Document:

Exhibit 10.3

 

ATRECA, INC.

 

2019 EMPLOYEE STOCK PURCHASE PLAN

 

1.                                      GENERAL; PURPOSE.

 

(a)                                 The Plan provides a means by which Eligible Employees of the Company and certain Designated Companies may be given an opportunity to purchase shares of Common Stock.  The Plan permits the Company to grant a series of Purchase Rights to Eligible Employees under an Employee Stock Purchase Plan.

 

(b)                                 The Company, by means of the Plan, seeks to retain the services of such Employees, to secure and retain the services of new Employees and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Related Corporations and Affiliates.

 

(c)                                  The Plan includes two components: a 423 Component and a Non-423 Component.  The Company intends (but makes no undertaking or representation to maintain) the 423 Component to qualify as an Employee Stock Purchase Plan.  The provisions of the 423 Component, accordingly, will be construed in a manner that is consistent with the requirements of Section 423 of the Code.  In addition, this Plan authorizes grants of Purchase Rights under the Non-423 Component that do not meet the requirements of an Employee Stock Purchase Plan.  Except as otherwise provided in the Plan or determined by the Board, the Non-423 Component will operate and be administered in the same manner as the 423 Component.  In addition, the Company may make separate Offerings which vary in terms (provided that such terms are not inconsistent with the provisions of the Plan or the requirements of an Employee Stock Purchase Plan), and the Company will designate which Designated Company is participating in each separate Offering.

 

2.                                      ADMINISTRATION.

 

(a)                                 The Board will administer the Plan unless and until the Board delegates administration of the Plan to a Committee or Committees, as provided in Section 2(c).

 

(b)                                 The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:

 

(i)                                    To determine how and when Purchase Rights will be granted and the provisions of each Offering (which need not be identical).

 

(ii)                                To designate from time to time which Related Corporations will be eligible to participate in the Plan as Designated 423 Corporations or as Designated Non-423 Corporations, which Affiliates may be excluded from participation in the Plan, and which Designated Companies will participate in each separate Offering (to the extent that the Company makes separate Offerings).

 

(iii)                            To construe and interpret the Plan and Purchase Rights, and to establish, amend and revoke rules and regulations for its administration.  The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it deems necessary or expedient to make the Plan fully effective.

 

(iv)                             To settle all controversies regarding the Plan and Purchase Rights granted under the Plan.

 

 

(v)                                 To suspend or terminate the Plan at any time as provided in Section 12.

 

(vi)                             To amend the Plan at any time as provided in Section 12.

 

(vii)                         Generally, to exercise such powers and to perform such acts as it deems necessary or expedient to promote the best interests of the Company, its Related Corporations, and Affiliates and to carry out the intent that the 423 Component be treated as an Employee Stock Purchase Plan.

 

(viii)                     To adopt such rules, procedures and sub-plans relating to the operation and administration of the Plan as are necessary or appropriate under applicable local laws, regulations and procedures to permit or facilitate participation in the Plan by Employees who are foreign nationals or employed or located outside the United States.  Without limiting the generality of, but consistent with, the foregoing, the Board specifically is authorized to adopt rules, procedures, and sub-plans, which, if applicable to a Designated Non-423 Corporation, do not have to comply with the requirements of Section 423 of the Code, regarding, without limitation, eligibility to participate in the Plan, the definition of eligible “earnings,” handling and making of Contributions, establishment of bank or trust accounts to hold Contributions, payment of interest, conversion of local currency, obligations to pay payroll tax, determination of beneficiary designation requirements, withholding procedures and handling of share issuances, any of which may vary according to applicable requirements.

 

(c)                                  The Board may delegate some or all of the administration of the Plan to a Committee or Committees.  If administration is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee, as applicable), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board.  Further, to the extent not prohibited by applicable law, the Board or Committee may, from time to time, delegate some or all of its authority under the Plan to other persons or groups of persons as it deems necessary, appropriate, or advisable under conditions or limitations that it may set at or after the time of the delegation.  The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated.  Whether or not the Board has delegated administration of the Plan to a Committee, the Board will have the final power to determine all questions of policy and expediency that may arise in the administration of the Plan.

 

(d)                                 All determinations, interpretations and constructions made by the Board in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons.

 

3.                                      SHARES OF COMMON STOCK SUBJECT TO THE PLAN.

 

(a)                                 Subject to the provisions of Section 11(a) relating to Capitalization Adjustments and the following sentence regarding the Evergreen Increase, the initial number of shares of Common Stock that may be issued under the Plan shall equal 1,700,0001 shares of Common Stock (the “Share Reserve”).  In addition, the Share Reserve will automatically increase on January 1st of each year for a period of up to ten (10) years, commencing on January 1, 2020 and ending on (and including) January 1, 2029 (each, an “Evergreen Date”), in an amount equal to the lesser of (i) one percent (1% of the total number of shares of Capital Stock outstanding on December 31st immediately preceding the applicable Evergreen Date, 

 

1 The initial 1,700,000 shares of Common Stock that may be issued under the Plan were adjusted to 283,333 pursuant to the 1-for-6 reverse split of the Company’s Common Stock, effective June 7, 2019.

 

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and (ii) 2,500,0002 shares (the “Evergreen Increase”).  Notwithstanding the foregoing, the Board may act prior to the Evergreen Date of a given year to provide that there will be no Evergreen Increase for such year or that the Evergreen Increase for such year will be a lesser number of shares of Common Stock than would otherwise occur pursuant to the preceding sentence.  For the avoidance of doubt, up to the maximum number of shares of Common Stock reserved under this Section 3(a) may be used to satisfy purchases of Common Stock under the 423 Component and any remaining portion of such maximum number of shares may be used to satisfy purchases of Common Stock under the Non-423 Component.

 

(b)                                 If any Purchase Right granted under the Plan terminates without having been exercised in full, the shares of Common Stock not purchased under such Purchase Right will again become available for issuance under the Plan.

 

(c)                                  The stock purchasable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market.

 

4.                                      GRANT OF PURCHASE RIGHTS; OFFERING.

 

(a)                                 The Board may from time to time grant or provide for the grant of Purchase Rights to Eligible Employees under an Offering (consisting of one or more Purchase Periods) on an Offering Date or Offering Dates selected by the Board.  Each Offering will be in such form and will contain such terms and conditions as the Board will deem appropriate, and, with respect to the 423 Component, will comply with the requirement of Section 423(b)(5) of the Code that all Employees granted Purchase Rights will have the same rights and privileges.  The terms and conditions of an Offering shall be incorporated by reference into the Plan and treated as part of the Plan.  The provisions of separate Offerings need not be identical, but each Offering will include (through incorporation of the provisions of this Plan by reference in the Offering Document or otherwise) the period during which the Offering will be effective, which period will not exceed 27 months beginning with the Offering Date, and the substance of the provisions contained in Sections 5 through 8, inclusive.

 

(b)                                 If a Participant has more than one Purchase Right outstanding under the Plan, unless he or she otherwise indicates in forms delivered to the Company or a third party designated by the Company (each, a “Company Designee”): (i) each form will apply to all of his or her Purchase Rights under the Plan, and (ii) a Purchase Right with a lower exercise price (or an earlier-granted Purchase Right, if different Purchase Rights have identical exercise prices) will be exercised to the fullest possible extent before a Purchase Right with a higher exercise price (or a later-granted Purchase Right if different Purchase Rights have identical exercise prices) will be exercised.

 

(c)                                  The Board will have the discretion to structure an Offering so that if the Fair Market Value of a share of Common Stock on the first Trading Day of a new Purchase Period within that Offering is less than or equal to the Fair Market Value of a share of Common Stock on the Offering Date for that Offering, then (i) that Offering will terminate immediately as of that first Trading Day, and (ii) the Participants in such terminated Offering will be automatically enrolled in a new Offering beginning on the first Trading Day of such new Purchase Period.

 

5.                                      ELIGIBILITY.

 

(a)                                 Purchase Rights may be granted only to Employees of the Company or, as the Board may designate in accordance with Section 2(b), to Employees of a Related Corporation or an Affiliate.  Except as provided in Section 5(b) or as required by applicable law, an Employee will not be eligible to be 

 

2 The initial 2,500,000 shares were adjusted to 416,666 pursuant to the 1-for-6 reverse split of the Company’s Common Stock, effective June 7, 2019.

