FUNDS UPON DEMAND.
2.5
CONVERSION MECHANICS.
THE NUMBER OF SHARES
OF COMMON STOCK TO BE ISSUED UPON EACH CONVERSION OF THIS NOTE SHALL BE
DETERMINED BY DIVIDING THAT PORTION OF THE PRINCIPAL AND INTEREST AND FEES TO BE
CONVERTED, IF ANY, BY THE THEN APPLICABLE FIXED CONVERSION PRICE.
2.6
ADJUSTMENT PROVISIONS.
THE FIXED CONVERSION
PRICE AND NUMBER AND KIND OF SHARES OR OTHER SECURITIES TO BE ISSUED UPON
CONVERSION DETERMINED PURSUANT TO SECTION 2.1 SHALL BE SUBJECT TO ADJUSTMENT
FROM TIME TO TIME UPON THE OCCURRENCE OF CERTAIN EVENTS DURING THE PERIOD THAT
THIS CONVERSION RIGHT REMAINS OUTSTANDING, AS FOLLOWS:
(A)
RECLASSIFICATION.
IF THE PARENT AT ANY
TIME SHALL, BY RECLASSIFICATION OR OTHERWISE, CHANGE THE COMMON STOCK INTO THE
SAME OR A DIFFERENT NUMBER OF SECURITIES OF ANY CLASS OR CLASSES, THIS NOTE, AS
TO THE UNPAID PRINCIPAL AMOUNT AND ACCRUED INTEREST THEREON, SHALL THEREAFTER BE
DEEMED TO EVIDENCE THE RIGHT TO PURCHASE AN ADJUSTED NUMBER OF SUCH SECURITIES
AND KIND OF SECURITIES AS WOULD HAVE BEEN ISSUABLE AS THE RESULT OF SUCH CHANGE
WITH RESPECT TO THE COMMON STOCK (I) IMMEDIATELY PRIOR TO OR (II) IMMEDIATELY
AFTER, SUCH RECLASSIFICATION OR OTHER CHANGE AT THE SOLE ELECTION OF THE HOLDER.
(B)
STOCK SPLITS, COMBINATIONS AND DIVIDENDS.
IF THE SHARES OF COMMON STOCK ARE SUBDIVIDED OR COMBINED INTO A GREATER OR
SMALLER NUMBER OF SHARES OF COMMON STOCK, OR IF A DIVIDEND IS PAID ON THE COMMON
STOCK OR ANY PREFERRED STOCK ISSUED BY THE PARENT IN SHARES OF COMMON STOCK, THE
FIXED CONVERSION PRICE SHALL BE PROPORTIONATELY
4
REDUCED IN CASE OF SUBDIVISION OF SHARES OR STOCK DIVIDEND OR PROPORTIONATELY
INCREASED IN THE CASE OF COMBINATION OF SHARES, IN EACH SUCH CASE BY THE RATIO
WHICH THE TOTAL NUMBER OF SHARES OF COMMON STOCK OUTSTANDING IMMEDIATELY AFTER
SUCH EVENT BEARS TO THE TOTAL NUMBER OF SHARES OF COMMON STOCK OUTSTANDING
IMMEDIATELY PRIOR TO SUCH EVENT.
(C)
SHARE ISSUANCES.
SUBJECT TO THE PROVISIONS
OF THIS SECTION 2.6, IF THE PARENT SHALL AT ANY TIME PRIOR TO THE CONVERSION OR
REPAYMENT IN FULL OF THE PRINCIPAL AMOUNT ISSUE ANY SHARES OF COMMON STOCK OR
SECURITIES CONVERTIBLE INTO COMMON STOCK TO A PERSON OTHER THAN THE HOLDER
(EXCEPT (I) PURSUANT TO SECTIONS 2.6(A) OR (B) ABOVE; (II) PURSUANT TO OPTIONS,
WARRANTS, OR OTHER OBLIGATIONS TO ISSUE SHARES OUTSTANDING ON THE DATE HEREOF AS
DISCLOSED TO THE HOLDER IN WRITING; OR (III) PURSUANT TO OPTIONS THAT MAY BE
ISSUED UNDER ANY EMPLOYEE INCENTIVE STOCK OPTION AND/OR ANY QUALIFIED STOCK
OPTION PLAN ADOPTED BY THE PARENT) FOR A CONSIDERATION PER SHARE (THE "OFFER
PRICE") LESS THAN THE FIXED CONVERSION PRICE IN EFFECT AT THE TIME OF SUCH
ISSUANCE, THEN THE FIXED CONVERSION PRICE SHALL BE IMMEDIATELY RESET TO SUCH
LOWER OFFER PRICE.
FOR PURPOSES HEREOF, THE ISSUANCE OF ANY SECURITY OF THE
PARENT CONVERTIBLE INTO OR EXERCISABLE OR EXCHANGEABLE FOR COMMON STOCK SHALL
RESULT IN AN ADJUSTMENT TO THE FIXED CONVERSION PRICE UPON THE ISSUANCE OF SUCH
SECURITIES.
(D)
COMPUTATION OF CONSIDERATION.
FOR PURPOSES