Exhibit 4.1
SENIOR SECURED EXCHANGEABLE
CONVERTIBLE NOTE
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II)
UNLESS SOLD PURSUANT TO RULE 144(k) UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES, PROVIDED THAT ANY TRANSFER OF THIS NOTE
TO THE PLEDGEE SHALL COMPLY WITH THE FOREGOING. ANY TRANSFEREE OF
THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING
SECTIONS 3(c)(iii), 4(c)(iii) AND 21(a) HEREOF. THE PRINCIPAL
AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES
ISSUABLE UPON CONVERSION OR EXCHANGE HEREOF MAY BE LESS THAN THE
AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTIONS 3(c)(iii)
AND 4(c)(iii) OF THIS NOTE.
M ICROVISION , I NC .
S ENIOR S ECURED E XCHANGEABLE C ONVERTIBLE N OTE
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Issuance Date: March 11, 2005
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Principal:
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FOR VALUE RECEIVED,
MICROVISION, INC., a Delaware
corporation (the “ Company ”), hereby promises
to pay to the order of
or its registered assigns (“ Holder ”) the
amount set out above as the Principal (as reduced pursuant to the
terms hereof pursuant to redemption, conversion, exchange or
otherwise, the “ Principal ”) when due, whether
upon the Maturity Date (as defined below), on any Installment Date
with respect to the Installment Amount due on such Installment Date
(each, as defined herein), acceleration, redemption or otherwise
(in each case, in accordance with the terms hereof) and to pay
interest (“ Interest ”) on any outstanding
Principal at the Interest Rate, subject to periodic adjustment
pursuant to Section 2, from the date set out above as the Issuance
Date (the “ Issuance Date ”) until the same
becomes due and payable, whether upon an Interest Date (as defined
below), any Installment Date or the Maturity Date (each, as defined
herein), acceleration, conversion, exchange, redemption or
otherwise (in each case in accordance with the terms hereof). This
Senior Secured Exchangeable Convertible Note (including all Senior
Secured Exchangeable Convertible Notes issued in exchange, transfer
or replacement hereof, this “ Note ”) is one of
an issue of Senior Secured Exchangeable Convertible Notes issued
pursuant to the Securities Purchase Agreement (as defined below) on
the Closing Date (collectively, the “ Notes ”
and such
other Senior Secured Exchangeable Convertible
Notes, the “ Other Notes ”). Certain capitalized
terms used herein are defined in Section 31.
(1) PAYMENTS OF PRINCIPAL .
On each Installment Date, the Company shall pay to the Holder an
amount equal to the Installment Amount due on such Installment Date
in accordance with Section 10. If any Principal remains outstanding
on the Maturity Date (as defined herein), then the Holder shall
surrender this Note to the Company and the Company shall pay to the
Holder in cash an amount equal to any outstanding Principal,
accrued and unpaid Interest. The “ Maturity Date
” shall be March 15, 2007, as extended at the option of the
Holder (i) in the event that, and for so long as, an Event of
Default (as defined in Section 5(a)) shall have occurred and be
continuing or any event shall have occurred and be continuing and
that with the passage of time and the failure to cure would result
in an Event of Default and (ii) through the date that is ten (10)
days after the consummation of a Change of Control in the event
that a Change of Control is publicly announced or a Change of
Control Notice (as defined in Section 5(b)) is delivered prior to
the Maturity Date.
(2) INTEREST; INTEREST RATE .
Interest on this Note shall commence accruing on the Issuance Date
and shall be computed on the basis of a 365-day year and actual
days elapsed and shall be payable in arrears for each Interest
Period on the last day of the succeeding Interest Period during the
period beginning on the Issuance Date and ending on, and including,
the Maturity Date (even if the Maturity Date is not the last day of
an Interest Period) (each, an “ Interest Date ”)
with the first Interest Date being June 15, 2005. Interest shall be
payable on each Interest Date to the record holder of this Note on
the applicable Interest Date in cash (“ Cash Interest
”) or, at the option of the Company, in shares of Company
Common Stock (“ Interest Shares ”) or a
combination thereof, provided that the Interest which accrued
during any period may be payable in Interest Shares if, and only
if, the Company delivers written notice (each an “
Interest Election Notice ”) of such election to each
holder of the Notes on or prior to the twentieth (20
th
) Company Trading Day
prior to the Interest Date (each, an “ Interest Election
Date ”). Each Interest Notice must specify the amount of
Interest that shall be paid as Cash Interest, if any, and the
amount of Interest that shall be paid in Interest Shares. Interest
to be paid on an Interest Date in Interest Shares shall be paid in
a number of fully paid and nonassessable shares (rounded to the
nearest whole share in accordance with Section 3(a)) of Company
Common Stock equal to the quotient of (a) the amount of Interest
payable on such Interest Date less any Cash Interest paid and (b)
the Interest Conversion Price in effect on the applicable Interest
Date. If any Interest Shares are to be paid on an Interest Date,
then the Company shall (X) provided that the Company’s
transfer agent (the “ Transfer Agent ”) is
participating in the Depository Trust Company (“ DTC
”) Fast Automated Securities Transfer Program, and such
action is not prohibited by applicable law or regulation or any
applicable policy of DTC, credit such aggregate number of Interest
Shares to which the Holder shall be entitled to the Holder’s
or its designee’s balance account with DTC through its
Deposit Withdrawal Agent Commission system, or (Y) if the foregoing
shall not apply, issue and deliver on the applicable Interest Date,
to the address set forth in the register maintained by the Company
for such purpose pursuant to the Securities Purchase Agreement or
to such address as specified by the Holder in writing to the
Company at least two (2) Business Days prior to the applicable
Interest Date, a certificate, registered in the name of the Holder
or its designee, for the number of Interest Shares to which the
Holder shall be entitled. Notwithstanding the foregoing, the
Company shall not be entitled to
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pay Interest in Interest Shares and shall be
required to pay such Interest in cash as Cash Interest on the
applicable Interest Date if, unless consented to in writing by the
Holder, during the period commencing on the applicable Interest
Election Date through the applicable Interest Date the Equity
Conditions as to the Company Common Stock have not been satisfied.
