Common use of Subsequent Financings Clause in Contracts

Subsequent Financings. In the event on or before two (2) years from the date of this Agreement the Company enters into a securities purchase agreement or similar agreement to issue securities to any Purchaser in a financing, or series of financings, Seller shall have the right, but not the obligation, to purchase up to 20% of the securities proposed to be issued to such Purchaser under the same terms and conditions as offered to Purchasers (“Purchase Right”). In the event any Purchaser is obligated to offer the Purchase Right to Seller hereunder, such Purchaser shall provide written notice of such Purchase Right to Seller setting forth the terms and conditions of the Purchase Right (“Option Notice”). Seller shall have three (3) business days following receipt of the Option Notice to notify the Purchaser, in writing, of Seller’s election to exercise the Purchase Right. In the event Seller exercises the Purchase Right by delivering written notice of such election to the Purchaser with three (3) business days following receipt of the Option Notice, Purchaser shall assign its right to acquire the securities to Seller or otherwise assign the Purchase Right to the Seller, consistent with the terms and conditions set forth in this Section 4.1. In the event the Purchaser does not receive written notice from Seller of its election to exercise the Purchase Right, the Purchaser shall have the right to consummate the purchase of the securities from the Company, in whole or in part on substantially the terms and conditions set forth in the Option Notice. In the event the Purchaser fails to provide Seller with the Option Notice, Seller’s sole remedy shall be to provide written notice to the Purchaser of such Purchaser’s failure to provide the required Option Notice, and to immediately tender payment for such purchase to the Purchaser. Failure to pay the purchase price for the exercise of the Purchase Right within five (5) business days following Seller’s receipt of actual or constructive notice of the financing or series of financings giving rise to the Purchase Right shall constitute a waiver of Seller’s right to exercise the Purchase Right. The Purchasers agree and covenant not to enter into any agreement with the Company to purchase securities unless such agreement is assignable to Seller and/or such agreement includes reference to the Purchase Right granted to Seller hereunder.

Subsequent Financings. In (a) For a period of one (1) year following the following the effective date of the registration statement providing for the resale of the Conversion Shares and the Warrant Shares, the Company covenants and agrees to promptly notify (in no event on later than five (5) days after making or before receiving an applicable offer) in writing (a "Rights Notice") each Purchaser who has purchased at least $1,700,000 of Preferred Shares pursuant to this Agreement (an “Eligible Purchaser”) of the terms and conditions of any proposed offer or sale to, or exchange with (or other type of distribution to) any third party (a “Subsequent Financing”), of Common Stock or any debt or equity securities convertible, exercisable or exchangeable into Common Stock; provided, however, prior to delivering a Rights Notice to each Eligible Purchaser, the Company shall first deliver to each Eligible Purchaser a written notice of the Company’s intention to effect a Subsequent Financing (“Pre-Notice”) within three (3) Trading Days of receiving an applicable offer, which Pre-Notice shall ask such Eligible Purchaser if it wants to review the details of such financing. Each Eligible Purchaser must notify the Company within three (3) Trading Days of receipt of the Pre-Notice that such Eligible Purchaser elects to review the details of such financing (“Pre-Notice Acceptance”). Upon the Company’s receipt of a Pre-Notice Acceptance, and only upon the Company’s receipt of a Pre-Notice Acceptance, the Company shall promptly, but no later than two (2) years Trading Days after such receipt, deliver a Rights Notice to such Eligible Purchaser. The Rights Notice shall describe, in reasonable detail, the proposed Subsequent Financing, the names and investment amounts of all investors participating in the Subsequent Financing, the proposed closing date of the Subsequent Financing, which shall be within twenty (20) calendar days from the date of the Rights Notice, and all of the terms and conditions thereof and proposed definitive documentation to be entered into in connection therewith. The Rights Notice shall provide each Eligible Purchaser an option (the “Rights Option”) during the seven (7) Trading Days following delivery of the Rights Notice (the “Option Period”) to inform the Company whether such Eligible Purchaser will purchase up to its pro rata portion of all or a portion of the securities being offered in such Subsequent Financing on the same, absolute terms and conditions as contemplated by such Subsequent Financing. If any Eligible Purchaser elects not to participate in such Subsequent Financing, the other Eligible Purchasers may participate on a pro-rata basis so long as such participation in the aggregate does not exceed the aggregate Purchase Price of all Eligible Purchasers hereunder. For purposes of this Section, all references to “pro rata” means, for any Eligible