UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 8-K

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CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): July 1, 2025

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PROKIDNEY CORP.

(Exact name of Registrant as Specified in Its Charter)

 

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(Former Name or Former Address, if Changed Since Last Report)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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ProKidney Corp., a Delaware corporation (“ProKidney Delaware” or the “Company”), is providing the disclosure contained in this Current Report on Form 8-K to reflect the completion of its domestication, which changed its jurisdiction of incorporation from the Cayman Islands to the State of Delaware (the “Domestication”). ProKidney Corp., the Cayman Islands exempted company (“ProKidney Cayman”) deregistered as an exempted company in the Cayman Islands pursuant to Sections 206 and 207 of the Companies Act (as amended) of the Cayman Islands (the “Companies Act”), and domesticated and continued its existence as a corporation incorporated in the State of Delaware pursuant to Section 388 of the General Corporation Law of the State of Delaware (the “DGCL”) effective on July 1, 2025 (the “Domestication Date”). References to the “Company,” “ProKidney Delaware,” “ProKidney Cayman,” the “Registrant,” “we,” “our,” “us” and similar terms mean, as of any time prior to the Domestication, ProKidney Cayman and, as of any time after the Domestication, ProKidney Delaware.

 

In connection with the Domestication, effective on the Domestication Date, (i) each Class A ordinary share, par value $0.0001 per share, of ProKidney Cayman (the “Class A ordinary shares”), issued and outstanding immediately prior to the effective time of the Domestication was automatically converted into one share of Class A common stock, par value $0.0001 per share, of ProKidney Delaware (the “Class A common stock”) and (ii) each Class B ordinary share, par value $0.0001 per share, of ProKidney Cayman (the “Class B ordinary shares”), issued and outstanding immediately prior to the effective time of the Domestication was automatically converted into one share of Class B common stock, par value $0.0001 per share, of ProKidney Delaware (the “Class B common stock” and, together with the Class A common stock, the “Common Stock”). The number of shares of Class A common stock and Class B common stock of the Company outstanding immediately after the Domestication was the same as the number of Class A ordinary shares and Class B ordinary shares of ProKidney Cayman outstanding immediately prior to the Domestication.

Additionally, in connection with the Domestication, effective on the Domestication Date, the board of directors of ProKidney Cayman adopted a resolution providing that (i) each Class B Series 1 RSR of ProKidney Cayman (a “Cayman Class B Series 1 RSR”), issued and outstanding immediately prior to the effective time of the Domestication was automatically converted into a restricted stock right (a “Class B Series 1 RSR”) for one share of Class B common stock, subject to the same vesting conditions as the Cayman B Series 1 RSRs (other than changes reflecting the Restructuring), (ii) each Class B Series 2 RSR of ProKidney Cayman (a “Cayman Class B Series 2 RSR”), issued and outstanding immediately prior to the effective time of the Domestication was automatically converted into a restricted stock right (a “Class B Series 2 RSR”) for one share of Class B common stock, subject to the same vesting conditions as the Cayman B Series 2 RSRs (other than changes reflecting the Restructuring), (iii) each Class B Series 3 RSR of ProKidney Cayman (a “Cayman Class B Series 3 RSR”), issued and outstanding immediately prior to the effective time of the Domestication was automatically converted into a restricted stock right (a “Class B Series 3 RSR”) for one share of Class B common stock, subject to the same vesting conditions as the Cayman B Series 3 RSRs (other than changes reflecting the Restructuring), (iv) each Class B PMEL RSR of ProKidney Cayman (a “Cayman Class B PMEL RSR”), issued and outstanding immediately prior to the effective time of the Domestication was automatically converted into a restricted stock right (a “Class B PMEL RSR”) for one share of Class B common stock, subject to the same vesting conditions as the Cayman Class B PMEL RSRs (other than changes reflecting the Restructuring). The number of Class B Series 1 RSRs, Class B Series 2 RSRs, Class B Series 3 RSRs and Class B PMEL RSRs, respectively, of the Company outstanding immediately after the Domestication was the same as the number of Cayman Class B Series 1 RSRs, Cayman Class B Series 2 RSRs, Cayman Class B Series 3 RSRs and Cayman Class B PMEL RSRs, respectively, of ProKidney Cayman outstanding immediately prior to the Domestication.

The Class A common stock has continued to be listed for trading on the Nasdaq Capital Market under the symbol “PROK.” Effective as of July 2, 2025, the Company’s CUSIP number relating to its Class A common stock changed to 74291D 104.

 

In connection with the Domestication, ProKidney Delaware adopted a certificate of incorporation (the “Certificate of Incorporation”) and bylaws (the “Bylaws”), and the rights of holders of the Common Stock are now governed by such documents and the DGCL. The Certificate of Incorporation and the Bylaws have been filed with this Current Report on Form 8-K as Exhibit 3.1 and Exhibit 3.2, respectively, and are incorporated by reference into this Item 3.03. A summary description of the Company’s capital stock, including key differences between the rights of ProKidney Cayman’s shareholders under Cayman law and the ProKidney Cayman memorandum and articles of association, on the one hand, and the rights of the Company’s stockholders under the DGCL and our new Certificate of Incorporation and Bylaws, on the other hand, is included in the sections of the final prospectus, dated April 28, 2025 (the “Final Prospectus”), titled “Description of Securities” and “Comparison of Corporate Governance and Shareholder Rights.” A description of the Domestication and certain potential effects, including of the material U.S. federal income tax consequences of the Domestication and ownership of the Common Stock, is included in the sections of the Final Prospectus titled “Proposal No. 1 The Domestication Proposal” and “Material U.S. Federal Income Tax Considerations.” The aforementioned sections of the Final Prospectus have been filed with this Current Report on Form 8-K as Exhibit 99.1 and are incorporated by reference into this Item 3.03.

 

 

Item 5.03

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

The information included in Item 3.03 above is hereby incorporated by reference into this Item 5.03. The Certificate of Incorporation and Bylaws were effective as of the Domestication Date.

 

Item 8.01

Other Events.

 

In accordance with Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), ProKidney Delaware is a successor registrant to ProKidney Cayman and thereby subject to the informational requirements of the Exchange Act and the rules and regulations promulgated thereunder. The shares of Class A common stock of the Company, as the successor registrant to ProKidney Cayman, are deemed to be registered under Section 12(b) of the Exchange Act.

 

Item 9.01

Financial Statements and Exhibits.

 

(d) Exhibits.

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

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Exhibit 3.1

		Page
ARTICLE 1 Definitions		1
ARTICLE 2 Stockholders		3
Section 2.01.	Place of Meetings	3
Section 2.02.	Annual Meetings; Stockholder Proposals.	3
Section 2.03.	Special Meetings	6
Section 2.04.	Record Date.	7
Section 2.05.	Notice of Meetings of Stockholders	8
Section 2.06.	Waivers of Notice	8
Section 2.07.	List of Stockholders	8
Section 2.08.	Quorum of Stockholders; Adjournment	9
Section 2.09.	Voting; Proxies	9
Section 2.10.	Voting Procedures and Inspectors at Meetings of Stockholders	10
Section 2.11.	Conduct of Meetings	10
Section 2.12.	Order of Business	11
ARTICLE 3 Directors		11
Section 3.01.	General Powers	11
Section 3.02.	Classes of Directors; Term of Office	11
Section 3.03.	Nominations of Directors	12
Section 3.04.	Nominee and Director Qualifications	15
Section 3.05.	Resignation	16
Section 3.06.	Compensation	16
Section 3.07.	Regular Meetings	16
Section 3.08.	Special Meetings	16
Section 3.09.	Telephone/Electronic Meetings	16
Section 3.10.	Adjourned Meetings	16
Section 3.11.	Notice Procedure	17
Section 3.12.	Waiver of Notice	17
Section 3.13.	Organization	17
Section 3.14.	Quorum of Directors	17
Section 3.15.	Action by Majority Vote	17
Section 3.16.	Action Without Meeting	17
Section 3.17.	Chairman	17
ARTICLE 4 Committees of the Board		18
ARTICLE 5 Officers		18
Section 5.01.	Positions; Election	18
Section 5.02.	Term of Office	18
Section 5.03.	Chief Executive Officer	19
Section 5.04.	President	19
Section 5.05.	Vice Presidents	19
Section 5.06.	Chief Financial Officer	20

Section 5.07.	Secretary	20
Section 5.08.	Treasurer	20
Section 5.09.	Assistant Secretaries and Assistant Treasurers	21
ARTICLE 6 General Provisions		21
Section 6.01.	Certificates Representing Shares	21
Section 6.02.	Transfer and Registry Agents	21
Section 6.03.	Lost, Stolen or Destroyed Certificates	21
Section 6.04.	Form of Records	21
Section 6.05.	Seal	22
Section 6.06.	Fiscal Year	22
Section 6.07.	Amendments	22
Section 6.08.	Conflict with Applicable Law or Certificate of Incorporation	22
ARTICLE 7 Indemnification		22
Section 7.01.	Directors and Officers	22
Section 7.02.	Employees and Other Agents	22
Section 7.03.	Expenses	22
Section 7.04.	Enforcement	23
Section 7.05.	Non-Exclusivity of Rights	23
Section 7.06.	Survival of Rights	24
Section 7.07.	Insurance	24
Section 7.08.	Amendments	24
Section 7.09.	Saving Clause	24
Section 7.10.	Certain Definitions	24

Exhibit 3.3

IN WITNESS WHEREOF, the Company has caused this Certificate to be executed by its duly authorized officer on this 1 day of July 2025.

	PROKIDNEY CORP., a Cayman Islands exempted company limited by shares
	By:	/s/ Todd C. Girolamo
		Name:	Todd C. Girolamo
		Title:	Corporate Compliance Officer; Secretary; Chief Legal Officer

Exhibit 4.1

NUMBER CA*0*	*** SHARES
SEE REVERSE FOR CERTAIN DEFINITIONS	CUSIP

Authorized Officer		Authorized Officer

TEN COM	—	as tenants in common		UNIF GIFT MIN ACT	—
						(Custodian)		(Minor)
TEN ENT	—	as tenants by the entireties				Under Uniform Gifts to Minors Act
JT TEN	—	as joint tenants with right of survivorship and not as tenants in common				(State)

	Notice:	The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular, without alteration or enlargement or any change whatever.

Signature(s) Guaranteed:
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 (OR ANY SUCCESSOR RULE) UNDER THE SECURITIES ACT OF 1933, AS AMENDED).

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Exhibit 4.2

NUMBER CB*0*	*** SHARES
SEE REVERSE FOR CERTAIN DEFINITIONS	CUSIP

Authorized Officer		Authorized Officer

TEN COM	—	as tenants in common		UNIF GIFT MIN ACT	—
						(Custodian)		(Minor)
TEN ENT	—	as tenants by the entireties				Under Uniform Gifts to Minors Act
JT TEN	—	as joint tenants with right of survivorship and not as tenants in common				(State)

	Notice:	The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular, without alteration or enlargement or any change whatever.

Signature(s) Guaranteed:
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 (OR ANY SUCCESSOR RULE) UNDER THE SECURITIES ACT OF 1933, AS AMENDED).

among

 

PROKIDNEY CORP.,

 

TRA PARTY REPRESENTATIVE

 

and

 

THE PERSONS NAMED HEREIN

 

AMENDED AND RESTATED

TAX RECEIVABLE AGREEMENT

 

This AMENDED AND RESTATED TAX RECEIVABLE AGREEMENT (this “Agreement”), dated as of July 1, 2025, is hereby entered into by and among ProKidney Corp., a Delaware corporation (“PubCo”, and together with its Subsidiaries, “Corporate Taxpayer”), the TRA Party Representative and each of the other persons from time to time party hereto (the “TRA Parties”).  Capitalized terms used but not defined herein have their respective meanings set forth in the Exchange Agreement (as defined below).

 

RECITALS

 

WHEREAS, PubCo was formerly a Cayman Islands exempted company limited by shares (PubCo, prior to its domestication to Delaware, “ProKidney Cayman”);

 

WHEREAS, on July 11, 2022, ProKidney Cayman completed a business combination (the “Business Combination”) pursuant to the Business Combination Agreement, dated January 18, 2022 (the “Business Combination Agreement”), that ProKidney Cayman (f/k/a Social Capital Suvretta Holdings Corp. III) entered into with ProKidney LP, a limited partnership organized under the laws of Ireland (“PKLP”);

 

WHEREAS, in connection with the closing of the Business Combination, ProKidney Cayman entered into that certain (i) Exchange Agreement (the “Original Exchange Agreement”), dated as of July 11, 2022, with PKLP and the TRA Parties, pursuant to which the TRA Parties could exchange their common units of PKLP and corresponding Class B ordinary shares of ProKidney Cayman for Class A ordinary shares of ProKidney Cayman and (ii) Tax Receivable Agreement (the “Original Agreement”), dated as of July 11, 2022, with PKLP and the TRA Parties, pursuant to which the TRA Parties could provide certain payments and make certain arrangements with respect to the effect of certain tax attributes on the liability for taxes of ProKidney Cayman and its Subsidiaries;

 

WHEREAS, on June 26, 2025, ProKidney Holdings, LLC (“Holdings”) was organized as a Delaware limited liability company by the filing of a certificate of formation in the office of the Secretary of State of the State of Delaware, and PKLP, as the initial member, entered into a limited liability company agreement of Holdings, which has been subsequently amended and restated into the Holdings LLCA (as defined below);

 

WHEREAS, (i) PKLP contributed substantially all of its assets to Holdings as a contribution to capital, (ii) PKLP commenced winding-up and made a liquidating distribution of its limited liability company interests in Holdings to its partners in redemption of their interests in PKLP, and (iii) ProKidney Corp. GP Limited sold its nominal economic interest in Holdings received in such distribution to ProKidney Cayman (the “Substitution”);

 

WHEREAS, immediately following the Substitution, ProKidney Cayman changed its jurisdiction of incorporation from the Cayman Islands to the State of Delaware by deregistering as an exempted company in the Cayman Islands and registering by way of continuation, for purposes of the Companies Act, as amended, of the Cayman Islands, and domesticating and continuing, for purposes of the Delaware General Corporation Law, as amended (the “DGCL”), as a corporation incorporated under the laws of the State of Delaware (the “Domestication” and together with the Substitution, the “Restructuring”);

 

WHEREAS, as a result of the Restructuring, the TRA Parties each hold Common Units of Holdings and Class B Common Shares of PubCo;

 

WHEREAS, in connection with the Restructuring, PubCo, Holdings, and the TRA Parties amended and restated the Original Exchange Agreement by entering into the Amended and Restated Exchange Agreement (as may be further amended from time to time, the “Exchange Agreement”), dated on or about the date hereof;

 

WHEREAS, following the Restructuring, Common Units held by the TRA Parties, together with Class B Common Shares, may be exchanged for Class A Common Shares constituting the Stock Exchange Payment or, alternatively, at the election of PubCo, the Cash Exchange Payment (an “Exchange”), pursuant to the provisions of the Holdings LLCA and the Exchange Agreement, and in either case contributed to Holdings by PubCo, provided that, at the election of PubCo in its sole discretion and in accordance with the Exchange Agreement, PubCo may effect a direct exchange of such cash or Class A Common Shares for Common Units (a “Direct Exchange,” which shall also constitute an Exchange);

 

WHEREAS, Holdings and each of its direct and indirect Subsidiaries that is treated as a partnership for U.S. federal income Tax purposes (but only if such indirect Subsidiaries are held only through Subsidiaries treated as partnerships or disregarded entities) have in effect an election under Section 754 of the Code (a “Section 754 Election”) for the Taxable Year in which an Exchange occurs to the extent eligible to do so, and where applicable, will have in effect elections or legal structures to effect similar Tax treatment and maximize Basis Adjustments under other applicable non-U.S. Tax laws;

 

WHEREAS, as a result of future Exchanges and Section 754 Elections, the income, gain, deduction, loss, expense, and other Tax items of Corporate Taxpayer may be affected by (i) the Basis Adjustments and (ii) any deduction attributable to any payment (including amounts attributable to Imputed Interest) made under this Agreement (collectively, the “Tax Attributes”); and

 

WHEREAS, the parties hereto now desire to amend and restate the Original Agreement in its entirety as set forth herein to provide for certain payments and make certain arrangements with respect to the effect of the Tax Attributes on the liability for Taxes of Corporate Taxpayer on the terms and subject to the conditions set forth herein and the Holdings LLCA.

 

NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree to amend and restate the Original Agreement to read in its entirety as follows:

 

ARTICLE I

 

Section 1.1          Certain Definitions.  As used in this Agreement, the terms set forth in this Article I shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined).

 

“Actual Tax Liability” means, with respect to any Taxable Year, the actual liability for Taxes, which shall not be less than zero, of (i) Corporate Taxpayer and (ii) without duplication, Holdings and its Subsidiaries, but only with respect to Taxes imposed on Holdings and its Subsidiaries and allocable to Corporate Taxpayer.

 

“Affiliate” of any particular Person means any other Person controlling, controlled by or under common control with such Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of voting securities, its capacity as a sole or managing member or otherwise.  For purposes of this Agreement, no TRA Party shall be considered to be an Affiliate of Corporate Taxpayer or Holdings.

 

“Agreed Rate” means a per annum rate equal to SOFR plus 100 basis points.

 

“Attributable” means the portion of any Tax Attribute of Corporate Taxpayer or, without duplication, Holdings or its Subsidiaries, that is attributable to a TRA Party and shall be determined by reference to the Tax Attributes, under the following principles:

 

(i)          any Basis Adjustments shall be determined separately with respect to each TRA Party and are Attributable to a TRA Party in an amount equal to the total Basis Adjustments relating to the Common Units that are Exchanged by such TRA Party; and

 

(ii)        any deduction to Corporate Taxpayer, as applicable, with respect to a Taxable Year in respect of any payment (including amounts attributable to Imputed Interest) made under this Agreement is Attributable to the Person that is required to include the Imputed Interest or other payment in income (without regard to whether such Person is actually subject to Tax thereon).

 

“Basis Adjustment” means the Tax basis of a Reference Asset (or a current tax deduction of the Corporate Taxpayer) directly or indirectly acquired by Corporate Taxpayer as a result of an Exchange (including any internal transactions of the Corporate Taxpayer following such Exchange intended to maximize the Tax basis or Tax benefits associated with the Reference Assets following the Exchange) and the payments made pursuant to this Agreement, including, without limitation, the adjustment to the Tax basis of a Reference Asset under Sections 732, 734(b) and/or 1012 of the Code (in situations where, as a result of one or more Exchanges, Holdings becomes an entity that is disregarded as separate from its owner for U.S. federal income Tax purposes) or under Sections 734(b), 743(b), 754 and/or 755 of the Code (in situations where, following an Exchange, Holdings remains in existence as an entity treated as a partnership for U.S. federal income Tax purposes), and, in each case, comparable sections of U.S. state and local and non-U.S. Tax laws.  The amount of any Basis Adjustment shall be determined using the Market Value with respect to such Exchange, except, for the avoidance of doubt, as otherwise required by a Determination.  For the avoidance of doubt, payments made under this Agreement shall not be treated as resulting in a Basis Adjustment to the extent such payments are treated as Imputed Interest, and the amount of any Basis Adjustment resulting from an Exchange of one or more Common Units shall be determined without regard to any Pre-Exchange Transfer of such Common Units and as if any such Pre-Exchange Transfer had not occurred.

 

A “Beneficial Owner” of a security is a Person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares:  (i) voting power, which includes the power to vote, or to direct the voting of, such security and/or (ii) investment power, which includes the power to dispose of, or to direct the disposition of, such security.  The term “Beneficial Ownership” shall have a correlative meaning.

 

“Board” means the Board of Directors of PubCo.

 

“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Law to close.

 

“Cash Exchange Payment” has the meaning set forth in the Exchange Agreement.

 

“Change of Control” means the occurrence of any of the following events:

 

(i)          any Person or any group of Persons acting together, which would constitute a “group” for purposes of Section 13(d) of the Exchange Act or any successor provisions thereto (excluding (a) a corporation or other entity owned, directly or indirectly, by the stockholders of PubCo in substantially the same proportions as their ownership of stock of PubCo or (b) any TRA Party, any Permitted Transferee of any TRA Party, or any group of Persons in which one or more of the TRA Parties, the Permitted Transferees of any such TRA Party, or any Affiliates of such Persons directly or indirectly hold Beneficial Ownership of securities representing more than 50% of the total voting power held by such group) is or becomes the Beneficial Owner, directly or indirectly, of securities of PubCo representing more than 50% of the combined voting power of PubCo’s then outstanding voting securities; or

 

(ii)          there is consummated a merger or consolidation of PubCo with any other corporation or other entity, and, immediately after the consummation of such merger or consolidation, the voting securities of PubCo immediately prior to such merger or consolidation do not continue to represent or are not converted into more than 50% of the combined voting power of the then outstanding voting securities of the Person resulting from such merger or consolidation or, if the surviving company is a Subsidiary, the ultimate parent thereof; or

 

(iii)      the stockholders of PubCo approve a plan of complete liquidation or dissolution of PubCo or there is consummated an agreement or series of related agreements for the sale, lease or other disposition, directly or indirectly, by PubCo of all or substantially all of the assets of PubCo, taken as a whole, other than such sale or other disposition by PubCo of all or substantially all of the assets of PubCo, taken as a whole, to an entity at least 50% of the combined voting power of the voting securities of which are owned by stockholders of PubCo in substantially the same proportions as their ownership of PubCo immediately prior to such sale.