Prior to the payment of Interest on an Interest Date, Interest on
this Note shall accrue at the Interest Rate and be payable by way
of inclusion of the Interest in the Conversion Amount (as defined
below) in accordance with Section 3(b)(i) and by way of inclusion
of the Interest in the Exchange Amount (as defined below) in
accordance with Section 4(b)(i). Upon the occurrence and during the
continuance of an Event of Default (other than an Event of Default
with respect to Sections 5(a)(i) or 5(a)(ii)), the Interest Rate
shall be increased to fifteen percent (15%). In the event that such
Event of Default is subsequently cured, the adjustment referred to
in the preceding sentence shall cease to be effective as of the
date of such cure; provided that the Interest as calculated and
unpaid at such increased rate during the continuance of such Event
of Default shall continue to apply to the extent relating to the
days after the occurrence of such Event of Default through and
including the date of cure of such Event of Default. The Company
shall pay any and all taxes that may be payable with respect to the
issuance and delivery of Interest Shares; provided that the
Company shall not be required to pay any tax that may be payable in
respect of any issuance of Interest Shares to any Person other than
the Holder or with respect to any income tax due by the Holder with
respect to such Interest Shares.
(3) CONVERSION OF NOTES .
This Note shall be convertible into shares of the Company’s
common stock, par value $.001 per share (the “ Company
Common Stock ”), on the terms and conditions set forth in
this Section 3.
(a) Conversion Right .
Subject to the provisions of Section 3(d), at any time or times on
or after the Issuance Date, the Holder shall be entitled to convert
any portion of the outstanding and unpaid Conversion Amount in
multiples of $10,000 (or, if less, any remaining Conversion Amount)
into fully paid and nonassessable shares of Company Common Stock in
accordance with Section 3(c), at the Conversion Rate (as defined
below). The Company shall not issue any fraction of a share of
Company Common Stock upon any conversion. If the issuance would
result in the issuance of a fraction of a share of Company Common
Stock, the Company shall round such fraction of a share of Company
Common Stock up to the nearest whole share. The Company shall pay
any and all taxes that may be payable with respect to the issuance
and delivery of Company Common Stock upon conversion of any
Conversion Amount; provided that the Company shall not be
required to pay any tax that may be payable in respect of any
transfer involved in the issue and delivery of Company Common Stock
to any Person other than the Holder or with respect to any income
tax due by the Holder with respect to such Company Common Stock
issued upon conversion.
(b) Conversion Rate . The
number of shares of Company Common Stock issuable upon conversion
of any Conversion Amount pursuant to Section 3(a) shall be
determined by dividing (x) such Conversion Amount by (y) the
Conversion Price (as defined below) (the “ Conversion
Rate ”).
(i) “ Conversion Amount
” means the sum of (A) the portion of the Principal to be
converted, redeemed or otherwise with respect to which this
determination is being made, and (B) accrued and unpaid Interest
with respect to such Principal.
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(ii) “ Conversion Price
” means (A) as of any Conversion Date (as defined below) or
other date of determination (other than with respect to an
Installment Amount on an Installment Date pursuant to a Company
Conversion (as defined in Section 10(a)) during the period
beginning on the Issuance Date and ending on and including the
Maturity Date, the Fixed Conversion Price, and (B) with respect to
any Installment Amount on an Installment Date pursuant to a Company
Conversion, at the option of the Holder, either the Fixed
Conversion Price or the Company Conversion Price, each in effect as
of such date and subject to adjustment as provided
herein.
(iii) “ Fixed Conversion
Price ” means $6.84, subject to adjustment as provided
herein.
(c) Mechanics of Conversion
.
(i) Optional Conversion . To
convert any Conversion Amount into shares of Company Common Stock
on any date (a “ Conversion Date ”), the Holder
shall (A) transmit by facsimile (or otherwise deliver), for receipt
on or prior to 11:59 p.m., New York Time, on such date, a copy of
an executed notice of conversion in the form attached hereto as
Exhibit I (the “ Conversion Notice ”) to
the Company and (B) if required by Section 3(c)(iii), surrender
this Note to a common carrier for delivery to the Company as soon
as practicable on or following such date (or an indemnification
undertaking with respect to this Note in the case of its loss,
theft or destruction). On or before the first (1
st
) Business Day following
the date of receipt of a Conversion Notice, the Company shall
transmit by facsimile a confirmation of receipt of such Conversion
Notice to the Holder and the Transfer Agent. On or before the
second (2 nd ) Business Day following the date of
receipt of a Conversion Notice (the “ Share Delivery
Date ”), the Company shall (X) provided that the Transfer
Agent is participating in the DTC Fast Automated Securities
Transfer Program and such action is not prohibited by applicable
law or regulation or any applicable policy of DTC, credit such
aggregate number of shares of Company Common Stock to which the
Holder shall be entitled to the Holder’s or its
designee’s balance account with DTC through its Deposit
Withdrawal Agent Commission system, or (Y) if the Transfer Agent is
not participating in the DTC Fast Automated Securities Transfer
Program, issue and deliver to the address as specified in the
Conversion Notice, a certificate, registered in the name of the
Holder or its designee, for the number of shares of Company Common
Stock to which the Holder shall be entitled. If this Note is
physically surrendered for conversion as required by Section
3(c)(iii) and the outstanding Principal of this Note is greater
than the Principal portion of the Conversion Amount being
converted, then the Company shall as soon as practicable and in no
event later than three Business Days after receipt of this Note
(the “ Note Delivery Date ”) and at its own
expense, issue and deliver to the holder a new Note (in accordance
with Section 21(d)) representing the outstanding Principal not
converted. The Person or Persons entitled to receive the shares of
Company Common Stock issuable upon a conversion of this
Note
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shall be treated for all purposes as
the record holder or holders of such shares of Company Common Stock
on the Conversion Date to the extent permitted by applicable law.
In the event of a conversion of this Note pursuant to Section 3(a),
the Principal amount of the Note subject to such conversion shall
be deducted from the Installment Amount(s) relating to the
Installment Date(s) as set forth in the Conversion
Notice.
