STATEMENT CEASES FOR ANY REASON TO REMAIN CONTINUOUSLY EFFECTIVE AS
TO ALL REGISTRABLE SECURITIES FOR WHICH IT IS REQUIRED TO BE EFFECTIVE, OR THE
BUYERS ARE OTHERWISE NOT PERMITTED TO UTILIZE THE PROSPECTUS THEREIN TO RESELL
SUCH REGISTRABLE SECURITIES FOR MORE THAN 30 CONSECUTIVE CALENDAR DAYS OR MORE
THAN AN AGGREGATE OF 40 CALENDAR DAYS DURING ANY 12-MONTH PERIOD (WHICH NEED NOT
BE CONSECUTIVE CALENDAR DAYS) (ANY SUCH FAILURE OR BREACH BEING REFERRED TO AS
AN "EVENT"), THEN IN ADDITION TO ANY OTHER RIGHTS THE HOLDERS OF THE CONVERTIBLE
DEBENTURES MAY HAVE HEREUNDER OR UNDER APPLICABLE LAW, ON EACH SUCH EVENT DATE
AND ON EACH MONTHLY ANNIVERSARY OF EACH SUCH EVENT DATE (IF THE APPLICABLE EVENT
SHALL NOT HAVE BEEN CURED BY SUCH DATE) UNTIL THE APPLICABLE EVENT IS CURED, THE
COMPANY SHALL PAY TO EACH HOLDER OF CONVERTIBLE DEBENTURES AN AMOUNT IN CASH, AS
3
PARTIAL LIQUIDATED DAMAGES ("LIQUIDATED DAMAGES") AND NOT AS A PENALTY, EQUAL TO
1.0% OF THE AGGREGATE PURCHASE PRICE PAID BY SUCH HOLDER PURSUANT TO THE
SECURITIES PURCHASE AGREEMENT FOR ANY CONVERTIBLE DEBENTURES THEN HELD BY SUCH
HOLDER.
THE PARTIES AGREE THAT (1) THE COMPANY SHALL NOT BE LIABLE FOR
LIQUIDATED DAMAGES UNDER THIS AGREEMENT WITH RESPECT TO ANY WARRANTS OR WARRANT
SHARES AND (2) THE MAXIMUM AGGREGATE LIQUIDATED DAMAGES PAYABLE TO A HOLDER OF
CONVERTIBLE DEBENTURES UNDER THIS AGREEMENT SHALL BE TWELVE PERCENT (12%) OF THE
AGGREGATE PURCHASE PRICE PAID BY SUCH HOLDER PURSUANT TO THE SECURITIES PURCHASE
AGREEMENT.
THE PARTIAL LIQUIDATED DAMAGES PURSUANT TO THE TERMS HEREOF SHALL
APPLY ON A DAILY PRO-RATA BASIS FOR ANY PORTION OF A MONTH PRIOR TO THE CURE OF
AN EVENT.
(C)
LIQUIDATED DAMAGES.
THE COMPANY AND THE
BUYER HERETO ACKNOWLEDGE AND AGREE THAT THE SUMS PAYABLE UNDER SUBSECTION 2(B)
ABOVE SHALL CONSTITUTE LIQUIDATED DAMAGES AND NOT PENALTIES AND ARE IN ADDITION
TO ALL OTHER RIGHTS OF THE BUYER, INCLUDING THE RIGHT TO CALL A DEFAULT.
THE
PARTIES FURTHER ACKNOWLEDGE THAT (I) THE AMOUNT OF LOSS OR DAMAGES LIKELY TO BE
INCURRED IS INCAPABLE OR IS DIFFICULT TO PRECISELY ESTIMATE, (II) THE AMOUNTS
SPECIFIED IN SUCH SUBSECTIONS BEAR A REASONABLE RELATIONSHIP TO, AND ARE NOT
PLAINLY OR GROSSLY DISPROPORTIONATE TO, THE PROBABLE LOSS LIKELY TO BE INCURRED
IN CONNECTION WITH ANY FAILURE BY THE COMPANY TO OBTAIN OR MAINTAIN THE
EFFECTIVENESS OF A REGISTRATION STATEMENT, (III) ONE OF THE REASONS FOR THE
COMPANY AND THE BUYER REACHING AN AGREEMENT AS TO SUCH AMOUNTS WAS THE
UNCERTAINTY AND COST OF LITIGATION REGARDING THE QUESTION OF ACTUAL DAMAGES, AND
(IV) THE COMPANY AND THE BUYER ARE SOPHISTICATED BUSINESS PARTIES AND HAVE BEEN
REPRESENTED BY SOPHISTICATED AND ABLE LEGAL COUNSEL AND NEGOTIATED THIS
AGREEMENT AT ARM'S LENGTH.
NOTWITHSTANDING THE FOREGOING, THERE SHALL BE NO
LIQUIDATED DAMAGES FOR CUT-BACK SECURITIES (AS DEFINED IN SECTION 3(C) BELOW).
3.
RELATED OBLIGATIONS.
(A)
THE COMPANY SHALL, NOT LESS THAN THREE (3)
TRADING DAYS PRIOR TO THE FILING OF EACH REGISTRATION STATEMENT AND NOT LESS
THAN ONE (1) TRADING DAY PRIOR TO THE FILING