Common use of Capitalization and Related Matters Clause in Contracts

Capitalization and Related Matters. (a) The Company has an authorized capital consisting of 230,000,000,000 shares of Common Stock and 25,000,000 shares in total of Series A-2 Convertible Preferred Stock, Series D Convertible Preferred Stock, Series C Preferred Stock and collectively with the Series E Preferred Stock, “Preferred Stock”, of which 13,489,918,237 shares of Common Stock and 3,000 shares of Preferred Stock are issued and outstanding as of the date hereof (after giving effect to the transactions contemplated hereby) as set forth on Schedule 3.2(a) hereto. All of the outstanding shares of the Company’s capital stock are, and immediately after the Closing will be, validly issued and outstanding, fully paid and non-assessable. No such stock (i) was issued in violation of the preemptive rights of any shareholder or (ii) is held as treasury stock. All of the outstanding capital stock of the Company was issued in compliance with all applicable federal and state securities or “blue sky” laws and regulations. (b) Except as set forth on Schedule 3.2(b) hereto, there are no outstanding securities convertible into Common Stock or any other capital stock of the Company nor any rights to subscribe for or to purchase, or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, such capital stock or securities convertible into such capital stock (collectively, “Securities Rights”). Except as set forth on Schedule 3.2 hereto the Company (i) is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any of its capital stock; or (ii) has no liability for dividends or other distributions declared or accrued, but unpaid, with respect to any capital stock. (c) Except as set forth on Schedule 3.2(c) hereto, the Company is not a party to any agreement, understanding or arrangement, direct or indirect, relating to any class or series of the Company’s capital stock, including, without limitation, any voting agreement, restriction on resale, shareholder agreement or registration rights agreement.

Capitalization and Related Matters. (ai) The authorized share capital of the Company has an authorized capital consists of 600,000,000 shares, consisting of 230,000,000,000 shares (i) 500,000,000 Common Shares and (ii) 100,000,000 Preferred Shares. (ii) As of the close of business on August 15, 2016 (the “Capitalization Date”), 23,624,014 Common Stock Shares were issued and 25,000,000 shares in total outstanding, and there were no Preferred Shares issued or outstanding. (iii) As of Series A-2 Convertible Preferred Stockthe Capitalization Date, Series D Convertible Preferred StockCompany Share Awards representing 2,319,471 Common Shares not subject to performance based vesting were issued and outstanding, Series C Preferred Stock Company Share Awards representing 659,800 Common Shares subject to performance based vesting (based on the maximum level of performance) were issued and collectively with the Series E Preferred Stockoutstanding, “Preferred Stock”Company Share Options representing 3,185,313 Common Shares were issued and outstanding, of which 13,489,918,237 shares 2,995,414 were vested and exercisable as of the Capitalization Date, and Company Warrants convertible into 2,000,000 Common Shares were exercisable. (iv) Section 3.6(a)(iv) of the Disclosure Letter sets forth as of the close of business on the Capitalization Date a list of each outstanding Company Equity Award and Company Warrant and (A) the name of the holder of such Company Equity Award and Company Warrant, (B) the number of Common Stock Shares subject to such outstanding Company Equity Award (based on the maximum level of performance for each Company Share Award that is subject to performance based vesting), (C) the date on which such Company Equity Award and 3,000 shares Company Warrant was granted or issued, (D) the exercise price of Preferred Stock each Company Share Option and Company Warrant, (E) the expiration date of each Company Share Option and Company Warrant, (F) the extent to which such Company Equity Award is vested as of such date, (G) if such Company Equity Award has performance-vesting criteria and (H) the amount of accrued dividend equivalents with respect to each Company Share Award and Company Warrant. (v) Section 3.6(a)(v) of the Disclosure Letter sets forth as of the close of business on the Capitalization Date the aggregate exercise price of all Company Share Options that have a per share exercise price that is less than the Merger Consideration. (i) The outstanding Common Shares have been, and all Common Shares which may be issued pursuant to the exercise or settlement of outstanding Company Equity Awards and Company Warrants are or will be when issued, duly authorized and validly issued and are fully paid, and an acquirer of Common Shares has no obligation to make further payments for its purchase of Common Shares or contributions to the Company solely by reason of the Common Shares or its status as a member of a limited liability company. (ii) Except for the Common Shares issued and outstanding as of the Capitalization Date as set forth in Section 3.6(a) (and any Common Shares issued following such date and prior to the date hereof (after giving effect to upon the transactions contemplated herebysettlement or exercise of Company Equity Awards or Company Warrants), and the Company Equity Awards and Company Warrants listed on Section 3.6(a) of the Disclosure Letter, as of the date hereof, except as set forth on Schedule 3.2(aSection 3.6(b) hereto. All of the Disclosure Letter, no equity interests of the Company are outstanding and neither the Company nor any Subsidiary thereof has outstanding (A) any securities convertible into or exchangeable for any shares of equity interests of the Company’s capital stock are, and immediately after the Closing will be, validly issued and outstanding, fully paid and non-assessable. No such stock (iB) was issued in violation of the preemptive rights of any shareholder or (ii) is held as treasury stock. All of the outstanding capital stock of the Company was issued in compliance with all applicable federal and state securities or “blue sky” laws and regulations. (b) Except as set forth on Schedule 3.2(b) hereto, there are no outstanding securities convertible into Common Stock or any other capital stock of the Company nor any rights to subscribe for or to purchase, purchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any warrants, calls, repurchase rights, voting rights, commitments or claims of any other character relating toto the issuance of, such capital any equity interests of the Company or any stock or securities convertible into or exchangeable for any such capital equity interests, or (C) any stock (collectivelyappreciation rights, contingent value rights, “Securities Rights”). Except as set forth phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on Schedule 3.2 hereto the value or price of, any equity interests of the Company (ithe items in clauses (A), (B) and (C) immediately above, together with the Common Shares, being referred to herein collectively as the “Company Securities”). (iii) Neither the Company nor any Subsidiary thereof is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire retire, to grant any of its capital stock; Person a right to subscribe for or (ii) has no liability for dividends acquire, or other distributions declared or accruedto register under the Securities Act, but unpaid, with respect to any capital stockCompany Securities. (civ) Except as set forth on Schedule 3.2(c) hereto, Neither the Company is not a party nor any Subsidiary thereof has outstanding any bonds, debentures, notes or other similar debt obligations the holders of which have the right to any agreement, understanding vote (or arrangement, direct are convertible into or indirect, relating exercisable for securities having the right to any class or series vote) with the Shareholders of the Company’s capital stock, including, without limitation, Company or any voting agreement, restriction such Subsidiary on resale, shareholder agreement or registration rights agreementany matter.