(ii) Company’s Failure to
Timely Convert . If the Company shall fail to issue a
certificate to the Holder or credit the Holder’s balance
account with DTC for the number of shares of Company Common Stock
to which the Holder is entitled upon conversion of any Conversion
Amount on or prior to the date which is five Business Days after
the Conversion Date (a “ Conversion Failure ”),
then (A) the Company shall pay damages in cash to the Holder for
each date of such Conversion Failure in an amount equal to 1.5% of
the product of (I) the sum of the number of shares of Company
Common Stock not issued to the Holder on or prior to the Share
Delivery Date and to which the Holder is entitled, and (II) the
Closing Sale Price of the Company Common Stock on the Share
Delivery Date and (B) the Holder, upon written notice to the
Company, may void its Conversion Notice with respect to, and retain
or have returned, as the case may be, any portion of this Note that
has not been converted pursuant to such Conversion Notice; provided
that the voiding of a Conversion Notice shall not affect the
Company’s obligations to make any payments which have accrued
prior to the date of such notice pursuant to this Section 3(c)(ii)
or otherwise. At the Holder’s option in lieu of the
foregoing, if within three (3) Company Trading Days after the
Company’s receipt of the facsimile copy of a Conversion
Notice the Company shall fail to issue and deliver a certificate to
the Holder or credit the Holder’s balance account with DTC
for the number of shares of Company Common Stock to which the
Holder is entitled upon such holder’s conversion of any
Conversion Amount, and if on or after such Trading Day the Holder
purchases (in an open market transaction or otherwise) Company
Common Stock to deliver in satisfaction of a sale by the Holder of
Company Common Stock issuable upon such conversion that the Holder
anticipated receiving from the Company (a “ Company Common
Stock Buy-In ”), then the Company shall, within three (3)
Business Days after the Holder’s request and in the
Holder’s discretion, either (i) pay cash to the Holder in an
amount equal to the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Company Common
Stock so purchased (the “ Company Common Stock Buy-In
Price ”), at which point the Company’s obligation
to deliver such certificate (and to issue such Company Common
Stock) shall terminate, or (ii) promptly honor its obligation to
deliver to the Holder a certificate or certificates representing
such Company Common Stock and pay cash to the Holder in an amount
equal to the excess (if any) of the Company Common Stock Buy-In
Price over the product of (A) such number of shares of Company
Common Stock, times (B) the Closing Bid Price on the Conversion
Date.
(iii) Book-Entry .
Notwithstanding anything to the contrary set forth herein, upon
conversion of any portion of this Note in accordance with the terms
hereof, the Holder shall not be required to physically surrender
this Note to the Company unless (A) the full Conversion Amount
represented by this Note is being converted or (B) the Holder has
provided the Company with prior written notice (which notice may be
included in a
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Conversion Notice) requesting
reissuance of this Note upon physical surrender of this Note. The
Holder and the Company shall maintain records showing the Principal
and Interest converted and the dates of such conversions or shall
use such other method, reasonably satisfactory to the Holder and
the Company, so as not to require physical surrender of this Note
upon conversion.
(iv) Pro Rata Conversion;
Disputes . In the event that the Company receives a Conversion
Notice from more than one holder of Notes for the same Conversion
Date and the Company can convert some, but not all, of such
portions of the Notes submitted for conversion, the Company,
subject to Section 3(d), shall convert from each holder of Notes
electing to have Notes converted on such date a pro rata amount of
such holder’s portion of its Notes submitted for conversion
based on the principal amount of Notes submitted for conversion on
such date by such holder relative to the aggregate principal amount
of all Notes submitted for conversion on such date. In the event of
a dispute as to the number of shares of Company Common Stock
issuable to the Holder in connection with a conversion of this
Note, the Company shall issue to the Holder the number of shares of
Company Common Stock not in dispute and resolve such dispute in
accordance with Section 26.
(d) Limitations on
Conversions .
(i) Beneficial Ownership .
Other than in connection with a Mandatory Conversion (as defined
below), the Company shall not effect any conversion of this Note,
and the Holder of this Note shall not have the right to convert any
portion of this Note, pursuant to Section 3(a), Section 10 or
otherwise, to the extent that after giving effect to such
conversion, the Holder (together with the Holder’s
affiliates), would beneficially own in excess of 9.99% (the “
Maximum Percentage ”) of the number of shares of
Company Common Stock outstanding immediately after giving effect to
such conversion. For purposes of the foregoing sentence, the number
of shares of Company Common Stock beneficially owned by the Holder
and its affiliates shall include the number of shares of Company
Common Stock issuable upon conversion of this Note with respect to
which the determination of such sentence is being made, but shall
exclude the number of shares of Company Common Stock which would be
issuable upon (A) conversion of the remaining, nonconverted portion
of this Note beneficially owned by the Holder or any of its
affiliates and (B) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company
(including, without limitation, any Other Notes or warrants)
subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any
of its affiliates. Except as set forth in the preceding sentence,
for purposes of this Section 3(d)(i), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “ 1934 Act
”). For purposes of this Section 3(d)(i), in determining the
number of outstanding shares of Company Common Stock, the Holder
may rely on the number of outstanding shares of Company Common
Stock as reflected in (x) the Company’s most recent Form 10-Q
or Form 10-K, as the case may be, (y) a more recent public
announcement by the Company or (z) any other notice by the Company
or the Transfer Agent setting forth the number of shares of Company
Common Stock
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outstanding. For any reason at any
time, upon the written or oral request of the Holder, the Company
shall within one (1) Business Day confirm orally and in writing to
the Holder the number of shares of Company Common Stock then
outstanding. In any case, the number of outstanding shares of
Company Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this
Note, by the Holder or its affiliates since the date as of which
such number of outstanding shares of Company Common Stock was
reported.
