ALL
MATERIAL RESPECTS WITH THEN APPLICABLE ACCOUNTING REQUIREMENTS AND WITH THE
RULES AND REGULATIONS OF THE SEC WITH RESPECT THERETO.
THE COMPANY KEEPS
ACCOUNTING RECORDS IN WHICH ALL MATERIAL ASSETS AND LIABILITIES, AND ALL
MATERIAL TRANSACTIONS, INCLUDING OFF-BALANCE SHEET TRANSACTIONS, OF THE COMPANY
ARE RECORDED IN ACCORDANCE WITH GAAP.
SECTION 2.06.
GOVERNMENTAL APPROVALS.
SUBJECT TO THE ACCURACY OF THE
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER SET FORTH IN ARTICLE III, NO
REGISTRATION OR FILING WITH, OR CONSENT OR APPROVAL OF OR OTHER ACTION BY, ANY
FEDERAL, STATE OR OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY IS OR WILL BE
NECESSARY FOR THE VALID EXECUTION, DELIVERY AND PERFORMANCE BY THE COMPANY OF
THIS AGREEMENT, THE ISSUANCE, SALE AND DELIVERY OF THE NOTE, OTHER THAN FILINGS
PURSUANT TO STATE SECURITIES LAWS (ALL OF WHICH FILINGS HAVE BEEN MADE BY THE
COMPANY, OTHER THAN THOSE WHICH ARE REQUIRED OR PERMITTED TO BE MADE AFTER THE
CLOSING AND WHICH WILL BE DULY MADE ON A TIMELY BASIS) IN CONNECTION WITH THE
SALE OF THE NOTE.
SECTION 2.07.
OFFERING OF THE NOTE.
NEITHER THE COMPANY, NOR ANY OF
ITS AFFILIATES, NOR ANY PERSON ACTING ON ITS OR THEIR BEHALF, HAS DIRECTLY OR
INDIRECTLY MADE ANY OFFERS OR SALES IN ANY SECURITY OR SOLICITED ANY OFFERS TO
BUY ANY SECURITY UNDER CIRCUMSTANCES THAT WOULD REQUIRE REGISTRATION UNDER THE
SECURITIES ACT OF THE ISSUANCE OF THE NOTE TO THE PURCHASER.
BASED, IN PART,
UPON THE PURCHASER'S REPRESENTATIONS IN ARTICLE III, THE ISSUANCE OF THE NOTE TO
THE PURCHASER WILL NOT BE INTEGRATED WITH ANY OTHER ISSUANCE OF THE COMPANY'S
SECURITIES (PAST, CURRENT OR FUTURE) FOR PURPOSES OF THE SECURITIES ACT.
SECTION 2.08.
MATERIAL CHANGES.
EXCEPT AS SET FORTH IN SCHEDULE II
ATTACHED HERETO, SINCE JUNE 30, 2006, THERE HAS NOT BEEN (I) ANY DIRECT OR
INDIRECT REDEMPTION, PURCHASE OR OTHER ACQUISITION BY
8
THE COMPANY OF ANY SHARES OF COMMON STOCK; (II) ANY DECLARATION, SETTING ASIDE
OR PAYMENT OF ANY DIVIDEND OR OTHER DISTRIBUTION BY THE COMPANY WITH RESPECT TO
THE COMMON STOCK; (III) ANY MATERIAL LIABILITIES (ABSOLUTE, ACCRUED OR
CONTINGENT) INCURRED OR ASSUMED BY THE COMPANY, OTHER THAN CURRENT LIABILITIES
INCURRED IN THE ORDINARY COURSE OF BUSINESS, LIABILITIES UNDER CONTRACTS ENTERED
INTO IN THE ORDINARY COURSE OF BUSINESS, PURCHASE PRICE PAYMENT OBLIGATIONS
INCURRED IN CONNECTION WITH THE ACQUISITION OF SENSIBLE SECURITY SOLUTIONS INC.,
AN ONTARIO CORPORATION, AND LIABILITIES NOT REQUIRED TO BE REFLECTED ON THE
COMPANY'S FINANCIAL STATEMENTS PURSUANT TO GAAP; OR (IV) ANY MORTGAGE, PLEDGE,
SECURITY INTEREST, ENCUMBRANCE, LIEN OR CHARGE OF ANY KIND (INCLUDING ANY
CONDITIONAL SALE OR OTHER TITLE RETENTION AGREEMENT, ANY LEASE IN THE NATURE
THEREOF, AND THE FILING OF OR AGREEMENT TO GIVE ANY FINANCING STATEMENT UNDER
THE UNIFORM COMMERCIAL CODE OR COMPARABLE LAW OF ANY JURISDICTION IN CONNECTION
WITH SUCH MORTGAGE, PLEDGE, SECURITY INTEREST, ENCUMBRANCE, LIEN OR CHARGE)
(EACH, A "LIEN") OR ADVERSE CLAIM ON ANY OF THE COMPANY'S PROPERTIES OR ASSETS,
EXCEPT FOR LIENS FOR TAXES NOT YET DUE AND PAYABLE, INTEREST OF LESSORS UNDER
OPERATING CAPITAL LEASES, PURCHASE MONEY