Provision Language
6. Withdrawal Right
The withdrawal right described in this section will be triggered only as a result of actions taken by the Company that are inconsistent with restrictions herein on the use of funds or with the Global Access Commitments or related U.S. tax obligations, including without limitation the requirements set forth in paragraphs 9 and 12 below. For the avoidance of doubt, the withdrawal right will not be triggered by the inability, for scientific and technical reasons beyond the control of the Company, to provide Services and successfully develop a product for the Group 1, Group 2 or Group 3 Diseases, so long as the Company has not breached any of the Global Access Commitments.
In the event that the Company fails to comply with the restrictions on the use of funds, the Global Access Commitments or the other related U.S. tax obligations set forth herein, (a “Charitability Default”), the Foundation will have the rights set forth below (the “Withdrawal Right”). Each party shall promptly notify the other party in writing of the occurrence of such event, and the Company shall thereafter promptly provide to the Foundation a proposed strategy to remedy the Charitability Default.
If the Company fails to cure the Charitability Default within ninety (90) days of the above-described notice, the Company shall have the option to either (i) redeem all Atreca Preferred Stock held by the Foundation and any Common Stock held by the Foundation issued upon conversion of the Atreca Preferred Stock, as applicable (collectively, the “Foundation’s Holdings”), provided that such redemption shall be made only to the extent permitted by applicable law, or (ii) locate a third party that will purchase the Foundation’s Holdings. In the event of a Charitability Default, the Foundation and Foundation-Supported Entities will also be provided with nonexclusive access (including any necessary licenses to relevant intellectual property) to the Platform Technology sufficient to enable the Foundation and Foundation-Supported Entities to practice the Platform Technology for the pursuit of the Global Access Objectives. Such access shall include, but not be limited to, access contemplated in this Letter Agreement sufficient for the Foundation or Foundation-Supported Entities to complete the Services that the Company agreed to perform under a grant or contract previously entered into between the Company and the Foundation or Foundation Supported Entity. Such access to and permissions to practice the Platform Technology shall be accomplished without any delay or hindrance by the Company (regardless of whether or not the provision of the Services had been started). The Foundation will continue to have the other rights set forth in this Letter Agreement (e.g., use of the results of the Services in accordance with Section 3.a.ii.). If the Company is unable to redeem all of the Foundation’s Holdings, and no third party purchases the Foundation’s Holdings, then the Company shall use its best efforts to effect the Withdrawal Right, consistent with the Code and applicable law (e.g., solvency requirements). Upon the transfer of any of the Foundation’s Holdings to any one or more transferees that are tax-exempt organizations as described in Section 501(c)(3) of the Code, the Foundation may assign to any such transferee all of its rights attached to such Foundation’s Holdings.
For redemption or purchase by a third party, the Foundation’s Holdings shall be valued at the greater of [*] or, if an appraisal is elected by the Foundation, the then current fair market value of the Foundation Holdings as determined by a mutually agreed upon (such agreement not unreasonably withheld) independent third-party appraiser. [*].
If the Foundation’s Holdings are sold or redeemed due to a Charitability Default, commencing upon the date of such sale or redemption, the Foundation will have two-year lookback rights by which, in the event of a sale of all or substantially all of the shares of the Company, or a sale of all or substantially all of its assets or a public offering of the Company that results in cash proceeds representing a valuation for the Company in excess of [*]% of the valuation used for the sale or redemption of the Foundation’s Holdings, the Foundation will receive compensation commensurate with its converted equity interest in the Company had the Charitability Default not occurred.
