the case of unaudited statements, to normal
year-end audit adjustments) Notwithstanding the immediately foregoing, Laurus
acknowledges and understands that the Company has engaged Squar Milner to be its
independent auditor to conduct a re-auditing of its 2001 financial statements
(the "Re-Audit"). The Re-Audit is being conducted because KPMG, the Company's
previous independent auditors, would not consent to the inclusion of its audit
report on the Company's 2001 annual report on Form 10-K.
With this
acknowledgement, Laurus agrees that, if the Re-Audit is completed by September
30, 2003 and the 2001 Form 10-K is filed promptly thereafter, the Re-Audit will
not give rise to a breach of any representation or warranty hereunder.
(M)
THE COMPANY'S COMMON STOCK IS LISTED FOR TRADING ON THE OTC BULLETIN BOARD
AND SATISFIES ALL REQUIREMENTS FOR THE CONTINUATION OF SUCH LISTING.
THE
COMPANY HAS NOT RECEIVED ANY NOTICE THAT ITS COMMON STOCK WILL BE DELISTED FROM
THE OTC BULLETIN BOARD OR THAT ITS COMMON STOCK DOES NOT MEET ALL REQUIREMENTS
FOR THE CONTINUATION OF SUCH LISTING.
(N)
NEITHER THE COMPANY, NOR ANY OF ITS AFFILIATES, NOR, TO THE BEST OF ITS
KNOWLEDGE, ANY PERSON ACTING ON ITS OR THEIR BEHALF, HAS DIRECTLY OR INDIRECTLY
MADE ANY OFFERS OR SALES OF ANY SECURITY OR SOLICITED ANY OFFERS TO BUY ANY
SECURITY UNDER CIRCUMSTANCES THAT WOULD CAUSE THE OFFERING OF THE SECURITIES
PURSUANT TO THIS AGREEMENT TO BE INTEGRATED WITH PRIOR OFFERINGS BY THE COMPANY
FOR PURPOSES OF THE SECURITIES ACT WHICH WOULD PREVENT THE COMPANY FROM SELLING
THE SECURITIES PURSUANT TO RULE 506 UNDER THE SECURITIES ACT, OR ANY APPLICABLE
EXCHANGE-RELATED STOCKHOLDER APPROVAL PROVISIONS.
NOR WILL THE COMPANY OR ANY
OF ITS AFFILIATES OR SUBSIDIARIES TAKE ANY ACTION OR STEPS THAT WOULD CAUSE THE
OFFERING OF THE SECURITIES TO BE INTEGRATED WITH OTHER OFFERINGS.
(O)
THE SECURITIES ARE RESTRICTED SECURITIES AS OF THE DATE OF THIS
AGREEMENT.
THE COMPANY WILL NOT ISSUE ANY STOP TRANSFER ORDER OR OTHER ORDER
IMPEDING THE SALE AND DELIVERY OF ANY OF THE SECURITIES AT SUCH TIME AS THE
SECURITIES ARE REGISTERED FOR PUBLIC SALE OR AN EXEMPTION FROM REGISTRATION IS
AVAILABLE, EXCEPT AS REQUIRED BY FEDERAL SECURITIES LAWS.
14
(P)
THE COMPANY UNDERSTANDS THE NATURE OF THE SECURITIES BEING ISSUED
HEREUNDER AND RECOGNIZES THAT THEY MAY HAVE A POTENTIAL DILUTIVE EFFECT.
THE
COMPANY SPECIFICALLY ACKNOWLEDGES THAT ITS OBLIGATION TO ISSUE THE SHARES OF
COMMON STOCK UPON CONVERSION OF THE NOTE IS BINDING UPON THE COMPANY AND
ENFORCEABLE REGARDLESS OF THE DILUTION SUCH ISSUANCE MAY HAVE ON THE OWNERSHIP
INTERESTS OF OTHER SHAREHOLDERS OF THE COMPANY.
(Q)
THERE IS NO AGREEMENT THAT HAS NOT BEEN FILED WITH THE SEC AS AN EXHIBIT
TO A REGISTRATION STATEMENT OR OTHER APPLICABLE FORM THE BREACH OF WHICH COULD
HAVE A MATERIAL AND ADVERSE EFFECT AS TO THE COMPANY AND ITS SUBSIDIARIES, OR
WOULD PROHIBIT OR OTHERWISE INTERFERE WITH THE ABILITY OF THE COMPANY TO ENTER
INTO AND PERFORM ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT OR THE REGISTRATION
RIGHTS AGREEMENT EXECUTED BY THE COMPANY