Stock Issuance (a) The Company shall issue the Award Shares in book entry form, registered in your name with notations regarding the applicable restrictions on transfer imposed under this Agreement; provided, however, that the Company may, in its discretion, elect to issue such shares in certificate form as provided below.
(b) Any certificates representing the Award Shares that may be delivered to you by the Company prior to vesting shall be redelivered to the Company to be held by the Company until the restrictions on such Award Shares have lapsed and the Award Shares shall thereby have become vested or the shares represented thereby have been forfeited hereunder. Such certificates shall bear a legend as contemplated by this Section 5.
(c) Promptly after the vesting of the Award Shares pursuant to this Agreement, the Company shall, as applicable, either remove the notations on any shares issued in book entry form which have vested or deliver to you a certificate or certificates evidencing the number of Award Shares which have vested.
(d) If the Company elects to issue you certificates, you shall be required to execute a stock power, in the form attached as Exhibit A, with respect to the Award Shares. The Company shall not deliver any certificates in accordance with this Agreement unless and until the Company shall have received such stock power executed by you. You, by acceptance of this award, shall be deemed to appoint, and you do so appoint by execution of this Agreement, the Company and each of its authorized representatives as your attorney(s)-in-fact to effect any transfer of unvested forfeited Award Shares (or Award Shares otherwise reacquired by the Company hereunder) to the Company as may be required pursuant to the Plan or this Agreement and to execute such documents as the Company or such representatives deem necessary or advisable in connection with any such transfer.
(e) Until the Award Shares become vested, any share certificates or book entry positions representing such shares will include a legend to the effect that you may sell, pledge, assign or otherwise directly or indirectly dispose of or transfer the Award Shares and the Award Shares are subject to the provisions of this Agreement and the Plan.
Rights to Future Stock Issuances Subject to the terms and conditions of this Section 10 and applicable securities Laws, if at any time prior to the first anniversary of the first Closing hereunder, the Company proposes to offer or sell any New Securities, the Company shall first offer the Investors the opportunity to purchase up to one hundred percent (100%) of such New Securities. The Investors shall be entitled to apportion the right of first offer hereby granted to them in proportion to their respective percentages of the total Subscription Amount including every Closing that has occurred under this Agreement as of such time stated in the preceding sentence.
10.1 The Company shall give notice (the “Offer Notice”) to the Investors, stating (a) its bona fide intention to offer such New Securities, (b) the number of such New Securities to be offered, and (c) the price and terms, if any, upon which it proposes to offer such New Securities.
10.2 By notification to the Company within ten (10) days after the Offer Notice is given, the Investors may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to one hundred percent (100%) of such New Securities. The closing of any sale pursuant to this Section 10 shall occur within the later of ninety (90) days of the date that the Offer Notice is given and the date of initial sale of the New Securities pursuant to Section 10.3.
10.3 The Company may, during the ninety (90) day period following the expiration of the period provided in Section 10.2, offer and sell the remaining portion of such New Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the Company does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Investors in accordance with this Section 10.
10.4 The right of first offer in this Section 10 shall not be applicable to an Exempt Issuance (as defined in the Note), or any New Securities registered for sale under the Securities Act.
Exercise of Options 4.1 No portion of the option granted hereunder may be exercised for a fraction of a share. The option granted hereunder shall be deemed to be exercised when written notice of such exercise has been given to the Corporation to the attention of the Secretary of the Corporation accompanied by full payment of the exercise price and by such other documents as the Board of Directors of the Corporation (the "Board") may reasonably request. Until the issuance (as evidenced by the appropriate entry on the books of the Corporation or of a duly authorized transfer agent of the Corporation) of the stock certificate evidencing such Option Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Option Shares, notwithstanding the exercise of the Option. The Corporation shall issue (or cause to be issued) such stock certificate promptly upon exercise of any portion of the option granted hereunder. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 5 hereof. Exercise of a portion of the option granted hereunder in any manner shall result in a decrease in the number of Option Shares which thereafter may be available by the number of Shares as to which the Option is exercised.
