Common use of Capitalization Clause in Contracts

Capitalization. Before giving effect to the transactions to be effected at the Closing, the authorized capital stock of the Company consists of (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the The authorized capital stock of the Company TRACER consists of (i) 50,000,000 400,000 shares of Common Stockpreferred stock, $.001 par value, of which 16,036,625 no shares are issued and outstanding; 500,000 shares of class A common stock, $.001 par value, of which 10,000 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 100,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation)class B common stock, $.001 par value, of which none no shares are issued and outstanding. All Prior to the Closing TRACER will have no equity securities issued or outstanding except those disclosed on Exhibit II attached hereto, which contains a list of such outstanding shares all holders of capital stock of TRACER and their respective shareholdings. Except as disclosed on Exhibit II, there are no outstanding warrants, options, agreements, convertible securities or other commitments pursuant to which the Corporation is or may become obligated to issue any shares of its capital stock or other securities of the Corporation, except as contemplated by this Agreement. There are, or and immediately upon issuance consummation at the Closing of the transactions contemplated hereby there will be, duly authorized, validly issued, fully paid and nonassessable. No no preemptive or similar rights to purchase or otherwise acquire shares of capital stock of TRACER pursuant to any provision of law, the Company are subject to preemptive rights Certificate of Incorporation or Bylaws of TRACER, or any other similar rights agreement to which TRACER is a party, or otherwise, except as contemplated by this Agreement and in that certain Amended and Restated Stockholders' Agreement dated as of July 13, 1995 by and among TRACER and the shareholders of Stockholders party thereto (the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c"Stockholders' Agreement"), a copy of which is attached as Exhibit III. All shares of common stock and other securities issued by TRACER prior to the effective date Closing have been issued in transactions exempt from registration under the Securities Act of this Agreement1933, as amendment (ithe "Securities Act") there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights and in compliance with applicable state securities laws ("Blue Sky Laws"). TRACER does not believe that it has violated the Securities Act or Blue Sky Laws in connection with the issuance of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital common stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their other securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished prior to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretoClosing.

Capitalization. Before giving effect to The Company has an authorized capitalization as of September 30, 2022 (the transactions to be effected at “Capitalization Date”) as set forth in its Form 10-Q for the Closingquarter ended September 30, 2022. All of the authorized issued shares of capital stock of the Company consists of (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares are have been duly and validly authorized and issued and outstanding, are fully paid and 2,068,000 shares are reserved for issuance upon conversion non-assessable; and all of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, of each subsidiary of the Company have been duly authorized, and validly authorized and issued, are fully paid and nonassessablenon-assessable and (except for directors’ qualifying shares) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except to the extent that it would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders stockholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as As of the effective date of this Agreementhereof, (i) there are no outstanding options, preferred stockwarrants, scripscrips, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiariessubsidiaries, or arrangements by which the Company or any of its Subsidiaries subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiariessubsidiaries except (w) as set forth in the SEC Reports and the exhibits attached and incorporated by reference thereto, (iix) there are no agreements as were granted or arrangements under which issued after the Company or any Capitalization Date pursuant to the Company’s equity compensation plans described in the SEC Reports, and (y) as a result of its Subsidiaries is obligated to register the purchase and sale of any of its or their securities under the 1933 Act Note Securities; and (iiiii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note Securities or the Conversion SharesUnderlying Securities. The Company has furnished to the Buyer true and correct copies Company's certificate of the Company’s Articles of Incorporation incorporation as in effect on the date hereof (“Articles of Incorporation”), and the Company’s Bylaws, 's bylaws as in effect on the date hereof have been filed as part of the SEC Reports and are available on the SEC’s ▇▇▇▇▇ system as of the business day prior to the date hereof. Other than the Note (and the “Bylaws”Existing Notes to the extent affected by the Existing Notes Amendment), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto are as described in the SEC Reports and exhibits attached or incorporated by reference thereto.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized capital stock of the Company consists of 25,000,000 shares of Company Common Stock and 6,500,000 shares of preferred stock, par value $.01 per share (the "Company Preferred Stock"). As of the date hereof, (i) 50,000,000 14,519,246 shares of Company Common Stock, of which 16,036,625 shares are Stock were issued and outstanding, (ii) no shares of Company Preferred Stock were issued and 2,068,000 outstanding, (iii) 2,627,068 shares are of Company Common Stock were reserved for issuance upon conversion the exercise of the Preferred Stock (subject to adjustment outstanding Company Options pursuant to the Company’s covenant set forth in Section 6(h) below); Company Option Plans and (iiiv) 1,000,000 1,693,916 shares of undesignated preferred stock (517,000 Company Common Stock were reserved for issuance upon the exercise of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingoutstanding Company Warrants. All of such the issued and outstanding shares of capital stock are, or upon issuance will be, duly authorized, Company Common Stock are validly issued, fully paid and nonassessable. No shares of capital stock , were issued in compliance with applicable law, and are not subject to any preemptive or similar rights. (b) Except as set forth in Section 3.2(b) of the Company are subject Disclosure Schedule and other than pursuant to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Option Agreement, there are not now, and at the Effective Time there will not be, any (i) there are no outstanding optionsright, preferred stocksubscription, scripwarrant, rights to subscribe forcall, puts, calls, rights of first refusal, agreements, understandings, claims option or other commitments agreement or rights arrangement of any character whatsoever relating tokind (collectively, "Rights") to purchase or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which otherwise to receive from the Company or any of its Subsidiaries is any of the outstanding authorized but unissued or may become bound to issue additional treasury shares of the capital stock or any other security of the Company or any of its Subsidiaries, (ii) there are no agreements outstanding security of any kind convertible into or arrangements under exchangeable for such capital stock or (iii) voting trust or other agreement or understanding to which the Company or any of its Subsidiaries is obligated a party or is bound with respect to register the sale voting of the capital stock of the Company or any of its Subsidiaries. (c) Each outstanding share of capital stock of each Subsidiary of the Company is duly authorized, validly issued, fully paid and nonassessable and each such share owned by the Company or their securities under any Subsidiary of the 1933 Act Company is owned free and clear of any mortgage, pledge, assessment, security interest, lease, sublease, lien, adverse claim, levy, charge, option, right of others or restriction (whether on voting, sale, transfer, disposition or otherwise) or other encumbrance of any kind, whether imposed by agreement, understanding, law or equity, or any conditional sale contract, title retention contract or other contract to give or to refrain from giving any of the foregoing (collectively, "Liens"). (d) Section 3.2(d) of the Disclosure Schedule sets forth a listing of (i) all outstanding Company Options as of the date hereof, which schedule shows the portion of each Company Option which is then vested, the vesting and acceleration provisions thereof, if any, the date upon which each Company Option expires and whether or not such Company Option is intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Code; (ii) all outstanding Company Warrants as of the date hereof, which schedule shows the portion of each Company Warrant which is exercisable and the date upon which each Company Warrant expires; and (iii) there are no anti-dilution or price adjustment provisions contained each outstanding Company Option and Company Warrant that will accelerate, in any security issued by the Company (whole or in any agreement providing rights part, pursuant to security holders) that will be triggered by the issuance its terms as a result of the Notestransactions contemplated hereby, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and which schedule summarizes the terms of all securities convertible into acceleration pursuant to such Company Option, Company Warrant or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretoOption Plan.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the Company’s authorized capital stock consists of 150,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock (none of which are issued and outstanding). As of the Issuance Date, 32,107,425 shares of Common Stock were issued and outstanding (excluding any shares held in treasury), and 3,220,617 stock options and other Common Stock Equivalents were issued and outstanding under the Company’s restricted stock and stock option plans. There are no Voting Securities authorized or outstanding other than the Common Stock and there are no other classes of capital stock of the Company consists of (i) 50,000,000 outstanding. The outstanding shares of Common Stock, of which 16,036,625 shares Stock are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No There are no preemptive rights other than as set forth in Section 5.06 of this Agreement or, except as set forth above and except for the Warrants, other outstanding rights, options, warrants, conversion rights or agreements or commitments of any character relating to the Company’s authorized and issued, unissued or treasury shares of capital stock, and the Company has not issued any debt securities, other securities, rights or obligations that are currently outstanding and convertible into or exchangeable for, or giving any Person a right to subscribe for or acquire, capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed The representations and warranties set forth in Schedule 5(cthis Section 8.01(f) are a material inducement to the Initial Warrant Holder to enter into this Agreement, and to the extent the representations and warranties set forth in this Section 8.01(f) are inaccurate in any respect, the number of shares of Underlying Stock for which the B-Warrants are exercisable will be equitably adjusted upward (but not downward), if necessary, such that the number of shares of Common Stock for which the A-Warrants and the B-Warrants were exercisable, as of the effective date of Issuance Date (assuming for this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of purpose that the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no antiB-dilution or price adjustment provisions contained Warrants were exercisable in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable full for Common Stock as of the Company Issuance Date), equals, in the aggregate, a number of shares of Common Stock equal to 25.0% of the amount equal to (x) the sum, without duplication, of the number of shares of Common Stock outstanding as of the Issuance Date (excluding any treasury shares) and the material rights number of shares of Common Stock into which Common Stock Equivalents outstanding as of the holders thereof Issuance Date (including the Warrants (assuming for this purpose that the B-Warrants were exercisable in respect theretofull for Common Stock as of the Issuance Date)) were exercisable less (y) 2,133,992.