Common use of Reservation Approval Clause in Contracts

Reservation Approval. The Company undertakes to obtain shareholder approval for an increase in the authorized Common Stock of the Company to not less than the amount necessary to validly reserve the Reserve Amount (as defined below) and will file an amendment to the Company’s Certificate of Incorporation and will reserve 150% of the amount of shares of Common Stock necessary to allow the conversion of the entire Note principal and interest that may accrue thereon on each Closing Date, and 100% of the Common Stock issuable upon exercise of all of the Warrants issued in connection with this Agreement (collectively such shares of Common stock being the “Reserve Amount” and the shareholder approval, amendment and reservation being the “Reservation Approval”). The Company will file a preliminary proxy statement for a meeting of the Company’s shareholders relating to the Reservation with the Commission on or before May 18, 2012 (“Proxy Filing Date”). The Company covenants to use its reasonable best efforts to obtain the Reservation Approval. Failure to obtain the Reservation Approval on or before June 30, 2012 (a “Reservation Default”) is an Event of Default under the Note for which liquidated damages will accrue at the rate of two percent (2%) for each thirty (30) days, or pro rata portion thereof, during the pendency of such Reservation Default.