Common use of Capitalization of the Company and its Subsidiaries Clause in Contracts

Capitalization of the Company and its Subsidiaries. (a) The authorized capital stock of the Company consists of: (i) 30,000,000 shares of Company Common Stock and (ii) 10,000,000 shares of Preferred Stock, par value $.01 per share, of which 2,500,000 shares are designated Series A Preferred Stock, par value $.01 per share ("Series A Preferred Stock"), and 850,000 shares are designated Series B Preferred Stock, par value $.01 per share ("Series B Preferred Stock"). As of the date hereof, there are issued and outstanding 3,647,822 shares of Company Common Stock, 2,468,194 shares of Series A Preferred Stock and 710,282 shares of Series B Preferred Stock, and there are no shares held in the Company's treasury. A true and complete list of record holders of the issued and outstanding Company Common Stock, Series A Preferred Stock and Series B Preferred Stock as of the date hereof is set forth in Section 3.2 of the Company Disclosure Schedule. As of and immediately prior to the Effective Time, all outstanding shares of Series A Preferred Stock will be converted, in accordance with their terms, into shares of Company Common Stock, and all outstanding shares of Series B Preferred Stock will be converted, in accordance with their terms, into shares of Company Common Stock. All of the issued and outstanding Shares have been validly issued, and are duly authorized, fully paid, non-assessable and free of preemptive rights. As of the date hereof, 2,364,858 shares are reserved for issuance and issuable upon or otherwise deliverable in connection with the exercise of outstanding Company Stock Options issued pursuant to the Company Option Plans. Since December 31, 1998, no shares of the Company's capital stock have been issued other than pursuant to Company Stock Options already in existence on such date. Except as set forth above, as of the date hereof, there are no outstanding (i) shares of capital stock or other voting securities of the Company; (ii) securities of the Company or any of its subsidiaries convertible into or exchangeable for shares of capital stock or voting securities of the Company; (iii) options or other rights to acquire from the Company or any of its subsidiaries, and no obligations of the Company or any of its subsidiaries to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the 7 15 Company; and (iv) equity equivalents, interests in the ownership or earnings of the Company or other similar rights (including, stock appreciation rights) (collectively, "Company Securities"). There are no outstanding obligations of the Company or any of its subsidiaries to repurchase, redeem or otherwise acquire any Company Securities. There are no stockholder agreements, voting trusts or other agreements to which the Company or any of its subsidiaries is a party or to which it is bound relating to the voting of any shares of capital stock of the Company (other than the Voting Agreement). Section 3.2 of the Company Disclosure Schedule sets forth true and complete information regarding the current exercise price, the date of grant and the number of Company Stock Options granted for each holder of Company Stock Options. Following the Effective Time and conversion of the Company Stock Options into options to acquire shares of Parent Common Stock in accordance with Section 2.2, in accordance with the Company Option Plans, no holder of Company Stock Options will have any right to receive shares of common stock of the Surviving Corporation upon exercise of the Company Stock Options. (b) All of the outstanding capital stock of the Company's subsidiaries is owned by the Company, directly or indirectly, free and clear of any Lien or any other limitation or restriction (including, any restriction on the right to vote or sell the same, except as may be provided as a matter of Law). There are no securities of the Company or its subsidiaries convertible into or exchangeable for, no options or other rights to acquire from the Company or its subsidiaries, and no other contract, or obligation (whether or not contingent) providing for the issuance or sale, directly or indirectly of, any capital stock or other ownership interests in, or any other securities of, any subsidiary of the Company. There are no outstanding contractual obligations of the Company or its subsidiaries to repurchase, redeem, or otherwise acquire any outstanding shares of capital stock or other ownership interests in any subsidiary of the Company.

