Common use of Participation Right Clause in Contracts

Participation Right. (a) The Company shall not issue (an “Issuance”) additional shares of Company Common Stock or other Equity Securities to any Person, including AEA or the AEA Investors (other than (i) shares or other securities issued upon the exchange, exercise or conversion of options, warrants, convertible stock, rights, calls or other securities exchangeable or exercisable for or convertible into such class of shares or other securities in accordance with the terms thereof, (ii) shares or other securities issued in connection with any stock split, stock dividend or recapitalization of the Company, (iii) shares or other securities issued by the Company pursuant to the acquisition of another corporation, partnership or other business or entity or a material portion of the assets thereof, by merger or purchase of assets (any such transaction, a “Qualified Transaction”) or otherwise pursuant to a plan, agreement or other arrangement in relation to a Qualified Transaction approved by the Board; provided, however, that if such corporation, partnership or other business or entity is an Affiliate of the Company or the AEA Investors, such acquisition is made on an arms-length basis, (iv) shares or other Equity Securities issued to employees, the Relationship Investors, officers or directors of the Company that are not employees of AEA; provided, however, that such Issuances are approved by the Board or a committee thereof and, in the case of Issuances to Relationship Investors, so long as such Issuances to the Relationship Investors do not have an aggregate value that exceeds Five Million Dollars ($5,000,000.00) in the aggregate for all such transactions and does not cause the AEA Investors to hold less than a majority of the outstanding Company Shares following such transactions, or (v) shares or other securities issued in connection with an IPO), unless, prior to such Issuance, the Company notifies each Stockholder party hereto in writing of the proposed Issuance and grants to each such Stockholder or, at such Stockholder’s election, one or more of its Affiliates the right (the “Right”) to subscribe for and purchase such additional shares of Company Common Stock or units of other Equity Securities to be issued in the proposed Issuance at the same price and upon the same terms and conditions (including, in the event such securities are issued as a unit together with other securities, the purchase of such other securities) to be issued in the proposed Issuance such that, immediately after giving effect to the Issuance and exercise of the Right (including, for purposes of this calculation, the issuance of shares of Company Common Stock upon conversion, exchange or exercise of any other Equity Securities issued in the Issuance or subject to the Right), the shares of Company Common Stock beneficially owned by such Stockholder and its Affiliates on a fully diluted basis (rounded to the nearest whole share) shall represent the same percentage of the aggregate number of shares of Company Common Stock outstanding on a fully diluted basis as were beneficially owned by such Stockholder and its Affiliates immediately prior to the Issuance. (b) The Right may be exercised by each Stockholder party hereto or its Affiliates at any time by written notice to the Company received by the Company within fifteen (15) Business Days after receipt of notice from the Company of the proposed Issuance, and the closing of the purchase and sale pursuant to the exercise of the right shall occur at least thirty (30) days after the giving of the notice of the proposed Issuance by the Company. Notwithstanding the foregoing, the Right shall not apply to any Issuance, pro rata, to all holders of Company Common Stock. (c) Notwithstanding the other provisions of this Section 2.5, if the Board reasonably determines that there is a need of the Company to issue securities of the Company that would otherwise be required to be offered to the Stockholders to exercise the Right under this Section 2.5 prior to such Issuance, the Company may issue such securities without first complying with this Section 2.5; provided, however, that within thirty (30) days after such Issuance, the Company offers each Stockholder the opportunity to purchase such number of securities that such Stockholder would have been entitled to purchase pursuant to the Right of Section 2.5 by sending written notice to the Stockholders. In the event of an offer made by the Company pursuant to this Section 2.5(c), the timing and procedures for the exercise and consummation of such offer shall be the same as those set forth in Section 2.5(b), with appropriate modifications to reflect the post-issuance delivery of the notice as contemplated in this Section 2.5(c).

Appears in 2 contracts

Samples: Stockholders’ Agreement (EWT Holdings I Corp.), Stockholders’ Agreement

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Participation Right. (a) The Company shall not issue (an “Issuance”) additional shares of Company Common Stock or other Equity Securities to any Person, including AEA or the AEA Investors Person (other than (i) shares or other securities issued upon the exchange, exercise or conversion of options, warrants, convertible stock, rights, calls or other securities exchangeable or exercisable for or convertible into such class of shares or other securities in accordance with the terms thereof, (ii) shares or other securities issued in connection with any stock split, stock dividend or other similar recapitalization of the Company, (iii) shares or other securities issued by the Company pursuant to the acquisition of another corporation, partnership or other business or entity or a material portion of the assets thereof, by merger or merger, purchase of assets (any such transaction, a “Qualified Transaction”) or otherwise pursuant to a plan, agreement or other arrangement in relation to a Qualified Transaction approved by the Board; provided, however, that if such corporation, partnership or other business or entity is an Affiliate of the Company or the AEA Investors, such acquisition is made on an arms-length basisbasis as determined by the Board in good faith, (iv) shares or other Equity Securities securities issued to employees, the Relationship Investors, officers or directors of the Company that are not employees of AEACompany; provided, however, that such Issuances are approved by the Board or a committee thereof and, in the case of Issuances to Relationship Investors, so long as such Issuances to the Relationship Investors do not have an aggregate value that exceeds Five Million Dollars ($5,000,000.00) in the aggregate for all such transactions and does not cause the AEA Investors to hold less than a majority of the outstanding Company Shares following such transactions, or (v) shares or other securities issued in connection with an IPO), unless, prior to such Issuance, the Company notifies each Stockholder party hereto in writing (the “Offer Notice”) of the proposed Issuance and grants to each such Stockholder or, at such Stockholder’s election, one or more of its Affiliates the right (the “Right”) to subscribe for and purchase such additional shares of Company Common Stock or units of other Equity Securities to be issued in the proposed Issuance at the same price and upon the same terms and conditions (including, in the event such securities are issued as a unit together with other securities, the purchase of such other securities) to be issued in the proposed Issuance such that, immediately after giving effect to the Issuance and exercise of the Right (including, for purposes of this calculation, the issuance of shares of Company Common Stock upon conversion, exchange or exercise of any other Equity Securities issued in the Issuance or subject to the Right), the shares of Company Common Stock beneficially owned by such Stockholder and its Affiliates on a fully diluted basis (rounded to the nearest whole share) shall represent the same percentage of the aggregate number of shares of Company Common Stock outstanding on a fully diluted basis as were beneficially owned by such Stockholder and its Affiliates immediately prior to the Issuance. (b) The Right may be exercised by each Stockholder party hereto or its Affiliates at any time by written notice to the Company received by the Company within fifteen (15) 15 Business Days after receipt of notice the Offer Notice from the Company of the proposed Issuance, and the closing of the purchase and sale pursuant to the exercise of the right shall occur at least thirty (30) 30 days after the giving of the notice Offer Notice of the proposed Issuance by the Company. Notwithstanding the foregoing, the Right shall not apply to any Issuance, pro rata, to all holders of Company Common Stock. Notwithstanding anything herein to the contrary, a Minority Investor shall be permitted to assign its Right to another Minority Investor. (c) If all Equity Securities referred to in the Offer Notice are not elected to be purchased by the Stockholders pursuant to Section 2.6(b), the Company may, during the 90 day period following the expiration of the 15 Business Day period described in Section 2.6(b), offer the remaining unsubscribed portion of such Equity Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the Company does not enter into an agreement for the sale of such remaining Equity Securities within such period, the Company must deliver another Offer Notice to the Stockholders and re-comply with the provisions of this Section 2.6 prior to any issuance of Equity Securities. (d) Notwithstanding the other provisions of this Section 2.5, if the Board reasonably determines that there is a need of the Company to issue securities of the Company that would otherwise be required to be offered to the Stockholders to exercise the Right under this Section 2.5 prior to such Issuance, the Company may issue such securities without first complying with this Section 2.5; provided, however, that within thirty (30) days after such Issuance, the Company offers each Stockholder the opportunity to purchase such number of securities that such Stockholder would have been entitled to purchase pursuant to the Right of Section 2.5 by sending written notice to the Stockholders. In the event of an offer made by the Company pursuant to this Section 2.5(c2.5(d), the timing and procedures for the exercise and consummation of such offer shall be the same as those set forth in Section 2.5(b), with appropriate modifications to reflect the post-issuance delivery of the notice Offer Notice as contemplated in this Section 2.5(c2.5(d).

