Common use of Exceptions to Adjustment of Exercise Price Clause in Contracts

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved by the independent members of the Board of Directors or by the Company’s shareholders, or (y) consultants, either directly or pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors or by the Company’s shareholders; (IV) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; and (V) shares of Common Stock issued to Persons in connection with a joint venture, strategic alliance or other commercial relationship with such Person relating to the operation of the Company’s business and not for the primary purpose of raising equity capital.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall will be made pursuant to under this paragraph (cSection 3(b) upon the issuance in respect of any Excluded Securities. For purposes hereof, “Excluded Securities” means the issuance of (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (IIIa) shares of Common Stock issuable or issued options to (x) employees employees, officers or directors from time of, or consultants to, the Company pursuant to time either directly any stock option agreement, stock option plan or upon the exercise of options, in such case granted or to be granted in the discretion equity incentive plan duly adopted by a majority of the Board of Directors, as approved by the independent members of the Board, pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved by the independent non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose (for purposes of clarity, the issuance of shares of Common Stock upon exercise of options granted pursuant to a stock option agreement, stock option plan or equity incentive plan subsequent to the date hereof shall also be Excluded Securities), (b) securities upon the exercise or exchange of or conversion of (i) any Securities issued in connection with the Purchase Agreement; (ii) securities to a registered broker-dealer in connection with the transactions contemplated by the Company’s shareholders, Purchase Agreement; and/or (iii) other securities or (y) consultants, either directly rights exercisable or pursuant to warrants to purchase exchangeable for or convertible into shares of Common Stock that which are issued and outstanding on the date hereof or issued hereafterof the Purchase Agreement, provided that such issuances are securities have not been amended since the date of the Purchase Agreement (other than on a non-discretionary basis pursuant to the pre-existing anti-dilution provisions thereof) to increase the number of such securities or to decrease the exercise, exchange or conversion price of any such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by the independent members a majority of the Board disinterested directors, provided any such issuance shall only be to a Person which is, itself or through its subsidiaries, an operating company in a business synergistic with the business of Directors the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or by the Company’s shareholders; to an entity whose primary business is investing in securities, (IVd) shares of Common Stock or other securities issued in connection with any Convertible Securities stock split, stock dividend or Purchase Rights outstanding on recapitalization of the date Company (subject to Section 3(a) hereof; ), and (Ve) shares of Common Stock or other securities issued to Persons in connection with a joint venture, strategic alliance or other commercial relationship with such Person relating to the operation of the Company’s business and not for the any registered primary purpose of raising equity capitalpublic offering.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of by the Board of Directors, as approved by the independent members of the Board, pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved by the independent members of the Board of Directors or by the Company’s shareholdersstockholders, or (y) consultants, either directly or pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors or by the Company’s shareholdersstockholders; (IV) except as required by subparagraph (c)(ii)(E) above, shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; and (V) shares of Common Stock issued to Persons a Person in connection with a joint venture, strategic alliance or other commercial relationship with such Person relating to the operation of the Company’s business and not for the primary purpose of raising equity capital; and (VI) securities issued with respect to which the Holders consents that no such adjustment shall be made as a result of such issuance.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “"Excluded Securities” " means ------------------- (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion exercise of the Preferred Shares Additional Investment Rights or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, Directors pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Issue Date or approved adopted after the Issue Date by the independent members of the Board of Directors or by with substantially the Company’s shareholderssame terms as such plans in effect as of the Issue Date, or and (y) consultants, either directly or vendors pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors or by the Company’s shareholdersDirectors; (IV) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company; (V) shares of Common Stock issued in connection with the acquisition by the Company of any corporation or other entity occurring after the Effective Date and as long as a fairness opinion with respect to such acquisition is rendered by an investment bank of national recognition; (VI) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; hereof and (VVII) shares of Common Stock issued to Persons in connection with whom the Corporation is entering into a joint venture, strategic alliance or other commercial relationship in connection with such Person relating to the operation of the Company’s 's business and not for in connection with a transaction the primary purpose of raising which is to raise equity capital.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall will be made pursuant to under this paragraph (cSection 3(b) upon the issuance in respect of any Excluded Securities. For purposes hereof, “Excluded Securities” means the issuance of (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (IIIa) shares of Common Stock issuable or issued options to (x) employees employees, officers or directors from time of, or consultants to, the Company pursuant to time either directly any stock option agreement, stock option plan or upon the exercise of options, in such case granted or to be granted in the discretion equity incentive plan duly adopted by a majority of the Board of Directors, as approved by the independent members of the Board, pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved by the independent non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose (for purposes of clarity, the issuance of shares of Common Stock upon exercise of options granted pursuant to a stock option agreement, stock option plan or equity incentive plan subsequent to the date hereof shall also be Excluded Securities), (b) securities upon the exercise or