(ii) Principal Market
Regulation . The Company shall not be obligated to issue any
shares of Company Common Stock upon conversion of this Note,
whether pursuant to this Section 3, Section 10 or otherwise, if the
issuance of such shares of Company Common Stock would exceed the
aggregate number of shares of Company Common Stock which the
Company may issue upon conversion or exercise as applicable of the
Notes and Warrants or as Interest Shares without breaching the
Company’s obligations under the rules or regulations of the
Nasdaq Stock Market (the “ Exchange Cap ”),
except that such limitation shall not apply in the event that the
Company (A) obtains the approval of its stockholders as required by
the applicable rules of the Nasdaq Stock Market for issuances of
Company Common Stock in excess of such amount, regardless of
whether or not the shares of Company Common Stock are then listed
on the applicable market or (B) obtains a written opinion from
outside counsel to the Company that such approval is not required,
which opinion shall be reasonably satisfactory to the Required
Holders. Until such approval or written opinion is obtained, no
purchaser of the Notes pursuant to the Securities Purchase
Agreement (the “ Purchasers ”) shall be issued
in the aggregate, upon conversion or exercise, as applicable, of
Notes or Warrants held by such Purchaser, shares of Company Common
Stock in an amount greater than the product of the Exchange Cap
multiplied by a fraction, the numerator of which is the principal
amount of Notes issued to such Purchaser pursuant to the Securities
Purchase Agreement on the Closing Date and the denominator of which
is the aggregate principal amount of all Notes issued to the
Purchasers pursuant to the Securities Purchase Agreement on the
Closing Date (with respect to each Purchaser, the “
Exchange Cap Allocation ”). In the event that any
Purchaser shall sell or otherwise transfer any of such
Purchaser’s Notes, the transferee shall be allocated a pro
rata portion of such Purchaser’s Exchange Cap Allocation, and
the restrictions of the prior sentence shall apply to such
transferee with respect to the portion of the Exchange Cap
Allocation allocated to such transferee. In the event that any
holder of Notes shall convert all of such holder’s Notes into
a number of shares of Company Common Stock which, in the aggregate,
is less than such holder’s Exchange Cap Allocation, then the
difference between such holder’s Exchange Cap Allocation and
the number of shares of Company Common Stock actually issued to
such holder shall be allocated to the respective Exchange Cap
Allocations of the remaining holders of Notes on a pro rata basis
in proportion to the aggregate principal amount of the Notes then
held by each such holder.
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(4) EXCHANGE OF NOTES . In
addition to the rights of the Holder under Section 3 hereof, this
Note shall be exchangeable into shares of Common Stock, $0.001 par
value (the “ Lumera Common Stock ”) of Lumera
Corporation, a Delaware corporation (“ Lumera
”), on the terms and conditions set forth in this Section
4.
(a) Exchange Right . Subject
to the provisions of Section 4(d), at any time or times on or after
the Issuance Date, the Holder shall be entitled to exchange any
portion of the outstanding and unpaid Exchange Amount (as defined
below) in multiples of $10,000 principal amount (or any remaining
principal amount) into fully paid and nonassessable shares of
Lumera Common Stock in accordance with Section 4(c), at the
Exchange Rate (as defined below). The Company shall not deliver any
fraction of a share of Lumera Common Stock upon any exchange. If
the delivery would result in the transfer of a fraction of a share
of Lumera Common Stock, the Company shall round such fraction of a
share of Lumera Common Stock up to the nearest whole share. The
Company shall pay any and all taxes that may be payable with
respect to the transfer and delivery of Lumera Common Stock upon
exchange of any Exchange Amount for Lumera Common Stock;
provided that the Company shall not be required to pay any
tax that may be payable in respect of any transfer involved in the
issue and delivery of Lumera Common Stock to any Person other than
the Holder or with respect to any income tax due by the Holder with
respect to such Lumera Common Stock issued upon
exchange.
(b) Exchange Rate . The
number of shares of Lumera Common Stock transferable upon exchange
of any Exchange Amount pursuant to Section 4(a) shall be determined
by dividing (x) such Exchange Amount by (y) the Exchange Price (as
defined below) (the “ Exchange Rate
”).
(i) “ Exchange Amount
” means the sum of (A) the portion of the Principal to be
exchanged with respect to which this determination is being made
and (B) accrued and unpaid Interest with respect to such
Principal.
(ii) “ Exchange Price
” means (A) as of any Exchange Date (as defined below) or
other date of determination (other than with respect to an
Installment Amount on an Installment Date pursuant to a Company
Exchange (as defined in Section 10(a)) during the period beginning
on the Issuance Date and ending on and including the Maturity Date,
the Fixed Exchange Price, and (B) with respect to any Installment
Amount on an Installment Date pursuant to a Company Exchange, at
the option of the Holder, either the Fixed Exchange Price or the
Lumera Exchange Price, each in effect as of such date and subject
to adjustment as provided herein.
(iii) “ Fixed Exchange
Price ” means $5.64, subject to adjustment as provided
herein.
(c) Mechanics of Exchange
.
(i) Optional Exchange . To
exchange any Exchange Amount into shares of Lumera Common Stock on
any date (an “ Exchange Date ”), the Holder
shall (A) transmit by facsimile (or otherwise deliver), for receipt
on or prior to 11:59 p.m., New York Time, on such date, a copy of
an executed notice of exchange in the form attached hereto
as
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Exhibit II (the “ Exchange
Notice ”) to the Company, (B) deliver to the transfer
agent for Lumera (the “ Lumera Transfer Agent ”)
the certificate for the Pledged Shares (as defined in the Pledge
and Securities Agreement) held by the Holder on such date in order
to allow the Lumera Transfer Agent, after confirmation by the
Company described below, to deliver the Lumera Common Stock in
accordance with such Exchange Notice and to return to the Holder,
as promptly as practicable, any remaining Pledged Shares not
subject to such Exchange Notice and (C) if required by Section
4(c)(iii), surrender this Note to a common carrier for delivery to
the Company as soon as practicable on or following such date (or an
indemnification undertaking with respect to this Note in the case
of its loss, theft or destruction). On or before the first
(1 st ) Business Day following the date
of receipt of an Exchange Notice, the Company shall transmit by
facsimile a confirmation of receipt of such Exchange Notice to the
Holder and the Lumera Transfer Agent. On or before the second
(2 nd ) Business Day following the date of
receipt of an Exchange Notice (the “ Lumera Share Delivery
Date ”), Lumera or the Lumera Transfer Agent shall (X)
provided that the Lumera Transfer Agent is participating in the DTC
Fast Automated Securities Transfer Program, and such shares of
Lumera Common Stock do not require the placement of any legends
restricting transfer of such shares of Lumera Common Stock, upon
the request of the Holder, credit such aggregate number of shares
of Lumera Common Stock to which the Holder shall be entitled to the
Holder’s or its designee’s balance account with DTC
through its Deposit Withdrawal Agent Commission system, or (Y) if
the Lumera Transfer Agent is not participating in the DTC Fast
Automated Securities Transfer Program, transfer and deliver to the
address as specified in the Exchange Notice, a certificate,
registered in the name of the Holder or its designee, for the
number of shares of Lumera Common Stock to which the Holder shall
be entitled. Upon any such transfer of any Lumera Common Stock to
the Holder, the Holder shall have good and marketable title to such
shares, free and clear of any liens, encumbrances, restrictions,
rights of first refusal or rights of any other Person (including,
without limitation, the pledge of such shares of Lumera Common
Stock pursuant to the Pledge and Security Agreement which shall be
automatically released solely with respect to such shares upon the
consummation of such exchange). The parties hereby agree that the
Lumera Common Stock to be exchanged for hereunder shall be such
Lumera Common Stock pledged to the Holder (or its collateral agent)
pursuant to the Pledge and Security Agreement. If this Note is
physically surrendered for exchange as required by Section
4(c)(iii) and the outstanding Principal of this Note is greater
than the Principal portion of the Exchange Amount being exchanged,
then the Company shall as soon as practicable and in no event later
than the Note Delivery Date and at its own expense, issue and
deliver to the holder a new Note (in accordance with Section 21(d))
representing the outstanding Principal not exchanged. Lumera and
the Lumera Transfer Agent shall treat for all purposes the Person
or Persons entitled to receive the shares of Lumera Common Stock
issuable upon an exchange of this Note as the transferee or
transferees of such shares of Lumera Common Stock on the Exchange
Date. In the event of an exchange of this Note pursuant to Section
4(a), the Principal amount of this Note subject to such exchange
shall be deducted from the Installment Amount(s) relating to the
Installment Date(s) as set forth in the Exchange Notice.
