Common use of Warrants and Warrant Shares Clause in Contracts

Warrants and Warrant Shares. Investor may exercise its right to purchase shares of the Common Stock, pursuant to the Warrants, on the terms and conditions set forth in this section (the “Warrant Shares”). (a) No later than one (1) year after the date of registration with the SEC of any shares of the Common Stock of the Company for sale or resale to the public (“First Termination Date”), Investor may elect to purchase, whereupon the Company shall issue, pursuant to the terms and conditions of this Agreement, up to Two Hundred Forty-Three Thousand Sixty (243,060) Warrant Shares at an exercise price of One and 50/100 Dollars ($1.50) per share (“First Exercise Price”). Investor’s right to purchase any Warrant Shares pursuant to this subsection shall expire at 5:00 P.M. Pacific Time on the First Termination Date. (b) No later than two (2) years after the date of such registration of any shares of the Common Stock of the Company (“Second Termination Date”), Investor may elect to purchase, whereupon the Company shall issue, pursuant to the terms and conditions of this Agreement, up to Two Hundred Forty-Three Thousand Sixty (243,060) Warrant Shares at an exercise price of Two and No/100 Dollars ($2.00) per share (“Second Exercise Price”). Investor’s right to purchase any Warrant Shares pursuant to this subsection shall expire at 5:00 P.M. Pacific Time on the Second Termination Date. (c) No later than three (3) years after the date of such registration of any shares of the Common Stock of the Company (“Third Termination Date;” collectively with the First Termination Date and the Second Termination Date, the “Termination Dates”), Investor may elect to purchase, whereupon the Company shall issue, pursuant to the terms and conditions of this Agreement, up to Two Hundred Forty-Three Thousand Sixty (243,060) Warrant Shares at an exercise price of Two and 50/100 Dollars ($2.50) per share (“Third Exercise Price;” collectively with the First Exercise Price and the Second Exercise Price, the “Exercise Price”). Investor’s right to purchase any Warrant Shares pursuant to this subsection shall expire at 5:00 P.M. Pacific Time on the Third Termination Date. (d) Notwithstanding any other provision of this Agreement to the contrary, in no event shall Investor be permitted to purchase any Warrant Shares later than the date which is ten (10) years after the date of this Agreement, nor shall any Warrant be sold, transferred, assigned, hypothecated, pledged, or in any way alienated (each a “Transfer”) by Investor to any person and all such attempted or purported Transfers shall be null and void. (e) In order to exercise any right to purchase Warrant Shares, Investor shall deliver to the Company written and executed notice of Investor’s intent to exercise Investor’s right to purchase said Warrant Shares (the “Notice”). The Notice shall specify the number of Warrant Shares which Investor elects to purchase, the applicable Exercise Price per share, and the total price for all Warrant Shares which Investor intends to purchase. Unless the Notice is delivered before 5:00 P.M. Pacific Time on the applicable Termination Date, the Notice shall be null and void. (f) If the Notice is timely delivered to the Company, the purchase and sale of the Warrant Shares shall take place at the offices of the Company at 11:00 A.M., on the day which is ten (10) business days after the timely delivery of the Notice to the Company, or at such other time and place as the Company and the Investor mutually agree upon orally or in writing (each such time and place are designated as a “Warrant Closing”). At each Warrant Closing, the Company shall deliver to Investor a duly executed stock certificate representing the Warrant Shares that Investor is purchasing and Investor shall deliver to the Company the applicable Exercise Price and all other, documents and materials required pursuant to this Agreement. Notwithstanding any other provision of this Agreement to the contrary, in no event shall the Company be required to issue any Warrant Shares to Investor unless and until (i) such issuance is in compliance with all applicable federal and state securities laws, and (ii) all payments and other documents and materials required to be delivered by Investor have been received by the Company and all conditions of this Agreement have been fulfilled.