BEFORE OR BY ANY COURT,
ARBITRATOR, GOVERNMENTAL OR ADMINISTRATIVE AGENCY OR REGULATORY AUTHORITY
(FEDERAL, STATE, COUNTY, LOCAL OR FOREIGN) WHICH ADVERSELY AFFECTS OR CHALLENGES
THE LEGALITY, VALIDITY OR ENFORCEABILITY OF ANY TRANSACTION DOCUMENT.
3.1.4
REQUIRED ACTIONS. EXCEPT FOR (A) FILINGS REQUIRED PURSUANT TO THE
REGISTRATION RIGHTS AGREEMENT, (B) ANY FILINGS REQUIRED UNDER APPLICABLE FEDERAL
AND/OR STATE SECURITIES LAWS, (C) THE MAKING OF ANY FILINGS, OR THE OBTAINING OF
ANY APPROVALS REQUIRED BY THE AMERICAN STOCK EXCHANGE, INCLUDING OBTAINING
SHAREHOLDER APPROVAL, (D) THE MAKING OF THE AMENDMENT FILING (COLLECTIVELY, THE
"REQUIRED ACTIONS") AND (E)
AS DISCLOSED ON SCHEDULE 3.1.4 ATTACHED HERETO,
ISSUER IS NOT REQUIRED TO TAKE ANY ACTION OR OBTAIN ANY CONSENT, WAIVER,
AUTHORIZATION OR ORDER OF, GIVE ANY NOTICE TO, OR MAKE ANY FILING OR
REGISTRATION WITH, ANY COURT OR OTHER FEDERAL, STATE, LOCAL OR OTHER
GOVERNMENTAL AUTHORITY OR OTHER PERSON IN CONNECTION WITH ITS EXECUTION,
DELIVERY AND PERFORMANCE OF THE TRANSACTION DOCUMENTS.
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3.1.5
ISSUANCE OF THE SECURITIES. SUBJECT TO THE ISSUER'S PERFORMING THE
REQUIRED ACTIONS, THE NOTES, WARRANTS AND SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THE NOTES AND/OR EXERCISE OF THE WARRANTS (COLLECTIVELY, THE
"REGISTRABLE SECURITIES") ARE DULY AUTHORIZED AND, WHEN ISSUED AND PAID FOR IN
ACCORDANCE WITH THIS AGREEMENT, THE NOTES AND THE WARRANTS, WILL BE DULY AND
VALIDLY ISSUED, FREE AND CLEAR OF ALL LIENS, CLAIMS AND ENCUMBRANCES IMPOSED BY
ISSUER OTHER THAN THOSE PROVIDED FOR IN THE TRANSACTION DOCUMENTS, AND WILL BE
ISSUED IN COMPLIANCE WITH AN EXEMPTION FROM REGISTRATION UNDER ALL APPLICABLE
U.S. FEDERAL SECURITIES LAWS. THE ISSUER HAS RESERVED FROM THE ISSUER'S
AUTHORIZED BUT UNISSUED COMMON STOCK THE MAXIMUM NUMBER OF SHARES IT MAY
CURRENTLY RESERVE IN CONNECTION WITH THE ISSUANCE OF SUCH COMMON STOCK UPON THE
CONVERSION OF THE NOTES AND EXERCISE OF THE WARRANTS. WITHIN FOUR BUSINESS DAYS
AFTER THE
SHAREHOLDER APPROVAL IS OBTAINED THE ISSUER SHALL MAKE THE AMENDMENT
FILING AND WITHIN FOUR BUSINESS DAYS AFTER THE AMENDMENT FILING IS MADE THE
ISSUER SHALL RESERVE FROM ITS DULY AUTHORIZED, BUT UNISSUED COMMON STOCK SUCH
ADDITIONAL NUMBER OF SHARES AS REQUIRED SO THAT THERE SHALL THEN BE RESERVED FOR
ISSUANCE AN AGGREGATE OF 125% OF THE COMMON STOCK THEN ISSUABLE UPON THE
CONVERSION OF THE NOTES AND EXERCISE OF THE WARRANTS.
3.1.6
CAPITALIZATION. SCHEDULE 3.1.6 SETS FORTH THE CAPITALIZATION OF
ISSUER AS OF THE DATE HEREOF, BEFORE GIVING EFFECT TO THE ISSUANCE OF THE
SECURITIES PURSUANT HERETO, INCLUDING THE AMOUNT AND KIND OF AUTHORIZED SHARES,
THE NUMBER OF EACH KIND OF SHARES ISSUED AND OUTSTANDING, THE NUMBER OF SHARES
ISSUED AND HELD AS TREASURY STOCK, AND THE NUMBER OF SHARES RESERVED FOR
ISSUANCE PURSUANT TO ISSUER'S STOCK OPTION PLANS AND ALL OUTSTANDING SECURITIES
CONVERTIBLE INTO OR EXCHANGEABLE FOR ANY SHARES OF ISSUER, INCLUDING A
DESCRIPTION OF THE RELEVANT OPTIONS, CONVERTIBLE SECURITIES AND EXCHANGEABLE
SECURITIES.
EXCEPT AS SET FORTH IN SCHEDULE 3.1.6, NO PERSON HAS ANY RIGHT OF
FIRST REFUSAL, PREEMPTIVE RIGHT, RIGHT OF PARTICIPATION, ANTI-DILUTION RIGHT OR
ANY SIMILAR RIGHT TO PARTICIPATE IN, OR THAT IS TRIGGERED