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the The authorized capital stock of the Company consists of 70,000,000 Shares of common stock and 30,000,000 shares of undesignated preferred stock. As of the date hereof, (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares 10,078,838 Shares are issued and outstanding, all of which are duly authorized, validly issued, fully paid and 2,068,000 nonassessable and free of preemptive rights, (ii) no shares are reserved for issuance upon conversion of preferred stock of the Preferred Company are issued or outstanding and (iii) 692,358 shares of Common Stock (subject to adjustment are issuable on exercise of outstanding stock options granted pursuant to the Company’s covenant 's Plans, and (iv) 15,950 shares of Common Stock are issuable upon exercise of warrants (the "Warrants"). Except as set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation)above, of which none are issued and outstanding. All of such outstanding no shares of capital stock areor other equity securities of the Company are issued or outstanding. There are no bonds, debentures, notes or other indebtedness or other securities of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of the Company may vote. Except as contemplated by this Agreement, there are no shareholder, voting trust, or other agreements or understandings to which the Company or any of its Subsidiaries is a party or to which any of them are bound, or, to the knowledge of the Company, any irrevocable proxies, relating to the voting of any shares of the capital stock or other equity securities of the Company or any of its Subsidiaries. Except as set forth in this Section or in the Company Disclosure Schedule, there are no options, warrants or other rights relating to the capital stock of the Company or any Subsidiary obligating the Company or any Subsidiary to issue or sell any shares of capital stock of, or other equity interests in, the Company or any Subsidiary. All shares of Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be, be duly authorized, validly issued, fully paid and nonassessable. No There are no commitments, understandings, restrictions or arrangements obligating the Company to purchase, redeem or acquire, nor is the Company party to any agreement granting preemptive or registration rights relating to, shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before As of May 15, 2000, the authorized common stock of the Company consisted of 40,000,000 shares of Common Stock of which 26,111,813 shares were issued and outstanding, and 20,000,000 shares of Class B common stock of which 2,255,452 shares were issued and outstanding. After giving effect to the transactions to be effected at the Closingcontemplated herein, the authorized capital preferred stock of the Company consists consisted of (i) 50,000,000 10,000,000 shares of blank check preferred stock of which there are 1,600,000 shares of Series C Preferred Stock that is not convertible into Common Stock, and 1,766,423 shares of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Series D Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingconvertible on a "one for one" basis into Common Stock. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, have been validly issued, issued and are fully paid and nonassessable. No shares of capital stock of the Company Common Stock are subject to preemptive rights or any other similar rights of the shareholders of and the Company or has not attached any liens or encumbrances imposed through the actions or failure to act of the Companyon any such shares. Except for the above-referenced preferred stock and as disclosed in Schedule 5(c3(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe forto, puts, calls, rights of first refusal, agreements, understandings, claims calls or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for into, any shares of capital stock of the Company or any of its Subsidiariessubsidiaries, or arrangements by which the Company or any of its Subsidiaries subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiariessubsidiaries, (ii) there are no outstanding debt securities, and (iii) there are no agreements or arrangements under which the Company or any of its Subsidiaries subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act (except as provided herein, in Schedule 3(c) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued the Registration Rights Agreement). If requested by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the NotesBuyer, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer, and the Buyer acknowledges receipt of same by its signature hereafter, true and correct copies of the Company’s 's Articles of Incorporation Incorporation, as amended, as in effect on the date hereof (“"Articles of Incorporation”"), and the Company’s 's Bylaws, as in effect on the date hereof (the “"Bylaws”"), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to (a) The authorized as well as the transactions to be effected at the Closing, the authorized issued and outstanding capital stock of each of the Company consists Purchased ELN Companies are as set forth in Schedule 3.5. The issued and outstanding shares of each of the Purchased ELN Companies (i) 50,000,000 shares of Common Stockhave been duly authorized, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No non-assessable, (iii) were not issued in violation of any Applicable Law, (iv) were not issued in violation of and are not subject to any pre-emptive rights, rights of first refusal or rights of first offer and (v) at Closing, will be owned beneficially and of record by the Seller, the Company and 8869332, as applicable, free and clear of all Liens other than restrictions on transfer generally imposed by applicable securities laws. (b) Except as set forth in Schedule 3.5, there are no issued, reserved for issuance or outstanding: (i) shares or other voting securities of, or equity interests in, any of capital the Purchased ELN Companies; (ii) securities of the Purchased ELN Companies convertible into or exercisable or exchangeable for shares or other voting securities of, or equity interests in, any of the Purchased ELN Companies; (iii) subscriptions, options, warrants, rights, agreements, commitments or understandings of any kind to acquire from the Seller or any of the Purchased ELN Companies, or other obligation of the Seller or any of the Purchased ELN Companies to issue, deliver, sell, transfer, repurchase or redeem, any shares or other voting securities of, or equity interests in, any of the Purchased ELN Companies or any securities convertible into or exercisable or exchangeable for shares or other voting securities of, or equity interests in, any of the Purchased ELN Companies; or (iv) stock appreciation rights, contingent value rights, “phantom” stock rights, profit participation rights or other similar rights or securities that are derivative of, or provide economic benefits based directly or indirectly on the value or price of, any shares or other voting securities of or equity interests in any of the Purchased ELN Companies (the items in clauses (i) through (iv) collectively, the “ELN Companies Securities”). (c) There are no outstanding bonds, debentures, notes or other Indebtedness of the Company are subject the holders of which have the right to preemptive rights vote (or convertible into or exercisable or exchangeable for securities having the right to vote) on any other similar rights of matters on which the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Companymay vote. Except as disclosed set forth in Schedule 5(c)3.5, as there are no accrued or unpaid dividends on any of the effective date Shares. (d) There are no shareholder agreements, voting trusts, proxies or other similar agreements or understandings in effect with respect to the voting, transfer or other disposition of the Shares. (e) Subject to the terms of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of at the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the NotesClosing, the Preferred Stock, or the Conversion Shares. The Company has furnished Seller will transfer and deliver to the Buyer true Purchaser good and correct copies of valid title to the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), Shares free and the terms clear of all Liens other than restrictions on transfer generally imposed by applicable securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretolaws.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the The authorized capital stock of the Company consists -------------- of (i) 50,000,000 15,000,000 shares of Common Stock. As of June 2, 1999, 8,444,377 shares of which 16,036,625 shares are Common Stock were issued and outstanding, and 2,068,000 (b) Options to purchase an aggregate of 819,882 shares are reserved for issuance upon conversion of Common Stock were outstanding, (c) 635,500 shares of Common Stock held by the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth Company in Section 6(h) below); its treasury and (iid) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding no shares of capital stock areof the Company were held by the Company's Subsidiaries. The Company has no outstanding bonds, debentures, notes or other obligations entitling the holders thereof to vote (or that are convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter. Since June 2, 1999, the Company (i) has not issued any shares of Common Stock other than upon issuance will bethe exercise of Options, (ii) has granted no Options to purchase shares of Common Stock under the Stock Option Plans and (iii) has not split, combined, converted or reclassified any of its shares of capital stock. All issued and outstanding shares of Common Stock are duly authorized, validly issued, fully paid paid, nonassessable and nonassessablefree of preemptive rights. No Except as set forth in this Section 6.4, there are no other shares of capital stock or voting ----------- securities of the Company, and no existing options, warrants, calls, subscriptions, convertible securities, or other rights, agreements or commitments that obligate the Company or any of its Subsidiaries to issue, transfer or sell any shares of capital stock of, or equity interests in, the Company or any of its Subsidiaries. There are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of the Company and there are subject to preemptive rights no performance awards outstanding under the Stock Option Plans or any other similar rights of the shareholders of outstanding stock-related awards. There are no voting trusts or other agreements or understandings to which the Company or any liens or encumbrances imposed through of its Subsidiaries or, to the actions or failure to act knowledge of the Company. Except as disclosed in Schedule 5(c), as any of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights Company's directors or executive officers is a party with respect to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares the voting of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect Except as disclosed in the SEC Documents, no shares are reserved for issuance pursuant to the transactions Company’s stock option plans, no shares are reserved for issuance pursuant to be effected at securities (other than the ClosingNote) exercisable for, the authorized capital stock of the Company consists of (i) 50,000,000 or convertible into or exchangeable for shares of Common Stock, of which 16,036,625 shares are issued Stock and outstanding, and 2,068,000 sufficient shares are reserved for issuance upon conversion of the Preferred Stock Note (subject to adjustment pursuant to as required by the Company’s covenant set forth in Section 6(h) belowNote and transfer agent share reserve letter); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)the SEC Documents and common stock purchase warrants issued by the Company after December 31, 2018, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer filed in its SEC Documents true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of of: (i) 50,000,000 200,000,000 shares of Common Stock, $0.001 par value per share, of which 16,036,625 70,864,772 shares are issued and outstanding; no shares are reserved for issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other than the Note) exercisable for, or convertible into or exchangeable for shares of Common Stock and 2,068,000 4,545,455 shares are reserved for issuance upon conversion of the Preferred Stock Note (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h4(g) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in the SEC Documents and in Schedule 5(c3(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer filed in its SEC Documents true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of of: (i) 50,000,000 250,000,000 shares of Common Stock, of which 16,036,625 approximately 154,851,540 shares are issued and outstanding; and (ii) 2,000,000 shares of preferred stock, of which 0 are issued and 2,068,000 outstanding. Except as disclosed in the SEC Documents, no shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(hstock option plans, no shares are reserved for issuance pursuant to securities (other than the Note and any other convertible promissory note issued to the Buyer) below); and (ii) 1,000,000 exercisable for, or convertible into or exchangeable for shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingCommon Stock. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)the SEC Documents, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized capital shares of stock of the Company consists consist of 200,000,000 shares of Company Common Stock, par value $0.001 per share, of the Company. As of the date hereof, (i) 50,000,000 67,066,418 shares of Company Common Stock were issued and outstanding (excluding shares of Company Common Stock held by the Company in its treasury), (ii) 15,000,000 shares of Company Common Stock have been reserved for issuance pursuant to the 2001 Stock Option Plan and the 2005 Stock Option Plan (“Incentive Plans”), and (iii) Company Stock Options entitling the owners thereof to purchase 7,960,000 shares of Company Common Stock were outstanding. As of the date of this Agreement, the Company had no Company Common Stock, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are or any other securities reserved for issuance upon conversion of the Preferred Stock (subject or required to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are reserved for issuance other than as described above. All such issued and outstanding. All of such outstanding shares of capital stock the Company and its Subsidiaries are, or and all shares subject to issuance as specified above, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be, when issued, duly authorized, validly issued, fully paid paid, nonassessable and nonassessable. No shares free of capital stock of the Company are subject to any preemptive rights purchase option, call option, right of first refusal, subscription agreement, or any other similar rights right under the Company Charter, the Company Bylaws or any agreement to which the Company is party or by which it is bound. (b) Except for the Company Stock Options, there are no existing options, warrants, calls, subscription rights, exercisable, convertible or exchangeable securities or other rights, agreements or commitments (contingent or otherwise) that obligate the Company to issue, transfer or sell any Company Common Stock or any investment that is convertible into or exercisable or exchangeable for any such shares. (c) The Company has not issued any share appreciation rights, dividend equivalent rights, performance awards, restricted stock unit awards or “phantom” shares. (d) There are no agreements or understandings to which the Company is a party with respect to the voting of the shareholders any securities of the Company or any liens or encumbrances imposed through which restrict the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights transfer of any character whatsoever relating tosuch shares, or securities or rights convertible into or exchangeable for any shares of capital stock of nor does the Company or have knowledge of any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no third party agreements or arrangements under which understandings with respect to the Company or any of its Subsidiaries is obligated to register the sale voting of any such shares or which restrict the transfer of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretosuch shares.