Spin-Out Preemptive Rights Sample Clauses
The Spin-Out Preemptive Rights clause grants existing shareholders the right to participate in new share issuances by a company that is being spun out from a parent entity. In practice, this means that if the spin-out company offers new shares, current shareholders have the opportunity to purchase a proportional amount before the shares are offered to outside investors. This clause ensures that existing shareholders can maintain their ownership percentage in the new entity, protecting them from dilution and preserving their investment stake during corporate restructuring events.
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Spin-Out Preemptive Rights. If, at any time after the date of this Agreement, (i) Company creates a subsidiary that is not a wholly owned subsidiary (as hereinafter defined); (ii) any wholly owned subsidiary sells or transfers any shares of capital stock to any entity that is not a wholly owned subsidiary; (iii) any wholly-owned Subsidiary merges, consolidates or takes any other action that results in such subsidiary not remaining a wholly owned subsidiary; or (iv) any wholly owned subsidiary sells all or substantially all of its assets (in a transaction that is not an Extraordinary Transaction) to any person or entity that is not a wholly owned subsidiary, then in each case Company shall cause such subsidiary (or the surviving or successor entity or purchaser of assets) (the “Spin-out Entity”) to (A) issue to Investor shares of preferred stock or common stock, as applicable, of the Spin-out Entity having relative rights, privileges and preferences equivalent to the relative rights, privileges and preferences of the Conversion Shares, Warrant Shares and Option Shares and (B) enter into agreements with Investor having substantially the same rights as any agreements between Investor and Company. The number of shares of such preferred stock and common stock of the Spin-out Entity issued to Investor shall be sufficient so that Investor shall thereafter have an equity ownership interest in the Spin-out Entity equal to its equity ownership interest in Company at such time on a fully-diluted basis, including all options reserved for issuance under any stock incentive, stock option, stock purchase or stock appreciation plan or arrangement maintained by Company or such Spin-out Entity. A “wholly owned subsidiary” is any entity that Company owns, holds and controls all of its capital stock, equity securities or other interests, either directly or through one or more other wholly owned subsidiaries.
Spin-Out Preemptive Rights. If at any time (i) the Company creates a direct or indirect subsidiary that is not (A) a wholly-owned subsidiary (either directly or indirectly) or (B) an entity that is created by the Company for the sole purposes of expanding or servicing the Company’s current line of business, which can include, but is not limited to, entities formed for operations in foreign jurisdictions, and sales and marketing, and customer support; provided, however, that such subsidiaries formed pursuant to this subsection 5.1 shall be wholly-owned subsidiaries except to the extent required by applicable laws outside of the United States, (ii) any direct or indirect subsidiary of the Company sells or transfers any shares of capital stock to any entity that is not the Company or a direct or indirect wholly-owned subsidiary of the Company, (iii) any direct or indirect subsidiary of the Company merges, consolidates or takes any other action that results in such subsidiary not remaining a wholly-owned subsidiary of the Company (either directly or indirectly) except to the extent required by applicable laws outside of the United States, or (iv) any direct or indirect subsidiary of the Company sells all or substantially all of its assets to any person or entity that is not the Company or a direct or indirect wholly-owned subsidiary of the Company, then in each case the Company shall cause such subsidiary (or the surviving or successor entity or purchaser of assets) (each, a “Spin-out Entity”) to provide each Major Holder a right of first offer (the “Spin-out Preemptive Rights”) to purchase up to its Spin-out Pro Rata Share (defined below) with respect to any common stock, preferred stock or any other security of the Spin-out Entity, including but not limited to, rights, options, or warrants to purchase such common stock, preferred stock or other security (“Spin-out Shares”) offered by the Spin-out Entity for financing purposes. For purposes of this Section 5.1, a Major Holder’s “Spin-out Pro Rata Share” of such Spin-out Shares shall be a fraction, (i) the numerator of which is the number of shares of Common Stock of the Company then held by such Major Holder immediately prior to the formation of such Spin-out Entity (assuming full conversion of the Shares and full conversion or exercise of all outstanding convertible securities, rights, options and warrants (other than the Bridge Notes) held by said Major Holder), and (ii) the denominator of which is the total number of shares of the Co...
Spin-Out Preemptive Rights. If at any time (a) the Company creates a direct or indirect subsidiary that is not a wholly owned subsidiary (either directly or indirectly) (other than de minimis ownership to the extent required by applicable laws outside of the United States), (b) any direct or indirect subsidiary of the Company sells or transfers any shares of capital stock to any entity other than the Company or a direct or indirect wholly owned subsidiary of the Company (other than de minimis ownership to the extent required by applicable laws outside of the United States), (c) any direct or indirect subsidiary of the Company merges, consolidates or takes any other action that results in such subsidiary not remaining a wholly owned subsidiary of the Company (either directly or indirectly) (other than de minimis ownership to the extent required by applicable laws outside of the United States), or (d) any direct or indirect subsidiary of the Company sells all or substantially all of its assets to any person or entity other than the Company or a direct or indirect wholly owned subsidiary of the Company, then in each case the Company shall cause such subsidiary (or the surviving or successor entity or purchaser of assets) (each, a “Spin-out Entity”) to provide each Investor a right of first offer (the “Spin-out Preemptive Rights”) to purchase up to its Pro-rata Portion of any Common Stock, Preferred Stock or any other security of the Spin-out Entity, including but not limited to, rights, options, or warrants to purchase such Common Stock, Preferred Stock or other security (“Spin-out Shares”) offered by the Spin-out Entity for financing purposes. The manner and procedure of such Spin-out Preemptive Rights shall be substantially similar to those described in Section 3.1. The Company shall use its reasonable best efforts to cause, or to exert influence it may have to cause, the organizational documents of the Spin-out Entity (y) to provide for voting rights and preferences substantially equivalent to the voting rights and preferences of the Preferred Stock and (z) to contain provisions substantially similar to this Article III.