6. COVENANTS.
(a) Reporting Status. With a view to making available to the Buyer the
benefits of Rule 144 or any similar rule or regulation of the SEC that
may at any time permit the Buyer to sell securities of the Company to
the public without registration, and as a material inducement to the
Buyer's purchase of the Securities, the Company represents, warrants,
and covenants to the following:
(i) The Company's Common Stock is registered under Section 12(g) of
the Exchange Act.
(ii) The Company is not and for at least the last 12 months prior to
the date hereof has not been a "shell company," as defined in
paragraph (i)(1)(i) of Rule 144 or Rule 12b-2 of the Exchange
Act.
(iii) The Company is subject to the reporting requirements of section
13 or 15(d) of the Exchange Act and has filed all required
reports under section 13 or 15(d) of the Exchange Act during the
12 months prior to the date hereof (or for such shorter period
that the issuer was required to file such reports), other than
Form 8-K reports;
(iv) from the date hereof until all the Securities either have been
sold by the Buyer, or may permanently be sold by the Buyer
without any restrictions pursuant to Rule 144, (the "Registration
Period") the Company shall file with the SEC in a timely manner
all required reports under section 13 or 15(d) of the Exchange
Act and such reports shall conform to the requirement of the
Exchange Act and the SEC for filing thereunder;
(v) The Company shall furnish to the Buyer so long as the Buyer owns
Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of
Rule 144, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so
filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Buyers to sell such securities
pursuant to Rule 144 without registration; and
(b) During the Registration Period 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.
(c) Reservation of Shares. On the date hereof, the Company shall reserve
for issuance to the Buyers 800,000,000 shares for issuance upon
conversions of the Debenture and exercise of the Warrants
(collectively, the "Share Reserve"). The Company represents that it
has sufficient authorized and unissued shares of Common Stock
available to create the Share Reserve after considering all other
commitments that may require the issuance of Common Stock. The Company
shall take all action reasonably necessary to at all times have
authorized, and reserved for the purpose of issuance, such number of
shares of Common Stock as shall be necessary to effect the full
conversion of the Convertible Debentures and the full exercise of the
Warrants. If at any time the Share Reserve is insufficient to effect
the full conversion of the Convertible Debentures or the full exercise
of the Warrants, the Company shall increase the Share Reserve
accordingly. If the Company does not have sufficient authorized and
unissued shares of Common Stock available to increase the Share
Reserve, the Company shall call and hold a special meeting of the
shareholders within thirty (30) days of such occurrence, for the sole
purpose of increasing the number of shares authorized. The Company's
management shall recommend to the shareholders to vote in favor of
increasing the number of shares of Common Stock authorized. Management
shall also vote all of its shares in favor of increasing the number of
authorized shares of Common Stock.
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