 

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granted Purchase Rights unless, on the Offering Date, the Employee has been in the employ of the Company, a Related Corporation or an Affiliate, as the case may be, for such continuous period preceding such Offering Date as the Board may require, but in no event will the required period of continuous employment be equal to or greater than two years.  In addition, the Board may provide that no Employee will be eligible to be granted Purchase Rights under the Plan unless, on the Offering Date, such Employee’s customary employment with the Company, the Related Corporation, or the Affiliate, as applicable, is more than 20 hours per week and more than five months per calendar year or such other criteria as the Board may determine consistent with Section 423 of the Code with respect to the 423 Component and applicable laws.

 

(b)                                 The Board may provide that each person who, during the course of an Offering, first becomes an Eligible Employee will, on a date or dates specified in the Offering which coincides with the day on which such person becomes an Eligible Employee or which occurs thereafter, receive a Purchase Right under that Offering, which Purchase Right will thereafter be deemed to be a part of that Offering.  Such Purchase Right will have the same characteristics as any Purchase Rights originally granted under that Offering, as described herein, except that:

 

(i)                                    the date on which such Purchase Right is granted will be the “Offering Date” of such Purchase Right for all purposes, including determination of the exercise price of such Purchase Right;

 

(ii)                                the period of the Offering with respect to such Purchase Right will begin on its Offering Date and end coincident with the end of such Offering; and

 

(iii)                            the Board may provide that if such person first becomes an Eligible Employee within a specified period of time before the end of the Offering, he or she will not receive any Purchase Right under that Offering.

 

(c)                                  No Employee will be eligible for the grant of any Purchase Rights if, immediately after any such Purchase Rights are granted, such Employee owns stock possessing five percent or more of the total combined voting power or value of all classes of stock of the Company or of any Related Corporation.  For purposes of this Section 5(c), the rules of Section 424(d) of the Code will apply in determining the stock ownership of any Employee, and stock which such Employee may purchase under all outstanding Purchase Rights and options will be treated as stock owned by such Employee.

 

(d)                                 As specified by Section 423(b)(8) of the Code, an Eligible Employee may be granted Purchase Rights only if such Purchase Rights, together with any other rights granted under all Employee Stock Purchase Plans of the Company and any Related Corporations or Affiliates, do not permit such Eligible Employee’s rights to purchase stock of the Company or any Related Corporation or Affiliates to accrue at a rate which, when aggregated, exceeds US$25,000 of Fair Market Value of such stock (determined at the time such rights are granted, and which, with respect to the Plan, will be determined as of their respective Offering Dates) for each calendar year in which such rights are outstanding at any time, subject to compliance with applicable laws.

 

(e)                                  Officers of the Company and any Designated Company, if they are otherwise Eligible Employees, will be eligible to participate in Offerings under the Plan.  Notwithstanding the foregoing, the Board may provide in an Offering that Employees who are highly compensated Employees within the meaning of Section 423(b)(4)(D) of the Code will not be eligible to participate.

 

(f)                                   Notwithstanding anything in this Section 5 to the contrary, in the case of an Offering under the Non-423 Component, an Eligible Employee (or group of Eligible Employees) may be excluded 

 

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from participation in the Plan or an Offering if the Board has determined, in its sole discretion, that participation of such Eligible Employee(s) is not advisable or practical for any reason.

 

6.                                      PURCHASE RIGHTS; PURCHASE PRICE.

 

(a)                                 On each Offering Date, each Eligible Employee, pursuant to an Offering made under the Plan, will be granted a Purchase Right to purchase up to that number of shares of Common Stock (rounded down to the nearest whole share) purchasable either with a percentage or with a maximum dollar amount, as designated by the Board, but in either case not exceeding 15% of such Employee’s earnings (as defined by the Board in each Offering) during the period that begins on the Offering Date (or such later date as the Board determines for a particular Offering) and ends on the date stated in the Offering, which date will be no later than the end of the Offering.

 

(b)                                 The Board will establish one or more Purchase Dates during an Offering on which Purchase Rights granted for that Offering will be exercised and shares of Common Stock will be purchased in accordance with such Offering.

 

(c)                                  In connection with each Offering made under the Plan, the Board may specify (i) a maximum number of shares of Common Stock that may be purchased by any Participant on any Purchase Date during such Offering, (ii) a maximum aggregate number of shares of Common Stock that may be purchased by all Participants pursuant to such Offering and/or (iii) a maximum aggregate number of shares of Common Stock that may be purchased by all Participants on any Purchase Date under the Offering.  If the aggregate purchase of shares of Common Stock issuable upon exercise of Purchase Rights granted under the Offering would exceed any such maximum aggregate number, then, in the absence of any Board action otherwise, a pro rata (based on each Participant’s accumulated Contributions) allocation of the shares of Common Stock (rounded down to the nearest whole share) available will be made in as nearly a uniform manner as will be practicable and equitable.

 

(d)                                 The purchase price of shares of Common Stock acquired pursuant to Purchase Rights will be not less than the lesser of:

 

(i)                                    an amount equal to 85% of the Fair Market Value of the shares of Common Stock on the Offering Date; or

 

(ii)                                an amount equal to 85% of the Fair Market Value of the shares of Common Stock on the applicable Purchase Date.

 

7.                                      PARTICIPATION; WITHDRAWAL; TERMINATION.

 

(a)                                 An Eligible Employee may elect to authorize payroll deductions as the means of making Contributions by completing and delivering to the Company or Company Designee, within the time specified in the Offering, an enrollment form provided by the Company or Company Designee. The enrollment form will specify the amount of Contributions not to exceed the maximum amount specified by the Board. Each Participant’s Contributions will be credited to a bookkeeping account for such Participant under the Plan and will be deposited with the general funds of the Company except where applicable laws or regulations require that Contributions be deposited with a Company Designee or otherwise segregated.  If permitted in the Offering, a Participant may begin such Contributions with the first payroll occurring on or after the Offering Date (or, in the case of a payroll date that occurs after the end of the prior Offering but before the Offering Date of the next new Offering, Contributions from such payroll will be included in the new Offering).  If permitted in the Offering, a Participant may thereafter reduce (including to zero) or increase his or her Contributions.  If required under applicable laws or 

 

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regulations or if specifically provided in the Offering, in addition to or instead of making Contributions by payroll deductions, a Participant may make Contributions through a payment by cash, check, or wire transfer prior to a Purchase Date, in a manner directed by the Company or a Company Designee.

 

(b)                                 During an Offering, a Participant may cease making Contributions and withdraw from the Offering by delivering to the Company or a Company Designee a withdrawal form provided by the Company.  The Company may impose a deadline before a Purchase Date for withdrawing.  Upon such withdrawal, such Participant’s Purchase Right in that Offering will immediately terminate and the Company will distribute as soon as practicable to such Participant all of his or her accumulated but unused Contributions and such Participant’s Purchase Right in that Offering shall thereupon terminate.  A Participant’s withdrawal from that Offering will have no effect upon his or her eligibility to participate in any other Offerings under the Plan, but such Participant will be required to deliver a new enrollment form to participate in subsequent Offerings.

 

(c)                                  Unless otherwise required by applicable law, Purchase Rights granted pursuant to any Offering under the Plan will terminate immediately if the Participant either (i) is no longer an Employee for any reason or for no reason or (ii) is otherwise no longer eligible to participate.  In this regard, unless otherwise determined by the Board, a Participant whose employment transfers or whose employment terminates with an immediate rehire (with no break in service) by or between the Company and a Designated Company will not be treated as having terminated employment for purposes of participating in the Plan or an Offering; however, if a Participant transfers from an Offering under the 423 Component to an Offering under the Non-423 Component, the exercise of the Participant’s Purchase Right will be qualified under the 423 Component only to the extent such exercise complies with Section 423 of the Code.  If a Participant transfers from an Offering under the Non-423 Component to an Offering under the 423 Component, the exercise of the Purchase Right will remain non-qualified under the Non-423 Component.  In the event that a Participant’s Purchase Right is terminated under the Plan, the Company will distribute as soon as practicable to such individual all of his or her accumulated but unused Contributions.

