Common use of Right to Participate in Certain Sales of Additional Securities Clause in Contracts

Right to Participate in Certain Sales of Additional Securities. 7.1.1 For so long as any shares of Registrable Securities remain outstanding, the Company agrees that it will not (and that it will cause its subsidiaries not to) sell or issue any shares of Capital Stock or Equity Securities, in each case, unless (x) the Company first submits a written notice (a “Pre-Emptive Right Notice”) to the Investors (for the benefit of the Investor Parties) setting forth in reasonable detail (A) the designation and all of the terms and provisions of the securities proposed to be issued (the “Proposed Securities”), including, to the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof and interest rate and maturity; (B) the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed sale of such Proposed Securities; and (C) the amount of such Proposed Securities proposed to be issued; provided, that following the delivery of such notice, the Company shall deliver to the Investors (for the benefit of the Investor Parties) any such information the Investors may reasonably request in order to evaluate the proposed issuance, (y) it offers to issue and sell to the Investor Parties, on such terms as the Proposed Securities are issued and upon full payment by the Investor Parties, the lesser of (i) fifty percent (50%) of the Proposed Securities (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice) or (ii) the percentage of the Proposed Securities equal to the aggregate Participation Portions of the Investor Parties (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice); provided, however, that, subject to compliance with the terms and conditions set forth in Section 7.1.5, the Company shall not be required to offer to issue or sell to the Investor Parties the portion of the Proposed Securities that would require the Company to obtain stockholder approval in respect of the issuance of any Proposed Securities to the Investor Parties under Nasdaq Marketplace Rule 5635 unless such approval has been obtained (provided, further, however, that the Company shall still be obligated to provide written notice of such proposed issuance to the Investors (for the benefit of the Investor Parties), which notice shall include a description of the Proposed Securities (including the number thereof) that would require stockholder approval in respect of the issuance thereof).

Right to Participate in Certain Sales of Additional Securities. 7.1.1 For so long as any shares Subject to Section 5.6 of Registrable Securities remain outstandingthe Purchase Agreement and Section 5A.3 of the Series F Purchase Agreement, the Company agrees that it will not (and that it will cause its subsidiaries not to) sell or issue any shares of Capital Stock capital stock of the Company, or Equity other securities convertible into or exchangeable for capital stock of the Company or options, warrants or rights carrying any rights to purchase capital stock of the Company (the “Offered Securities, in each case, ”) unless (x) the Company first submits a written notice (a the “Pre-Emptive Right Preemptive Rights Notice”) to the Investors (for identifying the benefit of the Investor Parties) setting forth in reasonable detail (A) the designation and all of the terms and provisions of the securities proposed to be issued (the “Proposed Securities”), including, to the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof and interest rate and maturity; (B) the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed sale of such Proposed Securities; and (C) the including price, number or aggregate principal amount of such Proposed securities and all other material terms), and offers to each Investor the opportunity to purchase its Pro Rata Allotment (as hereinafter defined) of the Offered Securities proposed (subject to be issued; providedincrease for over-allotment if any of the Investors do not fully exercise their rights) on terms and conditions, that following the delivery of such noticeincluding price, not less favorable than those on which the Company shall deliver proposes to sell such securities to a third party or parties. The Company’s offer to the Investors shall remain open and irrevocable for a period of thirty (for the benefit of the Investor Parties30) any such information days during which time the Investors may reasonably request in order to evaluate the proposed issuance, (y) it offers to issue and sell accept such offer by written notice to the Company setting forth the maximum number of shares or other securities to be purchased by any such Investor, including the number of shares or securities which the Investor Partieswould purchase if the other Investors do not elect to purchase, with the rights of the electing Investors to purchase such additional shares or securities to be based on such terms as the Proposed Securities relative holdings of shares of the electing Investors. Any securities so offered which are issued and upon full payment not purchased by the Investor PartiesInvestors pursuant to such offer may be sold by the Company, the lesser of (i) fifty percent (50%) of the Proposed Securities (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice) or (ii) the percentage of the Proposed Securities equal to the aggregate Participation Portions of the Investor Parties (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice); provided, however, that, subject to compliance with but only on the terms and conditions set forth in the initial offer to the Investors, at any time within one hundred twenty (120) days following the termination of the above-referenced thirty (30) day period. For purposes of this Section 7.1.53.1, each Investor’s “Pro Rata Allotment” of securities shall be based on the ratio which the shares of Common Stock held by such Investor (as determined in accordance with Section 1.2 hereof) bears to the total number of shares of Common Stock outstanding on the date of the Preemptive Rights Notice (determined on a fully-diluted and an as-converted basis). Notwithstanding the foregoing, the right to purchase shall be inapplicable with respect to any issuance or proposed issuance by the Company shall not be required of (i) up to offer 17,350,204 shares of Common Stock and up to issue 325,000 shares of Series 1 Stock, as appropriately adjusted for stock splits, stock dividends, recapitalizations and the like (or sell options to purchase such Common Stock or Series 1 Stock) to its officers, directors, employees and consultants pursuant to stock and options plans approved by a majority of the Board of Directors, (ii) Common Stock upon conversion of the Preferred Stock, (iii) securities as a result of any stock split, stock dividend or combination of the Company’s Common Stock, (iv) securities upon conversion or exercise of convertible or exercisable securities outstanding on the date hereof, (v) securities upon conversion of the Note or exercise of any warrants issued to the New Investor Parties in connection with the portion Purchase Agreement, (vi) securities in connection with a merger, consolidation, acquisition or similar business combination approved by a majority of the Proposed Securities that would require Board of Directors, (vii) securities pursuant to any loan arrangement or debt financing from a bank or similar financial institution approved by a majority of the Board of Directors, (viii) securities in connection with strategic transactions involving the Company to obtain stockholder approval in respect of and other entities, including joint venture, marketing or distribution arrangements or technology transfer or development arrangements, provided that such strategic transactions and the issuance of any Proposed Securities to the Investor Parties under Nasdaq Marketplace Rule 5635 unless such approval has securities in connection therewith have been obtained (provided, further, however, that the Company shall still be obligated to provide written notice of such proposed issuance to the Investors (for the benefit approved by a majority of the Board of Directors, (ix) securities purchased by the New Investor Parties), which notice shall include a description pursuant to Section 5.6 of the Proposed Securities Purchase Agreement and (including the number thereofx) that would require stockholder approval in respect securities purchased by Cisco pursuant to Section 5A.3 of the issuance thereof)Series F Purchase Agreement.”

