(OR
QUOTATION) OF ALL CONVERSION COMMON SHARES.
11
5.5.
PRE-EMPTIVE RIGHTS.
(A) EXCEPT FOR EXCLUDED
ISSUANCES (AS DEFINED BELOW IN SECTION 5.5(D)), IF THE COMPANY ISSUES ANY OF ITS
COMMON STOCK, SERIES A PREFERRED OR OTHER EQUITY SECURITIES, DEBT SECURITIES
CONTAINING EQUITY FEATURES OR OTHER SECURITIES OR OTHER RIGHTS CONVERTIBLE INTO
OR CONTAINING OPTIONS OR RIGHTS TO ACQUIRE ANY SUCH DEBT OR EQUITY SECURITIES
("OFFERED SECURITIES"), THE COMPANY SHALL FIRST OFFER, BY WRITTEN NOTICE (A
"PROPOSAL NOTICE"), TO SELL TO EACH HOLDER OF SERIES A PREFERRED SHARES AND THE
HOLDER OF THE WARRANT, A PORTION OF SUCH OFFERED SECURITIES EQUAL TO THE PRODUCT
OF (I) THE NUMBER OF SUCH OFFERED SECURITIES AND (II) THE QUOTIENT DETERMINED BY
DIVIDING (A) THE NUMBER OF CONVERSION COMMON SHARES HELD BY SUCH HOLDER BY
(B) THE NUMBER OF SHARES OF COMMON STOCK THEN OUTSTANDING (CALCULATED ASSUMING
THE CONVERSION INTO COMMON STOCK OF ALL SERIES A PREFERRED SHARES OUTSTANDING
IMMEDIATELY PRIOR TO SUCH PROPOSED ISSUANCE AND ASSUMING THE EXERCISE OF ALL
SECURITIES THEN EXERCISABLE INTO COMMON STOCK AND THE CONVERSION OF ALL
SECURITIES THEN CONVERTIBLE INTO COMMON STOCK).
THE PROPOSAL NOTICE SHALL BE
DELIVERED TO EACH HOLDER OF SERIES A PREFERRED SHARES AT LEAST
TWENTY (20) DAYS
PRIOR TO THE PROPOSED ISSUANCE AND SHALL SET FORTH IN REASONABLE DETAIL THE
OFFERED SECURITIES, THE PURCHASE PRICE THEREOF, THE PAYMENT TERMS AND SUCH
HOLDER'S PERCENTAGE ALLOTMENT.
DURING SUCH 10-DAY PERIOD FOLLOWING DELIVERY OF
THE PROPOSAL NOTICE (THE "OFFER PERIOD"), EACH HOLDER OF SERIES A PREFERRED
SHARES SHALL BE ENTITLED TO PURCHASE ITS PORTION OF SUCH OFFERED SECURITIES AT
THE MOST FAVORABLE PRICE AND ON THE MOST FAVORABLE TERMS AS SUCH OFFERED
SECURITIES ARE TO BE OFFERED TO ANY OTHER PERSON.
(B)
IN ORDER TO EXERCISE ITS PURCHASE RIGHTS
HEREUNDER, EACH HOLDER OF SERIES A PREFERRED SHARES MUST DELIVER A WRITTEN
NOTICE TO THE COMPANY DESCRIBING ITS ELECTION HEREUNDER WITHIN TEN (10) DAYS
AFTER RECEIPT OF THE PROPOSAL NOTICE FROM THE COMPANY; PROVIDED, THAT ANY SUCH
ELECTION MAY BE SUBJECT TO THE CONSUMMATION OF THE SALE OF THE OFFERED
SECURITIES AND OTHER RIGHTS DESCRIBED IN THE PROPOSAL NOTICE ON THE TERMS SET
FORTH THEREIN.
(C)
TO THE EXTENT ANY OF THE OFFERED SECURITIES
ARE NOT ACQUIRED BY ANY HOLDER OF SERIES A PREFERRED SHARES PURSUANT TO
SECTION 3.5(A), THE COMPANY SHALL BE ENTITLED TO SELL SUCH OFFERED SECURITIES ON
TERMS AND CONDITIONS NO MORE FAVORABLE TO THE PURCHASERS THEREOF THAN THOSE
OFFERED TO THE HOLDERS OF SERIES A PREFERRED SHARES DURING THE NINETY (90) DAYS
FOLLOWING THE EXPIRATION OF THE OFFER PERIOD.
ANY OFFERED SECURITIES SO OFFERED
OR SOLD BY THE COMPANY TO ANY PERSON AFTER SUCH 90-DAY PERIOD MUST BE REOFFERED
TO EACH HOLDER OF SERIES A PREFERRED SHARES PURSUANT TO THE TERMS OF
SECTION 3.5(A).
(D)
FOR PURPOSES OF THE FOREGOING, "EXCLUDED
ISSUANCES" MEANS (A) ISSUANCES TO EMPLOYEES, OFFICERS, DIRECTORS AND CONSULTANTS
OF THE COMPANY OF STOCK OPTIONS, RESTRICTED STOCK OR OTHER STOCK AWARDS UNDER
ANY EQUITY INCENTIVE OR RESTRICTED STOCK PLAN OR PLANS CURRENTLY