SELL ALL OF THE SECURITIES WITHOUT
RESTRICTION PURSUANT TO RULE 144(K) PROMULGATED UNDER THE SECURITIES ACT (OR
SUCCESSOR THERETO), OR (II) THE DATE ON WHICH (A) THE BUYERS SHALL HAVE SOLD ALL
THE SECURITIES AND (B) NONE OF THE CONVERTIBLE DEBENTURES OR WARRANTS ARE
OUTSTANDING (THE "REGISTRATION PERIOD"), THE COMPANY SHALL FILE IN A TIMELY
MANNER ALL REPORTS REQUIRED TO BE FILED WITH THE SEC PURSUANT TO THE EXCHANGE
ACT AND THE REGULATIONS OF THE SEC
THEREUNDER, AND THE COMPANY SHALL NOT
TERMINATE ITS STATUS AS AN ISSUER REQUIRED TO FILE REPORTS UNDER THE EXCHANGE
ACT EVEN IF THE EXCHANGE ACT OR THE RULES AND REGULATIONS THEREUNDER WOULD
OTHERWISE PERMIT SUCH TERMINATION.
(D)
USE OF PROCEEDS.
THE COMPANY WILL USE THE
PROCEEDS FROM THE SALE OF THE CONVERTIBLE DEBENTURES FOR GENERAL CORPORATE AND
WORKING CAPITAL PURPOSES.
(E)
RESERVATION OF SHARES.
ON THE DATE HEREOF,
THE COMPANY SHALL RESERVE FOR ISSUANCE TO THE BUYERS 20,500,000 SHARES FOR
ISSUANCE UPON CONVERSIONS OF THE CONVERTIBLE DENTURES AND ISSUANCE UPON EXERCISE
OF THE WARRANTS (THE "INITIAL SHARE RESERVE").
THE COMPANY REPRESENTS THAT IT
HAS SUFFICIENT AUTHORIZED AND UNISSUED SHARES OF COMMON STOCK AVAILABLE TO
CREATE THE SHARE RESERVE AFTER CONSIDERING ALL OTHER COMMITMENTS THAT MAY
REQUIRE THE ISSUANCE OF COMMON STOCK.
IF THE COMPANY OBTAINS STOCKHOLDER
APPROVAL, THE COMPANY SHALL PROMPTLY INCREASE THE INITIAL SHARE RESERVE BY
10,000,000 SHARES TO A TOTAL RESERVE OF 30,500,000 SHARES FOR ISSUANCE UPON
CONVERSIONS OF THE CONVERTIBLE DEBENTURES AND UPON EXERCISE OF THE WARRANTS
(COLLECTIVELY, THE "SHARE RESERVE")
THE COMPANY SHALL TAKE ALL ACTION
REASONABLY NECESSARY TO AT ALL TIMES HAVE AUTHORIZED, AND RESERVED FOR THE
PURPOSE OF ISSUANCE, SUCH NUMBER OF SHARES OF COMMON STOCK AS SHALL BE NECESSARY
TO EFFECT THE FULL CONVERSION OF THE CONVERTIBLE DEBENTURES AND THE FULL
EXERCISE OF THE WARRANTS.
IF AT ANY TIME THE SHARE RESERVE IS INSUFFICIENT TO
EFFECT THE FULL CONVERSION OF THE CONVERTIBLE DEBENTURES OR THE FULL EXERCISE OF
THE WARRANTS, THE COMPANY SHALL INCREASE THE SHARE RESERVE ACCORDINGLY.
IF THE
COMPANY DOES NOT HAVE SUFFICIENT AUTHORIZED AND UNISSUED SHARES OF COMMON STOCK
AVAILABLE TO INCREASE THE SHARE RESERVE, PRIOR TO THE CONSUMMATION OF THE THIRD
CLOSING, THE COMPANY SHALL USE ITS REASONABLE BEST EFFORTS TO CALL AND HOLD A
SPECIAL MEETING OF THE SHAREHOLDERS WITHIN NINETY (90) DAYS OF SUCH OCCURRENCE,
FOR THE PURPOSE OF INCREASING THE NUMBER OF SHARES AUTHORIZED.
THE COMPANY'S
BOARD SHALL RECOMMEND TO THE SHAREHOLDERS TO VOTE IN FAVOR OF INCREASING THE
NUMBER OF SHARES OF COMMON STOCK AUTHORIZED; PROVIDED, HOWEVER THAT THE BOARD
SHALL NOT BE OBLIGATED TO MAKE SUCH A RECOMMENDATION IF THE BOARD DETERMINES IN
GOOD FAITH, AFTER RECEIVING THE ADVICE OF ITS INDEPENDENT LEGAL AND FINANCIAL
ADVISORS, THAT SUCH A RECOMMENDATION WOULD CAUSE THE BOARD TO BREACH ITS
FIDUCIARY DUTIES.
(F)
LISTINGS OR QUOTATION.
THE COMPANY'S
COMMON STOCK SHALL BE LISTED OR QUOTED FOR TRADING ON ANY OF (A) THE AMERICAN
STOCK EXCHANGE, (B) NEW YORK STOCK
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EXCHANGE, (C) THE NASDAQ GLOBAL MARKET, (D) THE NASDAQ CAPITAL