Right to Participate in Certain Sales of Additional Securities. 7.1.1 For so long as any shares Subject to Section 5.6 of Registrable Securities remain outstandingthe Purchase Agreement and Section 5A.3 of the Series F Purchase Agreement, the Company agrees that it will not (and that it will cause its subsidiaries not to) sell or issue any shares of Capital Stock capital stock of the Company, or Equity other securities convertible into or exchangeable for capital stock of the Company or options, warrants or rights carrying any rights to purchase capital stock of the Company (the “Offered Securities, in each case, ”) unless (x) the Company first submits a written notice (a the “Pre-Emptive Right Preemptive Rights Notice”) to the Investors (for identifying the benefit of the Investor Parties) setting forth in reasonable detail (A) the designation and all of the terms and provisions of the securities proposed to be issued (the “Proposed Securities”), including, to the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof and interest rate and maturity; (B) the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed sale of such Proposed Securities; and (C) the including price, number or aggregate principal amount of such Proposed securities and all other material terms), and offers to each Investor the opportunity to purchase its Pro Rata Allotment (as hereinafter defined) of the Offered Securities proposed (subject to be issued; providedincrease for over-allotment if any of the Investors do not fully exercise their rights) on terms and conditions, that following the delivery of such noticeincluding price, not less favorable than those on which the Company shall deliver proposes to sell such securities to a third party or parties. The Company’s offer to the Investors shall remain open and irrevocable for a period of thirty (for the benefit of the Investor Parties30) any such information days during which time the Investors may reasonably request in order to evaluate the proposed issuance, (y) it offers to issue and sell accept such offer by written notice to the Company setting forth the maximum number of shares or other securities to be purchased by any such Investor, including the number of shares or securities which the Investor Partieswould purchase if the other Investors do not elect to purchase, with the rights of the electing Investors to purchase such additional shares or securities to be based on such terms as the Proposed Securities relative holdings of shares of the electing Investors. Any securities so offered which are issued and upon full payment not purchased by the Investor PartiesInvestors pursuant to such offer may be sold by the Company, the lesser of (i) fifty percent (50%) of the Proposed Securities (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice) or (ii) the percentage of the Proposed Securities equal to the aggregate Participation Portions of the Investor Parties (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice); provided, however, that, subject to compliance with but only on the terms and conditions set forth in the initial offer to the Investors, at any time within one hundred twenty (120) days following the termination of the above-referenced thirty (30) day period. For purposes of this Section 7.1.53.1, each Investor’s “Pro Rata Allotment” of securities shall be based on the ratio which the shares of Common Stock held by such Investor (as determined in accordance with Section 1.2 hereof) bears to the total number of shares of Common Stock outstanding on the date of the Preemptive Rights Notice (determined on a fully-diluted and an as-converted basis). Notwithstanding the foregoing, the right to purchase shall be inapplicable with respect to any issuance or proposed issuance by the Company shall not be required of (i) up to offer 17,350,204 shares of Common Stock and up to issue 325,000 shares of Series 1 Stock, as appropriately adjusted for stock splits, stock dividends, recapitalizations and the like (or sell options to purchase such Common Stock or Series 1 Stock) to its officers, directors, employees and consultants pursuant to stock and options plans approved by a majority of the Board of Directors, (ii) Common Stock upon conversion of the Preferred Stock, (iii) securities as a result of any stock split, stock dividend or combination of the Company’s Common Stock, (iv) securities upon conversion or exercise of convertible or exercisable securities outstanding on the date hereof, (v) securities upon conversion of the Note or exercise of any warrants issued to the New Investor Parties in connection with the portion Purchase Agreement, (vi) securities in connection with a merger, consolidation, acquisition or similar business combination approved by a majority of the Proposed Securities that would require Board of Directors, (vii) securities pursuant to any loan arrangement or debt financing from a bank or similar financial institution approved by a majority of the Board of Directors, (viii) securities in connection with strategic transactions involving the Company to obtain stockholder approval in respect of and other entities, including joint venture, marketing or distribution arrangements or technology transfer or development arrangements, provided that such strategic transactions and the issuance of any Proposed Securities to the Investor Parties under Nasdaq Marketplace Rule 5635 unless such approval has securities in connection therewith have been obtained (provided, further, however, that the Company shall still be obligated to provide written notice of such proposed issuance to the Investors (for the benefit approved by a majority of the Board of Directors, (ix) securities purchased by the New Investor Parties), which notice shall include a description pursuant to Section 5.6 of the Proposed Securities Purchase Agreement and (including the number thereofx) that would require stockholder approval in respect securities purchased by Cisco pursuant to Section 5A.3 of the issuance thereof)Series F Purchase Agreement.

Right to Participate in Certain Sales of Additional Securities. 7.1.1 For so long as The Company will not offer, sell or issue (a) any shares of Registrable capital stock of the Company, (b) Securities remain outstanding, convertible into or exchangeable for capital stock of the Company agrees that it will not or (and that it will cause its subsidiaries not toc) sell Options, Warrants or issue any shares other rights to purchase capital stock of Capital Stock or Equity the Company (collectively, “New Securities, in each case, ”) unless (x) the Company first submits a written notice to each Preferred Stockholder (a collectively, the “Pre-Emptive Right NoticeOfferees”) identifying the terms of the proposed offer, sale or issuance (including price, number and aggregate principal amount of Securities being offered, sold or issued), and offering to each of the Offerees the opportunity to purchase its Diluted Pro Rata Allotment of the New Securities (subject to increase for over-allotment if some Offerees do not fully exercise their rights) on terms and conditions contained in such notice. The Company will keep such offer open and irrevocable for a period of 30 days following receipt by the Offerees of such written notice, and the Offerees will have the right to elect to purchase the New Securities so offered by giving written notice thereof to the Investors Company within such 30 day period. Such notice will indicate the maximum number of New Securities which the Offerees would purchase (for including such number in the benefit case that one or more other Offerees do not elect to purchase any of the Investor Parties) setting forth in reasonable detail (A) New Securities to which such other Offerees are entitled to purchase). In the designation and all event that any Offeree does not elect to purchase its Diluted Pro Rata Allotment of the terms and provisions New Securities, then each other Offeree who has elected to purchase a number of New Securities in excess of its Diluted Pro Rata Allotment (an “Overallotment Offeree”) will have the securities proposed right to be issued purchase those New Securities which such Offeree elected not to purchase (the “Proposed Excess New Securities”), including, to the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof and interest rate and maturity; (B) the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed sale of such Proposed Securities; and (C) the amount of such Proposed Excess New Securities proposed to be issued; provided, that following the delivery of such notice, the Company shall deliver to the Investors (for the benefit of the Investor Parties) any such information the Investors may reasonably request in order to evaluate the proposed issuance, (y) it offers to issue and sell to the Investor Parties, on such terms as the Proposed Securities are issued and upon full payment by the Investor Parties, the lesser of (i) fifty percent (50%) of the Proposed Securities (to will be allocated among all Overallotment Offerees pro rata (up to the Investor Parties number of New Securities specified in proportion such Offeree’s notice) based on the number of Securities held (or, in the case of an Investor, based on the number of Securities held and the number of Securities that are issuable pursuant to their respective levels of ownership of Series B Shares as the conversion of the date Convertible Notes and the Series C Preferred Stock) by such Overallotment Offerees immediately prior to receipt of such written notice from the Pre-Emptive Rights Notice) or (ii) the percentage of the Proposed Securities equal to the aggregate Participation Portions of the Investor Parties (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice)Company; provided, however, thatthat no such Offeree will be required to purchase more than the number of New Securities specified in its election notice. Any New Securities so offered which are not purchased by the Offerees pursuant to such offer may be sold by the Company at any time within 120 days following the termination of the above referenced 30 day period, subject to compliance with but only on the terms and conditions set forth in the initial offer. The Company will not offer, sell or issue any New Securities after such 120 day period or on terms and conditions other than those set forth in the original offer notice without renewed compliance with this Section 7.1.5, the Company shall not be required to offer to issue or sell to the Investor Parties the portion of the Proposed Securities that would require the Company to obtain stockholder approval in respect of the issuance of any Proposed Securities to the Investor Parties under Nasdaq Marketplace Rule 5635 unless such approval has been obtained (provided, further, however, that the Company shall still be obligated to provide written notice of such proposed issuance to the Investors (for the benefit of the Investor Parties), which notice shall include a description of the Proposed Securities (including the number thereof) that would require stockholder approval in respect of the issuance thereof)4.1.