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized capital stock of the Company consists of Fifteen Million (i15,000,000) 50,000,000 Shares, of which, as of the date of this Agreement, 11,190,650 Shares were issued and outstanding and One Million (1,000,000) shares of Common Stockpreferred stock, no shares of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such the outstanding Shares have been validly issued and are fully paid, nonassessable and free of preemptive rights. As of the date of this Agreement, there are outstanding (i) no shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock other voting securities of the Company are subject to preemptive rights or any other similar rights of the shareholders Company, except as set forth above, (ii) no securities of the Company or any liens of its subsidiaries convertible into or encumbrances imposed through the actions exchangeable or failure to act exercisable for shares of capital stock or other securities of the Company, (iii) no options, preemptive or other rights to acquire from the Company or any of its subsidiaries, and, except as described in the Company SEC Reports (as defined below), no obligations of the Company or any of its subsidiaries to issue any capital stock, voting securities or securities convertible into or exchangeable or exercisable for capital stock or other securities of the Company and (iv) no equity equivalent interests in the ownership or earnings of the Company or its subsidiaries or other similar rights other than as set forth in the limited liability company operating agreement of NEG Holding LLC (collectively “Company Securities”). Except as disclosed set forth in Schedule 5(c)Section 2.2(a) of the Company Disclosure Schedule, as of the effective date of this Agreement, (i) there are no outstanding optionsrights or obligations of the Company or any of its subsidiaries to repurchase, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, redeem or otherwise acquire any Company Securities. There are no stockholder agreements, understandings, claims voting trusts or other commitments agreements or rights understandings to which the Company is a party or by which it is bound relating to the voting or registration of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company. (b) All of the outstanding capital stock of the Company’s subsidiaries owned by the Company is owned, 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 its Subsidiaries, or arrangements by which Applicable Law). Except as set forth in Section 2.2(b) of the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock Disclosure Schedule, there are no (i) securities of the Company or any of its Subsidiariessubsidiaries convertible into or exchangeable or exercisable for, (ii) there are no agreements options to acquire or arrangements under which (iii) other rights to acquire from the Company or any of its Subsidiaries is obligated to register the sale subsidiaries, any capital stock or other ownership interests in or any other securities of any subsidiary of the Company, and there exists no other contract, understanding, arrangement or obligation (whether or not contingent) providing for the issuance or sale, directly or indirectly, of any such capital stock. There are no outstanding contractual obligations of the Company or its subsidiaries to repurchase, redeem or their securities otherwise acquire any outstanding shares of capital stock or other ownership interests in any subsidiary of the Company. For purposes of this Agreement, “Lien” means, with respect to any asset (including any security), any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset; provided, however, that the term “Lien” shall not include (i) statutory liens for taxes that are not yet due and payable or are being contested in good faith by appropriate proceedings and are disclosed in Section 2.2(b) of the Company Disclosure Schedule or that are otherwise not material, (ii) statutory or common law liens to secure obligations to landlords, lessors or renters under leases or rental agreements confined to the 1933 Act and premises rented, (iii) there are no anti-dilution deposits or price adjustment provisions contained pledges made in any connection with, or to secure payment of, workers’ compensation, unemployment insurance, old age pension or other social security issued programs mandated under Applicable Laws, (iv) statutory or common law liens in favor of carriers, warehousemen, mechanics and materialmen, to secure claims for labor, materials or supplies and other like liens, and (v) restrictions on transfer of securities imposed by applicable state and federal securities laws. (c) The Shares constitute the only class of equity securities of the Company (or in any agreement providing rights its subsidiaries registered or required to security holders) that will be triggered by registered under the issuance Securities Exchange Act of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws1934, as in effect on the date hereof amended (the “BylawsExchange Act”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before (a) As of the date hereof and without giving effect to the transactions to be effected at issuance of Common Shares under the ClosingIPO or the Stock Split, the authorized capital stock of the Company consists of (i) 50,000,000 shares of 734,625,648 Common StockShares, of which 16,036,625 shares 198,940,997 Common Shares are issued and outstandingoutstanding and of which 612,500 are Company Restricted Shares. As of the date hereof, and 2,068,000 shares are 1,959,421 Common Shares were reserved for issuance upon conversion of under the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingIncentive Plan. All of such the issued and outstanding shares of capital stock are, or upon issuance will be, Common Shares are duly authorized, validly issued, fully paid and nonassessable. No Each of the outstanding Company Options and Company Restricted Shares was granted under and in accordance with the terms of the Stock Incentive Plan. (b) Except for the Company Options and as set forth in Section 3.4(a), there are no outstanding (i) shares of capital stock of or other voting or equity interests in the Company, (ii) securities of the Company are subject to preemptive convertible into or exercisable or exchangeable for shares of capital stock of or other voting or equity interests in the Company, (iii) options or other rights or agreements, commitments or understandings of any kind to acquire from the Company, or other similar rights of the shareholders obligation of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)Subsidiaries to issue, as of the effective date of this Agreementtransfer or sell, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of or other voting or equity interests in the Company or securities convertible into or exercisable or exchangeable for shares of capital stock of or other voting or equity interests in the Company, (iv) except for the Existing Stockholders Agreement and the Employee Stock Subscription Agreements, voting trusts, proxies or other similar agreements or understandings to which the Company or any of its Subsidiaries, the Subsidiaries is a party or arrangements by which the Company or any of its the Subsidiaries is or may become bound with respect to issue additional the voting of any shares of capital stock of or other voting or equity interests in the Company or any of the Subsidiaries and (v) except for the Existing Stockholders Agreement and the Employee Stock Subscription Agreements, contractual obligations or commitments of any character to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries is bound restricting the transfer of, or requiring the registration for sale of, any shares of capital stock of or other voting or equity interests in the Company or any of the Subsidiaries (the items in clauses (i), (ii) and (iii) being referred to collectively as the “Company Securities”). There are no outstanding obligations of the Company or any of its Subsidiariesthe Subsidiaries to repurchase, (ii) there are no agreements redeem or arrangements under which the otherwise acquire any Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretoSecurities.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 [ ] shares of Common Stock, of which 16,036,625 [ ] shares are issued and outstanding, [ ] shares are reserved for issuance pursuant to the Company's stock option plans, [ ] shares are reserved for issuance pursuant to securities (other than the Notes and 2,068,000 the Warrants) exercisable for, or convertible into or exchangeable for shares of Common Stock and, [ ] shares are reserved for issuance upon conversion of the Preferred Stock Notes and exercise of the Warrants (subject to adjustment pursuant to the Company’s 's covenant set forth in Section 6(h4(h) below); and (ii) 1,000,000 5,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation)stock, of which none 44,630 shares are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c3(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act (except the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred StockWarrants, or the Conversion Shares or Warrant Shares. The Company has furnished to the Buyer true and correct copies of the Company’s 's Articles of Incorporation as in effect on the date hereof (“"Articles of Incorporation”"), the Company’s Bylaws's By-laws, as in effect on the date hereof (the “Bylaws”"By-laws"), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company's Chief Executive or Chief Financial Officer on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized capital stock of the Company consists of 7,500,000 Shares. As of the date hereof, (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares 5,220,936 Shares are issued and outstanding, (ii) 0 Shares are issued and 2,068,000 shares held in the treasury of the Company, (iii) 421,550 Shares are reserved for issuance upon conversion exercise of outstanding Options granted under the Company Option Plans (as hereinafter defined) (iv) 11,000 Shares are reserved for issuance upon exercise of certain individual stock options granted to employees and directors of the Preferred Stock Company, and (subject v) 200,000 Shares are reserved for issuance upon exercise of outstanding warrants to adjustment purchase common stock. All the outstanding Shares are, and all shares which may be issued pursuant to the Company’s covenant set forth exercise of outstanding Options when issued in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of accordance with the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance respective terms thereof will be, duly authorized, validly issued, fully paid and nonassessable. No There are no bonds, debentures, notes or other indebtedness having general voting rights (or convertible into securities having such rights) ("Voting Debt") of the Company or any of its Subsidiaries issued and outstanding. Except (a) as disclosed on Schedule 3.2, (b) as set forth above, and (c) for the transactions contemplated by this Agreement, as of the date hereof, (i) there are no shares of capital stock of the Company are subject to preemptive rights authorized, issued or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreementoutstanding, (iii) there are no outstanding existing options, preferred stock, scrip, rights to subscribe for, putswarrants, calls, rights of first refusalpreemptive rights, subscriptions or other rights, agreements, understandings, claims arrangements or other commitments or rights of any character whatsoever character, relating to, to the issued or securities or rights convertible into or exchangeable for any shares of unissued capital stock of the Company or any of its Subsidiaries, obligating the Company or arrangements any of its Subsidiaries to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock or Voting Debt of, or other equity interest in, the Company or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interests, or obligating the Company or any of its Subsidiaries to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment, (iii) there are no outstanding contractual obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Shares, or capital stock of the Company or any subsidiary or affiliate of the Company or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any such subsidiary, other than those required in the ordinary course of business of such subsidiaries, or any other entity and (iv) there are no equity equivalents, interests in the ownership or earnings of the Company or other similar rights. (b) All the outstanding shares of capital stock of each Subsidiary have been validly issued and are fully paid and nonassessable and, except as disclosed on Schedule 3.2, are owned directly or indirectly by the Company free and clear of all security interests, liens, claims, pledges, agreements, limitations in voting rights, charges or other encumbrances of any nature whatsoever ("Liens"). Except as disclosed on Schedule 3.2, no entity in which the Company owns, directly or indirectly, less than a 50% equity interest is, individually or when taken together with all such other entities, material to the business of the Company and its subsidiaries taken as a whole. (c) There are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is or may become bound a party with respect to issue additional shares the voting of the capital stock of the Company or any of its the Subsidiaries, (ii) there are no agreements or arrangements under which . None of the Company or its Subsidiaries is required to redeem, repurchase or otherwise acquire shares of capital stock of the Company, or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance Subsidiaries, respectively, as a result of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretotransactions contemplated by this Agreement.