 

(d)                                 During a Participant’s lifetime, Purchase Rights will be exercisable only by such Participant.  Purchase Rights are not transferable by a Participant, except by will, by the laws of descent and distribution, or, if permitted by the Company, by a beneficiary designation as described in Section 10.

 

(e)                                  Unless otherwise specified in the Offering or required by applicable law, the Company will have no obligation to pay interest on Contributions.

 

8.                                      EXERCISE OF PURCHASE RIGHTS.

 

(a)                                 On each Purchase Date, each Participant’s accumulated Contributions will be applied to the purchase of shares of Common Stock (rounded down to the nearest whole share), up to the maximum number of shares of Common Stock permitted by the Plan and the applicable Offering, at the purchase price specified in the Offering.  No fractional shares will be issued unless specifically provided for in the Offering.

 

(b)                                 Unless otherwise provided in the Offering, if any amount of accumulated Contributions remains in a Participant’s account after the purchase of shares of Common Stock on a Purchase Date in an Offering, then such remaining amount will be distributed to such Participant as soon as practicable after the applicable Purchase Date, without interest, unless the payment of interest is required by applicable laws.

 

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(c)                                  No Purchase Rights may be exercised to any extent unless the shares of Common Stock to be issued upon such exercise under the Plan are covered by an effective registration statement pursuant to the Securities Act and the Plan is in material compliance with all applicable U.S. federal and state, foreign and other securities, exchange control and other laws applicable to the Plan.  If on a Purchase Date the shares of Common Stock are not so registered or the Plan is not in such compliance, no Purchase Rights will be exercised on such Purchase Date, and the Purchase Date will be delayed until the shares of Common Stock are subject to such an effective registration statement and the Plan is in material compliance, except that the Purchase Date will in no event be more than 6 months from the Offering Date.  If, on the Purchase Date, as delayed to the maximum extent permissible, the shares of Common Stock are not registered and the Plan is not in material compliance with all applicable laws or regulations, as determined by the Company in its sole discretion, no Purchase Rights will be exercised and all accumulated but unused Contributions will be distributed as soon as practicable to the Participants without interest, unless the payment of interest is required by applicable laws.

 

9.                                      COVENANTS OF THE COMPANY.

 

The Company will seek to obtain from each U.S. federal or state, foreign or other regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Purchase Rights and issue and sell shares of Common Stock thereunder unless the Company determines, in its sole discretion, that doing so would cause the Company to incur costs that are unreasonable.  If, after commercially reasonable efforts, the Company is unable to obtain the authority that counsel for the Company deems necessary for the grant of Purchase Rights or the lawful issuance and sale of Common Stock under the Plan, and at a commercially reasonable cost, the Company will be relieved from any liability for failure to grant Purchase Rights and/or to issue and sell Common Stock upon exercise of such Purchase Rights.

 

10.                               DESIGNATION OF BENEFICIARY.

 

(a)                                 The Company may, but is not obligated to, permit a Participant to submit a form designating a beneficiary who will receive any shares of Common Stock and/or Contributions from the Participant’s account under the Plan if the Participant dies before such shares and/or Contributions are delivered to the Participant.  The Company may, but is not obligated to, permit the Participant to change such designation of beneficiary. Any such designation and/or change must be on a form approved by the Company or as approved by the Company for use by a Company Designee.

 

(b)                                 If a Participant dies, in the absence of a valid beneficiary designation, the Company will deliver any shares of Common Stock and/or Contributions to the executor or administrator of the estate of the Participant.  If no executor or administrator has been appointed (to the knowledge of the Company), the Company, in its sole discretion, may deliver such shares of Common Stock and/or Contributions, without interest, unless the payment of interest is required by applicable laws, to the Participant’s spouse, dependents or relatives, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

 

11.                               ADJUSTMENTS UPON CHANGES IN COMMON STOCK; CORPORATE TRANSACTIONS.

 

(a)                                 In the event of a Capitalization Adjustment, the Board will appropriately and proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum number of securities by which the share reserve is to increase automatically each year pursuant to Section 3(a), (iii) the class(es) and number of securities subject to, and the purchase price applicable to outstanding Offerings and Purchase Rights, and (iv) the class(es) and 

 

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number of securities that are the subject of the purchase limits under each ongoing Offering.  The Board will make these adjustments, and its determination will be final, binding and conclusive.

 

(b)                                 In the event of a Corporate Transaction, then: (i) any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue outstanding Purchase Rights or may substitute similar rights (including a right to acquire the same consideration paid to the stockholders in the Corporate Transaction) for outstanding Purchase Rights, or (ii) if any surviving or acquiring corporation (or its parent company) does not assume or continue such Purchase Rights or does not substitute similar rights for such Purchase Rights, then the Participants’ accumulated Contributions will be used to purchase shares of Common Stock (rounded down to the nearest whole share) within ten business days prior to the Corporate Transaction under the outstanding Purchase Rights, and the Purchase Rights will terminate immediately after such purchase.

 

(c)                                  In the event of a spin-off or similar transaction, the Board may take actions including shortening an Offering.

 

12.                               AMENDMENT, TERMINATION OR SUSPENSION OF THE PLAN.

 

(a)                                 The Board may amend the Plan at any time in any respect the Board deems necessary or advisable.  However, except as provided in Section 11(a) relating to Capitalization Adjustments, stockholder approval will be required for any amendment of the Plan for which stockholder approval is required by applicable laws, regulations or listing requirements, including any amendment that either (i) materially increases the number of shares of Common Stock available for issuance under the Plan, (ii) materially expands the class of individuals eligible to become Participants and receive Purchase Rights, (iii) materially increases the benefits accruing to Participants under the Plan or materially reduces the price at which shares of Common Stock may be purchased under the Plan, (iv) materially extends the term of the Plan, or (v) expands the types of awards available for issuance under the Plan, but in each of (i) through (v) above only to the extent stockholder approval is required by applicable laws, regulations, or listing requirements.

 

(b)                                 The Board may suspend or terminate the Plan at any time.  No Purchase Rights may be granted under the Plan while the Plan is suspended or after it is terminated.

 

(c)                                  Any benefits, privileges, entitlements and obligations under any outstanding Purchase Rights granted before an amendment, suspension or termination of the Plan will not be materially impaired by any such amendment, suspension or termination except (i) with the consent of the person to whom such Purchase Rights were granted, (ii) as necessary to comply with any laws, listing requirements, or governmental regulations (including, without limitation, the provisions of Section 423 of the Code and the regulations and other interpretive guidance issued thereunder relating to Employee Stock Purchase Plans) including without limitation any such regulations or other guidance that may be issued or amended after the Effective Date, or (iii) as necessary to obtain or maintain any special tax, listing, or regulatory treatment.  To be clear, the Board may amend outstanding Purchase Rights without a Participant’s consent if such amendment is necessary to ensure that the Purchase Right and/or the 423 Component complies with the requirements of Section 423 of the Code, or other applicable laws, listing requirements, or governmental regulations.

 

Notwithstanding anything in the Plan to the contrary, the Board will be entitled to: (i) permit Contributions in excess of the amount designated by a Participant in order to adjust for mistakes in the Company’s processing of properly completed Contribution elections; (ii) establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly correspond with amounts withheld from the 

 

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Participant’s Contributions; (iii) amend any outstanding Purchase Rights or clarify any ambiguities regarding the terms of any Offering to enable the Purchase Rights to qualify under and/or comply with Section 423 of the Code; and (iv) establish other limitations or procedures as the Board determines in its sole discretion advisable that are consistent with the Plan. The actions of the Board pursuant to this paragraph will not be considered to alter or impair any Purchase Rights granted under an Offering as they are part of the initial terms of each Offering and the Purchase Rights granted under each Offering.

 

13.                               TAX MATTERS.

 

(a)                                 Purchase Rights granted under the 423 Component are intended to be exempt from the application of Section 409A of the Code under U.S. Treasury Regulation Section 1.409A-1(b)(5)(ii).  Purchase Rights granted under the Non-423 Component to U.S. taxpayers are intended to be exempt from the application of Section 409A of the Code under the short-term deferral exception or compliant with Section 409A of the Code and any ambiguities will be construed and interpreted in accordance with such intent.