Right to Participate in Certain Sales of Additional Securities. 7.1.1 For so long as any shares of Registrable Securities remain outstanding, the The Company agrees that it will not (and that it will cause its subsidiaries not to) sell or issue any shares of Capital Stock capital stock of the Company, or Equity Securitiesother securities convertible into or exchangeable for capital stock of the Company, in each caseor options, warrants or rights carrying any rights to purchase capital stock of the Company unless (x) the Company first submits a written notice (a “Pre-Emptive Right Notice”) offer to the Investors (for the benefit of the Investor Parties) setting forth in reasonable detail (A) the designation and all of the terms and provisions of the securities proposed to be issued (the “Proposed Securities”), including, to the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof and interest rate and maturity; Stockholders (Bincluding for all purposes of this Section 6 each permitted transferee of a Stockholder pursuant to Section 5.1(b)) identifying the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed sale of such Proposed Securities; and (C) the including price, number or aggregate principal amount of such Proposed Securities proposed securities and all other material terms), and offers to be issued; providedeach Investor and Stockholder the opportunity to purchase its Pro Rata Share (as hereinafter defined) of the securities (subject to increase for over-allotment if some Investors or Stockholders do not fully exercise their rights) on terms and conditions, that following the delivery of such noticeincluding price, the Company shall deliver not less favorable to the Investors (for and Stockholders than those on which the benefit Company proposes to sell such securities to a third party or parties. Each Investor's or Stockholder's "Pro Rata Share" of such securities shall be based on the Investor Parties) any such information ratio which the Investors may reasonably request in order shares of Common Stock held by he or it bears to evaluate all the proposed issuance, (y) it offers to issue issued and sell outstanding shares of Common Stock calculated on a fully-diluted basis giving effect to the Investor Parties, on such terms as the Proposed Securities are issued and upon full payment by the Investor Parties, the lesser conversion of (i) fifty percent (50%) of the Proposed Securities (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares convertible securities as of the date of such written offer. The Company's offer to the Pre-Emptive Rights Notice) Investors and Stockholders shall remain open and irrevocable for a period of 30 days, and Investors and Stockholders who elect to purchase shall have the first right to take up and purchase any shares or (ii) other securities which other Investors or Stockholders do not elect to purchase, based on the percentage relative holdings of the Proposed Securities equal electing purchasers. Any securities so offered which are not purchased pursuant to such offer may be sold by the aggregate Participation Portions of the Investor Parties (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice); provided, however, that, subject to compliance with Company but only on the terms and conditions set forth in the initial offer to the Investors and Stockholders, at any time within 90 days following the termination of the above-referenced 30-day period but may not be sold to any other person or on terms and conditions, including price, that are more favorable to the purchaser than those set forth in such offer or after such 90-day period without renewed compliance with this Section 7.1.56.1. Notwithstanding the foregoing, the Company may (i) issue options and shares of its Common Stock to its officers, employees, advisors, consultants, directors and the ESOP with respect to up to an aggregate 609,685 shares pursuant to the 1997 Stock Option Plan as in effect as of the date hereof, (ii) reissue to its officers and employees under the 1997 Stock Option Plan 1,218,000 canceled, terminated or expired options which were originally granted under the 1995 Stock Option Plan and issue stock upon the exercise of such options, (iii) reissue to its officers and employees under the 1997 Stock Option Plan, upon cancellation, termination or expiration, up to 1,907,794 options that were originally granted under the 1995 Stock Option Plan which are currently outstanding and issue stock upon the exercise of such options and (iv) issue Conversion Shares upon the conversion of the Convertible Preferred Shares, and this Section 6 shall not be required apply with respect to offer to issue or sell to the Investor Parties the portion of the Proposed Securities that would require the Company to obtain stockholder approval in respect of the issuance of any Proposed Securities to the Investor Parties under Nasdaq Marketplace Rule 5635 unless such approval has been obtained (provided, further, however, that the Company shall still be obligated to provide written notice of such proposed issuance to the Investors (for the benefit of the Investor Parties), which notice shall include a description of the Proposed Securities (including the number thereof) that would require stockholder approval in respect of the issuance thereof)issuances.

Right to Participate in Certain Sales of Additional Securities. 7.1.1 For so long as (a) The Company will not offer, sell or issue (i) any shares of Registrable Securities remain outstandingcapital stock of the Company, (ii) securities convertible into or exchangeable for capital stock of the Company, or (iii) options, warrants or other rights to purchase capital stock of the Company agrees that it will not (and that it will cause its subsidiaries not tocollectively, "NEW SECURITIES") sell or issue any shares of Capital Stock or Equity Securities, in each case, unless (x) the Company first submits a written notice offer to each Stockholder (a “Pre-Emptive Right Notice”) to the Investors (collectively for the benefit purposes of the Investor Parties) setting forth in reasonable detail (A) the designation and all of the terms and provisions of the securities proposed to be issued (the “Proposed Securities”), including, to the extent applicablethis Article III, the voting powers, preferences and relative participating, optional or other special rights, and "OFFEREES") identifying the qualification, limitations or restrictions thereof and interest rate and maturity; (B) the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed sale (including price, number and aggregate principal amount of securities being offered), and offers to each of the Offerees the opportunity to purchase its Pro Rata Allotment of the New Securities (subject to increase for over-allotment if some Offerees do not fully exercise their rights) on terms and conditions contained in such notice. The Company will keep such offer open and irrevocable for a period of 10 Business days following receipt by the Offerees of such Proposed Securities; and (C) the amount of such Proposed Securities proposed to be issued; provided, that following the delivery of such written notice, and the Offerees will have the right to elect to purchase the New Securities so offered by giving written notice thereof to the Company shall deliver within such 10 Business day-period. Such notice will indicate the maximum number of New Securities which the Offerees would purchase if one or more other Offerees do not elect to the Investors (for the benefit purchase any of the Investor PartiesNew Securities to which it is entitled to purchase. In the event that any Offeree does not elect to purchase its Pro Rata Allotment, then each Offeree who has elected to purchase a number of New Securities in excess of its Pro Rata Allotment (an "OVERALLOTMENT OFFEREE") any will have the right to purchase those New Securities which such information the Investors may reasonably request in order Offeree elected not to evaluate the proposed issuancepurchase, (y) it offers to issue and sell to the Investor Parties, on such terms as the Proposed which New Securities are issued and upon full payment by the Investor Parties, the lesser of (i) fifty percent (50%) of the Proposed Securities (to will be allocated among all Overallotment Offerees pro rata based on the Investor Parties number of issued and outstanding shares of Common Stock held by such Overallotment Offerees immediately prior to the commencement of such Offer; PROVIDED that no Offeree will be required to purchase more than the number of New Securities specified in proportion its election notice. Any New Securities so offered which are not purchased by the Offerees pursuant to their respective levels of ownership of Series B Shares as such offer may be sold by the Company at any time within 180 calendar days following the termination of the date of the Preabove-Emptive Rights Notice) or (ii) the percentage of the Proposed Securities equal to the aggregate Participation Portions of the Investor Parties (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Prereferenced ten Business Day-Emptive Rights Notice); providedperiod, however, that, subject to compliance with but only on the terms and conditions no more favorable to the purchasers thereof than those set forth in Section 7.1.5the initial offer. The Company will not offer, the Company shall not be required to offer to sell or issue any New Securities after such 180 calendar-day period or sell on terms and conditions more favorable to the Investor Parties purchasers thereof than those set forth in the portion of the Proposed Securities that would require the Company to obtain stockholder approval in respect of the issuance of any Proposed Securities to the Investor Parties under Nasdaq Marketplace Rule 5635 unless such approval has been obtained (provided, further, however, that the Company shall still be obligated to provide written original offer notice of such proposed issuance to the Investors (for the benefit of the Investor Parties), which notice shall include a description of the Proposed Securities (including the number thereof) that would require stockholder approval in respect of the issuance thereof)without renewed compliance with this Section 3.1.

Right to Participate in Certain Sales of Additional Securities. 7.1.1 For With -------------------------------------------------------------- respect to the Investors, so long as any shares the Investors continue to hold an aggregate number of Registrable Securities remain outstandingConvertible Preferred Shares and Conversion Shares equal to at least 50% of the Convertible Preferred Shares (subject to adjustments for stock splits, stock dividends and the like), and with respect to the Redeeming Stockholders, so long as such Redeeming Stockholders continue to hold in the aggregate at least 50% of the Common Stock held at the date hereof (subject to adjustments for stock splits, stock dividends and the like) the Company agrees that it will not (and that it will cause its subsidiaries not to) sell or issue any shares of Capital Stock capital stock of the Company, or Equity Securitiesother securities convertible into or exchangeable for capital stock of the Company, in each caseor options, warrants or rights carrying any rights to purchase capital stock of the Company unless (x) the Company first submits a written notice (a “Pre-Emptive Right Notice”) offer to each of the Investors (for and each Redeeming Stockholder identifying the benefit of the Investor Parties) setting forth in reasonable detail (A) the designation and all of the terms and provisions of the securities proposed to be issued (the “Proposed Securities”), including, to the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof and interest rate and maturity; (B) the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed sale (including price, number or aggregate principal amount of securities and all other material terms) (the "Offer"), and offers to each such Investor and each Redeeming Stockholder the opportunity to purchase its Pro Rata Share (as hereinafter defined) of such Proposed Securities; securities (subject to increase for over-allotment if some Investors or Redeeming Stockholder do not fully exercise their rights) on terms and conditions, including price, not less favorable to the Investors and the Redeeming Stockholders than those on which the Company proposes to sell such securities to a third party or parties. For the purposes of this Agreement, each Investor's or Redeeming Stockholder's "Pro Rata Share" of such securities shall be based upon the ratio which (CA) the amount number of shares of Common Stock (which shall include shares of Common Stock issuable upon exercise or conversion of securities then outstanding) owned by it or him, as the case may be, bears to (B) the total of all the issued and outstanding shares of Common Stock (which shall include shares of Common Stock issuable upon exercise or conversion of securities then outstanding). The Company's offer shall remain open and irrevocable for a period of 7 days, and Investors and Redeeming Stockholders who elect to purchase, by written notice to the Company, within such Proposed Securities proposed period shall have the first right to be issued; providedtake up and purchase any shares or other securities which other Investors and Redeeming Stockholders do not elect to purchase, that following based on the relative holdings of the electing purchasers. The closing of any such Offer shall occur no sooner than 30 days after the delivery of such notice, Offer. Any securities so offered which are not purchased pursuant to such offer may be sold by the Company shall deliver to the Investors (for the benefit of the Investor Parties) any such information the Investors may reasonably request in order to evaluate the proposed issuance, (y) it offers to issue and sell to the Investor Parties, but only on such terms as the Proposed Securities are issued and upon full payment by the Investor Parties, the lesser of (i) fifty percent (50%) of the Proposed Securities (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice) or (ii) the percentage of the Proposed Securities equal to the aggregate Participation Portions of the Investor Parties (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice); provided, however, that, subject to compliance with the terms and conditions set forth in the initial offer to the Investors and Redeeming Stockholders, at any time within 120 days following the termination of the above-referenced 30-day period but may not be sold to any other person or on terms and conditions, including price, that are more favorable to the purchaser than those set forth in such offer or after such 120-day period without renewed compliance with this Section 7.1.55.1. Notwithstanding the foregoing, the Company may (i) issue shares of Common Stock pursuant to the Warrant Agreements and pursuant to Warrants and stock options existing on the date hereof as set forth in Section 5.1 of the Disclosure Schedule; (ii) issue shares of Common Stock and options (and the Common Stock to be issued upon exercise thereof) included in the Stock Option Pool or otherwise approved by the Board of Directors of the Company; (iii) issue warrants to purchase up to 733,000 shares of Common Stock pursuant to warrants to be issued in connection with the placement by the Company of subordinated indebtedness and the shares of Common Stock issued upon exercise of such warrants; (iv) up to 100,000 shares of Convertible Preferred Stock to be issued in connection with the placement by the Company of subordinated indebtedness and shares of Common Stock issuable upon conversion thereof; and (v) issue Conversion Shares upon the conversion of the Convertible Preferred Shares, and the other provisions of this Section 5.1 shall not be required apply with respect to offer to issue or sell to the Investor Parties the portion of the Proposed Securities that would require the Company to obtain stockholder approval in respect of the issuance of any Proposed Securities to the Investor Parties under Nasdaq Marketplace Rule 5635 unless such approval has been obtained (provided, further, however, that the Company shall still be obligated to provide written notice of such proposed issuance to the Investors (for the benefit of the Investor Parties), which notice shall include a description of the Proposed Securities (including the number thereof) that would require stockholder approval in respect of the issuance thereof)issuances.