 

Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the shares of PubCo immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in, and own substantially all of the shares of, an entity which owns all or substantially all of the assets of PubCo immediately following such transaction or series of transactions.

 

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

 

“Corporate Taxpayer Return” means the U.S. federal, state, or local, or non-U.S. Tax Return, as applicable, of Corporate Taxpayer filed with respect to Taxes of any Taxable Year.

 

“Cumulative Net Realized Tax Benefit” for a Taxable Year means the cumulative amount of Realized Tax Benefits for all Taxable Years of Corporate Taxpayer, up to and including such Taxable Year, net of the cumulative amount of Realized Tax Detriments for the same period.  The Realized Tax Benefit and Realized Tax Detriment for each Taxable Year shall be determined based on the most recent Tax Benefit Schedules or Amended Schedules, if any, in existence at the time of such determination; provided that the computation of the Cumulative Net Realized Tax Benefit shall be adjusted to reflect any applicable Determination with respect to any Realized Tax Benefits and/or Realized Tax Detriments.

 

“Default Rate” means a per annum rate equal to SOFR plus 500 basis points.

 

“Determination” shall have the meaning ascribed to such term in Section 1313(a) of the Code or similar provision of state or local or non-U.S. Tax law, as applicable, or any other event (including the execution of IRS Form 870-AD) that finally and conclusively establishes the amount of any liability for Tax.

 

“Early Termination Date” means the date of an Early Termination Notice for purposes of determining the Early Termination Payment.

 

“Early Termination Rate” means a per annum rate equal to SOFR plus 150 basis points.

 

“Exchange Date” means the date of any Exchange.

 

“Holdings LLCA” means, with respect to Holdings, the Second Amended and Restated Limited Liability Company Agreement of Holdings, dated on or about the date hereof, as such agreement may be amended from time to time.

 

“Hypothetical Tax Liability” means, with respect to any Taxable Year, an amount, not less than zero, equal to the liability for Taxes of (i) Corporate Taxpayer and (ii) without duplication, Holdings and its Subsidiaries, but only with respect to Taxes imposed on Holdings and its Subsidiaries and allocable to Corporate Taxpayer, in each case determined using the same methods, elections, conventions and similar practices used in computing the Actual Tax Liability, but, in each case, (a) calculating depreciation, amortization or similar deductions and income, gain or loss using the Non-Stepped Up Tax Basis as reflected on the Basis Schedule including amendments thereto for the Taxable Year, and (b) excluding any deduction attributable to any payment (including amounts attributable to Imputed Interest) made under this Agreement for the Taxable Year.  For the avoidance of doubt, Hypothetical Tax Liability shall be determined without taking into account the carryover or carryback of any Tax item (or portions thereof) that is attributable to a Tax Attribute, as applicable.

 

“Imputed Interest” in respect of a TRA Party shall mean any interest imputed under Section 1272, 1274 or 483 or other provision of the Code and any similar provision of state, local and non-U.S. Tax law, as applicable, with respect to Corporate Taxpayer’s payment obligations in respect of such TRA Party under this Agreement.

 

“IRS” means the U.S. Internal Revenue Service.

 

“Market Value” shall mean on any date, (a) if Class A Common Shares trade on a national securities exchange or automated or electronic quotation system, the arithmetic average of the high trading and the low trading price on such date (or if such date is not a trading day, the immediately preceding trading day) or (b) if Class A Common Shares are not then traded on a national securities exchange or automated or electronic quotation system, as applicable, the “Appraiser FMV” (as defined in the Exchange Agreement) on such date of one (1) Class A Common Share.

 

“Non-Stepped Up Tax Basis” means with respect to any Reference Asset at any time, the Tax basis that such asset would have had at such time if no Basis Adjustments had been made.

 

“Permitted Transferee” has the meaning set forth in the Holdings LLCA.

 

“Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.

 

“Pre-Exchange Transfer” means any transfer (including upon the death of a member of Holdings) or distribution in respect of one or more Common Units (a) that occurs prior to an Exchange of such Common Units, and (b) to which Section 743(b) or 734(b) of the Code applies.

 

“Realized Tax Benefit” means, for a Taxable Year, the excess, if any, of the Hypothetical Tax Liability over the Actual Tax Liability.  If all or a portion of the actual liability for such Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Benefit unless and until there has been a Determination.

 

“Realized Tax Detriment” means, for a Taxable Year, the excess, if any, of the Actual Tax Liability over the Hypothetical Tax Liability.  If all or a portion of the actual liability for such Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Detriment unless and until there has been a Determination.

 

“Reference Asset” means an asset that is held by Holdings, or by any of its direct or indirect Subsidiaries treated as a partnership or disregarded entity (but only if such indirect Subsidiaries are held only through Subsidiaries treated as partnerships or disregarded entities) for purposes of the applicable Tax, at the time of an Exchange.  A Reference Asset also includes any asset the Tax basis of which is determined, in whole or in part, for purposes of the applicable Tax, by reference to the Tax basis of an asset that is described in the preceding sentence, including for U.S. federal income Tax purposes, any asset that is “substituted basis property” under Section 7701(a)(42) of the Code with respect to a Reference Asset, or any similar provisions of state, local, or non-U.S. Tax law.

 

“Schedule” means any of the following:  (a) a Basis Schedule, (b) a Tax Benefit Schedule, or (c) the Early Termination Schedule, and, in each case, any amendments thereto.

 

“Stock Exchange Payment” has the meaning set forth in the Exchange Agreement.

 

“Subsidiaries” means, with respect to any Person, as of any date of determination, any other Person as to which such first Person owns, directly or indirectly, or otherwise controls (i) more than 50% of the voting power or other similar interests or (ii) the sole general partner interest or managing member or similar interest of such other Person, provided that the Holdings and its Subsidiaries shall not be treated as a Subsidiary of Corporate Taxpayer.

 

“Subsidiary Stock” means any stock or other equity interest in any Subsidiary of Holdings that is treated as a C corporation for U.S. federal income tax purposes.

 

“Tax” or “Taxes” means any and all U.S. federal, state, local and non-U.S. taxes, assessments or similar charges that are based on or measured with respect to net income or profits, whether as an exclusive or an alternative basis, and including franchise taxes that are based on or measured with respect to net income or profits, together with any interest, penalties, or additions related to such amounts or imposed in respect thereof under applicable law.

 

“Tax Return” means any return, filing, declaration, report, questionnaire, information statement, or other document filed or required to be filed with respect to Taxes with any Taxing Authority (including any attached schedules), including any information return, claim for refund, amended return and declaration of estimated Tax (whether or not a payment is required to be made with respect to such filing).

 

“Taxable Year” means a taxable year of Corporate Taxpayer as defined in Section 441(b) of the Code or comparable section of state, local or non-U.S. Tax law, as applicable.

 

“Taxing Authority” shall mean any federal, national, state, county, municipal or other local government, or any subdivision, agency, commission or authority thereof, or any quasi- governmental body, or any other authority of any kind, exercising authority in relation to Tax matters.

 

“TRA Disinterested Majority” means a majority of the directors of the Board who are disinterested as determined by the Board in accordance with Delaware law with respect to the matter being considered by the Board; provided that to the extent a matter being considered by the Board is required to be considered by disinterested directors under the rules of the securities exchange on which Class A Common Shares are then listed, the Securities Act or the Exchange Act, such rules with respect to the definition of disinterested director shall apply solely with respect to such matter.

 

“TRA Party Representative” means initially Tolerantia, LLC, and thereafter, that TRA Party or a committee of TRA Parties determined from time to time by a plurality vote of the TRA Parties ratably in accordance with their right to receive Early Termination Payments under this Agreement, determined as if all TRA Parties directly holding Common Units had fully Exchanged their Common Units for Class A Common Shares or other consideration and PubCo had exercised its right of early termination on the date of the most recent Exchange.

 

“Treasury Regulations” means the final, temporary and proposed regulations under the Code promulgated from time to time (including corresponding provisions and succeeding provisions) as in effect for the relevant taxable period.

 

“Valuation Assumptions” shall mean, as of an Early Termination Date, the assumptions that in each Taxable Year ending on or after such Early Termination Date,

 

(a)         Corporate Taxpayer will have taxable income sufficient to fully utilize the Tax items arising from the Tax Attributes (other than any items addressed in clause (b)) during such Taxable Year or future Taxable Years (including, for the avoidance of doubt, deductions and other Tax items arising from Tax Attributes that would result from future Tax Benefit Payments that would be paid in accordance with the Valuation Assumptions, further assuming that such applicable future payments would be paid on the due date (including extensions) for filing a Corporate Taxpayer Return for the applicable Taxable Year) in which such deductions would become available,

 

(b)         any loss carryovers generated by deductions arising from any Tax Attributes, which loss carryovers are available in the Taxable Year that includes such Early Termination Date, will be used by the Corporate Taxpayer on a pro rata basis from the Early Termination Date through (A) the scheduled expiration date of such loss carryovers (if any) or (B) if there is no such scheduled expiration date, then the tenth (10^th) anniversary of the Early Termination Date,

 

(c)          the U.S. federal income Tax rates, and any state, local, or non-U.S. Tax rates, that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other applicable law as in effect on the Early Termination Date, except to the extent any change to such Tax rates for such Taxable Year has already been enacted into law as of the Early Termination Date, and SOFR that will be in effect for each such Taxable Year will be the rate in effect on the Early Termination Date,

 

(d)          any non-amortizable, non-depreciable Reference Assets (other than any Subsidiary Stock) will be disposed of on the fifteenth (15^th) anniversary of an Exchange which gave rise to the applicable Basis Adjustment and any short-term investments will be disposed of twelve (12) months following the Early Termination Date; provided that, in the event of a Change of Control, such non-amortizable, non-depreciable assets shall be deemed disposed of at the time of sale of the relevant asset (if earlier than such fifteenth (15^th) anniversary),

 

(e)          any Subsidiary Stock will never be disposed of, and

 

(f)           if, at the Early Termination Date, there are Common Units that have not been Exchanged, then each such Common Unit is Exchanged in a fully taxable transaction for the Market Value of Class A Common Shares that would be transferred if the Exchange occurred on the Early Termination Date.

 

Section 1.2            Other Definitions.

 

ARTICLE II

 

Section 2.1           Basis Adjustment.  Within three hundred and thirty five (335) calendar days after the end of each Taxable Year thereafter while this Agreement (or any amended and/or restated version thereof) remains in effect, PubCo shall deliver to each TRA Party a schedule (the “Basis Schedule”) that shows, in reasonable detail necessary to perform the calculations required by this Agreement, (a) the actual Tax basis and the Non-Stepped Up Tax Basis of the Reference Assets as of each applicable Exchange Date occurring during such Taxable Year, (b) the Basis Adjustment with respect to the Reference Assets Attributable to such TRA Party as a result of the Exchanges effected in such Taxable Year and prior Taxable Years by such TRA Party, calculated in the aggregate, (c) the period (or periods) over which the Reference Assets are amortizable and/or depreciable and (d) the period (or periods) over which each Basis Adjustment in respect of such TRA Party is amortizable and/or depreciable, in each case, calculated in the aggregate for all TRA Parties and solely with respect to the TRA Party to which such Basis Schedule is delivered.  All costs and expenses incurred in connection with the provision and preparation of the Basis Schedules and Tax Benefit Schedules for each TRA Party in compliance with this Agreement, as well as the procedures set forth in Section 2.3(b), if applicable, shall be borne by Holdings.  Each Basis Schedule will become final as provided in Section 2.3(a) and may be amended as provided in Section 2.3(b) (subject to the procedures set forth in Section 2.3(b)).

 

Section 2.2           Tax Benefit Schedule.

 

(a)         Tax Benefit Schedule.  Within three hundred and thirty five days (335) calendar days after the end of any Taxable Year in which there is a Realized Tax Benefit or Realized Tax Detriment Attributable to a TRA Party, PubCo shall provide to such TRA Party a schedule showing, in reasonable detail necessary to perform the calculations required by this Agreement, the calculation of the Tax Benefit Payment, if any, and any Realized Tax Benefit or Realized Tax Detriment, as applicable, Attributable to such TRA Party for such Taxable Year (a “Tax Benefit Schedule”).  Each Tax Benefit Schedule will become final as provided in Section 2.3(a) and may be amended as provided in Section 2.3(b) (subject to the procedures set forth in Section 2.3(b)).

 

(b)          Applicable Principles.  Subject to Section 3.3(a), the Realized Tax Benefit or Realized Tax Detriment for each Taxable Year is intended to measure the decrease or increase in the Actual Tax Liability for such Taxable Year attributable to the Tax Attributes, determined using a “with and without” methodology, and this Agreement shall be interpreted in accordance with such intention.  For the avoidance of doubt, the Actual Tax Liability will take into account the deduction of the portion of the Tax Benefit Payment that must be accounted for as interest under the Code or other applicable law based upon the characterization of Tax Benefit Payments as additional consideration payable by PubCo for the Common Units acquired in an Exchange.  Carryovers or carrybacks of any Tax item attributable to the Tax Attributes shall be considered to be subject to the rules of the Code and the Treasury Regulations or the appropriate provisions of U.S. state and local and non-U.S. Tax law, as applicable, governing the use, limitation and expiration of carryovers or carrybacks of the relevant type.  If a carryover or carryback of any Tax item includes a portion that is attributable to any Tax Attribute (“TRA Portion”) and another portion that is not (“Non-TRA Portion”), such portions shall be considered to be used in accordance with the “with and without” methodology so that the amount of any Non-TRA Portion is deemed utilized, to the extent available, prior to the amount of any TRA Portion, to the extent available (with the TRA Portion being applied on a proportionate basis consistent with the provisions of Section 3.3).  The parties agree that (i) all Tax Benefit Payments (other than the portion of Tax Benefit Payments treated as Imputed Interest) made to transferors in an Exchange will be treated as subsequent upward purchase price adjustments that have the effect of creating additional Basis Adjustments to Reference Assets for Corporate Taxpayer in the Taxable Year of payment, (ii) as a result, such additional Basis Adjustments described in clause (i) will be incorporated into the calculation for the Taxable Year of the applicable payment and into the calculations for subsequent Taxable Years, as appropriate, and (iii) the Actual Tax Liability shall take into account the deduction of the portion of the Tax Benefit Payment that must be accounted for as Imputed Interest under applicable law.

 

(c)          Administrative Assumptions.  For the avoidance of doubt, PubCo shall be entitled to make reasonable simplifying assumptions in making determinations contemplated by this Agreement, including reasonable assumptions regarding basis recovery periods based on available balance sheet information.  Notwithstanding anything to the contrary, to the extent PubCo reasonably determines (in consultation with its accounting and Tax advisors and the TRA Party Representative) that the administrative burden and costs associated with calculating the Tax Attributes with respect to any subsidiary of Holdings would materially outweigh the Tax Benefit Payment attributable to such Tax Attributes, PubCo shall be permitted to determine that such Tax Attributes shall not be treated as Tax Attributes for all purposes of this Agreement.

 

Section 2.3           Procedures, Amendments.

 

(a)          Procedure.  Every time PubCo delivers to a TRA Party an applicable Schedule under this Agreement, including any Amended Schedule delivered pursuant to Section 2.3(b), and any Early Termination Schedule or amended Early Termination Schedule, PubCo shall also (x) deliver to such TRA Party supporting schedules, valuation reports, if any, and work papers, as determined by PubCo or reasonably requested by such TRA Party, providing reasonable detail regarding data and calculations that were relevant for the preparation of the Schedule and (y) allow the TRA Party Representative and its advisors reasonable access to the appropriate representatives at the PubCo or its advisors, as determined by PubCo, in connection with the review of such Schedule.  Without limiting the generality of the preceding sentence, PubCo shall ensure that each Tax Benefit Schedule or Early Termination Schedule delivered to a TRA Party, together with any supporting schedules and work papers, provides a reasonably detailed presentation of the calculation of the Actual Tax Liability (the “with” calculation), the Hypothetical Tax Liability (the “without” calculation), and identifies any material assumptions or operating procedures or principles that were used for purposes of such calculations.  An applicable Schedule or amendment thereto shall become final and binding on all parties thirty (30) calendar days from the date on which all relevant TRA Parties are treated as having received the applicable Schedule or amendment thereto under Section 7.1 unless the TRA Party Representative (i) within thirty (30) calendar days from such date provides PubCo with written notice of a material objection (made in good faith) to such Schedule or amendment (“Objection Notice”) or (ii) provides a written waiver of such right to provide any Objection Notice within the period described in clause (i) above, in which case such Schedule or amendment thereto shall become binding on the date such waiver is received by PubCo.  PubCo and the TRA Party Representative shall negotiate in good faith to resolve the issues raised in an Objection Notice; if PubCo and the TRA Party Representative are unable to successfully resolve such issues within thirty (30) calendar days after receipt by PubCo of such Objection Notice, PubCo and the TRA Party Representative shall employ the reconciliation procedures described in Section 7.9 of this Agreement (the “Reconciliation Procedures”).  The TRA Party Representative will represent the interests of each of the TRA Parties and shall raise and pursue, in accordance with this Section 2.3(a), any objection to a Schedule or amendment thereto timely given in writing to the TRA Party Representative by a TRA Party.

 

(b)        Amended Schedule.  The applicable Schedule for any Taxable Year may be amended from time to time by PubCo (i) in connection with a Determination affecting such Schedule, (ii) to correct material inaccuracies in the Schedule, including those identified as a result of the receipt of additional factual information relating to a Taxable Year after the date the Schedule was provided to a TRA Party, (iii) to comply with the Expert’s determination under the Reconciliation Procedures, (iv) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to a carryback or carryforward of a loss or other Tax item to such Taxable Year, (v) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year, or (vi) to adjust an applicable Basis Schedule to take into account payments made pursuant to this Agreement (any such Schedule, an “Amended Schedule”).  PubCo shall provide an Amended Schedule to each TRA Party within thirty (30) calendar days of the occurrence of an event referenced in clauses (i) through (vi) of the preceding sentence.  In the event a Schedule is amended after such Schedule becomes final pursuant to Section 2.3(a) or, if applicable, Section 7.9, (A) the Amended Schedule shall not be taken into account in calculating any Tax Benefit Payment in the Taxable Year to which the amendment relates but instead shall be taken into account in calculating the Cumulative Net Realized Tax Benefit for the Taxable Year in which the amendment actually occurs, and (B) as a result of the foregoing, any increase of the Net Tax Benefit attributable to such Amended Schedule shall not accrue any other interest hereunder until after the due date (without extensions) for filing the Tax return of the Corporate Taxpayer for the Taxable Year in which the amendment actually occurs.

 

Section 2.4           Tax Classifications; Elections.

 

(a)          Basis Adjustments.  The parties to this Agreement acknowledge and agree to treat (A) to the fullest extent permitted by law each Direct Exchange as giving rise to Basis Adjustments and (B) to the fullest extent permitted by law each other Exchange using cash or Class A Common Shares contributed to Holdings by PubCo as a direct purchase of Common Units by PubCo from the applicable TRA Party pursuant to Section 707(a)(2)(B) of the Code and as giving rise to Basis Adjustments, or similar provisions under applicable non-U.S. Tax law.

 

(b)          Section 754 Election.  For  each Taxable Year in which an Exchange occurs and with respect to which PubCo has obligations under this Agreement, the board of managers of Holdings shall cause (i) Holdings and (ii) each of Holdings’ direct and indirect Subsidiaries (but only if such indirect Subsidiaries are held only through subsidiaries treated as partnerships or disregarded entities) that is treated as a partnership for U.S. federal income Tax purposes, in each case, to have in effect an election under Section 754 of the Code (and under any similar provisions of applicable state or local or non-U.S. Tax law) for each such Taxable Year to the extent eligible to make such election.

 

ARTICLE III

 

Section 3.1            Payments.

 

(a)          Payments.  Within five (5) Business Days after a Tax Benefit Schedule delivered to a TRA Party becomes final in accordance with Section 2.3(a), or, if applicable, Section 7.9, PubCo shall pay such TRA Party for such Taxable Year the Tax Benefit Payment determined pursuant to Section 3.1(b) that is Attributable to such TRA Party.  Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to the bank account previously designated by such TRA Party to PubCo or as otherwise agreed by PubCo and such TRA Party.  The payments provided for pursuant to the above sentence shall be computed separately for each TRA Party.  For the avoidance of doubt, no Tax Benefit Payment shall be made in respect of estimated Tax payments, including, without limitation, federal estimated income Tax payments.  Notwithstanding anything to the contrary in this Agreement, with respect to each Exchange by or with respect to any TRA Party, if such TRA Party notifies PubCo in writing of a stated maximum selling price (within the meaning of Treasury Regulations Section 15A.453-1(c)(2)), then the aggregate Tax Benefit Payments to such TRA Party in respect of such Exchange (other than amounts accounted for as interest under the Code) shall not exceed such stated maximum selling price.

