Reservation of Authorized Shares Clause Example from Business Contracts

Reservation of Authorized Shares. (a) Reservation. So long as the Note remains outstanding, the Company shall at all times reserve 500% of the maximum number of shares of Common Stock issued pursuant to the Transaction Documents issuable upon (1) conversion of the Note (assuming for purposes hereof that (x) the Note is convertible at the lower of: (A) the Alternate Conversion Price (assuming an Alternate Conversion Date as of such date of determination) or (B) 70% of the lowest daily VWAP after the Issuance Date, (y) Interest on... the Note shall accrue through the 12 month anniversary of the Issuance Date and will be converted into shares of Common Stock at a conversion price equal to: the lower of: (A) the Alternate Conversion Price (assuming an Alternate Conversion Date as of such date of determination) or (B) 70% of the lowest daily VWAP after the Issuance Date and (z) any such conversion shall not take into account any limitations on the conversion of the Note set forth in the Note); and (2) exercise of the Warrants (the "Required Reserve Amount"). (b) Insufficient Authorized Shares. If, notwithstanding Section 10(a), and not in limitation thereof, at any time while any of the Note remains outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance as provided in Section 10(a) at least a number of shares of Common Stock equal to the Required Reserve Amount (an "Authorized Share Failure"), then the Company shall immediately take all action necessary to increase the Company's authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than 60 days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders (or obtain approval by written consent) for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall comply with the 1934 Act and shall use its best efforts to solicit its stockholders' approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal. In the event that the Company is prohibited from issuing shares of Common Stock pursuant to the terms of this Note due to the failure by the Company to have sufficient shares of Common Stock available out of the authorized but unissued shares of Common Stock (such unavailable number of shares of Common Stock, the "Authorized Failure Shares"), in lieu of delivering such Authorized Failure Shares to the Holder, the Company shall pay cash in exchange for the prepayment of such portion of the Conversion Amount convertible into such Authorized Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorized Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the earlier of the date the Conversion Trigger Event occurs and the date the Holder delivers the applicable notice with respect to such Authorized Failure Shares to the Company and ending on the date of such issuance and payment under this Section 10(b); and (ii) to the extent the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorized Failure Shares, any brokerage commissions and other out-of-pocket expenses, if any, of the Holder incurred in connection therewith. 17 11. PREPAYMENTS MECHANICS. (a) The Company shall deliver the applicable Event of Default Prepayment Price to the Holder in cash within five Trading Days after the Company's receipt of the Holder's Event of Default Prepayment Notice. (b) If the Holder has submitted a Change of Control Prepayment Notice in accordance with Section 5(b), the Company shall deliver the applicable Change of Control Prepayment Price to the Holder in cash concurrently with the consummation of such Change of Control if such notice is received prior to the consummation of such Change of Control and within five Trading Days after the Company's receipt of such notice otherwise. (c) The Company shall deliver the applicable Company Optional Prepayment Price to the Holder in cash on the applicable Company Optional Prepayment Date. (d) The Company shall deliver the applicable Prepayment Amount to the Holder in cash on the fifth Trading Day immediately following the day a Prepayment Notice is delivered. View More