Capitalization and Related Matters. (a) The Company has an As of the date hereof, the authorized capital consisting stock of 230,000,000,000 the Company consists of 1,600,000,000 shares of Company Common Stock and 25,000,000 200,000,000 shares in total of Series A-2 Convertible Company Preferred Stock, Series D Convertible Preferred Stock, Series C Preferred Stock and collectively with . As of the Series E Preferred Stock, “Preferred Stock”, of which 13,489,918,237 date hereof: (i) 89,954,431 shares of Company Common Stock and 3,000 shares of Preferred Stock are issued and outstanding, and there are no shares of Company Preferred Stock issued or outstanding; (ii) 4,807,071 shares of Company Common Stock are reserved for issuance and issuable upon or otherwise deliverable under the Company’s Second Amended 1997 Stock Option Plan, 2000 Long Term Incentive Plan and Employee Stock Purchase Plan (collectively, the “Company Stock Plans”) in connection with the exercise of outstanding Company Options and the vesting of outstanding Other Stock Awards. Schedule 3.6(a)(ii) sets forth the exercise prices for the Company Options; (iii) 13,638,600 shares of Company Common Stock are reserved for issuance and issuable as of the date hereof (after giving effect to the transactions contemplated hereby) as set forth on Schedule 3.2(a) hereto. All of the outstanding shares upon conversion of the Company’s capital stock are3.125% Convertible Senior Debentures due 2006 (the “Convertible Debentures”); and (iv) 3,820,980 shares of Company Common Stock are reserved for issuance and 3,820,980 shares of Company Common Stock are issuable upon exercise of the Company Warrants. Schedule 3.6(a)(iv) sets forth the names of all holders of Company Warrants, the number of shares of Company Common Stock purchasable thereunder and immediately after the Closing will be, exercise price(s) therefor. (b) The outstanding shares of Company Common Stock (i) have been duly authorized and validly issued and outstanding, are fully paid and non-assessable. No such stock (i) was issued in violation of the preemptive rights of any shareholder or nonassessable and (ii) is held as treasury stock. All of the outstanding capital stock of the Company was were issued in compliance with all applicable federal and state securities laws. All grants of Company Options and Other Stock Awards were validly issued and properly approved by the Company’s Board of Directors in accordance with all applicable law and no such grants involved any “backdating” or “blue sky” laws similar practices with respect to the effective date of grant. Except as set forth above in Section 3.6(a), as of the date hereof, no shares of capital stock of the Company are outstanding. Except as set forth above in Section 3.6(a) or as required pursuant to Section 5.5 of this Agreement, the Company does not have outstanding any securities convertible into or exchangeable for any shares of capital stock, including Company Options, any rights to subscribe for or to purchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or known claims of any other character relating to the issuance of, any capital stock, or any stock or securities convertible into or exchangeable for any capital stock; and regulationsthe Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire, or to register under the Securities Act, any shares of capital stock. Except as set forth above in Section 3.6(a), the Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter. True and complete copies of the Company Warrants have been made available to Parent or its representatives. (bc) Except as set forth on Schedule 3.2(b) hereto3.6(c), there all of the outstanding shares of capital stock, or membership interests or other ownership interests of, each Subsidiary of the Company, as applicable, is validly issued, fully paid and nonassessable and is owned of record and beneficially by the Company, directly or indirectly. The Company has, as of the date hereof and shall have on the Closing Date, valid and marketable title to all of the shares of capital stock of, or membership interests or other ownership interests in, each Subsidiary of the Company, free and clear of any Liens other than Permitted Liens. Such outstanding shares of capital stock of, or membership interests or other ownership interests in, the Subsidiaries of the Company, as applicable, are no the sole outstanding securities of such Subsidiaries; the Subsidiaries of the Company do not have outstanding any securities convertible into Common Stock or exchangeable for any other capital stock of the Company nor of, or membership interests or other ownership interests in, such Subsidiaries, any rights to subscribe for or to purchase, purchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any other character relating toto the issuance of, any capital stock of, or membership interests or other ownership interests in, such capital Subsidiaries, or any stock or securities convertible into such or exchangeable for any capital stock (collectivelyof, “Securities Rights”). Except or membership interests or other ownership interests in, such Subsidiaries; and except as set forth on Schedule 3.2 hereto required pursuant to Section 5.5 of this Agreement, neither the Company (i) or any of its Subsidiaries is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire retire, or to register under the Securities Act, any of its capital stock; stock of, or (ii) has no liability for dividends membership interests or other distributions declared ownership interests in, any Subsidiary of the Company. The Company has made available to Parent or accruedits representatives true and correct copies of the organizational documents of C III Communications, but unpaidLLC (“CIII”) and all other agreements between the Company or its Subsidiaries on the one hand and BCSI Inc. (“BCSI”) or its Subsidiaries on the other hand, with respect to any capital stock. (c) Except as CIII or BCSI’s interest therein. BCSI and its Affiliates hold in the aggregate the interest in CIII set forth on Schedule 3.2(c3.6(c) hereto, and no other Person (other than the Company is not a party to and its Subsidiaries) owns any agreement, understanding or arrangement, direct or indirect, relating to any class or series of the Company’s capital stock, including, without limitation, any voting agreement, restriction on resale, shareholder agreement or registration rights agreementequity interest in CIII.

Capitalization and Related Matters. (a) The Company has an As of the date hereof, the authorized capital consisting stock of 230,000,000,000 the Company consists of 1,600,000,000 shares of Company Common Stock and 25,000,000 200,000,000 shares in total of Series A-2 Convertible Company Preferred Stock, Series D Convertible Preferred Stock, Series C Preferred Stock and collectively with . As of the Series E Preferred Stock, “Preferred Stock”, of which 13,489,918,237 date hereof: (i) 89,954,431 shares of Company Common Stock and 3,000 shares of Preferred Stock are issued and outstanding, and there are no shares of Company Preferred Stock issued or outstanding; (ii) 4,807,071 shares of Company Common Stock are reserved for issuance and issuable upon or otherwise deliverable under the Company's Second Amended 1997 Stock Option Plan, 2000 Long Term Incentive Plan and Employee Stock Purchase Plan (collectively, the "Company Stock Plans") in connection with the exercise of outstanding Company Options and the vesting of outstanding Other Stock Awards. Schedule 3.6(a)(ii) sets forth the exercise prices for the Company Options; (iii) 13,638,600 shares of Company Common Stock are reserved for issuance and issuable as of the date hereof (after giving effect to the transactions contemplated hereby) as set forth on Schedule 3.2(a) hereto. All upon conversion of the Company's 3.125% Convertible Senior Debentures due 2006 (the "Convertible Debentures"); and (iv) 3,820,980 shares of Company Common Stock are reserved for issuance and 3,820,980 shares of Company Common Stock are issuable upon exercise of the Company Warrants. Schedule 3.6(a)(iv) sets forth the names of all holders of Company Warrants, the number of shares of Company Common Stock purchasable thereunder and the exercise price(s) therefor. (b) The outstanding shares of the Company’s capital stock are, Company Common Stock (i) have been duly authorized and immediately after the Closing will be, validly issued and outstanding, are fully paid and non-assessable. No such stock (i) was issued in violation of the preemptive rights of any shareholder or nonassessable and (ii) is held as treasury stock. All of the outstanding capital stock of the Company was were issued in compliance with all applicable federal and state securities laws. All grants of Company Options and Other Stock Awards were validly issued and properly approved by the Company's Board of Directors in accordance with all applicable law and no such grants involved any "backdating" or “blue sky” laws similar practices with respect to the effective date of grant. Except as set forth above in Section 3.6(a), as of the date hereof, no shares of capital stock of the Company are outstanding. Except as set forth above in Section 3.6(a) or as required pursuant to Section 5.5 of this Agreement, the Company does not have outstanding any securities convertible into or exchangeable for any shares of capital stock, including Company Options, any rights to subscribe for or to purchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or known claims of any other character relating to the issuance of, any capital stock, or any stock or securities convertible into or exchangeable for any capital stock; and regulationsthe Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire, or to register under the Securities Act, any shares of capital stock. Except as set forth above in Section 3.6(a), the Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter. True and complete copies of the Company Warrants have been made available to Parent or its representatives. (bc) Except as set forth on Schedule 3.2(b) hereto3.6(c), there all of the outstanding shares of capital stock, or membership interests or other ownership interests of, each Subsidiary of the Company, as applicable, is validly issued, fully paid and nonassessable and is owned of record and beneficially by the Company, directly or indirectly. The Company has, as of the date hereof and shall have on the Closing Date, valid and marketable title to all of the shares of capital stock of, or membership interests or other ownership interests in, each Subsidiary of the Company, free and clear of any Liens other than Permitted Liens. Such outstanding shares of capital stock of, or membership interests or other ownership interests in, the Subsidiaries of the Company, as applicable, are no the sole outstanding securities of such Subsidiaries; the Subsidiaries of the Company do not have outstanding any securities convertible into Common Stock or exchangeable for any other capital stock of the Company nor of, or membership interests or other ownership interests in, such Subsidiaries, any rights to subscribe for or to purchase, purchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any other character relating toto the issuance of, any capital stock of, or membership interests or other ownership interests in, such capital Subsidiaries, or any stock or securities convertible into such or exchangeable for any capital stock (collectivelyof, “Securities Rights”). Except or membership interests or other ownership interests in, such Subsidiaries; and except as set forth on Schedule 3.2 hereto required pursuant to Section 5.5 of this Agreement, neither the Company (i) or any of its Subsidiaries is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire retire, or to register under the Securities Act, any of its capital stock; stock of, or (ii) has no liability for dividends membership interests or other distributions declared ownership interests in, any Subsidiary of the Company. The Company has made available to Parent or accruedits representatives true and correct copies of the organizational documents of C III Communications, but unpaidLLC ("CIII") and all other agreements between the Company or its Subsidiaries on the one hand and BCSI Inc. ("BCSI") or its Subsidiaries on the other hand, with respect to any capital stock. (c) Except as CIII or BCSI's interest therein. BCSI and its Affiliates hold in the aggregate the interest in CIII set forth on Schedule 3.2(c3.6(c) hereto, and no other Person (other than the Company is not a party to and its Subsidiaries) owns any agreement, understanding or arrangement, direct or indirect, relating to any class or series of the Company’s capital stock, including, without limitation, any voting agreement, restriction on resale, shareholder agreement or registration rights agreementequity interest in CIII.