exchange of or conversion of (i) any Securities issued under the Purchase Agreement; (ii) securities to a registered broker-dealer in connection with the transactions contemplated by the Company’s shareholders, Purchase Agreement; and/or (iii) other securities or (y) consultants, either directly rights exercisable or pursuant to warrants to purchase exchangeable for or convertible into shares of Common Stock that which are issued and outstanding on the date hereof or issued hereafterof the Purchase Agreement, provided that such issuances are securities have not been amended since the date of the Purchase Agreement (other than on a non-discretionary basis pursuant to the pre-existing anti-dilution provisions thereof) to increase the number of such securities or to decrease the exercise, exchange or conversion price of any such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by the independent members a majority of the Board disinterested directors, provided any such issuance shall only be to a Person which is, itself or through its subsidiaries, an operating company in a business synergistic with the business of Directors the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or by the Company’s shareholders; to an entity whose primary business is investing in securities, (IVd) shares of Common Stock or other securities issued in connection with any Convertible Securities stock split, stock dividend or recapitalization of the Company (subject to Section 3(a) and Section 4.14 of the Purchase Rights outstanding on the date Agreement hereof; ), and (Ve) shares of Common Stock or other securities issued to Persons in connection with a joint venture, strategic alliance or other commercial relationship with such Person relating to the operation of the Company’s business and not for the any registered primary purpose of raising equity capitalpublic offering.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “"Excluded Securities” " means (IA) securities purchased under the Securities Purchase Agreement; (IIB) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (IIIC) shares of Common Stock issuable or issued to (x) employees employees, consultants, officers or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of by the Board of Directors, as approved by the independent members of the BoardDirectors or a committee thereof, pursuant to one or more stock option plans, stock incentive plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved by the independent members of the Board of Directors or by including a majority of the Company’s shareholders's independent directors (as such term is defined under Rule 4200(a)(15) of the Nasdaq Market Rules), or (y) consultants, either directly consultants or vendors pursuant to options or warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members Board of Directors; provided, that in the case of any such options described in this clause (C) that are issued after the date hereof, only options exercisable for a maximum of 10% of the Board number of Directors or by shares outstanding on the Company’s shareholdersClosing Date shall be included as "Excluded Securities" (it being understood that such number does not include any options the issuance of which is not a Dilutive Issuance); (IVD) except as required by paragraph (c)(ii)(E) above, shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; and (VE) shares of Common Stock issued to Persons a Person in connection with a joint venture, strategic alliance or other commercial relationship with such Person relating to the operation of the Company’s 's business and not for the primary purpose of raising equity capital; (F) shares of Common Stock issued in connection with the acquisition by the Company of any corporation or other entity or of substantially all of the assets of any corporation or other entity or division or business unit thereof occurring after the Effective Date.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no No adjustment to the Exercise Price shall will be made pursuant to this paragraph (cA) upon the issuance exercise of any Excluded Securities. For purposes hereofwarrants, “Excluded Securities” means (Ioptions or convertible securities issued and outstanding on the Issue Date and set forth on Schedule 3(d) securities purchased under of the Securities Purchase AgreementAgreement in accordance with the terms of such securities as of such date, except to the extent provided for pursuant to (v) above; (IIB) securities issued upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any employee benefit plan of the Company now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose; (C) upon conversion of the Preferred Shares Notes or exercise of the Warrants; (IIID) shares upon the issuance of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved by the independent members of the Board of Directors or by the Company’s shareholders, or (y) consultants, either directly or pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors or by the Company’s shareholders; (IV) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; and (V) shares of Common Stock issued to Persons in connection with a joint venturesubdivision of Common Stock (by any stock split, strategic alliance stock dividend, recapitalization, reorganization, reclassification or other commercial relationship with such Person relating otherwise) or a combination of Common Stock (by reverse stock split, recapitalization, reorganization, reclassification or otherwise), provided, however, that the holder of this Warrant shall be entitled to the operation adjustment of the Company’s business Exercise Price to be made after the date of record for effecting such subdivision or combination as described in Section 4(c) hereof; or (E) upon the issuance of Common Stock or Convertible Securities in connection with mergers and not for acquisitions in which the primary purpose of raising equity capitalCompany is the surviving entity.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Debentures or the Warrants; (III) shares of Common Stock issuable or issued to (x) employees employees, consultants or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, Directors pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Issue Date or approved adopted after the Issue Date by the independent members of the Board of Directors or by with substantially the Company’s shareholderssame terms as such plans in effect as of the Issue Date, or and (y) consultants, either directly or vendors pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members Board of Directors; (IV) any borrowings, direct or indirect, from financial institutions by the Company that are approved by the Board of Directors Directors, including any type of loan or payment evidenced by any type of Debt instrument, provided the equity portion of any such borrowings, including warrants, options or other rights to purchase capital stock and other interests convertible into capital stock of the Company, does not exceed ten percent (10%) of such borrowing; (V) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company; (VI) shares of Common Stock issued in connection with the acquisition by the Company’s shareholdersCompany of any corporation or other entity occurring after the Effective Date and as long as a fairness opinion with respect to such acquisition is rendered by an investment bank of national recognition; (IVVII) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; hereof and (VVIII) shares of Common Stock issued to Persons in connection with whom the Corporation is entering into a joint venture, strategic alliance or other commercial relationship in connection with such Person relating to the operation of the Company’s Company ‘s business and not for in connection with a transaction the primary purpose of raising which is to raise equity capital.