OR MAINTENANCE
REQUIREMENTS THEREOF. THE BORROWER IS, AND HAS NO REASON TO BELIEVE THAT IT WILL
NOT IN THE FORESEEABLE FUTURE CONTINUE TO BE, IN COMPLIANCE WITH THE LISTING AND
MAINTENANCE REQUIREMENTS FOR CONTINUED TRADING OF THE COMMON STOCK ON THE
TRADING MARKET. THE ISSUANCE AND SALE OF THE SECURITIES AT THE CLOSING HEREUNDER
DOES NOT CONTRAVENE THE RULES
13
and regulations of the Trading Market and no approval of the shareholders of the
Borrower is required for the Borrower to issue and deliver to the Lender at the
Closing the maximum number of Securities contemplated by this Agreement assuming
exercise of the Warrants and conversion of the Debentures on the date hereof.
The issuance of the Additional Securities shall be subject to approval of the
shareholders of the Borrower in accordance with the requirements of The Nasdaq
Stock Market.
(W)
INVESTMENT COMPANY.
THE BORROWER IS NOT, AND
IS NOT AN AFFILIATE OF, AN "INVESTMENT COMPANY" WITHIN THE MEANING OF THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED.
(X)
NO ADDITIONAL AGREEMENTS.
THE BORROWER
DOES NOT HAVE ANY AGREEMENT OR UNDERSTANDING WITH THE LENDER WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS OTHER THAN AS SPECIFIED
IN THIS AGREEMENT.
(Y)
DISCLOSURE.
THE BORROWER UNDERSTANDS AND
CONFIRMS THAT THE LENDER WILL RELY ON THE FOREGOING REPRESENTATIONS AND
COVENANTS IN EFFECTING TRANSACTIONS IN SECURITIES OF THE BORROWER.
ALL
DISCLOSURE PROVIDED TO THE LENDER REGARDING THE BORROWER, ITS BUSINESS AND THE
TRANSACTIONS CONTEMPLATED HEREBY, FURNISHED BY OR ON BEHALF OF THE BORROWER
(INCLUDING THE BORROWER'S REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
AGREEMENT) ARE TRUE AND CORRECT AND DO NOT CONTAIN ANY UNTRUE STATEMENT OF A
MATERIAL FACT OR OMIT TO STATE ANY MATERIAL FACT NECESSARY IN ORDER TO MAKE THE
STATEMENTS MADE THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE
MADE, NOT MISLEADING.
(Z)
ACKNOWLEDGMENT REGARDING LENDER'S PURCHASE
OF SECURITIES. THE BORROWER ACKNOWLEDGES AND AGREES THAT THE LENDER IS ACTING
SOLELY IN THE CAPACITY OF AN ARM'S LENGTH LENDER WITH RESPECT TO THE TRANSACTION
DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY. THE BORROWER FURTHER
ACKNOWLEDGES THAT THE LENDER IS NOT ACTING AS A FINANCIAL ADVISOR OR FIDUCIARY
OF THE BORROWER (OR IN ANY SIMILAR CAPACITY) WITH RESPECT TO THE TRANSACTION
DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND ANY ADVICE GIVEN BY THE
LENDER OR ANY OF ITS REPRESENTATIVES OR AGENTS IN CONNECTION WITH THE
TRANSACTION DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY IS MERELY
INCIDENTAL TO THE LENDER'S PURCHASE OF THE SECURITIES. THE BORROWER FURTHER
REPRESENTS TO THE LENDER THAT THE BORROWER'S DECISION TO ENTER INTO THIS
AGREEMENT HAS BEEN BASED SOLELY ON THE INDEPENDENT EVALUATION BY THE BORROWER
AND ITS REPRESENTATIVES.
(AA)
SENIORITY.
AS OF THE DATE HEREOF, NO
INDEBTEDNESS OF THE BORROWER IS SENIOR TO OR PARI PASSU WITH THE DEBENTURES IN
RIGHT OF PAYMENT, WHETHER WITH RESPECT TO INTEREST OR UPON LIQUIDATION OR
DISSOLUTION, OR OTHERWISE.
3.2.
REPRESENTATIONS AND WARRANTIES OF THE LENDER.
THE LENDER HEREBY
REPRESENTS AND WARRANTS TO THE BORROWER AS FOLLOWS:
(A)
ORGANIZATION;