Capitalization and Related Matters. (a) The Company has an authorized capital consisting stock of 230,000,000,000 the Company consists solely of 30,000,000 shares of Common Stock Stock, of which 4,744,245 shares are issued and 25,000,000 outstanding, 8,000,000 shares in total of Series A-2 Convertible A Preferred Stock, of which 8,000,000 shares are issued and outstanding, 7,642,443 shares of Series B Preferred Stock, of which 7,616,280 shares are issued and outstanding and 3,400,000 shares of Series C Preferred Stock, of which 3,375,000 shares are issued and outstanding (each, a “Share” and, collectively, the “Shares”). Schedule 2.3(a) lists each holder of the Shares and the class and number of Shares owned by such holder. All shares of capital stock in the Company are owned by the Stockholders, of record and beneficially, and constitute the only issued and outstanding capital stock of the Company. All of the Shares were duly authorized and validly issued and are fully paid and non-assessable. (b) Except for the Company Options and the Comerica Warrants and as disclosed on Schedule 2.3(b)(i), (i) there are no authorized or outstanding (A) securities of the Company other than the Shares or (B) warrants, preemptive rights, other rights, or options with respect to any securities of the Company or any securities or right convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of the Company’s capital stock, and (ii) the Company is not subject to any obligation to issue, sell, deliver, redeem or otherwise transfer, acquire or retire the Shares or any other securities of the Company. Except as described on Schedule 2.3(b)(i), there are no shareholder agreements, buy-sell agreements, voting trust or other agreement or understanding to which the Company or any Subsidiary of the Company is a party or to which it is bound, all such agreements previously in effect shall be terminated on the Closing Date. Schedule 2.3(b)(i) sets forth a list of each Company Option (other than the Unvested Company Options) and the exercise price of each such option and separately, at the Effective Time as a result of the Merger reflecting any acceleration of vesting or adjustment to purchase price or exercise price of such option, the date of grant and the vesting schedule. Schedule 2.3(b)(ii) sets forth a list of each Unvested Company Option and the exercise price of each such option and separately, at the Effective Time as a result of the Merger reflecting any acceleration of vesting or adjustment to purchase price or exercise price of such option, the date of grant and the vesting schedule. (c) Each of the Company Options may, in accordance with their respective terms, be treated in the manner provided for herein. (d) All of the Shares and all options, warrants or other securities of the Company have been issued in accordance with applicable federal and state securities laws. The transactions contemplated by this Agreement are not subject to any preemptive rights. (e) Each of the amounts payable to the holders of the Series A Preferred Stock, Series D Convertible B Preferred Stock, Series C Preferred Stock and collectively with the Series E Preferred Stock, “Preferred Stock”, of which 13,489,918,237 shares of Common Stock under Section 1.5 has been calculated and 3,000 shares will be paid (when paid in accordance with and subject to the terms of Preferred Stock are issued this Agreement) in accordance with and outstanding as subject to all terms of the date hereof (after giving effect to the transactions contemplated hereby) as set forth on Schedule 3.2(a) hereto. All Certificate of the outstanding shares of the Company’s capital stock are, and immediately after the Closing will be, validly issued and outstanding, fully paid and non-assessable. No such stock (i) was issued in violation of the preemptive rights of any shareholder or (ii) is held as treasury stock. All of the outstanding capital stock Incorporation of the Company was issued in compliance with all applicable federal and state securities or “blue sky” laws and regulations. (b) Except as set forth on Schedule 3.2(b) as Exhibit 4.1 hereto, there are no outstanding securities convertible into Common Stock which will be duly authorized and filed with the Delaware Secretary of State prior to or at Closing, and any other capital stock of agreements binding upon the Company nor any rights to subscribe for or to purchase, or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, such capital stock or securities convertible into such capital stock (collectively, “Securities Rights”). Except as set forth on Schedule 3.2 hereto the Company (i) is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any of its capital stock; or (ii) has no liability for dividends or other distributions declared or accrued, but unpaid, with respect to any capital stock. (c) Except as set forth on Schedule 3.2(c) hereto, which the Company is not a party to any agreement, understanding or arrangement, direct or indirect, relating to any class or series of the Company’s capital stock, including, without limitation, any voting agreement, restriction on resale, shareholder agreement or registration rights agreementsubject and all applicable Laws.

Capitalization and Related Matters. (a) The Company has an As of the date hereof, the authorized capital consisting stock of 230,000,000,000 the Company consists of 55,000,000 shares of Company Common Stock and 25,000,000 38,670,716 shares in total of Series A-2 Convertible Company Preferred Stock, Series D Convertible Preferred Stock, Series C Preferred Stock and collectively with . As of the Series E Preferred Stock, “Preferred Stock”, of which 13,489,918,237 date hereof: (i) 3,890,973 shares of Company Common Stock are issued and 3,000 outstanding and 38,443,420 shares of Company Preferred Stock are issued and outstanding; (ii) 8,839,505 shares of Company Common Stock are reserved for issuance and issuable upon or otherwise deliverable under the Company’s 1996 Stock Option Plan and 2000 Stock Plan (collectively, the “Company Stock Plans”) or otherwise in connection with the exercise of outstanding as Company Options and the vesting of outstanding Other Stock Awards. Section 3.6(a)(ii) of the Company Disclosure Schedule sets forth the names of all holders, the number of shares of Company Common Stock covered thereby, the vesting schedule and the exercise prices for the Company Options and the outstanding Other Stock Awards; (iii) 2,173,843 shares of Company Common Stock are reserved for issuance and issuable upon exercise of the Company Warrants (other than the GE Preferred Warrant). As of the date hereof (hereof, 181,818 shares of Series B Preferred Stock are reserved for issuance and issuable upon exercise of the GE Preferred Warrant and, after giving effect the Conversion and immediately prior to the transactions contemplated hereby) as set forth on Schedule 3.2(a) hereto. All Closing, 181,818 shares of Company Common Stock will be reserved for issuance and issuable upon exercise of the GE Preferred Warrant. Section 3.6(a)(ii) of the Company Disclosure Schedule sets forth the names of all holders of Company Warrants, the number of shares of Company Common Stock and Company Preferred Stock (including the class and series thereof) issuable thereunder, the respective exercise prices for such Company Common Stock and Company Preferred Stock and the respective expiration dates of the Company Warrants; and (iv) the number of shares of Company Common Stock required to be issued in order to effect the Conversion, including, without limitation, the conversion of all Bridge Notes outstanding immediate prior to the Effective Time, will be reserved for issuance not less than one Business Day prior to the Closing Date. (b) The outstanding shares of the Company’s capital stock are, Company Common Stock and immediately after the Closing will be, Company Preferred Stock (i) have been duly authorized and validly issued and outstanding, are fully paid and non-assessable. No such stock (i) was issued in violation of the preemptive rights of any shareholder or nonassessable and (ii) is held as treasury stock. All of the outstanding capital stock of the Company was were issued in compliance with all applicable federal and state securities laws. All grants of Company Options and Other Stock Awards were validly issued and properly approved by the Company’s Board of Directors in accordance with all applicable law and no such grants involved any “backdating” or “blue sky” laws and regulations. (b) similar practices with respect to the effective date of grant. Except as set forth on Schedule 3.2(b) heretoabove in Section 3.6(a), there are no outstanding securities convertible into Common Stock or any other shares of capital stock of the Company nor are outstanding and the Company does not have outstanding any options, warrants or other securities convertible into or exchangeable or exercisable for any shares of capital stock or any rights to subscribe for or to purchase, purchase or any options for the purchase ofotherwise acquire, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or known claims of any other character relating toto the issuance of, such any capital stock of the Company, or any stock or securities convertible into such or exchangeable or exercisable for any capital stock (collectively, “Securities Rights”). Except as set forth on Schedule 3.2 hereto of the Company; and the Company (i) is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire retire, or to register under the Securities Act, any shares of its capital stock; or (ii) has no liability for dividends or other distributions declared or accrued, but unpaid, with respect to any capital stock. (c) . Except as set forth on Schedule 3.2(c) heretoabove in Section 3.6(a), the Company is does not a party have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to any agreement, understanding vote (or arrangement, direct which are convertible into or indirect, relating exercisable for securities having the right to any class or series vote) with the stockholders of the Company’s capital stock, including, without limitation, Company on any voting agreement, restriction on resale, shareholder agreement or registration rights agreementmatter.