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” "EXCLUDED SECURITIES" means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, Directors pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Issue Date or approved adopted after the Issue Date by the independent members of the Board of Directors or by with substantially the Company’s shareholderssame terms as such plans in effect as of the Issue Date, or and (y) consultants, either directly or vendors pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors or by the Company’s shareholdersDirectors; (IV) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company; (V) shares of Common Stock issued in connection with the acquisition by the Company of any corporation or other entity occurring after the Effective Date and as long as a fairness opinion with respect to such acquisition is rendered by an investment bank of national recognition; (VI) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; (VII) any Common Stock, warrants to purchase Common Stock, options to purchase Common Stock, or any other securities that the Company issued, or which the Company was obligated to issue, prior to or on September 20, 2005; and (VVIII) shares any issuance of Common Stock Stock, warrants to purchase Common Stock, options to purchase Common Stock, or any other securities issued to Persons investors, brokers, dealers or any other persons or entities in connection with a joint ventureconjunction with, strategic alliance or other commercial relationship with such Person relating and/or pursuant to the operation of terms of, the Company’s business and not for the primary purpose of raising equity capital's Private Placement Memorandum dated March 15, 2005, as amended.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) Section 2.3 upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (IA) securities purchased under the Securities Purchase Subscription Agreement; (IIB) securities issued upon conversion of the Preferred Shares or exercise of the WarrantsWarrants or upon the warrants issued third parties as provided for in the Subscription Agreement; (IIIC) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved by the independent members of the Board of Directors or adopted by the Company’s shareholders, or (y) consultantsto consultants or vendors, either directly or pursuant to warrants or other convertible securities to purchase acquire shares of Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors or by the Company’s shareholders; (IVD) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights Common Stock Equivalents outstanding on the date hereof; and (VE) shares of Common Stock or Common Stock Equivalents issued to Persons third parties in connection with a merger, acquisition, consolidation, joint venture, strategic alliance or other commercial relationship with such Person third party relating to the operation of the Company’s business and not for business, the primary purpose of raising which is not to raise equity capital; and (F) shares of Common Stock or other securities issued in connection with any stock split, stock dividend or recapitalization of the Company.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (cSection 4(c) upon the issuance of any Excluded SecuritiesSecurities and in no event shall the Exercise Price be adjusted pursuant to Section 4(c) to a price less than $1.20 per Warrant Share. For purposes hereof, “Excluded Securities” means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees employees, consultants or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, Directors pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved by the independent members of the Board of Directors or by the Company’s shareholders, or (y) consultants, either directly or pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors or by the Company’s shareholdersIssue Date; (IV) shares of Common Stock issued in connection with any Convertible Securities stock split, stock dividend or Purchase Rights outstanding on recapitalization of the date hereofCompany; and (V) shares of Common Stock securities issued to Persons in connection with a joint venture, strategic alliance bona fide licensing or other commercial relationship with such Person relating to the operation of the Company’s business and strategic transactions not for the primary purpose of raising equity capitalcapital approved by the Board of Directors; and (VI) shares of Common Stock issued in connection with the acquisition by the Company of any corporation or other entity occurring after the Effective Date and as long as a fairness opinion with respect to such acquisition is rendered by an investment bank of national recognition.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” "EXCLUDED SECURITIES" means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion exercise of the Preferred Shares Additional Investment Rights or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, Directors pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Issue Date or approved adopted after the Issue Date by the independent members of the Board of Directors or by with substantially the Company’s shareholderssame terms as such plans in effect as of the Issue Date, or and (y) consultants, either directly or vendors pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors or by the Company’s shareholdersDirectors; (IV) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company; (V) shares of Common Stock issued in connection with the acquisition by the Company of any corporation or other entity occurring after the Effective Date and as long as a fairness opinion with respect to such acquisition is rendered by an investment bank of national recognition; (VI) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; hereof and (VVII) shares of Common Stock issued to Persons in connection with whom the Corporation is entering into a joint venture, strategic alliance or other commercial relationship in connection with such Person relating to the operation of the Company’s 's business and not for in connection with a transaction the primary purpose of raising which is to raise equity capital.