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, INDIVIDUALLY OR TAKEN AS A WHOLE, OR ON THE TRANSACTIONS
CONTEMPLATED HEREBY OR IN 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 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 (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 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,
6
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 130% 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 SERIES A WARRANTS AND
SERIES B WARRANTS.
UPON CONVERSION OR EXERCISE IN ACCORDANCE WITH THE NOTES OR
THE WARRANTS, AS THE CASE MAY BE, THE CONVERSION SHARES, THE INTEREST SHARES AND
THE WARRANT SHARES, RESPECTIVELY, WILL BE VALIDLY ISSUED, FULLY PAID AND
NONASSESSABLE AND FREE FROM ALL PREEMPTIVE OR SIMILAR RIGHTS, TAXES, LIENS AND
CHARGES WITH RESPECT TO THE