INSTRUMENT FURNISHED PURSUANT HERETO, AND A CERTIFICATION
BY ANOTHER OFFICER OF THE COMPANY AS TO THE INCUMBENCY AND SIGNATURE OF THE
OFFICER SIGNING THE CERTIFICATE REFERRED TO IN THIS CLAUSE (II); AND
(III)
SUCH ADDITIONAL SUPPORTING DOCUMENTS AND
OTHER INFORMATION WITH RESPECT TO THE OPERATIONS AND AFFAIRS OF THE COMPANY AS
THE PURCHASERS OR THEIR COUNSEL REASONABLY MAY REQUEST.
All such documents will be satisfactory in form and substance to the Purchasers
and their counsel.
(G)
PREEMPTIVE AND FIRST REFUSAL RIGHTS. ALL
STOCKHOLDERS OF THE COMPANY HAVING ANY PREEMPTIVE OR FIRST REFUSAL RIGHTS WITH
RESPECT TO THE ISSUANCE OF THE NOTES WILL HAVE IRREVOCABLY WAIVED THE SAME IN
WRITING OR ALL SUCH RIGHTS WILL HAVE EXPIRED.
(H)
FEES OF PURCHASERS' COUNSEL. THE COMPANY
WILL HAVE PAID IN ACCORDANCE WITH SECTION 7.01 THE FEES AND DISBURSEMENTS OF
EACH PURCHASER'S COUNSEL INVOICED AT THE CLOSING; PROVIDED, HOWEVER, THAT THE
PURCHASERS MAY DEDUCT SUCH AMOUNTS FROM THE CONSIDERATION TO BE DELIVERED TO THE
COMPANY FOR THE PURCHASE OF THE NOTES PURSUANT TO SECTION 1.03.
(I)
TERMINATION BY EITHER PURCHASER. NEITHER
PURCHASER WILL BE OBLIGATED TO COMPLETE THE PURCHASE OF THE NOTES IF THE OTHER
PURCHASER ELECTS NOT TO COMPLETE THE TRANSACTION.
(J)
CONVERSION OF EXISTING DEBT. ON OR BEFORE
THE CLOSING DATE, THE COMPANY SHALL HAVE ENTERED INTO A BINDING, WRITTEN
CONVERSION AND SETTLEMENT AGREEMENT, SUBSTANTIALLY IN THE FORM OF EXHIBIT C WITH
EACH AND EVERY HOLDER OF THE 9% NOTES, THE AMENDED 9% NOTES, THE BRIDGE NOTES
AND THE ACQUISITION NOTES, RESPECTIVELY.
13
(K)
BOARD OF DIRECTORS. EFFECTIVE AS OF THE
CLOSING DATE, ROBERT WEBBER AND MARSHALL TOPLANSKY SHALL HAVE RESIGNED FROM THE
COMPANY'S BOARD OF DIRECTORS, AND ALAN HOWE SHALL HAVE BEEN APPOINTED TO THE
COMPANY'S BOARD OF DIRECTORS.
(L)
RENEGOTIATION OF TRADE DEBT. AT LEAST
$575,000 IN FACE AMOUNT OF THE COMPANY'S EXISTING UNSECURED TRADE DEBT SET FORTH
ON SCHEDULE II SHALL HAVE BEEN RENEGOTIATED PURSUANT TO THE TERMS OF A
SETTLEMENT AND RELEASE AGREEMENT SUBSTANTIALLY IN THE FORM OF EXHIBIT B, AND
SUCH SETTLEMENT AND RELEASE AGREEMENTS SHALL HAVE BEEN DULY ENTERED INTO BY THE
COMPANY WITH THOSE CERTAIN TRADE CREDITORS PURSUANT TO BINDING, WRITTEN
AGREEMENTS.
(M)
EQUITY INVESTMENT. A PRIVATE PLACEMENT OF THE
COMPANY'S COMMON STOCK OF AT LEAST $1,000,000 AT A PRICE PER SHARE OF $0.02 BY
NETWORK 1 FINANCIAL SERVICES, INC. (THE "PRIVATE PLACEMENT") SHALL BE SUBJECT TO
A BINDING, WRITTEN AGREEMENT WITH THE COMPANY WHICH SHALL CLOSE BEFORE THE
CLOSING OF THIS AGREEMENT.
(N)
WARRANT. THE COMPANY SHALL HAVE ISSUED TO
THE PURCHASERS OF SENIOR NOTES PRO RATA, ACCORDING TO EACH SUCH PURCHASER'S
PROPORTION OF THE AGGREGATE PRINCIPAL AMOUNT OF THE SENIOR NOTES, WARRANTS FOR
THE PURCHASE OF AN AGGREGATE OF 19.9% OF THE COMMON STOCK OF THE COMPANY,
EXERCISABLE AT $0.001 PER SHARE, IN THE FORM SET FORTH AS EXHIBIT D.
ARTICLE V
COVENANTS OF THE COMPANY
The Company agrees that, so long as any Notes are outstanding, except to the
extent compliance in any case or cases is waived in writing by