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) above upon the issuance of any Excluded Securities. For purposes hereof, “"Excluded Securities” " means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees employees, consultants or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, Directors pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Issue Date or approved adopted after the Issue Date by the independent members of the Board of Directors or by with substantially the Company’s shareholderssame terms as such plans in effect as of the Issue Date, or (y) consultants, either directly or vendors pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the Board of Directors; (IV) shares of Common Stock issued in connection with a commercial lending transaction with a federally-insured financial institution that is approved by the independent members of the Board of Directors Directors, provided that the fair market value of such shares does not exceed ten percent (10%) of the amount borrowed; (V) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company; (VI) shares of Common Stock issued in connection with the acquisition by the Company’s shareholdersCompany of any corporation or other entity occurring after the Effective Date, provided that a fairness opinion with respect to such acquisition is rendered by an investment bank of national recognition; (IVVII) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereofhereof and disclosed in a schedule to the Securities Purchase Agreement; and (VVIII) shares of Common Stock issued to Persons in connection with whom the Company is entering into a joint venture, strategic alliance or other commercial relationship in connection with such Person relating to the operation of the Company’s 's business and not for in connection with a transaction the primary purpose of raising which is to raise equity capital.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall will be made pursuant to under this paragraph (cSection 3(b) upon in respect of Excluded Securities. "Excluded Securities" means the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (IIIa) shares of Common Stock issuable or issued options to (x) employees employees, officers or directors from time of, or consultants to, the Company pursuant to time either directly any stock option agreement, stock option plan or upon the exercise of options, in such case granted or to be granted in the discretion equity incentive plan duly adopted by a majority of the Board of Directors, as approved by the independent members of the Board, pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved by the independent non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose (for purposes of clarity, the issuance of shares of Common Stock upon exercise of options granted pursuant to a stock option agreement, stock option plan or equity incentive plan subsequent to the date hereof shall also be Excluded Securities), (b) securities upon the exercise or exchange of or conversion of (i) any Securities issued in connection with the Purchase Agreement; (ii) securities to a registered broker-dealer in connection with the transactions contemplated by the Company’s shareholders, Purchase Agreement; and/or (iii) other securities or (y) consultants, either directly rights exercisable or pursuant to warrants to purchase exchangeable for or convertible into shares of Common Stock that which are issued and outstanding on the date hereof or issued hereafterof the Purchase Agreement, provided that such issuances are securities have not been amended since the date of the Purchase Agreement (other than on a non-discretionary basis pursuant to the pre-existing anti-dilution provisions thereof) to increase the number of such securities or to decrease the exercise, exchange or conversion price of any such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by the independent members a majority of the Board disinterested directors, provided any such issuance shall only be to a Person which is, itself or through its subsidiaries, an operating company in a business synergistic with the business of Directors the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or by the Company’s shareholders; to an entity whose primary business is investing in securities, (IVd) shares of Common Stock or other securities issued in connection with any Convertible Securities stock split, stock dividend or Purchase Rights outstanding on recapitalization of the date Company (subject to Section 3(a) hereof; ), and (Ve) shares of Common Stock or other securities issued to Persons in connection with a joint venture, strategic alliance or other commercial relationship with such Person relating to the operation of the Company’s business and not for the any registered primary purpose of raising equity capitalpublic offering.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “"Excluded Securities” " means (I) ------------------- securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, Directors (or a duly authorized committee thereof) pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Issue Date or approved adopted after the Issue Date by the independent members of the Board of Directors (or a duly authorized committee thereof) or by the Company’s 's shareholders, or (y) consultantsvendors, either directly or pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors (or a duly authorized committee thereof) or by the Company’s 's shareholders; (IV) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company; (V) shares of Common Stock issued in connection with the acquisition by the Company or a Subsidiary of any Person or business not for the purpose or with the effect of raising equity capital; (VI) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; and (VVII) shares of Common Stock issued to Persons in connection with whom the Company or a Subsidiary is entering into a joint venture, strategic alliance or other commercial relationship in connection with such Person relating to the operation of the Company’s 's business and not for in connection with a transaction the primary purpose of raising which is to raise equity capital; (VIII) shares of Common Stock, Convertible Securities or Purchase Rights issued in connection with the settlement of a bona fide litigation approved by the Board of Directors; and (IX) shares of Common Stock issued to a Subsidiary under a share exchange agreement.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Execution Date or approved by the independent members of the Board of Directors or by the Company’s shareholders, or (y) consultants, either directly or pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors or by the Company’s shareholders; (IV) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; and (V) shares of Common Stock issued to Persons a Person in connection with a joint venture, strategic alliance or other commercial relationship with such Person relating to the operation of the Company’s business and not for the primary purpose of raising equity capital.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of by the Board of Directors, as approved by the independent members of the Board, pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved by the independent members of the Board of Directors or by the Company’s shareholdersstockholders, or (y) consultants, either directly or pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors or by the Company’s shareholdersstockholders; (IV) except as required by subparagraph (c)(ii)(E) above, shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; and (V) shares of Common Stock issued to Persons a Person in connection with a joint venture, strategic alliance or other commercial relationship with such Person relating to the operation of the Company’s business and not for the primary purpose of raising equity capital; and (VI) securities issued with respect to which the Holders consents that no such adjustment shall be made as a result of such issuance.