 

(b)                                 Although the Company may endeavor to qualify a Purchase Right for special tax treatment under the laws of the United States or jurisdictions outside of the United States, or avoid adverse tax treatment (e.g., under Section 409A of the Code), the Company makes no representation to that effect and expressly disavows any covenant to maintain special or to avoid unfavorable tax treatment, notwithstanding anything to the contrary in this Plan.

 

14.                               TAX WITHHOLDING.

 

The Participant will make adequate provision to satisfy the Tax-Related Items withholding obligations, if any, of the Company and/or the applicable Designated Company which arise with respect to Participant’s participation in the Plan or upon the disposition of the shares of the Common Stock.  The Company and/or the Designated Company may, but will not be obligated to, withhold from the Participant’s compensation or any other payments due the Participant the amount necessary to meet such withholding obligations or withhold from the proceeds of the sale of shares of Common Stock or any other method of withholding that the Company and/or the Designated Company deems appropriate. The Company and/or the Designated Company will have the right to take such other action as may be necessary in the opinion of the Company or a Designated Company to satisfy withholding and/or reporting obligations for such Tax-Related Items.

 

15.                               EFFECTIVE DATE OF PLAN.

 

The Plan will become effective immediately prior to and contingent upon the IPO Date.  No Purchase Rights will be exercised unless and until the Plan has been approved by the stockholders of the Company, which approval must be within 12 months before or after the date the Plan is adopted (or if required under Section 12(a) above, materially amended) by the Board.

 

16.                               MISCELLANEOUS PROVISIONS.

 

(a)                                 Proceeds from the sale of shares of Common Stock pursuant to Purchase Rights will constitute general funds of the Company.

 

(b)                                 A Participant will not be deemed to be the holder of, or to have any of the rights of a holder with respect to, shares of Common Stock subject to Purchase Rights unless and until the Participant’s shares of Common Stock acquired upon exercise of Purchase Rights are recorded in the books of the Company (or its transfer agent).

 

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(c)                                  The Plan and Offering do not constitute an employment contract.  Nothing in the Plan or in the Offering will in any way alter the at-will nature of a Participant’s employment, if applicable, or be deemed to create in any way whatsoever any obligation on the part of any Participant to continue in the employ of the Company, a Related Corporation, or an Affiliate, or on the part of the Company, a Related Corporation or an Affiliate to continue the employment of a Participant.

 

(d)                                 The provisions of the Plan will be governed by the laws of the State of Delaware without resort to that state’s conflicts of laws rules.

 

(e)                                  If any particular provision of the Plan is found to be invalid or otherwise unenforceable, such provision will not affect the other provisions of the Plan, but the Plan will be construed in all respects as if such invalid provision were omitted.

 

(f)                                   If any provision of the Plan does not comply with applicable law or regulations, such provision shall be construed in such a manner as to comply with applicable law or regulations.

 

17.                               DEFINITIONS.

 

As used in the Plan, the following definitions will apply to the capitalized terms indicated below:

 

(a)                                 “423 Component” means the part of the Plan, which excludes the Non-423 Component, pursuant to which Purchase Rights that satisfy the requirements for an Employee Stock Purchase Plan may be granted to Eligible Employees.

 

(b)                                 “Affiliate” means any entity, other than a Related Corporation, in which the Company has an equity or other ownership interest or that is directly or indirectly controlled by, controls, or is under common control with the Company, in all cases, as determined by the Board, whether now or hereafter existing.

 

(c)                                  “Board” means the board of directors of the Company.

 

(d)                                 “Capital Stock” means each and every class of common stock of the Company, regardless of the number of votes per share.

 

(e)                                  “Capitalization Adjustment” means any change that is made in, or other events that occur with respect to, the Common Stock subject to the Plan or subject to any Purchase Right after the Effective Date without the receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other similar equity restructuring transaction, as that term is used in Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto).  Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.

 

(f)                                   “Code” means the U.S. Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.

 

(g)                                 “Committee” means a committee of one or more members of the Board to whom authority has been delegated by the Board in accordance with Section 2(c).

 

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(h)                                 “Common Stock” means, as of the IPO Date, the Class A common stock of the Company.

 

(i)                                    “Company” means Atreca, Inc., a Delaware corporation, and any successor corporation thereto.

 

(j)                                    “Contributions” means the payroll deductions and/or other payments specifically provided for in the Offering that a Participant contributes to fund the exercise of a Purchase Right. A Participant may make additional payments into his or her account if specifically provided for in the Offering, and then only if the Participant has not already contributed the maximum permitted amount of payroll deductions and/or other payments during the Offering.

 

(k)                                 “Corporate Transaction” means the consummation, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)                                    a sale or other disposition of all or substantially all, as determined by the Board in its sole discretion, of the consolidated assets of the Company and its Subsidiaries;

 

(ii)                                a sale or other disposition of more than 50% of the outstanding securities of the Company;

 

(iii)                            a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or

 

(iv)                             a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.

 

(l)                                    “Designated 423 Corporation” means any Related Corporation selected by the Board as participating in the 423 Component.

 

(m)                             “Designated Company” means any Designated Non-423 Corporation or Designated 423 Corporation, provided, however, that at any given time, a Related Corporation participating in the 423 Component shall not be a Related Corporation participating in the Non-423 Component.

 

(n)                                 “Designated Non-423 Corporation” means any Related Corporation or Affiliate selected by the Board as participating in the Non-423 Component.

 

(o)                                 “Director” means a member of the Board.

 

(p)                                 “Effective Date” means the effective date of the Plan, as set forth in Section 15.

 

(q)                                 “Eligible Employee” means an Employee who meets the requirements set forth in the document(s) governing the Offering for eligibility to participate in the Offering, provided that such Employee also meets the requirements for eligibility to participate set forth in the Plan.

 

(r)                                  “Employee” means any person, including an Officer or Director, who is “employed” for purposes of Section 423(b)(4) of the Code by the Company or a Related Corporation (including an 

 

11

 

Affiliate).  However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of the Plan.

 

(s)                                   “Employee Stock Purchase Plan” means a plan that grants Purchase Rights intended to be options issued under an “employee stock purchase plan,” as that term is defined in Section 423(b) of the Code.

 

(t)                                    “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder.

 

(u)                                 “Fair Market Value” means, as of any date, the value of the Common Stock determined as follows:

 

(i)                                    If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value of a share of Common Stock will be, unless otherwise determined by the Board, the closing sales price for such stock as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in such source as the Board deems reliable.  Unless otherwise provided by the Board, if there is no closing sales price for the Common Stock on the date of determination, then the Fair Market Value will be the closing sales price on the last preceding date for which such quotation exists.

 

(ii)                                In the absence of such markets for the Common Stock, the Fair Market Value will be determined by the Board in good faith in compliance with applicable laws and regulations and in a manner that complies with Sections 409A of the Code.

 

(iii)                            Notwithstanding the foregoing, for any Offering that commences on the IPO Date, the Fair Market Value of the shares of Common Stock on the Offering Date will be the price per share at which shares are first sold to the public in the Company’s initial public offering as specified in the final prospectus for that initial public offering.

 

(v)                                 “IPO Date” means the date of the underwriting agreement between the Company and the underwriter(s) managing the initial public offering of the Common Stock, pursuant to which the Common Stock is priced for the initial public offering.

 

(w)                               “Non-423 Component” means the part of the Plan, which excludes the 423 Component, pursuant to which Purchase Rights that are not intended to satisfy the requirements for an Employee Stock Purchase Plan may be granted to Eligible Employees.

 

(x)                                 “Offering” means the grant to Eligible Employees of Purchase Rights, with the exercise of those Purchase Rights automatically occurring at the end of one or more Purchase Periods. The terms and conditions of an Offering will generally be set forth in the “Offering Document” approved by the Board for that Offering.

 

(y)                                 “Offering Date” means a date selected by the Board for an Offering to commence.

 

(z)                                  “Officer” means a person who is an officer of the Company or a Related Corporation or Affiliate within the meaning of Section 16 of the Exchange Act.

 

(aa)                          “Participant” means an Eligible Employee who holds an outstanding Purchase Right.

 

12

 

(bb)                          “Plan” means this Atreca, Inc. 2019 Employee Stock Purchase Plan, as amended from time to time.

