THE COMPANY CONTAINED
HEREIN;
(II)
ALL OBLIGATIONS, COVENANTS AND AGREEMENTS OF THE COMPANY REQUIRED
TO BE PERFORMED AT OR PRIOR TO THE CLOSING DATE SHALL HAVE BEEN PERFORMED;
(III)
THE DELIVERY BY THE COMPANY OF THE ITEMS SET FORTH IN
SECTION 2.2(A) OF THIS AGREEMENT;
(IV)
THERE SHALL HAVE BEEN NO MATERIAL ADVERSE EFFECT WITH RESPECT TO
THE COMPANY SINCE THE DATE HEREOF;
(V)
THE COMPANY SHALL HAVE RECEIVED A SUFFICIENT NUMBER OF PURCHASERS
SUCH THAT THE AMENDMENTS SET FORTH IN SECTION 4.18 TO THE PRIOR TRANSACTION
DOCUMENTS ARE DEEMED EFFECTIVE;
(VI)
THE HOLDERS OF THE $600,000 PRINCIPAL AMOUNT OF UNSECURED BRIDGE
NOTES ISSUED BY THE COMPANY TO ON FEBRUARY 19, 2008 TO JMJ FINANCIAL SHALL HAVE
AGREED TO A PERMANENT CONVERSION FLOOR ON SUCH NOTES OF AT LEAST $0.15, SUBJECT
TO ADJUSTMENT FOR REVERSE AND FORWARD STOCK SPLITS, STOCK DIVIDENDS, STOCK
COMBINATIONS AND OTHER SIMILAR TRANSACTIONS OF THE COMMON STOCK THAT OCCUR AFTER
THE DATE OF THIS AGREEMENT, OR SUCH HOLDERS SHALL HAVE EXCHANGED THE NOTES, IN
FULL, INTO DEBENTURES IN THE FORM OF THE DEBENTURES;
(VII)
THE $130,000 IN UNSECURED CONVERTIBLE NOTES ISSUED TO PDPI LLC AND
THE SHAPIRO FAMILY TRUST ON MARCH 21, 2008 SHALL HAVE EXCHANGED SUCH NOTES INTO
DEBENTURES ON A $1 FOR $1 BASIS; AND
(VIII)
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 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 L.P. 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
9
INADVISABLE TO PURCHASE THE SECURITIES AT THE CLOSING.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1
Representations and Warranties of the Company.
Except as set
forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a
part hereof and shall qualify any representation or otherwise made herein to the
extent of the disclosure contained in the corresponding section of the
Disclosure Schedules, the Company hereby makes the following representations and
warranties 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 OF THE ISSUED AND OUTSTANDING