Right to Participate in Certain Sales of Additional Securities. 7.1.1 For so long as any shares of Registrable Securities remain outstanding, the The Company agrees that it will not (and that it will cause its subsidiaries not to) sell or issue any shares of Capital Stock capital stock of the Company, or Equity Securitiesother securities convertible into or exchangeable for capital stock of the Company, in each caseor options, warrants or rights carrying any rights to purchase capital stock of the Company unless (x) the Company first submits a written notice (a “Pre-Emptive Right Notice”) offer to the Investors (for identifying the benefit of the Investor Parties) setting forth in reasonable detail (A) the designation and all of the terms and provisions of the securities proposed to be issued (the “Proposed Securities”), including, to the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof and interest rate and maturity; (B) the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed sale of such Proposed Securities; and (C) the including price, number or aggregate principal amount of such Proposed Securities proposed securities and all other material terms), and offers to be issued; providedeach Investor the opportunity to purchase up to its Pro Rata Share (as hereinafter defined) of the securities (subject to increase for over-allotment if some Investors do not fully exercise their rights as provided below) on terms and conditions, that following the delivery of such noticeincluding price, the Company shall deliver not less favorable to the Investors than those on which the Company proposes to sell such securities to a third party or parties. Each Investor's "Pro Rata Share" of such securities shall be based on the ratio which the shares of Common Stock (for including shares issuable upon conversion of Preferred Stock) owned by it bears to all the benefit issued and outstanding shares of the Investor PartiesCommon Stock (including shares issuable upon conversion of Preferred Stock) any such information the Investors may reasonably request calculated in order to evaluate the proposed issuance, (y) it offers to issue and sell each case on a fully-diluted basis giving effect to the Investor Partiesconversion of convertible securities and assuming the exercise of all outstanding vested options, on such terms as the Proposed Securities are issued and upon full payment by the Investor Parties, the lesser of (i) fifty percent (50%) of the Proposed Securities (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares each case as of the date of such written offer. The Company's offer to the PreInvestors shall remain open and irrevocable for a period of 30 days, and Investors shall elect to purchase by giving written notice thereof to the Company within such thirty-Emptive Rights Noticeday period including therein the maximum number of shares or other securities such Investor would purchase if other Investors do not elect to purchase, with the rights of electing Investors to purchase such additional shares to be based upon the relative holdings of Common Stock (including shares issuable upon conversion of Preferred Stock) or (ii) the percentage of the Proposed Securities equal electing Investors in the case of over-subscription, provided that in the event any Investor within an Investor Group does not elect to purchase its Pro Rata Share, the aggregate Participation Portions other members of such Investor Group may elect to purchase such non-electing Investor's Pro Rata Share or portion thereof not so elected based on the relevant holdings of the participating Investors within such Investor Parties (Group before any such shares are allocated to participating Investors within any other Investor Group. Any securities so offered which are not purchased pursuant to such offer may be allocated among sold by the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice); provided, however, that, subject to compliance with Company but only on the terms and conditions set forth in the initial offer to the Investors, at any time within 120 days following the termination of the above-referenced 30-day period but may not be sold to any other person or on terms and conditions, including price, that are more favorable to the purchaser than those set forth in such offer or after such 120-day period without renewed compliance with this Section 7.1.53.1. Notwithstanding the foregoing, the right to purchase granted under this Article III shall be inapplicable with respect to any issuance or proposed issuance by the Company shall not be required to offer to issue of (i) warrants or sell to options, or stock issued on the Investor Parties exercise thereof in connection with any financing transaction, (ii) securities issued in connection with the portion acquisition of another corporation by the Company or any Affiliate of the Proposed Securities that would require Company, whether by merger, purchase of stock, purchase of all or substantially all of the assets of such corporation, or otherwise, (iii) Common Stock issued, or options or rights to purchase Common Stock granted, to employees, consultants, officers, directors, advisors or independent contractors of the Company to obtain stockholder approval in respect or of any Affiliate of the issuance Company, (iv) securities issued as a result of any Proposed Securities to the Investor Parties under Nasdaq Marketplace Rule 5635 unless such approval has been obtained (providedstock split, furtherstock dividend, however, that the Company shall still be obligated to provide written notice of such proposed issuance to the Investors (for the benefit reclassification or reorganization of the Investor Parties), which notice shall include a description Company's stock or (v) Common Stock or Redeemable Preferred Stock issued upon conversion of Convertible Participating Preferred Stock in accordance with the terms of the Proposed Securities (including the number thereof) that would require stockholder approval in respect Company's Amended and Restated Certificate of the issuance thereof)Incorporation.

Right to Participate in Certain Sales of Additional Securities. 7.1.1 For so long as any shares of Registrable Securities remain outstanding, the Company agrees that it will not (and that it will cause its subsidiaries not to) sell or issue any shares of Capital Stock or Equity Securities, in each case, unless (x) the Company first submits a written notice (a “Pre-Emptive Right Notice”) to the Investors (for the benefit of the Investor Parties) setting forth in reasonable detail (A) the designation and all of the terms and provisions of the securities proposed to be issued (the “Proposed Securities”), including, to the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof and interest rate and maturity; (B) the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed sale of such Proposed Securities; and (C) the amount of such Proposed Securities proposed to be issued; provided, that following the delivery of such notice, the Company shall deliver to the Investors (for the benefit of the Investor Parties) any such information the Investors may reasonably request in order to evaluate the proposed issuance, (y) it offers to issue and sell to the Investor Parties, on such terms as the Proposed Securities are issued and upon full payment by the Investor Parties, the lesser of (i) fifty percent (50%) Participation Portion of the Proposed Securities (to be allocated among the Investor Parties as may be determined by the Investors acting in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice) or (ii) the percentage of the Proposed Securities equal to the aggregate Participation Portions of the Investor Parties (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Noticesole discretion); provided, however, that, subject to compliance with the terms and conditions set forth in Section 7.1.5, the Company shall not be required to offer to issue or sell to the Investor Parties the portion of the Proposed Securities that would require the Company to obtain stockholder approval in respect of the issuance of any Proposed Securities to the Investor Parties under Nasdaq Marketplace Rule 5635 unless such approval has been obtained (provided, further, however, that the Company shall still be obligated to provide written notice of such proposed issuance to the Investors (for the benefit of the Investor Parties), which notice shall include a description of the Proposed Securities (including the number thereof) that would require stockholder approval in respect of the issuance thereofthereof (the “Restricted Issuance Information”)).

