DIRECTORS), INCLUDING ANY CONTRACT, AGREEMENT OR
OTHER ARRANGEMENT PROVIDING FOR THE FURNISHING OF SERVICES TO OR BY, PROVIDING
FOR RENTAL OF REAL OR PERSONAL PROPERTY TO OR FROM, OR OTHERWISE REQUIRING
PAYMENTS TO OR FROM ANY OFFICER, DIRECTOR OR SUCH EMPLOYEE OR, TO THE KNOWLEDGE
OF THE COMPANY, ANY CORPORATION, PARTNERSHIP, TRUST OR OTHER ENTITY IN WHICH ANY
OFFICER, DIRECTOR, OR ANY SUCH EMPLOYEE HAS A SUBSTANTIAL INTEREST OR IS AN
OFFICER, DIRECTOR, TRUSTEE OR PARTNER.
(V)
FEES AND RIGHTS OF FIRST REFUSAL. THE COMPANY IS NOT OBLIGATED TO
OFFER THE SECURITIES OFFERED HEREUNDER ON A RIGHT OF FIRST REFUSAL BASIS OR
OTHERWISE TO ANY THIRD PARTIES INCLUDING, BUT NOT LIMITED TO, CURRENT OR FORMER
SHAREHOLDERS OF THE COMPANY, UNDERWRITERS, BROKERS, AGENTS OR OTHER THIRD
PARTIES EXCEPT IN CONNECTION WITH THE 2005 8% CONVERTIBLE DEBENTURES AND THE
WARRANTS ISSUED TO THE PURCHASERS OF THE 2005 8% CONVERTIBLE DEBENTURES.
(W)
SHAREHOLDER APPROVAL.
THE COMPANY HAS OBTAINED AND PROVIDED
TO THE BUYER'S IRREVOCABLE VOTING PROXIES FROM JAMES E. ALEXANDER, BORIS
RUBIZHEVSKY, LINDSAY A. GARDNER, AND JOHN SAKYS
IN FAVOR OF THE PURPOSES
DESCRIBED IN SECTIONS 4(L) AND 4(M) HEREOF .
(X)
2005 8% CONVERTIBLE DEBENTURES.
THE AMOUNTS DUE UNDER THE
2005 8% CONVERTIBLE DEBENTURES IS AS OUTLINED IN THE DISCLOSURE SCHEDULE
ATTACHED HERETO.
4.
COVENANTS.
(A)
BEST EFFORTS. EACH PARTY SHALL USE ITS BEST EFFORTS TO TIMELY
SATISFY EACH OF THE CONDITIONS TO BE SATISFIED BY IT AS PROVIDED IN SECTIONS 6
AND 7 OF THIS AGREEMENT.
(B)
FORM D. THE COMPANY AGREES TO FILE A FORM D WITH RESPECT TO THE
CONVERRTIBLE DEBENTURES
AS REQUIRED UNDER REGULATION D AND TO PROVIDE A COPY
THEREOF TO EACH BUYER PROMPTLY AFTER SUCH FILING. THE COMPANY SHALL, ON OR
BEFORE THE CLOSING DATE, TAKE SUCH ACTION AS THE COMPANY SHALL REASONABLY
DETERMINE IS NECESSARY TO QUALIFY THE CONVERTIBLE
12
DEBENTURES , OR OBTAIN AN EXEMPTION FOR THE CONVERTIBLE DEBENTURES
FOR SALE TO
THE BUYERS AT THE CLOSING PURSUANT TO THIS AGREEMENT UNDER APPLICABLE SECURITIES
OR "BLUE SKY" LAWS OF THE STATES OF THE UNITED STATES, AND SHALL PROVIDE
EVIDENCE OF ANY SUCH ACTION SO TAKEN TO THE BUYERS ON OR PRIOR TO THE CLOSING
DATE.
(C)
REPORTING STATUS. UNTIL THE EARLIER OF (I) THE DATE AS OF WHICH
THE BUYER(S) MAY SELL ALL OF THE CONVERSION SHARES WITHOUT RESTRICTION PURSUANT
TO RULE 144(K) PROMULGATED UNDER THE SECURITIES ACT (OR SUCCESSOR THERETO), OR
(II) THE DATE ON WHICH (A) THE BUYER(S) SHALL HAVE SOLD ALL THE CONVERSION
SHARES AND (B) NONE OF THE CONVERTIBLE DEBENTURES ARE OUTSTANDING (THE
"REGISTRATION PERIOD"), THE COMPANY SHALL FILE IN A TIMELY MANNER ALL REPORTS
REQUIRED TO BE FILED WITH THE SEC PURSUANT TO THE EXCHANGE ACT AND THE
REGULATIONS OF THE SEC
THEREUNDER, AND THE COMPANY SHALL NOT TERMINATE ITS
STATUS AS AN ISSUER REQUIRED TO FILE REPORTS UNDER THE EXCHANGE ACT EVEN IF THE
EXCHANGE ACT OR THE RULES AND REGULATIONS THEREUNDER WOULD OTHERWISE PERMIT SUCH
TERMINATION.
(D)
USE OF PROCEEDS. THE COMPANY WILL USE THE PROCEEDS