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, CONDITION (FINANCIAL OR OTHERWISE) OR
PROSPECTS OF THE COMPANY AND ITS SUBSIDIARIES, TAKEN AS A WHOLE, OR ON THE
TRANSACTIONS CONTEMPLATED HEREBY AND THE OTHER TRANSACTION DOCUMENTS OR BY THE
AGREEMENTS AND INSTRUMENTS TO BE ENTERED INTO IN CONNECTION HEREWITH OR
THEREWITH, 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 NOTES, THE REGISTRATION RIGHTS AGREEMENT,
THE IRREVOCABLE TRANSFER AGENT INSTRUCTIONS (AS DEFINED IN SECTION 5(B)), THE
WARRANTS AND EACH OF THE OTHER AGREEMENTS ENTERED INTO BY THE PARTIES HERETO IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
5
(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 CONSUMMATION BY THE COMPANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, INCLUDING, WITHOUT LIMITATION, THE
ISSUANCE OF THE NOTES AND THE WARRANTS, THE RESERVATION FOR ISSUANCE AND THE
ISSUANCE OF THE CONVERSION SHARES ISSUABLE UPON CONVERSION OF THE NOTES AND THE
RESERVATION FOR ISSUANCE AND ISSUANCE OF WARRANT SHARES ISSUABLE UPON EXERCISE
OF THE WARRANTS, HAVE BEEN DULY AUTHORIZED BY THE COMPANY'S BOARD OF DIRECTORS
AND OTHER THAN AS SET FORTH IN SECTION 3(E), NO FURTHER FILING, 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.
(C)
ISSUANCE OF SECURITIES.
THE ISSUANCE OF THE NOTES AND THE
WARRANTS ARE DULY AUTHORIZED AND ARE FREE FROM ALL TAXES, LIENS AND CHARGES WITH
RESPECT TO THE ISSUE THEREOF.
AS OF THE CLOSING, A NUMBER OF SHARES OF COMMON
STOCK SHALL HAVE BEEN DULY AUTHORIZED AND RESERVED FOR ISSUANCE WHICH EQUALS OR
EXCEEDS (I) 150% OF THE AGGREGATE OF THE MAXIMUM NUMBER OF SHARES OF COMMON
STOCK ISSUABLE (I) UPON CONVERSION OF THE NOTES, (II) AS INTEREST SHARES
PURSUANT TO THE TERMS OF THE NOTES AND (III) UPON EXERCISE OF THE WARRANTS.
UPON CONVERSION OR EXERCISE IN ACCORDANCE WITH THE NOTES OR THE WARRANTS, AS