Appears in 2 contracts

Samples: Stockholders’ Agreement (GMS Inc.), Shareholder Agreement

Participation Right. From and after the date hereof and to and through the date that is two (a2) The years after the date hereof, neither the Company shall not issue nor any of the Subsidiaries shall, directly or indirectly, issue, offer, sell, grant any option to purchase, or otherwise dispose of (an “Issuance”or announce any issuance, offer, sale, grant or any option to purchase or other disposition of) additional shares any of their respective equity or equity equivalent securities, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time and under any circumstances convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, capital stock and other securities of the Company (including, without limitation, any securities of the Company or any Subsidiary which entitle the holder thereof to acquire Common Stock at any time, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock or other Equity Securities securities that entitle the holder to receive, directly or indirectly, Common Stock) (collectively with such capital stock or other securities of the Company, “Equivalents”) (any Personsuch issuance, including AEA offer, sale, grant, disposition or announcement being referred to as a “Subsequent Placement”), unless the AEA Investors (other than Company shall have first complied with this Section 4(m). The Company acknowledges and agrees that the right set forth in this Section 4(m) is a right granted by the Company, separately, to each Buyer. (i) shares At least five (5) Trading Days prior to the closing of the Subsequent Placement, the Company shall deliver to each Buyer a written notice of its intention to effect a Subsequent Placement (each such notice, a “Pre-Notice”), which Pre-Notice shall ask such Buyer if it wants to review the details of such financing. Upon the request of a Buyer, which shall be within two (2) Trading Days of its receipt of the Pre-Notice, and only upon a request by such Buyer, the Company shall promptly, but no later than one (1) Trading Day after such request, deliver to such Buyer an irrevocable written notice (the “Offer Notice”) of any proposed or intended issuance or sale or exchange (the “Offer”) of the securities being offered (the “Offered Securities”) in a Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe the price and other securities issued terms upon which they are to be issued, sold or exchanged, and the exchangenumber or amount of the Offered Securities to be issued, exercise sold or conversion of optionsexchanged, warrants(y) identify the Persons (if known) to which or with which the Offered Securities are to be offered, convertible stockissued, rights, calls sold or other securities exchangeable exchanged and (z) offer to issue and sell to or exercisable for or convertible into exchange with such class of shares or other securities Buyer in accordance with the terms thereofof the Offer all of the Offered Securities, provided that the number of Offered Securities which such Buyer shall have the right to subscribe for under this Section 4(m) shall be (a) based on such Buyer’s pro rata portion of the aggregate original principal amount of the Notes purchased hereunder by all Buyers (the “Basic Amount”), and (b) with respect to each Buyer that elects to purchase its Basic Amount, any additional portion of the Offered Securities attributable to the Basic Amounts of other Buyers as such Buyer shall indicate it will purchase or acquire should the other Buyers subscribe for less than their Basic Amounts (the “Undersubscription Amount”). (ii) shares To accept an Offer, in whole or other securities issued in connection with any stock splitpart, stock dividend or recapitalization such Buyer must deliver a written notice to the Company prior to the end of the Companyfifth (5th) Business Day after such Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion of such Buyer’s Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any, that such Buyer elects to purchase (iii) shares or other securities issued in either case, the “Notice of Acceptance”). If the Basic Amounts subscribed for by all Buyers are less than the Company pursuant total of all of the Basic Amounts, then such Buyer who has set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the acquisition of another corporationBasic Amounts subscribed for, partnership or other business or entity or a material portion of the assets thereof, by merger or purchase of assets (any such transaction, a “Qualified Transaction”) or otherwise pursuant to a plan, agreement or other arrangement in relation to a Qualified Transaction approved by the BoardUndersubscription Amount it has subscribed for; provided, however, that if the Undersubscription Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available Undersubscription Amount”), such corporation, partnership or other business or entity is an Affiliate Buyer who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion of the Available Undersubscription Amount as the Basic Amount of such Buyer bears to the total Basic Amounts of all Buyers that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the extent it deems reasonably necessary. Notwithstanding the foregoing, if the Company desires to modify or amend the AEA Investors, such acquisition is made on an arms-length basis, (iv) shares or other Equity Securities issued to employees, the Relationship Investors, officers or directors terms and conditions of the Company that are not employees of AEA; provided, however, that such Issuances are approved by the Board or a committee thereof and, in the case of Issuances to Relationship Investors, so long as such Issuances Offer prior to the Relationship Investors do not have an aggregate value that exceeds Five Million Dollars ($5,000,000.00) in the aggregate for all such transactions and does not cause the AEA Investors to hold less than a majority expiration of the outstanding Company Shares following such transactions, or (v) shares or other securities issued in connection with an IPO), unless, prior to such IssuanceOffer Period, the Company notifies may deliver to each Stockholder party hereto in writing Buyer a new Offer Notice and the Offer Period shall expire on the fifth (5th) Business Day after such Buyer’s receipt of such new Offer Notice. (iii) The Company shall have (i) twenty (20) Business Days from the expiration of the proposed Issuance and grants Offer Period above to each offer, issue, sell or exchange all or any part of such Stockholder or, at such Stockholder’s election, one or more Offered Securities as to which a Notice of its Affiliates the right Acceptance has not been given by a Buyer (the “RightRefused Securities”) pursuant to subscribe for and purchase such additional shares of Company Common Stock or units of other Equity Securities a definitive agreement(s) (the “Subsequent Placement Agreement”), but only to be issued the offerees described in the proposed Issuance at the same price Offer Notice (if so described therein) and only upon the same terms and conditions (including, in the event such securities without limitation, unit prices and interest rates) that are issued as a unit together with other securities, the purchase of such other securities) to be issued in the proposed Issuance such that, immediately after giving effect not more favorable to the Issuance and exercise of the Right (including, for purposes of this calculation, the issuance of shares of Company Common Stock upon conversion, exchange acquiring Person or exercise of any other Equity Securities issued in the Issuance Persons or subject to the Right), the shares of Company Common Stock beneficially owned by such Stockholder and its Affiliates on a fully diluted basis (rounded to the nearest whole share) shall represent the same percentage of the aggregate number of shares of Company Common Stock outstanding on a fully diluted basis as were beneficially owned by such Stockholder and its Affiliates immediately prior to the Issuance. (b) The Right may be exercised by each Stockholder party hereto or its Affiliates at any time by written notice less favorable to the Company received by than those set forth in the Company within Offer Notice and (ii) fifteen (15) Business Days after receipt of notice from the Company expiration of the proposed IssuanceOffer Period to publicly announce (a) the execution of such Subsequent Placement Agreement, and (b) either (x) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (y) the termination of such Subsequent Placement Agreement, which shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent Placement Agreement and any documents contemplated therein filed as exhibits thereto. (iv) In the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified in Section 4(m)(iii) above), then such Buyer may, at its sole option and in its sole discretion, reduce the number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number or amount of the Offered Securities that such Buyer elected to purchase pursuant to Section 4(m)(ii) above multiplied by a fraction, (i) the numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue, sell or exchange (including Offered Securities to be issued or sold to Buyers pursuant to this Section 4(m) prior to such reduction) and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Buyer so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities have again been offered to the Buyers in accordance with Section 4(m)(i) above. (v) Upon the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, such Buyer shall acquire from the Company, and the Company shall issue to such Buyer, the number or amount of Offered Securities specified in its Notice of Acceptance. The purchase and sale pursuant by such Buyer of any Offered Securities is subject in all cases to the exercise preparation, execution and delivery by the Company and such Buyer of a separate purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance to such Buyer and its counsel. (vi) Any Offered Securities not acquired by a Buyer or other Persons in accordance with this Section 4(m) may not be issued, sold or exchanged until they are again offered to such Buyer under the procedures specified in this Agreement. (vii) The Company and each Buyer agree that if any Buyer elects to participate in the Offer, neither the Subsequent Placement Agreement with respect to such Offer nor any other transaction documents related thereto (collectively, the “Subsequent Placement Documents”) shall include any term or provision whereby such Buyer shall be required to agree to any restrictions on trading as to any securities of the right Company owned by such Buyer prior to such Subsequent Placement. (viii) Notwithstanding anything to the contrary in this Section 4(m) and unless otherwise agreed to by such Buyer, the Company shall occur at least thirty either confirm in writing to such Buyer that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose its intention to issue the Offered Securities, in either case in such a manner such that such Buyer will not be in possession of any material, non-public information, by the tenth (3010th) days after the giving day following delivery of the Offer Notice. If by such twenty-fifth (25th) day, no public disclosure regarding a transaction with respect to the Offered Securities has been made, and no notice regarding the abandonment of such transaction has been received by such Buyer, such transaction shall be deemed to have been abandoned and such Buyer shall not be deemed to be in possession of any material, non-public information with respect to the Company or any of the proposed Issuance by Subsidiaries. Should the Company. Notwithstanding Company decide to pursue such transaction with respect to the foregoingOffered Securities, the Right Company shall provide such Buyer with another Offer Notice and such Buyer will again have the right of participation set forth in this Section 4(m). The Company shall not be permitted to deliver more than one such Offer Notice to such Buyer in any sixty (60) day period. (ix) The restrictions contained in this Section 4(m) shall not apply to in connection with the issuance of any Issuance, pro rata, to all holders of Excluded Securities (as defined in the Notes). The Company Common Stock. (c) Notwithstanding shall not circumvent the other provisions of this Section 2.5, if the Board reasonably determines 4(m) by providing terms or conditions to one Buyer that there is a need of the Company are not provided to issue securities of the Company that would otherwise be required to be offered to the Stockholders to exercise the Right under this Section 2.5 prior to such Issuance, the Company may issue such securities without first complying with this Section 2.5; provided, however, that within thirty (30) days after such Issuance, the Company offers each Stockholder the opportunity to purchase such number of securities that such Stockholder would have been entitled to purchase pursuant to the Right of Section 2.5 by sending written notice to the Stockholders. In the event of an offer made by the Company pursuant to this Section 2.5(c), the timing and procedures for the exercise and consummation of such offer shall be the same as those set forth in Section 2.5(b), with appropriate modifications to reflect the post-issuance delivery of the notice as contemplated in this Section 2.5(c)all.