Right to Participate in Certain Sales of Additional Securities. 7.1.1 For so long as any shares of Registrable Securities remain outstanding, the The Company agrees that it will not (and that it will cause its subsidiaries not to) sell or issue any shares of Capital Stock capital stock of the Company, or Equity Securitiesother securities convertible into or exchangeable for capital stock of the Company, in each caseor options, warrants or rights carrying any rights to purchase capital stock of the Company unless (x) the Company first submits a written notice (a “Pre-Emptive Right Notice”) offer to the Investors (for identifying the benefit of the Investor Parties) setting forth in reasonable detail (A) the designation and all of the terms and provisions of the securities proposed to be issued (the “Proposed Securities”), including, to the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof and interest rate and maturity; (B) the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed sale of such Proposed Securities; and (C) the including price, number or aggregate principal amount of such Proposed Securities proposed securities and all other material terms), and offers to be issued; providedeach Investor the opportunity to purchase its Pro Rata Share (as hereinafter defined) of the securities (subject to increase for over-allotment if some Investors do not fully exercise their rights) on terms and conditions, that following the delivery of such noticeincluding price, the Company shall deliver not less favorable to the Investors (for than those on which the benefit Company proposes to sell such securities to a third party or parties. Each Investor's "Pro Rata Share" of such securities shall be based on the ratio which the shares of the Investor Parties) any such information Securities owned by it bears to all the Investors may reasonably request in order to evaluate the proposed issuance, (y) it offers to issue and sell to the Investor Parties, on such terms as the Proposed Securities are issued and upon full payment by the Investor Parties, the lesser of (i) fifty percent (50%) outstanding shares of the Proposed Securities (Securities, Common Stock and Common Stock equivalents of the Company, calculated in each case on a fully-diluted basis giving effect to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares vested options as of the date of such written offer. The Company's offer to the Pre-Emptive Rights Notice) Investors shall remain open and irrevocable for a period of 30 days, and Investors who elect to purchase shall have the first right to take up and purchase any shares or (ii) other securities which other Investors do not elect to purchase, based on the percentage relative holdings of the Proposed Securities equal electing Investors. Any securities so offered which are not purchased pursuant to such offer may be sold by the aggregate Participation Portions of the Investor Parties (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice); provided, however, that, subject to compliance with Company but only on the terms and conditions set forth in the initial offer to the Investors, at any time within 120 days following the termination of the above-referenced 30-day period but may not be sold to any other person or on terms and conditions, including price, that are more favorable to the purchaser than those set forth in such offer or after such 120-day period without renewed compliance with this Section 7.1.56.1. Notwithstanding the foregoing, the Company shall not be required may (i) issue options for up to offer an aggregate 105,000 shares of Common Stock (subject to issue or sell adjustments for stock splits, stock dividends and the like) pursuant to the Investor Parties the portion terms of the Proposed Securities that would require Plan and may issue shares of its Common Stock upon the Company to obtain stockholder approval in respect exercise of any such stock options, and (ii) issue Conversion Shares upon the conversion of the issuance of any Proposed Securities to the Investor Parties under Nasdaq Marketplace Rule 5635 unless such approval has been obtained (provided, further, however, that the Company shall still be obligated to provide written notice of such proposed issuance to the Investors (for the benefit of the Investor Parties), which notice shall include a description of the Proposed Securities (including the number thereof) that would require stockholder approval in respect of the issuance thereof)Convertible Shares.

Right to Participate in Certain Sales of Additional Securities. 7.1.1 For so long as any shares of Registrable Securities remain outstanding, the The Company agrees that it will not (and that it will cause its subsidiaries not to) sell or issue any shares of Capital Stock capital stock of the Company, or Equity Securitiesother securities convertible into or exchangeable for capital stock of the Company, in each caseor options, warrants or rights carrying any rights to purchase capital stock of the Company unless (x) the Company first submits a written notice (a “Pre-Emptive Right Notice”) offer to the Investors (for the benefit of the Investor Partiesincluding their Permitted Transferees) setting forth in reasonable detail (A) the designation and all of the terms and provisions of the securities proposed to be issued (the “Proposed Securities”), including, to the extent applicablecollectively, the voting powers, preferences and relative participating, optional or other special rights, and "Offerees') identifying the qualification, limitations or restrictions thereof and interest rate and maturity; (B) the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed sale (including price, number or aggregate principal amount of such Proposed Securities; securities and all other material terms), and offers to each Investor (Cincluding each Permitted Transferee) the amount of such Proposed Securities proposed opportunity to be issued; provided, that following the delivery of such notice, the Company shall deliver to the Investors purchase its Pro Rata Allotment (for the benefit of the Investor Parties) any such information the Investors may reasonably request in order to evaluate the proposed issuance, (y) it offers to issue and sell to the Investor Parties, on such terms as the Proposed Securities are issued and upon full payment by the Investor Parties, the lesser of (i) fifty percent (50%hereinafter defined) of the Proposed Securities securities (subject to increase for over-allotment if some Investors do not fully exercise their rights) on terms and conditions, including price, not less favorable than those on which the Company proposes to sell such securities to a third party or parties. Each Offeree's "Pro Rata Allotment" of such securities shall be allocated among based on the Investor Parties ratio which the shares of Common Stock (including shares of Common Stock issuable upon conversion of Preferred Stock) then owned by it bears to all of the then issued and outstanding shares of Common Stock (including shares of Common Stock issuable upon conversion of Preferred Stock calculated in proportion each case on a fully-diluted basis giving effect to their respective levels the conversion of ownership convertible securities and assuming the exercise of Series B Shares all outstanding vested options, in each case as of the date of such written offer. The Company's offer pursuant to this Section 4. 1 shall remain open and irrevocable for a period of 30 days, and the Prerecipients of such offer shall elect to purchase by giving written notice thereof to the Company within such 30-Emptive Rights Noticeday period, including therein the maximum number of shares or other securities which the Offeree would purchase if other Offerees do not elect to purchase, with the rights of electing Offerees to purchase such additional shares to be based upon the relative holdings of Common Stock (including shares of Common Stock issuable upon conversion of Preferred Stock) or (ii) the percentage of the Proposed Securities equal electing Offerees in the case of over-subscription. Any securities so offered which are not purchased pursuant to such offer may be sold by the aggregate Participation Portions of the Investor Parties (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice); provided, however, that, subject to compliance with Company but only on the terms and conditions set forth in the initial offer, at any time within 120 days following the termination of the above-referenced 30-day period but may not be sold to any other person or on terms and conditions, including price, that are more favorable to the purchaser than those set forth in such offer or after such 120-day period without renewed compliance with this Section 7.1.54. 1. Notwithstanding the foregoing, the right to purchase granted under this Article IV shall be inapplicable with respect to any issuance or proposed issuance by the Company shall not be required of (i) securities issued in connection with the acquisition of another corporation by the Company, whether by merger, purchase of all or substantially all of the assets of such corporation, or otherwise, (ii) up to offer 994,407 shares (or options to issue purchase shares) of Common Stock (subject to adjustment in the event of stock splits, stock dividends, recapitalizations and like events) issued or sell granted to employees, consultants, officers, directors, advisors or independent contractors of the Company or of any Affiliate of the Company pursuant to the Investor Parties the portion Company's 1997 Stock Option and Grant Plan, (iii) securities issued as a result of any stock split, stock dividend, reclassification or reorganization of the Proposed Securities that would require the Company to obtain stockholder approval in respect Company's capital stock or (iv) Common Stock issued upon conversion of the issuance of any Proposed Securities to Convertible Preferred Stock in accordance with the Investor Parties under Nasdaq Marketplace Rule 5635 unless such approval has been obtained (provided, further, however, that the Company shall still be obligated to provide written notice of such proposed issuance to the Investors (for the benefit terms of the Investor Parties), which notice shall include a description Company's Amended and Restated Articles of the Proposed Securities (including the number thereof) that would require stockholder approval in respect of the issuance thereof)Incorporation.