 

(cc)                            “Purchase Date” means one or more dates during an Offering selected by the Board on which Purchase Rights will be exercised and on which purchases of shares of Common Stock will be carried out in accordance with such Offering.

 

(dd)                          “Purchase Period” means a period of time specified within an Offering, generally beginning on the Offering Date or on the first Trading Day following a Purchase Date, and ending on a Purchase Date.  An Offering may consist of one or more Purchase Periods.

 

(ee)                            “Purchase Right” means an option to purchase shares of Common Stock granted pursuant to the Plan.

 

(ff)                              “Related Corporation” means any “parent corporation” or “subsidiary corporation” of the Company whether now or subsequently established, as those terms are defined in Sections 424(e) and (f), respectively, of the Code.

 

(gg)                          “Securities Act” means the U.S. Securities Act of 1933, as amended.

 

(hh)                          “Tax-Related Items” means any income tax, social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related items arising in relation to a Participant’s participation in the Plan.

 

(ii)                                “Trading Day” means any day on which the exchange(s) or market(s) on which shares of Common Stock are listed, including but not limited to the NYSE, Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market or any successors thereto, is open for trading.

 

13Exhibit 10.14

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT , MARKED BY [*], HAS BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO ATRECA, INC. IF PUBLICLY DISCLOSED.

 

August 21, 2015

 

Atreca, Inc.
 75 Shoreway Rd, Suite C
 San Carlos, CA 94047-2727

 

Re:                             Program Related Investment by the Bill & Melinda Gates Foundation in Atreca, Inc.

 

Ladies and Gentleman:

 

This letter agreement (“Letter Agreement”) is entered into in connection with the investment by the Bill & Melinda Gates Foundation (the “Foundation”), a Washington charitable trust that is a tax-exempt private foundation, of an amount equal to approximately $[*] U.S. Dollars in cash (the “New Cash Investment”) in the Series A Preferred Stock (“Preferred Stock”) of Atreca, Inc. (the “Company”), and the conversion of $[*] U.S. Dollars in outstanding convertible debt previously issued to the Foundation by the Company pursuant to Convertible Promissory Notes (the “Notes”), plus accrued and unpaid interest on such Notes (together with the cash investment, the “BMGF Investment”).  This Letter Agreement amends and restates in its entirety that certain letter agreement, dated June 9, 2014, entered into by the Foundation and the Company, as amended from time to time.  The Foundation is making the BMGF Investment in accordance with the provisions of that certain Series A Preferred Stock Purchase Agreement, dated as of August 21, 2015 (the “Purchase Agreement”), and related documents, in each case as amended from time to time (collectively, the “Investment Documents”).  Capitalized terms not defined herein shall have the same meaning as in the Investment Documents.

 

In consideration of the Foundation making the BMGF Investment on the terms and conditions stated herein and in the Investment Documents, and for other good and valuable consideration, the undersigned hereby irrevocably agree as follows:

 

1.                                      Charitable Purposes and Use of Funds

 

The Foundation is making the BMGF Investment as a “program-related investment” within the meaning of Section 4944(c) of the U.S. Internal Revenue Code (the “Code”), and the Foundation’s primary purpose in making the BMGF Investment is to further significantly the accomplishment of its charitable purposes, including the relief of the poor and distressed, by seeking to (a) address global health challenges that disproportionately impact developing countries and (b) increase the access of poor and distressed individuals and families in the developing world to life-saving and other important vaccines and drugs, that can improve their health care (“Charitability Requirement”).  The Company shall use proceeds from the BMGF Investment for the charitable purposes described herein by supporting development of the Company’s technology to perform single-cell analyses of immune responses, including (a) rapidly identifying the repertoire of functional antibodies generated in an immune response by using DNA barcoding to enable high-throughput sequencing of paired immunoglobulin heavy and light chain genes from individual

 

 

[*]           = Certain confidential information contained in this document, marked by brackets, has been omitted pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

activated B cells generated in an immune response; (b) rapidly identifying T cell repertoires generated in an immune response by using DNA barcoding to enable high-throughput sequencing of paired T cell receptor genes (such as alpha/beta and gamma/delta TCRs) from individual T cells generated in an immune response; and (c) rapidly profiling gene expression by using molecular barcoding to enable high-throughput sequencing and quantification of nucleic acids from individual lymphocytes (the “Platform Technology”) necessary for the Company to make the Global Access Commitments (as defined in Section 3).  The Foundation believes that because of the broad applicability of the Platform Technology to the development of vaccines, drugs and diagnostics necessary to address global health concerns, the further development and improvements of the Platform Technology, in conjunction with the Global Access Commitments (defined in Section 3), will achieve the Charitability Requirement.

 

The Company understands and acknowledges that a primary organizational objective of the Foundation is to provide funding to support the development of drugs and vaccines to address diseases that have a disproportionate impact on people within developing countries, and to ensure that such products can be made available and accessible at reasonable cost to people within developing countries (the “Global Access Objectives”).  The Foundation is forming a strategic partnership with the Company in order to ensure (i) nonexclusive access to the Platform Technology for application to Developing World (defined below) vaccines, therapeutics and diagnostics and (ii) that resulting products (vaccines, therapeutics and diagnostics) are available and accessible at reasonable cost to people within the Developing World.  “Developing World’’ means those countries listed on the attached Appendix 1.  “Developed World’’ means all countries not included in “Developing World.”

 

2.                                      Developing World Diseases and Conditions

 

The Foundation and the Company agree that it is appropriate to separately consider sub­ categories of different diseases found in the Developing World, in particular as it relates to the right to use the information that arises from the Services (defined below).

 

The three sub-categories and the diseases they comprise are:

 

·                  Group 1 Diseases:  [*]

 

·                  Group 2 Diseases:  [*]

 

·                  Group 3 Diseases:  [*]

 

3.                                      Permitted Use of Platform Technology by Foundation and Foundation-Supported Entities

 

To ensure satisfaction of the Global Access Objectives, the Company will commit to the following as a condition to the Foundation making the BMGF Investment (the “Global Access Commitments”):

 

a.                                      At the request of the Foundation, the Company will receive and process samples from the Foundation or Foundation-Supported Entities (as defined below) and use the Platform Technology to rapidly identify the repertoire of functional antibodies generated in an immune response related to Group 1, Group 2 and Group 3 Diseases

 

2

 

[*]           = Certain confidential information contained in this document, marked by brackets, has been omitted pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

and Conditions (the “Services”).  The specific terms under which the Company will receive and process samples will be determined in connection with each project, which terms must be acceptable to the Company, the Foundation, and (as applicable) the Foundation-Supported entities providing such samples.  For the avoidance of doubt, neither the Foundation nor the Company shall delay or hinder the implementation of this Letter Agreement by unreasonably objecting to such terms.  The Services will further include research facilitation translation of the identified repertoire of functional antibodies into one or more clinical candidate for prophylaxis and/or therapy.  For clarity, a “Foundation-Supported Entity” is a third party receiving funding from the Foundation, is collaborating with the Foundation, or both, for the purpose of accomplishing the Global Access Objectives.  The Services will be subject to the following conditions:

 

i.                                          The Services will be funded by a grant or contract from the Foundation or Foundation-Supported Entities.

 

ii.                                       The results of the Services provided by the Company to the Foundation or Foundation-Supported Entities per each project plan may be used worldwide by the Foundation (or Foundation-Supported Entities) in research, development, manufacture and regulatory approval processes without any milestone payments, royalties or other monetary or non-monetary restrictions imposed on the Foundation (or any such Foundation-Supported Entities) by the Company so long as the Global Access Objectives are pursued by the Foundation (or any such Foundation Supported Entities), subject to Section 3.a.iii.

 

iii.                                    Any product in the categories below that arises from such research, development, manufacture and is subject to such regulatory approvals may only be sold or distributed by the Foundation (or Foundation-Supported Entities) in accordance with the following (see Appendix II):

 

(a)                   For Group 1 Diseases, therapeutic or prophylactic products (both monoclonal/protein and vector/nucleic acid based), vaccines, and diagnostics may be sold or distributed in either the Developing World or the Developed World by the Foundation (or Foundation-Supported Entities) without any milestone payments, royalties or other monetary or non-monetary restrictions imposed on the Foundation (or  any such Foundation-Supported Entities) by the Company so long as the Global Access Objectives are pursued by the Foundation (or any such Foundation Supported Entities).