Capitalization of the Company and its Subsidiaries. (a) The authorized capital stock of the Company consists of: (i) 30,000,000 of 1,500,000,000 shares of Company Common Stock and (ii) 10,000,000 50,000,000 shares of Preferred Stockpreferred stock, par value $.01 per share0.001, of which 2,500,000 shares are designated Series A Preferred Stock, par value $.01 per share the Company (the "Series A Preferred Stock"), and 850,000 shares are designated Series B Preferred Stock, par value $.01 per share ("Series B Preferred Stock"). As of the date hereof, there are issued and outstanding 3,647,822 shares of Company Common Stock, 2,468,194 (a) 7,000,000 shares of Series A Preferred Stock and 710,282 are issued or outstanding, 250,000 shares of Series B C Preferred Stock are issued and outstanding and have no voting rights, and 2,285,714 shares of Series D Preferred Stock are issued and outstanding, (b) [14,819,691] shares of Common Stock are issued and outstanding, (c) [__________] shares of Common Stock are reserved for or subject to issuance. Schedule 3.6 sets forth a true and correct list of all outstanding rights, options or warrants to purchase shares of any class or series of stock of the Company (collectively, the "Company Options") and a true and correct list of each of the Company's stock option, incentive, purchase or other plans pursuant to which options or warrants to purchase stock of the Company may be issued (collectively, the "Existing Plans"). Except for (i) shares of Common Stock issuable pursuant to the exercise of outstanding Company Options, and (ii) shares of Common Stock issuable upon conversion of the Series A Preferred Stock, and the Series C Preferred Stock, or the Series D Preferred Stock, there are no shares held in the Company's treasury. A true and complete list of record holders of the issued and outstanding Company Common Stock, Series A Preferred Stock and Series B Preferred Stock as of the date hereof is set forth in Section 3.2 or any other equity security of the Company Disclosure Scheduleissuable upon conversion or exchange of any security of the Company or any of its Subsidiaries nor any rights, options or warrants outstanding or other agreements to acquire shares of stock of the Company or any of its Subsidiaries. As Neither the Company nor any of and immediately prior its Subsidiaries is contractually obligated to the Effective Timeissue any shares of stock or to purchase, all redeem or otherwise acquire any of its outstanding shares of Series A Preferred Stock will be converted, in accordance with their terms, into shares of Company Common Stock, and all outstanding stock other than shares of Series B D Preferred Stock will be convertedpursuant to its terms. Neither the Company nor any of its Subsidiaries has created any "phantom stock," stock appreciation rights or other similar rights the value of which is related to or based upon the price or value of the Common Stock. Neither the Company nor any of its Subsidiaries has outstanding debt or debt instruments providing for voting rights with respect to the Company or such Subsidiary to the holders thereof. Other than pursuant to the Investor Rights Agreement, in accordance with their terms, into no stockholder of the Company or any of its Subsidiaries or other Person is entitled to any preemptive or similar rights to subscribe for shares of stock of the Company Common Stockor any of its Subsidiaries. All of the issued and outstanding Shares have been validly issued, shares of Common Stock and Preferred Stock are duly authorized, validly issued, fully paid, non-assessable and free of preemptive rightsnonassessable. As of the date hereof, 2,364,858 shares are reserved for issuance and issuable upon or otherwise deliverable in connection with the exercise of outstanding Company Stock Options issued Other than pursuant to the Employment Agreement between the Company Option Plans. Since December 31and ▇▇▇▇▇ ▇▇▇▇▇▇▇, 1998, no shares neither the Company nor any of its Subsidiaries has granted to any Person the Company's capital stock have been issued other than pursuant right to Company Stock Options already in existence on such date. Except as set forth above, as of the date hereof, there are no outstanding (i) shares of capital stock demand or other voting securities of the Company; (ii) securities of request that the Company or such Subsidiary effect a registration under the Securities Act of any of its subsidiaries convertible into securities held by such Person or exchangeable for shares of capital stock or voting to include any securities of the Company; (iii) options or other rights to acquire from such Person in any such registration by the Company or any of its subsidiariessuch Subsidiary. Immediately following the Closing and the Contemplated Transactions, and no obligations of the Company or any of its subsidiaries to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the 7 15 Company; and (iv) equity equivalents, interests in the ownership or earnings of the Company or other similar rights (including, stock appreciation rights) (collectively, "Company Securities"). There are no outstanding obligations of the Company or any of its subsidiaries to repurchase, redeem or otherwise acquire any Company Securities. There are no stockholder agreements, voting trusts or other agreements to which the Company or any of its subsidiaries is a party or to which it is bound relating to the voting of any shares of capital stock of the Company (other than the Voting Agreement). Section 3.2 of the Company Disclosure Schedule sets forth true and complete information regarding the current exercise price, the date of grant and the number of Company Common Stock Options granted for each holder of Company Stock Options. Following the Effective Time and issuable upon conversion of the Company Series E Preferred Stock Options into options that will be issued to acquire shares of Parent Common Stock in accordance with Section 2.2the Purchaser under this Agreement will represent, in accordance with the Company Option Plansaggregate, no holder of Company Stock Options will have any right to receive shares of common stock of the Surviving Corporation upon exercise of the Company Stock Options. (b) All less than [___]% of the outstanding capital stock of the Company's subsidiaries is owned Company on a Fully Diluted Basis, and the voting power of such issued shares of Series E Preferred Stock will represent, in the aggregate, no less than [___]% of the total number of votes able to be cast on any matter by the Company, directly or indirectly, free and clear of any Lien or any other limitation or restriction (including, any restriction on the right to vote or sell the same, except as may be provided as a matter of Law). There are no securities Voting Securities of the Company or its subsidiaries convertible into or exchangeable for, no options or other rights to acquire from the Company or its subsidiaries, and no other contract, or obligation (whether or not contingent) providing for the issuance or sale, directly or indirectly of, any capital stock or other ownership interests in, or any other securities of, any subsidiary of the Company. There are no outstanding contractual obligations of the Company or its subsidiaries to repurchase, redeem, or otherwise acquire any outstanding shares of capital stock or other ownership interests in any subsidiary of the Companyon a Fully Diluted Basis.