Right to Participate in Certain Sales of Additional Securities. 7.1.1 For so long as The Company agrees that, without the approval of a Majority Interest, it will not sell or issue (a) any shares of Registrable Securities remain outstandingcapital stock of the Company, (b) securities convertible into or exercisable or exchangeable for capital stock of the Company agrees that it will not or (and that it will cause its subsidiaries not toc) sell options, warrants or issue rights carrying any shares rights to purchase capital stock of Capital Stock or Equity Securities, in each casethe Company, unless (x) the Company first submits a written notice (a “Pre-Emptive Right Notice”) to each Investor identifying the Investors (for the benefit of the Investor Parties) setting forth in reasonable detail (A) the designation and all of the terms and provisions of the securities proposed to be issued (the “Proposed Securities”), including, to the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof and interest rate and maturity; (B) the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed sale (including price, number or aggregate principal amount of securities and all other material terms), and offers to each Investor the opportunity to purchase its Pro Rata Allotment (as hereinafter defined) of the securities (subject to increase for over-allotment if some Investors do not fully exercise their rights) on terms and conditions, including price, not less favorable than those on which the Company proposes to sell such securities to a third party or parties. Each Investor's Pro Rata Allotment of such Proposed Securities; and securities shall be based on the ratio which the number of Shares owned by such Investor (Cas determined in accordance with Section 1.3 hereof) the amount of such Proposed Securities proposed bears to be issued; provided, that following the delivery of such notice, the Company shall deliver to the Investors (for the benefit all of the Investor Parties) any such information the Investors may reasonably request in order to evaluate the proposed issuance, (y) it offers to issue and sell to the Investor Parties, on such terms as the Proposed Securities are issued and outstanding shares of Common Stock (including all shares of Common Stock then issuable upon full payment by the Investor Parties, the lesser conversion of (i) fifty percent the Preferred Stock, (50%ii) other securities of the Proposed Securities Company that are convertible into Common Stock pursuant to then exercisable rights of conversion, and (iii) options and warrants to be allocated among purchase Common Stock of the Investor Parties Company which are exercisable, in proportion to their respective levels of ownership of Series B Shares each case as of the date of such written offer.) The Company's offer pursuant to this Section 3.1 shall remain open and irrevocable for a period of thirty (30) calendar days following receipt by the PreInvestors of such written notice, and each Investor shall elect to purchase the securities so offered by giving written notice thereof to the Company within such 30-Emptive Rights Notice) day period, including therein the maximum number of shares of capital stock or (ii) the percentage other securities of the Proposed Securities equal Company which the Investor wishes to purchase, including the aggregate Participation Portions number of such shares it would purchase if one or more other Investors do not elect to purchase, with the rights of electing Investors to purchase such additional shares to be based upon the relative holdings of Shares of the Investor Parties (electing Investors in the case of over-subscription. Any securities so offered which are not purchased by the Investors pursuant to such offer may be allocated among sold by the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice); providedCompany, however, that, subject to compliance with but only on the terms and conditions set forth in the initial offer, at any time within 120 calendar days following the termination of the above-referenced 30-day period, but may not be sold to any other Person or on terms and conditions, including price, that are more favorable to the purchaser than those set forth in such offer or after such 120-day period without renewed compliance with this Section 7.1.53.1. In no event shall the Investor's right to purchase pursuant to this Section 3.1 permit them to acquire more than 2% of the Company's issued and outstanding shares of common stock on a fully diluted basis at the time of such issuance (including all convertible securities and outstanding option) and in the event of purchases of pro-rata fractions as provided above would result in aggregate purchases in excess of such amount the amounts to be purchased by the Purchasers shall be reduced on a pro-rata basis. Notwithstanding the foregoing, the Company right to purchase granted under this Article III shall not be required inapplicable with respect to offer to issue or sell to the Investor Parties the portion of the Proposed Securities that would require the Company to obtain stockholder approval in respect of (i) the issuance of up to an aggregate of 3,750,000 shares of Common Stock (as appropriately adjusted for any Proposed Securities stock split, combination, reorganization, recapitalization, reclassification, stock distribution, stock dividend or similar event) issued or issuable in connection with, or upon the exercise of, options or other awards granted or to be granted to employees, officers, directors or consultants of the Company pursuant to the Investor Parties under Nasdaq Marketplace Rule 5635 unless Company's 2000 Incentive Compensation Plan, in connection with their service as directors of the Company, their employment by the Company or their retention as consultants by the Company, in each case authorized by the Board of Directors and issued pursuant to the Company's 2000 Incentive Compensation Plan or any other equity incentive plan approved by a Majority Interest ("Excluded Shares"), plus such approval has been obtained number of Excluded Shares that are repurchased by the Company from such Persons after August 30, 2000 in accordance with the Company's Amended and Restated Certificate of Incorporation, pursuant to contractual rights held by the Company and at repurchase prices not exceeding the respective original purchase prices (appropriately adjusted to reflect the occurrence of any event described in Section A.7(b) of the Company's Amended and Restated Certificate of Incorporation) paid by such Persons to the Company therefore, (ii) securities issued as a result of any stock split, stock dividend, reclassification or reorganization or similar event with respect to the Shares, (iii) securities issued pursuant to the anti-dilution rights of any holder of equity securities or securities exercisable for or exchangeable or convertible into equity securities of the Company; (iv) securities issued pursuant to the closing of a Qualified Public Offering; (v) securities issued prior to August 30, 2001 solely in connection with a strategic alliance or other corporate partnering transaction; (vi) securities issued in exchange for the stock or assets of another company in connection with the acquisition of or merger into such company; provided, furtherthat such actions shall have been approved by a majority of the members of the Board of Directors, howeverwhich approval shall include that of the Series B Director Designee; (vii) warrants to purchase Common Stock or Convertible Preferred Stock outstanding as of August 30, that 2000; (viii) ) shares of Common Stock issued upon exercise of the Warrants; and (ix) shares of Common Stock issued upon conversion of, or as a dividend on, the Convertible Preferred Stock and the Series A Convertible Preferred Stock, par value $.0001, of the Company (the "Series A Preferred"). For purposes of this paragraph, the term Common Stock shall still be obligated to provide written notice of such proposed issuance to the Investors (for the benefit include all common stock of the Investor Parties), which notice shall include a description of the Proposed Securities (including the number thereof) that would require stockholder approval in respect of the issuance thereof)Company.

Right to Participate in Certain Sales of Additional Securities. 7.1.1 For so long as any shares of Registrable Securities remain outstanding, the (a) The Company agrees that it will not (and that it will cause its subsidiaries not to) sell or issue any shares of Capital Stock capital stock of the Company, or Equity other securities convertible into or exchangeable for capital stock of the Company, or options, warrants or rights carrying any rights to purchase capital stock of the Company (the "Offered Securities, in each case, ") unless (x) the Company first submits a written notice (a “Pre-Emptive Right the "Preemptive Rights Notice”") to the Investors (for Holder identifying the benefit of the Investor Parties) setting forth in reasonable detail (A) the designation and all of the terms and provisions of the securities proposed to be issued (the “Proposed Securities”), including, to the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof and interest rate and maturity; (B) the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed sale of such Proposed Securities; and (C) the including price, number or aggregate principal amount of such Proposed Securities proposed to be issued; providedsecurities and all other material terms), that following the delivery of such notice, the Company shall deliver and offers to the Investors Holder the opportunity to purchase its Pro Rata Allotment (for the benefit of the Investor Parties) any such information the Investors may reasonably request in order to evaluate the proposed issuance, (y) it offers to issue and sell to the Investor Parties, on such terms as the Proposed Securities are issued and upon full payment by the Investor Parties, the lesser of (i) fifty percent (50%hereinafter defined) of the Proposed Securities securities on terms and conditions, including price, not less favorable than those on which the Company proposes to sell such securities to a third party or parties. The Company's offer to the Holder shall remain open and irrevocable for a period of thirty (30) days during which time the Holder may accept such offer by written notice to the Company setting forth the maximum number of shares or other securities to be allocated among purchased by the Investor Parties in proportion Holder. Any securities so offered which are not purchased by the Holder pursuant to their respective levels of ownership of Series B Shares as of such offer may be sold by the date of the Pre-Emptive Rights Notice) or (ii) the percentage of the Proposed Securities equal to the aggregate Participation Portions of the Investor Parties (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice); providedCompany, however, that, subject to compliance with but only on the terms and conditions set forth in Section 7.1.5the initial offer to the Holder at any time within 120 days following the termination of the above-referenced 30-day period. The closing of the sale of the securities to the Holder shall be subject to the closing of the sale of the remaining Offered Securities. For purposes of this Agreement, the Company Holder's Pro Rata Allotment with respect to Offered Securities shall not be required to offer to issue or sell equal to the Investor Parties the portion total number of the Proposed such Offered Securities that would require proposed to be issued by the Company multiplied by a fraction, the numerator of which is the number of Shares (determined on an as-converted basis into the Company's Common Stock) owned by the Holder immediately prior to obtain stockholder approval in respect of the issuance of any Proposed Securities such Offered Securities, and the denominator of which is the total number of Shares of Common Stock outstanding immediately prior to the Investor Parties under Nasdaq Marketplace Rule 5635 unless such approval has been obtained (provided, further, however, that the Company shall still be obligated to provide written notice issuance of such proposed issuance to the Investors (for the benefit of the Investor Parties), which notice shall include a description of the Proposed Securities (including the number thereof) that would require stockholder approval in respect of the issuance thereof)Offered Securities.

