THE ISSUE OR OTHERWISE IN
CONNECTION THEREWITH;
(B)
IN THE CASE OF THE ISSUANCE OF SHARES OF COMMON STOCK FOR A
CONSIDERATION IN WHOLE OR IN PART OTHER THAN CASH, THE CONSIDERATION OTHER THAN
CASH SHALL BE DEEMED TO BE THE FAIR MARKET VALUE THEREOF AS DETERMINED IN GOOD
FAITH BY THE BOARD OF DIRECTORS OF THE BORROWER (IRRESPECTIVE OF THE ACCOUNTING
TREATMENT THEREOF); AND
(C)
IN THE CASE OF THE ISSUANCE OF SECURITIES CONVERTIBLE INTO OR
EXCHANGEABLE FOR SHARES OF COMMON STOCK, THE AGGREGATE CONSIDERATION RECEIVED
THEREFOR SHALL
4
BE DEEMED TO BE THE CONSIDERATION RECEIVED BY THE BORROWER FOR THE ISSUANCE OF
SUCH SECURITIES PLUS THE ADDITIONAL MINIMUM CONSIDERATION, IF ANY, TO BE
RECEIVED BY THE BORROWER UPON THE CONVERSION OR EXCHANGE THEREOF (THE
CONSIDERATION IN EACH CASE TO BE DETERMINED IN THE SAME MANNER AS PROVIDED IN
CLAUSES (A) AND (B) OF THIS SUBSECTION (D)).
3.7.
RESERVATION OF SHARES. DURING THE PERIOD THE CONVERSION RIGHT
EXISTS, THE BORROWER WILL RESERVE FROM ITS AUTHORIZED AND UNISSUED COMMON STOCK
A SUFFICIENT NUMBER OF SHARES TO PROVIDE FOR THE ISSUANCE OF COMMON STOCK UPON
THE FULL CONVERSION OF THIS NOTE.
THE BORROWER REPRESENTS THAT UPON ISSUANCE,
SUCH SHARES WILL BE DULY AND VALIDLY ISSUED, FULLY PAID AND NON-ASSESSABLE.
THE
BORROWER AGREES THAT ITS ISSUANCE OF THIS NOTE SHALL CONSTITUTE FULL AUTHORITY
TO ITS OFFICERS, AGENTS, AND TRANSFER AGENTS WHO ARE CHARGED WITH THE DUTY OF
EXECUTING AND ISSUING STOCK CERTIFICATES TO EXECUTE AND ISSUE THE NECESSARY
CERTIFICATES FOR SHARES OF COMMON STOCK UPON THE CONVERSION OF THIS NOTE.
3.8.
REGISTRATION RIGHTS.
THE HOLDER HAS BEEN GRANTED REGISTRATION
RIGHTS WITH RESPECT TO THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF
THIS NOTE AS MORE FULLY SET FORTH IN A REGISTRATION RIGHTS AGREEMENT DATED THE
DATE HEREOF.
ARTICLE IV
EVENTS OF DEFAULT
The occurrence of any of the following events is an Event of Default ("Event of
Default"):
4.1.
FAILURE TO PAY PRINCIPAL, INTEREST OR OTHER FEES.
THE BORROWER
FAILS TO PAY ANY INSTALLMENT OF PRINCIPAL, INTEREST OR OTHER FEES HEREON OR ON
ANY OTHER PROMISSORY NOTE ISSUED PURSUANT TO THE SECURITY AGREEMENT, WHEN DUE:
PROVIDED HOWEVER, THAT THE BORROWER SHALL HAVE A PERIOD OF THREE (3) BUSINESS
DAYS IN WHICH TO CURE SUCH FAILURE TO PAY SUCH MONETARY AMOUNTS.
4.2.
BREACH OF COVENANT.
THE BORROWER BREACHES ANY COVENANT OR OTHER
TERM OR CONDITION OF THIS NOTE IN ANY MATERIAL RESPECT AND SUCH BREACH, IF
SUBJECT TO CURE, CONTINUES FOR A PERIOD OF TEN (10)
DAYS AFTER THE OCCURRENCE
THEREOF.
4.3.
BREACH OF REPRESENTATIONS AND WARRANTIES.
ANY MATERIAL
REPRESENTATION OR WARRANTY OF THE BORROWER MADE HEREIN, OR IN ANY AGREEMENT,
STATEMENT OR CERTIFICATE GIVEN IN WRITING PURSUANT HERETO OR IN CONNECTION
HEREWITH SHALL BE FALSE OR MISLEADING.
4.4.
STOP TRADE.
AN SEC STOP TRADE ORDER OR PRINCIPAL MARKET TRADING
SUSPENSION OF THE COMMON STOCK FOR FIVE (5) CONSECUTIVE TRADING DAYS OR FIVE (5)
TRADING DAYS DURING A PERIOD OF TEN (10) CONSECUTIVE DAYS, EXCLUDING IN ALL
CASES A SUSPENSION OF