VENTURE (THE PRIMARY PURPOSE OF WHICH IS NOT TO RAISE
EQUITY CAPITAL),
(B) ANY ISSUANCE BY THE COMPANY OF SECURITIES AS CONSIDERATION FOR A MERGER OR
CONSOLIDATION OR THE ACQUISITION OF A BUSINESS, PRODUCT, LICENSE, OR OTHER
ASSETS OF ANOTHER PERSON OR ENTITY,
(C) OPTIONS TO PURCHASE SHARES OF COMMON STOCK, PROVIDED (I) SUCH OPTIONS ARE
ISSUED AFTER THE DATE OF THIS DEBENTURE TO EMPLOYEES OF THE COMPANY WITHIN
THIRTY (30) DAYS OF SUCH EMPLOYEE'S STARTING HIS EMPLOYMENT WITH THE COMPANY,
AND (II) THE EXERCISE PRICE OF SUCH OPTIONS IS NOT LESS THAN THE CLOSING PRICE
OF THE COMMON STOCK ON THE DATE OF ISSUANCE OF SUCH OPTION,
(D) SECURITIES ISSUED PURSUANT TO AN APPROVED STOCK PLAN,
(E) UP TO 1,000,000 WITHOUT REGISTRATION RIGHTS AND NOT PURSUANT TO FORM S-8 (IN
THE EVENT THAT SUCH ISSUANCE HAS REGISTRATION RIGHTS THE OBLIGOR SHALL OBTAIN
THE PRIOR WRITTEN APPROVAL OF THE HOLDER) SHARES THAT MAY BE ISSUED FROM TIME TO
TIME AT A PRICE NO LESS THAN THE VWAP ENDING WITHIN THREE (3) BUSINESS DAYS
PRIOR TO THE COMPLETION OF THE TRANSACTION (THE PRIMARY PURPOSE OF WHICH IS NOT
TO RAISE EQUITY CAPITAL),
(F) OTHER THAN AS PROVIDED FOR IN THE SECURITIES PURCHASE AGREEMENT ANY ISSUANCE
OF SECURITIES TO HOLDERS OF THE OTHER SECURITIES PROVIDED SUCH TRANSACTIONS ARE
IN ACCORDANCE WITH THE TERMS OF SUCH INSTRUMENT (INCLUDING ANY ANTI-DILUTION
PROTECTION CONTAINED IN SUCH INSTRUMENT) OR ARE ON TERMS DETERMINED BY THE BOARD
OF DIRECTORS OF THE COMPANY TO BE NO LESS FAVORABLE TO THE COMPANY THAN THE
EXISTING TERMS, AND
g)
the securities issued to, or upon the conversion or exercise of,
the warrants and convertible debentures issued through Clayton Dunning &
Co.,
Inc. (the "2007A Securities"),
14
which the Company anticipates will be issued in April 2007 or soon thereafter,
and are referenced in the Waiver Agreement between the parties dated February
19, 2007.
"Original Issue Date" shall mean the date of the first issuance of this
Debenture regardless of the number of transfers and regardless of the number of
instruments, which may be issued to evidence such Debenture.
"OTHER SECURITIES" MEANS (I) THOSE CONVERTIBLE DEBENTURES, OPTIONS AND WARRANTS
OF THE COMPANY ISSUED PRIOR TO, AND OUTSTANDING ON, THE ISSUANCE DATE OF THIS
WARRANT, (II) EXCEPT FOR AS PROVIDED IN SECTION 8(A) HEREIN OR AS OTHERWISE
AGREED BY THE HOLDER AND THE COMPANY, THE SHARES OF COMMON STOCK ISSUABLE ON
EXERCISE OF SUCH CONVERTIBLE DEBENTURES, OPTIONS AND WARRANTS, PROVIDED SUCH
CONVERTIBLE DEBENTURES, OPTIONS AND WARRANTS ARE NOT AMENDED AFTER THE ISSUANCE
DATE OF THIS WARRANT AND, AND (III) THE 660,000 SHARES OF RESTRICTED COMMON
STOCK ISSUED OR TO BE ISSUED PURSUANT TO THE SECURITIES PURCHASE AGREEMENT DATED
MAY 30, 2006, AND (IV) ANY OTHER SHARES OF COMMON STOCK ISSUED OR ISSUABLE
PURSUANT TO THIS WARRANT,
THE CONVERTIBLE DEBENTURE, AND THE REGISTRATION
RIGHTS AGREEMENT ENTERED INTO BETWEEN THE COMPANY AND THE INITIAL HOLDER OF THIS
WARRANT.
"Person" means a corporation, an association, a partnership, organization, a
business, an individual, a government