AS THE CONVERSION OR EXERCISE PRICE IN SUCH SECURITIES ARE
NOT AMENDED TO LOWER SUCH PRICE AND/OR ADVERSELY AFFECT THE PURCHASERS), (III)
SECURITIES ISSUED IN CONNECTION WITH BONA FIDE STRATEGIC LICENSE AGREEMENTS OR
OTHER PARTNERING ARRANGEMENTS SO LONG AS SUCH ISSUANCES ARE NOT FOR THE PURPOSE
OF RAISING CAPITAL, (IV) COMMON STOCK ISSUED OR THE ISSUANCE OR GRANTS OF
OPTIONS TO PURCHASE COMMON STOCK PURSUANT TO THE COMPANY'S STOCK OPTION PLANS
AND EMPLOYEE STOCK PURCHASE PLANS OUTSTANDING AS THEY EXIST ON THE DATE OF THIS
AGREEMENT, AND (V) ANY WARRANTS ISSUED TO THE PLACEMENT AGENT AND ITS DESIGNEES
FOR THE TRANSACTIONS CONTEMPLATED BY THE PURCHASE AGREEMENT.
SECTION 3.22
BOARD OF DIRECTORS.
THE COMPANY COVENANTS AND AGREES
THAT SO LONG AS THE PURCHASERS HOLD PREFERRED SHARES, THE PURCHASERS SHALL BE
ENTITLED TO DESIGNATE TWO (2) INDIVIDUALS (THE "PURCHASER DESIGNEES") TO SERVE
AS MEMBERS OF THE COMPANY'S BOARD OF DIRECTORS PURSUANT TO THE TERMS AND
PROVISIONS OF THE STOCKHOLDERS AGREEMENT; PROVIDED,
20
HOWEVER, THE COMPANY SHALL HAVE UP TO THIRTY (30) DAYS AFTER THE CLOSING TO
APPOINT THE PURCHASER DESIGNEES TO THE BOARD OF DIRECTORS IN ACCORDANCE WITH
THIS SECTION 3.22; PROVIDED, FURTHER, THAT IN NO EVENT SHALL THE NUMBER OF
PURCHASER DESIGNEES BE PROPORTIONATELY LESS THAN THE INVESTORS' AGGREGATE EQUITY
INTEREST OF THE COMPANY.
THE COMPANY COVENANTS AND AGREES THAT SO LONG AS THE
PURCHASERS HOLD PREFERRED SHARES, THERE SHALL BE NO GREATER THAN FIVE (5)
MEMBERS OF THE BOARD OF DIRECTORS EXCEPT AS CONTEMPLATED IN THIS SECTION 3.22
WITHOUT THE PRIOR WRITTEN CONSENT OF THE PURCHASERS.
SECTION 3.23
CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION
AGREEMENT.
THE PERSONS LISTED ON SCHEDULE 3.23 ATTACHED HERETO SHALL BE SUBJECT
TO THE TERMS AND PROVISIONS OF A CONFIDENTIALITY, NON-COMPETITION AND
NON-SOLICITATION AGREEMENT (THE "NON-COMPETITION AGREEMENT") IN THE FORM
SUBSTANTIALLY ATTACHED HERETO AS EXHIBIT H.
SECTION 3.24
COMPREHENSIVE OPERATING BUDGET.
THE COMPANY COVENANTS
AND AGREES THAT AS SOON AS AVAILABLE AND IN ANY EVENT WITHIN THIRTY (30) DAYS
PRIOR TO THE END OF EACH FISCAL YEAR OF THE COMPANY, THE COMPANY SHALL DELIVER
TO THE PURCHASERS A COMPREHENSIVE OPERATING BUDGET FORECASTING THE COMPANY'S
FINANCIAL POSITION ON A MONTH-TO-MONTH BASIS FOR THE UPCOMING FISCAL YEAR.
SECTION 3.25
BOARD MATERIALS.
THE COMPANY COVENANTS AND AGREES TO
DELIVER TO EACH PURCHASER COPIES OF ALL MATERIALS PROVIDED TO MEMBERS OF THE
BOARD OF DIRECTORS CONTEMPORANEOUSLY WITH THE DELIVERY OF MATERIALS TO SUCH
MEMBERS OF THE BOARD OF DIRECTORS, INCLUDING, WITHOUT LIMITATION, ALL FINANCIAL
MATERIALS USED IN PREPARATION OF THE COMPANY'S FINANCIAL STATEMENTS.
SECTION 3.26
ACQUISITIONS.
THE COMPANY COVENANTS AND AGREES THAT IT
SHALL NOT CONSUMMATE ANY ACQUISITIONS BY THE COMPANY WITHOUT THE CONSENT OF THE
BOARD OF DIRECTORS OF THE COMPANY, INCLUDING THE CONSENT OF THE MAJORITY OF THE
INVESTOR DESIGNEES (AS DEFINED IN THE STOCKHOLDERS AGREEMENT).
SECTION 3.27
D&O INSURANCE.
PROMPTLY FOLLOWING THE CLOSING AND AS
LONG AS ANY INVESTOR DESIGNEE (AS DEFINED IN THE STOCKHOLDERS AGREEMENT) SHALL
CONTINUE TO SERVE AS A DIRECTOR OF THE COMPANY AND THEREAFTER SO LONG AS THE
INVESTOR DESIGNEE SHALL BE SUBJECT TO