ANOTHER TO
PURCHASE ANY OTHER SECURITIES OF THE COMPANY, OTHER THAN, IN THE CASE OF CLAUSES
(II) AND (III), COMPENSATION PAID TO THE COMPANY'S PLACEMENT AGENT IN CONNECTION
WITH THE PLACEMENT OF THE SECURITIES.
(CC)
DILUTIVE EFFECT.
THE COMPANY UNDERSTANDS AND
ACKNOWLEDGES THAT THE NUMBER OF CONVERSION SHARES ISSUABLE UPON CONVERSION OF
THE CONVERTIBLE DEBENTURES AND THE WARRANT SHARES ISSUABLE UPON EXERCISE OF THE
WARRANTS WILL INCREASE IN CERTAIN CIRCUMSTANCES.
THE COMPANY FURTHER
ACKNOWLEDGES THAT ITS OBLIGATION TO ISSUE CONVERSION SHARES UPON CONVERSION OF
THE CONVERTIBLE DEBENTURES IN ACCORDANCE WITH THIS AGREEMENT AND THE CONVERTIBLE
DEBENTURES AND ITS OBLIGATION TO ISSUE THE WARRANT SHARES UPON EXERCISE OF THE
WARRANTS IN ACCORDANCE WITH THIS AGREEMENT AND THE WARRANTS, IN EACH CASE, IS
ABSOLUTE AND UNCONDITIONAL REGARDLESS OF THE DILUTIVE EFFECT THAT SUCH ISSUANCE
MAY HAVE ON THE OWNERSHIP INTERESTS OF OTHER STOCKHOLDERS OF THE COMPANY.
4.
COVENANTS.
(A)
BEST EFFORTS.
EACH PARTY SHALL USE ITS
BEST EFFORTS TO TIMELY SATISFY EACH OF THE CONDITIONS TO BE SATISFIED BY IT AS
PROVIDED IN SECTIONS 6 AND 7 OF THIS AGREEMENT.
(B)
FORM D.
THE COMPANY AGREES TO FILE A FORM D
WITH RESPECT TO THE SECURITIES AS REQUIRED UNDER REGULATION D AND TO PROVIDE A
COPY THEREOF TO EACH BUYER PROMPTLY AFTER SUCH FILING.
THE COMPANY SHALL, ON OR
BEFORE THE CLOSING DATE, TAKE SUCH ACTION AS THE COMPANY SHALL REASONABLY
DETERMINE IS NECESSARY TO QUALIFY THE SECURITIES, OR OBTAIN AN EXEMPTION FOR THE
SECURITIES FOR SALE TO THE BUYERS AT THE CLOSING PURSUANT TO THIS AGREEMENT
UNDER APPLICABLE SECURITIES OR "BLUE SKY" LAWS OF THE STATES OF THE UNITED
STATES, AND SHALL PROVIDE EVIDENCE OF ANY SUCH ACTION SO TAKEN TO THE BUYERS ON
OR PRIOR TO THE CLOSING DATE.
(C)
REPORTING STATUS.
UNTIL THE EARLIER OF (I)
THE DATE AS OF WHICH THE BUYER(S) MAY SELL ALL OF THE SECURITIES WITHOUT
RESTRICTION PURSUANT TO RULE 144(K) PROMULGATED UNDER THE SECURITIES ACT (OR
SUCCESSOR THERETO), OR (II) THE DATE ON WHICH (A) THE BUYERS SHALL HAVE SOLD ALL
THE SECURITIES AND (B) NONE OF THE CONVERTIBLE DEBENTURES OR WARRANTS ARE
OUTSTANDING (THE "REGISTRATION PERIOD"), THE COMPANY SHALL FILE IN A TIMELY
MANNER ALL REPORTS REQUIRED TO BE FILED WITH THE SEC PURSUANT TO THE EXCHANGE
ACT AND THE REGULATIONS OF THE SEC THEREUNDER, AND THE COMPANY SHALL NOT
TERMINATE ITS STATUS AS AN ISSUER REQUIRED TO FILE REPORTS UNDER THE EXCHANGE
ACT EVEN IF THE EXCHANGE ACT OR THE RULES AND REGULATIONS THEREUNDER WOULD
OTHERWISE PERMIT SUCH TERMINATION.
14
(D)
USE OF PROCEEDS.
THE COMPANY WILL USE THE
PROCEEDS FROM THE SALE OF THE CONVERTIBLE DEBENTURES FOR THE PURPOSES AND IN THE
AMOUNTS SET FORTH ON SCHEDULE 4(D).
(E)
RESERVATION OF SHARES.
IF THE COMPANY
OBTAINS STOCKHOLDER APPROVAL, THE COMPANY SHALL PROMPTLY ESTABLISH A RESERVE OF
31,888,888 SHARES OF COMMON STOCK FOR ISSUANCE TO THE BUYER(S) UPON CONVERSIONS
OF THE CONVERTIBLE DEBENTURES AND UPON EXERCISE OF THE WARRANTS (COLLECTIVELY,
THE "SHARE RESERVE").
THE COMPANY SHALL TAKE ALL ACTION REASONABLY NECESSARY