BE
EVIDENCED BY A WRITING SIGNED BY THE INVESTOR AND DELIVERED TO THE COMPANY PRIOR
TO THE END OF THE FIFTEEN (15)-BUSINESS DAY PERIOD OF SUCH OFFER, SETTING FORTH
SUCH OF THE BASIC AMOUNT AS THE INVESTOR ELECTS TO PURCHASE AND, IF THE INVESTOR
SHALL ELECT TO PURCHASE ALL OF THE BASIC AMOUNT, SUCH ADDITIONAL OFFERED
SECURITIES AS THE INVESTOR SHALL DESIRE TO PURCHASE (THE "NOTICE OF
ACCEPTANCE").
THE INVESTOR SHALL BE ENTITLED TO PURCHASE ONLY THAT PORTION OF
THE OFFERED SECURITIES AS IS EQUAL TO THE BASIC AMOUNT, AND IF THE INVESTOR
SHALL HAVE INDICATED IN THE NOTICE OF ACCEPTANCE A DESIRE TO PURCHASE ADDITIONAL
OFFERED SECURITIES ABOVE THE BASIC AMOUNT, THE COMPANY SHALL HAVE THE SOLE
DISCRETION AS TO THE PURCHASE BY THE INVESTOR OF ANY OFFERED SECURITIES ABOVE
SUCH BASIC AMOUNT.
THE PURCHASE BY THE INVESTOR OF ANY OFFERED SECURITIES IS
SUBJECT IN ALL CASES TO THE PREPARATION, EXECUTION AND DELIVERY BY THE COMPANY
AND THE INVESTOR OF A PURCHASE AGREEMENT RELATING TO SUCH OFFERED SECURITIES
REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY AND THE INVESTOR
AND THEIR RESPECTIVE COUNSEL.
(C)
CLOSING.
UPON THE CLOSING OF THE SALE OF
THE OFFERED SECURITIES TO THE INVESTOR, WHICH SHALL OCCUR ON, OR AS SOON AS
REASONABLY PRACTICABLE AFTER, THE CLOSING OF THE SALE OF THE OFFERED SECURITIES
NOT OFFERED TO THE INVESTOR (WHICH SHALL INCLUDE FULL PAYMENT TO THE COMPANY FOR
THE SALE TO SUCH OTHER PERSONS), THE INVESTOR SHALL PURCHASE FROM THE COMPANY
AND THE COMPANY SHALL SELL TO THE INVESTOR THE NUMBER OF OFFERED SECURITIES
SPECIFIED IN THE NOTICE OF ACCEPTANCE UPON THE TERMS AND CONDITIONS SPECIFIED IN
THE OFFER.
(D)
EXCEPTIONS.
THE RIGHTS OF THE INVESTOR
UNDER THIS SECTION 3.1 SHALL NOT APPLY TO:
(I)
ANY COMMON STOCK ISSUED AS A STOCK
DIVIDEND TO HOLDERS OF COMMON STOCK OR UPON ANY SUBDIVISION OR COMBINATION OF
SHARES OF COMMON STOCK;
(II)
ANY CAPITAL STOCK OR DERIVATIVE THEREOF
GRANTED TO AN EMPLOYEE, DIRECTOR OR CONSULTANT UNDER A STOCK PLAN APPROVED BY
THE BOARD OF DIRECTORS OF THE COMPANY;
(III)
ANY SECURITIES ISSUED AS CONSIDERATION FOR
THE ACQUISITION OF ANOTHER ENTITY BY THE COMPANY BY MERGER OR SHARE EXCHANGE
(WHEREBY THE COMPANY OWNS NO LESS THAN FIFTY-ONE PERCENT (51%) OF THE VOTING
POWER OF THE SURVIVING ENTITY) OR PURCHASE OF
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SUBSTANTIALLY ALL OF SUCH ENTITY'S STOCK OR ASSETS, IF SUCH ACQUISITION IS
APPROVED BY THE BOARD OF DIRECTORS;
(IV)
ANY SECURITIES ISSUED IN CONNECTION WITH A
STRATEGIC PARTNERSHIP, JOINT VENTURE OR OTHER SIMILAR ARRANGEMENT, PROVIDED THAT
THE PURPOSE OF SUCH ARRANGEMENT IS NOT PRIMARILY THE RAISING OF CAPITAL AND THAT
SUCH ARRANGEMENT IS APPROVED BY THE BOARD OF DIRECTORS;
(V)
ANY SECURITIES ISSUED TO A FINANCIAL
INSTITUTION IN CONNECTION WITH A BANK LOAN OR LEASE WITH SUCH FINANCIAL
INSTITUTION PROVIDED THAT SUCH ISSUANCE IS APPROVED BY THE BOARD OF DIRECTORS;
(VI)
ANY SECURITIES ISSUABLE UPON THE EXERCISE OR
CONVERSION OF OPTIONS, WARRANTS OR OTHER CONVERTIBLE OR EXERCISABLE SECURITIES
OUTSTANDING AS OF THE CLOSING DATE; AND