Common use of Spin-Out Preemptive Rights Clause in Contracts

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 Company’s Common Stock then outstanding (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)). The manner and procedure of such Spin-out Preemptive Rights shall be substantially similar to those described in Section 4 above with respect to the Major Holders. In addition, the Company shall cause, or exert such influence it may have to cause, the organizational documents of the Spin-out Entity (i) to provide for voting rights and preferences with respect to the Spin-out Shares equivalent to the voting rights and preferences of the Series B-1 Preferred and (ii) to contain provisions relating to this Section 5.1.

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 Company’s Common Stock then outstanding (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)warrants). The manner and procedure of such Spin-out Preemptive Rights shall be substantially similar to those described in Section 4 above with respect to the Major Holders. In addition, the Company shall cause, or exert such influence it may have to cause, the organizational documents of the Spin-out Entity (i) to provide for voting rights and preferences with respect to the Spin-out Shares equivalent to the voting rights and preferences of the Series B-1 Preferred and (ii) to contain provisions relating to this Section 5.1.

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 2.4(i)(B) 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 Investor 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 5.12.4, a Major HolderInvestor’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 Investor 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 or exercisable securities, rights, options and warrants (other than the Bridge Notes) including Preferred Stock held by said Major Holdersuch Investor), and (ii) the denominator of which is the total number of shares of the Company’s Common Stock then outstanding (assuming full conversion of the Shares and full conversion or exercise of all outstanding convertible or exercisable securities, rights, options and warrants (other than the Bridge Notes)including Preferred Stock). The manner and procedure of such Spin-out Preemptive Rights shall be substantially similar to those described in Section 4 above with respect to the Major Holders2.3 above. In addition, the Company shall cause, or exert such influence it may have to cause, the organizational documents of the Spin-out Entity (i) to provide for voting rights and preferences with respect to the Spin-out Shares equivalent to the voting rights and preferences of the Series B-1 Preferred Stock and (ii) to contain provisions relating protecting the rights of Investors pursuant to this Section 5.12.4.