Appears in 2 contracts

Samples: Securities Purchase Agreement (Valley Forge Composite Technologies, Inc.), Securities Purchase Agreement (Valley Forge Composite Technologies, Inc.)

Participation Right. (a) If any of the Company, Software or Games (the "ISSUER") intends, directly or indirectly, to offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition of) any of its equity or equity equivalent securities, including without limitation any debt, preferred stock or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable or exercisable for its Common Shares or securities convertible or exchangeable into its Common Shares (any such offer, sale, grant, disposition or announcement being referred to as a "SUBSEQUENT PLACEMENT") at any time prior to a Qualified IPO, the Issuer shall have first complied with this SECTION 4.12, provided that no Issuer shall be required to comply with this Section 4.12 in connection with the Permitted Software Debt and the Investors shall have no rights under this SECTION 4.12 with respect to such Permitted Software Debt. (b) The Company shall not issue deliver to each Investor a written notice (an “Issuance”the "OFFER NOTICE") additional shares of Company Common Stock any proposed or intended issuance or sale (the "OFFER") of the securities being offered (the "OFFERED SECURITIES") in a Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe the price and other Equity terms upon which they are to be issued or sold, and the number or amount of the Offered Securities to any Personbe issued or sold, including AEA (y) identify the persons or entities (if known) to which or with which the AEA Offered Securities are to be offered, issued or sold and (z) offer to issue and sell to such Investors an aggregate amount representing thirty five percent (35%) of the aggregate principal amount of the Notes purchased by all of the Investors at the Closing, to be allocated among such Investors (other than a) based on such Investor's Pro Rata Share (ithe "BASIC AMOUNT"), and (b) shares or other securities issued upon the exchangewith respect to each Investor that elects to purchase its Basic Amount, exercise or conversion of options, warrants, convertible stock, rights, calls or other securities exchangeable or exercisable for or convertible into such class of shares or other securities in accordance with the terms thereof, (ii) shares or other securities issued in connection with any stock split, stock dividend or recapitalization of the Company, (iii) shares or other securities issued by the Company pursuant to the acquisition of another corporation, partnership or other business or entity or a material additional portion of the assets thereofOffered Securities attributable to the Basic Amounts of other Investors as such Investor shall indicate it will purchase or acquire should the other Investors subscribe for less than their Basic Amounts (the "UNDERSUBSCRIPTION AMOUNT"). (c) To accept an Offer, in whole or in part, such Investor must deliver a written notice to the Company prior to the end of the second (2nd) Business Day by merger or 5:00 p.m New York City time after such Investor's receipt of the Offer Notice containing the final definitive terms of the Subsequent Placement (the "OFFER PERIOD"), setting forth the portion of such Investor's Basic Amount that such Investor elects to purchase and, if such Investor shall elect to purchase all of assets its Basic Amount, the Undersubscription Amount, if any, that such Investor elects to purchase (any such transactionin either case, a “Qualified Transaction”) or otherwise pursuant the "NOTICE OF ACCEPTANCE"). If the Basic Amounts subscribed for by all Investors are less than the total of all of the Basic Amounts, then each Investor who has set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to a planpurchase, agreement or other arrangement in relation addition to a Qualified Transaction approved by the BoardBasic Amounts subscribed for, the Undersubscription Amount it has subscribed for; provided, however, that if such corporationthe Undersubscription Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the "AVAILABLE UNDERSUBSCRIPTION AMOUNT"), partnership or other business or entity is an Affiliate each Investor who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion of the Company or Available Undersubscription Amount as the AEA InvestorsBasic Amount of such Investor bears to the total Basic Amounts of all Investors that have subscribed for Undersubscription Amounts, such acquisition is made on an arms-length basis, (iv) shares or other Equity Securities issued subject to employees, the Relationship Investors, officers or directors of rounding by the Company that are not employees of AEA; provided, however, that such Issuances are approved by the Board or a committee thereof and, in the case of Issuances to Relationship Investors, so long as such Issuances to the Relationship Investors do not have an aggregate value that exceeds Five Million Dollars ($5,000,000.00) in the aggregate for all such transactions and does not cause the AEA Investors to hold less than a majority of the outstanding Company Shares following such transactions, or (v) shares or other securities issued in connection with an IPO), unless, prior to such Issuance, the Company notifies each Stockholder party hereto in writing of the proposed Issuance and grants to each such Stockholder or, at such Stockholder’s election, one or more of extent its Affiliates the right (the “Right”) to subscribe for and purchase such additional shares of Company Common Stock or units of other Equity Securities to be issued in the proposed Issuance at the same price and upon the same terms and conditions (including, in the event such securities are issued as a unit together with other securities, the purchase of such other securities) to be issued in the proposed Issuance such that, immediately after giving effect to the Issuance and exercise of the Right (including, for purposes of this calculation, the issuance of shares of Company Common Stock upon conversion, exchange or exercise of any other Equity Securities issued in the Issuance or subject to the Right), the shares of Company Common Stock beneficially owned by such Stockholder and its Affiliates on a fully diluted basis (rounded to the nearest whole share) shall represent the same percentage of the aggregate number of shares of Company Common Stock outstanding on a fully diluted basis as were beneficially owned by such Stockholder and its Affiliates immediately prior to the Issuancedeems reasonably necessary. (bd) The Right If the aggregate dollar amount of the Subsequent Placement exceeds the amount purchasable by the Investors hereunder or the Investors, collectively, do not elect to purchase the entire amount of the Subsequent Placement which may be exercised purchased by each Stockholder party hereto such Investors pursuant to this SECTION 4.12, the Issuer may offer and sell the securities to which the Investors were entitled to purchase hereunder, or its Affiliates at any time by written notice to the Company received securities not purchasable by the Company within fifteen (15) Business Days after receipt of notice from Investors hereunder, as the Company of the proposed Issuance, and the closing of the purchase and sale pursuant to the exercise of the right shall occur at least thirty (30) days after the giving of the notice of the proposed Issuance by the Company. Notwithstanding the foregoing, the Right shall not apply to any Issuance, pro ratacase may be, to all holders of Company Common Stock. a third party (c) Notwithstanding the other provisions of this Section 2.5which may include any Investor), if the Board reasonably determines provided that there is a need of the Company to issue securities of the Company that would otherwise be required to be offered to the Stockholders to exercise the Right under this Section 2.5 prior to such Issuance, the Company may issue such securities without first complying with this Section 2.5; provided, however, that sale must occur within thirty (30) days of the Subsequent Placement Closing Date and on the same terms and conditions set forth in the Offer Notice. Any such sale made after such Issuancethirty-day period, or on terms or conditions different than the terms set forth in the Offer Note, must again be offered to the Investors in accordance with SECTION 4.12 above. Notwithstanding anything herein to the contrary, in the event that aggregate purchase price for all securities proposed to be issued in a Subsequent Placement by an Issuer is less than 35% of the aggregate principal amount of the Notes issued to all of the Investors at the Closing, the Company offers dollar amount of such securities to which each Stockholder the opportunity to purchase such number of securities that such Stockholder would have been Investor is entitled to purchase pursuant to the Right hereunder shall be proportionately reduced. Each purchase of Section 2.5 securities by sending written notice to the Stockholders. In the event of an offer made by the Company Investors pursuant to this Section 2.5(c), SECTION 4.12 shall take place on the timing and procedures for the exercise and consummation of such offer shall be the same as those set forth in Section 2.5(b), with appropriate modifications to reflect the post-issuance delivery of the notice as contemplated in this Section 2.5(c)Subsequent Placement Closing Date.

