THE SEC DOCUMENTS.
EACH OF THE COMPANY AND ITS SUBSIDIARY IS DULY QUALIFIED
TO DO BUSINESS AND IS IN GOOD STANDING IN EVERY JURISDICTION IN WHICH THE NATURE
OF THE BUSINESS CONDUCTED BY IT OR PROPERTY OWNED BY IT MAKES SUCH QUALIFICATION
NECESSARY, EXCEPT WHERE THE FAILURE TO BE SO QUALIFIED OR IN GOOD STANDING, AS
THE CASE MAY BE, WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT.
EXCEPT FOR MS RESEARCH AND DEVELOPMENT CORP., THE COMPANY DOES NOT OWN
OR CONTROL, DIRECTLY OR INDIRECTLY, ANY CORPORATION, ASSOCIATION OR OTHER
ENTITY.
SECTION 2.2
AUTHORIZATION; ENFORCEMENT.
THE COMPANY HAS ALL
REQUISITE CORPORATE POWER AND AUTHORITY TO ENTER INTO AND TO PERFORM ITS
OBLIGATIONS UNDER THIS AGREEMENT, TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED
HEREBY AND TO ISSUE THE SHARES IN ACCORDANCE WITH THE TERMS HEREOF.
THE
EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT BY THE COMPANY AND THE
CONSUMMATION BY IT OF THE TRANSACTIONS CONTEMPLATED HEREBY (INCLUDING THE
ISSUANCE OF THE SHARES) HAVE BEEN DULY AUTHORIZED BY THE COMPANY'S BOARD OF
DIRECTORS AND NO FURTHER CONSENT OR AUTHORIZATION OF THE COMPANY, ITS BOARD OF
DIRECTORS, OR ITS STOCKHOLDERS IS REQUIRED.
THIS AGREEMENT HAS BEEN DULY
EXECUTED BY THE COMPANY AND CONSTITUTES A LEGAL, VALID AND BINDING OBLIGATION OF
THE COMPANY ENFORCEABLE AGAINST THE COMPANY IN ACCORDANCE WITH ITS TERMS, EXCEPT
AS ENFORCEABILITY MAY BE LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY,
REORGANIZATION, OR MORATORIUM OR SIMILAR LAWS AFFECTING CREDITORS' AND
CONTRACTING PARTIES' RIGHTS GENERALLY AND EXCEPT AS ENFORCEABILITY MAY BE
SUBJECT TO GENERAL PRINCIPLES OF EQUITY AND EXCEPT AS RIGHTS TO INDEMNITY AND
CONTRIBUTION MAY BE LIMITED BY STATE OR FEDERAL SECURITIES LAWS OR PUBLIC POLICY
UNDERLYING SUCH LAWS.
SECTION 2.3
CAPITALIZATION.
THE AUTHORIZED CAPITAL STOCK OF THE
COMPANY, AS OF JUNE 30, 2006, CONSISTED OF 80,000,000 SHARES OF COMMON STOCK, OF
WHICH 19,630,636 SHARES WERE ISSUED AND OUTSTANDING AND 20,000,000 SHARES OF
BLANK CHECK PREFERRED STOCK, $0.001 PAR VALUE PER SHARE, NONE OF WHICH HAVE BEEN
DESIGNATED.
ALL OF THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK HAVE BEEN
DULY AUTHORIZED, VALIDLY ISSUED, FULLY PAID, AND NONASSESSABLE.
OPTIONS AND
WARRANTS TO PURCHASE AN AGGREGATE OF 2,521,460 SHARES OF COMMON STOCK WERE
OUTSTANDING AS OF JUNE 30, 2006.
EXCEPT AS DISCLOSED IN OR CONTEMPLATED BY THE
SEC DOCUMENTS, THE COMPANY DOES NOT HAVE OUTSTANDING ANY OPTIONS TO PURCHASE, OR
ANY PREEMPTIVE RIGHTS OR OTHER RIGHTS TO SUBSCRIBE FOR OR TO PURCHASE, ANY
SECURITIES OR OBLIGATIONS CONVERTIBLE INTO, OR ANY CONTRACTS OR COMMITMENTS TO
ISSUE OR SELL, SHARES OF ITS CAPITAL STOCK OR ANY SUCH OPTIONS, RIGHTS,
CONVERTIBLE SECURITIES OR OBLIGATIONS OTHER THAN OPTIONS GRANTED UNDER THE
COMPANY'S STOCK OPTION PLANS AND ITS EMPLOYEE STOCK PURCHASE PLAN.
2
SECTION 2.4
ISSUANCE OF SHARES.
THE SHARES ARE DULY AUTHORIZED AND,
UPON ISSUANCE IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, WILL BE VALIDLY
ISSUED, FULLY PAID AND NON-ASSESSABLE AND WILL NOT BE SUBJECT TO PREEMPTIVE
RIGHTS OR OTHER SIMILAR RIGHTS OF STOCKHOLDERS OF THE COMPANY.
SECTION 2.5
NO CONFLICTS; GOVERNMENT CONSENTS AND PERMITS.