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(ii) Company’s Failure to
Timely Exchange . If the Company shall fail to transfer and
deliver to the Holder or have credited to the Holder’s
balance account with DTC the number of shares of Lumera Common
Stock to which the Holder is entitled upon exchange of any Exchange
Amount on or prior to the date which is five Business Days after
the Exchange Date (an “ Exchange Failure ”),
then (A) the Company shall pay damages to the Holder for each date
of such Exchange Failure in an amount equal to 1.5% of the product
of (I) the sum of the number of shares of Lumera Common Stock not
transferred and delivered to the Holder on or prior to the Lumera
Share Delivery Date and to which the Holder is entitled and (II)
the Closing Sale Price of the Lumera Common Stock on the Lumera
Share Delivery Date and (B) the Holder, upon written notice to the
Company, may void its Exchange Notice with respect to, and retain
or have returned, as the case may be, any portion of this Note
surrendered by the Holder to the Lumera Transfer Agent that has not
been exchanged pursuant to such Exchange Notice; provided that the
voiding of an Exchange Notice shall not affect the Company’s
obligations to make any payments which have accrued prior to the
date of such notice pursuant to this Section 4(c)(ii) or otherwise.
At the Holder’s option in lieu of the foregoing, if within
three (3) Lumera Trading Days after the Company’s receipt of
the facsimile copy of a Exchange Notice the Company or the Lumera
Transfer Agent shall fail to issue and deliver a certificate to the
Holder or credit the Holder’s balance account with DTC for
the number of shares of Lumera Common Stock to which the Holder is
entitled upon such holder’s conversion of any Exchange
Amount, and if on or after such Trading Day the Holder purchases
(in an open market transaction or otherwise) Lumera Common Stock to
deliver in satisfaction of a sale by the Holder of Lumera Common
Stock issuable upon such conversion that the Holder anticipated
receiving from the Company (a “ Lumera Common Stock
Buy-In ”), then the Company shall, within three (3)
Business Days after the Holder’s request and in the
Holder’s discretion, either (i) pay cash to the Holder in an
amount equal to the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Lumera Common
Stock so purchased (the “ Lumera Common Stock Buy-In
Price ”), at which point the Company’s obligation
to deliver such certificate (and to issue such Lumera Common Stock)
shall terminate, or (ii) promptly honor its obligation to deliver
to the Holder a certificate or certificates representing such
Lumera Common Stock and pay cash to the Holder in an amount equal
to the excess (if any) of the Lumera Common Stock Buy-In Price over
the product of (A) such number of shares of Lumera Common Stock,
times (B) the Closing Bid Price on the Exchange Date.
(iii) Book-Entry .
Notwithstanding anything to the contrary set forth herein, upon
exchange of any portion of this Note in accordance with the terms
hereof, the Holder shall not be required to physically surrender
this Note to the Company unless (A) the full Exchange Amount
represented by this Note is being exchanged or (B) the Holder has
provided the Company with prior written notice (which notice may be
included in an Exchange Notice) requesting reissuance of this Note
upon physical surrender of this Note. The Holder and the Company
shall maintain records showing the Principal and Interest exchanged
and the dates of such exchanges or shall use such other method,
reasonably satisfactory to the Holder and the Company, so as not to
require physical surrender of this Note upon exchange.
10
(iv) Pro Rata Exchange;
Disputes . In the event that the Company receives an Exchange
Notice from more than one holder of Notes for the same Exchange
Date and the Company can exchange some, but not all, of such
portions of the Notes submitted for exchange, the Company, subject
to Section 4(d), shall exchange from each holder of Notes electing
to have Notes exchanged on such date a pro rata amount of such
holder’s portion of its Notes submitted for exchange based on
the principal amount of Notes submitted for exchange on such date
by such holder relative to the aggregate principal amount of all
Notes submitted for exchange on such date. In the event of a
dispute as to the number of shares of Lumera Common Stock
transferable to the Holder in connection with an exchange of this
Note, the Company shall transfer and deliver to the Holder the
number of shares of Lumera Common Stock not in dispute and resolve
such dispute in accordance with Section 26.
(d) Limitations on Exchanges
.
(i) Beneficial Ownership .
The Company shall not effect any exchange of this Note, and the
Holder of this Note shall not have the right to exchange any
portion of this Note, pursuant to Section 4(a), Section 10 or
otherwise, to the extent that after giving effect to such exchange,
the Holder (together with the Holder’s affiliates) would
beneficially own in excess of 9.99% (“ Lumera Maximum
Percentage ”) of the number of shares of Lumera Common
Stock outstanding immediately after giving effect to such exchange.