4.2 In the event of termination of an Optionee as an employee or consultant with the Corporation (but not in the event of an Optionee's change of status from employee to consultant or from consultant to employee), such Optionee may, but only within such period of time as is determined by the Board, of at least thirty (30) days (but in no event later than the Option Expiration Date), exercise the option granted hereunder to the extent that Optionee was entitled to exercise it under Section 2 hereof at the date of such termination, or to such greater extent as may be determined by the Board. If the Optionee does not exercise such option to the extent so entitled within the time specified herein, the option shall terminate.
4.3 In the event of termination of an Optionee's status as an employee or consultant as a result of the Optionee's "disability," as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended, the Optionee may exercise the option granted hereunder within twelve (12) months from the date of the Optionee's termination (but in no event shall the Optionee be entitled to exercise the option after the Option Expiration Date) to the extent that Optionee was entitled to exercise it under Section 2 on the date of termination.
4.4 In the event of the death of the Optionee, the option granted hereunder may be exercised at any time within twelve (12) months following the date of death (but in no event later may the option be exercised after the Option Expiration Date), by the Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent that the Optionee was entitled to exercise the Option in accordance with Section 2 hereof on the date of death.
Options and Convertible Securities The consideration per share received by the Company for Additional Shares of Common Stock deemed to have been issued pursuant to paragraph (c), relating to Options and Convertible Securities, shall be determined by dividing:
(A) the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities; by
(B) the maximum number of shares of Common Stock (as set forth in the instrument relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities.
Issuances The Shares to be issued hereunder will be validly issued, fully paid and nonassessable.
Rights, Options and Warrants If the Company distributes, to all or substantially all holders of Common Stock, rights, options or warrants (other than rights issued or otherwise distributed pursuant to a stockholder rights plan, as to which Sections 5.05(A)(iii)(1) and 5.05(F) will apply) entitling such holders, for a period of not more than sixty (60) calendar days after the record date of such distribution, to subscribe for or purchase shares of Common Stock at a price per share that is less than the average of the Last Reported Sale Prices per share of Common Stock for the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately before the date such distribution is announced, then the Conversion Rate will be increased based on the following formula: where: CR0 = the Conversion Rate in effect immediately before the Open of Business on the Ex-Dividend Date for such distribution; CR1 = the Conversion Rate in effect immediately after the Open of Business on such Ex-Dividend Date; OS = the number of shares of Common Stock outstanding immediately before the Open of Business on such Ex-Dividend Date; X = the total number of shares of Common Stock issuable pursuant to such rights, options or warrants; and Y = a number of shares of Common Stock obtained by dividing (x) the aggregate price payable to exercise such rights, options or warrants by (y) the average of the Last Reported Sale Prices per share of Common Stock for the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately before the date such distribution is announced. To the extent such rights, options or warrants are not so distributed, the Conversion Rate will be readjusted to the Conversion Rate that would then be in effect had the increase to the Conversion Rate for such distribution been made on the basis of only the rights, options or warrants, if any, actually distributed. In addition, to the extent that shares of Common Stock are not delivered after the expiration of such rights, options or warrants (including as a result of such rights, options or warrants not being exercised), the Conversion Rate will be readjusted to the Conversion Rate that would then be in effect had the increase to the Conversion Rate for such distribution been made on the basis of delivery of only the number of shares of Common Stock actually delivered upon exercise of such rights, option or warrants. For purposes of this Section 5.05(A)(ii) and Section 5.01(C)(i)(3)(a)(I), in determining whether any rights, options or warrants entitle holders of Common Stock to subscribe for or purchase shares of Common Stock at a price per share that is less than the average of the Last Reported Sale Prices per share of Common Stock for the ten (10) consecutive Trading Days ending on, and including, the Trading Day immediately before the date the distribution of such rights, options or warrants is announced, and in determining the aggregate price payable to exercise such rights, options or warrants, there will be taken into account any consideration the Company receives for such rights, options or warrants and any amount payable on exercise thereof, with the value of such consideration, if not cash, to be determined by the Company in good faith and in a commercially reasonable manner.
