END OF THE COMPANY'S CURRENT FISCAL
QUARTER, THE COMPANY WILL MAKE GENERALLY AVAILABLE TO HOLDERS OF ITS SECURITIES
AND DELIVER TO THE PLACEMENT AGENT, AN EARNINGS STATEMENT OF THE COMPANY (WHICH
NEED NOT BE AUDITED) THAT WILL SATISFY THE PROVISIONS OF SECTION 11(A) OF THE
SECURITIES ACT AND RULE 158 OF THE RULES AND REGULATIONS.
(K)
USE OF PROCEEDS.
THE COMPANY WILL APPLY THE NET PROCEEDS FROM THE
SALE OF THE SHARES IN THE MANNER SET FORTH IN THE DISCLOSURE PACKAGE AND THE
PROSPECTUS UNDER THE HEADING "USE OF PROCEEDS".
(L)
LOCK-UP PERIOD.
BEGINNING ON THE DATE HEREOF AND CONTINUING FOR
A PERIOD OF 90 DAYS AFTER THE DATE OF THE PROSPECTUS (THE "LOCK-UP PERIOD"), THE
COMPANY WILL NOT (1) OFFER TO SELL, HYPOTHECATE, PLEDGE, ANNOUNCE THE INTENTION
TO SELL, SELL, CONTRACT TO SELL, SELL ANY OPTION OR CONTRACT TO PURCHASE,
PURCHASE ANY OPTION OR CONTRACT TO SELL, GRANT ANY OPTION, RIGHT OR WARRANT TO
PURCHASE OR
15
OTHERWISE TRANSFER OR DISPOSE OF, DIRECTLY OR INDIRECTLY, OR ESTABLISH OR
INCREASE A PUT EQUIVALENT POSITION OR LIQUIDATE OR DECREASE A CALL EQUIVALENT
POSITION WITHIN THE MEANING OF SECTION 16 OF THE EXCHANGE ACT, WITH RESPECT TO,
ANY SHARES OF COMMON STOCK, ANY SECURITIES CONVERTIBLE INTO OR EXERCISABLE OR
EXCHANGEABLE FOR COMMON STOCK; (2) FILE OR CAUSE TO BECOME EFFECTIVE A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT RELATING TO THE OFFER AND SALE
OF ANY SHARES OF COMMON STOCK OR SECURITIES CONVERTIBLE INTO OR EXERCISABLE OR
EXCHANGEABLE FOR COMMON STOCK OR (3) ENTER INTO ANY SWAP OR OTHER AGREEMENT THAT
TRANSFERS, IN WHOLE OR IN PART, ANY OF THE ECONOMIC CONSEQUENCES OF OWNERSHIP OF
THE COMMON STOCK, WHETHER ANY SUCH TRANSACTION DESCRIBED IN CLAUSE (I), (II) OR
(III) ABOVE IS TO BE SETTLED BY DELIVERY OF COMMON STOCK OR SUCH OTHER
SECURITIES, IN CASH OR OTHERWISE, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
PLACEMENT AGENT (WHICH CONSENT MAY BE WITHHELD IN ITS SOLE DISCRETION), OTHER
THAN (I) THE SHARES TO BE SOLD HEREUNDER, (II) THE ISSUANCE OF EMPLOYEE STOCK
OPTIONS PURSUANT TO STOCK OPTION PLANS DESCRIBED IN THE REGISTRATION STATEMENT
(EXCLUDING THE EXHIBITS THERETO), THE DISCLOSURE PACKAGE AND THE PROSPECTUS,
(III) ISSUANCES OF COMMON STOCK UPON THE EXERCISE OF OPTIONS OR WARRANTS (EITHER
UPON CURRENT TERMS THEREOF OR UPON SUBSEQUENTLY AMENDED TERMS BUT EXCLUDING A
GENERAL REPRICING) DISCLOSED AS OUTSTANDING IN THE REGISTRATION STATEMENT
(EXCLUDING THE EXHIBITS THERETO), THE DISCLOSURE PACKAGE AND THE PROSPECTUS OR
UPON THE CONVERSION OR EXCHANGE OF CONVERTIBLE OR EXCHANGEABLE SECURITIES
OUTSTANDING AS OF THE DATE OF THIS AGREEMENT; (IV) THE ISSUANCE OF 100,000
SHARES TO THE REGENTS OF THE UNIVERSITY OF CALIFORNIA IN CONNECTION WITH A
POTENTIAL AMENDED LICENSE AGREEMENT BETWEEN THE COMPANY AND THE REGENTS; (V)
THE ISSUANCE BY THE COMPANY OF ANY SHARES OF COMMON STOCK AS CONSIDERATION FOR
MERGERS, ACQUISITIONS, OTHER BUSINESS COMBINATIONS, OR STRATEGIC ALLIANCES,
OCCURRING AFTER THE DATE OF THIS AGREEMENT; PROVIDED THAT EACH RECIPIENT OF
SHARES PURSUANT TO THIS CLAUSE (V) AGREES THAT ALL SUCH SHARES REMAIN SUBJECT TO
RESTRICTIONS