 

(b)                   For Group 2 Diseases, therapeutic or prophylactic products (both monoclonal/protein and vector/nucleic acid based), vaccines, and diagnostics may only be sold or distributed in the Developing World by the Foundation (or Foundation-Supported Entities) without any milestone payments, royalties or other monetary or non-monetary restrictions imposed on the Foundation (or any such Foundation-

 

3

 

[*]           = Certain confidential information contained in this document, marked by brackets, has been omitted pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

Supported Entities) by the Company so long as the Global Access Objectives are pursued by the Foundation.  For Group 2 Diseases, therapeutic or prophylactic products (both monoclonal/protein and vector/nucleic acid based), vaccines, and diagnostics may be sold or distributed in the Developed World by the Foundation (or Foundation-Supported Entities) only if written approval is provided by the Company and in accordance with such terms and conditions as the Company and the Foundation (or Foundation-Supported Entities) may agree.

 

(c)                    For Group 3 Diseases, therapeutic or prophylactic products (vector/nucleic acid based, but not including monoclonal/protein), vaccines, and diagnostics may only be sold or distributed in the Developing World by the Foundation (or Foundation-Supported Entities) without any milestone payments, royalties or other monetary or non-monetary restrictions imposed on the Foundation (or any such Foundation-Supported Entities) by the Company so long as the Global Access Objectives are pursued by the Foundation.  For Group 3 Diseases, therapeutic or prophylactic products (vector/nucleic acid based, but not including monoclonal/protein), vaccines, and diagnostics may be sold or distributed in the Developed World by the Foundation (or Foundation-Supported Entities) only if written approval is provided by the Company and in accordance with such terms and conditions as the Company and the Foundation (or Foundation-Supported Entities) may agree.

 

iv.                                   Immediately following the execution of this Agreement, the Company will reserve for the Foundation and Foundation-Supported Entities a capacity of sample processing and sequence generation for single-cell analysis of at least 3,000 lymphocytes per week, and a capacity of 10,000 lymphocytes per week for discrete periods of time with a three-month advance notice and commitment by the Foundation to the Company to utilize such increased capacity.

 

v.                                      The Company agrees to set a price for the Services that is commercially reasonable and that reflects the needs, including price sensitivity, of people most in need within the Developing World.

 

b.                                      Within the Developing World, the Foundation has rights to manufacture or have manufactured and the rights to develop and commercialize the vaccines, therapeutics and diagnostics for diseases and conditions that are not Group 1, Group 2 or Group 3 Diseases that arise from information gained through Services provided by Company to the Foundation or Foundation-Supported Entities, so long as the Global Access Objectives are pursued by the Foundation, and in accordance with such terms and conditions as the Company and the Foundation (or Foundation-Supported Entities) may agree.  Within the Developed World, the Foundation’s

 

4

 

[*]           = Certain confidential information contained in this document, marked by brackets, has been omitted pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

rights to manufacture or have manufactured and the rights to develop and commercialize the vaccines, therapeutics and diagnostics for diseases and conditions that are not Group 1, Group 2 or Group 3 Diseases that arise from information gained through Services provided by Company to the Foundation or Foundation-Supported Entities are subject to written approval by the Company and may be open to negotiations on a case-by-case basis.

 

c.                                       The Company agrees to use commercially reasonable efforts to enable the Foundation or Foundation-Supported Entities to exercise their rights to use the results of the Services provided by the Company in research, development, manufacture and regulatory approval processes and in connection with the permitted sale or distribution of products in accordance with this Section 3.

 

4.                                      Development Other than with BMGF

 

To the extent the Company utilizes the Platform Technology and successfully develops a vaccine, therapeutic or diagnostic for any of the diseases listed in the definition of Group 1, Group 2 or Group 3 Diseases (i.e., without support from the Foundation or Foundation-Supported Entities), the Company will use reasonably diligent efforts, that take into account both the Global Access Objectives and the Company’s profitability, enterprise value and other commercial interests, to make such product accessible to people most in need within the Developing World.  For clarity, nothing in this Letter Agreement shall limit the right or ability of the Company to work, for itself or with a third party, to use the Platform Technology on any products, whether for human use or otherwise.  The Company will report to the Foundation if it reasonably believes that a conflict in available capacity may arise as a result of work for itself or a third party.  The Company will further report to the Foundation before entering into negotiations for any license or other transfer of rights in the Platform Technology to a third party.

 

5.                                      Obligations in the Event of Acquisition of Platform Technology or Company by Another

 

In the event the Platform Technology is acquired directly, or through a merger or an acquisition of the Company by a third party, the Company will ensure the Global Access Commitments applicable to the Company’s Platform Technology described above will survive and be assumed by the acquirer.  The Company will not grant to a third-party any rights to, or enter into any arrangements with respect to, the Platform Technology that would prohibit, prevent or otherwise significantly restrict the Company (or any acquirer of the Platform Technology) from fulfilling the above stated commitments.  The Global Access Commitments shall apply solely to the Company’s Platform Technology and intellectual property rights and proprietary information owned or controlled by the Company, and shall expressly not be applicable to other services, products or intellectual property rights, including rights of any licensee of the Company or any company that merges with or acquires the Company.

 

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

 

5

 

[*]           = Certain confidential information contained in this document, marked by brackets, has been omitted pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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

 

6

 

[*]           = Certain confidential information contained in this document, marked by brackets, has been omitted pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

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.

 

7.                                      Exclusive License by Stanford to the Company and Provision for Benefit of Foundation

 

The Company has provided language acceptable to the Foundation in the exclusive license from Stanford in the event that license is terminated for any reason.  Such language provides the Foundation continued nonexclusive access to the patent or patents licensed to the Company by Stanford relating to the Platform Technology on terms consistent with the global access requirements of the Foundation.  Moreover, the Company further agrees, in the event of a termination of the Stanford license, to enter into a license to provide the Foundation, consistent with the Foundation’s rights in the territories as set forth in this letter, non-exclusive access to the Company proprietary information (including software in source code and executable formats) sufficient to allow the Foundation (or any entity it would identify for this purpose) to most directly and efficiently utilize the patent or patents previously licensed to the Company by Stanford relating to the Platform Technology as of the date of the termination of the Stanford license.

 

8.                                      Term.

 

This Letter Agreement shall become effective as of the Effective Date (as defined below) and shall expire as of the Patent Expiration Date of the Atreca Platform Technology, unless sooner terminated by mutual written agreement between the Company and the Foundation.

 

9.                                      Required Reporting and Inspection Rights.

 

In addition to any and all reports required to be delivered to the Foundation under the Investment Documents, the Company shall furnish, or cause to be furnished, to the Foundation the following reports and certifications:

 

a.                                      within ninety days after the end of the Company’s fiscal year during which the Foundation owns any portion of the Foundation’s Holdings, a certificate from the Company signed by an officer or director of the Company and substantially in the form attached to this Letter Agreement, certifying that the requirements of the BMGF Investment were met during the immediately preceding fiscal year, describing the use of the proceeds of the BMGF Investment, and evaluating the Company’s progress toward achieving the purposes of the BMGF Investment including, specifically, information regarding progress against the Global Access Commitments;

 

b.                                      within ninety days after the end of the Company’s fiscal year during which the Foundation ceases to own any portion of the Foundation’s Holdings, a certificate from the Company signed by an officer or director of the Company and substantially in the form attached to this Letter Agreement, certifying that the requirements of the BMGF Investment were met during the term of the BMGF Investment, describing the use of the proceeds of the BMGF Investment, and evaluating the Company’s progress toward achieving the purposes of the BMGF Investment including, specifically, information regarding progress against the Global Access Commitments;

 

7

 

[*]           = Certain confidential information contained in this document, marked by brackets, has been omitted pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

c.                                       any other information respecting the operations, activities and financial condition of the Company as the Foundation may from time to time request to discharge any expenditure responsibility, within the meaning of Sections 4945(d)(4) and 4945(h) of the Code, of  the Foundation with respect to the BMGF Investment, and to otherwise monitor the charitable benefits intended to be served by the BMGF Investment (which shall be at the Foundation’s expense);