Capitalization and Related Matters. (a) The Company has an authorized capital consisting stock of 230,000,000,000 the Company consists of 120,000,000 shares of Company Common Stock and 25,000,000 35,000,000 shares in total of Series A-2 Convertible Preferred Stockpreferred stock, Series D Convertible Preferred Stock, Series C Preferred Stock and collectively with par value $0.01 per share (the Series E Preferred Stock, “Company Preferred Stock”, of which 13,489,918,237 ). On the date hereof: (i) 1,617,625 shares of Company Common Stock are issued and 3,000 outstanding, including 6,780 restricted shares of Company Common Stock (“Restricted Stock”), (ii) 8,700,000 shares of Company Preferred Stock are issued and outstanding, all of which are designated Series B Preferred Stock, (iii) 1,173 shares of Company Common Stock are held by the Company as treasury shares; no shares of Company Preferred Stock are held by the Company as treasury shares, (iv) an aggregate of 112,427 shares of Company Common Stock are reserved and available for issuance pursuant to the Company Plans, and of such shares (A) 70,953 shares of Company Common Stock are subject to issuance pursuant to outstanding Company Options, and (B) 6,780 shares of Company Common Stock are subject to issuance pursuant to outstanding Restricted Stock and RSU grants, and (v) an aggregate of 1,385,178 shares of Company Common Stock are reserved and available for issuance upon the exercise of Company Warrants. Other than the Company Plans, there is no plan or other Contract providing for the grant of options, securities or other rights exercisable or exchangeable for or into shares of Company Common Stock by the Company or any of its Subsidiaries. No shares of Company Common Stock are owned by any Subsidiary of the Company. Section 3.06(a) of the Company Disclosure Schedule sets forth a true and complete list as of the date hereof hereof, of (after giving effect to x) all outstanding Company Options, the transactions contemplated herebynumber of shares of Company Common Stock (or other capital stock) as set forth on Schedule 3.2(a) hereto. All subject thereto, the grant dates, expiration dates and exercise prices thereof, the names of the holders thereof and whether or not each holder is a current employee of the Company or any of its Subsidiaries and whether or not such Company Option is intended to qualify as an “incentive stock option” under Section 422 of the Code, (y) all outstanding shares of Restricted Stock and RSUs, the number of shares of Company Common Stock (or other capital stock) subject thereto (as applicable), the grant dates, the dates any forfeiture or repurchase conditions lapse, any repurchase prices and the names of the holders thereof and whether or not each holder is a current employee of the Company or any of its Subsidiaries and (z) all outstanding Company Warrants, the number of shares of Company Common Stock (or other capital stock) subject thereto, the issuance dates, the maturity or expiration dates, the exercise or conversion prices and the names of the holders thereof. All outstanding Company Stock Options, shares of Restricted Stock and RSUs are evidenced by written award agreements, in each case in the forms set forth in Section 3.01(a) of the Company Disclosure Schedule, and no award agreement relating to any outstanding Company Stock Option, Restricted Stock or RSU contains terms that are inconsistent with such forms. Copies of all Instruments evidencing Company Warrants have been made available to Parent prior to the date hereof. (b) On the date hereof, no shares of capital stock of, or other equity or voting interests in, the Company’s , or any securities convertible into, or exchangeable for, any such stock, interests or securities, or any options, warrants, shares of deferred stock, restricted stock awards, stock appreciation or depreciation rights, dividend equivalent rights, “phantom” stock awards or other calls or rights to acquire or receive any such stock, interests or securities, or other rights that are linked in any way to the value of the Company Common Stock or the value of the Company or any part thereof, were issued, reserved for issuance or outstanding. Except as expressly permitted under Section 5.01(a)(i) of this Agreement, since the date hereof, there have been no issuances by the Company of shares of capital stock areof, and immediately after or other equity or voting interests in, the Closing will beCompany, validly issued and outstandingor any securities convertible into, fully paid and non-assessable. No or exchangeable for, any such stock, interests or securities, or any options, warrants, shares of deferred stock, restricted stock (i) was issued awards, restricted stock unit awards, stock appreciation or depreciation rights, dividend equivalent rights, “phantom” stock awards or other calls or rights to acquire or receive any such stock, interests or securities, or other rights that are linked in violation any way to the value of the preemptive rights of any shareholder Company Common Stock or (ii) is held as treasury stock. All the value of the Company or any part thereof. (c) All outstanding shares of capital stock of the Company was are, and all shares which are issuable pursuant to the Company Plans shall be, when issued in compliance accordance with all applicable federal the terms thereof, duly authorized, validly issued, fully paid and state securities nonassessable and not subject to or “blue sky” laws and regulations. (b) issued in violation of any purchase option, call or put option, right of first offer or refusal, preemptive right, subscription right or any similar right under any provision of the PBCL, the Company Organizational Documents or any Contract to which the Company is a party or otherwise bound. Except as set forth on Schedule 3.2(b) heretoin Section 3.06(a), there are no outstanding securities convertible into Common Stock (i) bonds, debentures, notes or any other capital stock evidences of indebtedness of the Company nor any rights to subscribe for or to purchase, or any options for of its Subsidiaries and (ii) securities or other instruments or obligations of the purchase Company or any of its Subsidiaries, in each case, the value of which is based upon or derived from any capital stock of, or other equity or voting interest in, the Company or which has or which by its terms may have at any agreements providing for time (whether actual or contingent) the issuance right to vote (contingent or otherwise) ofwhich is convertible into, or exchangeable or exercisable for, securities having the right to vote) on any calls, commitments matters on which holders of Company Common Stock may vote (whether generally in the election of Company directors or claims in respect of any character relating to, such capital stock other matter for which holders of Company Common Stock are entitled to vote as a matter of Law or securities convertible into such capital stock (collectively, “Securities Rights”pursuant to the Company Organizational Documents). Except as set forth on Schedule 3.2 hereto in Section 3.06(a), there are no securities, options, warrants, calls, rights or Contracts of any kind to which the Company or any of its Subsidiaries is a party, or by which the Company or any of its Subsidiaries is bound, obligating the Company or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock of, or other equity or voting interests in, or securities convertible into, or exchangeable or exercisable for, shares of capital stock of, or other equity or voting interests in, the Company or any of its Subsidiaries or obligating the Company or any of its Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right or Contract. With respect to the Company Options, (iA) is each Company Option intended to qualify as an “incentive stock option” under Section 422 of the Code so qualifies, (B) each grant of a Company Option was duly authorized no later than the date on which the grant of such Company Option was by its terms to be effective by all necessary corporate action, including, as applicable, approval by the Company Board (or a duly constituted and authorized committee thereof) and any required shareholder approval by the necessary number of votes or written consents, and the award agreement governing such grant (if any) was duly executed and delivered by each party thereto, (C) each such grant was made in accordance with the terms of the Company Plans, the Exchange Act and all other applicable Laws and regulatory rules or requirements, including the rules of NASDAQ, (D) the per share exercise price of each Company Option was not subject less than the fair market value of a share of Company Common Stock on the applicable date of grant of such Company Option and (E) each such grant was properly accounted for in accordance with GAAP in the financial statements (including the related notes) of the Company and disclosed in the Company SEC Reports in accordance with the Exchange Act and all other applicable Laws. Except as set forth in Section 3.06(a) and except for the outstanding shares of Restricted Stock and RSUs or except pursuant to the cashless exercise, if any, or Tax withholding provisions under which the Company Options, Restricted Stock and RSUs were granted, there are no outstanding contractual or other obligations of the Company or any obligation of its Subsidiaries to (contingent or otherwiseI) to repurchase repurchase, redeem or otherwise acquire any shares of capital stock of, or retire other equity or voting interests in, the Company or any of its capital stock; Subsidiaries or (iiII) has no liability for dividends vote or dispose of any shares of capital stock of, or other distributions declared equity or accruedvoting interests in, but unpaid, the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is a party to any voting agreements with respect to any shares of capital stockstock of, or other equity or voting interests in, the Company or any of its Subsidiaries and, to the Company’s Knowledge, there are no irrevocable proxies and no voting agreements or voting trusts with respect to any shares of capital stock of, or other equity or voting interests in, the Company or any of its Subsidiaries. All outstanding Company Securities may by their terms be treated in accordance with Sections 1.08, 1.09 and 1.10. (cd) Except as set forth The Company has registered the Company Common Stock pursuant to Section 12(b) or (g) of the Exchange Act and is in full compliance with all reporting requirements of the Exchange Act and all NASDAQ requirements for the continued listing and quotation of the Company Common Stock on Schedule 3.2(c) heretothe NASDAQ, including applicable corporate governance requirements. On August 31, 2007, the Company is not Office of General Counsel of the NASDAQ Listing Qualifications Hearings issued a party to any agreement, understanding or arrangement, direct or indirect, relating to any class or series of final written decision granting the Company’s capital stockrequest for continued listing on the NASDAQ, includingand, without limitationto the Company’s Knowledge, any voting agreement, restriction on resale, shareholder agreement there is no threat of the termination or registration discontinuance of the eligibility of the Common Stock for such listing. (e) No appraisal or dissenters rights agreementare available to the holders of the Shares pursuant to Section 1571 of the PBCL.

