OR THE CONVERSION SHARES.
THE COMPANY HAS FURNISHED TO THE
BUYER TRUE AND CORRECT COPIES OF THE COMPANY'S CERTIFICATE OF INCORPORATION AS
IN EFFECT ON THE DATE HEREOF ("CERTIFICATE OF INCORPORATION"), THE COMPANY'S
BY-LAWS, AS IN EFFECT ON THE DATE HEREOF (THE "BY-LAWS"), AND THE TERMS OF ALL
SECURITIES CONVERTIBLE INTO OR EXERCISABLE FOR COMMON STOCK OF THE COMPANY AND
THE MATERIAL RIGHTS OF THE HOLDERS THEREOF IN RESPECT THERETO.
THE COMPANY
SHALL PROVIDE THE BUYER WITH A WRITTEN UPDATE OF THIS REPRESENTATION SIGNED BY
THE COMPANY'S CHIEF EXECUTIVE ON BEHALF OF THE COMPANY AS OF THE CLOSING DATE.
D.
ISSUANCE OF SHARES.
THE CONVERSION SHARES ARE DULY
AUTHORIZED AND RESERVED FOR ISSUANCE AND, UPON CONVERSION OF THE NOTE IN
ACCORDANCE WITH ITS RESPECTIVE TERMS, WILL BE VALIDLY ISSUED, FULLY PAID AND
NON-ASSESSABLE, AND FREE FROM ALL TAXES, LIENS, CLAIMS AND ENCUMBRANCES WITH
RESPECT TO THE ISSUE THEREOF AND SHALL NOT BE SUBJECT TO PREEMPTIVE RIGHTS OR
OTHER SIMILAR RIGHTS OF SHAREHOLDERS OF THE COMPANY AND WILL NOT IMPOSE PERSONAL
LIABILITY UPON THE HOLDER THEREOF.
E.
ACKNOWLEDGMENT OF DILUTION.
THE COMPANY UNDERSTANDS AND
ACKNOWLEDGES THE POTENTIALLY DILUTIVE EFFECT TO THE COMMON STOCK UPON THE
ISSUANCE OF THE CONVERSION SHARES UPON CONVERSION OF THE NOTE.
THE COMPANY
FURTHER ACKNOWLEDGES THAT ITS OBLIGATION TO ISSUE CONVERSION SHARES UPON
CONVERSION OF THE NOTE IN ACCORDANCE WITH THIS AGREEMENT, THE NOTE IS ABSOLUTE
AND UNCONDITIONAL REGARDLESS OF THE DILUTIVE EFFECT THAT SUCH ISSUANCE MAY HAVE
ON THE OWNERSHIP INTERESTS OF OTHER SHAREHOLDERS OF THE COMPANY.
F.
NO CONFLICTS.
THE EXECUTION, DELIVERY AND PERFORMANCE OF
THIS AGREEMENT, THE NOTE BY THE COMPANY AND THE CONSUMMATION BY THE COMPANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY (INCLUDING, WITHOUT LIMITATION,
THE ISSUANCE AND RESERVATION FOR ISSUANCE OF THE CONVERSION SHARES) WILL NOT (I)
CONFLICT WITH OR RESULT IN A VIOLATION OF ANY PROVISION OF THE CERTIFICATE OF
INCORPORATION OR BY-LAWS OR (II) VIOLATE OR CONFLICT WITH, OR RESULT IN A BREACH
OF ANY PROVISION OF, OR CONSTITUTE A DEFAULT (OR AN EVENT WHICH WITH NOTICE OR
LAPSE OF TIME OR BOTH COULD BECOME A DEFAULT) UNDER, OR GIVE TO OTHERS ANY
RIGHTS OF TERMINATION, AMENDMENT, ACCELERATION OR CANCELLATION OF, ANY
AGREEMENT, INDENTURE, PATENT, PATENT LICENSE OR
6
INSTRUMENT TO WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES IS A PARTY, OR (III)
RESULT IN A VIOLATION OF ANY LAW, RULE, REGULATION, ORDER, JUDGMENT OR DECREE
(INCLUDING FEDERAL AND STATE SECURITIES LAWS AND REGULATIONS AND REGULATIONS OF
ANY SELF-REGULATORY ORGANIZATIONS TO WHICH THE COMPANY OR ITS SECURITIES ARE
SUBJECT) APPLICABLE TO THE COMPANY OR ANY OF ITS SUBSIDIARIES OR BY WHICH ANY
PROPERTY OR ASSET OF THE COMPANY OR ANY OF ITS SUBSIDIARIES IS BOUND OR AFFECTED
(EXCEPT FOR SUCH CONFLICTS, DEFAULTS, TERMINATIONS, AMENDMENTS, ACCELERATIONS,
CANCELLATIONS AND VIOLATIONS AS WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE,
HAVE A MATERIAL ADVERSE EFFECT).
NEITHER THE COMPANY NOR ANY OF ITS
SUBSIDIARIES IS IN VIOLATION OF ITS CERTIFICATE OF INCORPORATION, BY-LAWS OR
OTHER ORGANIZATIONAL DOCUMENTS AND NEITHER THE COMPANY NOR