DATE HEREOF;
(V)
THE SALE OF $2,000,000 OF COMMON STOCK TO MEDCAP PARTNERS, L.P.
("MEDCAP") AT A PURCHASE PRICE OF $0.60 PER SHARE PAID THROUGH THE CANCELLATION
OF THOSE CERTAIN PROMISSORY NOTES OF THE COMPANY ISSUED TO MEDCAP ON NOVEMBER
18, 2005 IN THE AGGREGATE PRINCIPAL AMOUNT OF $2,000,000 (THE "MEDCAP
TRANSACTION") SHALL HAVE BEEN CONSUMMATED CONTEMPORANEOUS WITH THE CLOSING
HEREUNDER ON TERMS AND CONDITIONS REASONABLY SATISFACTORY TO THE PURCHASERS; AND
(VI)
FROM THE DATE HEREOF TO THE CLOSING DATE, TRADING IN THE COMMON
STOCK SHALL NOT HAVE BEEN SUSPENDED BY THE COMMISSION
OR THE COMPANY'S
PRINCIPAL TRADING MARKET (EXCEPT FOR ANY SUSPENSION OF TRADING OF LIMITED
DURATION
7
AGREED TO BY THE COMPANY, WHICH SUSPENSION SHALL BE TERMINATED PRIOR TO THE
CLOSING), AND, AT ANY TIME PRIOR TO THE CLOSING DATE, TRADING IN SECURITIES
GENERALLY AS REPORTED BY BLOOMBERG FINANCIAL MARKETS SHALL NOT HAVE BEEN
SUSPENDED OR LIMITED, OR MINIMUM PRICES SHALL NOT HAVE BEEN ESTABLISHED ON
SECURITIES WHOSE TRADES ARE REPORTED BY SUCH SERVICE, OR ON ANY TRADING MARKET,
NOR SHALL A BANKING MORATORIUM HAVE BEEN DECLARED EITHER BY THE UNITED STATES OR
NEW YORK STATE AUTHORITIES NOR SHALL THERE HAVE OCCURRED ANY MATERIAL OUTBREAK
OR ESCALATION OF HOSTILITIES OR OTHER NATIONAL OR INTERNATIONAL CALAMITY OF SUCH
MAGNITUDE IN ITS EFFECT ON, OR ANY MATERIAL ADVERSE CHANGE IN, ANY FINANCIAL
MARKET WHICH, IN EACH CASE, IN THE REASONABLE JUDGMENT OF EACH PURCHASER, MAKES
IT IMPRACTICABLE OR INADVISABLE TO PURCHASE THE DEBENTURES AT THE CLOSING.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
EXCEPT AS SET
FORTH UNDER THE CORRESPONDING SECTION OF THE DISCLOSURE SCHEDULES DELIVERED TO
THE PURCHASERS CONCURRENTLY HEREWITH (THE "DISCLOSURE SCHEDULES") WHICH
DISCLOSURE SCHEDULES SHALL BE DEEMED A PART HEREOF, THE COMPANY HEREBY MAKES THE
REPRESENTATIONS AND WARRANTIES SET FORTH BELOW TO EACH PURCHASER.
(A)
SUBSIDIARIES.
ALL OF THE DIRECT AND INDIRECT SUBSIDIARIES OF THE
COMPANY ARE SET FORTH ON SCHEDULE 3.1(A).
THE COMPANY OWNS, DIRECTLY OR
INDIRECTLY, ALL OF THE CAPITAL STOCK OR OTHER EQUITY INTERESTS OF EACH
SUBSIDIARY FREE AND CLEAR OF ANY LIENS, AND ALL THE ISSUED AND OUTSTANDING
SHARES OF CAPITAL STOCK OF EACH SUBSIDIARY ARE VALIDLY ISSUED AND ARE FULLY
PAID, NON-ASSESSABLE AND FREE OF PREEMPTIVE AND SIMILAR RIGHTS TO SUBSCRIBE FOR
OR PURCHASE SECURITIES.
IF THE COMPANY HAS NO SUBSIDIARIES, THEN REFERENCES IN
THE TRANSACTION DOCUMENTS TO THE SUBSIDIARIES WILL BE DISREGARDED.
(B)
ORGANIZATION AND QUALIFICATION.
THE COMPANY AND EACH OF THE
SUBSIDIARIES IS AN ENTITY DULY INCORPORATED OR OTHERWISE ORGANIZED, VALIDLY
EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE JURISDICTION OF ITS
INCORPORATION OR ORGANIZATION (AS APPLICABLE), WITH THE REQUISITE POWER AND
AUTHORITY TO OWN AND USE ITS PROPERTIES AND ASSETS AND TO CARRY ON ITS BUSINESS
AS CURRENTLY CONDUCTED.
NEITHER THE COMPANY NOR ANY SUBSIDIARY IS IN VIOLATION
OR DEFAULT OF ANY OF THE PROVISIONS OF ITS RESPECTIVE CERTIFICATE OR ARTICLES OF
INCORPORATION, BYLAWS OR OTHER ORGANIZATIONAL OR CHARTER DOCUMENTS.
EACH OF THE
COMPANY AND THE SUBSIDIARIES IS DULY QUALIFIED TO