For purposes of the foregoing sentence, the number of shares of
Lumera Common Stock beneficially owned by the Holder and its
affiliates shall include the maximum number of shares of Lumera
Common Stock deliverable upon exchange of this Note with respect to
which the determination of such sentence is being made, but shall
exclude the number of shares of Lumera Common Stock which would be
deliverable upon (A) exchange of the remaining, nonexchanged
portion of this Note beneficially owned by the Holder or any of its
affiliates and (B) exercise, conversion or exchange of the
unexercised, unconverted or nonexchanged portion of any other
securities (including, without limitation, any Other Notes or
warrants) subject to a limitation on exchange, conversion or
exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its affiliates. Except as set forth
in the preceding sentence, for purposes of this Section 4(d)(i),
beneficial ownership shall be calculated in accordance with Section
13(d) of the 1934 Act. For purposes of this Section 4(d)(i), in
determining the number of outstanding shares of Lumera Common
Stock, the Company and the Holder may rely on the number of
outstanding shares of Lumera Common Stock as reflected in (x) the
most recent Form 10-Q or Form 10-K of Lumera, as the case may be,
or (y) a more recent public announcement by Lumera. For any reason
at any time, upon the written or oral request of the Holder, the
Company shall, or shall cause Lumera to, within one (1) Business
Day confirm orally and in writing to the Holder the number of
shares of Lumera Common Stock then outstanding. In any case, the
number of outstanding shares of Lumera Common Stock shall be
determined after giving effect to the conversion, exchange or
exercise of securities of Lumera, including this Note, by the
Holder or its affiliates since the date as of which such number of
outstanding shares of Lumera Common Stock was reported and to the
extent that such securities of Lumera include securities other than
this
11
Note, the Holder shall inform the
Company of any such conversions, exchanges or exercises.
(ii) Maximum Lumera Shares .
The Company shall not be obligated to deliver any shares of Lumera
Common Stock upon exchange of this Note or any Other Note, whether
pursuant to the applicable Section 4 or Section 10, as applicable,
the Pledge and Security Agreement or the Other Pledge and Security
Agreements or otherwise, if the delivery of such shares of Lumera
Common Stock would require the delivery of more than 1,750,000
shares of Lumera Common Stock in the aggregate (as adjusted for any
stock dividend, stock split, stock combination or other similar
transaction affecting the Lumera Common Stock after the Issuance
Date) (the “ Lumera Exchange Cap ”). No
Purchaser shall have delivered to it, upon exchange of Notes, a
number of shares of Lumera Common Stock in an amount greater than
the product of the Lumera Exchange Cap multiplied by a fraction,
the numerator of which is the principal amount of Notes issued to
such Purchaser pursuant to the Securities Purchase Agreement on the
Closing Date and the denominator of which is the aggregate
principal amount of all Notes issued to the Purchasers pursuant to
the Securities Purchase Agreement on the Closing Date (with respect
to each Purchaser, the “ Lumera Exchange Cap
Allocation ”). In the event that any Purchaser shall sell
or otherwise transfer any of such Purchaser’s Notes, the
transferee shall be allocated a pro rata portion of such
Purchaser’s Lumera Exchange Cap Allocation, and the
restrictions of the prior sentence shall apply to such transferee
with respect to the portion of the Lumera Exchange Cap Allocation
allocated to such transferee. In the event that any such holder
shall have converted and exchanged such holder’s Notes in
their entirety (such that such holder no longer has any Notes) and
such holder shall have received a number of shares of Lumera Common
Stock which, in the aggregate, is less than such holder’s
Lumera Exchange Cap Allocation, then the difference between such
holder’s Lumera Exchange Cap Allocation and the number of
shares of Lumera Common Stock actually delivered to such holder
shall be allocated to the respective Lumera Exchange Cap
Allocations of the remaining holders of Notes on a pro rata basis
in proportion to the aggregate principal amount of the Notes then
held by each such holder.
(5) RIGHTS UPON EVENT OF
DEFAULT .
(a) Event of Default . Each
of the following events (so long as its continuing) shall
constitute an “ Event of Default ”:
(i) the failure of a Registration
Statement required to be filed pursuant to the Registration Rights
Agreement to be declared effective by the SEC on or prior to the
date that is sixty (60) days after the Effectiveness Deadline (as
defined in the Registration Rights Agreement), or, while such
Registration Statement is required to be maintained effective
pursuant to the terms of the Registration Rights Agreement, the
effectiveness of such Registration Statement lapses for any reason
(including, without limitation, the issuance of a stop order) or is
unavailable to any holder of the Notes for sale of all of such
holder’s Registrable Securities (as defined in the
Registration Rights Agreement) in accordance with the terms of the
Registration Rights Agreement, and such lapse or unavailability
continues for a period of ten (10) consecutive days or for more
than an
12
aggregate of thirty (30) days in any
365-day period (other than days during an Allowable Grace Period
(as defined in the Registration Rights Agreement));
(ii) the failure of a Registration
Statement required to be filed pursuant to the Lumera Registration
Rights Agreement to be declared effective by the SEC on or prior to
the date that is sixty (60) days after the Effectiveness Deadline
(as defined in the Lumera Registration Rights Agreement), or, while
such Registration Statement is required to be maintained effective
pursuant to the terms of the Lumera Registration Rights Agreement,
the effectiveness of such Registration Statement lapses for any
reason (including, without limitation, the issuance of a stop
order) or is unavailable to any holder of the Notes for sale of all
of such holder’s Registrable Securities (as defined in the
Lumera Registration Rights Agreement) in accordance with the terms
of the Lumera Registration Rights Agreement, and such lapse or
unavailability continues for a period of ten (10) consecutive days
or for more than an aggregate of thirty (30) days in any 365-day
period (other than days during an Allowable Grace Period (as
defined in the Lumera Registration Rights Agreement));
(iii) the suspension from trading or
failure of the Company Common Stock to be listed on an Eligible
Market for a period of five (5) consecutive days or for more than
an aggregate of ten (10) days in any 365-day period;
(iv) the Company’s (A) failure
to cure a Conversion Failure by delivery of the required number of
shares of Company Common Stock within ten (10) Business Days after
the applicable Conversion Date or (B) notice, written or oral, to
any holder of the Notes, including by way of public announcement or
through any of its agents, at any time, of its intention not to
comply with a request for conversion of any Notes into shares of
Company Common Stock that is tendered for conversion in accordance
with the provisions of the Notes;
(v) the Company’s (A) failure
to cure an Exchange Failure by delivery of the required number of
shares of Lumera Common Stock within ten (10) Business Days after
the applicable Exchange Date or (B) notice, written or oral, to any
holder of the Notes, including by way of public announcement or
through any of its agents, at any time, of its intention not to
comply with a request for exchange of any Notes into shares of
Lumera Common Stock that are tendered for exchange in accordance
with the provisions of the Notes;
(vi) at any time following the tenth
(10 th ) Business Day after the Authorized
Share Failure Stockholder Meeting Deadline that the Holder’s
Authorized Share Allocation is less than the number of shares of
Company Common Stock that the Holder would be entitled to receive
upon a conversion of the full Conversion Amount of this Note
(without regard to any limitations on conversion set forth in
Section 3(d) or otherwise);
(vii) the Company’s failure to
pay to the Holder any amount of Principal, Interest, or other
amounts when and as due under this Note (including, without
limitation, the Company’s failure to pay any redemption
payments or amounts hereunder), or any other
13
Transaction Document or any other
agreement, document, certificate or other instrument delivered in
connection with the transactions contemplated hereby and thereby to
which the Holder is a party, except, in the case of a failure to
pay Interest when and as due, in which case only if such failure
continues for a period of at least five (5) Business
Days;
(viii) any default under, redemption
of or acceleration prior to maturity of any Indebtedness (as
defined in Section 3(r) of the Securities Purchase Agreement) of
the Company or any of its Subsidiaries (as defined in Section 3(a)
of the Securities Purchase Agreement) aggregating in excess of
$500,000 other than with respect to any Other Notes;
(ix) the Company or any of its
Subsidiaries pursuant to or within the meaning of Title 11, U.S.
