THE END OF
EACH OF THE FIRST THREE FISCAL QUARTERS OF THE COMPANY;
(B)
ANNUAL REPORTS FILED WITH THE COMMISSION ON FORM 10-K
CONTEMPORANEOUSLY WITH THE FILING THEREOF WITH THE COMMISSION AFTER THE END OF
EACH FISCAL YEAR OF THE COMPANY; AND
(C)
COPIES OF ALL NOTICES, INFORMATION AND PROXY STATEMENTS IN
CONNECTION WITH ANY MEETINGS, THAT ARE, IN EACH CASE, PROVIDED TO HOLDERS OF
SHARES OF COMMON STOCK, CONTEMPORANEOUSLY WITH THE DELIVERY OF SUCH NOTICES OR
INFORMATION TO SUCH HOLDERS OF COMMON STOCK.
SECTION 3.7
OTHER AGREEMENTS.
THE COMPANY SHALL NOT ENTER INTO ANY
AGREEMENT IN WHICH THE TERMS OF SUCH AGREEMENT WOULD RESTRICT OR IMPAIR THE
RIGHT OR ABILITY TO PERFORM OF THE COMPANY OR ANY SUBSIDIARY UNDER ANY
TRANSACTION DOCUMENT.
SECTION 3.8
SUBSEQUENT FINANCINGS; RIGHT OF FIRST REFUSAL. (A) FOR
PURPOSES OF THIS AGREEMENT, A "SUBSEQUENT FINANCING" SHALL BE DEFINED AS ANY
SUBSEQUENT OFFER OR SALE TO, OR EXCHANGE WITH (OR OTHER TYPE OF DISTRIBUTION
TO), ANY THIRD PARTY OF COMMON STOCK OR ANY SECURITIES CONVERTIBLE, EXERCISABLE
OR EXCHANGEABLE INTO COMMON STOCK, INCLUDING CONVERTIBLE DEBT SECURITIES
(COLLECTIVELY, THE "FINANCING SECURITIES"), EXCEPT FOR A PERMITTED FINANCING.
A
"PERMITTED FINANCING" SHALL MEAN (I) THE COMPANY'S ISSUANCE OF COMMON STOCK AND
WARRANTS THEREFOR IN CONNECTION WITH A MERGER AND/OR ACQUISITION OR
CONSOLIDATION, (II) THE ISSUANCE OF SHARES OF COMMON STOCK OR WARRANTS THEREFOR
IN CONNECTION WITH BONA FIDE STRATEGIC LICENSE
16
AGREEMENTS OR OTHER PARTNERING ARRANGEMENTS SO LONG AS SUCH ISSUANCES ARE NOT
FOR THE PURPOSE OF RAISING CAPITAL, (III) THE COMPANY'S ISSUANCE OF COMMON STOCK
OR THE ISSUANCE OR GRANTS OF OPTIONS TO PURCHASE COMMON STOCK PURSUANT TO THE
COMPANY'S STOCK OPTION PLANS AND EMPLOYEE STOCK PURCHASE PLANS, CONSULTANT STOCK
PLANS OR OTHER ARRANGEMENT DULY ADOPTED BY A MAJORITY OF THE NON-EMPLOYEE
MEMBERS OF THE BOARD OF DIRECTORS OF THE COMPANY OR A MAJORITY OF THE MEMBERS OF
A COMMITTEE OF NON-EMPLOYEE DIRECTORS ESTABLISHED FOR SUCH PURPOSE OUTSTANDING
AS THEY NOW EXIST, (IV) THE COMPANY'S ISSUANCE OF FINANCING SECURITIES IN
CONNECTION WITH A BONA FIDE FIRM UNDERWRITTEN PUBLIC OFFERING RESULTING IN GROSS
PROCEEDS TO THE COMPANY OF AT LEAST $10,000,000, AND (V) THE ISSUANCE OF COMMON
STOCK UPON THE EXERCISE OR CONVERSION OF ANY SECURITIES OUTSTANDING ON THE DATE
HEREOF.
(B)
FOR A PERIOD OF ONE (1) YEAR FOLLOWING THE CLOSING DATE, THE COMPANY
COVENANTS AND AGREES TO PROMPTLY NOTIFY (IN NO EVENT LATER THAN FIVE (5) TRADING
DAYS (AS DEFINED IN SECTION 3.11 HEREOF) AFTER MAKING OR RECEIVING AN APPLICABLE
OFFER) IN WRITING (A "RIGHTS NOTICE") THE PURCHASERS OF THE TERMS AND CONDITIONS
OF ANY SUBSEQUENT FINANCING OTHER THAN A PERMITTED FINANCING.
THE RIGHTS NOTICE
SHALL DESCRIBE, IN REASONABLE DETAIL, THE PROPOSED SUBSEQUENT FINANCING, THE
PROPOSED CLOSING DATE OF THE SUBSEQUENT FINANCING, WHICH SHALL BE WITHIN THIRTY
(30) CALENDAR DAYS FROM THE DATE THE RIGHTS NOTICE IS GIVEN, INCLUDING, WITHOUT
LIMITATION, ALL OF THE MATERIAL TERMS AND CONDITIONS THEREOF AND PROPOSED
DEFINITIVE DOCUMENTATION TO BE ENTERED INTO IN CONNECTION THEREWITH.
THE RIGHTS
NOTICE SHALL PROVIDE EACH PURCHASER