FIRST MAKE AN OFFERING OF SUCH NEW SECURITIES TO THE HOLDERS
IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION 3.1.
(A)
THE COMPANY SHALL DELIVER A WRITTEN NOTICE (THE "OFFER NOTICE") TO
EACH HOLDER AT LEAST FOURTEEN (14) DAYS PRIOR TO ANY SUCH OFFERING OR SALE OF
NEW SECURITIES, STATING (I) ITS BONA FIDE INTENTION TO OFFER SUCH NEW
SECURITIES, (II) THE NUMBER OF SUCH NEW SECURITIES TO BE OFFERED, AND (III) THE
PRICE AND TERMS, IF ANY, UPON WHICH IT PROPOSES TO OFFER SUCH NEW SECURITIES.
10
(B)
BY WRITTEN NOTIFICATION RECEIVED BY THE COMPANY, WITHIN FOURTEEN
(14) CALENDAR DAYS AFTER RECEIPT BY HOLDERS OF THE OFFER NOTICE, ANY HOLDER MAY
ELECT TO PURCHASE OR OBTAIN, AT THE PRICE AND ON THE TERMS SPECIFIED IN THE
OFFER NOTICE, UP TO THAT PORTION OF THE NEW SECURITIES WHICH EQUALS THE
PROPORTION THAT THE NUMBER OF REGISTRABLE SECURITIES
THEN HELD BY THE HOLDER
(OR THEN ISSUABLE TO SUCH HOLDER UPON CONVERSION OR EXERCISE OF NOTES AND
WARRANTS, AS THE CASE MAY BE) BEARS TO THE TOTAL NUMBER OF SHARES OF COMMON
STOCK OF THE COMPANY THEN OUTSTANDING (ASSUMING FULL CONVERSION AND EXERCISE OF
ALL CONVERTIBLE OR EXERCISABLE SECURITIES).
(C)
IF ALL NEW SECURITIES REFERRED TO IN THE OFFER NOTICE ARE NOT
ELECTED TO BE PURCHASED OR OBTAINED AS PROVIDED IN SECTION 3.1(B) HEREOF, THE
COMPANY MAY, DURING THE ONE HUNDRED AND TWENTY (120) DAY PERIOD FOLLOWING THE
EXPIRATION OF THE PERIOD PROVIDED IN SECTION 3.1(B) HEREOF, OFFER THE REMAINING
UNSUBSCRIBED PORTION OF SUCH NEW SECURITIES (COLLECTIVELY, THE "REFUSED
SECURITIES") TO ANY PERSON OR PERSONS AT A PRICE NOT LESS THAN, AND UPON TERMS
NO MORE FAVORABLE TO THE OFFEREE THAN, THOSE SPECIFIED IN THE OFFER NOTICE.
IF
THE COMPANY DOES NOT ENTER INTO AN AGREEMENT FOR THE SALE OF THE NEW SECURITIES
WITHIN SUCH PERIOD, OR IF SUCH AGREEMENT IS NOT CONSUMMATED WITHIN THIRTY (30)
DAYS OF THE EXECUTION THEREOF, THE RIGHT PROVIDED HEREUNDER SHALL BE DEEMED TO
BE REVIVED AND SUCH NEW SECURITIES SHALL NOT BE OFFERED UNLESS FIRST REOFFERED
TO THE HOLDERS IN ACCORDANCE WITH THIS SECTION 3.1.
(D)
THE PARTICIPATION RIGHT IN THIS SECTION 3.1 SHALL NOT BE APPLICABLE
TO: (I) SHARES OF COMMON STOCK OR OPTIONS OR OTHER RIGHTS TO ACQUIRE SUCH COMMON
STOCK ISSUED TO EMPLOYEES, CONSULTANTS, OFFICERS OR DIRECTORS OF THE COMPANY
PURSUANT TO ANY STOCK OPTION PLAN OR COMPENSATORY ARRANGEMENT APPROVED BY THE
BOARD; (II) SHARES OF COMMON STOCK ISSUED BY THE COMPANY IN A FIRM COMMITMENT
UNDERWRITTEN PUBLIC OFFERING PURSUANT TO A REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED; (III) THE ISSUANCE OF SECURITIES PURSUANT TO THE
ACQUISITION OF ANOTHER BUSINESS ENTITY OR BUSINESS SEGMENT OF ANY SUCH ENTITY BY
THE COMPANY BY MERGER, PURCHASE OF ALL OR SUBSTANTIALLY ALL THE ASSETS OR OTHER
REORGANIZATION WHEREBY THE COMPANY WILL OWN GREATER THAN 50% OF THE VOTING POWER
OF SUCH BUSINESS ENTITY OR BUSINESS SEGMENT OF ANY SUCH ENTITY, IF SUCH ISSUANCE
IS APPROVED BY THE BOARD; (IV) SECURITIES ISSUED