Appears in 1 contract

Samples: Note Purchase Agreement (CDC Corp)

Participation Right. (a) The Company shall not issue (an “Issuance”) additional shares of Company Common Stock or other Equity Securities equity securities to any Person, including AEA or the AEA Investors Person (other than (i) shares or other securities issued upon the exchange, exercise or conversion of options, warrants, convertible stock, rights, calls or other securities exchangeable or exercisable for or convertible into such class of shares or other securities in accordance with the terms thereof, (ii) shares or other securities issued in connection with any stock split, stock dividend or recapitalization of the Company, (iii) shares or other securities issued by the Company pursuant to the acquisition of of, or investment in, another corporation, partnership or other business or entity or the acquisition of a material portion of the assets thereofthereof (whether through a purchase of securities, by merger or merger, consolidation, purchase of assets (any such transactionor otherwise), a “Qualified Transaction”) or otherwise pursuant to a plan, agreement or other arrangement in relation to a Qualified Transaction approved by the Board; provided, however, that if such corporation, partnership or other business or entity is an Affiliate of the Company or the AEA Investors, such acquisition is made on an arms-length basisincluding joint ventures and strategic alliances, (iv) shares or other Equity Securities securities issued to credit financing sources in connection with a debt financing of the Company, (v) shares or other securities issued to employees, the Relationship Investorsofficers, officers directors or directors consultants of, or other providers of services to, the Company that are not employees or any of AEA; providedits subsidiaries, however, that such Issuances are approved by the Board or a committee thereof and, in the case of Issuances to Relationship Investors, so long as such Issuances to the Relationship Investors do not have an aggregate value that exceeds Five Million Dollars ($5,000,000.00) in the aggregate for all such transactions and does not cause the AEA Investors to hold less than a majority of the outstanding Company Shares following such transactions, or (vvi) shares or other securities issued in connection with an IPOa Public Offering or (vii) shares or other equity securities where the net proceeds to the Company from such Issuance do not exceed $1 million), unless, prior to such Issuance, unless the Company notifies each Stockholder party hereto in writing of such Issuance (which notice may be sent by the proposed Company prior to or after the completion of the applicable Issuance) (an “Issuance Notice”) and grants to each such Stockholder or, at such Stockholder’s election, one or more of its Affiliates the right (the “Right”) to subscribe for and purchase such additional shares of Company Common Stock or units of other Equity Securities equity securities to be issued in the proposed Issuance at the same price and upon the same terms and conditions (including, in the event such securities are issued as a unit together with other securities, the purchase of such other securities) to be issued in the proposed Issuance such that, immediately after giving effect to the Issuance and exercise of the Right (including, for purposes of this calculation, the issuance of shares of Company Common Stock upon conversion, exchange or exercise of any other Equity Securities equity securities issued in the Issuance or subject to the Right), the shares of Company Common Stock beneficially owned by such Stockholder stockholder and its Affiliates on a fully diluted basis (rounded to the nearest whole share) shall represent the same percentage of the aggregate number of shares of Company Common Stock outstanding on a fully diluted basis as were beneficially owned by such Stockholder and its Affiliates immediately prior to the Issuance. The Right contained in this Section 2.6(a) shall only apply to the Stockholders that are “accredited investors” under Regulation D of the Securities Act, unless the Company otherwise consents to such Stockholder’s participation under this Section 2.6. (b) The Subject to Section 2.6(a) above, the Right may be exercised by each Stockholder party hereto or its Affiliates at any time by written notice to the Company received by the Company within fifteen (15) Business Days 15 business days after receipt of notice an Issuance Notice from the Company of the proposed IssuanceCompany, and the closing of the purchase and sale pursuant to the exercise of the right Right shall occur at least thirty (30) 30 days after the giving of the notice of the proposed Issuance Notice by the Company. Notwithstanding the foregoing, the Right shall not apply to any Issuance, pro rata, to all holders of Company Common Stock. (c) Notwithstanding the other provisions of this Section 2.5, if the Board reasonably determines that there is a need of the Company to issue securities of the Company that would otherwise be required to be offered to the Stockholders to exercise the Right under this Section 2.5 prior to such Issuance, the Company may issue such securities without first complying with this Section 2.5; provided, however, that within thirty (30) days after such Issuance, the Company offers each Stockholder the opportunity to purchase such number of securities that such Stockholder would have been entitled to purchase pursuant to the Right of Section 2.5 by sending written notice to the Stockholders. In the event of an offer made by the Company pursuant to this Section 2.5(c), the timing and procedures for the exercise and consummation of such offer shall be the same as those set forth in Section 2.5(b), with appropriate modifications to reflect the post-issuance delivery of the notice as contemplated in this Section 2.5(c).

Appears in 1 contract

Samples: Stockholders' Agreement (Metaldyne Performance Group Inc.)

