OR ITS OWN LEGAL COUNSEL AND INVESTMENT
AND TAX ADVISORS. EACH BUYER IS RELYING SOLELY ON SUCH COUNSEL AND ADVISORS AND
NOT ON ANY STATEMENTS OR REPRESENTATIONS OF THE COMPANY OR ANY OF ITS
REPRESENTATIVES OR AGENTS FOR LEGAL, TAX OR INVESTMENT ADVICE WITH RESPECT TO
THIS INVESTMENT, THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE
SECURITIES LAWS OF ANY JURISDICTION.
3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants as of the date hereof to each of the Buyers
that, except as set forth in the SEC Documents (as defined herein) or in the
Disclosure Schedule attached hereto (the "Disclosure Schedule"):
(A)
ORGANIZATION AND QUALIFICATION. THE COMPANY AND ITS SUBSIDIARIES
ARE CORPORATIONS DULY ORGANIZED AND VALIDLY EXISTING IN GOOD STANDING UNDER THE
LAWS OF THE JURISDICTION IN WHICH THEY ARE INCORPORATED, AND HAVE THE REQUISITE
CORPORATE POWER TO OWN THEIR PROPERTIES AND TO CARRY ON THEIR BUSINESS AS NOW
BEING CONDUCTED. EACH OF THE COMPANY AND ITS SUBSIDIARIES IS DULY QUALIFIED AS A
FOREIGN CORPORATION TO DO BUSINESS AND IS IN GOOD STANDING IN EVERY JURISDICTION
IN WHICH THE NATURE OF THE BUSINESS CONDUCTED BY IT MAKES SUCH QUALIFICATION
NECESSARY, EXCEPT TO THE EXTENT THAT THE FAILURE TO BE SO QUALIFIED OR BE IN
GOOD STANDING WOULD NOT HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY AND ITS
SUBSIDIARIES TAKEN AS A WHOLE.
(B)
AUTHORIZATION, ENFORCEMENT, COMPLIANCE WITH OTHER INSTRUMENTS.
(I) THE COMPANY HAS THE REQUISITE CORPORATE POWER AND AUTHORITY TO ENTER INTO
AND PERFORM THIS AGREEMENT, THE SECURITY AGREEMENT, THE INVESTOR REGISTRATION
RIGHTS AGREEMENT, THE IRREVOCABLE TRANSFER AGENT AGREEMENT, AND ANY RELATED
AGREEMENTS (COLLECTIVELY THE "TRANSACTION DOCUMENTS") AND TO ISSUE THE
CONVERTIBLE DEBENTURES AND THE CONVERSION SHARES IN ACCORDANCE WITH THE TERMS
HEREOF AND THEREOF, (II) THE EXECUTION AND DELIVERY OF THE TRANSACTION DOCUMENTS
BY THE COMPANY AND THE CONSUMMATION BY IT OF THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY, INCLUDING, WITHOUT LIMITATION, THE ISSUANCE OF THE
CONVERTIBLE DEBENTURES THE CONVERSION SHARES
AND THE RESERVATION FOR ISSUANCE
AND THE ISSUANCE OF THE CONVERSION SHARES ISSUABLE UPON CONVERSION OR EXERCISE
THEREOF, HAVE BEEN DULY AUTHORIZED BY THE COMPANY'S BOARD OF DIRECTORS AND NO
FURTHER CONSENT OR AUTHORIZATION IS REQUIRED BY THE COMPANY, ITS BOARD OF
DIRECTORS OR ITS STOCKHOLDERS EXCEPT AS MAY BE NECESSARY TO COMPLY WITH THE
REQUIREMENTS OF THE NASDAQ CAPITAL MARKET, (III) THE TRANSACTION DOCUMENTS HAVE
BEEN DULY EXECUTED AND DELIVERED BY THE COMPANY, (IV) THE TRANSACTION DOCUMENTS
CONSTITUTE THE VALID AND BINDING OBLIGATIONS OF THE COMPANY ENFORCEABLE AGAINST
THE COMPANY IN ACCORDANCE WITH THEIR TERMS, EXCEPT AS SUCH ENFORCEABILITY MAY BE
LIMITED BY GENERAL PRINCIPLES OF EQUITY OR APPLICABLE BANKRUPTCY, INSOLVENCY,
REORGANIZATION, MORATORIUM, LIQUIDATION OR SIMILAR LAWS RELATING TO, OR
AFFECTING GENERALLY, THE ENFORCEMENT OF CREDITORS' RIGHTS AND REMEDIES. THE
AUTHORIZED OFFICER OF THE COMPANY EXECUTING THE TRANSACTION DOCUMENTS KNOWS OF
NO REASON WHY THE COMPANY CANNOT FILE THE REGISTRATION STATEMENT AS REQUIRED
UNDER THE INVESTOR REGISTRATION RIGHTS AGREEMENT OR PERFORM ANY OF THE COMPANY'S
OTHER OBLIGATIONS UNDER SUCH DOCUMENTS.
6
(C)