 

(b)          A “Tax Benefit Payment” in respect of a TRA Party for a Taxable Year means an amount, not less than zero, equal to the sum of the portion of the Net Tax Benefit that is Attributable to such TRA Party and the Interest Amount with respect thereto.  For the avoidance of doubt, for Tax purposes, the Interest Amount shall not be treated as interest (to the extent permitted by applicable law and other than amounts accounted for as Imputed Interest) but instead shall be treated as additional consideration for the acquisition of Common Units in the applicable Exchange, unless otherwise required by law.  Subject to Section 3.3(a), the “Net Tax Benefit” for a Taxable Year shall be an amount equal to the excess, if any, of (i) eighty-five percent (85%) of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year, over (ii) the total amount of payments previously made under the first sentence of Section 3.1(a) (excluding payments attributable to Interest Amounts); provided that, without limiting PubCo’s ability to make offsets against Tax Benefit Payments to the extent permitted by Section 3.4, if there is no such excess (or a deficit exists) no TRA Party shall be required to make a payment (or return a payment) to PubCo in respect of any portion of any Tax Benefit Payment previously paid by PubCo to such TRA Party.  The “Interest Amount” shall equal the interest on the Net Tax Benefit calculated at the Agreed Rate from the due date (without extensions) for filing the applicable Corporate Taxpayer Return with respect to Taxes for such Taxable Year until the payment date under Section 3.1(a); provided that such interest shall not accrue on the amount of any Net Tax Benefit after the date on which such amount is actually paid to the applicable TRA Party, regardless of whether such payment is made prior to the due date for such payment under Section 3.1(a).  The Net Tax Benefit and the Interest Amount shall be determined separately with respect to each Exchange, on a Common Unit by Common Unit basis by reference to the resulting Basis Adjustment to Corporate Taxpayer.

 

Section 3.2           No Duplicative Payments.    No duplicative payment of any amount (including interest) will be required under this Agreement.

 

Section 3.3           Pro Rata Payments; Coordination of Benefits with Other Tax Receivable Agreements.

 

(a)          Notwithstanding anything in Section 3.1 to the contrary, to the extent that the aggregate Realized Tax Benefit of Corporate Taxpayer with respect to the Tax Attributes is limited in a particular Taxable Year because Corporate Taxpayer does not have sufficient taxable income, the Net Tax Benefit for Corporate Taxpayer shall be allocated among all TRA Parties eligible for Tax Benefit Payments under this Agreement in proportion to the respective amounts of Net Tax Benefit that would have been allocated to each such TRA Party if Corporate Taxpayer had sufficient taxable income so that there were no such limitation.

 

(b)          If for any reason (including as contemplated by Section 3.3(a)) PubCo does not fully satisfy its payment obligations to make all Tax Benefit Payments due under this Agreement in respect of a particular Taxable Year, then PubCo and the TRA Parties agree that (i) Tax Benefit Payments for such Taxable Year shall be allocated to all parties eligible for Tax Benefit Payments under this Agreement in proportion to the relative amounts of Tax Benefit Payments that would have been allocable to each TRA Party if PubCo had sufficient cash available to make such Tax Benefit Payments and (ii) no Tax Benefit Payment shall be made in respect of any subsequent Taxable Year until all Tax Benefit Payments in respect of prior Taxable Years have been made in full.

 

(c)        Any Tax Benefit Payment or Early Termination Payment required to be made by PubCo to the TRA Parties under this Agreement shall rank senior in right of payment to any principal, interest or other amounts due and payable in respect of any similar agreement (“Other Tax Receivable Obligations”).  The effect of any other similar agreement shall not be taken into account in respect of any calculations made hereunder.

 

Section 3.4          Overpayments.  To the extent PubCo makes a payment to a TRA Party in respect of a particular Taxable Year under Section 3.1(a) in an amount in excess of the amount of such payment that should have been made to such TRA Party in respect of such Taxable Year (taking into account Section 3.3) under the terms of this Agreement, then such TRA Party shall not receive further payments under Section 3.1(a) until such TRA Party has foregone an amount of payments equal to such excess.  For clarity, the operation of this Section 3.4 with respect to any particular TRA Party shall not affect the rights or obligations of any other TRA Party under this Agreement.

 

ARTICLE IV

 

Section 4.1           Early Termination and Breach of Agreement.

 

(a)          PubCo may, with the prior written consent of the TRA Disinterested Majority, terminate this Agreement with respect to all amounts payable to the TRA Parties and with respect to all of the Common Units held by the TRA Parties at any time by paying to each TRA Party the Early Termination Payment in respect of such TRA Party; provided, however, that this Agreement shall only terminate upon the receipt of the entire Early Termination Payment by all TRA Parties and payments described in the next sentence, if any, and provided, further, that PubCo may withdraw any notice to execute its termination rights under this Section 4.1(a) prior to the time at which any Early Termination Payment has been paid.  Upon payment of the entire Early Termination Payment by PubCo to all of the TRA Parties, none of the TRA Parties or PubCo shall have any further payment rights or obligations under this Agreement, other than for any (i) Tax Benefit Payment due and payable that remains unpaid as of the Early Termination Date and (ii) any Tax Benefit Payment due for the Taxable Year ending immediately prior to, ending with or including the date of the Early Termination Notice (except to the extent that the amounts described in clause (i) and this clause (ii) are included in the Early Termination Payment).  If an Exchange occurs after PubCo makes all of the required Early Termination Payments, PubCo shall have no obligations under this Agreement with respect to such Exchange.

 

(b)          In the event that PubCo (1) materially breaches any of its material obligations under this Agreement, whether as a result of failure to make any payment when due, failure to honor any other material obligation required hereunder or by operation of law as a result of the rejection of this Agreement in a case commenced under the Bankruptcy Code (or other similar law), all obligations hereunder shall be accelerated and such obligations shall be calculated as if an Early Termination Notice had been delivered on the date of such breach and shall include, but not be limited to, (i) the Early Termination Payments calculated as if an Early Termination Notice had been delivered on the date of such breach, (ii) any Tax Benefit Payment in respect of a TRA Party agreed to by PubCo and such TRA Party as due and payable but unpaid as of the date of such breach, and (iii) any Tax Benefit Payment in respect of any TRA Party due for the Taxable Year ending immediately prior to, with or including the date of such breach (except to the extent included in clause (i) or clause (ii)); provided, that procedures similar to the procedures of Section 4.3(b) shall apply with respect to the determination of the amount payable by PubCo pursuant to this sentence.  Notwithstanding the foregoing, in the event that PubCo breaches a material obligation under this Agreement (and, in the case of a breach of a material obligation other than an obligation to make a payment, does not cure such breach reasonably promptly upon notice thereof), each TRA Party shall be entitled to elect to receive the amounts set forth in clauses (i), (ii) and (iii) above or to seek specific performance of the terms hereof.  The parties agree that the failure to make any payment due pursuant to this Agreement within three (3) months of the date such payment is due shall be deemed to be a breach of a material obligation under this Agreement for all purposes of this Agreement, and that it will not be considered to be a breach of a material obligation under this Agreement to make a payment due pursuant to this Agreement within three (3) months of the date such payment is due.  Notwithstanding anything in this Agreement to the contrary, it shall not be a breach of this Agreement if PubCo fails to make any Tax Benefit Payment when due to the extent that PubCo (x) has insufficient funds, or cannot make such payment as a result of obligations imposed in connection with any Senior Obligations, and cannot take commercially reasonable actions to obtain sufficient funds, to make such payment or (y) would become insolvent as a result of making such payment (in each case, as determined by the Board in good faith) (clause (x) and this clause (y) together, the “Liquidity Exceptions”); provided that the interest provisions of Section 5.2 shall apply to such late payment and any such payment obligation shall nonetheless accrue for the benefit of the TRA Parties and PubCo shall make such payment at the first opportunity that the Liquidity Exceptions do not apply, and provided, further, that if the Liquidity Exceptions apply and PubCo declares or pays any dividend of cash to its stockholders while any Tax Benefit Payment is due and payable and remains unpaid, then the Liquidity Exceptions shall no longer apply.  In the case of a breach of a material obligation other than an obligation to make a payment, PubCo will not be considered to have breached such obligation for purposes of this Section 4.1(b) until PubCo shall have been provided a reasonable opportunity to cure such breach and shall have failed to cure such breach.

 

(c)          In the event of a Change of Control, all obligations hereunder will be accelerated and such obligations shall be calculated as if an Early Termination Notice had been delivered on the date of such Change of Control and shall include, without duplication, (1) the Early Termination Payments calculated with respect to the TRA Parties as if the Early Termination Date is the date of such Change of Control, (2) any Tax Benefit Payment due and payable and that remains unpaid as of the date of such Change of Control, and (3) any Tax Benefit Payment in respect of any TRA Party due for the Taxable Year ending immediately prior to, with or including the date of such Change of Control (except to the extent included in clause (1) or clause (2)).  In the event of a Change of Control, (i) the TRA Parties shall be entitled to receive the amounts set forth in clauses (1), (2) and (3) of the preceding sentence, (ii) any Early Termination Payment described in the preceding sentence shall be calculated utilizing the Valuation Assumptions by substituting the phrase “date of a Change of Control” in each place “Early Termination Date” appears and (iii) Section 4.2 and Section 4.3 shall apply, mutatis mutandis, with respect to payments to the TRA Parties upon the Change of Control.  Upon payment by PubCo of the full amount prescribed by this Section 4.1(c) pursuant to a Change of Control, PubCo shall have no further payment obligations under this Agreement.

 

Section 4.2           Early Termination Notice.  If PubCo chooses to exercise its right of early termination in accordance with Section 4.1(a) above, PubCo shall deliver to each TRA Party a notice (the “Early Termination Notice”) and a schedule (the “Early Termination Schedule”) specifying PubCo’s intention to exercise such right and showing in reasonable detail the calculation of the Early Termination Payment(s) due for each TRA Party.  Each Early Termination Schedule shall become final and binding on all parties thirty (30) calendar days from the first date on which all TRA Parties are treated as having received such Schedule or amendment thereto under Section 7.1 unless, prior to such thirtieth (30^th) calendar day, the TRA Party Representative (a) provides PubCo with written notice of a material objection to such Schedule made in good faith (“Material Objection Notice”) or (b) provides a written waiver of such right of a Material Objection Notice, in which case such Schedule will become binding on the date the waiver is received by PubCo.  If PubCo and the TRA Party Representative, for any reason, are unable to successfully resolve the issues raised in such notice within thirty (30) calendar days after receipt by PubCo of the Material Objection Notice, PubCo and the TRA Party Representative shall employ the Reconciliation Procedures in which case such Schedule shall become binding in accordance with Section 7.9.  The date on which the Early Termination Schedule becomes binding in accordance with this Section 4.2 shall be the “Early Termination Effective Date”.

 

Section 4.3            Payment upon Early Termination.

 

(a)         Within three (3) Business Days after the Early Termination Effective Date, PubCo shall pay to each TRA Party an amount equal to the Early Termination Payment in respect of such TRA Party.  Such payment shall be made by wire transfer of immediately available funds to a bank account or accounts designated by each TRA Party or as otherwise agreed by PubCo and such TRA Party.

 

(b)          “Early Termination Payment” in respect of a TRA Party shall equal the present value, discounted at the Early Termination Rate as of the applicable Early Termination Effective Date, of all Tax Benefit Payments in respect of such TRA Party that would be required to be paid by PubCo beginning from the Early Termination Date and assuming that (i) the Valuation Assumptions in respect of such TRA Party are applied, (ii) for each Taxable Year, the Tax Benefit Payment is paid on the last day of such Taxable Year and (iii) for purposes of calculating the Early Termination Rate, SOFR shall be SOFR as of the date of the Early Termination Notice.  For the avoidance of doubt, an Early Termination Payment shall be made to each applicable TRA Party regardless of whether such TRA Party has exchanged all of its Common Units as of the Early Termination Effective Date.

 

ARTICLE V

 

Section 5.1          Subordination.  Notwithstanding any other provision of this Agreement to the contrary, any Tax Benefit Payment or Early Termination Payment required to be made by PubCo to the TRA Parties under this Agreement shall rank subordinate and junior in right of payment to any principal, interest or other amounts due and payable in respect of any obligations in respect of indebtedness for borrowed money of PubCo (“Senior Obligations”), shall rank senior in right of payment to any principal, interest or other amounts due and payable in respect of any Other Tax Receivable Obligation, and shall rank pari passu with all current or future unsecured obligations of PubCo that are not Senior Obligations or Other Tax Receivable Obligations.  To the extent that any payment under this Agreement is not permitted to be made at the time payment is due as a result of this Section 5.1 and the terms of agreements governing Senior Obligations, such payment obligation nevertheless shall accrue for the benefit of TRA Parties and PubCo shall make such payments at the first opportunity that such payments are permitted to be made in accordance with the terms of the Senior Obligations and Section 5.2 shall apply to such payment.  To the extent PubCo or its Subsidiaries (including Holdings and its Subsidiaries) incur, create or assume any Senior Obligations after the date hereof, PubCo shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to ensure that such indebtedness permits the amounts payable hereunder to be paid.

 

Section 5.2          Late Payments by PubCo.  The amount of all or any portion of any Tax Benefit Payment or Early Termination Payment not made to the TRA Parties when due under the terms of this Agreement, whether as a result of Section 5.1 or otherwise, shall be payable together with any interest thereon, computed at the Default Rate and commencing from the date on which such Tax Benefit Payment or Early Termination Payment was due and payable.

 

ARTICLE VI

 

Section 6.1        Participation in PubCo’s and Holdings’ Tax Matters.  Except as otherwise provided in this Agreement, the Business Combination Agreement or the Holdings LLCA, PubCo shall have full responsibility for, and sole discretion over, all Tax matters concerning Corporate Taxpayer and Holdings, including the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes.  Notwithstanding the foregoing, PubCo (i) shall notify the TRA Party Representative in writing of the commencement of, and keep the TRA Party Representative reasonably informed with respect to, the portion of any audit of Corporate Taxpayer and Holdings or any of Holdings’ Subsidiaries by a Taxing Authority the outcome of which is reasonably expected to adversely affect the rights and obligations of a TRA Party under this Agreement, and (ii) shall provide to the TRA Party Representative reasonable opportunity to participate in or provide information and other input to PubCo, Holdings and their respective advisors concerning the conduct of any portion of such audit the outcome of which is reasonably expected to significantly and adversely affect the rights and obligations of a TRA Party under this Agreement; provided, however, that PubCo and Holdings shall not be required to take any action that is inconsistent with any provision of the Holdings LLCA.

 

Section 6.2        Consistency.  PubCo and the TRA Parties agree to report and cause their respective Affiliates to report for all purposes, including U.S. federal, state, local and non-U.S. Tax purposes and financial reporting purposes, all Tax-related items (including the Basis Adjustments and each Tax Benefit Payment) in a manner consistent with that set forth in this Agreement or specified by PubCo in any Schedule (or Amended Schedule, as applicable) required to be provided by or on behalf of PubCo under this Agreement that is final and binding on the parties unless otherwise required by law.  PubCo shall (and shall cause Holdings and its other Subsidiaries to) use commercially reasonable efforts (for the avoidance of doubt, taking into account the interests and entitlements of all TRA Parties under this Agreement) to defend the Tax treatment contemplated by this Agreement and any Schedule (or Amended Schedule, as applicable) in any audit, contest or similar proceeding with any Taxing Authority.

 

Section 6.3          Cooperation.  Each of the TRA Parties shall (a) furnish to PubCo in a timely manner such information, documents and other materials as PubCo may reasonably request for purposes of making any determination or computation necessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or controversy with any Taxing Authority, (b) make itself and its representatives available to PubCo to provide explanations of documents and materials and such other information as PubCo or its representatives may reasonably request in connection with any of the matters described in clause (a) above, and (c) reasonably cooperate in connection with any such matter, and Holdings shall reimburse each such TRA Party for any reasonable third-party costs and expenses incurred pursuant to this Section.

 

ARTICLE VII

 

Section 7.1          Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, or by facsimile or email with confirmation of transmission by the transmitting equipment or (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service.  All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

 

If to PubCo, to:

 

ProKidney Corp.

2000 Frontis Plaza Blvd, Suite 250

Winston-Salem, NC 27103

Attention: Bruce Culleton, M.D.

Email: bruce.culleton@prokidney.com

with copies to (which shall not constitute notice):

 

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

New York, New York 10036

If to the TRA Parties, to the address and other contact information set forth in the records of Holdings from time to time.

 

Any party may change its address, fax number or email by giving the other party written notice of its new address, fax number or email in the manner set forth above.

 

Section 7.2          Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.  Delivery of an executed signature page to this Agreement by e-mail transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.  The parties hereby agree that this Agreement may be executed by way of electronic signatures and that the electronic signature has the same binding effect as a physical signature.  For the avoidance of doubt, the parties hereby agree that this Agreement, or any part thereof, shall not be denied legal effect, validity or enforceability solely on the ground that it is in the form of an electronic record.

 

Section 7.3          Entire Agreement; Third Party Beneficiaries.  This Agreement (together with all Exhibits and Schedules to this Agreement), the Business Combination Agreement, the Exchange Agreement, the Holdings LLCA, and the Confidentiality Agreement (as defined in the Business Combination Agreement), constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.  This Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

Section 7.4          Governing Law.  This Agreement shall be governed by, and construed in accordance with, the law of the State of Delaware, without regard to the conflicts of laws principles thereof that would mandate the application of the laws of another jurisdiction.

 

Section 7.5          Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

 

Section 7.6           Successors; Assignment; Amendments; Waivers.

 

(a)          Each TRA Party may assign any of its rights under this Agreement to any Person as long as such transferee has executed and delivered, or, in connection with such transfer, executes and delivers, a joinder to this Agreement, in form and substance reasonably satisfactory to PubCo (the “Joinder Requirement”), agreeing to become a TRA Party for all purposes of this Agreement; provided, however, that to the extent any TRA Party sells, exchanges, distributes, or otherwise transfers Common Units to any Person (other than PubCo or Holdings) in accordance with the terms of the Exchange Agreement and/or Holdings LLCA, such TRA Party shall have the option to assign to the transferee of such Common Units its rights under this Agreement with respect to such transferred Common Units as long as such transferee has executed and delivered, or, in connection with such transfer, executes and delivers, a joinder to this Agreement, in form and substance reasonably satisfactory to PubCo.  For the avoidance of doubt, if a TRA Party transfers Common Units in accordance with the terms of the Exchange Agreement and/or Holdings LLCA but does not assign to the transferee of such Common Units its rights under this Agreement with respect to such transferred Common Units, such TRA Party shall continue to be entitled to receive the Tax Benefit Payments arising in respect of a subsequent Exchange of such  Common Units and such transferee may not enforce the provisions of this Agreement.  Notwithstanding any other provision of this Agreement, an assignee of only rights to receive a Tax Benefit Payment in connection with an Exchange has no rights under this Agreement other than to enforce its right to receive a Tax Benefit Payment pursuant to this Agreement.  PubCo may not assign any of its rights or obligations under this Agreement to any Person (other than in connection with a Mandatory Assignment) without the prior written consent of the TRA Party Representative, which consent shall not to be unreasonably withheld, conditioned or delayed.  Any purported assignment in violation of the terms of this Section 7.6(a) shall be null and void.

 

(b)          No provision of this Agreement may be amended unless such amendment is approved in writing by PubCo (as determined by the TRA Disinterested Majority) and by the TRA Party Representative and no provision of this Agreement may be waived unless such waiver is in writing and signed by the party against whom the waiver is to be effective (or, in the case of a waiver by all TRA Parties, signed by the TRA Party Representative; provided that no such amendment or waiver shall be effective if such amendment or waiver will have a disproportionate and adverse effect on the payments certain TRA Parties will or may receive under this Agreement unless such amendment or waiver is consented in writing by the TRA Parties disproportionately and adversely affected who would be entitled to receive at least majority of the total amount of the Early Termination Payments payable to all TRA Parties disproportionately and adversely affected hereunder if PubCo had exercised its right of early termination on the date of the most recent Exchange prior to such amendment or waiver (excluding, for purposes of this sentence, all payments made to any TRA Party pursuant to this Agreement since the date of such most recent Exchange)).

 

(c)          All of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors, permitted assigns, heirs, executors, administrators and legal representatives.  PubCo shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of PubCo, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that PubCo would be required to perform if no such succession had taken place (any such assignment, a “Mandatory Assignment”).

 

Section 7.7           Titles and Subtitles.  The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

 

Section 7.8           Waiver of Jury Trial, Jurisdiction.

 

(a)         EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(b)          Subject to Section 7.9, any proceeding or action based upon, arising out of or related to this Agreement must be brought in the Court of Chancery of the State of Delaware (or, only to the extent such court does not have subject matter jurisdiction, the Superior Court of the State of Delaware or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware), and each of the parties irrevocably and unconditionally (i) consents and submits to the exclusive jurisdiction of each such court in any such proceeding or action, (ii) waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, (iii) agrees that all claims in respect of such proceeding or action shall be heard and determined only in any such court and (iv) agrees not to bring any proceeding or action arising out of or relating to this Agreement or the transactions contemplated hereby in any other court.  Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by Law or to commence legal proceedings or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any proceeding or action brought in accordance with this Section 7.8(b).