Participation Right. (a1) The Company shall not Subject to Section 3.1(2), in the event the Corporation proposes to issue, or offers or agrees to issue (an “Issuance”"Offering") additional shares of Company Common Stock or other Equity Securities to any Person, including AEA or the AEA Investors (other than (i) shares or other equity securities (or any securities exercisable for, or convertible or exchangeable into, shares or equity securities) other than pursuant to an Exempt Issuance (the "Offered Securities"), the Corporation shall give written notice to the Investor of the Offering as soon as possible, but in any event not later than two Business Days following the announcement of the Offering (the "Offering Notice") including the full particulars of the Offering, including the issue price (subject to Section 3.1(7)) (the "Issue Price"), if determined at that time, of the Offered Securities, the rights, privileges, restrictions, terms and conditions of the Offered Securities, the number of Offered Securities proposed to be issued upon to Persons in the exchangeOffering other than the Investor, the proposed use of proceeds (if any), the proposed completion date of the Offering, and any other terms and conditions relating to the Offering. The Offering Notice shall also include copies of any investor presentation, prospectus or offering memorandum or similar disclosure document, subscription agreement and other materials delivered by or proposed to be delivered by the Corporation (or by any agent or investment dealer acting on behalf of the Corporation) to potential subscribers under the Offering. (2) The Investor (directly or through an Affiliate) has the right (the "Participation Right"), to subscribe for and to be issued as part of an Offering at the Issue Price and otherwise on substantially the terms and conditions of the Offering, up to such number of Offered Securities that will (after giving effect to the Offering and assuming conversion, exercise or conversion exchange of optionsall of the convertible, warrants, convertible stock, rights, calls exercisable or other securities exchangeable or exercisable for or convertible into such class of shares or other securities in accordance with the terms thereof, (ii) shares or other securities Offered Securities issued in connection with any stock split, stock dividend or recapitalization the Offering and issuable to the Investor) allow the Investor and its Affiliates to maintain a percentage ownership interest in the Common Shares equal to the then Equity and Voting Interest of the CompanyInvestor, up to a maximum of 9.9%. (iii3) shares The Offering Notice will specify the time within which the Participation Right, if not exercised in whole or other securities issued in part, will be deemed to be declined, which time shall be five Business Days after the date on which such Offering Notice is given. Notwithstanding the foregoing, if the Offering is carried out as any type of offering which does not include a roadshow and may be launched in less than five Business Days according to usual market practice (including, without limitation, a "bought deal" or overnight marketed deal), the five Business Day period following receipt of the Offering Notice by the Company pursuant Investor shall not apply, and the Corporation shall give the Investor the most notice possible under the circumstances, but in no event no less than three Business Days, considering the promptness with which such offerings are currently carried out according to usual market practice, and the Investor shall only have such amount of time (but at least three Business Days) to notify the Corporation whether or not it will participate in the Offering, failing which the Corporation shall be free to conduct the Offering without the participation of the Investor. (4) Upon receipt of an Offering Notice, the Investor may, in its discretion, at any time until he expiry and deemed declination of the Offering Notice as set forth in Section 3.1(3) hereof, shall give written notice to the acquisition Corporation (the "Subscription Notice") of another corporation, partnership or other business or entity or a material portion its election to exercise its Participation Right and of the assets thereof, by merger or purchase number of assets Offered Securities the Investor wishes to purchase. The Subscription Notice (any such transaction, which shall represent the acceptance of the Corporation's Offering Notice) shall constitute a “Qualified Transaction”) or otherwise pursuant to a plan, binding agreement or other arrangement in relation to a Qualified Transaction approved by the Board; provided, however, that if such corporation, partnership or other business or entity is an Affiliate of the Company or the AEA Investors, such acquisition is made on an arms-length basis, (iv) shares or other Equity Securities issued to employees, the Relationship Investors, officers or directors of the Company that are not employees of AEA; provided, however, that such Issuances are approved by the Board or a committee thereof and, in the case of Issuances to Relationship Investors, so long as such Issuances to the Relationship Investors do not have an aggregate value that exceeds Five Million Dollars ($5,000,000.00) in the aggregate for all such transactions and does not cause the AEA Investors to hold less than a majority of the outstanding Company Shares following such transactions, or (v) shares or other securities issued in connection with an IPO), unless, prior to such Issuance, the Company notifies each Stockholder party hereto in writing of the proposed Issuance and grants to each such Stockholder or, at such Stockholder’s election, one or more of its Affiliates the right (the “Right”) Investor to subscribe for and purchase such additional shares purchase, and by the Corporation to issue and sell to the Investor, on the terms and conditions in the Offering Notice, the number or amount of Company Common Stock or units of other Equity Offered Securities as are to be issued to the Investor therein. (5) Upon receipt of a Subscription Notice, subject to the receipt and continued effectiveness of all required approvals (including the approval(s) of the Exchanges and any required approvals under securities laws), which approvals the Corporation shall use all commercially reasonable efforts to promptly obtain (including by applying for any necessary price protection confirmations), the Corporation shall issue to the Investor or its nominee, against payment of the subscription price payable in respect thereof, that number of Offered Securities set forth in the proposed Issuance at Subscription Notice. The Parties agree that the same price and upon Offering of any Offered Securities to the Investor pursuant to this Section 3.1(5) shall be on the same terms and conditions as, and shall occur concurrently with the completion of the relevant Offering. (including, 6) All of the Offered Securities not subscribed for by the Investor within the time limit specified in the event such securities are issued as a unit Offering Notice will be available for issuance, and may be issued, together with the other securitiesOffered Securities under the Offering, by the Corporation to any Person (and in the case of an underwritten offering, to the underwriter or underwriters) at not less than the Issue Price set forth in the Offering Notice. (7) The purchase of such other securitiesany Offered Securities pursuant to Section 3.1(2) shall be at the Issue Price and shall not be subject to any premium. If the Offered Securities being issued under an Offering are to be issued in for consideration other than cash consideration, the proposed Issuance such that, immediately after giving effect to consideration per Offered Security payable by the Issuance and Investor upon exercise of its Participation Right shall be the Right cash equivalent of the fair market value of the non-cash consideration per Offered Security to be paid by the other acquirors of Offered Securities under the Offering, as determined by the board of directors of the Corporation, acting reasonably. (including, for purposes 8) The provisions of this calculation, Article 3 shall cease to apply without the ability to be reinstated on the first date following the issuance of shares the Issued Shares upon which the Equity and Voting Interest of Company the Investor is less than Threshold Percentage (which, for this purpose, shall be calculated excluding any Common Stock upon conversion, exchange or exercise Shares issued as the result of any other Equity Securities issued in an Exempt Issuance from the Issuance or subject denominator to the Right), the shares definition of Company Common Stock beneficially owned by such Stockholder Equity and its Affiliates on a fully diluted basis (rounded to the nearest whole share) shall represent the same percentage Voting Interest of the aggregate number of shares of Company Common Stock outstanding on a fully diluted basis as were beneficially owned by such Stockholder and its Affiliates immediately prior to the Issuance. (b) The Right may be exercised by each Stockholder party hereto or its Affiliates at any time by written notice to the Company received by the Company within fifteen (15) Business Days after receipt of notice from the Company of the proposed Issuance, and the closing of the purchase and sale pursuant to the exercise of the right shall occur at least thirty (30) days after the giving of the notice of the proposed Issuance by the Company. Notwithstanding the foregoing, the Right shall not apply to any Issuance, pro rata, to all holders of Company Common Stock. (c) Notwithstanding the other provisions of this Section 2.5, if the Board reasonably determines that there is a need of the Company to issue securities of the Company that would otherwise be required to be offered to the Stockholders to exercise the Right under this Section 2.5 prior to such Issuance, the Company may issue such securities without first complying with this Section 2.5; provided, however, that within thirty (30) days after such Issuance, the Company offers each Stockholder the opportunity to purchase such number of securities that such Stockholder would have been entitled to purchase pursuant to the Right of Section 2.5 by sending written notice to the Stockholders. In the event of an offer made by the Company pursuant to this Section 2.5(c), the timing and procedures for the exercise and consummation of such offer shall be the same as those set forth in Section 2.5(b), with appropriate modifications to reflect the post-issuance delivery of the notice as contemplated in this Section 2.5(cInvestor).

Appears in 1 contract

Samples: Investor Rights Agreement (Integra Resources Corp.)

