OR OTHER ORGANIZATIONAL DOCUMENT.
(P)
COMPLIANCE WITH LAWS.
THE OPERATION OF EACH OF ITS AND EACH OF
ITS SUBSIDIARIES' BUSINESS IS AND SHALL CONTINUE TO BE IN COMPLIANCE IN ALL
MATERIAL RESPECTS WITH ALL APPLICABLE FEDERAL, STATE AND LOCAL LAWS, RULES AND
ORDINANCES, INCLUDING TO ALL LAWS, RULES, REGULATIONS AND ORDERS RELATING TO
TAXES, PAYMENT AND WITHHOLDING OF PAYROLL TAXES, EMPLOYER AND EMPLOYEE
CONTRIBUTIONS AND SIMILAR ITEMS, SECURITIES, EMPLOYEE RETIREMENT AND WELFARE
BENEFITS, EMPLOYEE HEALTH AND SAFETY AND ENVIRONMENTAL MATTERS.
(Q)
NOTICES.
IT AND EACH OF ITS SUBSIDIARIES SHALL PROMPTLY INFORM
LAURUS IN WRITING OF:
(I) THE COMMENCEMENT OF ALL PROCEEDINGS AND
INVESTIGATIONS BY OR BEFORE AND/OR THE RECEIPT OF ANY NOTICES FROM, ANY
GOVERNMENTAL OR NONGOVERNMENTAL BODY AND ALL ACTIONS AND PROCEEDINGS IN ANY
COURT OR BEFORE ANY ARBITRATOR AGAINST OR IN ANY WAY CONCERNING ANY EVENT WHICH
COULD REASONABLY BE EXPECTED TO HAVE SINGLY OR IN THE AGGREGATE, A MATERIAL
ADVERSE EFFECT; (II) ANY CHANGE WHICH HAS HAD, OR COULD REASONABLY BE EXPECTED
TO HAVE, A MATERIAL ADVERSE EFFECT; (III) ANY EVENT OF DEFAULT OR DEFAULT; AND
(IV) ANY DEFAULT OR ANY EVENT WHICH WITH THE PASSAGE OF TIME OR GIVING OF NOTICE
OR BOTH WOULD CONSTITUTE A DEFAULT UNDER ANY AGREEMENT FOR THE PAYMENT OF MONEY
TO WHICH IT OR ANY OF ITS SUBSIDIARIES IS A PARTY OR BY WHICH IT OR ANY OF ITS
SUBSIDIARIES OR ANY OF ITS OR ANY SUCH SUBSIDIARY'S PROPERTIES MAY BE BOUND THE
BREACH OF WHICH WOULD HAVE A MATERIAL ADVERSE EFFECT.
(R)
MARGIN STOCK.
IT SHALL NOT PERMIT ANY OF THE PROCEEDS OF THE
LOANS MADE HEREUNDER TO BE USED DIRECTLY OR INDIRECTLY TO "PURCHASE" OR "CARRY"
"MARGIN STOCK" OR TO REPAY INDEBTEDNESS INCURRED TO "PURCHASE" OR "CARRY"
"MARGIN STOCK" WITHIN THE RESPECTIVE MEANINGS OF EACH OF THE QUOTED TERMS UNDER
REGULATION U OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM AS NOW AND
FROM TIME TO TIME HEREAFTER IN EFFECT.
(S)
OFFERING RESTRICTIONS.
EXCEPT AS PREVIOUSLY DISCLOSED IN THE SEC
REPORTS OR IN THE EXCHANGE ACT FILINGS, OR STOCK OR STOCK OPTIONS GRANTED TO ITS
EMPLOYEES OR DIRECTORS, NEITHER IT NOR ANY OF ITS SUBSIDIARIES SHALL, PRIOR TO
THE FULL REPAYMENT OF THE SECURED NON-CONVERTIBLE TERM NOTE(TOGETHER WITH ALL
ACCRUED AND UNPAID INTEREST AND FEES RELATED THERETO), (X) ENTER INTO ANY EQUITY
LINE OF CREDIT AGREEMENT OR SIMILAR AGREEMENT OR (Y) ISSUE, OR ENTER INTO ANY
AGREEMENT TO ISSUE, ANY SECURITIES WITH A VARIABLE/FLOATING CONVERSION AND/OR
PRICING FEATURE WHICH ARE OR COULD BE (BY CONVERSION OR REGISTRATION)
FREE-TRADING SECURITIES (I.E. COMMON STOCK SUBJECT TO A REGISTRATION STATEMENT).
27
(T)
AUTHORIZATION AND RESERVATION OF SHARES.
THE PARENT SHALL AT ALL
TIMES HAVE AUTHORIZED AND RESERVED A SUFFICIENT NUMBER OF SHARES OF COMMON STOCK
TO PROVIDE FOR THE EXERCISE OF THE WARRANTS.
(U)
FINANCING RIGHT OF FIRST REFUSAL.
(I)
EACH COMPANY HEREBY GRANTS TO LAURUS A RIGHT OF FIRST REFUSAL TO
PROVIDE ANY ADDITIONAL FINANCING (AS DEFINED BELOW) TO BE ISSUED BY ANY COMPANY
AND/OR ANY OF ITS