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” "EXCLUDED SECURITIES" means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, Directors pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Issue Date or approved adopted after the Issue Date by the independent members of the Board of Directors or by with substantially the Company’s shareholderssame terms as such plans in effect as of the Issue Date, or and (y) consultants, either directly or vendors pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors or by the Company’s shareholdersDirectors; (IV) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company; (V) shares of Common Stock issued in connection with the acquisition by the Company of any corporation or other entity occurring after the Effective Date and as long as a fairness opinion with respect to such acquisition is rendered by an investment bank of national recognition; and (VI) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; and (V) shares of Common Stock issued to Persons in connection with a joint venture, strategic alliance or other commercial relationship with such Person relating to the operation of the Company’s business and not for the primary purpose of raising equity capital.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “"Excluded Securities” " means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Debentures or the Warrants; (III) shares of Common Stock issuable or issued to (x) employees employees, consultants or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, Directors pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Issue Date or approved adopted after the Issue Date by the independent members of the Board of Directors or by with substantially the Company’s shareholderssame terms as such plans in effect as of the Issue Date, or (y) consultants, either directly or vendors pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the Board of Directors; (IV) shares of Common Stock issued in connection with a commercial lending transaction with a federally- insured financial institution that is approved by the independent members of the Board of Directors Directors, provided that the fair market value of such shares does not exceed ten percent (10%) of the amount borrowed; (V) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company; (VI) shares of Common Stock issued in connection with the acquisition by the Company’s shareholdersCompany of any corporation or other entity occurring after the Effective Date, provided that, if in connection with such acquisition, the Company will issue a number of shares equal to or greater than 20% of the number of shares of Common Stock issued and outstanding immediately prior to the consummation of such acquisition, the Company shall obtain a fairness opinion with respect to such acquisition from an investment bank of national recognition; (IVVII) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereofhereof and disclosed in a schedule to the Securities Purchase Agreement; and (VVIII) shares of Common Stock issued to Persons in connection with whom the Company is entering into a joint venture, strategic alliance or other commercial relationship in connection with such Person relating to the operation of the Company’s 's business and not for in connection with a transaction the primary purpose of raising which is to raise equity capital.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “"Excluded Securities” " means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Issue Date or subsequently approved by the independent members of the Board of Directors or by the Company’s shareholders's stockholders, or (y) consultantsconsultants or vendors, either directly or pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors or by the Company’s shareholders's stockholders; (IV) except as required by subparagraph (c)(ii)(E) above, shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; and (V) shares of Common Stock issued to Persons a Person in connection with a joint venture, strategic alliance or other commercial relationship with such Person relating to the operation of the Company’s 's business and not for the primary purpose of raising equity capital; (VI) shares of Common Stock issued in connection with the acquisition by the Company of any corporation or other entity (including, without limitation, the interests in certain limited partnerships of which the Company or a Subsidiary is a general partner); and (VII) securities issued pursuant to a bona fide firm commitment underwritten public offering. For purposes hereof, approval by the independent members of the Board of Directors shall mean the approval of a majority of the independent members of the Board, which majority shall include not fewer than four (4) independent directors (as such term is defined under Rule 4200(a)(15) of the Nasdaq Market Rules).

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares Stock or exercise of the WarrantsWarrants or the VeriChip Warrant; (III) the 2004 Warrants (as defined in the Securities Purchase Agreement) and securities issued or issuable thereunder; (IV) shares of Common Stock (or the common stock of any Subsidiary) issuable or issued to (x) employees or directors of the Company or any such Subsidiary from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Company’s or such Subsidiary’s Board of Directors, Directors (or a duly authorized committee thereof) as approved by an inducement to join the independent members of the Board, Company or such Subsidiary or pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved adopted after the Closing Date by the independent members of the Company’s or such Subsidiary’s Board of Directors (or a duly authorized committee thereof) or by the Company’s or such Subsidiary’s shareholders, or (y) vendors, service providers or consultants, either directly or pursuant to options or warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Company’s or such Subsidiary’s Board of Directors (or a duly authorized committee thereof) or by the Company’s or such Subsidiary’s shareholders; (IVV) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company or any of its Subsidiaries; (VI) shares of Common Stock issued in connection with the acquisition by the Company of any corporation or other entity occurring after the Effective Date; (VII) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereofhereof and disclosed on Schedule 3.5 to the Securities Purchase Agreement; and (VIX) shares of Common Stock issued to Persons in connection with whom the Company or any of its Subsidiaries is entering into a joint venture, strategic alliance or other commercial relationship in connection with such Person relating to the operation of the Company’s or any such Subsidiary’s business and not for in connection with a transaction the primary purpose of raising which is to raise equity capital; (VIII) shares of Common Stock, Convertible Securities or Purchase Rights issued in connection with the settlement of a bona fide litigation approved by the Company’s or such Subsidiary’s Board of Directors and (IX) shares issued to a Subsidiary pursuant to a share exchange.