PROPOSAL NO. 4 THE LETTER AGREEMENT AMENDMENT PROPOSAL
Overview
The Letter Agreement Amendment Proposal asks the Companys shareholders to approve an amendment to the Letter Agreement, to allow the
initial shareholders including the Sponsor, Healthcare AI Acquisition, LLC (the Sponsor) and our independent directors to directly or indirectly, transfer their Class B Ordinary Shares to a third party prior to the expiration
of the applicable lock-up period.
Reasons for the Letter Agreement Amendment
Proposal
The initial shareholders including the Sponsor and our independent directors purchased 5,390,600 Class B Ordinary Shares
(after the forfeiture of 359,400 Class B Ordinary Shares) for $25,000 on February 23, 2021. The Class B Ordinary Shares will automatically convert into Class A Ordinary Shares on a one-for-one basis upon consummation of a Business Combination. In addition, the Sponsor purchased 11,124,960 private placement warrants, each exercisable to purchase one Class A Ordinary Share
at $11.50 per share, subject to adjustment, at a price of $1.00 per warrant ($11,124,960 in the aggregate).
As a condition to the Initial
Public Offering, the Sponsor, HEALTHCARE AI, its directors and officers, and the representative of the underwriters (the Insiders) entered into the Letter Agreement on December 14, 2021 pursuant to which the Sponsor and each
Insider agreed that, in particular, subject to certain limited exceptions, it, he or she shall not transfer any Class B Ordinary Shares until the earliest of (A) one year after the completion of a Business Combination and
(B) subsequent to a Business Combination, (x) if the closing price of the Class A Ordinary Shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and
the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which we complete a liquidation, merger, share
exchange or other similar transaction that results in all of our public shareholders having the right to exchange their Class A Ordinary Shares for cash, securities or other property. In addition, the Sponsor and each Insider also agreed that
it, he or she shall not transfer any Private Placement Warrants or Class A Ordinary Shares underlying such warrants until 30 days after the completion of a Business Combination.
As the Letter Agreement was a condition to the Initial Public Offering, HEALTHCARE AI is seeking shareholder approval to enter into and
consummate the Letter Agreement Amendment.
Consequences if the Insider Letter Agreement Amendment Proposal is Not Approved
If the Letter Agreement Amendment Proposal is not approved, the Extension Amendment Proposal and the Sponsor Handover will not be
implemented. Therefore, if the Letter Agreement Amendment Proposal is not approved on or before the Termination Date, the Company will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible
but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on
the funds held in the Trust Account and not previously released to HEALTHCARE AI to pay its income taxes, if any (less up to $100,000 of interest to pay liquidation expenses), divided by the number of the then-outstanding Public Shares, which
redemption will completely extinguish public shareholders rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject
to the approval of HEALTHCARE AIs remaining shareholders and the Board, liquidate and dissolve, subject in each case of clauses (ii) and (iii) to HEALTHCARE AIs obligations under Cayman Islands law to provide for claims of creditors
and to requirements of other applicable law. There will be no distribution from the Trust Account with respect to HEALTHCARE AIs warrants, which will expire worthless in the event HEALTHCARE AI dissolves and liquidates the Trust Account.
32