"SUBSIDIARIES" (WHICH FOR PURPOSES OF THIS AGREEMENT MEANS ANY ENTITY IN WHICH
THE COMPANY, DIRECTLY OR INDIRECTLY, OWNS AT LEAST 20% OF THE CAPITAL STOCK OR
HOLDS A COMPARABLE EQUITY OR SIMILAR INTEREST) ARE ENTITIES DULY ORGANIZED AND
VALIDLY EXISTING IN GOOD STANDING UNDER THE LAWS OF THE JURISDICTION IN WHICH
THEY ARE ORGANIZED, AND HAVE THE REQUISITE CORPORATE OR OTHER POWER AND
AUTHORIZATION 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 ENTITY TO DO BUSINESS AND IS IN GOOD STANDING IN EVERY JURISDICTION IN
WHICH ITS OWNERSHIP OF PROPERTY OR 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 COULD NOT REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT.
AS USED IN THIS AGREEMENT, "MATERIAL ADVERSE EFFECT"
MEANS ANY MATERIAL ADVERSE EFFECT ON THE BUSINESS, PROPERTIES, ASSETS,
OPERATIONS, RESULTS OF OPERATIONS, CONDITION (FINANCIAL OR OTHERWISE) OR
PROSPECTS OF THE COMPANY AND ITS SUBSIDIARIES, TAKEN AS A WHOLE, OR ON THE
TRANSACTIONS CONTEMPLATED HEREBY AND THE OTHER TRANSACTION DOCUMENTS (AS DEFINED
BELOW) OR ON THE AUTHORITY OR ABILITY OF THE COMPANY TO PERFORM ITS OBLIGATIONS
UNDER THE TRANSACTION DOCUMENTS.
THE COMPANY HAS NO SUBSIDIARIES EXCEPT AS SET
FORTH ON SCHEDULE 3(A).
(B)
AUTHORIZATION; ENFORCEMENT; VALIDITY.
THE COMPANY HAS THE
REQUISITE CORPORATE POWER AND AUTHORITY TO ENTER INTO AND PERFORM ITS
OBLIGATIONS UNDER THIS AGREEMENT, THE CERTIFICATE OF DESIGNATIONS, THE
REGISTRATION RIGHTS AGREEMENT, THE IRREVOCABLE TRANSFER AGENT INSTRUCTIONS (AS
DEFINED IN SECTION 5(B)), THE ESCROW AGREEMENT, THE WARRANTS AND EACH OF THE
OTHER AGREEMENTS ENTERED INTO BY THE PARTIES HERETO IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (COLLECTIVELY, THE "TRANSACTION
DOCUMENTS") AND TO ISSUE THE SECURITIES IN ACCORDANCE WITH THE TERMS HEREOF AND
THEREOF.
THE EXECUTION AND DELIVERY OF THE TRANSACTION DOCUMENTS BY THE COMPANY
AND THE CONSUMMATION BY THE COMPANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY, INCLUDING, WITHOUT LIMITATION, THE ISSUANCE OF THE PREFERRED SHARES AND
THE WARRANTS AND THE RESERVATION FOR ISSUANCE AND THE ISSUANCE OF THE CONVERSION
SHARES AND THE WARRANT SHARES ISSUABLE UPON CONVERSION OR EXERCISE THEREOF, AS
THE CASE MAY BE, 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.
THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS HAVE BEEN DULY EXECUTED AND DELIVERED BY THE COMPANY, AND CONSTITUTE
THE LEGAL, VALID AND BINDING OBLIGATIONS OF THE COMPANY ENFORCEABLE AGAINST THE
COMPANY IN ACCORDANCE WITH THEIR RESPECTIVE 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 APPLICABLE CREDITORS' RIGHTS AND
REMEDIES.
AS OF THE CLOSING, THE CERTIFICATE OF DESIGNATIONS IN THE FORM
ATTACHED AS EXHIBIT A SHALL HAVE BEEN FILED ON OR PRIOR TO