and with respect to the Tranche 3 Commitment, all Tranche 3 Advances.

 

“Tranche 1A Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to the Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 1A Commitment” opposite such Lender’s name on Schedule 1.1.

 

“Tranche 1B Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to the Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 1B Commitment” opposite such Lender’s name on Schedule 1.1.

 

“Tranche 1C Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to the Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 1C Commitment” opposite such Lender’s name on Schedule 1.1.

 

“Tranche 1D Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to the Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 1D Commitment” opposite such Lender’s name on Schedule 1.1.

 

“Tranche 2 Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to the Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 2 Commitment” opposite such Lender’s name on Schedule 1.1.

 

 

 “Tranche 3 Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to the Borrower in a principal amount not to exceed the amount set forth under the heading “Tranche 3 Commitment” opposite such Lender’s name on Schedule 1.1.

 

 “Tranche 3 Facility Charge” means an amount equal to one-half of one percent (0.50%) of the Tranche 3 Advances funded, which is payable to the Lenders in accordance with Section 4.2(d).

 

“UCC” means the Uniform Commercial Code as the same is, from time to time, in effect in the State of California; provided, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as the same is, from time to time, in effect in a jurisdiction other than the State of California, then the term “UCC” shall mean the Uniform Commercial Code as in effect, from time to time, in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.

 

“U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.

 

“Wholly-Owned Operating Company” means an Operating Company in which any Loan Party owns or controls, directly, 100% of the outstanding voting securities of such entity. As of the Closing Date, each Wholly-Owned Operating Company is identified as such on Schedule 1.

 

1.2           The following terms are defined in the Sections or subsections referenced opposite such terms:

 

Defined Term	Section
Agent	Preamble
Assignee	11.14
ATAI Germany	Preamble
ATAI US	Preamble
Borrower	Preamble
Claims	11.11(a)
Collateral	3.1
Confidential Information	11.13
End of Term Charge	2.6(b)
Event of Default	9
Guarantor	Preamble
Guaranteed Obligations	12.1
Indemnified Person	6.3
Lenders	Preamble
Liabilities	6.3
Maximum Rate	2.3
Minimum Market Capitalization Requirement	7.19
Open Source License	5.10
Parent	Preamble
Participant Register	11.8
Prepayment Charge	2.5(a)
Process Letter	Addendum 4
Publicity Materials	11.19
Register	11.7
Rights to Payment	3.1
Specified Disposition	Definition of Permitted Transfers
Term Loan	Recitals
Tranche 1A Advance	2.2(a)(i)
Tranche 1B Advance	2.2(a)(i)
Tranche 1B Expiration Date	2.2(a)(i)
Tranche 1C Advance	2.2(a)(i)
Tranche 1C Expiration Date	2.2(a)(i)
Tranche 1D Advance	2.2(a)(i)
Tranche 1D Expiration Date	2.2(a)(i)
Tranche 2 Advance	2.2(a)(ii)
Tranche 3 Advance	2.2(a)(iii)
Transfer	7.8

 

1.3          Unless otherwise specified, all references in this Agreement or any Annex or Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule” shall refer to the corresponding Section, subsection, Exhibit, Annex, or Schedule in or to this Agreement.  Unless otherwise specifically provided herein, any accounting term used in this Agreement or the other Loan Documents shall have the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed in accordance with GAAP, consistently applied. Unless otherwise defined herein or in the other Loan Documents, terms that are used herein or in the other Loan Documents and defined in the UCC shall have the meanings given to them in the UCC.  For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time.

