EXPENSES ARE INCURRED.
4.13
USE OF PROCEEDS.
EXCEPT FOR THE REPAYMENT OF
$500,000 IN BRIDGE NOTES DESCRIBED IN SCHEDULE 3.1(DD), TOGETHER WITH ACCRUED
INTEREST THEREON, AND ANY CASH REQUIRED TO SETTLE ANY AMOUNT OF INDEBTEDNESS NOT
CONVERTIBLE INTO A WHOLE NUMBER OF SHARES, THE COMPANY WILL USE THE NET PROCEEDS
FROM THE SALE OF THE SECURITIES HEREUNDER FOR WORKING CAPITAL PURPOSES AND NOT
FOR THE SATISFACTION OF ANY PORTION OF THE COMPANY'S DEBT (OTHER THAN PAYMENT OF
TRADE PAYABLES AND ACCRUED EXPENSES IN THE ORDINARY COURSE OF THE COMPANY'S
BUSINESS AND CONSISTENT WITH PRIOR PRACTICES), OR TO REDEEM ANY COMMON STOCK OR
COMMON STOCK EQUIVALENTS.
25
4.14
EXISTENCE; CONDUCT OF BUSINESS.
THE COMPANY
WILL, AND WILL CAUSE EACH OF THE SUBSIDIARIES TO, DO OR CAUSE TO BE DONE ALL
THINGS NECESSARY TO PRESERVE, RENEW AND KEEP IN FULL FORCE AND EFFECT ITS LEGAL
EXISTENCE AND THE RIGHTS, LICENSES, PERMITS, PRIVILEGES AND FRANCHISES MATERIAL
TO THE CONDUCT OF ITS BUSINESS, PROVIDED, THAT THE FOREGOING SHALL NOT PROHIBIT
(A) ANY SALE, LEASE, TRANSFER OR OTHER DISPOSITION PERMITTED BY THIS AGREEMENT,
OR (B) ANY MERGER OF (I) ANY DOMESTIC SUBSIDIARY WITH ANY OTHER DOMESTIC
SUBSIDIARY, (II) ANY DOMESTIC SUBSIDIARY WITH AND INTO THE COMPANY, OR (III) ANY
FOREIGN SUBSIDIARY WITH ANY OTHER FOREIGN SUBSIDIARY.
4.15
INDEBTEDNESS.
THE COMPANY WILL NOT ENTER INTO
ANY AGREEMENTS NOR ISSUE ANY INSTRUMENTS FOR BORROWED MONEY PRIOR TO THE CLOSING
WITHOUT THE CONSENT OF SF CAPITAL PARTNERS, LTD.
4.16
RESERVATION OF COMMON STOCK.
(A)
AT ANY POINT WHILE THE SECURITIES ARE
OUTSTANDING, THE COMPANY SHALL MAINTAIN A RESERVE FROM ITS DULY AUTHORIZED
SHARES OF COMMON STOCK FOR ISSUANCE PURSUANT TO THE TRANSACTION DOCUMENTS IN
SUCH AMOUNT AS MAY BE REQUIRED TO FULFILL ITS OBLIGATIONS IN FULL UNDER THE
TRANSACTION DOCUMENTS.
(B)
IF, ON ANY DATE WHILE THE SECURITIES ARE
OUTSTANDING, THE NUMBER OF AUTHORIZED BUT UNISSUED (AND OTHERWISE UNRESERVED)
SHARES OF COMMON STOCK IS LESS THAN 100% OF (I) THE REQUIRED MINIMUM ON SUCH
DATE, MINUS (II) THE NUMBER OF SHARES OF COMMON STOCK PREVIOUSLY ISSUED PURSUANT
TO THE TRANSACTION DOCUMENTS, THEN THE BOARD OF DIRECTORS OF THE COMPANY SHALL
USE COMMERCIALLY REASONABLE EFFORTS TO AMEND THE COMPANY'S CERTIFICATE OR
ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED BUT UNISSUED
SHARES OF COMMON STOCK TO AT LEAST THE REQUIRED MINIMUM AT SUCH TIME (MINUS THE
NUMBER OF SHARES OF COMMON STOCK PREVIOUSLY ISSUED PURSUANT TO THE TRANSACTION
DOCUMENTS), AS SOON AS POSSIBLE AND IN ANY EVENT NOT LATER THAN THE NEXT ANNUAL
MEETING OF SHAREHOLDERS.
THE COMPANY SHALL OBTAIN SHAREHOLDER APPROVAL IN
CONNECTION WITH THIS SECTION 4.16(B), WITH THE RECOMMENDATION OF THE COMPANY'S
BOARD OF DIRECTORS THAT SUCH PROPOSAL BE APPROVED, AND THE COMPANY SHALL SOLICIT
PROXIES FROM ITS SHAREHOLDERS IN CONNECTION THEREWITH IN THE SAME MANNER AS ALL
OTHER MANAGEMENT PROPOSALS IN SUCH PROXY STATEMENT AND ALL MANAGEMENT-APPOINTED
PROXY-HOLDERS SHALL VOTE THEIR PROXIES IN FAVOR OF SUCH PROPOSAL.
IF THE
COMPANY DOES NOT OBTAIN SHAREHOLDER APPROVAL AT THE FIRST MEETING, THE COMPANY
SHALL CALL A