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Debentures or the Warrants; (III) shares of Common Stock issuable or issued to (x) employees employees, consultants or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, Directors pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Issue Date or approved adopted after the Issue Date by the independent members of the Board of Directors or by with substantially the Company’s shareholderssame terms as such plans in effect as of the Issue Date, or (y) consultants, either directly or vendors pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the Board of Directors; (IV) shares of Common Stock issued in connection with a commercial lending transaction with a federally-insured financial institution that is approved by the independent members of the Board of Directors Directors, provided that the fair market value of such shares does not exceed ten percent (10%) of the amount borrowed; (V) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company; (VI) shares of Common Stock issued in connection with the acquisition by the Company’s shareholdersCompany of any corporation or other entity occurring after the Effective Date, provided that, if in connection with such acquisition, the Company will issue a number of shares equal to or greater than 20% of the number of shares of Common Stock issued and outstanding immediately prior to the consummation of such acquisition, the Company shall obtain a fairness opinion with respect to such acquisition from an investment bank of national recognition; (IVVII) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereofhereof and disclosed in a schedule to the Securities Purchase Agreement; and (VVIII) shares of Common Stock issued to Persons in connection with whom the Company is entering into a joint venture, strategic alliance or other commercial relationship in connection with such Person relating to the operation of the Company’s business and not for in connection with a transaction the primary purpose of raising which is to raise equity capital.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of by the Board of Directors, as approved by the independent members of the Board, pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved by the independent members of the Board of Directors or by the Company’s shareholdersstockholders, including Battery Ventures IX, L.P. (“Battery”) and PAR Investment Partners, L.P. (“PAR”), or (y) consultants, either directly or pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors Directors, including the Battery representative and the PAR representative, or by the Company’s shareholdersstockholders, including Battery and PAR; (IV) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; and (V) shares of Common Stock issued to Persons a Person in connection with a joint venture, strategic alliance or other commercial relationship with such Person relating to the operation of the Company’s business and not for the primary purpose of raising equity capital; and (VI) securities issued with respect to which the Holders consent that no such adjustment shall be made as a result of such issuance.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (I) securities purchased under the Securities Purchase Agreementand the Existing Securities (as defined in the Debentures); (II) securities issued upon conversion of the Preferred Shares or exercise of the WarrantsExisting Securities; (III) shares of Common Stock issuable or issued to (x) employees employees, consultants or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, Directors pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Issue Date or approved adopted after the Issue Date by the independent members of the Board of Directors or by with substantially the Company’s shareholderssame terms as such plans in effect as of the Issue Date, or and (y) consultants, either directly or vendors pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members Board of Directors; (IV) any borrowings, direct or indirect, from financial institutions by the Company that are approved by the Board of Directors Directors, including any type of loan or payment evidenced by any type of Debt instrument, provided the value of the equity portion of any such borrowings, including warrants, options or other rights to purchase capital stock and other interests convertible into capital stock of the Company, does not exceed ten percent (10%) of such borrowing; (V) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company; (VI) shares of Common Stock issued in connection with the acquisition by the Company’s shareholdersCompany of any corporation or other entity occurring after the Effective Date and as long as a fairness opinion with respect to such acquisition is rendered by an investment bank of national recognition; (IVVII) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof, including, without limitation, the Existing Securities; and (VVIII) shares of Common Stock issued to Persons in connection with whom the Company is entering into a joint venture, strategic alliance or other commercial relationship in connection with such Person relating to the operation of the Company’s Company ‘s business and not for in connection with a transaction the primary purpose of raising which is to raise equity capital.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (cSection 6(c) upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees employees, consultants or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, Directors pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved by the independent members of the Board of Directors or by the Company’s shareholders, or (y) consultants, either directly or pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors or by the Company’s shareholdersIssue Date; (IV) shares of Common Stock issued in connection with any Convertible Securities stock split, stock dividend or Purchase Rights outstanding on recapitalization of the date hereofCompany; and (V) shares of Common Stock securities issued to Persons in connection with a joint venture, strategic alliance bona fide licensing or other commercial relationship with such Person relating to the operation of the Company’s business and strategic transactions not for the primary purpose of raising equity capitalcapital approved by the Board of Directors; (VI) shares of Common Stock issued in connection with the acquisition by the Company of any corporation or other entity occurring after the Effective Date and as long as a fairness opinion with respect to such acquisition is rendered by an investment bank of national recognition; and (VII) 233,853 shares of Common Stock issuable to SRI International pursuant to that certain Warrant and Shareholder Rights Agreement (the “SRI Warrant”) issued by the Company to SRI on October 6, 2000 (plus any additional shares of Common Stock that may become issuable under the SRI Warrant in order to prevent dilution resulting from any stock split, stock dividend, recapitalization, reorganization, reclassification or other event that subdivides all of the outstanding shares of Common Stock).