 

Section 7.9           Reconciliation.  In the event that PubCo and the TRA Party Representative are unable to resolve a disagreement with respect to the matters governed by Section 2.3 and 4.2 within the relevant period designated in this Agreement (“Reconciliation Dispute”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “Expert”) in the particular area of disagreement mutually acceptable to both parties.  The Expert shall be a partner or principal in a nationally recognized accounting or law firm, and unless PubCo and the TRA Party Representative agree in writing otherwise, the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with PubCo or the TRA Party Representative or other actual or potential conflict of interest.  If PubCo and the TRA Party Representative are unable to agree on an Expert within fifteen (15) calendar days of the commencement of a Reconciliation Dispute, the Expert shall be appointed by the International Chamber of Commerce Centre for Expertise.  The Expert shall resolve any matter relating to the Basis Schedule or an amendment thereto or the Early Termination Schedule or an amendment thereto within thirty (30) calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within fifteen (15) calendar days or as soon thereafter as is reasonably practicable, in each case after the matter has been submitted to the Expert for resolution.  Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement would be due (in the absence of such disagreement) or any Tax Return reflecting the subject of a disagreement is due, the undisputed amount shall be paid on the date prescribed by this Agreement and such Tax Return may be filed as prepared by PubCo, subject to adjustment or amendment upon resolution.  The costs and expenses relating to the engagement of such Expert or amending any Tax Return shall be borne by Holdings except as provided in the next sentence.  PubCo and the TRA Party Representative shall bear their own costs and expenses of such proceeding, unless (i) the Expert adopts the TRA Party Representative’s position, in which case PubCo shall reimburse the TRA Party Representative for any reasonable out-of-pocket costs and expenses in such proceeding, or (ii) the Expert adopts PubCo’s position, in which case the TRA Party Representative shall reimburse PubCo for any reasonable out-of- pocket costs and expenses in such proceeding.  Any dispute as to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.9 shall be decided by the Expert.  The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.9, absent manifest error, shall be binding on PubCo and each of the TRA Parties and may be entered and enforced in any court having jurisdiction.

 

Section 7.10       Withholding.  PubCo shall be entitled to deduct and withhold from any payment payable pursuant to this Agreement such amounts as PubCo is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local or non-U.S. Tax law; provided, however, that (i) PubCo shall use commercially reasonable efforts to provide notice to the applicable TRA Party of its intent to deduct and withhold (together with information setting forth the basis for such deduction or withholding) prior to the making of such deductions and withholding payments and (ii) the parties shall reasonably cooperate to minimize or eliminate such deductions or withholding payments to the extent permitted by applicable law, in the case of each of clauses (i) and (ii), other than any deduction or withholding required by reason of such TRA Party’s failure to comply with the last sentence of this Section 7.10.  To the extent that amounts are so withheld and timely paid over to the appropriate Taxing Authority by PubCo, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such withholding was made.  Each TRA Party shall promptly provide PubCo with any applicable Tax forms and certifications (including IRS Form W-9 or the applicable version of IRS Form W-8) reasonably requested by PubCo in connection with determining whether any such deductions and withholdings are required under the Code or any provision of state, local or non-U.S. Tax law.

 

Section 7.11          Consolidated Group Status; Transfers of Corporate Assets.

 

(a)          To the extent Corporate Taxpayer consists or becomes a member of an affiliated, consolidated, combined or unitary group of corporations that files a consolidated, combined or unitary income Tax Return pursuant to Sections 1501 et seq.  of the Code or any corresponding provisions of state, local or non-U.S. Tax law, then:  (i) the provisions of this Agreement shall be applied with respect to the group as a whole; and (ii) Tax Benefit Payments, Early Termination Payments and other applicable items hereunder shall be computed with reference to the consolidated, combined or unitary taxable income of the group as a whole.

 

(b)          If any Person the income of which is included in the income of Corporate Taxpayer transfers one or more Reference Assets to an entity the income of which will not be included in the income of Corporate Taxpayer for applicable Tax purposes, such Person, for purposes of calculating the amount of any Tax Benefit Payment or Early Termination Payment due hereunder, shall be treated as having disposed of such asset in a fully taxable transaction on the date of such transfer.  The consideration deemed to be received in a transaction contemplated in the prior sentence shall be equal to the fair market value of the deemed transferred asset (as determined by an independent expert mutually agreed upon by Corporate Taxpayer and the TRA Party Representative, unless such condition is waived by the TRA Party Representative) on a gross basis, i.e., disregarding (i) the amount of debt to which such asset is subject, in the case of a transfer of an encumbered asset or (ii) the amount of debt allocated to such asset, in the case of a transfer of a partnership interest.  The transactions described in this Section 7.11(b) shall be taken into account in determining the Realized Tax Benefit or Realized Tax Detriment, as applicable, for such Taxable Year based on the income, gain or loss deemed allocated to Corporate Taxpayer using the Non-Stepped Up Tax Basis of the Reference Assets in calculating its Hypothetical Tax Liability for such Taxable Year and using the actual Tax basis of the Reference Assets in calculating its Actual Tax Liability, determined using the “with and without” methodology.  Thus, for example, in determining the Hypothetical Tax Liability of Corporate Taxpayer the taxable income of Corporate Taxpayer shall be determined by treating Holdings as having sold the applicable Reference Asset for its fair market value, recovering any basis applicable to such Reference Asset (using the Non-Stepped Up Tax Basis), while the Actual Tax Liability of Corporate Taxpayer would be determined by recovering the actual Tax basis of the Reference Asset that reflects any Basis Adjustments.  For purposes of this Section 7.11(b), a transfer of a partnership interest (including, for the avoidance of doubt, a Common Unit) or an election by any Person the income of which is included in the income of Corporate Taxpayer to be treated as a corporation for U.S. federal income tax purposes (or other applicable provisions of state and local and non-U.S. Tax laws) shall be treated as a transfer of the transferring partner’s share of each of the assets and liabilities of that partnership.  Notwithstanding the foregoing, after the occurrence of any such transfer as described in the first sentence of this Section 7.11(b), if the Corporate Taxpayer takes actions to ensure that the amount to be received by the TRA Parties hereunder and the timing thereof, taking into account such actions, would be the same amount and timing as if such transfer described in the first sentence Section 7.11(b) did not occur, then this Section 7.11(b) shall not apply with respect to such transfer.

 

Section 7.12          Confidentiality.

 

(a)          Each TRA Party and each of their respective assignees acknowledges and agrees that the information of PubCo is confidential and, except in the course of performing any duties as necessary for PubCo and its Affiliates, as required by law or legal process or to enforce the terms of this Agreement, such person shall keep and retain in confidence in accordance with this Agreement, and not disclose to any Person, any confidential matters acquired pursuant to this Agreement of PubCo and its Affiliates and successors, concerning Holdings and its Affiliates and successors or the members of Holdings, learned by the TRA Party heretofore or hereafter.  This Section 7.12 shall not apply to (i) any information that has been made publicly available by PubCo or any of its Affiliates, becomes public knowledge or is generally known (except as a result of an act of the TRA Party in violation of this Agreement), (ii) the disclosure of information to the extent necessary for the TRA Party to assert its rights hereunder or defend itself in connection with any action or proceeding arising out of, or relating to, this Agreement, (iii) any information that comes into the possession of, or becomes available to, the TRA Party from a source other than PubCo, its Affiliates or its or their respective representatives (provided that such source is not known by the TRA Party to be bound by a legal, contractual or fiduciary confidentiality obligation not to disclose such information) and (iv) the disclosure of information to the extent necessary for the TRA Party to prepare and file its Tax Returns, to respond to any inquiries regarding the same from any Taxing Authority or to prosecute or defend any action, proceeding or audit by any Taxing Authority with respect to such returns.  Notwithstanding anything to the contrary herein, each TRA Party and each of their assignees (and each employee, representative or other agent of the TRA Party or its assignees, as applicable) may disclose to any and all Persons the Tax treatment and Tax structure of PubCo, Holdings and their Affiliates, and any of their transactions, and all materials of any kind (including opinions or other Tax analyses) that are provided to the TRA Party relating to such Tax treatment and Tax structure.

 

(b)          If a TRA Party or an assignee commits a breach, or threatens to commit a breach, of any of the provisions of this Section 7.12, PubCo shall have the right and remedy to have the provisions of this Section 7.11(b) specifically enforced by injunctive relief or otherwise by any court of competent jurisdiction without the need to post any bond or other security, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the PubCo or any of its Affiliates and that money damages alone will not provide an adequate remedy.  Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.

 

Section 7.13          Change in Law.  Notwithstanding anything herein to the contrary, if, in connection with an actual or proposed change in law, a TRA Party reasonably believes that the existence of this Agreement could cause income (other than income arising from receipt of a payment under this Agreement) recognized by the TRA Party upon any Exchange by such TRA Party to be treated as ordinary income rather than capital gain (or otherwise taxed at ordinary income rates) for U.S. federal income Tax purposes, or would have other material adverse Tax consequences to such TRA Party, then at the written election of such TRA Party and to the extent specified by such TRA Party, this Agreement (i) shall cease to have further effect with respect to such TRA Party, (ii) shall not apply to an Exchange by such TRA Party occurring after a date specified by such TRA Party, or (iii) shall otherwise be amended in a manner determined by such TRA Party; provided that any such amendment pursuant to clause (iii) shall not result in an increase in payments under this Agreement at any time as compared to the amounts and times of payments that would have been due in the absence of such amendment.

 

Section 7.14         Independent Nature of TRA Parties’ Rights and Obligations.  The obligations of each TRA Party hereunder are several and not joint with the obligations of any other TRA Party, and no TRA Party shall be responsible in any way for the performance of the obligations of any other TRA Party hereunder.  The decision of each TRA Party to enter into this Agreement has been made by such TRA Party independently of any other TRA Party.  Nothing contained herein, and no action taken by any TRA Party pursuant hereto, shall be deemed to constitute the TRA Parties as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the TRA Parties are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated hereby and PubCo acknowledges that the TRA Parties are not acting in concert or as a group, and PubCo will not assert any such claim, with respect to such obligations or the transactions contemplated hereby.

 

Section 7.15          TRA Party Representative.

 

(a)         Without further action of any of PubCo, the TRA Party Representative or any TRA Party, and as partial consideration in respect of the benefits conferred by this Agreement, the TRA Party Representative is hereby irrevocably constituted and appointed as the TRA Party Representative, with full power of substitution, to take any and all actions and make any decisions required or permitted to be taken by the TRA Party Representative under this Agreement.  The TRA Party Representative agrees that with respect to any material notice, information or other communication it receives from PubCo in its capacity as a TRA Party Representative, it will promptly share such notice, information or communication with each TRA Party.

 

(b)          If at any time the TRA Party Representative shall incur out of pocket expenses in connection with the exercise of its duties hereunder, upon written notice to PubCo from the TRA Party Representative of documented costs and expenses (including fees and disbursements of counsel and accountants) incurred by the TRA Party Representative in connection with the performance of its rights or obligations under this Agreement and the taking of any and all actions in connection therewith, PubCo shall reduce the future payments (if any) due to the TRA Parties hereunder pro rata by the amount of such expenses which it shall instead remit directly to the TRA Party Representative (provided that, for applicable Tax purposes, such amounts will be deemed to be distributed first to the TRA Parties and then paid over to the TRA Party Representative by the TRA Parties).  In connection with the performance of its rights and obligations under this Agreement and the taking of any and all actions in connection therewith, the TRA Party Representative shall not be required to expend any of its own funds (though, for the avoidance of doubt but without limiting the provisions of this Section 7.15(b), it may do so at any time and from time to time in its sole discretion).

 

(c)          The TRA Party Representative shall not be liable to any TRA Party for any act of the TRA Party Representative arising out of or in connection with the acceptance or administration of its duties under this Agreement, except to the extent any liability, loss, damage, penalty, fine, cost or expense is actually incurred by such TRA Party as a proximate result of the bad faith or willful misconduct of the TRA Party Representative (it being understood that any act done or omitted pursuant to the advice of legal counsel shall be conclusive evidence of such good faith judgment).  The TRA Party Representative shall not be liable for, and shall be indemnified by the TRA Parties (on a several but not joint basis) for, any liability, loss, damage, penalty or fine incurred by the TRA Party Representative (and any cost or expense incurred by the TRA Party Representative in connection therewith and herewith and not previously reimbursed pursuant to subsection (b) above) arising out of or in connection with the acceptance or administration of its duties under this Agreement, and such liability, loss, damage, penalty, fine, cost or expense shall be treated as an expense subject to reimbursement pursuant to the provisions of subsection (b) above, except to the extent that any such liability, loss, damage, penalty, fine, cost or expense is the proximate result of the bad faith or willful misconduct of the TRA Party Representative (it being understood that any act done or omitted pursuant to the advice of legal counsel shall be conclusive evidence of such good faith judgment); provided, however, in no event shall any TRA Party be obligated to indemnify the TRA Party Representative hereunder for any liability, loss, damage, penalty, fine, cost or expense to the extent (and only to the extent) that the aggregate amount of all liabilities, losses, damages, penalties, fines, costs and expenses indemnified by such TRA Party hereunder is or would be in excess of the aggregate payments under this Agreement actually remitted to such TRA Party.

 

(d)          Subject to Section 7.6(a), a decision, act, consent or instruction of the TRA Party Representative shall constitute a decision of all TRA Parties and shall be final, binding and conclusive upon each TRA Party, and PubCo may rely upon any decision, act, consent or instruction of the TRA Party Representative as being the decision, act, consent or instruction of each TRA Party.  PubCo is hereby relieved from any liability to any person for any acts done by PubCo in accordance with any such decision, act, consent or instruction of the TRA Party Representative.

 

[The remainder of this page is intentionally blank]

 

IN WITNESS WHEREOF, PubCo, the TRA Party Representative and each TRA Party have duly executed this Agreement as of the date first written above.

 

IN WITNESS WHEREOF, PubCo, the TRA Party Representative and each TRA Party have duly executed this Agreement as of the date first written above.

 

IN WITNESS WHEREOF, PubCo, the TRA Party Representative and each TRA Party have duly executed this Agreement as of the date first written above.

 

Execution Version

 

THIS AMENDED AND RESTATED LOCK-UP AGREEMENT (this “Agreement”) is made and entered into as of July 1, 2025, by ProKidney Corp., a Delaware corporation (the “Company”), and certain ProKidney Holders (as defined below) who are equityholders of ProKidney Holdings, LLC, a Delaware limited liability company (“ProKidney”).

 

 

 

 

 

 

 

 

 

 

 

1.            Definitions.  The terms defined in this Section 1 shall, for all purposes of this Agreement, have the respective meanings set forth below:

 

(a)          “Class A Common Shares” shall mean the shares of Class A common stock of the Company, par value $0.0001 per share.

 

(b)          “Class B Common Shares” shall mean the shares of Class B common stock of the Company, par value $0.0001 per share.

 

(c)          “Common Shares” shall mean the Class A Common Shares and the Class B Common Shares, collectively.

 

(d)          “Common Units” shall mean the units of ProKidney designated as “Common Units” pursuant to the ProKidney LLCA.

 

(e)        “Earn-Out Shares” shall mean the (i) Common Shares issued upon the vesting of the Delaware Class B Series 1 RSRs, Delaware Class B Series 2 RSRs, or Delaware Class B Series 3 RSRs, as applicable and (ii) corresponding Common Units issued upon the vesting of the Series 1 RCUs, Series 2 RCUs, or Series 3 RCUs, as applicable, in each case in accordance with Section 2.5 of the Business Combination Agreement (as modified by virtue of the Restructuring by the Plan of Domestication and the ProKidney LLCA).

 

(f)         “Exchange Agreement” means (i) prior to the Restructuring, the Exchange Agreement, dated as of the date of the Original Agreement, by among ProKidney Cayman, PKLP and certain ProKidney Holders from time to time party thereto, as amended from time to time, and (ii) after the Restructuring, the Amended and Restated Exchange Agreement, dated on or about the date hereof, by and among the Company, ProKidney, and certain ProKidney Holders from time to time party thereto, as amended from time to time.

 

(g)          “Holder” shall mean any of the Holders.

 

(h)         “Holders” shall mean the Sponsor, the Sponsor Key Holders, the ProKidney Holders and any Person who either became a party to the Original Agreement pursuant to Section 2 thereof or hereafter becomes a party to this Agreement pursuant to Section 2.

 

(i)          “Lock-Up Period” shall mean, except with respect to the Earn-Out Shares, the period beginning on the Closing Date and ending on the earlier of (i) the date that is 180 days after the Closing Date and (ii) (A) in the case of the Private Placement Shares (as defined in the Insider Letters (as defined below)), the last day of the Private Placement Shares Lock-Up Period (as defined in the Insider Letters) and (B) in the case of Lock-Up Shares other than the Private Placement Shares, (I) for 33% of the Lock-Up Shares (other than the Private Placement Shares and the Earn-Out Shares) held by the Holders and their respective Permitted Transferees, the date on which the last reported sale price of Acquiror Class A Common Stock equaled or exceeded $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any twenty (20) trading days within any thirty (30)-trading day period commencing at least thirty (30) days after the Closing Date and (II) for an additional 50% of the Lock-Up Shares (other than the Private Placement Shares and the Earn-Out Shares) held by the Holders and their respective Permitted Transferees (i.e., clauses (I) plus (II) totaling an aggregate of 83% of the Lock-Up Shares (other than the Private Placement Shares and the Earn-Out Shares) held by the Holders and their respective Permitted Transferees), the date on which the last reported sale price of Acquiror Class A Common Stock equaled or exceeded $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any twenty (20) trading days within any thirty (30)-trading day period commencing at least thirty (30) days after the Closing Date; provided, that, notwithstanding anything to the contrary in the foregoing, in the case of any Lock-Up Shares held by a ProKidney Holder or an affiliate of a ProKidney Holder, solely with respect to fifty percent (50%) of such ProKidney Holder or such affiliate’s Lock-Up Shares, the earlier of (i) four (4) years following the Closing Date and (ii) the date that the Company shall have received notice of any regulatory market authorization, including full or conditional authorization, to market its lead product candidate, Renal Autologous Cell Therapy (it being understood and agreed that, with respect to this proviso, such number of Lock-Up Shares shall be based solely on the calculation of such holder’s Lock-Up Shares as of the Closing Date and such Lock-Up Period shall not in any case end earlier than 180 days after the Closing Date).  With respect to each Earn-Out Share, the “Lock-Up Period” shall mean the period beginning on the date on which such Earn-Out Share is issued (if any) and ending 180 days after such date; provided, that, in the case of any Earn-Out Shares held by a ProKidney Holder or an affiliate of a ProKidney Holder, solely with respect to fifty percent (50%) of such ProKidney Holder or such affiliate’s Earn-Out Shares, the earlier of (i) four (4) years following the Closing Date and (ii) the date that the Company shall have received notice of any regulatory market authorization, including full or conditional authorization, to market its lead product candidate, Renal Autologous Cell Therapy (it being understood and agreed that, with respect to this proviso, such Lock-Up Period shall not in any case end earlier than 180 days after the date on which such Earn-Out Shares are issued).

 

(j)          “Lock-Up Shares” shall mean with respect to (i) Sponsor, the Sponsor Key Holders and their respective Permitted Transferees, the shares of Acquiror Common Stock (and after the Restructuring, Common Shares issued in substitution for such shares of Acquiror Common Stock) held by the such Person immediately following the Closing (other than the PIPE Shares or shares of Acquiror Common Stock (and after the Restructuring, Common Shares issued in substitution for such shares of Acquiror Common Stock) acquired in the public market) and (ii) the ProKidney Holders and their respective Permitted Transferees, (A) the shares of Acquiror Common Stock (and after the Restructuring, Common Shares issued in substitution for such shares of Acquiror Common Stock), New Company Common Units and other equity interests (including profits interests) of PKLP (and after the Restructuring, Common Units and other equity interests (including profits interests) of ProKidney issued in substitution for such New Company Common Units and other equity interests (including profits interests) of PKLP) held by such Person immediately following the Closing, including any PIPE Shares, but excluding any shares of Acquiror Common Stock (and after the Restructuring, Common Shares issued in substitution for such shares of Acquiror Common Stock) acquired in the public market, (B) shares of Acquiror Common Stock, New Company Common Units or other equity interests of PKLP issued upon settlement or exercise of profits interests, restricted stock units, stock options or other equity awards of ProKidney Cayman, PKLP or their respective subsidiaries outstanding as of immediately following the Closing (and after the Restructuring, Common Shares, Common Units, or other equity interests of ProKidney issued upon settlement or exercise of profits interests, restricted stock units, stock options or other equity awards of the Company, ProKidney or their respective subsidiaries issued in substitution for such shares of Acquiror Common Stock, New Company Common Units or other equity interests of PKLP issued upon settlement or exercise of profits interests, restricted stock units, stock options or other equity awards of ProKidney Cayman, PKLP or their respective subsidiaries outstanding as of immediately following the Closing) and (C) the Earn-Out Shares.

 

(k)          “Paired Interests” shall mean Common Units paired with Class B Common Shares.