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Participation Right. Subject to the terms and conditions specified in this Section 2.3, the Company hereby grants to each Investor holding at least 200,000 shares of Registrable Securities (a "Major Investor") a participation right with respect to future sales by the Company of its Shares (as hereinafter defined). Each Major Investor shall be entitled to the participation right based on its pro rata ownership of the Company's securities determined by multiplying the number of shares of Common Stock issued and issuable upon conversion of the Preferred Stock held by such Investor by a fraction, the numerator of which is the number of shares of Common Stock issued and issuable upon conversion of the Preferred Stock held by such Major Investor and the denominator of which is the number of shares of Common Stock then outstanding (including shares issuable upon conversion of the then issued and outstanding shares of Preferred Stock). Each time the Company proposes to offer any shares of, or securities convertible into or exercisable for any shares of, any class of its capital stock ("Shares"), the Company shall first make an offering of such Shares to each Major Investor in accordance with the following provisions: (a) The Company shall not issue deliver a notice (an “Issuance”"Notice") additional shares of Company Common Stock or other Equity Securities to any Person, including AEA or the AEA Investors (other than Investor stating (i) shares or other securities issued upon the exchange, exercise or conversion of options, warrants, convertible stock, rights, calls or other securities exchangeable or exercisable for or convertible into its bona fide intention to offer such class of shares or other securities in accordance with the terms thereofShares, (ii) shares or other securities issued in connection with any stock splitthe number of such Shares to be offered, stock dividend or recapitalization of the Company, and (iii) the price and terms, if any, upon which it proposes to offer such Shares. (b) Within 15 calendar days after receipt of the Notice, each Major Investor may elect to purchase or obtain, at the price and on the terms specified in the Notice, up to that portion of such Shares which equals the proportion that the number of shares of Common Stock issued and held, or other securities issued issuable upon conversion of the Preferred Stock then held by such Major Investor bears to the total number of shares of Common Stock of the Company then outstanding (assuming full conversion and exercise of all outstanding convertible and exercisable securities). (c) If all Shares which a Major Investor is entitled to obtain pursuant to subsection 2.3(b) hereof are not elected to be obtained as provided in subsection 2.3(b) hereof, the Company may, during the 120-day period following the expiration of the period provided in subsection 2.3(b) hereof, offer the remaining unsubscribed portion of such Shares to any person or persons at a price not less than, and upon terms no more favorable to the offeree than those specified in the Notice. If the Company does not enter into an agreement for the sale of the Shares within such period, or if such agreement is not consummated within 30 days of the execution thereof, the right provided hereunder shall be deemed to be revived and such Shares shall not be offered unless first reoffered to the Major Investors in accordance herewith. (d) The participation right in this paragraph 2.3 shall not be applicable (i) to the prior or future issuance or sale of shares of Common Stock or options therefor at fair market value (not including shares of Common Stock acquired by the Company pursuant to any forfeiture provision, right of repurchase or right of first refusal) to Company employees, directors, officers, agents or consultants for the acquisition primary purpose of another corporationsoliciting or retaining their employment or services, partnership (ii) the issuance of up to 5,705,124 shares of Series E Preferred Stock pursuant to the Series E Agreement, (iii) the issuance of securities in connection with or other business or entity or a material portion after consummation of the assets thereof, by merger or purchase of assets (any such transaction, a “Qualified Transaction”) or otherwise pursuant to a plan, agreement or other arrangement in relation to a Qualified Transaction approved by the Board; provided, however, that if such corporation, partnership or other business or entity is an Affiliate of the Company or the AEA Investors, such acquisition is made on an arms-length basisCompany's Initial Public Offering, (iv) shares the issuance of securities to investment bankers or other Equity Securities issued pursuant to employees, the Relationship Investors, officers corporate or directors strategic partnerships or alliances approved by a two-thirds (2/3) vote of the Company that are not employees Board of AEA; providedDirectors, however, that such Issuances are approved by the Board or a committee thereof and, in the case of Issuances to Relationship Investors, so long as such Issuances to the Relationship Investors do not have an aggregate value that exceeds Five Million Dollars ($5,000,000.00) in the aggregate for all such transactions and does not cause the AEA Investors to hold less than a majority of the outstanding Company Shares following such transactions, or (v) shares or other the issuance of Common Stock pursuant to the conversion of the Preferred Stock, (vi) the issuance of securities issued in connection with an IPO)a bona fide business acquisition of or by the Company, unlesswhether by merger, prior to such Issuanceconsolidation, the Company notifies each Stockholder party hereto in writing sale of assets, sale or exchange of stock, or otherwise alliances approved by a two-thirds (2/3) vote of the proposed Issuance and grants to each such Stockholder orBoard of Directors, at such Stockholder’s election, one or more of its Affiliates the right (the “Right”vii) to subscribe for and purchase such additional shares of Company Common Stock or units of other Equity Securities to be issued in the proposed Issuance at the same price and upon the same terms and conditions (including, in the event such securities are issued as a unit together with other securities, the purchase of such other securities) to be issued in the proposed Issuance such that, immediately after giving effect to the Issuance and exercise of the Right (including, for purposes of this calculation, the issuance of shares securities to lenders or lessors in connection with a bona fide loan or lease financing approved by two-thirds (2/3) of Company Common Stock upon conversionthe Board of Directors, exchange and (viii) the issuance of securities pursuant to the conversion or exercise of any other Equity Securities issued in convertible or exercisable securities the Issuance or original issuance of which was subject to the Right), the shares of Company Common Stock beneficially owned by such Stockholder and its Affiliates on a fully diluted basis (rounded to the nearest whole share) shall represent the same percentage of the aggregate number of shares of Company Common Stock outstanding on a fully diluted basis as were beneficially owned by such Stockholder and its Affiliates immediately prior to the Issuance. (b) The Right may be exercised by each Stockholder party hereto or its Affiliates at any time by written notice to the Company received by the Company within fifteen (15) Business Days after receipt of notice exempt from the Company of the proposed Issuance, and the closing of the purchase and sale pursuant to the exercise of the right shall occur at least thirty (30) days after the giving of the notice of the proposed Issuance by the Company. Notwithstanding the foregoing, the Right shall not apply to any Issuance, pro rata, to all holders of Company Common Stock. (c) Notwithstanding the other provisions of this Section 2.5, if the Board reasonably determines that there is a need of the Company to issue securities of the Company that would otherwise be required to be offered to the Stockholders to exercise the Right under this Section 2.5 prior to such Issuance, the Company may issue such securities without first complying with this Section 2.5; provided, however, that within thirty (30) days after such Issuance, the Company offers each Stockholder the opportunity to purchase such number of securities that such Stockholder would have been entitled to purchase pursuant to the Right of Section 2.5 by sending written notice to the Stockholders. In the event of an offer made by the Company pursuant to this Section 2.5(c), the timing and procedures for the exercise and consummation of such offer shall be the same as those set forth in Section 2.5(b), with appropriate modifications to reflect the post-issuance delivery of the notice as contemplated in this Section 2.5(c)2.3.

Appears in 1 contract

Samples: Investor Rights Agreement (Selectica Inc)