 

d.                                      (i) within one hundred eighty days after the end of each fiscal year of the Company, the Company shall provide to the Foundation a balance sheet, income statement and statement of cash flows for such preceding fiscal year, all in reasonable detail and audited by independent certified public accountants selected by the Company (“Company’s Accountants”), and such financial statements shall be accompanied by a report and opinion thereon by the Company’s Accountants; (ii) within ninety days after the end of each fiscal year of the Company, the Company shall provide to the Foundation an unaudited balance sheet, income statement and statement of cash flows for such preceding fiscal year as prepared in accordance with generally accepted accounting principles; and (iii) within forty-five days after the end of each fiscal quarter of the Company, the Company shall provide to the Foundation an unaudited balance sheet, income statement and statement of cash flows for such quarter as prepared in accordance with generally accepted accounting principles; provided, however, that if the Company merges with, is acquired by or becomes, a reporting company under the Securities Exchange Act of 1934, as amended, the filing of quarterly and annual reports with the S.E.C. shall be deemed to satisfy the financial reporting obligations pursuant to this Section 3.d; and provided further that if, for any period, the Company has any subsidiary whose accounts are consolidated with those of the Company, then in respect of such period the financial statements delivered pursuant to the foregoing sections shall be the consolidated and consolidating financial statements of the Company and all such consolidated subsidiaries;

 

e.                                       at least thirty days prior to the end of each fiscal year, a budget and business plan for the next fiscal year, approved by the Board of Directors of the Company, and prepared on a monthly basis, including balance sheets, income statements, and statements of cash flow for such months and, promptly after prepared, any other budgets or revised budgets prepared by the Company;

 

f.                                        such other information relating to the financial condition, business, prospects, or corporate affairs of the Company as the Foundation may from time to time reasonably request; provided, however, that the Company shall not be obligated under this Section 3.f to provide information (i) that the Company reasonably determines in good faith to be a trade secret; or (ii) the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel; and

 

8

 

[*]           = Certain confidential information contained in this document, marked by brackets, has been omitted pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

g.                                       all information, including the terms and conditions, in this Letter Agreement and provided in the future with respect to the commitments and performance of the Company hereunder shall be treated as confidential information and subject to the Mutual Nondisclosure Agreement dated March 18, 2012; provided that at all times the Foundation shall be permitted to disclose such information as may be required to satisfy its reporting requirements under the Code.

 

10.                               Access to Records and Facilities.

 

The Company shall maintain books and records adequate to provide the information ordinarily required by commercial investors under similar circumstances, and provide the Foundation access to such books and records.  Such reports shall be maintained for four years after the BMGF Investment has terminated.  The Company shall permit the Foundation, at the Foundation’s expense and in connection with its rights under this Letter Agreement, to visit and inspect the Company’s properties; examine its books of account and records; and discuss the Company’s affairs, finances, and accounts with its officers, during normal business hours of the Company as may be reasonably requested by the Foundation.

 

11.                               Public Reports.

 

The Foundation may include information about the Company in its periodic public reports to the extent such information is not confidential.  The Company may include information about the Foundation in its periodic reports to the extent such information is not confidential, provided that if such disclosure is required by law, rule, regulation or administrative process, such confidentiality shall not prevent the Company from disclosing such information (solely to the extent required by such law, rule, regulation or administrative process).

 

12.                               Prohibited Uses.

 

The Company shall not expend any proceeds of the BMGF Investment to carry on propaganda or otherwise to attempt to influence legislation, to influence the outcome of any specific public election or to carry on, directly or indirectly, any voter registration drive, or to participate or intervene in any political campaign on behalf of or in opposition to any candidate for public office within the meaning of Section 4945(d) of the Code.  The proceeds of the BMGF Investment shall not (i) be earmarked to be used for any activity, appearance or communication associated with the activities described in the foregoing sentence nor (ii) be intended for benefit, and will not benefit, any person having a personal or private interest in the Foundation, including without limitation, descendants of the founders of the Foundation, or persons related to or controlled by, directly or indirectly, such private interests.

 

13.                               Disqualified Person.

 

Neither the Company nor (to the best knowledge of the Company) any shareholder of the Company is a “disqualified person” with respect to the Foundation (as the term “disqualified person” is defined in Section 4946(a) of the Code).  The Foundation does not, and one or more disqualified persons with respect to the Foundation do not, directly or indirectly, control the Company.

 

9

 

[*]           = Certain confidential information contained in this document, marked by brackets, has been omitted pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

14.                               Promotion of Terrorist Activities.

 

In compliance with the provisions of the Patriot Act and Executive Order 13224, the Company represents that it will not promote or support terrorist activities and that it will not provide any proceeds of the BMGF Investment to any entity or individual that promotes or engages in such activities.

 

15.                               Use of Name.

 

Except as permitted in Section 9 of this Letter Agreement (including, without limitation, Section 9.g.), any announcement of the Foundation’s investment by any of the Foundation, the Company or any of their respective representatives, directors, trustees, officers, stockholders, agents, investors, employees, partners or members of either the Foundation or the Company, as applicable, will require the prior written approval of both the Foundation and the Company.  Prior written approval of the Foundation shall be required for any use of the Foundation’s name or logo in any respect; provided, however, that the Company may use the Foundation’s name for any uses that have been pre-approved in writing by the Foundation.  Notwithstanding the foregoing, the Foundation’s name and logo will not be used by any party in any manner to market, sell or otherwise promote the Company, its products, services and/or business.

 

Prior written approval of the Company shall be required for any use of the Company’s name or logo in any respect; provided, however, that the Foundation may use the Company’s name for any uses that have been pre-approved in writing by the Company; provided further that disclosures permitted under Section 9 of this Letter Agreement (including without limitation Section 9.g.) shall be deemed to be pre-approved.  Notwithstanding the foregoing, the Company’s name and logo will not be used by any party in any manner to market, sell or otherwise promote the Foundation, its products, services and/or business.  Notwithstanding the terms of this Section 15 or any other provisions of this Letter Agreement, either party may disclose any information to the extent required to comply with any applicable law, rule, regulation, court order, or demand or order of a governmental body with competent jurisdiction.

 

16.                               Entire Agreement; Modification.

 

The terms and conditions set forth in this Letter Agreement are in addition to the provisions stated in the Investment Documents.  No change, modification or waiver of any term or condition of this Letter Agreement shall be valid unless it is in writing, it is signed by the party to be bound, and it expressly refers to this Letter Agreement.  The Company will not take any action or enter into any agreement or arrangement that is reasonably likely to prohibit, restrict or limit the Company from honoring the rights of the Foundation, or the obligations or commitments of the Company, under this Letter Agreement or any other Investment Document.

 

17.                               Authority.

 

Each of the signatories below covenants, represents and warrants that he, she or it had all authority necessary to execute this Letter Agreement and that, on execution, this Letter Agreement will be fully binding and enforceable in accordance with its terms, and that no other consents or approvals of any other person or third parties are required or necessary for this Letter Agreement to be so binding.

 

10

 

[*]           = Certain confidential information contained in this document, marked by brackets, has been omitted pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

18.                               Charitability Opinion.

 

As a condition to making the New Cash Investment, the Foundation must obtain a written legal opinion from its outside special tax counsel (to be provided at the Foundation’s expense), that the Investment will qualify as a program-related investment under the Code.