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c6(c) upon the issuance of any Excluded Securities. For purposes hereof, “"Excluded Securities” " means (I) securities purchased under the Securities Purchase AgreementAgreement (including all securities issued to any finder or broker for facilitating the purchase of the Debentures and the Warrants); (II) securities issued upon conversion of the Preferred Shares or exercise of the Debentures or Warrants; (III) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, Directors (or a duly authorized committee thereof) pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved adopted after the Closing Date by the independent members of the Board of Directors (or a duly authorized committee thereof) or by the Company’s 's shareholders, or (y) consultantsvendors, either directly or pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors (or a duly authorized committee thereof) or by the Company’s 's shareholders; (IV) any borrowings, direct or indirect, from financial institutions by the Company that are approved by the Board of Directors, including any type of loan or payment evidenced by any type of Debt instrument, provided the value of the equity portion of any such borrowings, including warrants, options or other rights to purchase capital stock and other interests convertible into capital stock of the Company, does not exceed ten percent (10%) of such borrowing (or, in the case of a borrowing under the existing working capital facility provided by ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Related Parties, does not exceed forty percent (40%) of such borrowing); (V) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company; (VI) shares of Common Stock issued in connection with the acquisition by the Company of any corporation or other entity occurring after the Initial Effective Date; (VII) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; and (VVIII) shares of Common Stock issued to Persons in connection with whom the Company is entering into a joint venture, strategic alliance or other commercial relationship in connection with such Person relating to the operation of the Company’s 's business and not for in connection with a transaction the primary purpose of raising which is to raise equity capital, (IX) shares of Common Stock issued pursuant to a registered public offering underwritten on a best efforts basis by ▇▇▇▇▇▇▇ ▇▇▇▇▇ or a nationally-recognized investment bank with net proceeds to the Company of at least fifteen million dollars ($15,000,000), and (X) the Additional Registrable Securities (as defined in the Registration Rights Agreement).

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “"Excluded Securities” " means (I) securities ------------------- purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, Directors (or a duly authorized committee thereof) pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Issue Date or approved adopted ----------------------- after the Issue Date by the independent members of the Board of Directors (or a duly authorized committee thereof) or by the Company’s 's shareholders, or (y) consultantsvendors, either directly or pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors (or a duly authorized committee thereof) or by the Company’s 's shareholders; (IV) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company; (V) shares of Common Stock issued in connection with the acquisition by the Company or a Subsidiary of any Person --------------- or business not for the purpose or with the effect of raising equity capital; (VI) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; and (VVII) shares of Common Stock issued to Persons in connection with whom the Corporation is entering into a joint venture, strategic alliance or other commercial relationship in connection with such Person relating to the operation of the Company’s 's business and not for in connection with a transaction the primary purpose of raising which is to raise equity capital; and (VIII) shares of Common Stock, Convertible Securities or Purchase Rights issued in connection with the settlement of a bona fide litigation approved by the Board of Directors.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “"Excluded Securities” " means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) securities issued upon the exercise of stock options and warrants outstanding as of the date hereof, (IV) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved by the independent members of the Board of Directors or by the Company’s shareholdersDate, or (y) consultants, either directly or pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors or by the Company’s 's shareholders; (IV) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; and (V) shares of Common Stock issued to Persons a Person in connection with a joint venture, strategic alliance or other commercial relationship with such Person relating to the operation of the Company’s 's business and not for the primary purpose of raising equity capital, (VI) up to an additional $3 million of securities that may be directly placed by the Company with its existing shareholders, within 45 days from the date hereof, on the same terms and conditions as the sale of the Securities pursuant to the Purchase Agreement, and (VII) the issuance of up to 100,000 shares to legal counsel for services rendered or to be rendered in connection with the transactions contemplated by this Agreement.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of by the Board of Directors, as approved by the independent members of the Board, pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved by the independent members of the Board of Directors or by the Company’s shareholdersstockholders, including Batter Ventures IX, L.P. (“Battery”), or (y) consultants, either directly or pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors Directors, including the Battery representative, or by the Company’s shareholdersstockholders, including Battery; (IV) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; and (V) shares of Common Stock issued to Persons a Person in connection with a joint venture, strategic alliance or other commercial relationship with such Person relating to the operation of the Company’s business and not for the primary purpose of raising equity capital; and (VI) securities issued with respect to which the Holders consent that no such adjustment shall be made as a result of such issuance.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) upon the issuance of any Excluded Securities. For purposes hereof, “"Excluded Securities” " means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Issue Date or subsequently approved by the independent members of the Board of Directors or by the Company’s shareholders's stockholders, or (y) consultants, either directly or pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the independent members of the Board of Directors or by the Company’s shareholders's stockholders; (IV) except as required by subparagraph (c)(ii)(E) above, shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereof; and (V) shares of Common Stock issued to Persons a Person in connection with a joint venture, strategic alliance or other commercial relationship with such Person relating to the operation of the Company’s 's business and not for the primary purpose of raising equity capital; (VI) shares of Common Stock (or other securities convertible or exercisable into shares of Common Stock) issued in connection with the acquisition by the Company of any corporation or other entity (including, without limitation, the interests in certain limited partnerships of which the Company or a Subsidiary is a general partner) or substantially all of the assets of any corporation or other entity or division thereof, as long as a purpose of such transaction is not to raise equity capital; (VII) any borrowings by the Company, direct or indirect, from a commercial lending institution that are approved by the Board of Directors, including any type of loan or payment evidenced by any type of Debt instrument, provided the value of the equity portion of any such borrowings, including warrants, options or other rights to purchase capital stock and other interests convertible into capital stock of the Company, does not exceed ten percent (10%) of such borrowing; and (VIII) up to an aggregate of $5,000,000 of Film Vehicle Interests (as defined in the Securities Purchase Agreement).

