Common use of Upon Dilutive Issuances Clause in Contracts

Upon Dilutive Issuances. If the Corporation shall, while there are any shares of Series A Preferred Stock outstanding, issue or sell shares of its Common Stock or Common Stock Equivalents (as defined in Section 5.4.2.1 below) without consideration or at a price per share or Net Consideration Per Share (as defined in Section 5.4.3 below) less than the Conversion Value in effect immediately prior to such issuance or sale (a "DILUTIVE ISSUANCE"), then in each such case the Conversion Value, except as hereinafter provided, shall be reduced so as to equal an amount determined by multiplying such Conversion Value by the following fraction: N(0) + N(1) ------------------------- N(0) + N(2) Where: N(0) = the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares of Common Stock or Common Stock Equivalents (calculated on a fully-diluted basis assuming the exercise or conversion of all then exercisable or convertible options, warrants, purchase rights and convertible securities). N(l) = the number of shares of Common Stock which the aggregate consideration, if any, (including the Net Consideration Per Share with respect to the issuance of Common Stock Equivalents) received or receivable by the Corporation for the total number of such additional shares of Common Stock so issued or deemed to be issued would purchase at the Conversion Value in effect immediately prior to such issuance. N(2) = the number of such additional shares of Common Stock so issued or deemed to be issued. Example: Common Stock outstanding immediately prior to the Dilutive Issuance: 1,000,000 Conversion Value of Series A Preferred Stock immediately prior to the Dilutive Issuance $3.00 New shares issued pursuant to the Dilutive Issuance 1,000,000 Issue price of the New Shares $1.50 N(0) = 1,000,000 N(1) = (1,000,000)($1.50)/$3.00 = 500,000 N(2) = 1,000,000 New conversion Value of the Series A Preferred Stock [$3.00][(1,000,000 + 500,000)/(1,000,000 + 1,000,000) = 0.75] = $2.25 The provisions of this Section 5.4.1 may be waived as to all shares of Series A Preferred Stock in any instance (without the necessity of convening any meeting of stockholders of the Corporation) upon the written agreement of the holders of a majority of the outstanding shares of Series A Preferred Stock.

Upon Dilutive Issuances. If the Corporation shall, while there are any shares of Series A B Preferred Stock outstanding, issue or sell shares of its Common Stock or "Common Stock Equivalents Equivalents" (as defined in Section 5.4.2.1 5.3.2.1 below) without consideration or at a price per share or "Net Consideration Per Share Share" (as defined in Section 5.4.3 5.3.3 below) less than the Series B Conversion Value in effect immediately prior to such issuance or sale (a "DILUTIVE ISSUANCE")sale, then in each such case the Series B Conversion Value, except as hereinafter provided, shall be reduced lowered so as to be equal to an amount determined by multiplying such Series B Conversion Value by the following fraction: N(0) N + N(1) ------------------------- N(0) N 0 1 --------- N + N(2) N 0 2 Where: N(0) N0 = the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares of Common Stock or Common Stock Equivalents (calculated on a fully-diluted basis assuming the exercise or conversion of all then exercisable or convertible options, warrants, purchase rights and convertible securities). N(l) N1 = the number of shares of Common Stock which the aggregate consideration, if any, any (including the Net Consideration Per Share with respect to the issuance of Common Stock Equivalents) received or receivable by the Corporation for the total number of such additional shares of Common Stock so issued or deemed to be issued would purchase at the Series B Conversion Value in effect immediately prior to such issuance. N(2) N2 = the number of such additional shares of Common Stock so issued or deemed to be issued. Example: Common Stock outstanding immediately prior to the Dilutive Issuance: 1,000,000 Conversion Value of Series A Preferred Stock immediately prior to the Dilutive Issuance $3.00 New shares issued pursuant to the Dilutive Issuance 1,000,000 Issue price of the New Shares $1.50 N(0) = 1,000,000 N(1) = (1,000,000)($1.50)/$3.00 = 500,000 N(2) = 1,000,000 New conversion Value of the Series A Preferred Stock [$3.00][(1,000,000 + 500,000)/(1,000,000 + 1,000,000) = 0.75] = $2.25 The provisions of this Section 5.4.1 5.3.1 may be waived as to all shares of Series A B Preferred Stock in any instance (without the necessity of convening any meeting of stockholders of the Corporation) upon the written agreement of the holders of a majority two-thirds of the outstanding shares of Series A B Preferred Stock.

Upon Dilutive Issuances. If the Corporation shall, while there are any shares of Series A Preferred Stock outstanding, issue or sell shares of its Common Stock or "Common Stock Equivalents Equivalents" (as defined in Section 5.4.2.1 A5.3.2.1 below) without consideration or at a price per share or "Net Consideration Per Share Share" (as defined in Section 5.4.3 A5.3.3 below) less than the Series A Conversion Value in effect immediately prior to such issuance or sale (a "DILUTIVE ISSUANCE")sale, then in each such case the Series A Conversion Value, except as hereinafter provided, shall be reduced lowered so as to be equal to an amount determined by multiplying such Series A Conversion Value by the following fraction: N(0) + N(1) ------------------------- ------------------- N(0) + N(2) Where: N(0) = the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares of Common Stock or Common Stock Equivalents (calculated on a fully-diluted basis assuming the exercise or conversion of all then exercisable or convertible options, warrants, purchase rights and convertible securities). N(lN(1) = the number of shares of Common Stock which the aggregate consideration, if any, (including the Net Consideration Per Share with respect to the issuance of Common Stock Equivalents) received or receivable by the Corporation for the total number of such additional shares of Common Stock so issued or deemed to be issued would purchase at the Series A Conversion Value in effect immediately prior to such issuance. N(2) = the number of such additional shares of Common Stock so issued or deemed to be issued. Example: Common Stock outstanding immediately prior to the Dilutive Issuance: initial capital 1,000,000 Conversion Value of Series A Preferred Stock immediately prior to the Dilutive Issuance $3.00 New initial conversion price $ 1.00 new shares issued pursuant to the Dilutive Issuance 1,000,000 Issue total new consideration $ 500,000 new issue price of the New Shares $1.50 N(0) = 1,000,000 N(1) = (1,000,000)($1.50)/$3.00 = $ 0.50 new shares which would be issued at initial conversion price 500,000 N(2) = 1,000,000 New new conversion Value of the Series A Preferred Stock [$3.00][(1,000,000 + 500,000)/(1,000,000 + 1,000,000) = price $ 0.75] = $2.25 The provisions of this Section 5.4.1 may be waived as to all shares of Series A Preferred Stock in any instance (without the necessity of convening any meeting of stockholders of the Corporation) upon the written agreement of the holders of a majority of the outstanding shares of Series A Preferred Stock.