Capitalization and Related Matters. (a) The Company has an authorized capital consisting of 230,000,000,000 shares of Common Stock and 25,000,000 shares in total of Series A-2 Convertible Preferred Stock, Series D Convertible Preferred Stock, Series C Preferred Stock and collectively with the Series E Preferred Stock, “Preferred Stock”, of which 13,489,918,237 shares of Common Stock and 3,000 shares of Preferred Stock are issued and outstanding as As of the date hereof (after giving effect to hereof, the transactions contemplated hereby) as set forth on Schedule 3.2(a) hereto. All of the outstanding shares of the Company’s capital stock are, and immediately after the Closing will be, validly issued and outstanding, fully paid and non-assessable. No such stock (i) was issued in violation of the preemptive rights of any shareholder or (ii) is held as treasury stock. All of the outstanding authorized capital stock of the Company was consists of 100,000,000 shares of Company Common Stock and 10,000,000 shares of Company Preferred Stock. As of the close of business on August 3, 2007: (i) 7,099,229 shares of Company Common Stock are issued and outstanding, and there are no shares of Company Preferred Stock issued or outstanding; (ii) 1,300,000 shares of Company Common Stock are reserved for issuance and issuable upon or otherwise deliverable under the Company's 2006 Incentive Award Plan, the IsoTis, S.A. Stock Option Plan 2003/0, the IsoTis, S.A. Stock Option Plan 2003/1, the IsoTis, S.A. Stock Option Plan 2003/2 (collectively, the "Company Stock Plans") in compliance connection with all applicable federal the exercise of outstanding Company Options. Section 3.6(a)(ii) of the Company Disclosure Letter sets forth, for each outstanding Company Option, whether or not vested, the (x) name of the holder of such Company Option, (y) the exercise price per share for such Company Option and state securities or “blue sky” laws (z) the expiration date of such Company Option; and (iii) 681,297 shares of Company Common Stock were reserved for issuance, and regulationswere issued, pursuant to the consummation of the Swiss Merger. A. has knowingly granted, and there is no and has been no policy or intentional practice by the Company or IsoTis, S.A. to grant, Company Stock Options or options to purchase equity interests of IsoTis, S.A., as applicable, prior to, or otherwise intentionally coordinate the grant of such options with, the release of material information regarding the Company or its Subsidiaries. Each Company Option was properly accounted for in all material respects in accordance with GAAP in the financial statements (bincluding the related notes) of the Company and its Subsidiaries and disclosed in the filings of the Company and its Subsidiaries with the SEC in accordance with the Exchange Act and other applicable securities laws. Except as set forth on Schedule 3.2(b) heretoabove in Section 3.6(a), there are no outstanding securities convertible into Common Stock or any other shares of capital stock of the Company nor are outstanding and the Company does not have outstanding any securities convertible into or exchangeable for any shares of capital stock, including Company Options, any rights to subscribe for or to purchasepurchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or known claims of any other character relating to the issuance of, any capital stock, or any stock or securities convertible into or exchangeable for any capital stock; and the Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire, or to register under the Securities Act, any shares of capital stock. Except as set forth above in Section 3.6(a), the Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter. (b) All of the outstanding shares of capital stock, or membership interests or other ownership interests of, each Subsidiary of the Company, as applicable, is validly issued, fully paid and nonassessable and is owned of record and beneficially by the Company, directly or indirectly. The Company has, as of the date hereof and shall have on the Closing Date, valid and marketable title to all of the shares of capital stock of, or membership interests or other ownership interests in, each Subsidiary of the Company, free and clear of any Liens other than Permitted Liens. Such outstanding shares of capital stock of, or membership interests or other ownership interests in, the Subsidiaries of the Company, as applicable, are the sole outstanding securities of such Subsidiaries; the Subsidiaries of the Company do not have outstanding any securities convertible into or exchangeable for any capital stock of, or membership interests or other ownership interests in, such Subsidiaries, any rights to subscribe for or to purchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any other character relating toto the issuance of, any capital stock of, or membership interests or other ownership interests in, such capital Subsidiaries, or any stock or securities convertible into such or exchangeable for any capital stock (collectivelyof, “Securities Rights”). Except as set forth on Schedule 3.2 hereto or membership interests or other ownership interests in, such Subsidiaries; and neither the Company (i) or any of its Subsidiaries is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire retire, or to register under the Securities Act, any of its capital stock; stock of, or (ii) has no liability for dividends membership interests or other distributions declared or accruedownership interests in, but unpaid, with respect to any capital stock. (c) Except as set forth on Schedule 3.2(c) hereto, the Company is not a party to any agreement, understanding or arrangement, direct or indirect, relating to any class or series Subsidiary of the Company’s capital stock, including, without limitation, any voting agreement, restriction on resale, shareholder agreement or registration rights agreement.

Capitalization and Related Matters. (a) The Company has an authorized capital consisting of 230,000,000,000 shares of Common Stock and 25,000,000 shares in total of Series A-2 Convertible Preferred Stock, Series D Convertible Preferred Stock, Series C Preferred Stock and collectively with the Series E Preferred Stock, “Preferred Stock”, of which 13,489,918,237 shares of Common Stock and 3,000 shares of Preferred Stock are issued and outstanding as As of the date hereof (after giving effect to hereof, the transactions contemplated hereby) as set forth on Schedule 3.2(a) hereto. All of the outstanding shares of the Company’s capital stock are, and immediately after the Closing will be, validly issued and outstanding, fully paid and non-assessable. No such stock (i) was issued in violation of the preemptive rights of any shareholder or (ii) is held as treasury stock. All of the outstanding authorized capital stock of the Company was consists of 100,000,000 shares of Company Common Stock and 10,000,000 shares of Company Preferred Stock. As of the close of business on August 3, 2007: (i) 7,099,229 shares of Company Common Stock are issued and outstanding, and there are no shares of Company Preferred Stock issued or outstanding; (ii) 1,300,000 shares of Company Common Stock are reserved for issuance and issuable upon or otherwise deliverable under the Company’s 2006 Incentive Award Plan, the IsoTis, S.A. Stock Option Plan 2003/0, the IsoTis, S.A. Stock Option Plan 2003/1, the IsoTis, S.A. Stock Option Plan 2003/2 (collectively, the “Company Stock Plans”) in connection with the exercise of outstanding Company Options. Section 3.6(a)(ii) of the Company Disclosure Letter sets forth, for each outstanding Company Option, whether or not vested, the (x) name of the holder of such Company Option, (y) the exercise price per share for such Company Option and (z) the expiration date of such Company Option; and (iii) 681,297 shares of Company Common Stock were reserved for issuance, and were issued, pursuant to the consummation of the Swiss Merger. The outstanding shares of Company Common Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable and (ii) were issued in compliance with all applicable federal federal, state and state foreign securities laws. All grants of Company Options were validly issued and properly approved by the Company’s Board of Directors or “blue sky” laws a duly authorized committee thereof (and regulations. all required approvals by the stockholders of the Company have been obtained) no later than the date on which the grant of such Company Stock Option was by its terms to be effective in accordance with all applicable law and all grants of options to purchase equity interests of IsoTis, S.A. which were subsequently converted into Company Options were validly issued and properly approved by IsoTis, S.A.’s Board of Directors or a duly authorized committee thereof (band all required approvals by the stockholders of IsoTis, S.A. have been obtained) no later than the date on which the grant of such option was by its terms to be effective in accordance with all applicable law and, neither the Company nor IsoTis, S.A. has