Capitalization of the Company and its Subsidiaries. (a) The authorized capital stock of the Company consists of: (i) 30,000,000 of 1,500,000,000 shares of Company Common Stock and (ii) 10,000,000 50,000,000 shares of Preferred Stockpreferred stock, par value $.01 per share0.001, of which 2,500,000 shares are designated Series A the Company (the “Preferred Stock, par value $.01 per share ("Series A Preferred Stock"), and 850,000 shares are designated Series B Preferred Stock, par value $.01 per share ("Series B Preferred Stock"”). As of the date hereof, there are issued and outstanding 3,647,822 shares of Company Common Stock, 2,468,194 (a) 7,000,000 shares of Series A Preferred Stock are issued and 710,282 outstanding, 7,254,997 shares of Series B E Preferred Stock are issued and outstanding and have no voting rights, (b) 24,027,924 shares of Common Stock are issued and outstanding, (c) 12,468,025 shares of Common Stock are reserved for or subject to issuance. Schedule 3.6 sets forth a true and correct list of all outstanding rights, options or warrants to purchase shares of any class or series of stock of the Company (collectively, the “Company Options”) and a true and correct list of each of the Company’s stock option, incentive, purchase or other plans pursuant to which options or warrants to purchase stock of the Company may be issued (collectively, the “Existing Plans”). Except as set out on Schedule 3.6 and for (i) shares of Common Stock issuable pursuant to the exercise of outstanding Company Options, (ii) shares of Common Stock issuable upon conversion of the Series A Preferred Stock, and or the Series E Preferred Stock, (iii) securities issuable upon conversion of the Convertible Promissory Note, dated May 10, 2012, (the “▇▇▇▇▇▇▇ Note”), there are no shares held in the Company's treasury. A true and complete list of record holders of the issued and outstanding Company Common Stock, Series A Preferred Stock and Series B Preferred Stock as of the date hereof is set forth in Section 3.2 or any other equity security of the Company Disclosure Scheduleissuable upon conversion or exchange of any security of the Company or any of its Subsidiaries nor any rights, options or warrants outstanding or other agreements to acquire shares of stock of the Company or any of its Subsidiaries. As Neither the Company nor any of and immediately prior its Subsidiaries is contractually obligated to the Effective Timeissue any shares of stock or to purchase, all redeem or otherwise acquire any of its outstanding shares of Series A Preferred Stock will be convertedstock. Neither the Company nor any of its Subsidiaries has created any “phantom stock,” stock appreciation rights or other similar rights the value of which is related to or based upon the price or value of the Common Stock. Neither the Company nor any of its Subsidiaries has outstanding debt or debt instruments providing for voting rights with respect to the Company or such Subsidiary to the holders thereof. Other than pursuant to the Investor Rights Agreement, in accordance with their terms, into no stockholder of the Company or any of its Subsidiaries or other Person is entitled to any preemptive or similar rights to subscribe for shares of stock of the Company Common Stock, and all outstanding shares or any of Series B Preferred Stock will be converted, in accordance with their terms, into shares of Company Common Stockits Subsidiaries. All of the issued and outstanding Shares have been validly issued, shares of Common Stock and Preferred Stock are duly authorized, validly issued, fully paid, non-assessable and free of preemptive rightsnonassessable. As of the date hereof, 2,364,858 shares are reserved for issuance and issuable upon or otherwise deliverable in connection with the exercise of outstanding Company Stock Options issued Other than pursuant to the Employment Agreements between the Company Option Plans. Since December 31and ▇▇▇▇▇▇▇ and Song, 1998respectively, no shares neither the Company nor any of its Subsidiaries has granted to any Person the Company's capital stock have been issued other than pursuant right to Company Stock Options already in existence on such date. Except as set forth above, as of the date hereof, there are no outstanding (i) shares of capital stock demand or other voting securities of the Company; (ii) securities of request that the Company or such Subsidiary effect a registration under the Securities Act of any of its subsidiaries convertible into securities held by such Person or exchangeable for shares of capital stock or voting to include any securities of the Company; (iii) options or other rights to acquire from such Person in any such registration by the Company or any of its subsidiaries, and no obligations of the Company or any of its subsidiaries to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the 7 15 Company; and (iv) equity equivalents, interests in the ownership or earnings of the Company or other similar rights (including, stock appreciation rights) (collectively, "Company Securities"). There are no outstanding obligations of the Company or any of its subsidiaries to repurchase, redeem or otherwise acquire any Company