THE SUBSIDIARY, DR. HANS-RUDOLF STAIGER AND
DR. MICHAEL HAMM (EACH IN A FIDUCIARY CAPACITY AS TRUSTEE FOR THE BENEFIT OF THE
COMPANY PURSUANT TO TRUST AGREEMENTS WITH THE COMPANY DATED APRIL 12, 1999) AND
EDWARD RILEY, EACH HOLD ONE SHARE IN TRUST ON BEHALF OF THE COMPANY IN
ACCORDANCE WITH APPLICABLE SWISS LAW, WHICH PROVIDES THAT EACH DIRECTOR OF A
SWISS COMPANY MUST ALSO BE A SHAREHOLDER AND THAT A MAJORITY OF SUCH DIRECTORS
MUST BE SWISS OR EU CITIZENS, DOMICILED IN SWITZERLAND. THE OUTSTANDING STOCK OF
THE SUBSIDIARY IS VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE AND WAS ISSUED IN
COMPLIANCE WITH APPLICABLE LAWS. NONE OF THE OUTSTANDING STOCK OF THE SUBSIDIARY
HAS BEEN ISSUED IN VIOLATION OF THE RIGHTS OF ANY PERSON. AS OF THE DATE HEREOF,
(I) THERE ARE NO RIGHTS OUTSTANDING, AND (II) THERE ARE NO AGREEMENTS,
UNDERSTANDINGS OR COMMITMENTS RELATING TO THE RIGHTS OF THE COMPANY TO VOTE OR
DISPOSE OF THE STOCK OF THE SUBSIDIARY.
(C)
THE AFFILIATE IS A MAINE LIMITED LIABILITY COMPANY AND SOLE OWNER
OF THE OWNER REAL ESTATE. THE EQUITY OF THE AFFILIATE IS OWNED 51% BY EDWARD
RILEY AND 49% BY RUSSELL HOLMES.
3.4.
CLEAR TITLE. EXCEPT AS OTHERWISE SET FORTH IN SCHEDULE 3.4 OR THE
LEASED PROPERTY DISCLOSED IN SCHEDULE 3.15(D) HERETO, ON THE CLOSING DATE, (I)
THE COMPANY, SUBSIDIARY AND AFFILIATE HOLD GOOD TITLE (OR VALID AND ENFORCEABLE
LEASEHOLD INTERESTS) TO THEIR RESPECTIVE PERSONAL PROPERTY, AND (II) SUCH
PERSONAL PROPERTY IS AND SHALL BE FREE AND CLEAR OF ANY AND ALL ENCUMBRANCES OF
ANY KIND, NATURE AND DESCRIPTION WHATSOEVER, EXCEPT FOR ENCUMBRANCES WHICH ARE
DISCLOSED, REFLECTED OR RESERVED FOR OR AGAINST IN THE BALANCE SHEETS, OR ARE
BEING RELEASED BY PAYMENT FROM CLOSING PROCEEDS.
3.5.
CONDITION OF ASSETS. ALL OF THE PROPERTIES AND ASSETS OF THE
COMPANY, SUBSIDIARY AND AFFILIATE ARE THE ASSETS USED TO OPERATE THEIR
RESPECTIVE BUSINESSES AS CURRENTLY CONDUCTED, (II) SUCH PROPERTIES AND ASSETS
HAVE BEEN PROPERLY MAINTAINED, CONSISTENT WITH PAST PRACTICES, AND ARE IN GOOD
OPERATING CONDITION, NORMAL WEAR AND TEAR EXCEPTED, AND (III) ALL LEASED
PROPERTY IS IN THE CONDITION RECEIVED BY THE COMPANY AND SUBSIDIARY AT THE TIME
OF THE LEASE, NORMAL WEAR AND TEAR EXCEPTED.
3.6.
LEGAL PROCEEDINGS. EXCEPT AS SET FORTH ON SCHEDULE 3.6(A), THERE
HAS NOT BEEN IN THE TWENTY-FOUR (24) MONTHS PRIOR TO THE DATE HEREOF ANY CLAIMS,
ACTIONS, SUITS, INQUIRIES, PROCEEDINGS, ORDERS OR INVESTIGATIONS OF ANY KIND OR
NATURE WHATSOEVER, AT LAW OR IN EQUITY, BY OR BEFORE ANY COURT OR GOVERNMENTAL
BODY. EXCEPT AS SET FORTH ON SCHEDULE 3.6(B), THERE ARE NO CLAIMS, ACTIONS,
SUITS, INQUIRIES, PROCEEDINGS, ORDERS OR INVESTIGATIONS OF ANY KIND OR NATURE
WHATSOEVER, AT LAW OR IN EQUITY, BY OR BEFORE ANY COURT OR GOVERNMENTAL BODY, OR
TO THE SELLER'S KNOWLEDGE, THREATENED AGAINST OR INVOLVING OR POTENTIALLY
INVOLVING:
(A)
THE COMPANY, SUBSIDIARY, AFFILIATE OR BUSINESS, ASSETS,
PROPERTIES, OFFICERS OR DIRECTORS, OR WHICH QUESTIONS OR CHALLENGES THE VALIDITY
OF THIS AGREEMENT, ANY ANCILLARY DOCUMENT OR ANY ACTION TAKEN OR TO BE TAKEN BY
SELLER