Right to Participate in Certain Sales of Additional Securities. 7.1.1 For so long as any shares Subject to Section 5.6 of Registrable Securities remain outstandingthe Purchase Agreement, the Company agrees that it will not (and that it will cause its subsidiaries not to) sell or issue any shares of Capital Stock capital stock of the Company, or Equity other securities convertible into or exchangeable for capital stock of the Company or options, warrants or rights carrying any rights to purchase capital stock of the Company (the “Offered Securities, in each case, ”) unless (x) the Company first submits a written notice (a the “Pre-Emptive Right Preemptive Rights Notice”) to the Investors (for identifying the benefit of the Investor Parties) setting forth in reasonable detail (A) the designation and all of the terms and provisions of the securities proposed to be issued (the “Proposed Securities”), including, to the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof and interest rate and maturity; (B) the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed sale of such Proposed Securities; and (C) the including price, number or aggregate principal amount of such Proposed securities and all other material terms), and offers to each Investor the opportunity to purchase its Pro Rata Allotment (as hereinafter defined) of the Offered Securities proposed (subject to be issued; providedincrease for over-allotment if any of the Investors do not fully exercise their rights) on terms and conditions, that following the delivery of such noticeincluding price, not less favorable than those on which the Company shall deliver proposes to sell such securities to a third party or parties. The Company’s offer to the Investors shall remain open and irrevocable for a period of thirty (for the benefit of the Investor Parties30) any such information days during which time the Investors may reasonably request in order to evaluate the proposed issuance, (y) it offers to issue and sell accept such offer by written notice to the Company setting forth the maximum number of shares or other securities to be purchased by any such Investor, including the number of shares or securities which the Investor Partieswould purchase if the other Investors do not elect to purchase, with the rights of the electing Investors to purchase such additional shares or securities to be based on such terms as the Proposed Securities relative holdings of shares of the electing Investors. Any securities so offered which are issued and upon full payment not purchased by the Investor PartiesInvestors pursuant to such offer may be sold by the Company, the lesser of (i) fifty percent (50%) of the Proposed Securities (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice) or (ii) the percentage of the Proposed Securities equal to the aggregate Participation Portions of the Investor Parties (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice); provided, however, that, subject to compliance with but only on the terms and conditions set forth in the initial offer to the Investors, at any time within one hundred twenty (120) days following the termination of the above-referenced thirty (30) day period. For purposes of this Section 7.1.53.1, each Investor’s “Pro Rata Allotment” of securities shall be based on the ratio which the shares of Common Stock held by such Investor (as determined in accordance with Section 1.2 hereof) bears to the total number of shares of Common Stock outstanding on the date of the Preemptive Rights Notice (determined on a fully-diluted and an as-converted basis). Notwithstanding the foregoing, the right to purchase shall be inapplicable with respect to any issuance or proposed issuance by the Company shall not be required of (i) up to offer 17,350,204 shares of Common Stock and up to issue 325,000 shares of Series 1 Stock, as appropriately adjusted for stock splits, stock dividends, recapitalizations and the like (or sell options to purchase such Common Stock or Series 1 Stock) to its officers, directors, employees and consultants pursuant to stock and options plans approved by a majority of the Board of Directors, (ii) Common Stock upon conversion of the Preferred Stock, (iii) securities as a result of any stock split, stock dividend or combination of the Company’s Common Stock, (iv) securities upon conversion or exercise of convertible or exercisable securities outstanding on the date hereof, (v) securities upon conversion of the Note or exercise of any warrants issued to the New Investor Parties in connection with the portion Purchase Agreement, (vi) securities in connection with a merger, consolidation, acquisition or similar business combination approved by a majority of the Proposed Securities that would require Board of Directors, (vii) securities pursuant to any loan arrangement or debt financing from a bank or similar financial institution approved by a majority of the Board of Directors, (viii) securities in connection with strategic transactions involving the Company to obtain stockholder approval in respect of and other entities, including joint venture, marketing or distribution arrangements or technology transfer or development arrangements, provided that such strategic transactions and the issuance of any Proposed Securities to the Investor Parties under Nasdaq Marketplace Rule 5635 unless such approval has securities in connection therewith have been obtained (provided, further, however, that the Company shall still be obligated to provide written notice of such proposed issuance to the Investors (for the benefit approved by a majority of the Board of Directors and (ix) securities purchased by the New Investor Parties), which notice shall include a description pursuant to Section 5.6 of the Proposed Securities (including the number thereof) that would require stockholder approval in respect of the issuance thereof)Purchase Agreement.

Right to Participate in Certain Sales of Additional Securities. 7.1.1 For so long as If at any shares of Registrable time the Company intends to issue any (i) Equity Interests, (ii) securities convertible into or exchangeable for Equity Interests, or (iii) options, warrants or rights carrying any rights to purchase Equity Interests, other than Excluded Securities remain outstanding(collectively, the Company agrees that "OFFERED SECURITIES"), it will not (and that it will cause its subsidiaries not to) sell or issue any shares of Capital Stock or Equity Securities, in each case, unless (x) the Company first submits shall submit a written notice offer to each Mezzanine Investor (a “Pre-Emptive Right Notice”) to collectively, the Investors (for the benefit of the Investor Parties) setting forth in reasonable detail (A) the designation and all of the terms and provisions of the securities proposed to be issued (the “Proposed Securities”"OFFEREES"), including, to identifying the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof and interest rate and maturity; (B) the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed issuance and sale of such Proposed Securities; and (C) the including price, number or aggregate principal amount of such Proposed the Offered Securities proposed and all other material terms), to be issuedpurchase its Pro Rata Allotment (as hereinafter defined) of the Offered Securities (subject to increase for over-subscription if some Offerees do not fully exercise their rights) on terms and conditions, including price, not less favorable to the Offerees than those on which the Company proposes to sell the Offered Securities to a third party or parties; provided, however, that following such Offeree agrees to purchase the delivery of Offered Securities and any other securities to be purchased in tandem therewith by the prospective purchaser. The Company's obligation to complete any such notice, the Company shall deliver issuance or sale is subject to the Investors (for the benefit receipt of all necessary Gaming Approvals. Each Offeree's "PRO RATA ALLOTMENT" of the Investor PartiesOffered Securities shall be based on the ratio (as determined in accordance with Section 1.2 hereof) any such information which the Investors may reasonably request in order Offered Securities then owned by it bears to evaluate all of the proposed issuance, (y) it offers to issue and sell to the Investor Parties, on such terms as the Proposed Securities are then issued and upon full payment by the Investor Parties, the lesser of (i) fifty percent (50%) of the Proposed outstanding Securities (to be allocated among the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of such written offer. The Company's offer pursuant to this Section 4.1 shall remain open and irrevocable for a period of ten (10) Business Days, and the Prerecipients of such offer shall elect to purchase by giving written notice thereof to the Company within such 10-Emptive Rights Notice) or (ii) day period, including therein the percentage maximum number of Offered Securities of the Proposed Company which the Offeree would purchase if other Offerees do not elect to purchase, with the rights of electing Offerees to purchase such additional Offered Securities equal to be based upon the aggregate Participation Portions relative holdings of Securities of the Investor Parties (electing Offerees in the case of over-subscription. Any Offered Securities which are not purchased pursuant to such offer plus, at the Company's election, an equivalent number of securities so purchased by the Offerees may be allocated among sold by the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice); providedCompany, however, that, subject to compliance with but only on the terms and conditions set forth in Section 7.1.5the initial offer, at any time within ninety (90) days following the Company shall termination of the above-referenced 10-day period or any longer period of time as may be required by any Gaming Authorities but may not be required sold to offer to issue any other Person or sell on terms and conditions, including price, that are more favorable to the Investor Parties the portion of the Proposed Securities that would require the Company to obtain stockholder approval purchaser than those set forth in respect of the issuance of such offer or after such 90-day period or such longer period as may be required by any Proposed Securities to the Investor Parties under Nasdaq Marketplace Rule 5635 unless such approval has been obtained (provided, further, however, that the Company shall still be obligated to provide written notice of such proposed issuance to the Investors (for the benefit of the Investor Parties), which notice shall include a description of the Proposed Securities (including the number thereof) that would require stockholder approval in respect of the issuance thereof)Gaming Authorities without renewed compliance with this Section 4.1.