 

(l)         “Permitted Transferee” shall mean any Person to whom a Holder is permitted to transfer Lock-Up Shares prior to the expiration of the Lock-Up Period pursuant to Section 2(b).

 

(m)       “Person” means any individual, estate, corporation, partnership, limited partnership, limited liability company, limited company, joint venture, trust, unincorporated or governmental organization or any agency or political subdivision thereof.

 

(n)          “PIPE Shares” shall mean shares of Acquiror Common Stock purchased in the PIPE Investment (and after the Restructuring, Common Shares issued in substitution for such shares of Acquiror Common Stock).

 

(o)          “Plan of Domestication” shall mean the Plan of Domestication of ProKidney Cayman adopted on or about the date hereof.

 

(p)          “ProKidney Holders” shall mean certain equityholders of ProKidney set forth on Schedule 2 hereto.

 

(q)        “Sponsor” shall mean, collectively, each of (i) SC Master Holdings, LLC and (ii) SVAV Sponsor III, LLC as the Permitted Transferees of SCS Sponsor III LLC, a Cayman Islands limited liability company from and after the date of the Original Agreement.

 

(r)          “Sponsor Key Holders” shall mean the Persons set forth on Schedule 1 hereto.

 

(s)          “Transfer” shall mean the (i) sale or assignment of, offer to sell, contract or agreement to sell, hypothecation, pledge, grant of any option to purchase or other disposal of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation or decrease of a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, with respect to, any security, (ii) entry into any swap or other arrangement that transfers to another Person, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (iii) public announcement of any intention to effect any transaction specified in clause (i) or (ii).

 

2.            Lock-Up Provisions.

 

(a)       Subject to Section 2(b), each Holder agrees that it shall not Transfer any Lock-Up Shares until the end of the applicable Lock-Up Period with respect to such Lock-Up Shares.

 

(b)          Notwithstanding the provisions set forth in Section 2(a), each Holder or its respective Permitted Transferees may Transfer the Lock-Up Shares during the Lock-Up Period (i) to (A) the Company’s or ProKidney’s officers or directors, (B) any affiliates or family members of the Company’s or ProKidney’s officers or directors, (C) any direct or indirect partners, members or equity holders of the Sponsor or Sponsor Key Holders, any affiliates of the Sponsor or the Sponsor Key Holders or any related investment funds or vehicles controlled or managed by such Persons or their respective affiliates, or (D) the ProKidney Holders or any direct or indirect partners, members or equity holders of the ProKidney Holders, any affiliates of the ProKidney Holders or any related investment funds or vehicles controlled or managed by such Persons or their respective affiliates; (ii) in the case of an individual, by gift to a member of such individual’s immediate family or to a trust, the beneficiary of which is such individual or a member of such individual’s immediate family or an affiliate of such Person, or to a charitable organization; (iii) in the case of an individual, by virtue of laws of descent and distribution upon death of such individual; (iv) in the case of an individual, pursuant to a qualified domestic relations order, divorce settlement, divorce decree or separation agreement; (v) to a nominee or custodian of a Person to whom a Transfer would be permitted under clauses (i) through (iv) above; (vi) to the partners, members or equityholders of such Holder by virtue of the Sponsor’s organizational documents, as amended; (vii) in connection with a pledge of shares of Acquiror Class A Common Stock, shares of Acquiror Class B Common Stock or New Company Common Units, or any other securities convertible into or exercisable or exchangeable for shares of Acquiror Class A Common Stock, shares of Acquiror Class B Common Stock or New Company Common Units (and after the Restructuring, Class A Common Shares, Class B Common Shares or Common Units, or any other securities convertible into or exercisable or exchangeable for Class A Common Shares, Class B Common Shares or Common Units), to a financial institution, including the enforcement of any such pledge by a financial institution; (viii) to the Company or ProKidney; (ix) as forfeitures of shares of Acquiror Common Stock (and after the Restructuring, Common Shares) pursuant to a “net” or “cashless” exercise of stock options; (x) as forfeitures of Acquiror Common Stock or New Company Common Units (and after the Restructuring, Common Shares or Common Units) to satisfy tax withholding requirements upon the vesting of equity-based awards granted pursuant to an equity incentive plan; (xi) in connection with a liquidation, merger, stock exchange, reorganization, tender offer approved by the Board of Directors of ProKidney Cayman (and after the Restructuring, the Board of Directors of the Company) or a duly authorized committee thereof or other similar transaction which results in all of ProKidney Cayman’s (and after the Restructuring, the Company’s) stockholders having the right to exchange their Acquiror Common Stock (and after the Restructuring, their Common Shares) for cash, securities or other property subsequent to the Closing Date; (xii) pursuant to an exchange of New Company Common Units for shares of Acquiror Common Stock (and after the Restructuring, Paired Interests for Class A Common Shares) pursuant to the Exchange Agreement (provided, that any shares of Acquiror Common Stock for which New Company Common Units (and after the Restructuring, any Class A Common Shares for which Paired Interests) are exchanged pursuant to this clause (xii) shall continue to be Lock-Up Shares for the duration of the applicable Lock-Up Period); or (xiii) in connection with any legal, regulatory or other order; provided, however, that in the case of clauses (i) through (vi), such Permitted Transferees must enter into a written agreement with the Company agreeing to be bound by the transfer restrictions in this Section 2.

 

(c)       In order to enforce this Section 2, the Company and ProKidney may impose stop-transfer instructions with respect to the Lock-Up Shares until the end of the Lock-Up Period.

 

(d)       For the avoidance of doubt, each Holder shall retain all of its rights as a stockholder of the Company or equityholder of ProKidney, as applicable, with respect to the Lock-Up Shares during the Lock-Up Period, including the right to vote any Lock-Up Shares that such Holder is entitled to vote.

 

(e)        If any Holder is granted a release or waiver from any lock-up agreement (such holder a “Triggering Holder”) executed in connection with the Closing prior to the expiration of the Lock-Up Period, then each Holder shall also be granted an early release from his, her or its obligations hereunder on the same terms and on a pro-rata basis with respect to such number of Lock-Up Shares rounded down to the nearest whole Lock-Up Share equal to the product of (i) the total percentage of Lock-Up Shares held by the Triggering Holder immediately following the consummation of the Closing that are being released from the lock-up agreement multiplied by (ii) the total number of Lock-Up Shares held by the Holder immediately following the consummation of the Closing; provided that, the foregoing shall not be applicable with respect to a release or waiver of any Holder that holds less than an aggregate of 100,000 New Company Common Units (and after the Restructuring, Common Units).

 

(f)        The lock-up provisions in this Section 2 shall supersede the lock-up provisions contained in Sections 7(a) and 7(b) of that certain letter agreement dated as of June 29, 2021 and that certain letter agreement dated as of September 24, 2021, in each case by and among ProKidney Cayman, the Sponsor and certain of ProKidney Cayman’s then current and former officers and directors (collectively, the “Insider Letters”) and which provisions in Sections 7(a) and 7(b) of the Insider Letters shall be of no further force or effect.

 

3.            Miscellaneous.

 

(a)          Governing Law.  This Agreement, and all claims or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement) will be governed by and construed in accordance with the internal laws of the State of Delaware applicable to agreements executed and performed entirely within such State.

 

(b)          Consent to Jurisdiction and Service of Process.  ANY PROCEEDING OR ACTION BASED UPON, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY MUST BE BROUGHT IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE (OR, ONLY TO THE EXTENT SUCH COURT DOES NOT HAVE SUBJECT MATTER JURISDICTION, THE SUPERIOR COURT OF THE STATE OF DELAWARE OR, IF IT HAS OR CAN ACQUIRE JURISDICTION, IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE), AND EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY (I) CONSENTS AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF EACH SUCH COURT IN ANY SUCH PROCEEDING OR ACTION, (II) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO PERSONAL JURISDICTION, VENUE OR TO CONVENIENCE OF FORUM, (III) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH PROCEEDING OR ACTION SHALL BE HEARD AND DETERMINED ONLY IN ANY SUCH COURT AND (IV) AGREES NOT TO BRING ANY PROCEEDING OR ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY OTHER COURT.  SERVICE OF PROCESS WITH RESPECT THERETO MAY BE MADE UPON ANY PARTY TO THIS AGREEMENT BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS AS PROVIDED IN SECTION 3(h), WITHOUT LIMITING THE RIGHT OF A PARTY TO SERVE PROCESS IN ANY OTHER MATTER PERMITTED BY APPLICABLE LAWS.

 

(c)          Waiver of Jury Trial.  EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 3(c).

 

(d)          Assignment; Third Parties.  This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns.  This Agreement and all obligations of a Holder are personal to such Holder and may not be transferred or delegated at any time.  Nothing contained in this Agreement shall be construed to confer upon any person who is not a signatory hereto any rights or benefits, as a third party beneficiary or otherwise.

 

(e)          Specific Performance.  Each Holder acknowledges that its obligations under this Agreement are unique, recognizes and affirms that in the event of a breach of this Agreement by such Holder, money damages will be inadequate and the Company will have no adequate remedy at law, and agrees that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by such Holder in accordance with their specific terms or were otherwise breached.  Accordingly, the Company shall be entitled to an injunction or restraining order to prevent breaches of this Agreement by a Holder and to enforce specifically the terms and provisions hereof, without the requirement to post any bond or other security or to prove that money damages would be inadequate, this being in addition to any other right or remedy to which such party may be entitled under this Agreement, at law or in equity.

 

(f)          Amendment; Waiver.  Upon (i) the approval of a majority of the total number of directors serving on the Board of Directors of the Company and (ii) the written consent of the Holders of a majority of the total Lock-Up Shares, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived by the Company, or any of such provisions, covenants or conditions may be amended or modified, so long as no Holder is impacted disproportionately than any other Holder by such waiver, amendment or modification; provided, however, that notwithstanding the foregoing, any amendment hereto or waiver hereof that adversely affects a Holder, solely in its capacity as a holder of Lock-Up Shares, shall require the consent of the Holder so affected.  No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company.  No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.

 

(g)          Interpretation.  The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.  In this Agreement, unless the context otherwise requires:  (i) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (ii) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding or succeeding such term and shall be deemed in each case to be followed by the words “without limitation”; (iii) the words “herein,” “hereto,” and “hereby” and other words of similar import in this Agreement shall be deemed in each case to refer to this Agreement as a whole and not to any particular section or other subdivision of this Agreement; and (iv) the term “or” means “and/or”.  The parties have participated jointly in the negotiation and drafting of this Agreement.  Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

 

(h)          Notices.  All notices and other communications among the parties hereto shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid or (iii) when delivered by FedEx or other nationally recognized overnight delivery service, addressed, if to the Company, to:  ProKidney Corp., 2000 Frontis Plaza Blvd, Suite 250, Winston-Salem, NC 27103, Attn:  Bruce Culleton, Chief Executive Officer email: bruce.culleton@prokidney.com, with a copy, which shall not constitute notice, to Todd Girolamo, General Counsel, email:  todd.girolamo@prokidney.com; and if to any Holder, at such Holder’s address or email address as set forth in the Company’s books and records.

 

(i)           Severability.  If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect.  Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

 

(j)           Entire Agreement.  This Agreement constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled.  Notwithstanding the foregoing, nothing in this Agreement (other than Section 2(f)) shall limit any of the rights, remedies or obligations of the Company or any of the Holders under any other agreement between any of the Holders and the Company, and nothing in any other agreement, certificate or instrument shall limit any of the rights, remedies or obligations of any of the Holders or the Company under this Agreement.

 

(k)          Several Liability:  The liability of any Holder hereunder is several (and not joint).  Notwithstanding any other provision of this Agreement, in no event will any Holder be liable for any other Holder’s breach of such other Holder’s obligations under this Agreement.

 

(l)           Counterparts.  The undersigned hereby consents to receipt of this Agreement in electronic form and understands and agrees that this Agreement may be signed electronically.  In the event that any signature is delivered by facsimile transmission, electronic mail or otherwise by electronic transmission evidencing an intent to sign this Agreement, such facsimile transmission, electronic mail or other electronic transmission shall create a valid and binding obligation of the undersigned with the same force and effect as if such signature were an original.  Execution and delivery of this Agreement by facsimile transmission, electronic mail or other electronic transmission is legal, valid and binding for all purposes.

 

[Remainder of Page Intentionally Left Blank; Signature Pages Follow]

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Lock-Up Agreement as of the date first written above.

 

[Signature Page to Amended and Restated Lock-Up Agreement]

[Signature Page to Amended and Restated Lock-Up Agreement]

[Signature Page to Amended and Restated Lock-Up Agreement]

	HOLDER:
	JAMES COULSTON
	/s/ James Coulston

[Signature Page to Amended and Restated Lock-Up Agreement]

	HOLDER:
	JOE STAVAS
	/s/ Joe Stavas

[Signature Page to Amended and Restated Lock-Up Agreement]

	HOLDER:
	DARIN WEBER
	/s/ Darin Weber

[Signature Page to Amended and Restated Lock-Up Agreement]

	HOLDER:
	WILLIAM DOYLE
	/s/ William Doyle

[Signature Page to Amended and Restated Lock-Up Agreement]

	HOLDER:
	ALAN LOTVIN
	/s/ Alan Lotvin

[Signature Page to Amended and Restated Lock-Up Agreement]

	HOLDER:
	BRIAN PEREIRA
	/s/ Brian Pereira

[Signature Page to Amended and Restated Lock-Up Agreement]

[Signature Page to Amended and Restated Lock-Up Agreement]

SCHEDULE 1

 

SPONSOR KEY HOLDERS

 

1.          Uma Sinha

2.          Marc Semigran

 

SCHEDULE 2

 

PROKIDNEY HOLDERS

 

1.            Tolerantia, LLC

2.            Control Empresarial de Capitales, S.A. de C.V.

3.            ProKidney Management Equity LLC

4.            Pablo Legorreta

5.            Tim Bertram

6.            James Coulston

7.            Deepak Jain

8.            Ashley Johns

9.            Joe Stavas

10.          Gail Ward

11.          Darin Weber

12.          William Doyle

13.          Alan Lotvin

14.          Brian Pereira

15.          Dean Kamen

16.          DEKAVERSE LLC

17.          Any other Closing Company Unitholders not otherwise identified herein

 

---

Exhibit 10.3

Execution Version

AMENDED AND RESTATED

EXCHANGE AGREEMENT

 

THIS AMENDED AND RESTATED EXCHANGE AGREEMENT (this “Agreement”), dated as of July 1, 2025, by and among ProKidney Corp., a Delaware corporation (the “Company”), ProKidney Holdings, LLC, a limited liability company organized under the laws of Delaware (“Holdings”), and the holders, other than the Company, of Common Units (as defined herein) from time-to-time party hereto.

 

RECITALS

 

WHEREAS, the Company was formerly a Cayman Islands exempted company limited by shares (the Company, prior to its domestication to Delaware, “ProKidney Cayman”);

 

WHEREAS, on July 11, 2022, ProKidney Cayman completed a business combination (the “Business Combination”) pursuant to the Business Combination Agreement, dated January 18, 2022 (the “Business Combination Agreement”), that ProKidney Cayman (f/k/a Social Capital Suvretta Holdings Corp. III) entered into with ProKidney LP, a limited partnership organized under the laws of Ireland (“PKLP”);

 

WHEREAS, in connection with the closing of the Business Combination, ProKidney Cayman entered into an Exchange Agreement (the “Original Agreement”), dated as of July 11, 2022, by and among ProKidney Cayman, PKLP and the holders of common units (other than ProKidney Cayman) in PKLP (the “PKLP Holders”), pursuant to which the PKLP Holders could exchange such common units and corresponding Class B ordinary shares of ProKidney Cayman for Class A ordinary shares of ProKidney Cayman;

 

WHEREAS, on June 26, 2025, Holdings was organized as a Delaware limited liability company by the filing of a certificate of formation in the office of the Secretary of State of the State of Delaware, and PKLP, as the initial member, entered into a limited liability company agreement of Holdings, which has been subsequently amended and restated into that certain Second Amended and Restated Limited Liability Company Agreement of Holdings, dated as of July 1, 2025 (as may be further amended from time to time, the “Holdings LLCA”), by and among Holdings, the Company and the other members of Holdings;

 

WHEREAS, (i) PKLP contributed substantially all of its assets to Holdings as a contribution to capital, (ii) PKLP commenced winding-up and made a liquidating distribution of its limited liability company interests in Holdings to its partners in redemption of their interests in PKLP, and (iii) ProKidney Corp. GP Limited sold its nominal economic interest in Holdings received in such distribution to ProKidney Cayman (the “Substitution”);

 

WHEREAS, immediately following the Substitution, ProKidney Cayman changed its jurisdiction of incorporation from the Cayman Islands to the State of Delaware by deregistering as an exempted company in the Cayman Islands and registering by way of continuation, for purposes of the Companies Act, as amended, of the Cayman Islands, and domesticating and continuing, for purposes of the Delaware General Corporation Law, as amended, as a corporation incorporated under the laws of the State of Delaware (the “Domestication” and together with the Substitution, the “Restructuring”);

 

WHEREAS, as a result of the Restructuring, the former limited partners of PKLP hold Paired Interests (as defined below) consisting of Common Units of Holdings and Class B Common Shares of the Company; and

 

WHEREAS, the parties hereto now desire to amend and restate the Original Agreement in its entirety as set forth herein to provide for the redemption and/or exchange of Paired Interests, on the terms and subject to the conditions set forth herein and the Holdings LLCA.

 

NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree to amend and restate the Original Agreement to read in its entirety as follows:

 

ARTICLE I

 

 

The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.

 

“Agreement” has the meaning set forth in the Preamble.

 

“Appraiser FMV” means the fair market value of a Class A Common Share as determined by an independent appraiser mutually agreed upon by the Company and the relevant Exchanging Member (such agreement not to be unreasonably withheld), whose determination shall be final and binding for those purposes for which Appraiser FMV is used in this Agreement.  Appraiser FMV shall be the fair market value determined without regard to any discounts for minority interest, illiquidity or other discounts.  The cost of any independent appraisal in connection with the determination of Appraiser FMV in accordance with this Agreement shall be borne by Holdings.

 

“Business Combination” has the meaning set forth in the Recitals.

 

“Business Combination Agreement” has the meaning set forth in the Recitals.

 

“Business Day” means any day except a Saturday, a Sunday or any other day on which commercial banks are required or authorized to close in the State of New York.

 

“Cash Exchange Class A 5-Day VWAP” means the arithmetic average of the VWAP for each of the five (5) consecutive Trading Days ending on the Trading Day immediately prior to the Exchange Notice Date (in the case of an Unrestricted Exchange) or the Exchange Date (in the case of any other Exchange).

 

“Cash Exchange Notice” has the meaning set forth in Section 2.1(c).

 

“Cash Exchange Payment” means, with respect to the portion of any Exchange for which a Cash Exchange Notice is delivered by the Company and the Company has elected to make a Cash Exchange Payment in accordance with Section 2.1(c):

 

 

 

“Certificate Delivery” means, in the case of any Class B Common Shares to be transferred and surrendered by an Exchanging Member in connection with an Exchange which are represented by a certificate or certificates, the process by which the Exchanging Member shall present and surrender such certificate or certificates representing such Class B Common Shares, which shall be during normal business hours at the principal executive offices of the Company, or if any agent for the registration or transfer of Class B Common Shares is then duly appointed and acting, at the office of such transfer agent, along with any instruments of transfer reasonably required by the Company or such transfer agent, as applicable, duly executed by the Exchanging Member or the Exchanging Member’s duly authorized representative.

 

“Change of Control” has the meaning given to such term in the Tax Receivable Agreement; provided, that, for the avoidance of doubt, any event that constitutes both a PubCo Offer and a Change of Control of the Company shall be considered a PubCo Offer for purposes of this Agreement.

 

“Class A Common Shares” means the shares of Class A common stock of the Company, par value $0.0001 per share.

 

“Class B Common Shares” means the shares of Class B common stock of the Company, par value $0.0001 per share.

 

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

 

“Commission” means the U.S. Securities and Exchange Commission, including any Governmental Entity succeeding to the functions thereof.

 

“Common Units” means the units of Holdings designated as a “Common Unit” pursuant to the Holdings LLCA.

 

“Company” has the meaning set forth in the Preamble.

 

“Conversion Date” has the meaning set forth in the Holdings LLCA.

 

“Direct Exchange” has the meaning set forth in Section 2.6 of this Agreement.

 

“Direct Exchange Election Notice” has the meaning set forth in Section 2.6 of this Agreement.

 

“Domestication” has the meaning set forth in the Recitals.

 

“Exchange” has the meaning set forth in Section 2.1(a) of this Agreement.

 

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

 

“Exchange Blackout Period” means (i) any “black out” or similar period under the Company’s policies covering trading in the Company’s securities to which the applicable Exchanging Member is subject (or will be subject at such time as it owns Class A Common Shares), which period restricts the ability of such Exchanging Member to immediately resell Class A Common Shares to be issued to such Exchanging Member in connection with a Stock Exchange Payment and (ii) the period of time commencing on (x) the date of the declaration of a dividend by the Company and ending on the first day following (y) the record date determined by the PubCo Board with respect to such dividend declared pursuant to clause (x), which period of time shall be no longer than ten (10) Business Days; provided that in no event shall an Exchange Blackout Period which respect to clause (ii) of the definition hereof occur more than four (4) times per calendar year.