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this paragraph (c) above upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (III) shares of Common Stock issuable or issued to (x) employees employees, consultants or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved by the independent members of the Board, Directors pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Issue Date or approved adopted after the Issue Date by the independent members of the Board of Directors or by with substantially the Company’s shareholderssame terms as such plans in effect as of the Issue Date, or (y) consultants, either directly or vendors pursuant to warrants to purchase Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances are approved by the Board of Directors; (IV) shares of Common Stock issued in connection with a commercial lending transaction with a federally-insured financial institution that is approved by the independent members of the Board of Directors Directors, provided that the fair market value of such shares does not exceed ten percent (10%) of the amount borrowed; (V) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company; (VI) shares of Common Stock issued in connection with the acquisition by the Company’s shareholdersCompany of any corporation or other entity occurring after the Effective Date, provided that a fairness opinion with respect to such acquisition is rendered by an investment bank of national recognition; (IVVII) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on the date hereofhereof and disclosed in a schedule to the Securities Purchase Agreement; and (VVIII) shares of Common Stock issued to Persons in connection with whom the Company is entering into a joint venture, strategic alliance or other commercial relationship in connection with such Person relating to the operation of the Company’s business and not for in connection with a transaction the primary purpose of raising which is to raise equity capital.

Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall will be made pursuant to under this paragraph (cSection 11(c) upon in respect of an Exempt Issuance. For purposes of this Agreement, “Exempt Issuance” shall mean the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (I) securities purchased under the Securities Purchase Agreement; (II) securities issued upon conversion of the Preferred Shares or exercise of the Warrants; (IIIa) shares of Common Stock issuable or issued options to (x) employees employees, officers or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, as approved Company pursuant to any stock or option plan duly adopted by the independent members a majority of the Board, pursuant to one or more stock option plans or restricted stock plans or stock purchase plans in effect as of the Closing Date or approved by the independent non-employee members of the Board of Directors of the Company or by a majority of the members of a committee composed exclusively of non-employee directors established for such purpose or otherwise issued in connection with employment, (b) securities upon the conversion or exercise of any Notes or Series AA Convertible Preferred Stock (“Preferred Stock”), any warrants issued to the original holders of the Company’s shareholders, or (y) consultants, either directly or 10% Secured Convertible Subordinated Notes issued pursuant to warrants to purchase Common Stock the Securities Purchase Agreement (the “Purchase Agreement”), dated October 31, 2005, among the Company and the purchasers that are a party thereto (the “Notes”) or the holders of the Preferred Stock or any other convertible securities, options or warrants issued and outstanding on the date hereof or issued hereafterof this Agreement, provided that such issuances are approved by securities have not been amended since the independent members date of this Agreement to increase the number of shares of Common Stock issuable pursuant to such securities (but if the number is increased, this proviso will only apply to the increased number, not the number outstanding on the date of this Agreement), (c) securities issued pursuant to equipment financing, leasing arrangements, commercial bank financings, corporate partnering arrangements, strategic transactions (including joint ventures), acquisitions, mergers or technology transfer or development arrangements, provided any such issuance shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, (d) as a dividend or distribution on, or reclassification of, other outstanding shares for which an adjustment to the Conversion Price (as defined in the Purchase Agreement) is made pursuant to Section 5(e)(ii) of the Board of Directors or by Notes issued pursuant to the Company’s shareholders; Purchase Agreement, (IVe) shares of Common Stock issued in connection with any Convertible Securities or Purchase Rights outstanding on options to consultants or suppliers, provided the date hereof; and (V) number of shares of Common Stock issued to Persons or shares underlying options does not exceed, in connection with a joint venturethe aggregate, strategic alliance or other commercial relationship with such Person relating to the operation 0.5 % of the Company’s business and not for the primary purpose of raising equity capitaloutstanding Common Stock in any 12-month period.