Securities. There are no stockholder agreements, voting trusts or other agreements to which the Company or any of its subsidiaries is a party or to which it is bound relating to the voting of any shares of capital stock of the Company (other than the Voting Agreement). Section 3.2 of the Company Disclosure Schedule sets forth true and complete information regarding the current exercise price, the date of grant and the number of Company Stock Options granted for each holder of Company Stock Options. Following the Effective Time and conversion of the Company Stock Options into options to acquire shares of Parent Common Stock in accordance with Section 2.2, in accordance with the Company Option Plans, no holder of Company Stock Options will have any right to receive shares of common stock of the Surviving Corporation upon exercise of the Company Stock Optionssuch Subsidiary. (b) All of the outstanding capital stock of the Company's subsidiaries is owned by the Company, directly or indirectly, free and clear of any Lien or any other limitation or restriction (including, any restriction on the right to vote or sell the same, except as may be provided as a matter of Law). There are no securities of the Company or its subsidiaries convertible into or exchangeable for, no options or other rights to acquire from the Company or its subsidiaries, and no other contract, or obligation (whether or not contingent) providing for the issuance or sale, directly or indirectly of, any capital stock or other ownership interests in, or any other securities of, any subsidiary of the Company. There are no outstanding contractual obligations of the Company or its subsidiaries to repurchase, redeem, or otherwise acquire any outstanding shares of capital stock or other ownership interests in any subsidiary of the Company.

Capitalization of the Company and its Subsidiaries. (a) The authorized capital stock of the Company consists of: (i) 30,000,000 of 1,500,000,000 shares of Company Common Stock and (ii) 10,000,000 50,000,000 shares of Preferred Stockpreferred stock, par value $.01 per share0.001, of which 2,500,000 shares are designated Series A the Company (the “Preferred Stock, par value $.01 per share ("Series A Preferred Stock"), and 850,000 shares are designated Series B Preferred Stock, par value $.01 per share ("Series B Preferred Stock"”). As of the date hereof, there (a) 7,000,000 shares of Series A Preferred Stock are issued or outstanding, and 250,000 shares of Series C Preferred Stock are issued or outstanding and have no voting rights, (b) 15,283,597 shares of Common Stock are issued and outstanding 3,647,822 outstanding, (c) 4,534,897 shares of Common Stock are reserved for or subject to issuance. Schedule 3.6 sets forth a true and correct list of all outstanding rights, options or warrants to purchase shares of any class or series of stock of the Company (collectively, the “Company Options”) and a true and correct list of each of the Company’s stock option, incentive, purchase or other plans pursuant to which options or warrants to purchase stock of the Company may be issued (collectively, the “Existing Plans”). Except for (i) shares of Common Stock issuable pursuant to the exercise of outstanding Company Options, and (ii) for shares of Common Stock issuable upon conversion of the Series A Preferred Stock or the Series C Preferred Stock, there are no shares of Common Stock or any other equity security of the Company issuable upon conversion or exchange of any security of the Company or any of its Subsidiaries nor any rights, options or warrants outstanding or other agreements to acquire shares of stock of the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is contractually obligated to issue any shares of stock or to purchase, redeem or otherwise acquire any of its outstanding shares of stock. Neither the Company nor any of its Subsidiaries has created any “phantom stock,” stock appreciation rights or other similar rights the value of which is related to or based upon the price or value of the Common Stock. Neither the Company nor any of its Subsidiaries has outstanding debt or debt instruments providing for voting rights with respect to the Company or such Subsidiary to the holders thereof. No stockholder of the Company or any of its Subsidiaries or other Person is entitled to any preemptive or similar rights to subscribe for shares of stock of the Company or any of its Subsidiaries. All of the issued and outstanding shares of Common Stock and Preferred Stock are duly authorized, 2,468,194 validly issued, fully paid, and nonassessable. Other than pursuant to Article 8, neither the Company nor any of its Subsidiaries has granted to any Person the right to demand or request that the Company or such Subsidiary effect a registration under the Securities Act of any securities held by such Person or to include any securities of such Person in any such registration by the Company or such Subsidiary. Immediately following the Closing, the shares of Common Stock issuable upon conversion of the Series D Preferred Stock that will be issued to the Purchaser under this Agreement will represent, in the aggregate, no less than 10% of the outstanding