SHARES OF COMMON STOCK ISSUED UPON THE EXERCISE OR CONVERSION OF ANY
SECURITIES OF THE COMPANY OUTSTANDING ON THE CLOSING DATE; (VII) SHARES OF
COMMON STOCK ISSUED IN CONNECTION WITH A JOINT VENTURE, STRATEGIC ALLIANCE OR
OTHER COMMERCIAL RELATIONSHIP RELATING TO THE OPERATION OF THE COMPANY'S
BUSINESS THE PRIMARY PURPOSE OF WHICH IS NOT TO RAISE EQUITY CAPITAL; (VIII)
SECURITIES ISSUED PURSUANT TO A BONA FIDE FIRM COMMITMENT UNDERWRITTEN PUBLIC
OFFERING; AND (IX) SECURITIES ISSUED IN A REGISTERED DIRECT OFFERING SOLD
PURSUANT TO A REGISTRATION STATEMENT OTHER THAN THE REGISTRATION STATEMENT.
(B)
"PRO RATA SHARE" MEANS, WITH RESPECT TO AN
INVESTOR AT ANY TIME, THE PERCENTAGE DETERMINED BY DIVIDING THE AGGREGATE NUMBER
OF SUCH INVESTOR'S SHARES AND WARRANT SHARES ISSUABLE UNDER THE WARRANTS AT SUCH
TIME, DETERMINED ON A FULLY DILUTED BASIS AFTER GIVING EFFECT TO THE EXERCISE IN
FULL OF SUCH WARRANTS (WITHOUT REGARD TO ANY RESTRICTIONS ON SUCH EXERCISE THAT
MAY BE SET FORTH IN THE WARRANTS), BY THE NUMBER OF THE SHARES OF THE COMMON
STOCK OUTSTANDING PLUS THE NUMBER OF WARRANT SHARES ISSUABLE UNDER THE WARRANTS
AT SUCH TIME.
(C)
"SUBSEQUENT PLACEMENT" MEANS THE ISSUANCE,
SALE, EXCHANGE, OR AGREEMENT OR OBLIGATION TO ISSUE, SELL OR EXCHANGE OR
RESERVE, OR AGREEMENT TO OR SET ASIDE FOR ISSUANCE, SALE OR EXCHANGE ANY SHARES
OF COMMON STOCK (OR SECURITIES OR RIGHTS CONVERTIBLE, EXERCISABLE OR
EXCHANGEABLE, DIRECTLY OR INDIRECTLY, FOR COMMON STOCK) THAT ARE OFFERED OR SOLD
12
by the Company for a per share price that is less than the Purchase Price per
Share (proportionately adjusted for stock splits, stock dividends and similar
event); provided, however, that the issuance or sale, or agreement to issue or
sell, an Excluded Security shall not constitute a Subsequent Placement.
6.2.
OFFERED SECURITIES. FROM THE CLOSING DATE
THROUGH THE FIRST DATE ON WHICH NONE OF THE WARRANTS REMAIN OUTSTANDING (AS A
RESULT OF THEIR EXERCISE AND/OR EXPIRATION), THE COMPANY WILL NOT, DIRECTLY OR
INDIRECTLY, EFFECT A SUBSEQUENT PLACEMENT, UNLESS IN EACH SUCH CASE THE COMPANY
SHALL HAVE FIRST OFFERED TO SELL TO EACH INVESTOR ITS PRO RATA SHARE OF THE
SECURITIES BEING OFFERED IN SUCH SUBSEQUENT PLACEMENT (THE SECURITIES BEING
OFFERED TO THE INVESTORS BEING REFERRED TO HEREIN AS THE "OFFERED SECURITIES").
NOTWITHSTANDING THE FOREGOING, EACH INVESTOR'S RIGHTS TO PARTICIPATE IN
SUBSEQUENT PLACEMENTS PURSUANT TO THIS SECTION 6 SHALL EXPIRE WHEN SUCH
INVESTOR'S WARRANTS ARE NO LONGER OUTSTANDING AND HAVE EITHER BEEN EXERCISED OR
HAVE EXPIRED.
THE COMPANY SHALL OFFER TO SELL TO EACH INVESTOR (A) SUCH
INVESTOR'S PRO RATA SHARE OF THE OFFERED SECURITIES (THE "BASIC AMOUNT"), AND
(B) SUCH ADDITIONAL PORTION OF THE OFFERED SECURITIES AS SUCH INVESTOR SHALL
INDICATE IT WILL PURCHASE SHOULD THE OTHER INVESTORS SUBSCRIBE FOR LESS THAN
THEIR BASIC AMOUNTS (THE "UNDERSUBSCRIPTION AMOUNT"), AT A PRICE AND ON SUCH
OTHER TERMS AS SHALL HAVE BEEN SPECIFIED BY THE COMPANY IN WRITING DELIVERED TO
SUCH INVESTOR (THE "OFFER"), WHICH OFFER BY ITS TERMS SHALL REMAIN OPEN AND
IRREVOCABLE FOR A PERIOD OF NOT LESS THAN THREE (3)