Common use of Automatic Conversion upon a Qualified Financing Clause in Contracts

Automatic Conversion upon a Qualified Financing. 3.1 Subject to the prior receipt of Regulatory Approvals, in the event that the Company consummates a Qualified Financing (as defined below) within the Conversion Period, then, and upon the closing of such Qualified Financing, the then-outstanding Principal Amount shall be automatically converted (the “Automatic Conversion”) into an equity investment in the Company, on the same terms and conditions applicable to the Qualified Financing except that the price per share applicable thereto shall be the Conversion Price (as defined below) applicable to such conversion as determined pursuant to Section ‎5 below (including without limitation, the same liquidation preference and anti-dilution protection (which shall be applied with respect to the Conversion Price, mutatis mutandis), registration rights, preemptive rights, right of first refusal, voting and veto rights, or other rights, pro-rata to the respective amounts of investment) and the Investor shall be deemed an investor in the Qualified Financing such that the Investor shall receive, in consideration for the conversion of the Principal Amount, such number of fully-paid and non-assessable shares of the Company, of the same type of securities as received by the investors in such Qualified Financing, equal to the quotient received by dividing the then-outstanding Principal Amount by the Conversion Price (the “Qualified Shares”). 3.2 The Automatic Conversion shall be conditional upon, and concurrent with, the closing of the Qualified Financing and will finally settle and discharge the Loan Amount. 3.3 The Company shall notify the Investor of the Qualified Financing and provide the Investor with all documents and other reasonably required information, not later than two (2) business days following execution by the Company of the term sheet or other relevant document relating to the Qualified Financing. 3.4 As used herein, the term “Qualified Financing” means an equity investment in the Company of at least US$ 1,500,000 (excluding conversion of any portion of the then outstanding Loan Amount), in one closing or a series of related closings (provided that all such transactions consummated upon such related closings are substantially under the same terms and conditions). In the event that the Qualified Financing is consummated by a series of related closings, then, the then outstanding Principal Amount shall be converted as aforesaid at the first closing to occur at which all conditions precedent to the qualification of such financing as a Qualified Financing have been satisfied (irrespective if the entire US$ 1,500,000 has been paid to the Company at such closing, as long as the Company has received a commitment for an unconditional investment of the entire US$ 1,500,000, it being clarified that a pre-condition of no material adverse effect occurring prior to a future closing shall not be deemed to revert the commitment to a conditional commitment). In the event that the Qualified Financing is consummated by a series of related closings and the transactions consummated in such closings are not on the same terms and conditions and/or involve the issuance of more than one type of the Company’s securities, then, the then outstanding Principal Amount shall be converted as aforesaid into an equity investment on the most favorable terms to the Investor, at the Conversion Price, with the securities issued therefor being of the type that confers upon its holders the most favorable (when taken as a whole) rights, preferences and privileges.