Capitalization. Before giving effect to (a) As of the transactions to be effected at the Closingdate hereof, the authorized and issued capital stock of the Company consists and each of (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares are issued and outstandingits Subsidiaries, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant ownership interest in each Subsidiary, is as set forth in Section 6(h) belowSchedule 3.5(a); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock arehave been, or upon issuance will be, duly authorized, authorized and validly issued, fully paid and nonassessablenonassessable and were issued in accordance with the registration or qualification provisions of the Securities Act, or pursuant to valid exemptions therefrom. No Except as disclosed in Schedule 3.5(a), in the Articles of Incorporation or in the Transaction Documents: (i) no shares of the Company’s capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens liens, claims or encumbrances imposed through suffered or permitted by the actions or failure to act Company, nor is any holder of the Company. Except as disclosed in Schedule 5(c)’s capital stock entitled to preemptive, right of first refusal or similar rights arising out of any agreement or understanding with the Company, (ii) as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, scrip rights to subscribe forto, puts, calls, rights of first refusal, agreements, understandings, claims calls or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable or exercisable for, or giving any Person any right to subscribe for or acquire, any shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of any of the Company or its Subsidiaries or options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, any shares of capital stock of the Company (provided, that the Company may grant additional options to its employees or directors in the ordinary course of business between the date hereof and the Closing Date pursuant to a plan in existence on the date of this Agreement), (iii) there are no outstanding debt securities, or other form of material debt of the Company or any of its Subsidiaries, (iiiv) there are no contracts, commitments, understandings, agreements or arrangements under which the Company or any of its Subsidiaries is obligated required to register the sale of any of its or their securities under the 1933 Act and Securities Act, (iiiv) there are no outstanding securities of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings, agreements or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries, (vi) there are no securities or instruments containing anti-dilution or price adjustment similar provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the NotesPurchased Warrants or the Warrant Shares, (vii) the Preferred StockCompany does not have any stock appreciation rights or “phantom stock” plans or agreements, or any similar plan or agreement and (viii) as of the Conversion Shares. The Company has furnished date of this Agreement, except as set forth in filings made with the Commission, to the Buyer true and correct copies of the Company’s Articles and each of Incorporation its Subsidiaries’ knowledge, no Person (as defined below) or group of related Persons beneficially owns (as determined pursuant to Rule 13d-3 promulgated under the Exchange Act) or has the right to acquire by agreement with or by obligation binding upon the Company, beneficial ownership of in effect excess of 5% of the Common Stock. Any Person with any right to purchase securities of the Company that would be triggered as a result of the transactions contemplated hereby or by any of the other Transaction Documents has waived such rights or the time for the exercise of such rights has passed, except where failure of the Company to receive such waiver would not have a Material Adverse Effect. Except as set forth on Schedule 3.5, there are no options, warrants or other outstanding securities of the date hereof Company (“Articles including, without limitation, any equity securities issued pursuant to any Company Plan) the vesting of Incorporation”)which will be accelerated by the transactions contemplated hereby or by any of the other Transaction Documents. Except as set forth in Schedule 3.5(a) and in the Amendments to the Employment Agreements, none of the transactions contemplated by this Agreement or by any of the other Transaction Documents shall cause, directly or indirectly, the acceleration of vesting of any options issued pursuant to the Company’s Bylaws2000 Stock Option Plan. (b) Schedule 3.5(b) sets forth, as in effect on of the date hereof Closing Date, a true and complete list of (x) each of the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock Subsidiaries of the Company and (y) the material rights aggregate number of authorized and issued shares of capital stock or other unit of equity of such Subsidiary. The Company directly or indirectly owns all of the holders thereof issued and outstanding capital stock or other units of equity of the Subsidiaries, free and clear of all Liens. All of such shares of capital stock or other units of equity are duly authorized, validly issued, fully paid and non-assessable, and were issued in respect theretocompliance with the registration and qualification requirements of all applicable federal, state and foreign securities laws. There are no options, warrants, conversion privileges, subscription or purchase rights or other rights currently outstanding to purchase or otherwise acquire any authorized but unissued, unauthorized or treasury shares of capital stock or other securities of, or any proprietary interest in, any of the Subsidiaries, and there is no outstanding security of any kind convertible into or exchangeable for such shares or proprietary interest.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 100,000,000 shares of Common Stock, of which 16,036,625 { } shares are issued and outstanding, { } shares are reserved for issuance pursuant to the Company's stock option plans, { } shares are reserved for issuance pursuant to securities (other than the Notes and 2,068,000 the Warrants) exercisable for, or convertible into or exchangeable for shares of Common Stock and, 24,476,923 shares are reserved for issuance upon conversion of the Preferred Stock Notes and exercise of the Warrants (subject to adjustment pursuant to the Company’s 's covenant set forth in Section 6(h4(h) below); and (ii) 1,000,000 { } shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none { } shares are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c3(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act (except the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred StockWarrants, or the Conversion Shares or Warrant Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles 's Certificate of Incorporation as in effect on the date hereof (“Articles "Certificate of Incorporation”"), the Company’s Bylaws's By-laws, as in effect on the date hereof (the “Bylaws”"By-laws"), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company's Chief Executive or Chief Financial Officer on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to (a) As of the transactions to be effected at the ClosingOriginal Effective Date, the authorized capital stock and outstanding Equity Interests of the Company consists of (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares Borrower are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingon Schedule 3.21. All of such the outstanding shares Equity Interests of capital stock are, or upon issuance will be, duly authorized, the Borrower are validly issued, fully paid and nonassessable. No shares of capital stock of the Company non-assessable and are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), owned as of the effective date Original Effective Date by the equity holders and in the amounts set forth on Schedule 3.21. As of this Agreementthe Original Effective Date, none of the outstanding Equity Interests of the Borrower was issued in violation of any law (iincluding, without limitation, state and federal securities laws) and there are no Liens on or with respect to any such Equity Interests. (b) As of the Original Effective Date, except as set forth on Schedule 3.21, there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or (i) securities or rights convertible into or exchangeable for any shares of capital stock Equity Interests of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, Borrower; (ii) options, warrants or other rights to purchase or subscribe for Equity Interests of the Borrower or (iii) contracts, commitments, agreements, understandings or arrangements of any kind relating to the issuance of any Equity Interests of the Borrower. As of the Original Effective Date, except as set forth on Schedule 3.21, there is no outstanding right, option or other agreement of any kind to purchase or otherwise to receive from the Borrower or any equity holder of the Borrower, any ownership interest in the Borrower, and there is no outstanding right or security of any kind convertible into such ownership interest. As of the Original Effective Date, there are no voting trusts, proxies or other similar agreements or arrangements under which understandings with respect to the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance Equity Interests of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretoBorrower.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized capital stock of the Company consists of (i) 50,000,000 15,000,000 shares of Company Common Stock, Stock of which 16,036,625 at the date hereof: (A) 5,920,500 shares are issued and outstanding, ; (B) no shares are held in the treasury of the Company; and 2,068,000 (C) 127,500 shares are reserved for future issuance upon conversion of pursuant to stock options (the Preferred "Stock (subject to adjustment Options") granted pursuant to the Company’s covenant set forth in Section 6(h's Incentive Stock Option Plan and 1996 Stock Option Plan (the "Option Plans") below)and 185,000 are reserved for future issuance pursuant to stock options available for grant under the Option Plans; and (ii) 1,000,000 5,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing stock, par value $.01 per share, of the Amendment to the Articles of IncorporationCompany ("COMPANY PREFERRED STOCK"), of which none no shares are issued and or outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or reserved for any other similar rights purpose. Each of the shareholders outstanding shares of capital stock of, or other equity interests in, the Company and Subsidiary has been duly authorized and validly issued, and, in the case of shares of capital stock, are fully paid and nonassessable, and such shares or other equity interests owned by the Company are owned free and clear of all security interests, liens, claims, pledges, agreements, limitations on the Company's voting rights, charges or other encumbrances of any nature whatsoever, except that PNC Bank and Von Roll hold security interests in all of the Company's assets pursuant to the provisions of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Debt. (b) Except as disclosed set forth in Schedule 5(c)Section 4.03(a) above, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, warrants or other rights to subscribe for, puts, calls, rights of first refusal(including registration rights), agreements, understandings, claims arrangements or other commitments or rights of any character whatsoever to which the Company or Subsidiary is a party relating to, to the issued or securities or rights convertible into or exchangeable for any shares of unissued capital stock of the Company or any of its Subsidiaries, Subsidiary or arrangements by which obligating the Company or Subsidiary to grant, issue or sell any of its Subsidiaries is or may become bound to issue additional shares of the capital stock of the Company or any of its SubsidiariesSubsidiary, (ii) there by sale, lease, license or otherwise. There are no agreements obligations, contingent or arrangements under which otherwise, of the Company or Subsidiary to (x) repurchase, redeem or otherwise acquire any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.capital stock 7

Capitalization. Before giving effect to the transactions to be effected at the Closing, the The authorized capital stock of the Company consists of an unlimited number of Company Shares. As of December 21, 2004, there were: (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares are 54,796,531 Company Shares issued and outstanding; (ii) Company Options outstanding, and 2,068,000 shares are reserved for issuance upon conversion entitling the holders thereof to acquire an aggregate of the Preferred Stock 2,281,018 Company Shares; (subject to adjustment pursuant to iii) 299,433 RSUs granted by the Company’s covenant set forth in Section 6(h) below); and (iiiv) 1,000,000 shares of undesignated preferred stock 167,443 DSUs granted by the Company. Except for the Company Options, RSUs and DSUs described in the immediately preceding sentence, there are no options, warrants, conversion privileges or other rights, agreements, arrangements or commitments (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of pre-emptive, contingent or otherwise) obligating the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, Company or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock any Subsidiary of the Company are subject to preemptive rights issue or sell any other similar rights of the shareholders shares of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, such Subsidiary or securities or rights obligations of any kind convertible into or exchangeable for any shares of capital stock the Company or any Subsidiary of the Company, or to make any payment which is contingent on the value of any shares of the Company. All outstanding Company Shares have been duly authorized and are validly issued and outstanding as fully paid and non-assessable shares, free of pre-emptive rights. There are no outstanding bonds, debentures or other evidences of indebtedness of the Company or any of its Subsidiaries having the right to vote (or that are convertible for or exercisable into securities having the right to vote) with the holders of the Company Shares on any matter. Except as set forth in the Disclosure Letter, there are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any outstanding Company Shares or with respect to the voting or disposition of any outstanding securities of the Company or any of its Subsidiaries, or arrangements . No holder of securities issued by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock Subsidiary of the Company or has any of its Subsidiaries, (ii) there are no agreements or arrangements under which right to compel the Company or any of its Subsidiaries is obligated to register the or otherwise qualify securities for public sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the NotesCanada, the Preferred Stock, United States or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretoelsewhere.

Capitalization. Before giving effect Except as disclosed in the SEC Documents, no shares are reserved for issuance pursuant to the transactions Company’s stock option plans, no shares are reserved for issuance pursuant to be effected at securities (other than the ClosingNote) exercisable for, the authorized capital stock of the Company consists of (i) 50,000,000 or convertible into or exchangeable for shares of Common Stock, of which 16,036,625 Stock and sufficient shares are issued and outstanding, and 2,068,000 shares are shall be reserved for issuance upon conversion of the Preferred Stock Note (subject to adjustment pursuant to as required by the Company’s covenant set forth in Section 6(h) belowNote and transfer agent share reserve letter); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No Except as set forth in the SEC Documents, no shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)the SEC Documents, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer filed in its SEC Documents true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to (a) Section 2.05(a) of the transactions to be effected at the Closing, XC Disclosure Letter sets forth the authorized and outstanding capital stock of XC as of December 31, 2017 (the Company consists of (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below“Capitalization Date”); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock areof XC have been, and all shares that may be issued pursuant to any XC Stock Plan or upon issuance arrangement will be, when issued in accordance with the respective terms thereof, duly authorized, authorized and validly issued, issued and are fully paid and nonassessable. No nonassessable and have not been issued in violation of any preemptive rights. (b) Except as set forth in this Section 2.05, and for changes since the Capitalization Date resulting from the exercise of XC Stock Options or vesting of XC Awards outstanding on such date or from actions permitted pursuant to, or taken in accordance with, Section 4.01, there are no issued, reserved for issuance or outstanding (i) shares of capital stock of the Company are subject to preemptive rights or any other similar rights voting securities of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed ownership interests in Schedule 5(c), as of the effective date of this AgreementXC, (iii) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights securities of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights XC convertible into or exchangeable for any shares of capital stock or other voting securities of or ownership interests in XC, (iii) warrants, calls, options or other rights to acquire from XC, or other obligation of XC to issue, any capital stock or other voting securities or ownership interests in or any securities convertible into or exchangeable for capital stock or other voting securities or ownership interests in XC or (iv) restricted shares, stock appreciation rights, performance units, conversion rights, contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the Company value or price of, any capital stock or voting securities of XC (the items in clauses (i) through (iv) being referred to collectively as the “XC Securities”). Except as set forth in the Organizational Documents of XC, there are no outstanding obligations of XC or any of its SubsidiariesSubsidiaries to repurchase, redeem or otherwise acquire any XC Securities. (c) Upon completion of the SA Closing in accordance with the terms of this Agreement, good and marketable title to the Subscribed Shares will be transferred to FH, free and clear of all Liens (other than any Liens arising under any applicable securities Laws, the Organizational Documents of XC or the Shareholders Agreement). (d) There are no voting agreements, shareholder agreements, voting trusts, proxies or similar agreements, arrangements by or commitments to which the Company XC or any of its Subsidiaries is or may become bound a party with respect to issue additional the voting of any shares of capital stock or other equity interest of the Company XC or any of its Subsidiaries, (ii) there . There are no agreements bonds, debentures, notes or arrangements under which the Company other instruments of indebtedness of XC or any of its Subsidiaries is obligated that entitle the holder of such instruments of indebtedness to register the sale vote together with shareholders of XC on any of its matters with respect to XC or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretoSubsidiary.

