"SUBSIDIARIES" (WHICH FOR PURPOSES OF THIS AGREEMENT MEANS ANY ENTITY IN WHICH
THE COMPANY, DIRECTLY OR INDIRECTLY, OWNS 50% OR MORE OF THE CAPITAL STOCK OR
HOLDS A MAJORITY OR SIMILAR INTEREST) ARE CORPORATIONS DULY ORGANIZED AND
VALIDLY EXISTING IN GOOD STANDING UNDER THE LAWS OF THE JURISDICTION IN WHICH
THEY ARE INCORPORATED, AND HAVE THE REQUISITE CORPORATE 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
CORPORATION 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 WOULD NOT 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,
FINANCIAL CONDITION OR PROSPECTS OF THE COMPANY AND ITS SUBSIDIARIES, IF ANY,
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).
(B)
AUTHORIZATION; ENFORCEMENT; VALIDITY.
THE COMPANY HAS THE
REQUISITE CORPORATE POWER AND AUTHORITY TO ENTER INTO AND PERFORM THIS AGREEMENT
AND THE REGISTRATION RIGHTS AGREEMENT, (TOGETHER, THE "TRANSACTION DOCUMENTS")
AND TO FILE, AND PERFORM ITS OBLIGATIONS UNDER, THE TRANSACTION DOCUMENTS, AND
TO ISSUE THE SHARES 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 SHARES, 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.
THE TRANSACTION DOCUMENTS
HAVE BEEN DULY EXECUTED AND DELIVERED
BY THE COMPANY, AND CONSTITUTE THE VALID AND BINDING OBLIGATIONS OF THE COMPANY
ENFORCEABLE AGAINST THE COMPANY IN ACCORDANCE WITH THEIR 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 CREDITORS' RIGHTS AND
REMEDIES.
(C)
CAPITALIZATION.
THE AUTHORIZED CAPITAL STOCK OF THE COMPANY
CONSISTS OF (I) 250,000,000 SHARES OF COMMON STOCK, OF WHICH (A) 45,225,034
SHARES WERE ISSUED AND OUTSTANDING AS OF JULY 31, 2002 AND (B) 14,230,014 SHARES
WERE RESERVED FOR ISSUANCE UPON THE EXERCISE OR CONVERSION, AS THE CASE MAY BE,
OF OUTSTANDING OPTIONS, WARRANTS OR OTHER CONVERTIBLE SECURITIES AS OF
JULY 31,
2002 AND (II) 10,000,000 SHARES OF CONVERTIBLE REDEEMABLE PREFERRED STOCK, OF
WHICH 1,491,881 SHARES WERE ISSUED AND OUTSTANDING AS OF JULY 31, 2002 AND NONE
WERE
RESERVED FOR ISSUANCE UPON THE EXERCISE OR CONVERSION, AS THE CASE MAY BE,
OF OUTSTANDING OPTIONS,