AS SET FORTH IN SECTION 2(C)(II) HEREOF (AND ANALOGOUS PROVISIONS UNDER
THE OTHER NOTES) AND SECTIONS 2(A) OF THE WARRANTS; (IV) ANY APPLICABLE SHARES
OF COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE EVENT REQUIRING
DETERMINATION MAY BE ISSUED IN FULL WITHOUT VIOLATING SECTION 3(D) HEREOF AND
THE RULES OR REGULATIONS OF THE PRINCIPAL MARKET OR ANY OTHER APPLICABLE
ELIGIBLE MARKET; (V) DURING THE SIX (6) MONTH PERIOD ENDING ON AND INCLUDING THE
DATE IMMEDIATELY PRECEDING THE APPLICABLE DATE OF DETERMINATION, THE COMPANY
SHALL NOT HAVE FAILED TO TIMELY MAKE ANY PAYMENTS WITHIN FIVE (5) BUSINESS DAYS
OF WHEN SUCH PAYMENT IS DUE PURSUANT TO ANY TRANSACTION DOCUMENT; (VI) DURING
THE EQUITY CONDITIONS MEASURING PERIOD, THERE SHALL NOT HAVE OCCURRED EITHER (A)
THE PUBLIC ANNOUNCEMENT OF A PENDING, PROPOSED OR INTENDED FUNDAMENTAL
TRANSACTION WHICH HAS NOT BEEN ABANDONED, TERMINATED OR CONSUMMATED, OR (B) AN
EVENT OF DEFAULT OR (VII) DURING THE PERIOD COMMENCING ON THE INTEREST NOTICE
DUE DATE, AND ENDING ON THE INTEREST DATE, AN EVENT THAT WITH THE PASSAGE OF
TIME OR GIVING OF NOTICE WOULD CONSTITUTE AN EVENT OF DEFAULT; (VIII) THE
COMPANY
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SHALL HAVE NO KNOWLEDGE OF ANY FACT THAT WOULD CAUSE (X) THE REGISTRATION
STATEMENTS REQUIRED PURSUANT TO THE REGISTRATION RIGHTS AGREEMENT NOT TO BE
EFFECTIVE AND AVAILABLE FOR THE RESALE OF ALL REMAINING REGISTRABLE SECURITIES
IN ACCORDANCE WITH THE TERMS OF THE REGISTRATION RIGHTS AGREEMENT OR (Y) ANY
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES AND SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE OF THE WARRANTS NOT TO BE ELIGIBLE FOR SALE
WITHOUT RESTRICTION PURSUANT TO RULE 144(K) AND ANY APPLICABLE STATE SECURITIES
LAWS; AND (IX) THE COMPANY OTHERWISE SHALL HAVE BEEN IN MATERIAL COMPLIANCE WITH
AND SHALL NOT HAVE MATERIALLY BREACHED ANY PROVISION, COVENANT, REPRESENTATION
OR WARRANTY OF ANY TRANSACTION DOCUMENT.
(N)
"EQUITY CONDITIONS FAILURE" MEANS THAT (I) ON ANY DAY DURING THE
PERIOD COMMENCING TEN (10) TRADING DAYS PRIOR TO THE APPLICABLE INTEREST NOTICE
DATE THROUGH THE APPLICABLE INTEREST DATE AND (II) ON ANY DAY DURING THE PERIOD
COMMENCING TEN (10) TRADING DAYS PRIOR TO THE APPLICABLE MANDATORY CONVERSION
NOTICE DATE THROUGH THE APPLICABLE MANDATORY CONVERSION DATE, THE EQUITY
CONDITIONS HAVE NOT BEEN SATISFIED (OR WAIVED IN WRITING BY THE HOLDER).
(O)
"EXCLUDED SECURITIES" MEANS ANY COMMON STOCK ISSUED OR ISSUABLE:
(I) IN CONNECTION WITH ANY APPROVED STOCK PLAN; (II) UPON CONVERSION OF THE
NOTES OR THE EXERCISE OF THE WARRANTS; (III) IN CONNECTION WITH THE PAYMENT OF
ANY INTEREST SHARES ON THE NOTES; (IV) PURSUANT TO A BONA FIDE FIRM COMMITMENT
UNDERWRITTEN PUBLIC OFFERING WITH A NATIONALLY RECOGNIZED UNDERWRITER WHICH
GENERATES GROSS PROCEEDS TO THE COMPANY IN EXCESS OF $20,000,000 (OTHER THAN AN
"AT-THE-MARKET OFFERING" AS DEFINED IN RULE 415(A)(4) UNDER THE 1933 ACT AND
"EQUITY LINES"); (V) TO RELATIVITY MEDIA, LLC PURSUANT TO A DISTRIBUTION
AGREEMENT DATED AS OF AUGUST 11, 2006 BETWEEN THE COMPANY AND RELATIVITY MEDIA,
LLC IN AN AGGREGATE AMOUNT NOT TO EXCEED 3,400,000 SHARES OF COMMON STOCK ON
SUCH TERMS