Common use of Optional Conversion Upon Equity Financing Clause in Contracts

Optional Conversion Upon Equity Financing. Upon a sale (or series of related sales) by the Company of its Equity Securities in one or more offerings relying on Section 4(a)(2) of the Securities Act or Regulation D thereunder for exemption from the registration requirements of Section 5 of the Securities Act that does not meet the investment commitment and/or gross cash proceeds criteria to be considered a Next Equity Financing, the principal balance and unpaid accrued interest on all Notes will convert into Conversion Shares upon the election of all of the Requisite Noteholders. The number of Conversion Shares the Company issues upon such conversion will equal the quotient (rounded down to the nearest whole share) obtained by dividing (x) the outstanding principal balance and unpaid accrued interest under each converting Note on the date of conversion by (y) the applicable Conversion Price. The issuance of Conversion Shares pursuant to a conversion of each Note under this Section 4.2(a) will be on, and subject to, the same terms and conditions applicable to the Equity Securities issued in the equity financing.