COMPANY AND ITS
"SUBSIDIARIES" (WHICH FOR PURPOSES OF THIS AGREEMENT MEANS ANY ENTITY IN WHICH
THE COMPANY, DIRECTLY OR INDIRECTLY, OWNS 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 OR FINANCIAL CONDITION 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) OR THE
CERTIFICATE OF DESIGNATION (AS DEFINED BELOW).
3.2
AUTHORIZATION; ENFORCEMENT; VALIDITY.
THE COMPANY HAS THE
REQUISITE CORPORATE POWER AND AUTHORITY TO ENTER INTO AND PERFORM THIS
AGREEMENT, THE INVESTOR RIGHTS AGREEMENT AND THE STANDSTILL 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 OF EVEN DATE HEREWITH
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.
3.3
ISSUANCE OF SECURITIES.
THE SHARES ARE DULY AUTHORIZED AND, UPON
ISSUANCE AT THE CLOSING, SHALL BE (I) VALIDLY ISSUED, FULLY PAID AND
NON-ASSESSABLE, (II) FREE FROM ALL TAXES, LIENS AND CHARGES WITH RESPECT TO THE
ISSUE THEREOF AND (III) ENTITLED TO THE RIGHTS AND PREFERENCES SET FORTH IN THE
COMPANY'S FORM OF CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES
B PREFERRED STOCK ATTACHED HERETO AS EXHIBIT D (THE "CERTIFICATE OF
DESIGNATIONS").
AT LEAST 1,000,000 SHARES OF COMMON STOCK HAVE BEEN DULY
AUTHORIZED AND RESERVED FOR ISSUANCE UPON CONVERSION OF