knowingly granted, and there is no and has been no policy or intentional practice by the Company or IsoTis, S.A. to grant, Company Stock Options or options to purchase equity interests of IsoTis, S.A., as applicable, prior to, or otherwise intentionally coordinate the grant of such options with, the release of material information regarding the Company or its Subsidiaries. Each Company Option was properly accounted for in all material respects in accordance with GAAP in the financial statements (including the related notes) of the Company and its Subsidiaries and disclosed in the filings of the Company and its Subsidiaries with the SEC in accordance with the Exchange Act and other applicable securities laws. Except as set forth on Schedule 3.2(b) heretoabove in Section 3.6(a), there are no outstanding securities convertible into Common Stock or any other shares of capital stock of the Company nor are outstanding and the Company does not have outstanding any securities convertible into or exchangeable for any shares of capital stock, including Company Options, any rights to subscribe for or to purchasepurchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or known claims of any other character relating to the issuance of, any capital stock, or any stock or securities convertible into or exchangeable for any capital stock; and the Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire, or to register under the Securities Act, any shares of capital stock. Except as set forth above in Section 3.6(a), the Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter. (b) All of the outstanding shares of capital stock, or membership interests or other ownership interests of, each Subsidiary of the Company, as applicable, is validly issued, fully paid and nonassessable and is owned of record and beneficially by the Company, directly or indirectly. The Company has, as of the date hereof and shall have on the Closing Date, valid and marketable title to all of the shares of capital stock of, or membership interests or other ownership interests in, each Subsidiary of the Company, free and clear of any Liens other than Permitted Liens. Such outstanding shares of capital stock of, or membership interests or other ownership interests in, the Subsidiaries of the Company, as applicable, are the sole outstanding securities of such Subsidiaries; the Subsidiaries of the Company do not have outstanding any securities convertible into or exchangeable for any capital stock of, or membership interests or other ownership interests in, such Subsidiaries, any rights to subscribe for or to purchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any other character relating toto the issuance of, any capital stock of, or membership interests or other ownership interests in, such capital Subsidiaries, or any stock or securities convertible into such or exchangeable for any capital stock (collectivelyof, “Securities Rights”). Except as set forth on Schedule 3.2 hereto or membership interests or other ownership interests in, such Subsidiaries; and neither the Company (i) or any of its Subsidiaries is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire retire, or to register under the Securities Act, any of its capital stock; stock of, or (ii) has no liability for dividends membership interests or other distributions declared or accruedownership interests in, but unpaid, with respect to any capital stock. (c) Except as set forth on Schedule 3.2(c) hereto, the Company is not a party to any agreement, understanding or arrangement, direct or indirect, relating to any class or series Subsidiary of the Company’s capital stock, including, without limitation, any voting agreement, restriction on resale, shareholder agreement or registration rights agreement.

Capitalization and Related Matters. (a) The Company has an authorized capital consisting of 230,000,000,000 shares of Common Stock and 25,000,000 shares in total of Series A-2 Convertible Preferred Stock, Series D Convertible Preferred Stock, Series C Preferred Stock and collectively with the Series E Preferred Stock, “Preferred Stock”, of which 13,489,918,237 shares of Common Stock and 3,000 shares of Preferred Stock are issued and outstanding as of the date hereof (after giving effect to the transactions contemplated hereby) as set forth on Schedule 3.2(a) hereto. All of the outstanding shares of the Company’s capital stock are, and immediately after the Closing will be, validly issued and outstanding, fully paid and non-assessable. No such stock (i) was issued in violation of the preemptive rights of any shareholder or (ii) is held as treasury stock. All of the outstanding capital stock of the Company consists of 500,000,000 shares of Common Stock, 50,000,000 shares of Company Class B Common Stock, 210,000,000 shares of Company Class C Common Stock, and 100,000,000 shares of Company Preferred Stock. (i) As of February 13, 2013, 60,508,304 shares of Common Stock were issued and outstanding, and there were no shares of Company Class B Common Stock, Company Class C Common Stock, or Company Preferred Stock issued or outstanding, (ii) as of February 13, 2013, 179,794 shares of Common Stock were issuable upon or otherwise deliverable under the Company’s 2009 Stock Incentive Plan (the “Company Stock Plan”) in connection with the lapse of restrictions on Restricted Stock, (iii) as of February 13, 2013, 5,486,808 shares of Common Stock were issuable upon or otherwise deliverable under the Company Stock Plan in connection with the vesting of Restricted Stock Units, and (iv) there are no Company Equity Awards outstanding that have been granted under an arrangement, Employee Benefit Plan or Contract other than the Company Stock Plan. Section 3.6(a) of the Disclosure Letter sets forth as of the close of business on December 31, 2012 a list of each outstanding Company Equity Award granted under the Company Stock Plan and (A) the name of the holder of such Company Equity Award, (B) the number of shares of Common Stock subject to such outstanding Company Equity Award, (C) the date on which such Company Equity Award was granted or issued, (D) the applicable vesting schedule and the extent to which such Company Equity Award is vested as of such date and (E) if such Company Equity Award has performance-vesting criteria. As promptly as practicable following the date of this Agreement, the Company will provide or make available to Parent a list as of the close of business on February 13, 2013 setting forth the items specified by clauses (A)–(E) of the preceding sentence. (b) The outstanding shares of Common Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable, and (ii) were issued in compliance with all applicable federal and state securities or “blue sky” laws Laws. Except for the Common Stock issued and regulations. (b) Except outstanding as of February 13, 2013 as set forth on Schedule 3.2(bin Section 3.6(a) hereto, there are no outstanding securities convertible into (and any shares of Common Stock issued following such date and prior to the date hereof upon the settlement of Company Equity Awards), Company Equity Awards listed on Section 3.6(a) of the Disclosure Letter, or any other shares of Common Stock, no shares of capital stock of the Company are outstanding and neither the Company nor any Subsidiary thereof has outstanding (A) any securities convertible into or exchangeable for any shares of capital stock of the Company, (B) any rights to subscribe for or to purchase, purchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any other character relating toto the issuance of, such any capital stock of the Company or any stock or securities convertible into or exchangeable for any such capital stock, or (C) any stock (collectivelyappreciation rights, performance shares, contingent value rights, “Securities Rightsphantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock of the Company (the items in clauses (A), (B) and (C) immediately above, together with the capital stock of the Company, being referred to herein collectively as the “Company Securities”). Except as set forth on Schedule 3.2 hereto Neither the Company (i) nor any Subsidiary thereof is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire retire, or to register under the Securities Act, any of its capital stock; or (ii) Company Securities. Neither the Company nor any Subsidiary thereof has no liability for dividends outstanding any bonds, debentures, notes or other distributions declared obligations the holders of which have the right to vote (or accrued, but unpaid, are convertible into or exercisable for securities having the right to vote) with respect to any capital stock. (c) Except as set forth on Schedule 3.2(c) hereto, the stockholders of the Company is not a party to or any agreement, understanding or arrangement, direct or indirect, relating to such Subsidiary on any class or series of the Company’s capital stock, including, without limitation, any voting agreement, restriction on resale, shareholder agreement or registration rights agreementmatter.