Purchaser electing to participate in such Subsequent Financing, the percentage obtained by dividing (x) the number of Preferred Shares purchased by such Eligible Purchaser at the Closing by (y) the total number of all of the Preferred Shares purchased by all of the participating Eligible Purchasers at the Closing. Delivery of any Rights Notice constitutes a representation and warranty by the Company that there are no other material terms and conditions, arrangements, agreements or otherwise except for those disclosed in the Rights Notice, to provide additional compensation to any party participating in any proposed Subsequent Financing, including, but not limited to, additional compensation based on changes in the Purchase Price or any type of reset or adjustment of a purchase or conversion price or to issue additional securities at any time after the closing date of a Subsequent Financing. If the Company does not receive notice of exercise of the Rights Option from the Eligible Purchasers within the Option Period, the Company shall have the right to close the Subsequent Financing on the scheduled closing date with a third party; ­ provided that all of the material terms and conditions of the closing are the same as those provided to the Eligible Purchasers in the Rights Notice. If the closing of the proposed Subsequent Financing does not occur on that date, any closing of the contemplated Subsequent Financing or any other Subsequent Financing shall be subject to all of the provisions of this Section 3.21(a), including, without limitation, the delivery of a new Rights Notice. The provisions of this Section 3.21(a) shall not apply to issuances of securities in a Permitted Financing. (b) For purposes of this Agreement, a Permitted Financing (as defined hereinafter) shall not be considered a Subsequent Financing. A "Permitted Financing" shall mean (i) securities issued (other than for cash) in connection with a merger, acquisition, or consolidation, (ii) securities issued pursuant to the conversion or exercise of convertible or exercisable securities issued or outstanding on or prior to the date of this Agreement or issued pursuant to this Agreement (so long as the Company enters into a conversion or exercise price in such securities are not amended to lower such price and/or adversely affect the Purchasers), (iii) securities issued in connection with bona fide strategic license agreements or other partnering arrangements so long as such issuances are not for the purpose of raising capital, (iv) Common Stock issued or the issuance or grants of options to purchase agreement or similar agreement Common Stock pursuant to issue securities to any Purchaser in a financingthe Company’s stock option plans and employee stock purchase plans outstanding as they exist on the date of this Agreement, (v) the payment of dividends on the Preferred Shares, or series other preferred stock issued and outstanding on or prior to the date of financingsthis Agreement, Seller shall have in shares of Common Stock, (vi) the right, but not the obligation, to purchase issuance of up to 20% 500,000 shares of the securities proposed Common Stock relating to be investor relations or public relations activities, and (vi) any warrants issued to such Purchaser under the same terms placement agent and conditions as offered to Purchasers (“Purchase Right”). In its designees for the event any Purchaser is obligated to offer transactions contemplated by the Purchase Right to Seller hereunder, such Purchaser shall provide written notice of such Purchase Right to Seller setting forth the terms and conditions of the Purchase Right (“Option Notice”). Seller shall have three (3) business days following receipt of the Option Notice to notify the Purchaser, in writing, of Seller’s election to exercise the Purchase Right. In the event Seller exercises the Purchase Right by delivering written notice of such election to the Purchaser with three (3) business days following receipt of the Option Notice, Purchaser shall assign its right to acquire the securities to Seller or otherwise assign the Purchase Right to the Seller, consistent with the terms and conditions set forth in this Section 4.1. In the event the Purchaser does not receive written notice from Seller of its election to exercise the Purchase Right, the Purchaser shall have the right to consummate the purchase of the securities from the Company, in whole or in part on substantially the terms and conditions set forth in the Option Notice. In the event the Purchaser fails to provide Seller with the Option Notice, Seller’s sole remedy shall be to provide written notice to the Purchaser of such Purchaser’s failure to provide the required Option Notice, and to immediately tender payment for such purchase to the Purchaser. Failure to pay the purchase price for the exercise of the Purchase Right within five (5) business days following Seller’s receipt of actual or constructive notice of the financing or series of financings giving rise to the Purchase Right shall constitute a waiver of Seller’s right to exercise the Purchase Right. The Purchasers agree and covenant not to enter into any agreement with the Company to purchase securities unless such agreement is assignable to Seller and/or such agreement includes reference to the Purchase Right granted to Seller hereunderAgreement.