Participation Right. (a) The Company shall not issue (an “Issuance”) additional shares For a period of Company Common Stock or other Equity Securities to any Person, including AEA or one year following the AEA Investors (other than (i) shares or other securities issued upon the exchange, exercise or conversion of options, warrants, convertible stock, rights, calls or other securities exchangeable or exercisable for or convertible into such class of shares or other securities in accordance with the terms thereof, (ii) shares or other securities issued in connection with any stock split, stock dividend or recapitalization Effective Date of the CompanyRegistration Statement, (iii) shares or other securities issued Investor is hereby granted the right to participate in each future capital-raising transaction commenced by the Company pursuant prior to the acquisition expiration of another corporation, partnership or other business or entity or a material portion of the assets thereof, by merger or purchase of assets such one-year period (any such transaction, a “Qualified Transaction”) or otherwise pursuant to a plan, agreement or other arrangement in relation to a Qualified Transaction approved by the Board; provided, however, that if such corporation, partnership or other business or entity is an Affiliate of the Company or the AEA Investors, such acquisition is made on an arms-length basis, (iv) shares or other Equity Securities issued to employees, the Relationship Investors, officers or directors of the Company that are not employees of AEA; provided, however, that such Issuances are approved by the Board or a committee thereof and, in the case of Issuances to Relationship Investors, so long as such Issuances to the Relationship Investors do not have an aggregate value that exceeds Five Million Dollars ($5,000,000.00) in the aggregate for all such transactions and does not cause the AEA Investors to hold less than a majority of the outstanding Company Shares following such transactions, or (v) shares or other securities issued in connection with an IPO), unless, prior to such Issuance, the Company notifies each Stockholder party hereto in writing of the proposed Issuance and grants to each such Stockholder or, at such Stockholder’s election, one or more of its Affiliates the right (the “Right”) to subscribe for and purchase such additional shares of Company Common Stock or units of other Equity Securities to be issued in the proposed Issuance at the same price and upon the same terms and conditions (includingas are offered to third party participants in such transaction), pro rata to the extent of the dollar amount of Investor’s investment in the Shares. The Company shall provide Investor with not less than ten days’ prior written notice of Investor’s right to participate in a capital-raising transaction covered by this provision, and Investor shall have ten days from its receipt or deemed receipt of such notice to notify the Company, in writing, whether it desires to participate. In the event Investor fails to respond to the Company’s notice within such securities are issued ten day period, Investor shall be deemed not to have exercised its participation right. In the event Investor provides timely written notice to the Company of its election to participate in a capital-raising transaction covered by this provision, Investor shall tender its payment and any required documentation to the Company within five days following Investor’s written notice of participation to the Company. In the event Investor fails to make such payment on a timely basis or provide such documents, Investor’s right of participation shall terminate and shall thereafter be of no further force or effect. The right of participation granted to Investors under this Section 4.11 shall not apply to: (1) any of the transaction whereby (i) the Company pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) the Company subdivides outstanding shares of Common Stock into a larger number of shares, (iii) the Company combines outstanding shares of Common Stock into a smaller number of shares or (iv) there is a Fundamental Transaction (as a unit together with other securities, the purchase of such other securities) to be issued defined in the proposed Issuance such thatWarrant), (2) the issuance, immediately after giving effect to the Issuance and exercise of the Right (including, for purposes of this calculation, the issuance of shares of Company Common Stock upon conversion, exchange or exercise of any other Equity Securities issued in securities pursuant to this Agreement, (3) the Issuance issuance of options exercisable for Common Stock to employees, officers, consultants or subject directors of the Company or its subsidiaries, but only to the Right), the shares of Company Common Stock beneficially owned by such Stockholder and its Affiliates on a fully diluted basis (rounded to the nearest whole share) shall represent the same percentage of extent that the aggregate number of shares excluded hereby and issued after the date of Company this Agreement shall not exceed 5% of the outstanding shares of Common Stock outstanding on a fully diluted basis as were beneficially owned by at the time of such Stockholder and its Affiliates immediately prior to the Issuance.issuance, (b4) The Right may be exercised by each Stockholder party hereto the issuance, conversion, exchange or its Affiliates at exercise of any time by written notice to the Company received by the Company within fifteen (15) Business Days after receipt of notice from the Company of the proposed Issuance, and the closing of the purchase and sale securities pursuant to any additional equity financings with higher offering price per share on its common shares or equity-linked securities of any kind than the shares of Common Stock issued pursuant to this Agreement, (5) the issuance of Common Stock issuable upon the conversion, exchange or exercise of other securities, warrants, options or similar rights, which securities were issued before the date of this Agreement, provided such securities are not amended after the date hereof to increase the number of shares of Common Stock issuable thereunder or to lower the exercise or conversion price thereof, or (6) the issuance of the right shall occur at least thirty (30) days after the giving of the notice of the proposed Issuance by the Company. Notwithstanding the foregoing, the Right shall not apply to any Issuance, pro rata, to all holders of Company Common Stock. (c) Notwithstanding the , options, warrants or other provisions of this Section 2.5, if the Board reasonably determines that there is a need convertible securities issued to strategic partners of the Company to issue securities in connection with transactions consummated with such strategic partners in furtherance of the Company that would otherwise be required to be offered to the Stockholders to exercise the Right under this Section 2.5 prior to such Issuance, the Company may issue such securities without first complying with this Section 2.5; provided, however, that within thirty (30) days after such Issuance, the Company offers each Stockholder the opportunity to purchase such number of securities that such Stockholder would have been entitled to purchase pursuant to the Right of Section 2.5 by sending written notice to the Stockholders. In the event of an offer made by the Company pursuant to this Section 2.5(c), the timing and procedures for the exercise and consummation of such offer shall be the same as those set forth in Section 2.5(b), with appropriate modifications to reflect the post-issuance delivery of the notice as contemplated in this Section 2.5(c)Company’s business objectives.

Appears in 1 contract

Samples: Securities Purchase Agreement (Sinohub, Inc.)