 

“Exchange Date” means, subject in all cases to the provisions of Section 2.2(a) hereof, in the case of any Unrestricted Exchange, the date that is five (5) Business Days after the date the Exchange Notice is given pursuant to Section 2.1(b), unless the Exchanging Member submits a written request to extend such date and the Company in its sole discretion agrees in writing to such extension, and in any other case, the Quarterly Exchange Date; provided, that if the Exchange Date for any Exchange with respect to which the Company elects to make a Stock Exchange Payment would otherwise fall within any Exchange Blackout Period, then, unless waived by the Company with respect to any Exchange that is not an Unrestricted Exchange, the Exchange Date shall occur on the next Business Day following the end of such Exchange Blackout Period; provided, further, that in the event the Company is required under the terms of this Agreement, or otherwise elects, to make a Stock Exchange Payment, the Exchange may be conditioned (including as to timing) by the Exchanging Member on the closing of an underwritten distribution of the Class A Common Shares that may be issued in connection with such proposed Exchange.

 

“Exchange Notice” has the meaning set forth in Section 2.1(b) of this Agreement.

 

“Exchange Notice Date” means, with respect to an Exchange, the date the applicable Exchange Notice is delivered in accordance with Section 2.1(b).

“Exchange Notice Date Value” means, in the case of an Exchange (other than an Unrestricted Exchange), the arithmetic average of the VWAP for each of the five (5) consecutive Trading Days ending on the Trading Day immediately prior to the Exchange Notice Date.

 

“Exchange Rate” means, at any time, the number of Class A Common Shares for which a Paired Interest is entitled to be exchanged at such time.  On the date of this Agreement, the Exchange Rate shall be 1 for 1, subject to adjustment pursuant to Section 2.4 hereof.

 

“Exchanged Units” means any Common Units to be Exchanged (as part of a Paired Interest) for the Cash Exchange Payment or Stock Exchange Payment, as applicable, on the applicable Exchange Date.

 

“Exchanging Member” means, with respect to any Exchange, the Holdings Unitholder exchanging Common Units pursuant to Section 2.1(a) of this Agreement.

 

“Governmental Entity” means any nation or government, any state, province or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any court, arbitrator (public or private) or other body or administrative, regulatory or quasi-judicial authority, agency, department, board, commission or instrumentality of any federal, state, local or foreign jurisdiction.

 

“Holdings” has the meaning set forth in the Preamble.

 

“Holdings LLCA” has the meaning set forth in the Preamble, as such agreement may be amended from time to time.

 

“Holdings Unitholder” means each member in Holdings who is also a holder of one or more Common Units that may from time to time be a party to this Agreement.

 

“HSR Act” has the meaning given to such term in Section 2.1(b) of this Agreement.

 

“Law” means any statute, act, code, law (including common law), ordinance, rule, regulation, determination, guidance or governmental order, in each case, of any Governmental Entity.

 

“Lock-Up Agreement” means that certain Amended and Restated Lock-Up Agreement, dated on or about the date hereof, by and among the Company and the other parties thereto, as such agreement may be amended from time to time.

 

“National Securities Exchange” means a securities exchange that has registered with the Commission under Section 6 of the Exchange Act.

 

“OpCo Board” means the board of managers of Holdings.

 

“Original Agreement” has the meaning set forth in the Recitals.

 

“Paired Interest” means one Common Unit and one Class B Common Share.

“Permitted Exchange Event” means any of the following events, which has or is occurring, or is otherwise satisfied, as of the Exchange Date:

 

 

 

 

“Permitted Transferee” has the meaning given to such term in Section 3.1 of this Agreement.

 

“Person” means any individual, estate, corporation, partnership, limited partnership, limited liability company, limited company, joint venture, trust, unincorporated or governmental organization or any agency or political subdivision thereof.

 

“PKLP” has the meaning set forth in the Recitals.

 

“PKLP Holders” has the meaning set forth in the Recitals.

 

“Private Placement Safe Harbor” means the “private placement” safe harbor set forth in Treasury Regulations Section 1.7704-1(h).

 

“ProKidney Cayman” has the meaning set forth in the Recitals.

 

“PubCo Board” means the board of directors of the Company.

 

“PubCo Offer” has the meaning set forth in Section 2.7 of this Agreement.

 

“Quarterly Exchange Date” means, either (x) for each fiscal quarter, the first (1st) Business Day occurring after the sixtieth (60th) day after the expiration of the applicable Quarterly Exchange Notice Period or (y) such other date as the Company shall determine in its sole discretion; provided that such date is at least sixty (60) days after the expiration of the Quarterly Exchange Notice Period; provided, further, that the Company shall use commercially reasonable efforts to ensure that at least one (1) Quarterly Exchange Date occurs each fiscal quarter.

“Quarterly Exchange Date Value” means the arithmetic average of the VWAP for each of the five (5) consecutive Trading Days ending on the Trading Day immediately prior to the Exchange Date; provided, that, if such an Exchange (other than an Unrestricted Exchange) is in connection with a Secondary Offering or other negotiated transaction, the Quarterly Exchange Date Value shall be the per share price of Class A Common Shares in such transaction.

 

“Quarterly Exchange Notice Period” means, for each fiscal quarter, the period commencing on the third (3rd) Business Day after the day on which the Company releases its earnings for the prior fiscal period, beginning with the first such date that falls on or after the (x) waiver or (y) expiration of any contractual lock-up period relating to the shares of the Company that may be applicable to a Holdings Unitholder, which would prohibit an Exchange (or such other date within such quarter as the Company shall determine in its sole discretion) and ending ten (10) Business Days thereafter.  Notwithstanding the foregoing, the Company may change the definition of Quarterly Exchange Notice Period with respect to any Quarterly Exchange Notice Period scheduled to occur in a calendar quarter subsequent to the then-current calendar quarter, if (x) the revised definition provides for a Quarterly Exchange Notice Period occurring at least once in each calendar quarter, (y) the first Quarterly Exchange Notice Period pursuant to the revised definition will occur no less than ten (10) Business Days from the date written notice of such change is sent to each Holdings Unitholder (other than the Company) and (z) the revised definition, together with the revised Quarterly Exchange Date resulting therefrom, do not materially adversely affect the ability of the Holdings Unitholders to exercise their Exchange rights pursuant to this Agreement.

 

“Redemption” has the meaning set forth in Section 2.1(a) of this Agreement.

 

“Registration Rights Agreement” means that certain Registration Rights Agreement, dated as of July 11, 2022, by and among ProKidney Cayman and the other parties thereto, as such agreement may be amended from time to time.

 

“Restricted Common Unit” has the meaning set forth in the Holdings LLCA.

 

“Restructuring” has the meaning set forth in the Recitals.

 

“Retraction Notice” has the meaning set forth in Section 2.1(d) of this Agreement.

 

“Secondary Offering” has the meaning set forth in Section 2.1(e) of this Agreement.

 

“Secondary Offering Paired Interests” has the meaning set forth in Section 2.1(a) of this Agreement.

 

“Securities Act” means the U.S. Securities Act of 1933, as amended.

 

“Stock Exchange Payment” means, with respect to the portion of any Exchange for which a Cash Exchange Notice is not delivered by the Company, on behalf of Holdings, a number of Class A Common Shares equal to the product of the number of Exchanged Units multiplied by the Exchange Rate.

 

“Substitution” has the meaning set forth in the Recitals.

“Tax Receivable Agreement” means that certain Amended and Restated Tax Receivable Agreement, dated on or about the date hereof, by and among the Company and the other parties thereto, as such agreement may be amended from time to time.

 

“Taxing Authority” has the meaning set forth in the Tax Receivable Agreement.

 

“Tolerantia Consent” means the consent of Tolerantia, LLC to an Exchange, which consent shall be deemed standing until Tolerantia, LLC provides written notice to Holdings and the Company that such standing consent is no longer applicable for tax, regulatory or other purposes, after which such consent shall mean the written consent of Tolerantia, LLC provided to the Company and Holdings in connection with such Exchange.

 

“Trading Day” means a day on which the Trading Market is open for the transaction of business (unless such trading shall have been suspended for the entire day).

 

“Trading Market” means the Nasdaq Stock Market or such other principal United States securities exchange on which Class A Common Shares are listed, quoted or admitted to trading.

 

“Unrestricted Exchanges” means any Exchange that is in connection with a Permitted Exchange Event or that occurs during a period in which Holdings meets the requirements of the Private Placement Safe Harbor.

 

“Vesting Event” has the meaning set forth in the Holdings LLCA.

 

“VWAP” means the daily per share volume-weighted average price of Class A Common Shares on the Trading Market, as displayed under the heading “Bloomberg VWAP” on the Bloomberg page designated for Class A Common Shares (or its equivalent successor if such page is not available) in respect of the period from the open of trading on such Trading Day until the close of trading on such Trading Day or, if such volume-weighted average price is unavailable, (a) the per share volume-weighted average price of a Class A Common Share on such Trading Day (determined without regard to afterhours trading or any other trading outside the regular trading session or trading hours), or (b) if such determination is not feasible, the market price per Class A Common Share, in either case as determined by a nationally recognized independent investment banking firm retained in good faith for this purpose by the Company.

ARTICLE II

 

 

 

 

 

 

 

 

 

 

 

 

 

SECTION 2.3   Expenses and Restrictions.

 

 

 

 

SECTION 2.4   Adjustment. The Exchange Rate shall be adjusted accordingly if there is:  (a) any subdivision (by any unit split, unit distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse unit split, reclassification, reorganization, recapitalization or otherwise) of the Common Units that is not accompanied by an identical subdivision or combination of the Class A Common Shares or (b) any subdivision (by any share or stock split, stock dividend or distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse share or stock split, reclassification, reorganization, recapitalization or otherwise) of the Class A Common Shares that is not accompanied by an identical subdivision or combination of the Common Units.  If there is any reclassification, reorganization, recapitalization or other similar transaction in which the Class A Common Shares are converted or changed into another security, securities or other property, then upon any subsequent Exchange, an Exchanging Member shall be entitled to receive the amount of such security, securities or other property that such Exchanging Member would have received if such Exchange had occurred immediately prior to the effective time of such reclassification, reorganization, recapitalization or other similar transaction, taking into account any adjustment as a result of any subdivision (by any share or stock split, distribution or dividend, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse share or stock split, reclassification, recapitalization or otherwise) of such security, securities or other property that occurs after the effective time of such reclassification, reorganization, recapitalization or other similar transaction.  Except as may be required in the immediately preceding sentence, no adjustments in respect of distributions shall be made upon the exchange of any Common Unit.

 

 

 

SECTION 2.6 Direct Exchange. Notwithstanding anything to the contrary in this Article II, the Company may, in its sole and absolute discretion, elect to effect on the Exchange Date the Exchange of Paired Interests for the Cash Exchange Payment and/or the Stock Exchange Payment, as the case may be (and subject to the terms of Section 2.2(a), (c) and (d)), through a direct exchange of such Paired Interests between the Exchanging Member and the Company (a “Direct Exchange”).  Upon such Direct Exchange pursuant to this Section 2.6, the Company shall acquire the Exchanged Units (which shall remain outstanding) and the Company shall be treated for all purposes of this Agreement as the owner of such Exchanged Units; provided that, any such election by the Company shall not relieve Holdings of its obligation arising with respect to such applicable Exchange Notice.  The Company may, at any time prior to an Exchange Date, deliver written notice (a “Direct Exchange Election Notice”) to Holdings and the Exchanging Member setting forth its election to exercise its right to consummate a Direct Exchange; provided, that such election does not prejudice the ability of the parties to consummate an Exchange or Direct Exchange on the Exchange Date.  A Direct Exchange Election Notice may be revoked by the Company at any time; provided that any such revocation does not prejudice the ability of the parties to consummate an Exchange or Direct Exchange on the Exchange Date.  The right to consummate a Direct Exchange in all events shall be exercisable for all of the Paired Interests that would otherwise have been subject to an Exchange.  Except as otherwise provided in this Section 2.6, a Direct Exchange shall be consummated pursuant to the same timeframe and in the same manner as the relevant Exchange would have been consummated had the Company not delivered a Direct Exchange Election Notice.

SECTION 2.7   PubCo Offer or Change of Control.

 

 

ARTICLE III

 

SECTION 3.1   Additional Holdings Unitholders. To the extent a Holdings Unitholder validly transfers any or all of such holder’s Common Units to another Person or Persons in a transaction in accordance with, and not in contravention of, the Holdings LLCA, the Lock-Up Agreement and any other agreement or agreements with the Company or any of its subsidiaries to which a transferring Holdings Unitholder may be party, then such transferee (each, a “Permitted Transferee”) shall execute and deliver a joinder to this Agreement, substantially in the form of Exhibit B hereto, whereupon such Permitted Transferee shall become a Holdings Unitholder hereunder.  To the extent Holdings issues Common Units in the future, and such units’ terms and conditions, as determined in the OpCo Board’s discretion pursuant to Section 3.01(b) of the Holdings LLCA, so allow, Holdings shall be entitled, in its sole discretion, to make any holder of such Common Units a Holdings Unitholder hereunder through such holder’s execution and delivery of a joinder to this Agreement, substantially in the form of Exhibit B hereto.

SECTION 3.2    Addresses and Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax, by electronic mail (delivery receipt requested) or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be as specified in a notice given in accordance with this Section 3.2):

ProKidney Corp.

2000 Frontis Plaza Blvd., Suite 250

Winston-Salem, NC 27103

 

 

ProKidney Holdings, LLC

2000 Frontis Plaza Blvd., Suite 250

Winston-Salem, NC 27103

 in each case, with a copy to (which shall not constitute notice):

 

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

New York, New York 10036

Eric Wexler

ewexler@akingump.com

 

SECTION 3.3  Further Action. The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.

SECTION 3.4   Binding Effect. This Agreement shall be binding upon and inure to the benefit of all of the parties and, to the extent permitted by this Agreement, their successors, executors, administrators, heirs, legal representatives and assigns.  No Holdings Unitholder may assign its rights under this Agreement without the consent of the Company and Holdings.

SECTION 3.5   Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions is not affected in any manner materially adverse to any party.  Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

SECTION 3.6   Amendment. The provisions of this Agreement may be amended, supplemented, waived or modified only by the affirmative vote or written consent of each of (i) the Company (as determined by the majority of the disinterested members of the PubCo Board), (ii) Holdings and (iii) Holdings Unitholders holding at least a majority of the then outstanding Common Units (excluding Common Units held by the Company); provided that, for purposes of this clause (iii), in addition to the consent required by clauses (i) and (ii), no amendment, supplement, waiver or modification to the provisions of this Agreement that would materially, disproportionately and adversely affect the rights of a Holdings Unitholder (other than the Company and its subsidiaries) may be made without the consent of such Holdings Unitholder (or, if there is more than one (1) such Holdings Unitholder that is so affected, without the consent of a majority in interest of such affected Holdings Unitholders (other than the Company and its subsidiaries) in accordance with their holdings of Common Units).

SECTION 3.7  Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach of any other covenant, duty, agreement or condition.

SECTION 3.8   Submission to Jurisdiction; Waiver of Jury Trial.

 

 

 

 

 

SECTION 3.9  Counterparts. This Agreement may be executed and delivered (including, without limitation, by facsimile transmission or by e-mail delivery of a “.pdf” format data file) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.  Copies of executed counterparts transmitted by telecopy, by e-mail delivery of a “.pdf” format data file or other electronic transmission service shall be considered original executed counterparts for purposes of this Section 3.9.
 

SECTION 3.10  Tax Treatment. This Agreement shall be treated as part of the “partnership agreement” of Holdings as described in Section 761(c) of the Code and Sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations promulgated thereunder.  As required by the Code and the Treasury Regulations, the parties shall report any Exchange consummated hereunder as a taxable sale of the Exchanged Units (together with an equal number of Class B Common Shares) by a Holdings Unitholder to the Company in exchange for (i) the payment by the Company of the Stock Exchange Payment, the Cash Exchange Payment, or other applicable consideration to the Exchanging Member and, if applicable, (ii) corresponding payments under the Tax Receivable Agreement, and no party shall take a contrary position on any income tax return, amendment thereof or communication with any Taxing Authority unless an alternate position is permitted under the Code and Treasury Regulations and the Company consents in writing to such alternate position, such consent not to be unreasonably withheld, conditioned, or delayed.  Further, in connection with any Exchange consummated hereunder, Holdings and/or the Company shall provide the exchanging Holdings Unitholder with all reasonably necessary information to enable the exchanging Holdings Unitholder to file its income tax returns for the taxable year that includes the Exchange, including, without limitation, information with respect to assets under Section 751 of the Code (including, without limitation, relevant information regarding “unrealized receivables” or “inventory items”) and basis adjustments under Section 743(b) of the Code as soon as practicable and in all events within sixty (60) days following the close of such taxable year (and use commercially reasonable efforts to provide estimates of such information within ninety (90) days of the applicable Exchanges).  Within thirty (30) days following the Exchange Date, the Company shall deliver a notification to Holdings in accordance with Treasury Regulations Section 1.743-1(k)(2).

 

 

 

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered, all as of the date first set forth above.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered, all as of the date first set forth above.

 

[Signature Page to Amended and Restated Exchange Agreement]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered, all as of the date first set forth above.

 

[Signature Page to Amended and Restated Exchange Agreement]

EXHIBIT A

 

EXCHANGE NOTICE

 

ProKidney Holdings, LLC

2000 Frontis Plaza Blvd., Suite 250

Winston-Salem, NC 27103

Attention:

Bruce Culleton, Chief Executive Officer

Email:

bruce.culleton@prokidney.com

 

Reference is hereby made to the Amended and Restated Exchange Agreement, dated as of July 1, 2025 (as amended from time to time, the “Exchange Agreement”), among ProKidney Corp., a Delaware corporation (the “Company”), ProKidney Holdings, LLC, a limited liability company organized under the laws of Delaware (“Holdings”), and the Holdings Unitholders from time to time party thereto (each, a “Holder”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Exchange Agreement.

 

The undersigned Holder hereby transfers the number of Paired Interests set forth below in Exchange for the Stock Exchange Payment to be issued in its name as set forth below, or the Cash Exchange Payment, as applicable, as set forth in the Exchange Agreement.

 

The undersigned Holder agrees and acknowledges that as set forth in the Exchange Agreement, the Class A Common Shares to be issued following completion of an Exchange may, in the sole discretion of the Company, be restricted and/or legended securities under the Securities Act, the regulations promulgated thereunder or any other applicable federal or state securities laws, which may not be sold or transferred without a registration statement filed under the Securities Act or an applicable exemption from the registration requirements thereunder.

 

The undersigned hereby represents and warrants that (i) the undersigned has full legal capacity to execute and deliver this Exchange Notice and to perform the undersigned’s obligations hereunder; (ii) this Exchange Notice has been duly executed and delivered by the undersigned and is the legal, valid and binding obligation of the undersigned enforceable against it in accordance with the terms thereof or hereof, as the case may be, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and the availability of equitable remedies; (iii) the Paired Interests subject to this Exchange Notice are being transferred to the Company or Holdings, as applicable, free and clear of any pledge, lien, security interest, encumbrance, equities or claim; and (iv) no consent, approval, authorization, order, registration or qualification of any third party or with any court or governmental agency or body having jurisdiction over the undersigned or the Paired Interests subject to this Exchange Notice is required to be obtained by the undersigned for the transfer of such Paired Interests to the Company or Holdings, as applicable.

The undersigned hereby irrevocably constitutes and appoints any officer of the Company or any director, manager or officer of Holdings as its true and lawful agent and attorney in fact, with full power of substitution and full power and authority in its name, place and stead, to do any and all things and to take any and all actions that may be necessary to transfer to the Company or Holdings, as applicable, the Paired Interests subject to this Exchange Notice and to deliver to the undersigned the Stock Exchange Payment or Cash Exchange Payment, as applicable, to be delivered in exchange therefor.

 

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Exchange Notice to be executed and delivered by the undersigned or by its duly authorized attorney.

 

EXHIBIT B

 

JOINDER

 

This Joinder Agreement (“Joinder Agreement”) is a joinder to the Exchange Agreement, dated as of July 1, 2025 (as amended from time to time, the “Exchange Agreement”), among ProKidney Corp., a Delaware corporation (the “Company”), ProKidney Holdings, LLC, a limited liability company organized under the laws of Delaware (“Holdings”), and each of the Holdings Unitholders from time to time party thereto.  Capitalized terms used but not defined in this Joinder Agreement shall have their meanings given to them in the Exchange Agreement.  This Joinder Agreement shall be governed by, and construed in accordance with, the law of the State of Delaware. In the event of any conflict between this Joinder Agreement and the Exchange Agreement, the terms of this Joinder Agreement shall control.

