THE WARRANTS).
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(M)
CONDUCT OF BUSINESS.
THE BUSINESS OF THE
COMPANY AND ITS SUBSIDIARIES SHALL NOT BE CONDUCTED IN VIOLATION OF ANY LAW,
ORDINANCE OR REGULATION OF ANY GOVERNMENTAL ENTITY, EXCEPT WHERE SUCH VIOLATIONS
WOULD NOT RESULT, EITHER INDIVIDUALLY OR IN THE AGGREGATE, IN A MATERIAL ADVERSE
EFFECT.
(N)
ADDITIONAL ISSUANCES OF SECURITIES.
(I)
FOR PURPOSES OF THIS SECTION 4(N), THE
FOLLOWING DEFINITIONS SHALL APPLY.
(1)
"CONVERTIBLE SECURITIES" MEANS ANY STOCK OR
SECURITIES (OTHER THAN OPTIONS) CONVERTIBLE INTO OR EXERCISABLE OR EXCHANGEABLE
FOR SHARES OF COMMON STOCK.
(2)
"OPTIONS" MEANS ANY RIGHTS, WARRANTS OR
OPTIONS TO SUBSCRIBE FOR OR PURCHASE SHARES OF COMMON STOCK OR CONVERTIBLE
SECURITIES.
(3)
"COMMON STOCK EQUIVALENTS" MEANS,
COLLECTIVELY, OPTIONS AND CONVERTIBLE SECURITIES.
(II)
FROM THE DATE HEREOF UNTIL THE DATE THAT
IS ONE HUNDRED TWENTY (120) TRADING DAYS (AS DEFINED IN THE CERTIFICATE OF
DESIGNATIONS) AFTER THE EFFECTIVE DATE (THE "TRIGGER DATE"), THE COMPANY WILL
NOT, DIRECTLY OR INDIRECTLY, OFFER, SELL, GRANT ANY OPTION TO PURCHASE, OR
OTHERWISE DISPOSE OF (OR ANNOUNCE ANY OFFER, SALE, GRANT OR ANY OPTION TO
PURCHASE OR OTHER DISPOSITION OF) ANY OF ITS OR ITS SUBSIDIARIES' EQUITY OR
EQUITY EQUIVALENT SECURITIES, INCLUDING WITHOUT LIMITATION ANY DEBT, PREFERRED
STOCK OR OTHER INSTRUMENT OR SECURITY THAT IS, AT ANY TIME DURING ITS LIFE AND
UNDER ANY CIRCUMSTANCES, CONVERTIBLE INTO OR EXCHANGEABLE OR EXERCISABLE FOR
SHARES OF COMMON STOCK OR COMMON STOCK EQUIVALENTS (ANY SUCH OFFER, SALE, GRANT,
DISPOSITION OR ANNOUNCEMENT BEING REFERRED TO AS A "SUBSEQUENT PLACEMENT").
(III)
FROM THE TRIGGER DATE UNTIL NO PREFERRED
SHARES REMAIN OUTSTANDING, THE COMPANY WILL NOT, DIRECTLY OR INDIRECTLY, EFFECT
ANY SUBSEQUENT PLACEMENT UNLESS THE COMPANY SHALL HAVE FIRST COMPLIED WITH THIS
SECTION 4(N)(III).
(1)
THE COMPANY SHALL DELIVER TO EACH BUYER A
WRITTEN NOTICE (THE "OFFER NOTICE") OF ANY PROPOSED OR INTENDED ISSUANCE OR SALE
OR EXCHANGE (THE "OFFER") OF THE SECURITIES BEING OFFERED (THE "OFFERED
SECURITIES") IN A SUBSEQUENT PLACEMENT, WHICH OFFER NOTICE SHALL (W) IDENTIFY
AND DESCRIBE THE OFFERED SECURITIES, (X) DESCRIBE THE PRICE AND OTHER TERMS UPON
WHICH THEY ARE TO BE ISSUED, SOLD OR EXCHANGED, AND THE NUMBER OR AMOUNT OF THE
OFFERED SECURITIES TO BE ISSUED, SOLD OR EXCHANGED, (Y) IDENTIFY THE PERSONS OR
ENTITIES (IF KNOWN) TO WHICH OR WITH WHICH THE OFFERED SECURITIES ARE TO BE
OFFERED, ISSUED, SOLD OR EXCHANGED AND (Z) OFFER TO ISSUE AND SELL TO OR
EXCHANGE WITH SUCH BUYERS 30% OF THE OFFERED SECURITIES ALLOCATED AMONG SUCH
BUYERS (A) BASED ON SUCH BUYER'S PRO RATA PORTION OF THE AGGREGATE NUMBER OF
PREFERRED SHARES PURCHASED HEREUNDER (THE "BASIC AMOUNT"), AND (B) WITH RESPECT
TO EACH BUYER THAT ELECTS TO PURCHASE ITS BASIC AMOUNT, ANY ADDITIONAL PORTION
OF THE OFFERED SECURITIES ATTRIBUTABLE TO THE BASIC AMOUNTS OF OTHER BUYERS AS
SUCH BUYER SHALL INDICATE IT WILL PURCHASE OR ACQUIRE SHOULD THE OTHER BUYERS
SUBSCRIBE FOR LESS THAN THEIR BASIC AMOUNTS (THE
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"UNDERSUBSCRIPTION AMOUNT"), WHICH PROCESS SHALL BE REPEATED UNTIL THE BUYERS
SHALL HAVE AN OPPORTUNITY TO SUBSCRIBE FOR ANY REMAINING UNDERSUBSCRIPTION