Common use of Modification of Rights upon Exercise of Contingent Purchase Right Clause in Contracts

Modification of Rights upon Exercise of Contingent Purchase Right. In the event it is determined that the issuance of Common Stock upon the exercise of the Contingent Purchase Right (whether arising from one or more Covered Transactions or one or more Cash Out Transactions) would result in the Investor receiving a number of shares of Common Stock that would require the Company to seek stockholder approval under the NASDAQ Stock Market Rules then, immediately following such determination, and without any action on the part of the Company or the Investor, the Contingent Purchase Right shall be modified such that, upon exercise of the Contingent Purchase Right, the Company shall first have an obligation to issue to the Investor the maximum number of shares of Common Stock at par value which will continue to not require the Company to obtain stockholder approval for the issuance, and the Company shall then be obligated to issue shares of Non-Convertible Preferred Stock (as defined in Section 3.1(h)) (in lieu of Common Stock) at par value in respect of the remaining shares of Common Stock that are covered by the Contingent Purchase Right based on the following formula. The number of shares of Non-Convertible Preferred Stock to be issued upon the exercise of the Contingent Purchase Right shall be equal to the difference between (x) the total number of shares of Common Stock covered by the Contingent Purchase Right for the particular Covered Transaction or Cash Out Transaction, as applicable, and (y) the amount of shares of Common Stock previously issued in respect of the exercise of such Contingent Purchase Right for the particular Covered Transaction or Cash Out Transaction, if any, divided by 100 and then rounded down to the nearest whole share. In lieu of issuing any fractional share of Non-Convertible Preferred Stock that the Investor would otherwise be entitled to receive had the number of shares not been rounded down as a result of the previous sentence, the Investor shall be entitled to receive from the Company an amount in cash (rounded to the nearest cent) determined by multiplying (x) the average (rounded to the nearest tenth of a cent) of the closing sale prices of the Common Stock on the NASDAQ Stock Market for the three trading days immediately following the date of exercise of the Contingent Purchase Right relating to the applicable Covered Transaction or Cash Out Transaction, by (y) the fraction of a share, by (z) 100. The cash payment shall be made to the Investor within 10 days following the determination date. For the sake of clarity, if no shares of Common Stock may be issued upon exercise of the Contingent Purchase Right without requiring stockholder approval for such issuance, then the Company shall have no obligation to issue shares of Common Stock upon exercise of such Contingent Purchase Right, and shall instead be obligated to issue shares of Non-Convertible Preferred Stock in respect of all of the shares of Common Stock that are covered by the Contingent Purchase Right. The modification to the Contingent Purchase Right provided for in this Section 3.1(g) shall continue to apply to the Contingent Purchase Right arising from any Covered Transaction or Cash Out Transaction occurring on or after the date on which it is initially determined that stockholder approval would be required for the issuance of Common Stock upon exercise of the Contingent Purchase Right until the date on which Stockholder Approval is obtained in accordance with Section 3.1(i).