THE DEBENTURES AND THE WARRANTS AT
THE CLOSING.
(vi)
Each of L. David Tomei, Samuil Umansky and Gabriele Cerrone
("Principal Executives") shall have resigned as officers and directors of the
Company, except that Dr. Tomei shall remain as a Consultant to the Company and
President of the Company's SpaXen joint venture, Dr. Umansky shall remain as the
Company's Chief Scientific Officer and Mr. Cerrone shall remain as a Consultant
to the Company;
(vii)
The Principal Executives shall have agreed to reduce their
compensation from the Company by 30% in exchange for an equity grant approved by
a committee of independent directors [or insert actual grant];
(viii)
The actions taken in accordance with paragraphs (vi) and (vii) of
this Section 2.2(b) do not result in the acceleration of payments or vesting of
options (except to the extent that the resignation of Dr. Tomei and appointment
of Gian Luigi Buitoni as Chairman vests 200,000 options granted to Dr. Tomei
April 12, 2006; and
(ix)
The remaining members of the Board of Directors shall have
appointed Gian Luigi Buitoni, Chairman of the Board, with the temporary
authority of CEO, and two additional nominees designated by the Lead Investor
8
on or before the Company's next annual meeting of shareholders (collectively,
the "Investor Nominees").
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
EXCEPT AS SET
FORTH UNDER THE CORRESPONDING SECTION OF THE DISCLOSURE SCHEDULES DELIVERED TO
THE PURCHASERS CONCURRENTLY HEREWITH (THE "DISCLOSURE SCHEDULES"), WHICH
DISCLOSURE SCHEDULES SHALL BE DEEMED A PART HEREOF, THE COMPANY HEREBY MAKES THE
REPRESENTATIONS AND WARRANTIES SET FORTH BELOW TO EACH PURCHASER.
(A)
SUBSIDIARIES.
ALL OF THE DIRECT AND INDIRECT SUBSIDIARIES OF THE
COMPANY ARE SET FORTH ON SCHEDULE 3.1(A).
THE COMPANY OWNS, DIRECTLY OR
INDIRECTLY, ALL OF THE CAPITAL STOCK OR OTHER EQUITY INTERESTS OF EACH
SUBSIDIARY FREE AND CLEAR OF ANY LIENS, AND ALL THE ISSUED AND OUTSTANDING
SHARES OF CAPITAL STOCK OF EACH SUBSIDIARY ARE VALIDLY ISSUED AND ARE FULLY
PAID, NON-ASSESSABLE AND FREE OF PREEMPTIVE AND SIMILAR RIGHTS TO SUBSCRIBE FOR
OR PURCHASE SECURITIES.
(B)
ORGANIZATION AND QUALIFICATION.
EXCEPT AS DESCRIBED IN SCHEDULE
3.1, THE COMPANY AND EACH OF THE SUBSIDIARIES, IS AN ENTITY DULY INCORPORATED OR
OTHERWISE ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING (UNLESS SUCH
SUBSIDIARY IS INDICATED TO BE "INACTIVE" ON SCHEDULE 3.1(A) ATTACHED HERETO AND
WHICH SUBSIDIARIES HAVE NO MATERIAL ASSETS) UNDER THE LAWS OF THE JURISDICTION
OF ITS INCORPORATION OR ORGANIZATION (AS APPLICABLE), WITH THE REQUISITE POWER
AND AUTHORITY TO OWN AND USE ITS PROPERTIES AND ASSETS AND TO CARRY ON ITS
BUSINESS AS CURRENTLY CONDUCTED.
NEITHER THE COMPANY NOR ANY SUBSIDIARY IS IN
VIOLATION OR DEFAULT OF ANY OF THE PROVISIONS OF ITS RESPECTIVE CERTIFICATE OR
ARTICLES OF INCORPORATION, BYLAWS OR OTHER ORGANIZATIONAL OR CHARTER DOCUMENTS.
EACH OF THE COMPANY AND THE SUBSIDIARIES IS DULY QUALIFIED TO CONDUCT BUSINESS
AND IS IN GOOD STANDING AS A FOREIGN CORPORATION OR OTHER ENTITY IN EACH
JURISDICTION IN WHICH THE NATURE OF THE BUSINESS CONDUCTED OR PROPERTY OWNED