Common use of Right of First Option Clause in Contracts

Right of First Option. (a) The Company hereby grants to each Holder the right of first option to purchase a number of shares (rounded down to the nearest whole share) equal to its pro rata share of New Securities (as defined in Section 4.1(c)) which the Company may, from time to time, propose to sell and issue on or after the date of this Agreement, subject to Sections 4.1(b)-(e). A Holder’s pro rata share, for purposes of this right of first option, is equal to the ratio of (a) the number of shares of Common Stock owned by such Holder immediately prior to the issuance of New Securities (assuming full conversion of the Shares and full conversion or exercise of all outstanding convertible securities, rights, options and warrants held by said Holder) to (b) the total number of shares of Common Stock outstanding immediately prior to the issuance of New Securities (assuming full conversion of the Shares and full conversion or exercise of all outstanding convertible securities, rights, options and warrants). Each Holder (including CL Alaska) shall have a right of over-allotment such that if any Holder fails to exercise its rights hereunder to purchase its full pro rata share of New Securities, the other Holders may purchase such Holder’s unsubscribed portion on a pro rata basis; provided, however, that where a Holder informs the Company during the Election Period that such Holder intends to exercise its rights to purchase its full pro rata share of New Securities, but such Holder (or one or more designees of such Holder as provided in Section 4.1(d)) does not purchase such pro rata share for whatever reason, the Company may determine either (i) not to sell the unpurchased amounts or (ii) to offer unpurchased amounts to the other Holders in accordance with their over-allotment rights. (b) In addition to the rights granted pursuant to Section 4.1(a) above, the Company hereby grants to CL Alaska, the right of first option to purchase an additional number of New Securities, in each issuance of New Securities after the date of this Agreement, equal to the amount by which the CL Alaska Participation Shares exceeds CL Alaska’s pro rata share as calculated in accordance with Section 4.1(a), subject to Section 4.1(c)-(e); provided, however, that the number of New Securities that CL Alaska shall have the right of first option to purchase in any issuance pursuant to Sections 4.1(a) and (b) shall in no event exceed the amount by which (i) the total number of shares of New Securities issued in such issuance exceeds (ii) the aggregate number of New Securities subject to the right of first option which each other Holder elects to purchase pursuant to Section 4.1(a). The “CL Alaska Participation Shares” with respect to any new issuance shall be a number of shares (rounded down to the nearest whole share) of New Securities equal to the lesser of (a) 64.71% of the New Securities issued by the Company in such issuance and (b) a number of New Securities equal to the positive difference, if any, by which (1) a number equal to 50% of the number of shares of Common Stock outstanding immediately following such issuance of New Securities (assuming full conversion of the Shares and New Securities and full conversion or exercise of all outstanding Company convertible securities, rights, options and warrants) exceeds (2) the number of shares of Common Stock owned by CL Alaska immediately prior to such issuance of New Securities (assuming full conversion of the Shares and full conversion or exercise of all outstanding convertible securities, rights, options and warrants held by CL Alaska), such positive difference rounded to the next whole share.