 

19.                               Additional Company Representations and Warranties.

 

The Company hereby represents and warrants to the Foundation that, as of the date of this Letter Agreement, the representations and warranties set forth in Section 3 of the Purchase Agreement are true and correct in all material respects as of the date hereof, except to extent of any disclosures by the Company as set forth in the Schedule of Exceptions delivered by the Company in connection with the Closing (as defined in the Purchase Agreement) or in the Schedules attached hereto.  In addition, except as set forth in the Schedules attached hereto, the Company hereby represents and warrants to the Foundation, as of the date hereof, as follows:

 

a.                                      Changes. Since the Statement Date (as defined in the Purchase Agreement), there has not been:

 

i.                                          any material change to a material contract or agreement by which the Company or any of its assets is bound or subject;

 

ii.                                       any (x) material change in any compensation arrangement or agreement with any employee, officer, director or stockholder or (y) resignation or termination of employment of any officer or key employee of the Company; or (z) loans or guarantees made by the Company to or for the benefit of its employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business;

 

iii.                                    any mortgage, pledge, transfer of a security interest in, or lien, created by the Company, with respect to any of its material properties or assets, except liens for taxes not yet due or payable and liens that arise in the ordinary course of business and do not materially impair the Company’s ownership or use of such property or assets;

 

iv.                                   other than repurchases of Common Stock that are unvested or exercises by the Company of its right of first refusal (each, a “Permitted Distribution”), any declaration, setting aside or payment or other distribution in respect of any of the Company’s capital stock, or any direct or indirect redemption, purchase, or other acquisition of any of such stock by the Company;

 

v.                                      receipt of notice that there has been a loss of, or material order cancellation by, any major customer of the Company; or

 

vi.                                   any arrangement or commitment by the Company to do any of the things described in this Section 19.a.

 

11

 

[*]           = Certain confidential information contained in this document, marked by brackets, has been omitted pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

b.                                      Agreements; Actions.

 

i.                                          Except for the Related Agreements (as defined in the Purchase Agreement) or as described in the Memorandum (as defined in the Purchase Agreement), there are no agreements, understandings, instruments, contracts or proposed transactions to which the Company is a party or by which it is bound that involve (A) obligations (contingent or otherwise) of, or payments to, the Company in excess of $500,000, or (B) the grant of rights to manufacture, produce, assemble, license, market, or sell its products to any other person that limit the Company’s exclusive right to develop, manufacture, assemble, distribute, market or sell its products.

 

ii.                                       Since the Statement Date, the Company has not (A) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock in each case other than any Permitted Distribution, (B) made any loans or advances to any person, other than ordinary advances for travel expenses, or (C) other than in the ordinary course of business sold, exchanged or otherwise disposed of any of its assets or rights the sale, exchange or other disposition of which would have or would reasonably be likely to have a Material Adverse Effect.

 

iii.                                    The Company is not a guarantor or indemnitor of any indebtedness of any other person.

 

c.                                       Employees.

 

To its knowledge, the Company has complied in all material respects with all applicable state and federal equal employment opportunity laws and with other laws related to employment, including those related to wages, hours, worker classification and collective bargaining.  Except as required by law, upon termination of the employment of any such employees, no severance or other payments will become due.

 

d.                                      Foreign Corrupt Practices Act. Neither the Company nor, to its knowledge, any of the Company’s directors, officers, employees or agents have, directly or, to the Company’s knowledge, indirectly, made, offered, promised or authorized any payment or gift of any money or anything of value to or for the benefit of any “foreign official” (as such term is defined in the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”)), foreign political party or official thereof or candidate for foreign political office for the purpose of (i) influencing any official act or decision of such official, party or candidate, (ii) inducing such official, party or candidate to use his, her or its influence to affect any act or decision of a foreign governmental authority, or (iii) securing any improper advantage, in the case of (i), (ii) and (iii) above in order to assist the Company or any of its affiliates in obtaining or retaining business for or with, or directing business to, any person.  Neither the Company nor, to the Company’s knowledge, any of its directors, officers, employees or agents have made or, to the Company’s knowledge, authorized any

 

12

 

[*]           = Certain confidential information contained in this document, marked by brackets, has been omitted pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

bribe, rebate, payoff, influence payment, kickback or other unlawful payment of funds or received or retained any funds in violation of any law, rule or regulation.  To the Company’s knowledge, neither the Company nor any of its officers, directors or employees is the subject of any allegation, voluntary disclosure, investigation, prosecution or other enforcement action related to the FCPA or any other anti-corruption law.

 

For purposes of this Section 19, “Company” shall include the Company’s wholly-owned subsidiary, Atreca Pte. Ltd, a limited company organized under the laws of Singapore.

 

20.                               Counterparts.

 

This Letter Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall be deemed to be and constitute one and the same instrument.

 

[Signature Page to Follow]

 

13

 

[*]           = Certain confidential information contained in this document, marked by brackets, has been omitted pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

IN WITNESS WHEREOF, the parties have caused to be executed this Letter Agreement effective as of the date first set forth above (the “Effective Date”).

 

	
Atreca, Inc.  
    	
Bill & Melinda Gates Foundation  
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Tito A. Serafini 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Tito A. Serafini 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
President and Chief Executive Officer
    	
 
    	
Title:
    	
 
    
									

 

 

[*]           = Certain confidential information contained in this document, marked by brackets, has been omitted pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

IN WITNESS WHEREOF, the parties have caused to be executed this Letter Agreement effective as of the date first set forth above (the “Effective Date”).

 

	
Atreca, Inc.
    	
Bill & Melinda Gates Foundation
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
/s/ Jim Bromley
    
	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
Jim Bromley
    
	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
Title:
    	
Chief Financial Officer
    
									

 

 

[*]           = Certain confidential information contained in this document, marked by brackets, has been omitted pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

Appendix I

 

Developing World

 

The following 74 countries shall be included in the definition of Developing World, all of which (except for South Africa and Thailand) are eligible for support from GAVI as of the date of this Letter Agreement.

 

	
·             Afghanistan
    	
·             Guinea
    	
·             Pakistan
    
	
·             Angola
    	
·             Guinea-Bissau
    	
·             Papua New Guinea
    
	
·             Armenia
    	
·             Guyana
    	
·             Rwanda
    
	
·             Azerbaijan
    	
·             Haiti
    	
·             Sao Tome e Principe
    
	
·             Bangladesh
    	
·             Honduras
    	
·             Senegal
    
	
·             Benin
    	
·             India
    	
·             Sierra Leone
    
	
·             Bhutan
    	
·             Indonesia
    	
·             Solomon Islands
    
	
·             Bolivia
    	
·             Kenya
    	
·             Somalia
    
	
·             Burkina Faso
    	
·             Kiribati
    	
·             South Africa
    
	
·             Burundi
    	
·             Korea, DPR
    	
·             Sri Lanka
    
	
·             Cambodia
    	
·             Kyrgyz Republic
    	
·             Sudan
    
	
·             Cameroon
    	
·             Lao PDR
    	
·             Thailand
    
	
·             Central African Republic
    	
·             Lesotho
    	
·             Tajikistan
    
	
·             Chad
    	
·             Liberia
    	
·             Tanzania
    
	
·             Comoros
    	
·             Madagascar
    	
·             Timor Leste
    
	
·             Congo
    	
·             Malawi
    	
·             Togo
    
	
·             Congo, Dem Republic of
    	
·             Mali
    	
·             Uganda
    
	
·             Cote d’Ivoire
    	
·             Mauritania
    	
·             Ukraine
    
	
·             Djibouti
    	
·             Moldova
    	
·             Uzbekistan
    
	
·             Eritrea
    	
·             Mongolia
    	
·             VietNam
    
	
·             Ethiopia
    	
·             Mozambique
    	
·             Yemen
    
	
·             Gambia
    	
·             Myanmar
    	
·             Zambia
    
	
·             Georgia
    	
·             Nepal
    	
·             Zimbabwe
    
	
·             Ghana
    	
·             Nicaragua
    	
 
    
	
 
    	
·             Niger
    	
 
    
	
 
    	
·             Nigeria
    	
 
    

 

 

[*]           = Certain confidential information contained in this document, marked by brackets, has been omitted pursuant to Rule 406 of the Securities Act of 1933, as amended.

 

Appendix II

 

Disease Access Rights

 

	
 
    	
 
    	
Therapeutic/Prophylactic
    	
 
    	
 
    	
 
    	
 
    
	
Disease(s)
    	
 
    	
Monoclonal/
   Protein
    	
 
    	
Vector/
   Nucleic Acid
   Based
    	
 
    	
Vaccine
   (Antigen)
    	
 
    	
Diagnostics
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Group 1
    	
 
    	
Y
    	
 
    	
Y
    	
 
    	
Y
    	
 
    	
Y
    
	
Group 2
    	
 
    	
Y
    	
 
    	
Y
    	
 
    	
Y
    	
 
    	
Y
    
	
Group 3
    	
 
    	
 
    	
 
    	
Y
    	
 
    	
Y
    	
 
    	
Y

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