capital stock of the Company on a Fully Diluted Basis, and the voting power of such issued shares of Series D Preferred Stock will represent, in the aggregate, no less than 7% of the total number of votes able to be cast on any matter by Voting Securities of the Company on a Fully Diluted Basis. Upon completion of the sale and issuance of the Series E Preferred Stock, and the exchange of all of the shares of Series D Preferred Stock for additional shares of Series E Preferred Stock, and the exchange by the Purchaser with ▇▇▇▇▇ ▇▇▇▇▇▇▇ of 933,333 shares of Series E Preferred Stock for all of his shares of Series A Preferred Stock, then the shares of Common Stock issuable upon conversion of the Series A Preferred Stock and Series E Preferred Stock that will be held by the Purchaser will represent, in the aggregate, no less than 40% of the outstanding capital stock of the Company on a Fully Diluted Basis (assuming no changes to the outstanding capital stock of the Company as of the date hereof other as described in the Series E Purchase Agreement), and the voting power of such shares of Series A Preferred Stock and 710,282 shares of Series B E Preferred StockStock will represent, and there are no shares held in the Company's treasury. A true and complete list of record holders aggregate, no less than 50% of the issued and outstanding Company Common Stock, Series A Preferred Stock and Series B Preferred Stock as total number of the date hereof is set forth in Section 3.2 votes able to be cast on any matter by Voting Securities of the Company Disclosure Schedule. As of and immediately prior on a Fully Diluted Basis (assuming no changes to the Effective Time, all outstanding shares of Series A Preferred Stock will be converted, in accordance with their terms, into shares of Company Common Stock, and all outstanding shares of Series B Preferred Stock will be converted, in accordance with their terms, into shares of Company Common Stock. All of the issued and outstanding Shares have been validly issued, and are duly authorized, fully paid, non-assessable and free of preemptive rights. As of the date hereof, 2,364,858 shares are reserved for issuance and issuable upon or otherwise deliverable in connection with the exercise of outstanding Company Stock Options issued pursuant to the Company Option Plans. Since December 31, 1998, no shares of the Company's capital stock have been issued other than pursuant to Company Stock Options already in existence on such date. Except as set forth above, as of the date hereof, there are no outstanding (i) shares of capital stock or other voting securities of the Company; (ii) securities of the Company or any of its subsidiaries convertible into or exchangeable for shares of capital stock or voting securities of the Company; (iii) options or other rights to acquire from the Company or any of its subsidiaries, and no obligations of the Company or any of its subsidiaries to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the 7 15 Company; and (iv) equity equivalents, interests in the ownership or earnings of the Company or other similar rights (including, stock appreciation rights) (collectively, "Company Securities"). There are no outstanding obligations of the Company or any of its subsidiaries to repurchase, redeem or otherwise acquire any Company Securities. There are no stockholder agreements, voting trusts or other agreements to which the Company or any of its subsidiaries is a party or to which it is bound relating to the voting of any shares of capital stock of the Company (other than the Voting Agreement). Section 3.2 of the Company Disclosure Schedule sets forth true and complete information regarding the current exercise price, the date of grant and the number of Company Stock Options granted for each holder of Company Stock Options. Following the Effective Time and conversion of the Company Stock Options into options to acquire shares of Parent Common Stock in accordance with Section 2.2, in accordance with the Company Option Plans, no holder of Company Stock Options will have any right to receive shares of common stock of the Surviving Corporation upon exercise of the Company Stock Options. (b) All of the outstanding capital stock of the Company's subsidiaries is owned by the Company, directly or indirectly, free and clear of any Lien or any other limitation or restriction (including, any restriction on the right to vote or sell the same, except Company as may be provided as a matter of Law). There are no securities of the Company or its subsidiaries convertible into or exchangeable for, no options or date hereof other rights to acquire from as described in the Company or its subsidiaries, and no other contract, or obligation (whether or not contingent) providing for the issuance or sale, directly or indirectly of, any capital stock or other ownership interests in, or any other securities of, any subsidiary of the Company. There are no outstanding contractual obligations of the Company or its subsidiaries to repurchase, redeem, or otherwise acquire any outstanding shares of capital stock or other ownership interests in any subsidiary of the CompanySeries E Purchase Agreement).