Right to Participate in Certain Sales of Additional Securities. 7.1.1 For so long as any shares of Registrable Securities remain outstanding, the The Company agrees that it will not (and that it will cause its subsidiaries not to) sell or issue (i) any shares of Capital Stock capital stock of the Company, (ii) securities convertible into or Equity Securitiesexchangeable for capital stock of the Company or (iii) options, in each casewarrants or rights carrying any rights to purchase capital stock of the Company, unless (x) the Company first submits a written notice offer to each Investor (a “Pre-Emptive Right Notice”) to collectively, the Investors (for the benefit of the Investor Parties) setting forth in reasonable detail (A) the designation and all of the terms and provisions of the securities proposed to be issued (the “Proposed Securities”"Offerees"), including, to identifying the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof and interest rate and maturity; (B) the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed sale of such Proposed Securities; and (C) the including price, number or aggregate principal amount of such Proposed Securities proposed to be issued; providedsecurities and all other material terms), that following the delivery of such notice, the Company shall deliver to the Investors (for the benefit of the Investor Parties) any such information the Investors may reasonably request in order to evaluate the proposed issuance, (y) it and offers to issue and sell each Offeree the opportunity to the Investor Parties, on such terms purchase its Pro Rata Allotment (as the Proposed Securities are issued and upon full payment by the Investor Parties, the lesser of (i) fifty percent (50%hereinafter defined) of the Proposed Securities securities (subject to increase for over-allotment if some Offerees do not fully exercise their rights) on terms and conditions, including price, not less favorable than those on which the Company proposes to sell such securities to a third party or parties. Each Offeree's "Pro Rata Allotment" of such securities shall be allocated among based on the Investor Parties ratio (as determined in proportion accordance with Section 1.3 hereof) which the Shares then owned by it bears to their respective levels all of ownership the then issued and outstanding shares of Series B Shares Common Stock (including for this purpose any shares of Common Stock issuable upon conversion of the Preferred Stock) as of the date of such written offer. The Company's offer pursuant to this Section 3.1 shall remain open and irrevocable for a period of thirty (30) calendar days, and the Prerecipients of such offer shall elect to purchase by giving written notice thereof to the Company within such 30-Emptive Rights Notice) day period, including therein the maximum number of shares of capital stock or (ii) the percentage other securities of the Proposed Securities equal Company which the Offeree would purchase if other Offerees do not elect to purchase, with the aggregate Participation Portions rights of electing Offerees to purchase such additional shares to be based upon the relative holdings of Shares of the Investor Parties (electing Offerees in the case of over-subscription. Any securities so offered which are not purchased pursuant to such offer may be allocated among sold by the Investor Parties in proportion to their respective levels of ownership of Series B Shares as of the date of the Pre-Emptive Rights Notice); providedCompany, however, that, subject to compliance with but only on the terms and conditions set forth in the initial offer, at any time within 120 calendar days following the termination of the above-referenced 30-day period but may not be sold to any other person or on terms and conditions, including price, that are more favorable to the purchaser than those set forth in such offer or after such 120-day period without renewed compliance with this Section 7.1.53.1. Notwithstanding the foregoing, the Company right to purchase granted under this Article III shall not be required inapplicable with respect to offer any (i) of the Excluded Shares (as defined in the Company's Amended and Restated Articles of Incorporation), (ii) any shares of Common Stock underlying the option previously granted to issue Michxxx Xxxxxxxxx (xx appropriately adjusted for any stock split, combination, reorganization, recapitalization, reclassification, stock distribution, stock dividend or sell similar event), (iii) securities issued as a result of any stock split, stock dividend, reclassification or reorganization or similar event with respect to the Investor Parties Common Stock, (iv) shares issued as consideration for any acquisition approved by the portion Board of Directors, or (v) shares of Common Stock issued upon conversion of the Proposed Securities that would require the Company to obtain stockholder approval in respect of the issuance of any Proposed Securities to the Investor Parties under Nasdaq Marketplace Rule 5635 unless such approval has been obtained (provided, further, however, that the Company shall still be obligated to provide written notice of such proposed issuance to the Investors (for the benefit of the Investor Parties), which notice shall include a description of the Proposed Securities (including the number thereof) that would require stockholder approval in respect of the issuance thereof)Preferred Stock.

Right to Participate in Certain Sales of Additional Securities. 7.1.1 (a) For so long as any shares a period of Registrable Securities remain outstandingthree years after the Closing, subject to the terms and conditions of this Section 6.2 the Company agrees that it will not (and that it will cause its subsidiaries not to) sell or issue any shares of Capital Stock capital stock of the Company, or Equity other securities convertible into or exchangeable for capital stock of the Company, or Options, warrants or rights carrying any rights to purchase capital stock of the Company (the “New Securities, in each case”), unless (x) the Company first submits a written notice (a the “Pre-Emptive Right Preemptive Rights Notice”) to the Investors (for Purchasers identifying the benefit of the Investor Parties) setting forth in reasonable detail (A) the designation and all of the terms and provisions of the securities proposed to be issued (the “Proposed Securities”), including, to the extent applicable, the voting powers, preferences and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof and interest rate and maturity; (B) the price, timing (which shall be at least three (3) but no more than six (6) Business Days after the delivery or deemed delivery of such Pre-Emptive Right Notice to the Investor) and other terms of the proposed sale (including the price, number or aggregate principal amount and type of such Proposed Securities; securities and (Call other material terms) the amount of such Proposed Securities proposed to be issued; provided, that following the delivery of such notice, the Company shall deliver to the Investors (for the benefit of the Investor Parties) any such information the Investors may reasonably request in order to evaluate the proposed issuance, (y) it and offers to issue and sell each Purchaser the opportunity to the Investor Parties, on such terms purchase its Pro Rata Allotment (as the Proposed Securities are issued and upon full payment by the Investor Parties, the lesser of (i) fifty percent (50%hereinafter defined) of the Proposed New Securities (on terms and conditions, including price, not less favorable than those on which the Company proposes to sell such New Securities to a third party or parties. The Company’s offer to the Purchasers shall remain open for a period of 20 days after the Preemptive Rights Notice, during which time the Purchasers may accept such offer by written notice to the Company setting forth the maximum number of New Securities sought to be allocated among purchased by any such Purchaser. Any New Securities so offered that are not purchased by the Investor Parties Purchasers pursuant to such offer may be sold by the Company, but only at a price not less than the price and on other terms and conditions not more favorable to the purchasers than as set forth in proportion the Preemptive Rights Notice, at any time within 90 days following the termination of the above-referenced 20 day period. For purposes of this Section 6, the “Pro Rata Allotment” of the New Securities of Purchasers is based on the ratio that the Conversion Shares held by or issuable to their respective levels such Purchaser upon conversion of ownership of its Series B A Preferred Shares as of on the date of the Pre-Emptive Preemptive Rights Notice) or (ii) Notice bears to the percentage sum of the Proposed Securities equal to the aggregate Participation Portions total number of the Investor Parties (to be allocated among the Investor Parties in proportion to their respective levels shares of ownership of Series B Shares as of Common Stock outstanding on the date of the Pre-Emptive Preemptive Rights Notice); provided, however, that, subject to compliance with the terms and conditions set forth in Section 7.1.5, the Company shall not be required to offer to issue or sell to the Investor Parties the portion of the Proposed Securities that would require the Company to obtain stockholder approval in respect of the issuance of any Proposed Securities to the Investor Parties under Nasdaq Marketplace Rule 5635 unless such approval has been obtained (provided, further, however, that the Company shall still be obligated to provide written notice of such proposed issuance to the Investors (for the benefit of the Investor Parties), which notice shall include a description of the Proposed Securities Notice (including the number thereof) that would require stockholder approval in respect Conversion Shares issuable upon conversion of the issuance thereofSeries A Preferred Stock on an as-converted basis).