Capitalization. Before giving effect to the transactions to be effected at the ClosingAs of August 10, 2020, the authorized capital stock of the Company consists of of: (i) 50,000,000 150,000,000 shares of Common Stock, of which 16,036,625 approximately 120,932,409 shares are issued and outstanding; and (ii) 50,000,000 shares of preferred stock, of which 632,477 are issued and 2,068,000 outstanding. Except as disclosed in the SEC Documents, no shares are reserved for issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other than the Note) exercisable for, or convertible into or exchangeable for shares of Common Stock and 8,000,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingNote. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)the SEC Documents, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer filed in its SEC Documents true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 [ ] shares of Common Stock, of which 16,036,625 [ ] shares are issued and outstanding, no shares are reserved for issuance pursuant to the Company’s stock option plans, 1,500,000 shares are reserved for issuance pursuant to securities (other than the Notes and 2,068,000 the Warrants) exercisable for, or convertible into or exchangeable for shares of Common Stock and [ ] shares are reserved for issuance upon conversion of the Preferred Stock Notes and exercise of the Warrants (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h4(h) below); and (ii) 1,000,000 50,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation)stock, of which none no shares are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders stockholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c3(c), as of the effective date of this Agreement, , (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act (except the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred StockWarrants, or the Conversion Shares or Warrant Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive or Chief Financial Officer on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 900,000,000 shares of Common Stock, of which 16,036,625 2,119,076 shares are issued and outstanding, no shares are reserved for issuance pursuant to the Company's stock option plans, no shares are reserved for issuance pursuant to securities (other than the Debentures and 2,068,000 the Warrants) exercisable for, or convertible into or exchangeable for shares of Common Stock and 104,666,667 shares are reserved for issuance upon conversion of the Preferred Stock Debentures and the Additional Debentures (as defined in Section 4(l)) and exercise of the Warrants and the Additional Warrants (as defined in Section 4(l)) (subject to adjustment pursuant to the Company’s 's covenant set forth in Section 6(h4(h) below); and (ii) 1,000,000 no shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingstock. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c3(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act (except the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the NotesDebentures, the Preferred StockWarrants, or the Conversion Shares or Warrant Shares. The Company has furnished to the Buyer true and correct copies of the Company’s 's Articles of Incorporation as in effect on the date hereof (“"Articles of Incorporation”"), the Company’s Bylaws's By-laws, as in effect on the date hereof (the “Bylaws”"By-laws"), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company's Chief Executive or Chief Financial Officer on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 ___________ shares of Common Stock, of which 16,036,625 __________ shares are issued and outstanding, __________ shares are reserved for issuance pursuant to the Company's stock option plans, __________ shares are reserved for issuance pursuant to securities (other than the Notes and 2,068,000 the Warrants) exercisable for, or convertible into or exchangeable for shares of Common Stock and __________ shares are reserved for issuance upon conversion of the Preferred Stock Notes and exercise of the Warrants (subject to adjustment pursuant to the Company’s 's covenant set forth in Section 6(h4(h) below); and (ii) 1,000,000 ______ shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation)stock, of which none _______ shares are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(cSCHEDULE 3(C), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act (except the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred StockWarrants, or the Conversion Shares or Warrant Shares. The Company has furnished to the Buyer true and correct copies of the Company’s 's Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”"ARTICLES OF INCORPORATION"), the Company’s Bylaws's By-laws, as in effect on the date hereof (the “Bylaws”"BY-LAWS"), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company's Chief Executive or Chief Financial Officer on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 [ ] shares of Common Stock, of which 16,036,625 [ ] shares are issued and outstanding, no shares are reserved for issuance pursuant to the Company’s stock option plans, 1,500,000 shares are reserved for issuance pursuant to securities (other than the Notes and 2,068,000 the Warrants) exercisable for, or convertible into or exchangeable for shares of Common Stock and [ ] shares are reserved for issuance upon conversion of the Preferred Stock Notes and exercise of the Warrants (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h4(h) below); and (ii) 1,000,000 50,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation)stock, of which none no shares are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders stockholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c3(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act (except the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred StockWarrants, or the Conversion Shares or Warrant Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive or Chief Financial Officer on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 150,000,000 shares of Common Stock, of which 16,036,625 74,162,895 shares are issued and outstanding, and 2,068,000 9,300,000 shares are reserved for issuance pursuant to the Company’s stock option plans, and, 66,537,105 shares are reserved for issuance upon conversion of the Preferred Stock Notes and exercise of the Warrants (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h4(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c3(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act (except the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred StockWarrants, or the Conversion Shares or Warrant Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive or Chief Financial Officer on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to (a) As of the transactions to be effected at the Closingdate of this Agreement, the authorized capital stock capitalization of the Company consists of (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant is as set forth in Section 6(h3.06(a) belowof the Company Disclosure Letter, which reflects in all material respects all of the issued and outstanding Company Share Capital and all rights to acquire share capital or securities of the Company. (b) Except as set forth in the capitalization table under Section 3.06(a) of the Company Disclosure Letter, to the extent expressly permitted under Section 5.01 (including as required by applicable Law); and , or as set forth in Section 3.06(g) of the Company Disclosure Letter, (i) there are no other outstanding shares of the Company, (ii) 1,000,000 there are no outstanding subscriptions, options, warrants, calls, convertible securities, rights of first refusal, preemptive rights, or other similar rights (whether or not currently exercisable), agreements or commitments (other than this Agreement) relating to the issuance or acquisition of share capital to which the Company or any of its Subsidiaries is a party obligating the Company or any of its Subsidiaries to (A) issue, transfer or sell any shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing the Company or other equity interests of the Amendment Company or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interests, (B) grant, extend or enter into any such subscription, option, warrant, call, convertible securities or other similar right, agreement or arrangement, (C) redeem, repurchase or otherwise acquire any such shares of the Company or other equity interests, or (D) provide an amount of funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in the Company or any of its Subsidiaries or any other Person, and (iii) other than pursuant to this Agreement, there is no condition or circumstance that could be reasonably likely to give rise to or provide a basis for the assertion of a claim by any Person to the Articles effect that such Person is entitled to acquire or receive any shares of Incorporation)the Company. There are no outstanding or authorized stock appreciation, of which none are issued and outstanding. phantom stock, profit participation or other similar rights with respect to the Company or its Subsidiaries. (c) All of such outstanding shares of capital stock arethe Company Share Capital have been duly authorized and are validly issued, fully paid and non-assessable and not subject to any pre-emptive rights, right of participation, right of maintenance or upon issuance will beany similar right. All outstanding shares of the Company Share Capital were issued or sold in compliance in all material respects with (i) applicable securities Laws, (ii) the Company Organizational Documents, and (iii) any Contract. (d) Each outstanding share or other equity interests of each Subsidiary is duly authorized, validly issued, fully paid and nonassessable. No shares non-assessable and is not subject to any pre-emptive rights, right of capital stock participation, right of maintenance, or any similar right. (e) Except as set forth in the Company Organizational Documents and Section 3.06(b) of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)Disclosure Letter, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock contractual obligations of the Company or any of its SubsidiariesSubsidiaries to repurchase, redeem or otherwise acquire any shares of the Company Share Capital or shares of any Subsidiary, if any, of the Company. (f) There are no voting trusts, proxies or similar agreements, arrangements by or commitments to which the Company or any of its Subsidiaries is or may become bound a party with respect to issue additional the voting of any shares of capital stock of the Company or any of its Subsidiaries, (ii) there . There are no agreements bonds, debentures, notes or arrangements under which other instruments of indebtedness of the Company or any of its Subsidiaries is obligated that entitle the holder of such instruments of indebtedness to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock vote together with shareholders of the Company and on any matters with respect to the material rights of the holders thereof Company or any Subsidiary, if any. (g) The Company does not have any share option plan or any other plan, program, agreement or arrangement providing for any equity-based compensation for any Person that are currently in respect theretoeffect or outstanding.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized capital stock of the Company consists of (i1) 50,000,000 30,000,000 shares of Common Stock, and (2) 5,000,000 shares of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion Preferred Stock. As of the date of this Agreement, 14,995,000 shares of Common Stock and no shares of Preferred Stock (subject together with the Common Stock, the "Company Stock") are outstanding. All of the Shares have been duly authorized, validly issued and are fully paid and nonassessable. Except for the Company Stock, there are no shares of capital stock or other equity securities of the Company outstanding. (b) Except for the warrants to adjustment pursuant to purchase 790,000 shares of Common Stock and as contemplated by the Related Agreements, (i) there are no preemptive or similar rights on the part of any holder of any class of securities of the Company’s covenant set forth in Section 6(h) below); , and (ii) 1,000,000 no options, warrants, conversion or other rights, agreements or commitments of any kind are outstanding that obligate the Company, contingently or otherwise, to issue, sell, purchase, return or redeem any shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of its capital stock areof any class or any securities convertible into or exchangeable for any such shares, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessableno authorization therefor has been given. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights held in the Company's treasury and except in respect of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, (i) there are warrants described above no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company are reserved for issuance. There are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of its Subsidiariesthe Shares. (c) Notwithstanding anything to the contrary set forth herein, the sole remedy for any breach of the representations and warranties set forth in subparagraph (b) above shall be a purchase price adjustment (the "Purchase Price Adjustment") on a retrospective basis so that either (i) the number of Shares transferred to the Purchaser is increased or arrangements by which (ii) the Company or any Purchase Price is decreased so that, in either such event, the Purchaser shall have as of its Subsidiaries is or may become bound to issue additional shares the Closing Date the economic equivalent of 15.74% of the capital stock of the Company or any (on a fully diluted basis) in consideration of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated Purchase Price. The Indirect Stockholder shall cause the Stockholders to register effect the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained Purchase Price Adjustment in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”)such event, and the terms parties agree that an interest factor of all securities convertible into or exercisable ten percent (10%) from the Closing Date until the effective date of any such Purchase Price Adjustment shall be included in the Purchase Price Adjustment to compensate the Purchaser for Common Stock of the Company and the material rights of the holders thereof delay in respect theretoobtaining such economic equivalent.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized capital stock of the Company consists of (i) 50,000,000 20 million shares of Common Stock, of which 16,036,625 10,556,755 shares are were issued and outstandingoutstanding as of the close of business on May 22, 2002, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 5 million shares of undesignated preferred stock (517,000 stock, no shares of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such the issued and outstanding shares of capital stock areof the Company have been validly issued, or upon issuance will be, and are duly authorized, validly issuedfully paid, fully paid non-assessable and nonassessablefree of preemptive rights. Except as set forth on Schedule 3.02(a), as of the date hereof, there are no outstanding (i) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or voting securities of the Company, (ii) options, warrants or other rights to acquire from the Company or any of its Subsidiaries, or 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 Company or (iii) equity equivalents, interests in the ownership or earnings of the Company or any of its Subsidiaries or other similar rights (including stock appreciation rights) (collectively, "Company Securities"). No shares of capital stock of the Company have been issued by the Company since May 22, 2002, except pursuant to any exercise of options or warrants described in Schedule 3.02 (a) There are subject to preemptive rights or any other similar rights of the shareholders no outstanding obligations of the Company or any liens of its Subsidiaries to repurchase, redeem or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for otherwise acquire any shares of capital stock of the Company or any of its SubsidiariesCompany Securities. There are no stockholder agreements, voting trusts or arrangements by other agreements or understandings to which the Company or any of its Subsidiaries is a party or may become to which it is bound relating to issue additional the voting of any shares of capital stock of the Company. Schedule 3.02(a) sets forth information as of the date hereof regarding the exercise price, date of grant, term and number of shares underlying each outstanding option and warrant to acquire capital stock of the Company. (b) Except as described in Schedule 3.01, 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). There are no securities of the Company or any of its Subsidiaries convertible into or exchangeable for, no options or other rights to acquire from the Company or its Subsidiaries, and no other Contract, understanding, arrangement or obligation (iiwhether or not contingent) there are no agreements providing for the issuance or arrangements under which the Company sale, directly or indirectly of, any capital stock or other ownership interests in, or any of its Subsidiaries is obligated to register the sale of other securities of, any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies Subsidiary of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to the transactions to be effected at the ClosingAs of June 4, 2019, the authorized capital stock of the Company consists of (i) 50,000,000 500,000,000 shares of Common Stock, of which 16,036,625 approximately 33,316,861 shares of Common Stock are issued and outstanding, and 2,068,000 100,000,000 shares of preferred stock authorized of which 0 shares of preferred stock are issued and outstanding. Except as disclosed in the SEC Documents, no shares are reserved for issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other than the Note) exercisable for, or convertible into or exchangeable for shares of Common Stock and 6,000,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingNote. