ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT AND DELIVERED TO THE INVESTORS, THE SHARES WILL BE DULY AND VALIDLY
ISSUED AND OUTSTANDING, FULLY PAID AND NON-ASSESSABLE AND WILL BE FREE OF ANY
ENCUMBRANCE (AS DEFINED BELOW) CREATED BY THE COMPANY, IN THE COMPANY'S CONTROL,
OR OF WHICH THE COMPANY HAS ACTUAL KNOWLEDGE, OTHER THAN THOSE IMPOSED PURSUANT
TO THIS AGREEMENT AND SECURITIES LAWS OF GENERAL APPLICATION.
AS USED IN THIS
AGREEMENT, "ENCUMBRANCE" SHALL MEAN ANY CLAIM, LIEN, PLEDGE, OPTION, CHARGE,
EASEMENT, SECURITY INTEREST, DEED OF TRUST, MORTGAGE, RIGHT OF WAY,
ENCROACHMENT, PRIVATE BUILDING OR USE RESTRICTION, CONDITIONAL SALES AGREEMENT,
ENCUMBRANCE OR OTHER RIGHT OF THIRD PARTIES, WHETHER VOLUNTARILY INCURRED OR
ARISING BY OPERATION OF LAW, AND INCLUDES, WITHOUT LIMITATION, ANY AGREEMENT TO
GIVE ANY OF THE FOREGOING IN THE FUTURE, AND ANY CONTINGENT SALE OR OTHER
TITLE.
EXCEPT AS SET FORTH IN SCHEDULE 2.2, THE ISSUANCE AND SALE OF THE SHARES
WILL NOT BE SUBJECT TO PREEMPTIVE OR OTHER SIMILAR RIGHTS OF ANY HOLDER OF THE
COMPANY'S SECURITIES.
2.3
ENFORCEABILITY.
THIS AGREEMENT HAS BEEN DULY EXECUTED AND
DELIVERED BY THE COMPANY AND CONSTITUTES A LEGAL, VALID AND BINDING AGREEMENT
AND OBLIGATION OF THE COMPANY ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITS
TERMS SUBJECT TO BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR OTHER
SIMILAR LAWS NOW OR HEREAFTER IN EFFECT GENERALLY RELATING TO OR AFFECTING
CREDITORS' RIGHTS.
2.4
NO VIOLATION.
EXCEPT AS SET FORTH ON SCHEDULE 2.4, THE EXECUTION
AND THE DELIVERY BY THE COMPANY OF THIS AGREEMENT AND THE PERFORMANCE BY THE
COMPANY OF ITS OBLIGATIONS HEREUNDER, INCLUDING THE ISSUANCE AND SALE OF THE
SHARES, DOES NOT AND WILL NOT (I) CONFLICT WITH OR RESULT IN A BREACH OF THE
TERMS, CONDITIONS OR PROVISIONS OF, (II) CONSTITUTE A DEFAULT UNDER (OR AN EVENT
THAT WITH NOTICE OR LAPSE OF TIME WOULD BECOME A DEFAULT), (III) RESULT IN A
VIOLATION OF, OR (IV) REQUIRE ANY AUTHORIZATION, CONSENT OR APPROVAL NOT
HERETOFORE OBTAINED PURSUANT TO, (A) ANY BINDING WRITTEN OR ORAL AGREEMENT OR
INSTRUMENT INCLUDING, WITHOUT LIMITATION, ANY CHARTER, BYLAW, TRUST INSTRUMENT,
INDENTURE OR EVIDENCE OF INDEBTEDNESS, LEASE, CONTRACT OR OTHER OBLIGATION OR
COMMITMENT (EACH, A "CONTRACTUAL OBLIGATION") BINDING UPON THE COMPANY OR ANY
SUBSIDIARY OR ANY OF THEIR RESPECTIVE PROPERTIES OR ASSETS, OR (B) ANY LAW,
RULE, REGULATION, RESTRICTION, ORDER, WRIT, JUDGMENT, AWARD, DETERMINATION,
INJUNCTION OR DECREE OF ANY COURT OR GOVERNMENT, OR ANY DECISION OR RULING OF
ANY ARBITRATOR (EACH, A "REQUIREMENT OF LAW") BINDING UPON OR APPLICABLE TO THE
COMPANY OR ANY SUBSIDIARY OR ANY OF THEIR RESPECTIVE PROPERTIES OR ASSETS AND
WHICH WOULD HAVE A MATERIAL ADVERSE EFFECT.
2.5
LITIGATION.
EXCEPT AS SET FORTH IN SCHEDULE 2.5 OR THE SEC
REPORTS (AS DEFINED IN SECTION 2.7 BELOW), THERE ARE NO PENDING OR OVERTLY
THREATENED ACTIONS, CLAIMS, ORDERS, DECREES, INVESTIGATIONS, SUITS OR
PROCEEDINGS BY OR BEFORE ANY GOVERNMENTAL AUTHORITY, ARBITRATOR, COURT OR
ADMINISTRATIVE AGENCY WHICH WOULD HAVE A MATERIAL ADVERSE EFFECT.
2.6
CAPITALIZATION.
THE AUTHORIZED CAPITAL STOCK OF THE COMPANY
CONSISTS OF 250,000,000 SHARES OF COMMON STOCK, NO PAR VALUE, 54,497,869