Capitalization and Related Matters. (a) The Company has an authorized capital consisting stock of 230,000,000,000 the Company consists solely of 18,500,000 shares of Common Stock and 25,000,000 shares in total of Series A-2 Convertible Preferred Stock, Series D Convertible Preferred Stock, Series C Preferred Stock and collectively with the Series E Preferred Stock, “Preferred Stock”, of which 13,489,918,237 12,162,777 shares of Common Stock and 3,000 shares of Preferred Stock (including 1,326,504 Restricted Shares) are issued and outstanding as of the date hereof (after giving effect to each, a “Share” and, collectively, the transactions contemplated hereby) as set forth on Schedule 3.2(a) hereto“Shares”). All As of the outstanding shares date hereof, there are an aggregate of the Company’s capital stock are, and immediately after the Closing will be, validly issued and outstanding, fully paid and non-assessable. No such stock (i) was issued in violation 2,603,510 shares of the preemptive rights of any shareholder or Common Stock subject to outstanding Company Options and (ii) is held 242,563 shares of Common Stock subject to outstanding Company Warrants. (b) Schedule 2.3(b) lists each holder of the Shares, the number of Shares owned by each Stockholder as treasury stockof the date hereof, and whether any of such Shares are unvested or subject to a repurchase option, risk of forfeiture or other contractual right as of the date hereof. All Shares of capital stock in the Company are owned by the Stockholders, of record and beneficially, and the Shares constitute the only issued and outstanding capital stock of the Company was issued in compliance with all applicable federal and state securities or “blue sky” laws and regulations. (b) Company. Except as set forth in Schedule 2.3(b), to the knowledge of the Company, each Stockholder owns his, her or its Shares in the Company free and clear of any lien, claim, encumbrance, security interest, charge, pledge, equitable interest or other restriction or adverse claim of whatever nature, including any restrictions on Schedule 3.2(b) heretouse, there are no outstanding securities convertible into Common Stock transfer, receipt of income, voting or exercise of any other capital stock attribute of the Company nor any rights to subscribe for or to purchase, or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, such capital stock or securities convertible into such capital stock ownership (collectively, “Securities RightsLiens”). Except as set forth on Schedule 3.2 hereto 2.3(b), all of the Company (i) is not Shares were duly authorized and validly issued; are fully paid and non-assessable without restriction on the right of transfer thereof; and were not, when issued, subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any of its capital stock; or (ii) has no liability for dividends or other distributions declared or accrued, but unpaid, with respect to any capital stockunwaived preemptive rights. (c) Schedule 2.3(c)(i) lists each outstanding and unexercised Company Warrant, the holder thereof, the number of shares of the Company’s Common Stock available for exercise thereunder, the exercise price immediately prior to the Effective Time and, separately, at the Effective Time, reflecting any acceleration of vesting or adjustment to the exercise price of such Company Warrant as a result of the Merger, the date of grant and any vesting schedule. Schedule 2.3(c)(ii) lists each outstanding and unexercised Company Option as of the date hereof, the holder thereof, the number of shares of the Company’s Common Stock available for exercise thereunder, the exercise price and, separately, reflecting any acceleration of vesting or adjustment to the exercise price of such Company Option as a result of the Merger, the date of grant and any vesting schedule. Schedule 2.3(c)(iii) lists each exercised Company Option as of the date hereof pursuant to which the Shares issued upon the exercise of such Company Option are not fully vested or otherwise remain subject to a repurchase option, risk of forfeiture or other similar contractual right as of the date hereof, the holder thereof, the exercise price, the number of Shares acquired upon exercise thereof, the dates of grant and exercise, the stock purchase agreement entered into in connection therewith, and any vesting schedule, including any acceleration of vesting as a result of the Merger. Schedule 2.3(c)(iv) lists each stock purchase or other agreement (other than agreements entered into in connection with the exercise of unvested Company Options) as of the date hereof pursuant to which Restricted Shares outstanding as of the date hereof were acquired (other than Restricted Shares listed in Schedule 2.3(c)(iii)), the name of the Stockholder who is a party to the agreement, the number of shares of the Company’s Common Stock acquired thereunder, the date of the agreement, and any vesting schedule, including any acceleration of vesting as a result of the Merger. The stock purchase agreements listed in Schedule 2.3(c)(iii) and in Schedule 2.3(c)(iv) are, collectively, the “Restricted Share Purchase Agreements.” (d) Except as set forth on Schedule 3.2(c) heretofor the Company Options, the Company is not a party Warrants, and the Restricted Share Purchase Agreements, (i) there are no authorized or outstanding (A) securities of the Company other than the Shares, (B) warrants, preemptive rights, calls, options, stock purchase rights or other rights with respect to any agreementsecurities of the Company or any securities or right convertible into, understanding exchangeable for, or arrangementevidencing the right to subscribe for, direct or indirect, relating to any class or series shares of the Company’s capital stock, includingor (C) stock appreciation, without limitationphantom rights, profit participation or similar rights with respect to the Company, and (ii) neither the Company nor to the knowledge of the Company any of the Stockholders is subject to any obligation to issue, sell, deliver, redeem, or otherwise transfer, acquire, repurchase, or retire the Shares or any other securities of the Company. There are no stockholder agreements, buy-sell agreements, voting trusts or other agreements or understandings to which the Company or any Subsidiary of the Company is a party or by which it is, or to the knowledge of the Company, any voting agreementof the Shares are, restriction bound. (e) The Company Options and Company Warrants may, in accordance with their respective terms, be treated in the manner provided for in this Agreement. (f) All of the Shares, Company Options, Company Warrants and other securities of the Company have been issued in accordance with applicable federal and state securities laws. The transactions contemplated by this Agreement are not subject to any preemptive rights. (g) When paid in accordance with and subject to the terms of this Agreement, each of the amounts payable to the Stockholders under Section 1.5 and as set forth on resaleSchedule 1.5(b)(ii) has been calculated in accordance with and subject to all terms of the Certificate of Incorporation of the Company, shareholder agreement all applicable Laws and any other agreements to which the Company is a party, to which the Company is subject or registration rights agreementby which the Company is bound.

Capitalization and Related Matters. (a) The Company has an authorized capital consisting stock of 230,000,000,000 the Company consists of 16,000,000 shares of Company Common Stock and 25,000,000 1,000,000 shares in total of Series A-2 Convertible Preferred Stockpreferred stock, Series D Convertible Preferred Stockpar value $.10 per share, Series C Preferred Stock and collectively with of the Series E Preferred Stock, Company (the “Preferred Stock”). At the close of business on October 26, of which 13,489,918,237 2007: (i) 10,976,549 shares of Company Common Stock are issued and 3,000 outstanding, including no restricted shares of Company Common Stock, (ii) no shares of Preferred Stock are issued and outstanding, (iii) 89,205 shares of Company Common Stock are held by the Company as treasury shares, (iv) an aggregate of 1,974,994 shares of Company Common Stock are reserved and available for issuance pursuant to the Company’s 2004 Stock and Incentive Award Plan, 1983 Stock Option Plan and 1984 Stock Option Plan (the “Company Option Plans”), and of such shares, 1,278,819 shares of Company Common Stock are subject to issuance pursuant to outstanding Company Options and (v) an aggregate of 104,395 shares of Company Common Stock are reserved and available for issuance pursuant to the Company’s 1985 Employee Stock Purchase Plan (together with the Company Option Plans, the “Company Plans”). Other than the Company Plans and as set forth in Section 3.06(a) of the Company Disclosure Schedule, there is no plan or other Contract providing for the grant of options, securities or other rights exercisable or exchangeable for or into shares of Company Common Stock by the Company or any of its Subsidiaries. No shares of Company Common Stock are owned by any Subsidiary of the Company. Section 3.06(a) of the Company Disclosure Schedule sets forth a true and complete list as of the date hereof hereof, of all outstanding Company Options, the number of shares of Company Common Stock (after giving effect or other capital stock) subject thereto, the grant dates, expiration dates, exercise prices and vesting schedules thereof, the names of the holders thereof and whether or not each holder is a current employee of the Company or any of its Subsidiaries and whether or not such Company Option is intended to qualify as an “incentive stock option” under Section 422 of the transactions contemplated herebyCode. (b) On the date hereof, except for the Company Options and as set forth on Schedule 3.2(ain Section 3.06(a) hereto. All of the Company Disclosure Schedule, no shares of capital stock of, or other equity or voting interests in, the Company, or any securities convertible into, or exchangeable for, any such stock, interests or securities, or any options, warrants, shares of deferred stock, restricted stock awards, restricted stock units, stock appreciation or depreciation rights, performance stock awards and performance stock units, dividend equivalent rights, “phantom” stock awards or other agreements (to which the Company or any of its Subsidiaries is a party) or calls or rights to acquire or receive any such stock, interests or securities, or other rights that are linked in any way to the value of the Company Common Stock or the value of the Company or any part thereof, were issued, reserved for issuance or outstanding. (c) All outstanding shares of the Company’s capital stock of the Company are, and immediately after all shares which are issuable pursuant to the Closing will Company Plans shall be, when issued in accordance with the terms thereof, duly authorized, validly issued and outstandingissued, fully paid and non-assessable. No such stock (i) was assessable and not subject to or issued in violation of the any purchase option, call or put option, right of first offer or refusal, preemptive rights of right, subscription right or any shareholder or (ii) is held as treasury stock. All similar right under any provision of the outstanding capital stock of DGCL, the Company was issued in compliance with all applicable federal and state securities or “blue sky” laws and regulations. (b) Except as set forth on Schedule 3.2(b) hereto, there are no outstanding securities convertible into Common Stock Organizational Documents or any other capital stock of Contract to which the Company nor any rights to subscribe for is a party or to purchase, or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, such capital stock or securities convertible into such capital stock (collectively, “Securities Rights”)otherwise bound. Except as set forth on Schedule 3.2 hereto the Company in Section 3.06(a), there are no (i) is not subject to any obligation (contingent bonds, debentures, notes or otherwise) to repurchase other evidences of indebtedness of the Company or otherwise acquire or retire any of its capital stock; or Subsidiaries and (ii) has no liability for dividends securities or other distributions declared instruments or accruedobligations of the Company or any of its Subsidiaries, but unpaidin each case, with respect to the value of which is based upon or derived from any capital stock. (c) Except as set forth on Schedule 3.2(c) heretostock of, or other equity or voting interest in, the Company or which has or which by its terms may have at any time (whether actual or contingent) the right to vote (or which is not convertible into, or exchangeable or exercisable for, securities having the right to vote) on any matters on which holders of Company Common Stock may vote whether generally in the election of Company directors or in respect of any other matter for which holders of Company Common Stock are entitled to vote as a party matter of Law or pursuant to any agreementthe Company Organizational Documents. With respect to the Company Options, understanding or arrangement, direct or indirect, relating (A) each Company Option intended to any class or series qualify as an “incentive stock option” under Section 422 of the Company’s capital stockCode so qualifies, (B) each grant of a Company Option was duly authorized no later than the date on which the grant of such Company Option was by its terms to be effective by all necessary corporate action, including, without limitationas applicable, approval by the Company Board (or a duly constituted and authorized committee thereof) and any voting agreementrequired stockholder approval by the necessary number of votes or written consents, restriction and the award agreement governing such grant (if any) was duly executed and delivered by each party thereto, (C) each such grant was made in accordance with the terms of the Company Plans, the Exchange Act and all other applicable Laws and regulatory rules or requirements, including the rules of NASDAQ, (D) the per share exercise price of each Company Option was not less than the fair market value of a share of Company Common Stock on resale, shareholder agreement or registration rights agreementthe applicable date of grant of such Company Option and (E) each such grant was properly accounted for in accordance with U.S. GAAP in the financial statements (including the related notes) of the Company and disclosed in the Company SEC Reports in accordance with the Exchange Act and all other applicable Laws. The provisions of the Company Option Plans and the grant agreements governing the Company Options permit the Company Options to be treated in accordance with Section 1.09.