 

The undersigned hereby joins and enters into the Exchange Agreement having acquired Common Units in Holdings.  By signing and returning this Joinder Agreement to the Company, the undersigned accepts and agrees to be bound by and subject to all of the terms and conditions of and agreements of a Holdings Unitholder contained in the Exchange Agreement, with all attendant rights, duties and obligations of a Holdings Unitholder thereunder.  The parties to the Exchange Agreement shall treat the execution and delivery hereof by the undersigned as the execution and delivery of the Exchange Agreement by the undersigned and, upon receipt of this Joinder Agreement by the Company and by Holdings, the signature of the undersigned set forth below shall constitute a counterpart signature to the signature page of the Exchange Agreement.

 

---

Exhibit 10.4

 

FIRST AMENDMENT TO THE

 

PROKIDNEY CORP. EMPLOYEE STOCK PURCHASE PLAN

 

This first amendment (this “Amendment”), effective as of July 1, 2025 (the “Effective Date”), is entered into by ProKidney Corp., a Delaware corporation (the “Company”) and, before changing its jurisdiction of incorporation from Cayman Islands to the State of Delaware by deregistering as an exempted limited company in the Cayman Islands and registering by way of continuation for purposes of the Companies Act, as amended, of the Cayman Islands, and domesticating and continuing, for purposes of the Delaware General Corporation Law, as amended, as a corporation incorporated under the laws of the State of Delaware, ProKidney Corp., a Cayman Islands exempted company, to amend the ProKidney Corp. Employee Stock Purchase Plan (the “Plan”).

WHEREAS, the Company, currently maintains and sponsors the Plan;

 

WHEREAS, Section 18(i) of the Plan provides that the Compensation Committee of the Board of the Directors (the “Compensation Committee”) of the Company may in its sole discretion, amend the Plan; and

 

WHEREAS, the Compensation Committee has determined it to be in its best interests to amend the Plan as set forth herein.

 

NOW, THEREFORE, the Plan shall hereby be amended as follows:

 

 

“Domestication” means the Company’s changing of its jurisdiction of incorporation from Cayman Islands to the State of Delaware by deregistering as an exempted limited company in the Cayman Islands and registering by way of continuation for purposes of the Companies Act, as amended, of the Cayman Islands, and domesticating and continuing, for purposes of the Delaware General Corporation Law, as amended, as a corporation incorporated under the laws of the State of Delaware.

 

“Holdings LLCA” means that certain Second Amended and Restated Limited Liability Company Agreement of ProKidney Holdings, LLC, dated as of July 1, by and among the Company and the other members of ProKidney Holdings, LLC party thereto.

 

“Plan of Domestication” means the Plan of Domestication of ProKidney Corp., a Cayman Islands exempted limited company, made on July 1, 2025.

 

 

“Articles” means, collectively, the Certificate of Incorporation and the bylaws of the Company, as may be amended and/or restated from time to time.

 

“Company” means ProKidney Corp., a Delaware corporation, including any successor thereto.

 

“Fully-Diluted Basis” means all Shares outstanding on the applicable date of determination, which shall include Shares into which Common Units may be exchanged pursuant to the Exchange Agreement (as such terms are defined in the Holdings LLCA), but before giving effect to the number of Shares reserved for issuance or issued under this Plan and the Company’s 2022 Incentive Equity Plan and excluding (i) all shares of Class B Common Stock, par value $0.0001 per share, of the Company issuable upon the vesting and settlement of Delaware Class B Earnout RSRs (as defined in the Holdings LLCA) in accordance with the Plan of Domestication and (ii) the Common Units issuable upon the vesting of the Series 1 RCUs, Series 2 RCUs, and Series 3 RCUs (as such terms are defined in the Holdings LLCA) in accordance with the Holdings LLCA, in each case, on the applicable date of determination.

“Share” means, (i) prior to the consummation of the Domestication, a Class A ordinary share, $0.0001 par value, in the capital of ProKidney Corp., a Cayman Islands exempted limited company, and (ii) following the consummation of the Domestication, a share of Class A common stock, $0.0001 par value, of the Company.

 

 

“(b) Delegation of Authority. To the extent permitted by applicable law, including under the Delaware General Corporation Law, as amended from time to time, and the Articles, the Committee may delegate to (i) one or more officers of the Company some or all of its authority under the Plan and (ii) one or more committees of the Board some or all of its authority under the Plan.”

 

 

[Signature page follows]

IN WITNESS WHEREOF, the Company has executed this First Amendment to the ProKidney Corp. Employee Stock Purchase Plan as of the 1st day of July, 2025.

---

Exhibit 10.5

1.

Capitalized terms that are not defined in this Amendment shall have the meanings ascribed thereto in the Plan, except as otherwise provided herein. As used in this Amendment, the word “herein” refers to this Amendment as a whole and not to any particular article, section or other subdivision of this instrument.

2.

Section 1 of the Plan shall be, and hereby is, amended and restated in its entirety as follows:

3.

The following defined terms in Section 2 of the Plan are inserted in their appropriate alphabetical order:

4.

The following defined terms in Section 2 of the Plan are amended and restated in their entirety as follows:

5.

Section 4(b) of the Plan shall be, and hereby is, amended and restated in its entirety as follows:

6.

References to “shareholder” or “shareholders” of the Company in the Plan shall mean “stockholder” or “stockholders”, respectively, of the Company.

7.

To the extent that Shares are required to, or may, be issued pursuant to an Award, shares of the Company’s Class A common stock, par value $0.0001 per share, will be issued upon the exercise of, or the payment of, any such Awards previously or hereafter granted under the Plan, including Awards that were granted and outstanding prior to the Effective Date.

8.

Until surrendered and exchanged, each certificate delivered to a Participant pursuant to the Plan and evidencing outstanding Shares immediately prior to the Effective Date shall, for all purposes of the Plan and the Shares, continue to evidence the identical amount and number of outstanding Shares at and after the Effective Date. After the Effective Date, the Company may make such modifications in the certificates evidencing (and the form of) the Shares as it deems necessary to reflect the substance of this Amendment, but no such modifications shall be necessary to reflect the substance of this Amendment.

9.

Except as modified by this Amendment, all of the terms and conditions of the Plan shall remain valid and in full force and effect.

	PROKIDNEY CORP.
Date: July 1, 2025	By:	/s/ Todd C. Girolamo
		Todd C. Girolamo
		Chief Legal Officer

Exhibit 10.6

 

Execution Version

FORM OF INDEMNITY AGREEMENT

 

THIS INDEMNITY AGREEMENT (this “Agreement”) is made as of July 1, 2025, by and between ProKidney Corp., a Delaware corporation (the “Company”), and _________________ (“Indemnitee”).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TERMS AND CONDITIONS

 

1.          SERVICES TO THE COMPANY.  Indemnitee will serve or continue to serve as an officer, director, advisor, key employee, agent or in any other capacity of the Company, as applicable, for so long as Indemnitee is duly elected or appointed or retained or until Indemnitee tenders Indemnitee’s resignation or until Indemnitee is removed.  The foregoing notwithstanding, this Agreement shall continue in full force and effect after Indemnitee has ceased to serve as an officer, director, advisor, key employee, agent or in any other capacity of the Company, as provided in Section 17.  This Agreement, however, shall not impose any obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company beyond any period otherwise required by law or by other agreements or commitments of the parties, if any.

 

2.           DEFINITIONS.  As used in this Agreement:

(a)          The term “agent” shall mean any person who is or was a director, officer or employee of the Company or a Subsidiary of the Company or other person authorized by the Company to act for the Company, to include such person serving in such capacity as a director, officer, employee, fiduciary or other official of another corporation, partnership, limited liability company, joint venture, trust or other Enterprise at the request of, for the convenience of, or to represent the interests of the Company or a Subsidiary of the Company.

 

(b)        The terms “Beneficial Owner” and “Beneficial Ownership” shall have the meanings set forth in Rule 13d-3 promulgated under the Exchange Act (as defined below) as in effect on the date hereof.

 

(c)         The term “Change in Control” shall mean the occurrence of the earliest to occur after the date of this Agreement of any of the following events:

 

(i)        Acquisition of Stock by Third Party.  Other than Tolerantia, LLC, Control Empresarial de Capitales, S.A. de C.V., ProKidney Management Equity LLC (collectively, the “Up-C Owners”) or any of their respective affiliates, any Person (as defined below) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors, unless (1) the change in the relative Beneficial Ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding securities entitled to vote generally in the election of directors, or (2) such acquisition was approved in advance by the Continuing Directors (as defined below) and such acquisition would not constitute a Change in Control under part (iii) of this definition;

 

(ii)       Change in Board of Directors.  Individuals who, as of the date hereof, constitute the Board, and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two thirds of the directors then still in office who were directors on the date hereof or whose election for nomination for election was previously so approved (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) (collectively, the “Continuing Directors”), cease for any reason to constitute at least a majority of the members of the Board;

 

(iii)      Corporate Transactions.  The effective date of a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving the Company and one or more businesses (a “Business Combination”), in each case, unless, following such Business Combination: (1) all or substantially all of the individuals and entities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty-one percent (51%) of the combined voting power of the then outstanding securities of the surviving or resulting entity of such Business Combination (or, if the surviving or resulting entity is a wholly owned subsidiary of another entity immediately following such Business Combination, the parent entity of such surviving or resulting entity) entitled to vote generally in the election of directors in substantially the same proportions as their ownership immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors; (2) other than an affiliate of any of the UP-C Owners, no Person (excluding any corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of fifteen percent (15%) or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of the surviving or resulting entity of such Business Combination (or, if the surviving or resulting entity is a wholly owned subsidiary of another entity immediately following such Business Combination, the parent entity of such surviving or resulting entity) except to the extent that such ownership existed prior to the Business Combination; and (3) at least a majority of the Board of Directors of the surviving or resulting entity of such Business Combination (or, if the surviving or resulting entity is a wholly owned subsidiary of another entity immediately following such Business Combination, the parent entity of such surviving or resulting entity) were Continuing Directors at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination;

(iv)      Liquidation.  The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company or an agreement or series of agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than factoring the Company’s current receivables or escrows due (or, if such stockholder approval is not required, the decision by the Board to proceed with such a liquidation, sale, or disposition in one transaction or a series of related transactions); or

 

(v)      Other Events.  There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or any successor rule) (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

 

(d)        The term “Corporate Status” describes the status of a person who is or was a director, officer, trustee, general partner, manager, member, managing member, fiduciary, employee or agent of the Company or of any other Enterprise (as defined below) which such person is or was serving at the request of the Company.

 

(e)        The term “Delaware Court” shall mean the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware).

 

(f)         The term “Disinterested Director” shall mean a director of the Company who is not and was not a party to the Proceeding (as defined below) in respect of which indemnification is sought by Indemnitee.

 

(g)        The term “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, including the use of, or participation in, one or more electronic networks or databases (including one or more distributed electronic networks or databases), that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such recipient through an automated process.

 

(h)        The term “electronic mail” means an electronic transmission directed to a unique electronic mail address (which electronic mail shall be deemed to include any files attached thereto and any information hyperlinked to a website if such electronic mail includes the contact information of an officer or agent of the corporation who is available to assist with accessing such files and information).

 

(i)         The term “electronic mail address” means a destination, commonly expressed as a string of characters, consisting of a unique user name or mailbox (commonly referred to as the “local part” of the address) and a reference to an internet domain (commonly referred to as the “domain part” of the address), whether or not displayed, to which electronic mail can be sent or delivered.

 

(j)        The term “Enterprise” shall mean the Company and any other corporation, constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger to which the Company (or any of its wholly owned Subsidiaries) is a party, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, general partner, member, manager, managing member, fiduciary, employee or agent.

 

(k)          The term “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(l)          The term “Expenses” shall include all direct and indirect costs, fees and expenses of any type or nature whatsoever, including, without limitation, all reasonable attorneys’ fees and costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators and professional advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, fax transmission charges, secretarial services, any federal, state, local or foreign taxes (including ERISA excise taxes and penalties) imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement and all other disbursements, obligations or expenses of the types customarily incurred in connection with, or as a result of, prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a deponent or witness in, settlement or appeal of, or otherwise participating in, a Proceeding (as defined below), including reasonable compensation for time spent by Indemnitee for which he or she is not otherwise compensated by the Company or any third party.  Expenses also shall include (i) Expenses incurred in connection with any appeal resulting from any Proceeding (as defined below), including without limitation the principal, premium, security for, and other costs relating to any cost bond, supersedes bond, or other appeal bond or its equivalent and (ii) Expenses incurred in connection with recovery under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee is ultimately determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be. “Expenses,” however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

 

(m)        The term “fines” shall include any excise tax assessed on Indemnitee with respect to any employee benefit plan.

 

(n)         The term “Independent Counsel” shall mean a law firm or a member of a law firm with significant experience in matters of corporation law and that neither presently is, nor in the past five years has been, retained to represent:  (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements); or (ii) any other party to the Proceeding (as defined below) giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

 

(o)        The term “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided, however, that “Person” shall exclude:  (i) the Company; (ii) any Subsidiaries (as defined below) of the Company; (iii) any employee benefit plan of the Company or of a Subsidiary (as defined below) of the Company or of any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company; and (iv) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a Subsidiary (as defined below) of the Company or of a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

(p)        The term “Proceeding” shall include any threatened, asserted, pending or completed action, suit, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or investigative or related nature, and whether made pursuant to federal, state or other law, in which Indemnitee was, is, will or might be involved as a party or otherwise by reason of the fact that Indemnitee is or was a director, officer, advisor, key employee or agent of the Company, by reason of any action (or failure to act) taken by Indemnitee or of any action (or failure to act) on Indemnitee’s part while acting as a director, officer, advisor, key employee or agent of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, advisor, trustee, general partner, member, manager, managing member, fiduciary, employee or agent of any other Enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement.

 

(q)         The term “serving at the request of the Company” shall include any service as a director, officer, employee, agent or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with respect to an employee benefit plan, its participants or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

 

(r)         The term “Subsidiary,” with respect to any Person, shall mean any corporation, limited liability company, partnership, joint venture, trust or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by that Person.

 

(s)         The term “to the fullest extent permitted by applicable law” shall include, but not be limited to:  (i) to the fullest extent authorized or permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL, and (ii) to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers, directors, advisors, employees and agents, and persons who serve, at the request of the Company, as directors, officers, advisors, employees or agents of other corporations, partnerships, joint ventures, trusts or other Enterprises.

 

3.        INDEMNITY IN THIRD-PARTY PROCEEDINGS.  To the fullest extent permitted by applicable law and subject to the terms of this Agreement, the Company shall indemnify and hold harmless Indemnitee in accordance with the provisions of this Section 3 if Indemnitee was, is, or is threatened to be made, a party to or a participant (as a witness, deponent or otherwise) in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor by reason of Indemnitee’s Corporate Status.  Pursuant to this Section 3, Indemnitee shall be indemnified and held harmless against all Expenses, judgments, liabilities, fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, liabilities, fines, penalties and amounts paid in settlement; provided, however, that any amount paid in settlement be consented to in writing by the Company, which consent shall not be unreasonably withheld) actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding, had no reasonable cause to believe that Indemnitee’s conduct was unlawful.

 

4.          INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY.  To the fullest extent permitted by applicable law and subject to the terms of this Agreement, the Company shall indemnify and hold harmless Indemnitee in accordance with the provisions of this Section 4 if Indemnitee was, is, or is threatened to be made, a party to or a participant (as a witness, deponent or otherwise) in any Proceeding by or in the right of the Company to procure a judgment in its favor by reason of Indemnitee’s Corporate Status.  Pursuant to this Section 4, Indemnitee shall be indemnified and held harmless against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with defense or settlement of such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. No indemnification or hold harmless for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent that a Delaware Court or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification or to be held harmless.

 

5.           INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL.  Notwithstanding any other provisions of this Agreement, and without limiting the rights of Indemnitee under any other provision hereof, to the extent that Indemnitee was or is, by reason of Indemnitee’s Corporate Status, a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall, to the fullest extent permitted by applicable law, indemnify and hold harmless Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall, to the fullest extent permitted by applicable law, indemnify and hold harmless Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter.  If Indemnitee is not wholly successful in such Proceeding, the Company also shall, to the fullest extent permitted by applicable law, indemnify and hold harmless Indemnitee against all Expenses reasonably incurred in connection with a claim, issue or matter related to any claim, issue, or matter on which Indemnitee was successful.  For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

6.         INDEMNIFICATION FOR EXPENSES OF A WITNESS.  Notwithstanding any other provision of this Agreement, and without limiting the rights of Indemnitee under any other provision hereof, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a deponent or witness in any Proceeding to which Indemnitee was or is not a party, Indemnitee shall, to the fullest extent permitted by applicable law, be indemnified and held harmless against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.

7.          ADDITIONAL INDEMNIFICATION RIGHTS. Notwithstanding any limitation in Sections 3, 4, or 5, the Company shall, to the fullest extent permitted by applicable law, indemnify and hold harmless Indemnitee if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, liabilities, fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, liabilities, fines, penalties and amounts paid in settlement; provided, however, that any amount paid in settlement be consented to in writing by the Company, which consent shall not be unreasonably withheld) actually and reasonably incurred by Indemnitee in connection with the Proceeding.  No indemnification or hold harmless rights shall be available under this Section 7 on account of Indemnitee’s conduct which constitutes a breach of Indemnitee’s duty of loyalty to the Company or its stockholders or is an act or omission not in good faith or which involves intentional misconduct or a knowing violation of the law.

 

8.           CONTRIBUTION IN THE EVENT OF JOINT LIABILITY.

 

(a)         To the fullest extent permitted by applicable law, if the indemnification and/or hold harmless rights provided for in this Agreement are unavailable to Indemnitee in whole or in part for any reason whatsoever, the Company, in lieu of indemnifying and holding harmless Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for judgments, liabilities, fines, penalties, amounts paid or to be paid in settlement and/or for Expenses, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against Indemnitee.

 

(b)         The Company shall not enter into any settlement of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.

 

(c)         To the fullest extent permitted by applicable law, the Company hereby agrees to fully indemnify and hold harmless Indemnitee from any claims for contribution which may be brought by officers, directors, advisors, employees or agents of the Company other than Indemnitee who may be jointly liable with Indemnitee.

 

9.          EXCLUSIONS.  Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnification or hold harmless payment or advance Expenses in connection with any claim made against Indemnitee:

 

(a)         for which payment has actually been received by or on behalf of Indemnitee under any insurance policy or other indemnity or advancement provision and which payment has not subsequently been returned, except with respect to any excess beyond the amount actually received under any insurance policy, contract, agreement, other indemnity or advancement provision or otherwise;

 

(b)         for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (or any successor rule) or similar provisions of state statutory law or common law; or

 

(c)       except as otherwise provided in Sections 14(f)-(g) hereof, prior to a Change in Control, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, advisors, employees, agents or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification or hold harmless payment, in its sole discretion, pursuant to the powers vested in the Company under applicable law.  Indemnitee shall seek payments or advances from the Company only to the extent that such payments or advances are unavailable from any insurance policy of the Company covering Indemnitee.

 

10.         ADVANCES OF EXPENSES; DEFENSE OF CLAIM.

 

(a)         Notwithstanding any provision of this Agreement to the contrary, except for this Section 10, and to the fullest extent not prohibited by applicable law, the Company shall pay the Expenses incurred by any Indemnitee (or reasonably expected by Indemnitee to be incurred by Indemnitee within three (3) months) in connection with any Proceeding within ten (10) days after the receipt by the Company of a statement or statements requesting such advances from time to time, prior to the final disposition of any Proceeding, in each case upon the Company’s receipt of an undertaking, by or on behalf of Indemnitee, to repay the advanced amounts to the extent that it is ultimately determined that such Indemnitee is not entitled to be indemnified by the Company under the provisions of this Agreement or applicable law.  Advances shall be unsecured and interest free.  Advances shall include any and all reasonable Expenses incurred pursuing a Proceeding to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed.  If it shall be determined by a final judgment or other final adjudication that Indemnitee was not entitled to indemnification, any advancement shall be returned to the Company (without interest) by such Indemnitee.  This Section 10(a) shall not apply to any claim made by Indemnitee for which an indemnification or hold harmless payment is excluded pursuant to Section 9.

 

(b)          The Company will be entitled to participate in the Proceeding at its own expense.

 

(c)         The Company shall not settle any action, claim or Proceeding (in whole or in part) which would impose any Expense, judgment, liability, fine, penalty or limitation on Indemnitee without Indemnitee’s prior written consent.

 

11.          PROCEDURE FOR NOTIFICATION AND APPLICATION FOR INDEMNIFICATION.

 

(a)       Indemnitee shall notify the Company in writing of any Proceeding, claim, issue or matter with respect to which Indemnitee intends to seek indemnification or advancement of Expenses hereunder as soon as reasonably practicable following the receipt by Indemnitee of written notice thereof, which written notification shall include a description of the Proceeding, claim, issue or matter and the facts underlying such Proceeding, claim, issue or matter.  Without limitation to the foregoing, Indemnitee agrees to notify promptly the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding, claim, issue or matter therein which may be subject to indemnification or hold harmless rights or advancement of Expenses covered hereunder.  The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement, or otherwise.

