Common use of Equity Payment Clause in Contracts

Equity Payment. Upon closing of the Financing, Licensee shall issue to AstraZeneca $3.0 million worth of its Series B Convertible Preferred Stock (the “License Shares”) valued at the price per share paid by the investors in the Financing, subject to AstraZeneca’s execution of the applicable documents entered into in the Financing between Licensee and the participants in the Financing (the “Financing Documents”). The Financing Documents are expected to include the following terms, and should any such term not be included in the Financing Documents, then Licensee will at AstraZeneca’s request within thirty (30) days following the closing of the Financing, either amend the Financing Documents to include such term or enter into an additional agreement with AstraZeneca that provides AstraZeneca with substantially the same rights: (i) the pro rata right, based on AstraZeneca’s equity ownership percentage in the Licensee (assuming conversion of all outstanding convertible preferred stock into common stock of the Licensee and the exercise of all options outstanding under Licensee’s equity incentive plans), to participate in subsequent issuances of equity securities by the Licensee (subject to customary exclusions) to maintain AstraZeneca’s equity ownership percentage, (ii) the right to invite one representative of AstraZeneca to attend meetings of the Licensee’s board of directors in a nonvoting observer capacity (subject to customary confidentiality agreements and procedures), (iii) the right to receive audited annual financial statements within 120 days following the Licensee’s fiscal year-end, (iv) the right to receive unaudited quarterly financial statements within forty-five (45) days following the Licensee’s fiscal quarter-end, (v) the right to receive copies of the Licensee’s annual business plans and budgets to the extent prepared by or on behalf of the Licensee, (vi) the right to receive written notification of any material defaults of Licensee’s obligations under its material contracts or other obligations or the commencement or settlement of any litigation by or against the Licensee, (vii) such other information concerning the Licensee and its business as AstraZeneca may reasonably require from time to time (provided, however, that the Licensee shall not be obligated to provide information pursuant to this clause (vii) that the Licensee reasonably determines in good faith to be a trade secret or the disclosure of which would adversely affect the attorney-client privilege between the Licensee and its counsel), and (viii) all other rights granted to the holders of shares of Series B Convertible Preferred Stock and other terms to which such holders are subject under the Financing Documents (other than any right to appoint a director to Licensee’s board of directors), including standard registration rights, customary lock-up restrictions, and right of first refusal and co-sale rights. Notwithstanding anything to the contrary set forth above or in the Financing Documents, if the terms of the Financing include (or are later amended to impose) any pay-to-play provision on the holders of shares of any series of the Licensee’s preferred stock, none of the License Shares shall be included in the calculation of AstraZeneca’s “pro rata portion” investment obligation with respect to such “pay-to-play” provision. All AstraZeneca’s rights and Licensee’s obligations under this Section 4.2 will terminate on the earliest of (a) such date as AstraZeneca no longer holds any of the License Shares or any other shares of any series of Licensee’s preferred stock, (b) the consummation of a transaction in which (i) Licensee sells to a third party (other than an Affiliate of Licensee) all or substantially all of Licensee’s assets or (ii) a third party acquires from the stockholders of Licensee shares of Licensee’s capital stock representing 100% of the outstanding voting power of Licensee (other than a transaction in which the stockholders of Licensee immediately prior to such transaction, continue to hold at least a majority of the voting power of Licensee or the surviving entity (or if the surviving entity is a wholly owned subsidiary, its parent) immediately after such transaction), and (c) the closing of Licensee’s first underwritten public offering of the Licensee’s common stock under the Securities Act of 1933, as amended.