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
5
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 WOULD 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 OR CONDITION (FINANCIAL OR OTHERWISE) OF THE COMPANY AND ITS
SUBSIDIARIES, TAKEN AS A WHOLE, OR ON THE TRANSACTIONS CONTEMPLATED HEREBY OR BY
THE AGREEMENTS AND INSTRUMENTS TO BE ENTERED INTO IN CONNECTION HEREWITH, OR ON
THE AUTHORITY OR ABILITY OF THE COMPANY TO PERFORM ITS OBLIGATIONS UNDER THE
TRANSACTION DOCUMENTS (AS DEFINED BELOW).
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)) AND THE WARRANTS (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 EXECUTION AND FILING OF THE CERTIFICATE OF DESIGNATIONS 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 OF EVEN DATE HEREWITH 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.
THE CERTIFICATE OF DESIGNATIONS HAS BEEN FILED
ON OR PRIOR TO THE CLOSING DATE WITH THE SECRETARY OF STATE OF THE STATE OF
DELAWARE AND WILL BE IN FULL FORCE AND EFFECT, ENFORCEABLE AGAINST THE COMPANY
IN ACCORDANCE WITH ITS TERMS AND SHALL NOT HAVE BEEN AMENDED UNLESS IN
COMPLIANCE WITH ITS TERMS.
(C)
ISSUANCE OF SECURITIES.
THE PREFERRED
SHARES AND WARRANTS ARE DULY AUTHORIZED AND, UPON ISSUANCE IN ACCORDANCE WITH
THE TERMS HEREOF, SHALL BE VALIDLY ISSUED, FREE FROM ALL DOCUMENTARY STAMP,
TRANSFER OR SIMILAR TAXES (PROVIDED THAT