Code, or any similar Federal, foreign or state law for the relief
of debtors (collectively, “ Bankruptcy Law ”),
(A) commences a voluntary case, (B) consents to the entry of an
order for relief against it in an involuntary case, (C) consents to
the appointment of a receiver, trustee, assignee, liquidator or
similar official (a “ Custodian ”), (D) makes a
general assignment for the benefit of its creditors or (E) admits
in writing that it is generally unable to pay its debts as they
become due;
(x) a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law
that (A) is for relief against the Company or any of its
Subsidiaries in an involuntary case, (B) appoints a Custodian of
the Company or any of its Subsidiaries or (C) orders the
liquidation of the Company or any of its Subsidiaries;
(xi) a final judgment or judgments
for the payment of money aggregating in excess of $500,000 are
rendered against the Company or any of its Subsidiaries and which
judgments are not, within sixty (60) days after the entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged
within sixty (60) days after the expiration of such stay; provided,
however, that any judgment which is covered by insurance or an
indemnity from a credit worthy party shall not be included in
calculating the $500,000 amount set forth above so long as the
Company provides the Holder a written statement from such insurer
or indemnity provider (which written statement shall be reasonably
satisfactory to the Holder) to the effect that such judgment is
covered by insurance or an indemnity and the Company will receive
the proceeds of such insurance or indemnity within thirty (30) days
of the issuance of such judgment;
(xii) the Company breaches any
representation, warranty, covenant or other term or condition of
any Transaction Document, except (A) to the extent that such breach
would not have a Material Adverse Effect (as defined in Section
3(a) of the Securities Purchase Agreement) and (B) in the case of a
breach of a covenant or term or condition of any Transaction
Document which is curable, only if such breach continues for a
period of at least ten (10) consecutive Business Days;
(xiii) any breach or failure in any
respect to comply with either of Sections 10 or 17 of this Note;
or
14
(xiv) any Event of Default (as
defined in the Other Notes) occurs with respect to any Other
Notes.
(b) Redemption Right .
Promptly after the occurrence of an Event of Default with respect
to this Note or any Other Note, the Company shall deliver written
notice thereof via facsimile and overnight courier (an “
Event of Default Notice ”) to the Holder. At any time
after the earlier of the Holder’s receipt of an Event of
Default Notice and the Holder becoming aware of an Event of Default
and prior to 90 days after written notice from the Company to the
Holder that such Event of Default is cured (which written notice
shall provide reasonably satisfactory evidence that such Event of
Default has actually been cured), the Holder may require the
Company to redeem all or any portion of this Note by delivering
written notice thereof (the “ Event of Default Redemption
Notice ”) to the Company, which Event of Default
Redemption Notice shall indicate the portion of this Note that the
Holder is electing to redeem. Each portion of this Note subject to
redemption by the Company pursuant to this Section 5(b) shall be
redeemed by the Company at a price equal to the greater of (i) the
product of (x) the Conversion Amount to be redeemed and (y) the
Redemption Premium and (ii) the product of (A) the Conversion Rate
with respect to such Conversion Amount in effect at such time as
the Holder delivers an Event of Default Redemption Notice and (B)
the Closing Sale Price of the Company Common Stock on the date
immediately preceding such Event of Default (the “ Event
of Default Redemption Price ”). Redemptions required by
this Section 5(b) shall be made in accordance with the provisions
of Section 14. In the event of a partial redemption of this Note
pursuant hereto, the principal amount redeemed shall be deducted
from the Installment Amounts relating to the Installment Dates as
set forth in the Event of Default Redemption Notice.
(6) RIGHTS UPON FUNDAMENTAL
TRANSACTION AND CHANGE OF CONTROL .
(a) Assumption . The Company
shall not enter into or be party to a Fundamental Transaction
unless (i) the Successor Entity assumes in writing all of the
obligations of the Company under this Note and the other
Transaction Documents in accordance with the provisions of this
Section 6(a) pursuant to written agreements in form and substance
satisfactory to the Required Holders and approved by the Required
Holders (such approval not to be unreasonably withheld or delayed)
prior to such Fundamental Transaction, including agreements to
deliver to each holder of Notes in exchange for such Notes a
security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to the Notes,
including, without limitation, having a principal amount and
interest rate equal to the principal amounts and the interest rates
of the Notes held by such holder and having similar ranking to the
Notes, and satisfactory to the Required Holders (any such approval
not to be unreasonably withheld or delayed) and (ii) the Successor
Entity (including its Parent Entity) is a publicly traded
corporation whose common stock is quoted on or listed for trading
on an Eligible Market. Upon the occurrence of any Fundamental
Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Note referring to
the “Company” shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and
shall assume all of the obligations of the Company under this Note
with the same effect as if such Successor Entity had been named as
the Company herein. Upon consummation of the Fundamental
15
Transaction, the Successor Entity
shall deliver to the Holder confirmation that there shall be issued
upon conversion or redemption of this Note at any time after the
consummation of the Fundamental Transaction, in lieu of the shares
of the Company Common Stock (or other securities, cash, assets or
other property) purchasable upon the conversion or redemption of
the Notes prior to such Fundamental Transaction, such shares of
stock, securities, cash, assets or any other property whatsoever
(including warrants or other purchase or subscription rights) which
the Holder would have been entitled to receive upon the happening
of such Fundamental Transaction had this Note been converted
immediately prior to such Fundamental Transaction, as adjusted in
accordance with the provisions of this Note. The provisions of this
Section shall apply similarly and equally to successive Fundamental
Transactions and shall be applied without regard to any limitations
on the conversion or redemption of this Note.
