OF WHICH THE COMPANY HAS ACTUAL KNOWLEDGE, OTHER THAN THOSE IMPOSED PURSUANT
TO THIS AGREEMENT AND SECURITIES LAWS OF GENERAL APPLICATION.
AS USED IN THIS
AGREEMENT, "ENCUMBRANCE" SHALL MEAN ANY CLAIM, LIEN, PLEDGE, OPTION, CHARGE,
EASEMENT, SECURITY INTEREST, DEED OF TRUST, MORTGAGE, RIGHT OF WAY,
ENCROACHMENT, PRIVATE BUILDING OR USE RESTRICTION, CONDITIONAL SALES AGREEMENT,
ENCUMBRANCE OR OTHER RIGHT OF THIRD PARTIES, WHETHER VOLUNTARILY INCURRED OR
ARISING BY OPERATION OF LAW, AND INCLUDES, WITHOUT LIMITATION, ANY AGREEMENT TO
GIVE ANY OF THE FOREGOING IN THE FUTURE, AND ANY CONTINGENT SALE OR OTHER
TITLE.
THE ISSUANCE AND SALE OF THE SHARES WILL NOT BE SUBJECT TO PREEMPTIVE OR
OTHER SIMILAR RIGHTS OF ANY HOLDER OF THE COMPANY'S SECURITIES.
2.3
ENFORCEABILITY.
THIS AGREEMENT HAS BEEN
DULY EXECUTED AND DELIVERED BY THE COMPANY AND CONSTITUTES A LEGAL, VALID AND
BINDING AGREEMENT AND OBLIGATION OF THE COMPANY ENFORCEABLE AGAINST IT IN
ACCORDANCE WITH ITS TERMS SUBJECT TO BANKRUPTCY, INSOLVENCY, REORGANIZATION,
MORATORIUM OR OTHER SIMILAR LAWS NOW OR HEREAFTER IN EFFECT GENERALLY RELATING
TO OR AFFECTING CREDITORS' RIGHTS.
2.4
NO VIOLATION.
EXCEPT AS SET FORTH ON
SCHEDULE 2.4, THE EXECUTION AND THE DELIVERY BY THE COMPANY OF THIS AGREEMENT
AND THE PERFORMANCE BY THE COMPANY OF ITS OBLIGATIONS HEREUNDER, INCLUDING THE
ISSUANCE AND SALE OF THE SHARES, DOES NOT AND WILL NOT (I) CONFLICT WITH OR
RESULT IN A BREACH OF THE TERMS, CONDITIONS OR PROVISIONS OF, (II) CONSTITUTE A
DEFAULT UNDER, (III) RESULT IN A VIOLATION OF, OR (IV) REQUIRE ANY
AUTHORIZATION, CONSENT OR APPROVAL NOT HERETOFORE OBTAINED PURSUANT TO, ANY
BINDING WRITTEN OR ORAL AGREEMENT OR INSTRUMENT INCLUDING, WITHOUT LIMITATION,
ANY CHARTER, BYLAW, TRUST INSTRUMENT, INDENTURE OR EVIDENCE OF INDEBTEDNESS,
LEASE, CONTRACT OR OTHER OBLIGATION OR COMMITMENT (EACH, A "CONTRACTUAL
OBLIGATION") BINDING UPON THE COMPANY OR ANY SUBSIDIARY OR ANY OF THEIR
RESPECTIVE PROPERTIES OR ASSETS, OR ANY LAW, RULE, REGULATION, RESTRICTION,
ORDER, WRIT, JUDGMENT, AWARD, DETERMINATION, INJUNCTION OR DECREE OF ANY COURT
OR GOVERNMENT, OR ANY DECISION OR RULING OF ANY ARBITRATOR (EACH, A "REQUIREMENT
OF LAW") BINDING UPON OR APPLICABLE TO THE COMPANY OR ANY SUBSIDIARY OR ANY OF
THEIR RESPECTIVE PROPERTIES OR ASSETS AND WHICH WOULD HAVE A MATERIAL ADVERSE
EFFECT.
2.5
LITIGATION.
EXCEPT AS SET FORTH IN
SCHEDULE 2.5 OR THE SEC REPORTS (AS DEFINED IN SECTION 2.7 BELOW), THERE ARE NO
PENDING OR OVERTLY THREATENED ACTIONS, CLAIMS, ORDERS, DECREES, INVESTIGATIONS,
SUITS OR PROCEEDINGS BY OR BEFORE ANY GOVERNMENTAL AUTHORITY, ARBITRATOR, COURT
OR ADMINISTRATIVE AGENCY WHICH WOULD HAVE A MATERIAL ADVERSE EFFECT.
2.6
CAPITALIZATION.
THE AUTHORIZED CAPITAL
STOCK OF THE COMPANY CONSISTS OF 250,000,000 SHARES OF COMMON STOCK, NO PAR
VALUE, 25,962,774 SHARES OF WHICH HAVE BEEN VALIDLY ISSUED AND ARE OUTSTANDING
AS OF THE DATE HEREOF (AND SUCH ISSUED SHARES ARE FULLY PAID AND
NON-ASSESSABLE), AND 25,000,000 SHARES OF PREFERRED STOCK, NO PAR VALUE, OF
WHICH NO SHARES ARE OUTSTANDING ON THE DATE HEREOF.
EXCEPT AS SET FORTH ON
SCHEDULE 2.6, THE COMPANY OWNS 100% OF THE CAPITAL STOCK OF EACH OF THE
SUBSIDIARIES.
EXCEPT AS SET FORTH ON