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)the SEC Documents, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer filed in its SEC Documents true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 200,000,000 shares of Common Stock, of which 16,036,625 75,000,000 shares are issued and outstanding, 0 shares are reserved for issuance pursuant to the Company's stock option plans, 5,761,904 shares are reserved for issuance pursuant to securities (other than the Notes and 2,068,000 the Warrants) exercisable for, or convertible into or exchangeable for shares of Common Stock and 116,111,111 shares are reserved for issuance upon conversion of the Preferred Stock Notes and exercise of the Warrants (subject to adjustment pursuant to the Company’s 's covenant set forth in Section 6(h4(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c3(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act (except the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred StockWarrants, or the Conversion Shares or Warrant Shares. The Company has furnished to the Buyer true and correct copies of the Company’s 's Articles of Incorporation as in effect on the date hereof (“"Articles of Incorporation”"), the Company’s Bylaws's By-laws, as in effect on the date hereof (the “Bylaws”"By-laws"), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company's Chief Executive or Chief Financial Officer on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 1 billion shares of Common Stock, of which 16,036,625 31,077,356 shares are issued and outstanding, no shares are reserved for issuance pursuant to securities (other than the Notes and 2,068,000 the Warrants) exercisable for, or convertible into or exchangeable for shares of Common Stock aside from one certificate (#P2) for 10,000 preferred shares, convertible to 60,000 free trading shares and are reserved for issuance upon conversion of the Preferred Stock Notes and exercise of the Warrants (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h4(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c3(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act (except the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred StockWarrants, or the Conversion Shares or Warrant Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive or Chief Financial Officer on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the The authorized capital stock of the Company consists Company, as of (i) 50,000,000 June 10, 2015, consisted of 100,000,000 shares of Common Stock, of which 16,036,625 21,198,411 shares are were issued and outstanding, outstanding and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 5,000,000 shares of undesignated preferred stock (517,000 blank check Preferred Stock, none of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingcurrently designated. All of such the issued and outstanding shares of capital stock are, or upon issuance will be, Common Stock have been duly authorized, validly issued, fully paid paid, and nonassessable. No As of June 10, 2015, options to purchase an aggregate of 1,205,295 shares of capital Common Stock and restricted stock units with respect to an aggregate of the Company are subject to preemptive rights or any other similar rights 635,424 shares of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the CompanyCommon Stock were outstanding. Except as disclosed in Schedule 5(c)or contemplated by the SEC Documents, as of the effective date of this AgreementCompany does not have outstanding any options to purchase, (i) there are no outstanding options, preferred stock, scrip, or any preemptive rights or other rights to subscribe forfor or to purchase, putsany securities or obligations convertible into, callsor any contracts or commitments to issue or sell, rights shares of first refusalits capital stock or any such options, agreementsrights, understandingsconvertible securities or obligations other than options and restricted stock units granted under the Company’s stock option plans. There are no bonds, claims debentures, notes or other commitments indebtedness having general voting rights (or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock securities having such rights) (“Voting Debt”) of the Company issued and outstanding. The issuance and sale of the Shares and Warrants will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of its Subsidiariessuch securities. There are no stockholders agreements, voting agreements or arrangements by other similar agreements with respect to the Company’s capital stock to which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiariesa party or, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies Company’s knowledge, between or among any of the Company’s Articles stockholders except as disclosed in SEC documents. The Company’s Amended and Restated Certificate of Incorporation Incorporation, as in effect on amended (the date hereof (“Articles Certificate of Incorporation”), the Company’s Bylaws, as in effect on the date hereof hereof, and the Company’s Second Amended and Restated Bylaws, as amended (the “Bylaws”), and as in effect on the terms of all securities convertible into or exercisable for Common Stock of date hereof, are each filed as exhibits to the Company and the material rights of the holders thereof in respect theretoSEC Documents.

Capitalization. Before giving effect Except as disclosed in the SEC Documents and in Schedule 3(c), no shares are reserved for issuance pursuant to the transactions Company’s stock option plans, no shares are reserved for issuance pursuant to be effected at securities (other than the ClosingNote) exercisable for, the authorized capital stock of the Company consists of (i) 50,000,000 or convertible into or exchangeable for shares of Common Stock, of which 16,036,625 shares are issued Stock and outstanding, and 2,068,000 sufficient shares are reserved for issuance upon conversion of the Preferred Stock Note (subject to adjustment pursuant to as required by the Company’s covenant set forth in Section 6(h) belowNote and transfer agent share reserve letter); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in the SEC Documents and in Schedule 5(c3(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer filed in its SEC Documents true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized capital stock of the Company ▇▇▇▇▇▇▇ consists of (i) 50,000,000 shares of 65,000,000 ▇▇▇▇▇▇▇ Common StockShares, of which 16,036,625 14,067,987 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion outstanding as of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); date of this Agreement, and (ii) 1,000,000 10,000,000 shares of undesignated preferred stock (517,000 stock, par value $0.001 per share, none of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. As of the date of this Agreement, 2,715,918 ▇▇▇▇▇▇▇ Common Shares were reserved for issuance upon exercise of options pursuant to the ▇▇▇▇▇▇▇ Stock Plans and up to 704,878 ▇▇▇▇▇▇▇ Common Shares were reserved for issuance pursuant to outstanding purchase rights pursuant to the ▇▇▇▇▇▇▇ ESPP. As of the date of this Agreement, there are options to purchase 2,192,837 ▇▇▇▇▇▇▇ Common Shares issued and outstanding pursuant to the ▇▇▇▇▇▇▇ Stock Plans. All of such the outstanding shares of capital stock are, or upon issuance will be, of ▇▇▇▇▇▇▇ have been duly authorized, and validly issued, issued and are fully paid and nonassessablenonassessable under the DGCL. No None of the outstanding shares of capital stock of the Company are subject to ▇▇▇▇▇▇▇ has been issued in violation of any preemptive rights or any other similar rights of the shareholders current or past stockholders of ▇▇▇▇▇▇▇. (b) Except as set forth in Section 4.5(a) or in Section 4.5(b) of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)▇▇▇▇▇▇▇ Disclosure Letter, as of the effective date of this Agreement, (i) there are no outstanding options, preferred (i) shares of capital stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims debt securities or other commitments voting securities of ▇▇▇▇▇▇▇, (ii) securities of ▇▇▇▇▇▇▇ or rights any of any character whatsoever relating to, or securities or rights its Subsidiaries convertible into or exchangeable for shares of capital stock, debt securities or voting securities of ▇▇▇▇▇▇▇, or (iii) subscriptions, calls, contracts, commitments, understandings, restrictions, arrangements, rights, warrants, options or other rights to acquire from ▇▇▇▇▇▇▇, or obligations of ▇▇▇▇▇▇▇ to issue, any capital stock, debt securities or other voting securities or obligating ▇▇▇▇▇▇▇ to grant, extend or enter into any such agreement or commitment. There are no outstanding obligations of ▇▇▇▇▇▇▇ to repurchase, redeem or otherwise acquire any securities of ▇▇▇▇▇▇▇. All warrants or other securities convertible into ▇▇▇▇▇▇▇ Common Shares (other than options to purchase ▇▇▇▇▇▇▇ Common Shares issued under the ▇▇▇▇▇▇▇ Option Plans) to be assumed in the ▇▇▇▇▇▇▇ Merger pursuant to Section 3.4 are set forth in Section 4.5(b) of the ▇▇▇▇▇▇▇ Disclosure Letter. There are no outstanding obligations of ▇▇▇▇▇▇▇ to grant, extend, accelerate the vesting of or enter into any option, warrant, equity security or other security of ▇▇▇▇▇▇▇. There are no ▇▇▇▇▇▇▇ Common Shares that are unvested or are subject to a repurchase option, risk of forfeiture or other condition under any applicable restricted stock purchase agreement or other agreement with ▇▇▇▇▇▇▇. There are no registration rights and voting trusts, proxies or other agreements or understandings to which ▇▇▇▇▇▇▇ or any of its Subsidiaries is a party or is bound with respect to the voting of any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto▇▇▇▇▇▇▇.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of of: (i) 50,000,000 500,000,000 shares of Common Stock, of which 16,036,625 approximately 24,666,182 shares are issued and outstanding; and (ii) 10,000,000 shares of blank check preferred stock, of which -0- are issued and 2,068,000 outstanding. Except as disclosed in the SEC Documents (plus EMA shares), no shares are reserved for issuance pursuant to the Company’s stock option plans, 773,020 shares are reserved for issuance pursuant to securities (other than the Note and any other convertible promissory note issued to the Buyer) exercisable for, or convertible into or exchangeable for shares of Common Stock and 1,600,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingNote. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)the SEC Documents, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer filed in its SEC Documents true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to (a) At the transactions to be effected at close of business on May 31, 2011, 34,094,159 Shares were authorized and issued, of which 370,962 Shares were held in treasury. All of the Closing, the authorized issued shares of capital stock of the Company consists of (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No Up to 338,414 of the Shares held in treasury as set forth in the first sentence of this Section 2.4(a) may be issued pursuant to the Company’s Extraordinary Variable Compensation Plan (the “Equity Plan”), and upon the issuance thereof such Shares shall be duly authorized, validly issued, fully paid and nonassessable. (b) Except as set forth in Section 2.4(a) or in Section 2.4(b) of the Company Disclosure Letter, as of the date hereof, there are no outstanding (i) shares of capital stock of or other voting or equity interests in the Company are subject to preemptive rights or any other similar rights of the shareholders Company, (ii) securities of the Company or any liens or encumbrances imposed through other than the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, (i) there Convertible Notes that are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exercisable or exchangeable for any shares of capital stock of or other voting or equity interests in the Company, (iii) options or other rights or agreements, commitments, understandings, or other obligation of the Company or any of its SubsidiariesSubsidiaries to issue, transfer or arrangements sell, any shares of capital stock of or other voting or equity interests in the Company or securities convertible into or exercisable or exchangeable for shares of capital stock of or other voting or equity interests in the Company, (iv) voting trusts, proxies or other similar agreements or understandings to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is or may become bound with respect to issue additional the voting of any shares of capital stock of or other voting or equity interests in the Company or (v) contractual obligations or commitments of any character to which the Company is a party restricting the transfer of, or requiring the registration for sale of, any shares of capital stock of or other voting or equity interests in the Company (the items in clauses (i), (ii) and (iii) being referred to collectively as the “Company Securities”). There are no outstanding obligations of the Company or any of its SubsidiariesSubsidiaries to repurchase, redeem or otherwise acquire any Company Securities. (iic) there are no agreements or arrangements under which Except as set forth in Section 2.4(c) of the Company or Disclosure Letter, neither the Company nor any of its Subsidiaries is obligated has outstanding bonds, debentures, notes or, other than as referred to register in this Section 2.4 and Section 2.5, other securities, other than the sale Convertible Notes, (i) the holders of any of its or their securities under which have the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by right to vote with the Company Shareholders on any matter or (or in any agreement providing rights to security holdersii) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities which are convertible into or exercisable for Common Stock Company Securities having the right to vote. (d) Except as set forth in Section 2.4(d) of the Company Disclosure Letter, the Company and the material rights of the holders thereof in respect theretoits Subsidiaries have no indebtedness for borrowed money.