WARRANT CERTIFICATES HAVE BEEN ISSUED AS
CONTEMPLATED HEREBY, (I) THE WARRANTS AND THE WARRANT CERTIFICATES WILL
CONSTITUTE LEGAL, VALID, BINDING AND ENFORCEABLE OBLIGATIONS OF THE ISSUER,
EXCEPT AS SUCH ENFORCEMENT MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY,
REORGANIZATION,
2
MORATORIUM OR OTHER SIMILAR LAWS AFFECTING CREDITORS' RIGHTS GENERALLY AND
EXCEPT AS EQUITABLE REMEDIES MAY BE LIMITED BY GENERAL PRINCIPLES OF EQUITY
(WHETHER SUCH REMEDIES ARE SOUGHT IN A PROCEEDING AT LAW OR IN EQUITY) AND (II)
THE WARRANT SHARES, WHEN ISSUED UPON EXERCISE OF THE WARRANTS IN ACCORDANCE WITH
THE TERMS THEREOF, WILL BE DULY AUTHORIZED, VALIDLY ISSUED, FULLY PAID AND
NONASSESSABLE SHARES OF THE COMMON STOCK.
(D)
(I) THE ISSUER'S CAPITAL STOCK CONSISTS OF 30,000,000 SHARES OF
COMMON STOCK, OF WHICH 17,538,691 HAVE BEEN ISSUED AND ARE OUTSTANDING AND OF
WHICH 66,000 HAVE BEEN RESERVED FOR ISSUANCE UPON EXERCISE OF THE WARRANTS; AND
500,000 SHARES OF PREFERRED STOCK, 15,000 OF WHICH ARE DESIGNATED AS SERIES A-1
CUMULATIVE CONVERTIBLE PREFERRED STOCK, AND ALL OF WHICH ARE ISSUED AND
OUTSTANDING, AND (II) OTHER THAN (A) THE SHARES REFERRED TO ABOVE AND (B) THE
WARRANTS, AND (C) OPTIONS TO PURCHASE 3,002,770 SHARES OF COMMON STOCK UNDER THE
COMPANY'S RESTATED STOCK OPTION PLAN AND 132,493 WARRANTS TO PURCHASE COMMON
STOCK, THERE ARE NO OUTSTANDING OPTIONS, WARRANTS, CONVERSION RIGHTS OR OTHER
RIGHTS TO OBTAIN ANY SHARES OF COMMON STOCK OR PREFERRED STOCK FROM THE ISSUER
OR ANY OTHER SECURITY ISSUED BY THE ISSUER CONVERTIBLE INTO OR EXCHANGEABLE FOR
SHARES OF COMMON STOCK OR PREFERRED STOCK OF THE ISSUER.
(E)
ALL OF THE ISSUED AND OUTSTANDING SHARES OF STOCK IN THE ISSUER
ARE VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE, AND HAVE BEEN ISSUED IN
COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS, RULES AND
REGULATIONS.
(F)
NEITHER THE ISSUER NOR ANY AFFILIATE OF THE ISSUER IS:
(I)
INVESTMENT COMPANY ACT.
AN "INVESTMENT COMPANY", OR A COMPANY
"CONTROLLED" BY AN "INVESTMENT COMPANY", WITHIN THE MEANING OF THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED.
(II)
HOLDING COMPANY ACT.
A "HOLDING COMPANY", A "SUBSIDIARY COMPANY"
OF A "HOLDING COMPANY", OR AN "AFFILIATE" OF A "HOLDING COMPANY" OR OF A
"SUBSIDIARY COMPANY" OF A "HOLDING COMPANY", AS SUCH TERMS ARE DEFINED IN THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, AS AMENDED.
(III)
REGULATIONS AS TO BORROWING.
SUBJECT TO ANY STATUTE OR
REGULATION WHICH REGULATES THE INCURRENCE OF ANY INDEBTEDNESS INCLUDING, WITHOUT
LIMITATION, STATUTES OR REGULATIONS RELATIVE TO COMMON OR INTERSTATE CARRIERS OR
TO THE SALE OF ELECTRICITY, GAS, STEAM, WATER, TELEPHONE, TELEGRAPH OR OTHER
PUBLIC UTILITY SERVICES.
SECTION 3.
ISSUANCE OF WARRANTS.
THE ISSUER HEREBY AGREES TO ISSUE
AND DELIVER TO HOLDER ON THE CLOSING DATE WARRANTS EVIDENCING RIGHTS TO PURCHASE
66,000 SHARES OF COMMON STOCK, $.01 PAR VALUE PER SHARE, OF THE ISSUER ("COMMON
STOCK"), SUBJECT TO ADJUSTMENT AS PROVIDED IN SECTION 12, AT ANY TIME ON OR
BEFORE THE EXPIRATION DATE AT A PRICE PER SHARE EQUAL TO THE EXERCISE PRICE.
ON
THE CLOSING DATE, SIMULTANEOUSLY WITH THE MAKING OF THE LOAN BY THE