1.5          Dutch Terms. In this Agreement where it relates to Parent a reference to: (a) a necessary corporate or other organizational action where applicable includes without limitation (i) any action any action required to comply with the Works Councils Act of the Netherlands (Wet op de ondernemingsraden); and (ii) obtaining an unconditional positive advice (advies) from the competent works council(s) if a positive advice is required pursuant to the Works Councils Act (Wet op de ondernemingsraden), (b) a security interest includes any mortgage (hypotheek), pledge (pandrecht), retention of title arrangement (eigendomsvoorbehoud), right of retention (recht van retentie), right to reclaim goods (recht van reclame), and, in general, any right in rem (beperkt recht), created for the purpose of granting security (goederenrechtelijk zekerheidsrecht), (c) a winding-up or dissolution includes a bankruptcy (faillissement) or dissolution (ontbinding), (d) a moratorium includes surseance van betaling and a moratorium is declared or occurs includes surseance verleend, (e) any step or procedure taken in connection with insolvency proceedings includes a Dutch entity having filed a notice under section 36 of the Tax Collection Act of the Netherlands (Invorderingswet 1990), (f) a liquidator includes a curator or a beoogd curator, (g) an administrator includes a bewindvoerder, a beoogd bewindvoerder, a stille bewindvoerder and a herstructureringsdeskundige or an observatory, (h) an attachment includes a conservatoir beslag or executoriaal beslag, (i) gross negligence means grove schuld; and (j) willful misconduct means opzet.

 

Notwithstanding the foregoing, Parent may (A) pay the purchase price of any Permitted Bond Hedge Transaction or (B) settle, unwind or terminate all or any portion of any Permitted Warrant Transaction by (I) set-off against the concurrent settlement, unwind or other termination of all or any portion of any related Permitted Bond Hedge Transaction or (II) delivery of common stock.

 

Notwithstanding the foregoing, and for the avoidance of doubt, this Section 7.7 shall not prohibit the conversion by holders of (including any payment upon conversion, whether in cash, common stock or a combination thereof), or required payment of any principal or premium on (including, for the avoidance of doubt, in respect of a required repurchase in connection with the redemption of Permitted Convertible Debt upon satisfaction of a condition related to the stock price of the common stock) or required payment of any interest with respect to, any Permitted Convertible Debt in each case, in accordance with the terms of the indenture governing such Permitted Convertible Debt; provided that principal payments in cash (other than cash in lieu of fractional shares) shall only be allowed if the Redemption Conditions are satisfied in respect of such payment and at all times after such payment; provided further that, to the extent both (a) the aggregate amount of cash payable upon conversion or payment of any Permitted Convertible Debt (excluding any required payment of interest with respect to such Permitted Convertible Debt and excluding any payment of cash in lieu of a fractional share due upon conversion thereof) exceeds the aggregate principal amount thereof and (b) such conversion or payment is not offset by an exercise or early unwind or settlement of a corresponding portion of the Bond Hedge Transactions relating to such Permitted Convertible Debt (including, for the avoidance of doubt, the case where there is no Bond Hedge Transaction relating to such Permitted Convertible Debt), the payment of such excess cash shall not be permitted by the preceding sentence.

 

Notwithstanding the foregoing, Parent may repurchase, exchange or induce the conversion of Permitted Convertible Debt by delivery of common stock and/or a different series of Permitted Convertible Debt and/or by payment of cash (in an amount that does not exceed the proceeds received by Parent from the substantially concurrent issuance of common stock and/or Permitted Convertible Debt plus the net cash proceeds, if any, received by Parent pursuant to the related exercise or early unwind or termination of the related Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, pursuant to the immediately following proviso); provided that, substantially concurrently with, or a commercially reasonable period of time before or after, the related settlement date for the Permitted Convertible Debt that is so repurchased, exchanged or converted, Parent shall exercise or unwind or terminate early (whether in cash, shares or any combination thereof) the portion of the Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, corresponding to such Permitted Convertible Debt that are so repurchased, exchanged or converted.

(ii)

if, at the time a demand for payment is made under this Agreement, a domination or profit and loss transfer agreement (Beherrschungs- oder Gewinnabführungsvertrag) within the meaning of § 291 German Stock Corporation Act (Aktiengesetz) with the Parent is in force (“DPLTA”), the guarantee or indemnity granted by ATAI Germany or directly or indirectly owned Subsidiaries of ATAI Germany under this Agreement to secure any obligations or liabilities with respect to the AG’s Shareholder Obligations shall be valid and enforceable, except if an to the extent the payment under the guarantee or indemnity will, or must be expected to, result in an annual loss to ATAI Germany which would not be, or cannot be expected to be, compensated for by a compensation claim under the DPLTA which compensation claim could be accounted for in the balance sheet of ATAI Germany at full value (vollwertig).