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized capital stock of the Company consists of (i) 50,000,000 15,000,000 shares of Common Stock, Stock of which 16,036,625 as of May 31, 2000 there were 9,679,001 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); outstanding and (ii) 1,000,000 3,000,000 shares of undesignated preferred stock (517,000 Preferred Stock of which will be designated Series A Convertible Preferred Stock upon filing as of the Amendment to the Articles of Incorporation), of which none date hereof there are no shares issued and outstanding. All As of such May 31, 2000 there were outstanding Options to purchase an aggregate of 367,977 shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid Common Stock (all of which Options were vested and nonassessableexercisable). No All outstanding shares of capital stock of the Company have been duly authorized and validly issued and are subject to preemptive rights fully paid and nonassessable. (b) Except for the Rights Agreement, except as set forth in this SECTION 5.5 and except for changes since May 31, 2000 resulting from the exercise of Options outstanding on such date, there are no outstanding (i) shares of capital stock or any other similar rights voting securities of the shareholders Company, (ii) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company or its Subsidiaries, (iii) options or other rights to acquire from the Company or its Subsidiaries, or obligations of the Company or its Subsidiaries to issue, any shares of capital stock, voting securities or securities convertible into or exchangeable for shares of capital stock or voting securities of the Company or any liens Subsidiary, and (iv) no equity equivalent interests in the ownership or encumbrances imposed through the actions or failure to act earnings of the CompanyCompany or its Subsidiaries or other similar rights (the items in clauses (b)(i), (ii), (iii) and (iv) being referred to collectively as the "COMPANY SECURITIES"). Except as disclosed in Schedule 5(c), as set forth on SECTION 5.5 of the effective date of this AgreementDisclosure Letter, (i) there are no outstanding optionsobligations of the Company or any Subsidiary to repurchase, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, redeem or otherwise acquire any Company Securities. There are no stockholder agreements, understandings, claims voting trusts or other commitments agreements or rights understandings to which the Company or any of any character whatsoever its Subsidiaries is a party or by which it is bound relating to, to the voting or securities or rights convertible into or exchangeable for registration of any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company Subsidiaries or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing preemptive rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in with respect thereto.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the The authorized capital stock of the Company consists of (i) 50,000,000 25,000,000 shares of Common Stock. At the close of business on March 18, 1998, (i) 12,214,473 shares of which 16,036,625 shares are Common Stock were issued and outstanding, (ii) no shares of Common Stock were held by the Company in its treasury and 2,068,000 (iii) 2,722,548 shares are of Common Stock were reserved for issuance upon conversion exercise of the Preferred options to purchase shares of Common Stock (subject to adjustment "Company Stock Options") issued pursuant to the Company’s covenant 's stock option plans and outstanding warrants to purchase common stock. Except as set forth in Section 6(h) below); and (ii) 1,000,000 above, as of the date of this Agreement, no shares of undesignated preferred capital stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing or other voting securities of the Amendment to the Articles of Incorporation)Company were issued, of which none are issued and reserved for issuance or outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, of the Company are duly authorized, validly issued, fully paid and nonassessablenonassessable and not subject to preemptive rights. No There are no bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of the Company may vote. Except as set forth above, as of the date of this Agreement, there are not any securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which the Company or any of its subsidiaries is a party or by which any of them 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 or other voting securities of the Company are subject to preemptive rights or of any of its subsidiaries or obligating the Company or any other similar rights of the shareholders its subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. There is not any outstanding contractual obligations of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, its subsidiaries (i) there are no outstanding optionsto repurchase, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims redeem or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for otherwise acquire any shares of capital stock of the Company or (ii) to vote or to dispose of any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of the capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto's subsidiaries.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized capital stock Equity Interests of the Company consists of 12,500,000 Class A Units, 2,000,000 Class B Units and 0 Class C Units, of which 11,982,748 Class A Units, 890,422 Class B Units and 0 Class C Units are issued and outstanding and none of which are held in treasury. All of the Company Interests (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, have been duly authorized, are validly issued, fully paid (to the extent such concept is applicable) and nonassessablenon-assessable (to the extent such concept is applicable), with no personal liability attaching to the ownership thereof and (ii) are owned of record and beneficially by the Company Members as set forth in the Member Allocation Schedule. No shares The Company Interests constitute all of capital stock the issued and outstanding Equity Interests of the Company. All of the Company are Interests was issued in compliance with applicable Law. None of the Company Interests was issued in violation of any agreements, arrangements or commitment to which the Company or any equityholder is a party or is subject to or in violation of any preemptive or similar rights granted by the Company or any other similar rights Person. (b) Except as set forth on the Member Allocation Schedule or on Section 4.4(b) of the shareholders Company Disclosure Schedule, there are no securities, options, warrants, rights, calls, subscriptions, agreements, commitments or understandings of any nature whatsoever, fixed or contingent, that directly or indirectly (i) calls for the issuance, redemption, sale, pledge or other disposition of any Equity Interests or other equity awards of the Company or any liens securities convertible into, or encumbrances imposed through the actions other rights to acquire, any Equity Interests or failure to act other equity awards of the Company. Except as disclosed in Schedule 5(c), as (ii) obligates the Company to grant, offer or enter into any of the effective date foregoing, or (iii) relates to the voting or control of this Agreementsuch Equity Interests, securities or rights. The Company has not granted to any Person the right to demand or request that the Company 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. (ic) Except for the Company Interests, there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or (i) equity securities or rights interests or voting debt or equity securities of the Company, (ii) securities convertible into or exchangeable for into equity securities or interests of the Company, (iii) any shares of capital stock debt or debt instruments, options or warrants that require the Company to issue, sell or otherwise cause to become outstanding or to acquire, repurchase or redeem equity securities or interests of the Company or any of its Subsidiaries, (iv) “phantom stock,” stock appreciation rights or arrangements by which other similar rights with respect to the Company. No Company Member or any other Person is entitled to any preemptive or similar rights to subscribe for Equity Interests of its Subsidiaries is or may become bound to issue additional shares of capital stock the Company. (d) None of the Company Members or any Key Persons are or were at the time of its Subsidiaries, (ii) there are no agreements or arrangements under which their investment in the Company or any persons resident in India for the purpose of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained applicable Laws in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretoIndia.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 30,000,000 shares of Company Common Stock, par value $.01 per share, of which 16,036,625 12,273,636 shares are issued and outstanding, outstanding and 2,068,000 no shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to held in the Company’s covenant set forth in Section 6(h) below); 's treasury, and (ii) 1,000,000 shares of undesignated preferred stock (517,000 Company Preferred Stock, par value $.01 per share, none of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and or outstanding. All of such issued and outstanding shares of capital stock areof each Subsidiary are owned, beneficially and of record, by the Company, free and clear of any mortgage, pledge, security interest, encumbrance, lien or upon issuance will beother charge of any kind ("Lien"), duly authorized, other than Liens granted in connection with the Company's credit facility. All issued and outstanding shares of Company Common Stock have been validly issued, are fully paid and nonassessable, and have not been issued in violation of and are not currently subject to any preemptive rights. No Except for options to purchase an aggregate 1,710,764 shares of capital stock of Company Common Stock granted pursuant to the Company's Third Amended and Restated 1996 Stock Option Plan (the "Company Option Plan") listed, together with their respective exercise prices, in the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of Disclosure Schedule, and for Liens granted in connection with the Company. Except as disclosed in Schedule 5(c)'s credit facility, as of the effective date of this Agreement, there are not any outstanding or authorized subscriptions, options, warrants, calls, rights, convertible securities, commitments, restrictions, arrangements, or any other agreements of any character to which the Company or any Subsidiary is a party that, directly or indirectly, (i) there are no outstanding options, preferred stock, scrip, rights obligate the Company or any Subsidiary to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for issue any shares of capital stock or any securities convertible into, or exercisable or exchangeable for, or evidencing the right to subscribe for, any shares of capital stock, (ii) call for or relate to the sale, pledge, transfer, or other disposition or encumbrance by the Company or any Subsidiary of any shares of its Subsidiariescapital stock, or arrangements by which (iii) to the knowledge of the Company, relate to the voting or control of such capital stock. The Company Disclosure Schedule sets forth a complete and accurate list of all stock options, warrants, and other rights to acquire Company Common Stock, including the name of the holder, the date of grant, acquisition price, number of shares, exercisability schedule, and, in the case of options, the type of option under the Code. No consent of holders or participants under the Company or any Option Plan is required to carry out the provisions of its Subsidiaries is or may become bound to issue additional shares of capital stock Section 1.7. All actions, if any, required on the part of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company Option Plan to allow for the treatment of Company Options as is provided in Section 1.7, has been, or any of its Subsidiaries is obligated prior to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued Closing will be, validly taken by the Company. In no event will the aggregate number of shares of Company Common Stock outstanding at the Effective Time (including all shares subject to then outstanding Company Options or in any agreement providing other rights to security holdersacquire or commitments to issue shares of Company stock, other than the Stock Option Agreement referenced in Section 5.13) that will be triggered exceed by more than 1,000 shares the issuance sum of the Notes, the Preferred Stock, or the Conversion Shares. The outstanding shares of Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock described in the first sentence of this Section 3.3, plus any shares of Company Common Stock issued upon the exercise of outstanding options to purchase Company and the material rights of the holders thereof Common Stock identified in respect theretoSection 3.3.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the The authorized capital stock of the Company consists of 10,000,000 Shares. At the close of business on May 26, 1999 (ia) 50,000,000 shares of Common Stock, of which 16,036,625 shares are 3,468,202 Shares were issued and outstanding, and 2,068,000 shares are (b) no Shares were held by the Company in its treasury, (c) 944,450 Shares were reserved for issuance upon conversion exercise of the Preferred outstanding Company Stock Options (subject to adjustment pursuant to the Company’s covenant set forth as defined in Section 6(h7.4) below); and (iid) 1,000,000 shares 305,000 Shares were issuable upon the exercise of undesignated preferred stock outstanding Warrants (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingas defined in Section 7.4. All of Since such outstanding date no shares of capital stock or other voting securities of the Company were issued, reserved for issuance, issuable or outstanding. All outstanding Shares are, or upon issuance and all Shares that may be issued will be, when issued, duly authorized, validly issued, fully paid and nonassessablenonassessable and not subject to preemptive rights. No There are no bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of the Company may vote. Except as set forth above, as of the date hereof, there are no securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which the Company is a party or by which any of them is bound obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders voting securities of the Company or obligating the Company to issue, grant, extend or enter into any liens such security, option, warrant, call, right, commitment, agreement, arrangement or encumbrances imposed through the actions or failure to act of the Companyundertaking. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, (i) there There are no outstanding optionscontractual obligations of the Company to repurchase, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims redeem or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained other than as set forth in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”Section 7.4), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the The authorized capital stock of the Company at the date hereof consists of (ia) 50,000,000 10,000,000 shares of Common Stock, 4,606,184 of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(hb) below); and (ii) 1,000,000 5,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation)Stock, of which none 500,000 are issued and outstanding. All of such the issued and outstanding shares of the Company's capital stock are, or upon issuance will be, have been duly authorized, authorized and validly issued, issued and are fully paid and nonassessablenon-assessable and all securities previously issued and sold by the Company were issued and sold in compliance with applicable Federal and state securities laws. No Except as set forth in the Disclosure Schedule, no other shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, its subsidiaries or securities or rights convertible into or exchangeable for such shares have been issued or reserved for issuance, and except as contemplated by the Financing Documents, (a) no subscription, warrant, option, convertible security or other right (contingent or otherwise) to purchase or acquire any shares of capital stock of the Company or any of its Subsidiariessubsidiaries is authorized or outstanding, (b) there is not any commitment or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock offer of the Company or any of its Subsidiariessubsidiaries to issue any subscription, warrant (ii) there are no agreements other than the Warrants), option, convertible security or arrangements under which other such right to issue or distribute to holders of any shares of its indebtedness or assets of the Company or any of its Subsidiaries is obligated to register subsidiaries, (c) neither the sale of Company nor any of its subsidiaries has any obligation (contingent or their securities under the 1933 Act otherwise) to purchase, redeem or otherwise acquire any shares of its capital stock or any interest therein or to pay any dividend or make any other distribution in respect thereof, and (iiid) there are no anti-dilution or price adjustment provisions contained in any security issued by restrictions on the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies transfer of the Company’s Articles 's capital stock other than those arising from Federal and state securities laws. Except as contemplated by this Agreement, no person or entity is entitled to (x) any preemptive or similar right with respect to issuance of Incorporation as in effect on the date hereof (“Articles any capital stock of Incorporation”), the Company’s Bylaws, as in effect on or (y) any rights with respect to the date hereof (the “Bylaws”), and the terms registration of all securities convertible into or exercisable for Common Stock any capital stock of the Company and under the material rights Securities Act of 1933, as amended (the holders thereof in respect thereto"Securities Act").

