EARLY FINANCING SECURITIES. Shall mean these elements of the authorized shares of the common stock of QC1: (a) Three million (3,000,000) shares reserved for warrants for COAST pursuant to the CONSULTING AGREEMENT of even date herewith; (b) Five Million (5,000,000) shares of which Four Million Five Hundred Thousand (4,500,000) shares are reserved for capital raising for QC1 and including therein any purchasers of any part of such Five Million shares in private
... transactions prior to the effective date of a Registration Statement, and Five Hundred Thousand (500,000) shares are reserved for advertising, including any investor relations or public relations expenses; and (c) Five million (5,000,000) shares held by QCF; provided, however, that, as to any particular EARLY FINANCING SECURITIES, such EARLY FINANCING SECURITIES will cease to be EARLY FINANCING SECURITIES when it: (i) has been sold pursuant to a Registration Statement or in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act; or (ii) can then be sold by the Holder (as defined in Section 2 below) thereof without registration under the Securities Act pursuant to Rule 144 under the Securities Act; provided that, as set forth in Section 7, non-dilution rights may continue to apply, and provided that an assignment of a Holder's warrants or common stock shall not constitute a sale for the definitional purposes of Section 1.4.
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