Participation Right. From the date hereof through the first date after the Closing Date on which the Buyer, together with Buyer’s Affiliates, cease to have “beneficial ownership” (aas determined under Section 13(d) The of the 1934 Act and the rules and regulations thereunder) of greater than five percent (5%) of the Common Stock, neither the Company nor any of its Subsidiaries shall, directly or indirectly, issue, offer, sell, grant any option or right to purchase, or otherwise dispose of (or announce any issuance, offer, sale, grant of any option or right to purchase or other disposition of) any equity security or any equity-linked or related security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the 1933 Act), any Convertible Securities (as defined below), any preferred stock or any purchase rights (any such issuance, offer, sale, grant, disposition or announcement is referred to as a “Subsequent Placement”) unless the Company shall not issue (have first complied with this Section 4(k). Buyer may elect, in its sole and absolute discretion, to assign its rights under the Section 4(k) to an Affiliate of Buyer, provided that such Affiliate shall be an “Issuance”accredited investor” as that term is defined in Rule 501(a) additional shares of Regulation D and shall execute an instrument in form and substance reasonably acceptable to the Company Common Stock or other Equity Securities pursuant to any Person, including AEA or which such Affiliate joins in and agrees to be bound by the AEA Investors (other than provisions of this Section 4(k). (i) shares At least five (5) Business Days prior to each proposed or intended Subsequent Placement, the Company shall deliver to Buyer an irrevocable written notice (the “Offer Notice”) of such proposed or intended issuance or sale or exchange (the “Offer”) of the securities being offered (the “Offered Securities”) in such Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe the price and other securities issued terms upon which they are to be issued, sold or exchanged, and the exchangenumber or amount of the Offered Securities to be issued, exercise sold or conversion of optionsexchanged, warrants(y) identify the Persons (if known) to which or with which the Offered Securities are to be offered, convertible stockissued, rights, calls sold or other securities exchangeable exchanged and (z) offer to issue and sell to or exercisable for exchange with Buyer (or convertible into such class of shares or other securities Buyer’s Affiliate) in accordance with the terms thereof, of the Offer 100% of the Offered Securities. (ii) shares To accept an Offer, in whole or other securities issued in connection with any stock splitpart, stock dividend or recapitalization Buyer must deliver a written notice to the Company prior to the end of the fifth (5th) Business Day after the Company’s delivery to Buyer of the applicable Offer Notice (the “Offer Period”), setting forth all or any portion of the Offered Securities that Buyer elects to purchase (the “Notice of Acceptance”). Notwithstanding the foregoing, if the Company desires to modify or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the Company may deliver to Buyer a new Offer Notice and the Offer Period shall expire on the fifth (5th) Business Day after the Company’s delivery to Buyer of such new Offer Notice. (iii) shares or other securities issued by The Company shall have thirty (30) days from the Company pursuant to the acquisition of another corporation, partnership or other business or entity or a material portion expiration of the assets thereofOffer Period above (i) to offer, issue, sell or exchange all or any part of such Offered Securities as to which a Notice of Acceptance has not been given by merger or purchase of assets Buyer (any such transaction, a the Qualified TransactionRefused Securities”) or otherwise pursuant to a plan, agreement or other arrangement in relation to a Qualified Transaction approved by the Board; provided, however, that if such corporation, partnership or other business or entity is an Affiliate of the Company or the AEA Investors, such acquisition is made on an arms-length basis, (ivdefinitive agreement(s) shares or other Equity Securities issued to employees, the Relationship Investors, officers or directors of the Company that are not employees of AEA; provided, however, that such Issuances are approved by the Board or a committee thereof and, in the case of Issuances to Relationship Investors, so long as such Issuances to the Relationship Investors do not have an aggregate value that exceeds Five Million Dollars ($5,000,000.00) in the aggregate for all such transactions and does not cause the AEA Investors to hold less than a majority of the outstanding Company Shares following such transactions, or (v) shares or other securities issued in connection with an IPO), unless, prior to such Issuance, the Company notifies each Stockholder party hereto in writing of the proposed Issuance and grants to each such Stockholder or, at such Stockholder’s election, one or more of its Affiliates the right (the “RightSubsequent Placement Agreement) ), but only to subscribe for and purchase such additional shares of Company Common Stock or units of other Equity Securities to be issued the offerees described in the proposed Issuance at the same price Offer Notice (if so described therein) and only upon the same terms and conditions (including, without limitation, unit prices and interest rates) that are not more favorable to the acquiring Person or Persons or less favorable to the Company than those set forth in the Offer Notice and (ii) to publicly announce, if required by applicable law, (a) the execution of such Subsequent Placement Agreement, and (b) either (x) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (y) the termination of such Subsequent Placement Agreement, which shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent Placement Agreement and any documents contemplated therein filed as exhibits thereto. (iv) In the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified in Section 4(k)(iii) above), then Buyer may, at its sole option and in its sole discretion, reduce the number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number or amount of the Offered Securities that Buyer elected to purchase pursuant to Section 4(k)(ii) above multiplied by a fraction, (i) the numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue, sell or exchange and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event that Buyer so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities are issued as a unit together have again been offered to the Buyer in accordance with other securitiesSection 4(k)(i) above. (v) Upon the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, Buyer shall acquire from the Company, and the Company shall issue to Buyer, the number or amount of Offered Securities specified in its Notice of Acceptance. The purchase by Buyer of any Offered Securities is subject in all cases to the preparation, execution and delivery by the Company and Buyer of a separate purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance to Buyer and its counsel. (vi) Any Offered Securities not acquired by Buyer or other Persons in accordance with this Section 4(k) may not be issued, sold or exchanged until they are again offered to Buyer under the procedures specified in this Agreement. (vii) The Company and Buyer agree that if Buyer elects to participate in the Offer, neither the Subsequent Placement Agreement with respect to such Offer nor any other transaction documents related thereto (collectively, the “Subsequent Placement Documents”) shall include any term or provision whereby Buyer shall be required to agree to any restrictions on trading as to any securities of the Company or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection with, any agreement previously entered into with the Company or any instrument received from the Company. (viii) Notwithstanding anything to the contrary in this Section 4(k) and unless otherwise agreed to by Buyer, the Company shall either confirm in writing to Buyer that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose, if required by applicable law, its intention to issue the Offered Securities, in either case in such a manner such that Buyer will not be in possession of any material, non-public information, by the fifth (5th) Business Day following delivery of the Offer Notice. If by such fifth (5th) Business Day, no public disclosure regarding a transaction with respect to the Offered Securities has been made, and no notice regarding the abandonment of such other securities) transaction has been received by Buyer, such transaction shall be deemed to have been abandoned and Buyer shall not be issued in the proposed Issuance such thatpossession of any material, immediately after giving effect non-public information with respect to the Issuance Company or any of its Subsidiaries. Should the Company decide to pursue such transaction with respect to the Offered Securities, the Company shall provide Buyer with another Offer Notice in accordance with, and exercise of subject to, the Right (including, for purposes terms of this calculation, Section 4(k) and Buyer will again have the right of participation set forth in this Section 4(k). (ix) The restrictions contained in this Section 4(k) shall not apply in connection with the issuance of any Excluded Securities (as defined below). “Excluded Securities” means, collectively, (A) shares of Company Common Stock or options to purchase Common Stock to directors, officers, employees or consultants (provided that, (1) any such consultant may not be an Affiliate of either Mxxx Xxx or TGR Capital, LLC, may not be an officer, director or employee of the Company, and may not be providing, directly or indirectly, any capital to the Company, and (2) such shares or options must be issued or granted pursuant to a written, arms’ length agreement between the consultant and the Company in connection with bona fide services provided to the Company by such consultant) of the Company in their capacity as such pursuant to an Approved Share Plan (as defined below); and (B) shares of Common Stock issued upon conversion, exchange the conversion or exercise of any Convertible Securities (other Equity Securities than options to purchase Common Stock issued in the Issuance or subject pursuant to an Approved Share Plan that are covered by clause (A) above) issued prior to the Right)date of this Agreement, provided that the shares conversion or exercise (as the case may be) of Company Common Stock beneficially owned by any such Stockholder and its Affiliates on a fully diluted basis (rounded Convertible Security is made solely pursuant to the nearest whole shareconversion or exercise (as the case may be) shall represent provisions of such Convertible Security that were in effect on the same percentage of the aggregate number of shares of Company Common Stock outstanding on a fully diluted basis as were beneficially owned by such Stockholder and its Affiliates date immediately prior to the Issuance. date of this Agreement, the conversion or exercise price of any such Convertible Securities (bother than options to purchase Common Stock issued pursuant to an Approved Share Plan that are covered by clause (A) The Right above) is not lowered, none of such Convertible Securities are (other than options to purchase Common Stock issued pursuant to an Approved Share Plan that are covered by clause (A) above) (nor is any provision of any such Convertible Securities) amended or waived in any manner (whether by the Company or the holder thereof) to increase the number of shares issuable thereunder and none of the terms or conditions of any such Convertible Securities (other than options to purchase Common Stock issued pursuant to an Approved Share Plan that are covered by clause (A) above) are otherwise materially changed or waived (whether by the Company or the holder thereof) in any manner that adversely affects the Buyer. “Approved Share Plan” means any employee benefit plan which has been approved by the board of directors of the Company prior to or subsequent to the date hereof pursuant to which shares of Common Stock and options to purchase Common Stock may be exercised issued to any employee, officer, director or consultant (provided that, (1) any such consultant may not be an Affiliate of either Mxxx Xxx or TGR Capital, LLC, may not be an officer, director or employee of the Company, and may not be providing, directly or indirectly, any capital to the Company), and (2) such shares or options must be issued or granted pursuant to a written, arms’ length agreement between the consultant and the Company in connection with bona fide services provided to the Company by each Stockholder party hereto such consultant) for services provided to the Company in their capacity as such. “Convertible Securities” means any capital stock or other security of the Company or any of its Affiliates Subsidiaries that is, or may be, at any time by written notice and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to the Company received by the Company within fifteen (15) Business Days after receipt of notice from the Company of the proposed Issuanceacquire, and the closing of the purchase and sale pursuant to the exercise of the right shall occur at least thirty (30) days after the giving of the notice of the proposed Issuance by the Company. Notwithstanding the foregoing, the Right shall not apply to any Issuance, pro rata, to all holders of Company Common Stock. (c) Notwithstanding the capital stock or other provisions of this Section 2.5, if the Board reasonably determines that there is a need security of the Company to issue securities (including, without limitation, Common Stock) or any of the Company that would otherwise be required to be offered to the Stockholders to exercise the Right under this Section 2.5 prior to such Issuance, the Company may issue such securities without first complying with this Section 2.5; provided, however, that within thirty (30) days after such Issuance, the Company offers each Stockholder the opportunity to purchase such number of securities that such Stockholder would have been entitled to purchase pursuant to the Right of Section 2.5 by sending written notice to the Stockholders. In the event of an offer made by the Company pursuant to this Section 2.5(c), the timing and procedures for the exercise and consummation of such offer shall be the same as those set forth in Section 2.5(b), with appropriate modifications to reflect the post-issuance delivery of the notice as contemplated in this Section 2.5(c)its Subsidiaries.

Appears in 1 contract

Samples: Subscription Agreement (Net Element, Inc.)

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