 

(b)       To obtain indemnification under this Agreement, Indemnitee shall deliver to the Company a written application to indemnify and hold harmless Indemnitee in accordance with this Agreement, which written request shall include such documentation and other information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification hereunder.  Such application(s) may be delivered from time to time and at such time(s) as Indemnitee deems appropriate in his or her sole discretion.  Following such a written application for indemnification by Indemnitee, Indemnitee’s entitlement to indemnification shall be determined according to Section 12(a) of this Agreement.

 

12.         PROCEDURE UPON APPLICATION FOR INDEMNIFICATION.

 

(a)       A determination, if required by applicable law, with respect to Indemnitee’s entitlement to indemnification under any of the provisions of this Agreement shall be made in the specific case by one of the following methods:  (i) if no Change in Control has occurred, (x) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (y) by a committee of Disinterested Directors, even though less than a quorum of the Board, or (z) if there are no Disinterested Directors or if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control has occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee.  The Company promptly will advise Indemnitee in writing with respect to any determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied.  If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination.  Indemnitee shall reasonably cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination.  Any costs or Expenses (including reasonable attorney’s fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby agrees to indemnify and to hold Indemnitee harmless therefor.

 

(b)        In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12(a) hereof, the Independent Counsel shall be selected as provided in this Section 12(b).  The Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected and certifying that the Independent Counsel so selected meets the requirements of “Independent Counsel” as defined in Section 2 of this Agreement.  If the Independent Counsel is selected by the Board, the Company shall give written notice to Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected and certifying that the Independent Counsel so selected meets the requirements of “Independent Counsel” as defined in Section 2 of this Agreement.  In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been received, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the person so selected shall act as Independent Counsel.  If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a Delaware Court has determined that such objection is without merit.  If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 11(b) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Delaware Court for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Delaware Court, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 12(a) hereof.  Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

 

(c)        The Company agrees to pay the reasonable fees and expenses of Independent Counsel and to fully indemnify and hold harmless such Independent Counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

13.         PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.

 

(a)         In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall, to the fullest extent not prohibited by applicable law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11(b) of this Agreement, and the Company shall, to the fullest extent not prohibited by applicable law, have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption.  Neither the failure of the Company (including by the Disinterested Directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by the Disinterested Directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

 

(b)      If the person, persons or entity empowered or selected under Section 12 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within forty-five (45) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent permitted by law, be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a final judicial determination that any or all such indemnification is expressly prohibited under applicable law; provided, however, that such 45-day period may be extended for a reasonable time, not to exceed an additional fifteen (15) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto and requests such additional time in a writing delivered to the Company.

 

(c)        The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.

 

(d)         For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the directors, trustees, general partners, managers, managing members or officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise, its Board, any committee of the Board or any director, trustee, general partner, manager or managing member of the Enterprise, or on information or records given or reports made to the Enterprise, its Board, any committee of the Board or any director, trustee, general partner, manager or managing member of the Enterprise, by an independent certified public accountant or by an appraiser or other expert selected by the Enterprise, its Board, any committee of the Board or any director, trustee, general partner, manager or managing member.  The provisions of this Section 13(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed or found to have met the applicable standard of conduct set forth in this Agreement.

 

(e)        The knowledge and/or actions, or failure to act, of any other director, officer, advisor, trustee, partner, manager, managing member, fiduciary, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

 

14.         REMEDIES OF INDEMNITEE.

 

(a)        In the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses, to the fullest extent permitted by applicable law, is not timely made pursuant to Section 10 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 12(a) of this Agreement within forty-five (45) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5, 6, 7 or the last sentence of Section 12(a) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, (v) a contribution payment is not made in a timely manner pursuant to Section 8 of this Agreement, or (vi) payment of indemnification pursuant to Section 3 or 4 of this Agreement is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, or (vii) payment to Indemnitee pursuant to any hold harmless rights under this Agreement or otherwise is not made in accordance with this Agreement, Indemnitee shall be entitled to seek an adjudication by the Delaware Court to such indemnification, hold harmless, contribution or advancement rights.  Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules and Mediation Procedures of the American Arbitration Association.  Except as set forth herein, the provisions of Delaware law (without regard to its conflict of laws rules) shall apply to any such arbitration.  The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

 

(b)         In the event that a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination.

 

(c)         In any judicial proceeding or arbitration commenced pursuant to this Section 14, Indemnitee shall, to the fullest extent not prohibited by applicable law, be presumed to be entitled to be indemnified and held harmless and to receive advancement of Expenses under this Agreement and the Company shall have the burden of proving Indemnitee is not entitled to be indemnified and held harmless and to receive advancement of Expenses, as the case may be, and the Company may not refer to or introduce into evidence any determination pursuant to Section 12(a) of this Agreement adverse to Indemnitee for any purpose.  If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 14, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 10 until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).

 

(d)         If a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

(e)       The Company shall, to the fullest extent not prohibited by applicable law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in the Delaware Court or before any applicable arbitrator that the Company is bound by all the provisions of this Agreement.

 

(f)          The Company shall indemnify and hold harmless Indemnitee to the fullest extent permitted by applicable law against all Expenses and, if requested by Indemnitee, shall (within ten (10) days after the Company’s receipt of such written request) pay to Indemnitee, to the fullest extent permitted by applicable law, such Expenses which are incurred by Indemnitee in connection with any judicial proceeding or arbitration brought by Indemnitee:  (i) to enforce his or her rights under, or to recover damages for breach of, this Agreement or any other indemnification, hold harmless, advancement or contribution agreement or provision of the Charter or the By-laws now or hereafter in effect; or (ii) for recovery or advances under any insurance policy maintained by any person for the benefit of Indemnitee, regardless of the outcome and whether Indemnitee ultimately is determined to be entitled to such indemnification or hold harmless right, advancement, contribution or insurance recovery, as the case may be (unless such judicial proceeding or arbitration was not brought by Indemnitee in good faith).

 

(g)        Interest shall be paid by the Company to Indemnitee at the legal rate under Delaware law for amounts which the Company indemnifies, holds harmless or advances, or is obliged to indemnify, hold harmless, or advance, for the period commencing with the date on which Indemnitee requests indemnification, to be held harmless, contribution, reimbursement or advancement of any Expenses and ending with the date on which such payment is made to Indemnitee by the Company.

 

15.       SECURITY.  Notwithstanding anything herein to the contrary, to the extent requested by Indemnitee and approved by the Board, and to the extent not prohibited by applicable law, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral.  Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of Indemnitee.

16.         NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.

 

(a)         The rights of Indemnitee as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Charter, the By-laws, any agreement, a vote of stockholders or a resolution of the Board, or otherwise.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any Proceeding (regardless of when such Proceeding is first threatened, commenced or completed) or claim, issue or matter therein arising out of, or related to, any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal.  To the extent that a change in applicable law, whether by statute or judicial decision, permits greater indemnification or hold harmless rights or advancement of Expenses than would be afforded currently under the Charter, the By-laws or this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

 

(b)       The DGCL, the Charter and the By-laws permit the Company to purchase and maintain insurance or furnish similar protection or make other arrangements including, but not limited to, providing a trust fund, letter of credit, or surety bond (“Indemnification Arrangements”) on behalf of Indemnitee against any liability asserted against Indemnitee or incurred by or on behalf of Indemnitee or in such capacity as a director, officer, advisor, employee or agent of the Company or of any other Enterprise which such person serves at the request of the Company, or arising out of Indemnitee’s status as such, whether or not the Company would have the power to indemnify Indemnitee against such liability under the provisions of this Agreement or the DGCL, as it may then be in effect.  The purchase, establishment, and maintenance of any such Indemnification Arrangement shall not in any way limit or affect the rights and obligations of the Company or of Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and Indemnitee shall not in any way limit or affect the rights and obligations of the Company or the other party or parties thereto under any such Indemnification Arrangement.

 

(c)        To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, advisors, trustees, partners, managers, managing members, fiduciaries, employees, or agents of the Company or of any other Enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, advisor, trustee, partner, manager, managing member, fiduciary, employee or agent under such policy or policies.  If, at the time the Company receives notice from any source of a Proceeding as to which Indemnitee is a party or a participant (as a witness, deponent or otherwise), the Company has liability insurance in effect applicable to such Proceeding and Indemnitee, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter use commercially reasonably efforts to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.

 

(d)         In the event of any payment under this Agreement, the Company, to the fullest extent permitted by applicable law, shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.  No such payment by the Company under this Agreement shall be deemed to relieve any insurer of its obligations.

 

(e)        The Company’s obligation to indemnify, hold harmless, or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, advisor, trustee, partner, manager, managing member, fiduciary,  employee or agent of any other Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or hold harmless payments or advancement of expenses from such Enterprise.  Notwithstanding any other provision of this Agreement to the contrary, (i) Indemnitee shall have no obligation to reduce, offset, allocate, pursue or apportion any indemnification, hold harmless, advancement, contribution or insurance coverage among multiple parties possessing such duties to Indemnitee prior to the Company’s satisfaction and performance of all its obligations under this Agreement, and (ii) the Company shall perform fully its obligations under this Agreement without regard to whether Indemnitee holds, may pursue or has pursued any indemnification, hold harmless, advancement, contribution or insurance coverage rights against any person or entity other than the Company.

 

(f)          To the extent Indemnitee has rights to indemnification, advancement of expenses and/or insurance provided by one or more third parties (collectively, the “Third-Party Indemnitors”) as applicable, (i) the Company shall be the indemnitor of first resort (i.e., that its obligations to Indemnitee are primary and any obligation of the Third Party Indemnitors to advance Expenses or to provide indemnification for the same Expenses or liabilities incurred by Indemnitee are secondary), (ii) the Company shall be required to advance the full amount of Expenses incurred by Indemnitee and shall be liable for the full amount of all claims, liabilities, damages, losses, costs and Expenses (including amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other costs and reasonable Expenses of investigating or defending against any claim or alleged claim) to the extent legally permitted and as required by the terms of this Agreement, the Company’s organizational documents or other agreement, without regard to any rights Indemnitee may have against the Third Party Indemnitors and (iii) the Company irrevocably waives, relinquishes and releases the Third Party Indemnitors from any and all claims against them for contribution, subrogation or any other recovery of any kind in respect thereof.  No advancement or payment by the Third-Party Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing, and the Third-Party Indemnitors shall have a right of contribution and be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company.

 

17.        DURATION OF AGREEMENT.  All agreements and obligations of the Company contained herein shall continue during the period Indemnitee serves as a director, officer, advisor, employee or agent of the Company or as a director, officer, advisor, trustee, partner, manager, managing member, fiduciary, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other Enterprise which Indemnitee serves at the request of the Company and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding (including any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement) by reason of Indemnitee’s Corporate Status, whether or not Indemnitee is acting in any such capacity at the time any liability or expense arises for which indemnification or advancement can be provided under this Agreement.

18.        SEVERABILITY.  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever:  (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by applicable law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

 

19.         ENFORCEMENT AND BINDING EFFECT.

 

(a)        The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director, advisor, officer, key employee or in another capacity of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director, advisor, officer, key employee or in another capacity of the Company.

 

(b)         Without limiting any of the rights of Indemnitee under the Charter or By-laws as they may be amended from time to time, this Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

 

(c)         The indemnification, hold harmless and advancement of expenses rights provided by or granted pursuant to this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), shall continue as to an Indemnitee who has ceased to be an officer, director, advisor, key employee, agent (or in any other capacity of the Company) or a director, officer, trustee, general partner, manager, member, managing member, fiduciary, employee or agent of any other Enterprise at the Company’s request, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

 

(d)         The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

(e)         The Company and Indemnitee agree herein that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause Indemnitee irreparable harm.  Accordingly, the parties hereto agree that Indemnitee may, to the fullest extent permitted by applicable law, enforce this Agreement by seeking, among other things, injunctive relief and/or specific performance hereof , without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which Indemnitee may be entitled.  The Company and Indemnitee further agree that Indemnitee shall, to the fullest extent permitted by applicable law, be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertaking in connection therewith.  The Company acknowledges that in the absence of a waiver, a bond or undertaking may be required of Indemnitee by a Delaware Court.  The Company hereby waives any such requirement of such a bond or undertaking to the fullest extent permitted by applicable law.

 

20.       MODIFICATION AND WAIVER.  No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the Company and Indemnitee.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.

 

21.         NOTICES.  All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered by hand or communicated by telephone and receipted for by the party to whom said notice or other communication shall have been directed, (ii) mailed by certified or registered mail with postage prepaid, on the third (3rd) business day after the date on which it is so mailed, (iii) mailed by reputable overnight courier and receipted for by the party to whom said notice or other communication shall have been directed, or (iv) by electronic mail or other electronic transmission, upon receipt by the party to whom said notice shall have been directed:

 

(a)         If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide in writing to the Company.

 

(b)          If to the Company, to:

 

ProKidney Corp.

2000 Frontis Plaza Blvd, Suite 250

Winston-Salem, NC 27103

Attention:  Bruce Culleton

Email:  bruce.culleton@prokidney.com

 

With a copy, which shall not constitute notice, to

 

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

New York, New York 10036

Attention:  Stuart Leblang and Eric H. Wexler

Email:  sleblang@akingump.com; ewexler@akingump.com

 

or to any other address as may have been furnished to Indemnitee in writing by the Company.

 

22.         APPLICABLE LAW AND CONSENT TO JURISDICTION.  This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules.  Except with respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement, to the fullest extent permitted by applicable law, the Company and Indemnitee hereby irrevocably and unconditionally:  (a) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court and not in any other state or federal court in the United States of America or any court in any other country; (b) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement; (c) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court; and (d) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum, or is subject (in whole or in part) to a jury trial.  To the fullest extent permitted by applicable law, the parties hereby agree that the mailing of process and other papers in connection with any such action or proceeding in the manner provided by Section 21 or in such other manner as may be permitted by law, shall be valid and sufficient service thereof.  EACH PARTY HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

 

23.         IDENTICAL COUNTERPARTS.  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.  Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

24.        MISCELLANEOUS.  Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun and vice versa, where appropriate.  The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.  The word “or” when used in this Agreement is not exclusive.

 

25.         PERIOD OF LIMITATIONS.  No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action such shorter period shall govern.

 

26.         ADDITIONAL ACTS.  If for the validation of any of the provisions in this Agreement any act, resolution, approval or other procedure is required to the fullest extent permitted by applicable law, the Company undertakes to cause such act, resolution, approval or other procedure to be affected or adopted in a manner that will enable the Company to fulfill its obligations under this Agreement.

 

27.         MAINTENANCE OF INSURANCE.  The Company shall use commercially reasonable efforts to obtain and maintain in effect during the entire period for which the Company is obligated to indemnify the Indemnitee under this Agreement, one or more policies of insurance with reputable insurance companies to provide the officers, directors, key employees and agents of the Company with coverage for losses from wrongful acts and omissions and to ensure the Company’s performance of its indemnification obligations under this Agreement, as applicable to directors, officers, key employees or agents, respectively.  The Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, key employee or agent under such policy or policies.  In all such insurance policies, the Indemnitee shall be named as an insured in such a manner as to provide the Indemnitee with the same rights and benefits as are accorded to the most favorably insured of the Company’s directors, officers, key employees or agents, as applicable.

 

[Signature Page Follows]

 

 

---

			Page
ARTICLE I DEFINITIONS			2
	1.01	Definitions	2
ARTICLE II FORMATION, TERM, PURPOSE AND POWERS			14
	2.01	Formation	14
	2.02	Name	14
	2.03	Term	14
	2.04	Offices	14
	2.05	Agent for Service of Process; Existence and Good Standing; Foreign Qualification.	14
	2.06	Business Purpose	15
	2.07	Powers of the Company	15
	2.08	Members; Reclassification; Admission of New Members	15
	2.09	Resignation	15
	2.10	Representations of Members	15
	2.11	Amendment and Restatement of Existing LLC Agreement	17
ARTICLE III MANAGEMENT			17
	3.01	OpCo Board.	17
	3.02	Appointment of the OpCo Board	18
	3.03	Meetings of the OpCo Board	19
	3.04	Action by the OpCo Board..	19
	3.05	Compensation	19
	3.06	Expenses	19
	3.07	Officers	20
	3.08	Authority of Members	20
	3.09	Meetings of the Members	21
	3.10	Action by Written Consent or Ratification	21
	3.11	Investment Company Act Restrictions	22
	3.12	Certain Transactions	22
ARTICLE IV DISTRIBUTIONS			22
	4.01	Distributions	22
	4.02	Liquidation Distribution	24
	4.03	Limitations on Distribution	24

			Page
	4.04	Use of Distribution Funds by PubCo	24
ARTICLE V CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; TAX ALLOCATIONS; TAX MATTERS			25
	5.01	Capital Contributions	25
	5.02	No Additional Capital Contributions	25
	5.03	Capital Accounts	25
	5.04	Allocations of Profits and Losses	25
	5.05	Special Allocations	26
	5.06	Tax Allocations	28
	5.07	Tax Advances	28
	5.08	Partnership Representative.	29
	5.09	Other Allocation Provisions	30
	5.10	Survival	30
	5.11	Mexican Income Tax Law	30
ARTICLE VI BOOKS AND RECORDS; REPORTS			31
	6.01	Books and Records.	31
	6.02	Confidentiality.	32
ARTICLE VII COMPANY UNITS			33
	7.01	Units.	33
	7.02	Register	34
	7.03	Registered Members	35
	7.04	Issuances, Repurchases and Redemptions, Recapitalizations.	35
	7.05	Redemptions pursuant to the Exchange Agreement	37
	7.06	Restricted Common Units.	37
ARTICLE VIII TRANSFER RESTRICTIONS			39
	8.01	Member Transfers.	39
	8.02	Mandatory Exchanges and Approved Qualified Transaction	41
	8.03	Encumbrances	42
	8.04	Further Restrictions.	43
	8.05	Rights of Assignees	44
	8.06	Admissions, Resignations and Removals.	45
	8.07	Admission of Assignees as Substitute Members	45
	8.08	Resignation and Removal of Members	45

			Page
	8.09	Withholding	45
ARTICLE IX DISSOLUTION, LIQUIDATION AND TERMINATION			46
	9.01	No Dissolution	46
	9.02	Events Causing Dissolution	46
	9.03	Distribution upon Dissolution	46
	9.04	Time for Liquidation	47
	9.05	Termination	47
	9.06	Claims of the Members	47
	9.07	Survival of Certain Provisions	47
ARTICLE X LIABILITY AND INDEMNIFICATION			47
	10.01	Liability of Members and Managers.	47
	10.02	Indemnification.	49
ARTICLE XI VALUATION			51
	11.01	Fair Market Value	51
	11.02	Determination	51
ARTICLE XII MISCELLANEOUS			52
	12.01	Severability	52
	12.02	Notices	52
	12.03	Cumulative Remedies	53
	12.04	Binding Effect	53
	12.05	Interpretation	53
	12.06	Counterparts	53
	12.07	Further Assurances	53
	12.08	Entire Agreement	53
	12.09	Governing Law	54
	12.10	Submission to Jurisdiction; Waiver of Jury Trial.	54
	12.11	Expenses	55
	12.12	Amendments and Waivers.	55
	12.13	No Third Party Beneficiaries	56
	12.14	Headings	56
	12.15	Power of Attorney	56
	12.16	Separate Agreements; Schedules	56
	12.17	Partnership Status	57
	12.18	Delivery by Facsimile or Email	57

(a)

If to the Company, to:

(b)

If to any Member (other than PubCo and any Managers who are also Members), to such Member at the address of such Member as set forth on Schedule I or to such other address or addresses as the applicable Member may designate to the Company by like notice as hereinabove set forth.

(c)

If to PubCo or any Manager, to:

	COMPANY:
	PROKIDNEY HOLDINGS, LLC
	By:	/s/ Todd Girolamo
	Name:	Todd Girolamo
	Title:	Corporate Compliance Officer, Secretary; Chief Legal Officer

	PUBCO:
	PROKIDNEY CORP.
	By:	/s/ Todd Girolamo
	Name:	Todd Girolamo
	Title:	Corporate Compliance Officer, Secretary; Chief Legal Officer

	OTHER MEMBERS:
	Tolernatia, LLC
	/s/ Jaime Gomez-Sotomayor
	Name: Jaime Gomez-Sotomayor
	Title: Authorized Person
	ProKidney Management Equity LLC
	By: Tolerantia, LLC, as attorney-in-fact
	/s/ Jaime Gomez-Sotomayor
	Name: Jaime Gomez-Sotomayor
	Title: Authorized Person
	CONTROL EMPRESARIAL DE CAPITALES, S.A. DE C.V.
	By: Tolerantia, LLC, as attorney-in-fact
	/s/ Jaime Gomez-Sotomayor
	Name: Jaime Gomez-Sotomayor
	Title: Authorized Person
	ProKidney Corp.
	/s/ Todd Girolamo
	Name: Todd Girolamo
	Title: Corporate Compliance Officer; Secretary; Chief Legal Officer

	MANAGERS:
	Bruce Culleton
	/s/ Bruce Culleton
	(Signature)

	Pablo Legorreta
	/s/ Pablo Legorreta
	(Signature)
	Jaime Gomez-sotomayor
	/s/ Jaime Gomez-Sotomayor
	(Signature)

1.

Bruce Culleton

2.

Pablo Legorreta (Chairperson)

3.

Jaime Gomez-Sotomayor