Treatment of Options and Convertible Securities In case the Company at any time or from time to time after the date hereof shall issue, sell, grant or assume any Options or Convertible Securities (both as defined below), then, and in each such case, the maximum number of Additional Shares of Common Stock (as set forth in the instrument relating thereto, without regard to any provisions contained therein for a subsequent adjustment of such number the purpose of which is to protect against dilution) at any time issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue, sale, grant or assumption; PROVIDED, HOWEVER, that such Additional Shares of Common Stock shall not be deemed to have been issued unless the consideration per share (determined pursuant to Section 3.e hereof) of such shares would be less than the greater of the Current Market Price or the Warrant Price in effect on the date of and immediately prior to such issue, sale, grant or assumption, as the case may be; and PROVIDED, FURTHER, that in any such case in which Additional Shares of Common Stock are deemed to be issued:
i. no further adjustment of the Warrant Price shall be made upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consequent issue or sale of Convertible Securities or shares of Common Stock;
ii. if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Company, or decrease in the number of Additional Shares of Common Stock issuable, upon the exercise, conversion or exchange thereof (by change of rate or otherwise), the Warrant Price computed upon the original issue, sale, grant or assumption thereof, and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options, or the rights of conversion or exchange under such Convertible Securities, which are outstanding at such time;
iii. upon the expiration (or purchase by the Company and cancellation or retirement) of any such Options which shall not have been exercised, or the expiration of any rights of conversion or exchange under any such Convertible Securities which (or purchase by the Company and cancellation or retirement of any such Convertible Securities the rights of conversion or exchange under which) shall not have been exercised, the Warrant Price computed upon the original issue, sale, grant or assumption thereof, and any subsequent adjustments based thereon, shall, upon (and effective as of) such expiration (or such cancellation or retirement, as the case may be), be recomputed as if:
(A) in the case of Options or Convertible Securities, the only Additional Shares of Common Stock issued or sold were the Additional Shares of Common Stock, if any, actually issued or sold upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Company for the issue, sale, grant or assumption of all such Options, whether or not exercised, plus the consideration actually received by the Company upon such exercise, or for the issue or sale of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Company upon such conversion or exchange, and
(B) in the case of Options for Convertible Securities, only the Convertible Securities, if any, actually issued or sold upon the exercise of such Options were issued at the time of the issue, sale, grant or assumption of such Options, and the consideration received by the Company for the Additional Shares of Common Stock deemed to have then been issued was the consideration actually received by the Company for the issue, sale, grant or assumption of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Company (pursuant to Section 3.e hereof) upon the issue or sale of such Convertible Securities with respect to which such Options were actually exercised;
Reservation of Stock Issuable Upon Conversion The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the indebtedness represented by this Note, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all indebtedness represented by this Note, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all indebtedness represented by this Note, the Corporation will take such action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.
Reservation of Stock Issuable on Exercise of Warrant The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrant, shares of Common Stock (or Other Securities) from time to time issuable on the exercise of the Warrant.
OVERALL LIMIT ON COMMON STOCK ISSUABLE Notwithstanding anything contained herein to the contrary, if during the Open Period the Company becomes listed on an exchange that limits the number of shares of Common Stock that may be issued without shareholder approval, then the number of Shares issuable by the Company and purchasable by the Investor, shall not exceed that number of the shares of Common Stock that may be issuable without shareholder approval (the "Maximum Common Stock Issuance"). If such issuance of shares of Common Stock could cause a delisting on the Principal Market, then the Maximum Common Stock Issuance shall first be approved by the Company's shareholders in accordance with applicable law and the By-laws and Amended and Restated Certificate of Incorporation of the Company, if such issuance of shares of Common Stock could cause a delisting on the Principal Market. The parties understand and agree that the Company's failure to seek or obtain such shareholder approval shall in no way adversely affect the validity and due authorization of the issuance and sale of Securities or the Investor's obligation in accordance with the terms and conditions hereof to purchase a number of Shares in the aggregate up to the Maximum Common Stock Issuance limitation, and that such approval pertains only to the applicability of the Maximum Common Stock Issuance limitation provided in this Section 2(H).
