PLANS TO OBTAIN ANY SUCH FINANCING, THEN PRIOR TO SEEKING,
NEGOTIATING OR OBTAINING ANY SUCH FINANCING OR ENTERING INTO ANY TERM SHEET,
LETTER OF INTENT, COMMITMENT OR SIMILAR ARRANGEMENT TO OBTAIN SUCH FINANCING
(EACH A "FUNDING OPPORTUNITY") FROM A THIRD PARTY (OTHER THAN AN INVESTOR), THE
COMPANY AND PHOENIX SHALL DISCUSS THE MATERIAL ECONOMIC PARAMETERS OF THE
PROPOSED FUNDING OPPORTUNITY. PHOENIX SHALL THEN HAVE THIRTY (30) BUSINESS DAYS
AFTER THE DATE OF RECEIPT FROM THE COMPANY OF A DETAILED PROPOSED TERM SHEET OR
PROPOSED DEFINITIVE AGREEMENT TO NOTIFY THE COMPANY IN WRITING (THE "FINANCING
NOTICE") WHETHER OR NOT IT INTENDS TO EXERCISE ITS RIGHT OF FIRST OPPORTUNITY TO
PROVIDE THE FINANCING TO THE COMPANY.
IF THE COMPANY AND PHOENIX CANNOT COME TO
A MUTUAL AGREEMENT AS TO THE TERMS AND CONDITIONS OF SUCH FINANCING WITHIN THAT
PERIOD OF THIRTY (30) BUSINESS DAYS, FOR ANY REASON WHATSOEVER, THEN THE COMPANY
MAY PURSUE OBTAINING SUCH FINANCING FROM A THIRD PARTY AS DESCRIBED BELOW,
PROVIDED, HOWEVER, THAT IN NO EVENT SHALL THE COMPANY CONSUMMATE SUCH FINANCING
WITH A PERSON OTHER THAN PHOENIX (OR ONE OF ITS AFFILIATES) ON TERMS MORE
FAVORABLE TO SUCH THIRD PARTY THAN THOSE OFFERED TO PHOENIX.
IN THE EVENT THAT
PHOENIX DOES NOT EXERCISE ITS RIGHT HEREUNDER, THEN THE COMPANY MAY PURSUE
OBTAINING THE PROPOSED FINANCING FROM OTHER PERSONS FOR A PERIOD OF SIXTY (60)
DAYS, AND, IN THE EVENT THAT THE COMPANY OBTAINS A SIGNED LETTER OF INTENT FROM
OTHER PERSONS WITHIN THAT 60-DAY PERIOD, IT MAY CONTINUE TO PURSUE SUCH PROPOSED
FINANCING FOR AN ADDITIONAL ONE HUNDRED TWENTY (120) DAYS.
NOTWITHSTANDING THE
FOREGOING, NO RIGHT OF FIRST OPPORTUNITY WILL EXIST FOR (I) ANY ISSUANCE OF
SECURITIES UPON CONVERSION, EXERCISE OR EXCHANGE OF EXISTING SECURITIES PURSUANT
TO TERMS IN EFFECT AND PUBLICLY DISCLOSED IN THE COMPANY'S SEC FILINGS AS OF
JULY 13, 2007; (II) ANY ISSUANCE BY A SUBSIDIARY TO ANOTHER SUBSIDIARY OR TO THE
COMPANY; OR (III) ANY ISSUANCE OR EXERCISE OF OPTIONS UNDER THE COMPANY'S
EMPLOYEE OR CONSULTANT INCENTIVE OPTION PLANS.
4.8
RESTRICTIONS OF SALES OF EXECUTIVE MANAGEMENT SHARES.
SO LONG AS ANY OF
THE COMMON SHARES ARE NOT FREELY SALEABLE IN AN ELIGIBLE MARKET, NO CAPITAL
STOCK OF THE COMPANY MAY BE SOLD BY ANY PERSON THAT HOLDS ANY EXECUTIVE
MANAGEMENT POSITION UNDER THE REGISTRATION STATEMENT, RULE 144 (AS DEFINED IN
SECTION 1.1 HEREOF) OR ANY OTHER METHOD.
4.9
BOARD OBSERVER AND DIRECTOR RIGHTS.
SO LONG AS THE INVESTORS HOLD COMMON
SHARES REPRESENTING (I) AT LEAST 50% OF THE REGISTRABLE SECURITIES AND (II) AT
LEAST 5% OF ALL SHARES OF THE
22
OUTSTANDING CAPITAL STOCK OF THE COMPANY, PHOENIX SHALL BE ENTITLED TO DESIGNATE
UP TO TWO INDIVIDUALS AS NON-VOTING OBSERVERS WHO SHALL BE ENTITLED TO ATTEND
ALL MEETINGS OF THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") AND ANY
COMMITTEE MEETING OF THE BOARD, AND SHALL BE ENTITLED TO RECEIVE ANY AND ALL
DOCUMENTATION, MATERIAL AND INFORMATION PROVIDED BY THE COMPANY TO THE BOARD AT
THE SAME TIME THAT IT IS PROVIDED