(b) Holder Redemption Right .
No sooner than fifteen (15) days nor later than ten (10) days prior
to the consummation of a Change of Control, but not prior to the
public announcement of such Change of Control, the Company shall
deliver written notice thereof via facsimile and overnight courier
to the Holder (a “ Change of Control Notice ”).
At any time during the period beginning after the Holder’s
receipt of a Change of Control Notice and ending on the date of the
consummation of such Change of Control (or, in the event a Change
of Control Notice is not delivered at least ten (10) days prior to
a Change of Control, at any time on or after the date which is ten
(10) days prior to a Change of Control and ending ten (10) days
after the consummation of such Change of Control), the Holder may
require the Company to redeem all or any portion of this Note by
delivering written notice thereof (“ Holder Change of
Control Redemption Notice ”) to the Company, which Holder
Change of Control Redemption Notice shall indicate the Conversion
Amount the Holder is electing to redeem. The portion of this Note
subject to redemption pursuant to this Section 6 shall be redeemed
by the Company at a price equal to the greater of (i) the product
of (x) the Conversion Amount being redeemed and (y) the quotient
determined by dividing (A) the Closing Sale Price of the Company
Common Stock immediately following the public announcement of such
proposed Change of Control by (B) the Conversion Price and (ii)
125% of the Conversion Amount being redeemed (the “ Holder
Change of Control Redemption Price ”). Redemptions
required by this Section 6(b) shall be made in accordance with the
provisions of Section 14 and shall have priority to payments to
stockholders in connection with a Change of Control.
Notwithstanding anything to the contrary in this Section 6(b), but
subject to Sections 3(d) and 4(d), until the Holder Change of
Control Redemption Price (together with any interest thereon) is
paid in full, the Conversion Amount submitted for redemption under
this Section 6(b) (together with any interest thereon) may be
converted, in whole or in part, by the Holder into Company Common
Stock pursuant to Section 3 or may be exchanged, in whole or in
part, by the Holder into Lumera Common Stock pursuant to Section 4.
In the event of a partial redemption of this Note pursuant hereto,
the principal amount redeemed shall be deducted from the
Installment Amounts relating to the Installment Dates as set forth
in the Holder Change of Control Redemption Notice.
(7) RIGHTS UPON ISSUANCE OF
PURCHASE RIGHTS AND OTHER CORPORATE EVENTS .
(a) Company Purchase Rights .
If at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock,
warrants,
16
securities or other property pro
rata to the record holders of any class of Company Common Stock
(the “ Company Purchase Rights ”), then the
Holder will be entitled to acquire, upon the terms applicable to
such Company Purchase Rights, the aggregate Company Purchase Rights
which the Holder could have acquired if the Holder had held the
number of shares of Company Common Stock acquirable upon complete
conversion of this Note (without taking into account any
limitations or restrictions on the convertibility of this Note
other than the Exchange Cap; provided, however that if the effect
of the Exchange Cap would be to limit the rights of the Holders
compared to what it would have received in the absence of the
Exchange Cap, the Company shall not grant, issue or sell any such
Company Purchase Rights unless it obtains the approval of its
stockholders of the issuance to the Holder of shares of Company
Common Stock under the Transaction Documents as required by the
applicable rules of the Nasdaq Stock Market) immediately before the
date on which a record is taken for the grant, issuance or sale of
such Company Purchase Rights, or, if no such record is taken, the
date as of which the record holders of Company Common Stock are to
be determined for the grant, issue or sale of such Company Purchase
Rights.
(b) Other Corporate Events .
In addition to and not in substitution for any other rights
hereunder, prior to the consummation of any Fundamental Transaction
pursuant to which holders of shares of Company Common Stock are
entitled to receive securities or other assets with respect to or
in exchange for shares of Company Common Stock (a “
Corporate Event ”), the Company shall make appropriate
provision to insure that the Holder will thereafter have the right
to receive upon a conversion of this Note, (i) in addition to the
shares of Company Common Stock receivable upon such conversion,
such securities or other assets to which the Holder would have been
entitled with respect to such shares of Company Common Stock had
such shares of Company Common Stock been held by the Holder upon
the consummation of such Corporate Event (without taking into
account any limitations or restrictions on the convertibility of
this Note other than the Exchange Cap; provided, however that if
the effect of the Exchange Cap would be to limit the rights of the
Holders compared to what it would have received in the absence of
the Exchange Cap, the Company shall not shall not permit the
occurrence of such Corporate Event unless it obtains the approval
of its stockholders of the issuance to the Holder of shares of
Company Common Stock under the Transaction Documents as required by
the applicable rules of the Nasdaq Stock Market) or (ii) in lieu of
the shares of Company Common Stock otherwise receivable upon such
conversion, such securities or other assets received by the holders
of shares of Company Common Stock in connection with the
consummation of such Corporate Event in such amounts as the Holder
would have been entitled to receive had this Note initially been
issued with conversion rights for the form of such consideration
(as opposed to shares of Company Common Stock) at a conversion rate
for such consideration commensurate with the Conversion Rate.
Provision made pursuant to the preceding sentence shall be in a
form and substance satisfactory to the Required Holders. The
provisions of this Section shall apply similarly and equally to
successive Corporate Events and shall be applied without regard to
any limitations on the conversion or redemption of this Note other
than the Exchange Cap; provided, however that if the effect of the
Exchange Cap would be to limit the rights of the Holders compared
to what it would have received in the absence of the Exchange Cap,
the Company shall not shall not permit the occurrence of any such
Corporate Events unless i
