Common use of Subsequent Financings Clause in Contracts

Subsequent Financings. Until at least 60 days after the Registration Statement is declared effective, Company will not issue or enter into an agreement to issue any shares of Common Stock, except as provided in subsections (a), (b), (c)(i), (c)(iii), (c)(v) or (c)(vi) below. Until at least 6 months after the entire Debenture and Warrant have been converted, redeemed or exercised, Company will not (1) enter into any agreement that in any way restricts its ability to enter into any agreement, amendment or waiver with Investor, including without limitation any agreement to offer, sell or issue to Investor any preferred stock, common stock or other securities of Company, (2) enter into any equity or convertible financing pursuant to which shares of Common Stock or Common Stock equivalents may effectively be issued (i) at a discount, (ii) at a variable price, or (iii) where the price or number of shares are subject to any type of variability or reset feature. Notwithstanding the preceding sentence, Company may enter into any financing: (a) with Investor; (b) for non-convertible debt with no equity component; or (c) issuing Common Stock or Common Stock equivalents at a fixed price (i) upon the exercise or exchange or conversion of any securities issued and outstanding on, and not amended or modified after, the Effective Date, (ii) in an underwritten public offering that does not include warrants and generates gross proceeds of at least $10 million, (iii) up to $250,000 per month in private placements of securities that are restricted for at least 6 months after issuance; (iv) in exchange for services pursuant to existing qualified incentive stock option plans, or pursuant to new plans duly adopted by the Board of Directors of the Company if the securities are restricted for at least 6 months after issuance, including options or other awards, to Company employees, officers, directors, or individual independent contractors specifically engaged in the operations or management of oil and gas field related activity and specifically excluding corporate contractors and general and administrative service providers, (v) as consideration for acquisitions, mergers, consolidations or strategic transactions, including licensing and partnering agreements, or purchase of all or substantially all of the securities or assets of another entity, or (vi) as consideration for an equipment loan or leasing arrangement, real property leasing arrangement, or debt financing, from a licensed commercial bank; provided however, with regard to any of the foregoing set forth in clauses (iv) through (vi), that (1) the primary purpose of such issuance is not to raise capital, (2) the purchasers or acquirers of the securities in such issuance do not include Company or any of its Subsidiaries and solely consists of either (w) the individuals actually providing the services, (x) the actual participants in such strategic alliance or strategic partnership, (y) the actual owners of such assets or securities acquired in such acquisition or merger or (z) the stockholders, partners or members of the foregoing Persons, (3) the number or amount of securities issued to such Person by the Company shall not be disproportionate to such Person’s actual participation in such strategic alliance or strategic partnership or ownership of such assets or securities to be acquired by the Company, or the value of services provided to the Company, as applicable, and (4) none of such Persons are an entity whose primary business is investing in securities, unless such entity has more than $1 billion in assets under management.

Subsequent Financings. Until at least 60 days after the Registration Statement is declared effective, Company will not issue or enter into an agreement to issue any shares of Common Stock, except as provided in subsections (a), (b), (c)(i), (c)(iii), (c)(iv), (c)(v) or (c)(vi) below. Until at least 6 months after the entire Debenture Preferred Shares and Warrant have been converted, redeemed or exercised, Company will not (1) enter into any agreement that in any way restricts its ability to enter into any agreement, amendment or waiver with Investor, including without limitation any agreement to offer, sell or issue to Investor any preferred stock, common stock or other securities of Company, (2) enter into any equity or convertible financing pursuant to which shares of Common Stock or Common Stock equivalents may effectively be issued (i) at a discount, (ii) at a variable price, or (iii) where the price or number of shares are subject to any type of variability or reset feature. Notwithstanding the preceding sentence, Company may enter into any financing: (a) with Investor; (b) for non-convertible debt with no equity component; or (c) issuing Common Stock or Common Stock equivalents at a fixed price (i) upon the exercise or exchange or conversion of any securities issued and outstanding on, and not amended or modified after, the Effective Date, (ii) in an underwritten public offering that does not include warrants and generates gross proceeds of at least $10 million, (iii) up to $250,000 per month in private placements of securities that are restricted for at least 6 months after issuance; (iv) in exchange for services pursuant to existing qualified incentive stock option plans, or pursuant to new plans duly adopted by the Board of Directors of the Company if the securities are restricted for at least 6 months after issuance, including options or other awards, to Company employees, officers, directors, or individual independent contractors specifically engaged in the operations or management of oil and gas field related activity and specifically excluding corporate contractors and general and administrative service providers, (v) as consideration for acquisitions, mergers, consolidations or strategic transactions, including licensing and partnering agreements, or purchase of all or substantially all of the securities or assets of another entity, or (vi) as consideration for an equipment loan or leasing arrangement, real property leasing arrangement, or debt financing, from a licensed commercial bank; provided however, with regard to any of the foregoing set forth in clauses (iv) through (vi), that (1) the primary purpose of such issuance is not to raise capital, (2) the purchasers or acquirers of the securities in such issuance do not include Company or any of its Subsidiaries and solely consists of either (w) the individuals actually providing the services, (x) the actual participants in such strategic alliance or strategic partnership, (y) the actual owners of such assets or securities acquired in such acquisition or merger or (z) the stockholders, partners or members of the foregoing Persons, (3) the number or amount of securities issued to such Person by the Company shall not be disproportionate to such Person’s actual participation in such strategic alliance or strategic partnership or ownership of such assets or securities to be acquired by the Company, or the value of services provided to the Company, as applicable, and (4) none of such Persons are an entity whose primary business is investing in securities, unless such entity has more than $1 billion in assets under management.