ISSUER THE ESCROW AGREEMENT;
2.7.5
ISSUER MUST HAVE RECEIVED FROM SUCH PURCHASER A FULLY COMPLETED
INVESTOR QUESTIONNAIRE, AND MUST HAVE FOUND THE CONTENTS OF SUCH QUESTIONNAIRE
TO BE SATISFACTORY IN THE ISSUER'S SOLE DISCRETION;
2.7.6
THE ISSUER MUST HAVE RECEIVED CONFIRMATION FROM THE ESCROW AGENT
THAT IT HAS RECEIVED THE SUBSCRIPTION PRICE PAYABLE BY SUCH PURCHASER; AND
2.7.7
A CUMULATIVE SUBSCRIPTION PRICE OF AT LEAST $2,000,000 MUST BE
AVAILABLE FOR RELEASE BY ESCROW AGENT TO ISSUER.
2.7.8
There shall be no injunction, restraining order or decree of any
nature of any court or governmental authority of competent jurisdiction that is
in effect that restrains or prohibits the consummation of the transactions
contemplated hereby and by the other Transaction Documents.
6
2.7.9
The Issuer shall have obtained all necessary waivers from Western
Commercial Bank with respect to its Senior Secured Loan permitting the Issuer to
enter into the Transaction Documents.
2.8
CLOSING. THE TRANSACTIONS CONTEMPLATED IN SECTION 2.1 WILL BE
CONSUMMATED IN ONE CLOSING (THE "CLOSING"), WHICH WILL BE HELD ON THE
DATE(S) DESIGNATED BY PURCHASER THAT OCCUR (A) ON OR AFTER THE DATE HEREOF AND
(B) ON OR BEFORE MARCH 31, 2008 (THE "CLOSING DATE").
AT THE CLOSING:
2.8.1
ISSUER WILL EXECUTE AND DELIVER TO EACH PURCHASER A SIGNATURE
PAGE TO THIS AGREEMENT WITH RESPECT TO EACH PURCHASER PARTICIPATING IN SUCH
CLOSING;
2.8.2
ISSUER WILL ISSUE THE RELEVANT NOTE(S) AND WARRANT(S) TO EACH SUCH
PURCHASER;
2.8.3
COMMENCING WITH THE CLOSING, COLLATERAL AGENT MAY TAKE ALL ACTIONS
REASONABLY NECESSARY OR APPROPRIATE PERFECT THE SECURITY INTERESTS UNDER THE
SECURITY AGREEMENT; AND
2.8.4
THE ISSUER AND THE COLLATERAL AGENT WILL JOINTLY INSTRUCT THE ESCROW
AGENT TO RELEASE THE SUBSCRIPTION PRICE PAID BY THE RELEVANT PURCHASER(S) TO THE
ISSUER AND/OR TO MAKE SUCH OTHER PERMITTED PAYMENT(S) AS THE ISSUER MAY
INSTRUCT.
2.9
CANCELLATION AND REFUND.
IF THE CLOSING OF ANY PURCHASER'S
SUBSCRIPTION HAS NOT OCCURRED PRIOR TO MARCH 31, 2008, OR IF, AT ANY EARLIER
DATE, EVENTS OCCUR THAT PRECLUDE THE CONDITIONS PRECEDENT TO CLOSING SUCH
PURCHASER'S SUBSCRIPTION FROM OCCURRING, AND SUCH PURCHASER HAS NOT CONSENTED TO
OTHERWISE EXTEND THE CLOSING DATE, THEN THE ESCROW AGENT WILL REFUND SUCH
PURCHASER'S SUBSCRIPTION PRICE AND THE SUBSCRIPTION BY SUCH PURCHASER TO
PURCHASE THE NOTES AND WARRANTS WILL AUTOMATICALLY BE CANCELLED.
3.
REPRESENTATIONS, WARRANTIES AND
COVENANTS
3.1
REPRESENTATIONS, WARRANTIES AND COVENANTS OF ISSUER.
ISSUER
REPRESENTS, WARRANTS AND COVENANTS TO COLLATERAL AGENT AND PURCHASERS THAT:
3.1.1
ORGANIZATION AND QUALIFICATION. ISSUER IS A CORPORATION DULY
INCORPORATED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE STATE
OF CALIFORNIA, WITH THE REQUISITE POWER AND AUTHORITY, SUBJECT TO THE ISSUER'S
OBTAINING THE SHAREHOLDER APPROVAL (AS SUCH TERM IS DEFINED IN SECTION 4.2.6),
TO ENTER INTO THE TRANSACTION DOCUMENTS AND TO OWN, LEASE AND USE ITS PROPERTIES
AND ASSETS AND TO CARRY ON ITS BUSINESS AS CURRENTLY CONDUCTED.
ISSUER IS DULY
QUALIFIED TO CONDUCT BUSINESS AND IS IN GOOD STANDING AS A FOREIGN CORPORATION
IN EACH JURISDICTION IN WHICH IT CONDUCTS BUSINESS AS NECESSARY, EXCEPT WHERE
THE FAILURE TO