Capitalization and Related Matters. (a) The Company has an As of the date hereof, the authorized capital consisting stock of 230,000,000,000 the Company consists of 110,000,000 Company Common Shares and 45,000,000 shares of Common Stock and 25,000,000 shares in total of Series A-2 Convertible Preferred Stock. As of April 7, Series D Convertible Preferred Stock, Series C Preferred Stock 2011: (i) 61,064,896 Company Common Shares and collectively with the Series E Preferred Stock, “Preferred Stock”, of which 13,489,918,237 18,000,000 shares of Common Stock and 3,000 shares of Convertible Preferred Stock are issued and outstanding; (ii) 8,539,957 Company Common Shares (the “Company Share Reserve”) are reserved for issuance and issuable upon or otherwise deliverable under the 2003 Global Crossing Limited Stock Incentive Plan. The Global Crossing Share Reserve represents 870,096 Company Common Shares issuable upon the exercise of outstanding as Company Options, 7,045,853 Company Common Shares issuable upon the settlement of outstanding Company RSUs assuming maximum payout and 624,008 Company Common Shares remaining available for issuance or delivery under the date hereof 2003 Global Crossing Limited Stock Incentive Plan after the exercise of all such Company Options and settlement of all such Company RSUs assuming maximum payout. Schedule 3.6(a)(ii) sets forth the exercise prices for the Company Options and the vesting schedule for each outstanding Company Option and Company RSU; and (after giving effect to the transactions contemplated herebyiii) as set forth on Schedule 3.2(a) hereto. All of the outstanding shares 18,000,000 Company Common Shares are reserved for issuance and issuable upon conversion of the Company’s capital stock are2% Cumulative Preferred Shares, par value $0.10 per share, (the “Convertible Preferred Stock”). (b) The issued and immediately after the Closing will be, outstanding Company Common Shares and shares of Convertible Preferred Stock (i) have been duly authorized and validly issued and outstanding, are fully paid and non-assessable. No such stock (i) was issued in violation of the preemptive rights of any shareholder or nonassessable and (ii) is held as treasury stock. All of the outstanding capital stock of the Company was were issued in compliance with all applicable U.S. federal and state securities or “blue sky” laws and regulations. any non-U.S. securities laws. With respect to the Company Options, (bi) the per share exercise price of each Company Option was not less than the fair market value of a Company Common Share on the applicable date of grant, as determined in accordance with the terms of the applicable Company Benefit Plan and, to the extent applicable, sections 409A and 422 of the Code, (ii) each such grant was properly accounted for in all material respects in accordance with GAAP in the financial statements and no change is expected in respect of any prior financial statement relating to expenses for stock compensation and (iii) to the Knowledge of the Company, there is no pending audit, investigation or inquiry by any governmental agency or by the Company with respect to the Company’s stock option granting practices or other equity compensation practices. Except as set forth on Schedule 3.2(b) heretoabove in Section 3.6(a), there are no outstanding securities convertible into Common Stock or any other shares of capital stock of the Company nor are issued and outstanding and the Company does not have outstanding any securities convertible into or exchangeable for any shares of capital stock, including Company Options, any rights to subscribe for or to purchasepurchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or known claims of any other character relating to the issuance of, any capital stock, or any stock or securities convertible into or exchangeable for any capital stock; and, except as set forth on Schedule 3.6(b), the Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire, or to register under the Securities Act, any shares of capital stock. Except as set forth above in Section 3.6(a), the Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the shareholders of the Company on any matter. Except as set forth above in Section 3.6(a), there are no outstanding stock options, restricted stock units, restricted stock, stock appreciation rights, “phantom” stock rights, performance units, or other compensatory rights or awards (in each case, issued by the Company or any of its Subsidiaries), that are convertible into or exercisable for a Company Common Share on a deferred basis or otherwise or other rights that are linked to, or based upon, the value of Company Common Shares. All Company Options and Company RSUs are evidenced by award agreements in the forms previously made available to Parent. (c) The Company has no rights plan, “poison-pill” or other similar agreement or arrangement or any anti-takeover provision in the Company Organizational Documents that is, or at the Effective Time shall be, applicable to the Company, the Company Common Shares, the Convertible Preferred Stock, the Amalgamation or the other transactions contemplated by this Agreement and the Amalgamation Agreement. (d) All of the outstanding shares of capital stock, or membership interests or other ownership interests of, each Subsidiary of the Company, as applicable, are validly issued, fully paid and nonassessable and, except as set forth on Schedule 3.6(d), are owned of record and beneficially by the Company, directly or indirectly. The Company has, as of the date hereof and shall have on the Closing Date, valid and marketable title to all of the shares of capital stock of, or membership interests or other ownership interests in, each Subsidiary of the Company, free and clear of any Liens other than Permitted Liens. Such outstanding shares of capital stock of, or membership interests or other ownership interests in, the Subsidiaries of the Company, as applicable, are the sole outstanding securities of such Subsidiaries; the Subsidiaries of the Company do not have outstanding any securities convertible into or exchangeable for any capital stock of, or membership interests or other ownership interests in, such Subsidiaries, any rights to subscribe for or to purchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any other character relating toto the issuance of, any capital stock of, or membership interests or other ownership interests in, such capital Subsidiaries, or any stock or securities convertible into such or exchangeable for any capital stock (collectivelyof, “Securities Rights”). Except as set forth on Schedule 3.2 hereto or membership interests or other ownership interests in, such Subsidiaries; and neither the Company (i) or any of its Subsidiaries is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire retire, or to register under the Securities Act, any of its capital stock; stock of, or (ii) has no liability for dividends membership interests or other distributions declared or accruedownership interests in, but unpaid, with respect to any capital stock. (c) Except as set forth on Schedule 3.2(c) hereto, the Company is not a party to any agreement, understanding or arrangement, direct or indirect, relating to any class or series Subsidiary of the Company’s capital stock, including, without limitation, any voting agreement, restriction on resale, shareholder agreement or registration rights agreement.