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of of: (i) 50,000,000 230,000,000 shares of Common Stock, of which 16,036,625 approximately 72,302,937 shares are issued and outstanding; and (ii) nil shares of preferred stock, of which nil are issued and 2,068,000 outstanding. Except as disclosed in the SEC Documents, no shares are reserved for issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other than the Note) exercisable for, or convertible into or exchangeable for shares of Common Stock and 31,000,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingNote. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)the SEC Documents, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer filed in its SEC Documents true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect Except as disclosed in the SEC Documents, no shares are reserved for issuance pursuant to the transactions Company’s stock option plans, no shares are reserved for issuance pursuant to be effected at securities (other than the ClosingNote) exercisable for, the authorized capital stock of the Company consists of (i) 50,000,000 or convertible into or exchangeable for shares of Common Stock, of which 16,036,625 shares are issued Stock and outstanding, and 2,068,000 sufficient shares are reserved for issuance upon conversion of the Preferred Stock Note (subject to adjustment pursuant to as required by the Company’s covenant set forth in Section 6(h) belowNote and transfer agent share reserve letter); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)the SEC Documents, as of the effective date of this Agreement, (i) except as disclosed on Schedule 3(c), there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer filed in its SEC Documents true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written certification of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized capital stock of the Company consists of (i) 50,000,000 an unlimited number of shares of Common Stock and (ii) an unlimited number of shares of preferred stock (the "Preferred Stock"). Of such authorized capital stock, (i) 7,196,627 shares of which 16,036,625 shares Common Stock are issued and outstanding, all of which are validly issued and 2,068,000 are fully paid, nonassessable and free of preemptive rights, (ii) no shares of Preferred Stock are issued and outstanding and (iii) 2,104,340 shares of Common Stock are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant exercise of outstanding options and warrants to purchase Common Stock. Assuming the exercise of all outstanding options and warrants to purchase Common Stock and the issuance of the Shares pursuant to this Agreement, there would be 25,800,967 shares of Common Stock issued and outstanding as of the date hereof. (b) Other than as set forth in Section 6(hsubsection 2.2(a) below); above, certain rights issued pursuant to the Rights Agreement between the Company and American Stock Transfer & Trust Company (iithe "Rights Agreement") 1,000,000 and certain entitlements of each independent director to receive options under the terms of the Company's 1999 Stock Option Plan on January 1 of each year, there are no outstanding options, warrants, subscriptions, calls, convertible securities or other rights, agreements, arrangements or commitments (contingent or otherwise) (including any right of conversion or exchange under any outstanding security, instrument or other agreement) obligating the Company or any of its direct or indirect subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, any shares of undesignated preferred their capital stock or obligating them to grant, extend or enter into any such agreement or commitment. There are no outstanding contractual obligations of the Company or any of its direct or indirect subsidiaries to repurchase, redeem or otherwise acquire any shares of their capital stock or make any investment (517,000 in the form of which a loan, capital contribution or otherwise) in any other Person other than a subsidiary of the Company. Upon consummation of the Closing as contemplated hereby, including receipt by the Company of the Purchase Price payable pursuant to Section 1.2 hereof, the Shares owned by each Investor will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized capital stock of the Company consists solely of 200,000,000 Company Common Shares and 2,000,000 shares of preferred stock. As of May 31, 2003, there were outstanding (i) 50,000,000 39,775,611 Company Common Shares, (ii) no shares of Company preferred stock, (iii) stock options (or binding obligations to issue stock options) to purchase an aggregate of up to 4,931,287 Company Common StockShares, (iv) warrants (or binding obligations to issue warrants) to purchase an aggregate of up to 969,346 Company Common Shares (of which 16,036,625 shares are issued and outstandingwarrants to purchase an aggregate of 969,346 Company Common Shares were currently exercisable), and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject v) rights to adjustment purchase Company Common Shares pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingCompany ESPP. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company have been duly authorized and validly issued and are subject to preemptive rights or any other similar rights fully paid and nonassessable. (b) As of the shareholders date hereof, except (i) as set forth in this Section 3.2, (ii) for changes after the date of this Agreement resulting from the grant of stock options in the ordinary course of business consistent with past practice and the exercise of Company Options or any liens or encumbrances imposed through Company Warrants outstanding on the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, or (iiii) for issuances of Company Common Shares after the date of this Agreement pursuant to the Company ESPP in accordance with its terms (subject to any amendments of such terms in accordance with the terms of the Company ESPP), there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights (x) shares of first refusal, agreements, understandings, claims capital stock or other commitments or rights voting securities of any character whatsoever relating tothe Company, or (y) securities or rights of the Company convertible into or exchangeable for any shares of capital stock or voting securities of the Company or its subsidiaries, or (z) options or other rights to acquire from the Company, and there is no obligation of the Company to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company (the items in clauses (x), (y) and (z) being referred to collectively as the “Company Securities”). There are no outstanding obligations of the Company or any of its Subsidiariessubsidiaries to repurchase, redeem or otherwise acquire any Company Securities. There are no preemptive or other similar rights available to the holders of any Company Securities. Except as otherwise contemplated by this Agreement, neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated herein, shall result in the acceleration of vesting of any Company Option or Company Warrant or otherwise result in any change to the terms of any Company Option or Company Warrant other than the conversion set forth in Section 2.4 or 2.5, as the case may be. (c) All of the outstanding shares of capital stock of, or arrangements other ownership interest in, each subsidiary of the Company have been duly authorized and validly issued and are fully paid and nonassessable. All of the outstanding capital stock of, or other ownership interest which is owned, directly or indirectly, by which the Company in, each of its subsidiaries is owned free and clear of any mortgage, lien, pledge, charge, security interest or encumbrance of any kind (including any limitation or restriction on the right to vote, sell or otherwise dispose of such capital stock or other ownership interests). There are no outstanding (i) securities of the Company’s subsidiaries convertible into or exchangeable or exercisable for shares of capital stock or other voting securities or ownership interests in any of its subsidiaries, (ii) options, warrants or other rights to acquire from the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock subsidiaries, and no other obligation of the Company or any of its Subsidiariessubsidiaries to issue, any capital stock, voting securities or other ownership interests in, or any securities convertible into or exchangeable or exercisable for any capital stock, voting securities or ownership interests in, any of its subsidiaries or (iiiii) there are no agreements or arrangements under which obligations of the Company or any of its Subsidiaries is obligated subsidiaries to register the sale repurchase, redeem or otherwise acquire any outstanding securities of any of its subsidiaries or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stockcapital stock of, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies other ownership interests in, any of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretoits subsidiaries.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 10,000,000 shares of preferred stock, $0.001 par value per share, none of which is issued and outstanding, and 90,000,000 shares of Common Stock, of which 16,036,625 as of the date hereof, 35,026,384 shares are issued and outstanding, and 2,068,000 4,831,900 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); stock option and (ii) 1,000,000 purchase plans and 10,750,000 shares are reserved for issuance pursuant to warrants exercisable for shares of undesignated preferred stock Common Stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of subject to increase to cover the Amendment to the Articles of Incorporationanti-dilution provisions associated therewith), of which none are issued and outstanding. All of such outstanding shares of capital stock areare duly authorized and have been, or upon issuance will be, duly authorized, validly issued, issued and are fully paid and nonassessable. No shares Except as specified in Section 3.1(g) of capital stock the Disclosure Letter, no securities of the Company are subject entitled to preemptive rights or similar rights, and no Person has any right of first refusal, preemptive right, right of participation, or any other similar rights of right to participate in the shareholders of transactions contemplated by the Company or any liens or encumbrances imposed through the actions or failure to act of the CompanyTransaction Documents. Except as disclosed specified in Schedule 5(c), as Section 3.1(g) of the effective date of this AgreementDisclosure Letter, (i) there are no outstanding options, preferred stockwarrants, scrip, scrip rights to subscribe forto, puts, calls, rights of first refusal, agreements, understandings, claims calls or other commitments or rights of any character whatsoever relating to, or securities securities, rights or rights obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of capital stock of the Company Common Stock, or any of its Subsidiariescontracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries Subsidiary is or may become bound to issue additional shares of capital stock Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. Except as specified in Section 3.1(g) of the Company Disclosure Letter, the issue and sale of the Securities will not, immediately or any with the passage of its Subsidiariestime, (ii) there are no agreements or arrangements under which obligate the Company to issue shares of Common Stock or other securities to any of its Subsidiaries is obligated to register Person (other than the sale Investors) and will not result in a right of any holder of its Company securities to adjust the exercise, conversion, exchange or their reset price under such securities (including, without limitation, under the 1933 Act and (iii) there are no any anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”similar provisions), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the authorized capital stock of the Company consists of (iA) 50,000,000 shares of Common Stock, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company of every class and series have been duly authorized and validly issued, free of any preemptive or similar rights except such as have been fully complied with, and are subject fully paid and nonassessable, with no liability attaching to preemptive the ownership thereof. (B) Except as set forth in the (x) Certificate of Incorporation, or (y) the Registration Rights Agreement, the Investor Rights Agreement, the Right of First Refusal Agreement, or the Voting Agreement (all of which were entered into by the Company and the various other parties thereto as of March 4, 2004, as they may have been amended), there are no outstanding (i) rights of first offer or first refusal, "drag-along" rights, "tag-along" rights or any other similar rights or agreements, arrangements or commitments of any character which obligate the Company or any of its subsidiaries, or, to the knowledge of the shareholders Company, any stockholder of the Company or other person, to transfer, sell or vote any liens or encumbrances imposed through the actions or failure to act of the Company. Except Company Securities (as disclosed in Schedule 5(cdefined below), as of (ii) obligations on the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock part of the Company or any of its Subsidiariessubsidiaries to repurchase, redeem or arrangements by which otherwise acquire any Company Securities, (iii) liabilities on the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock part of the Company or any of its Subsidiariessubsidiaries for dividends declared or accumulated but unpaid with respect to Company Securities, (iiiv) there are no agreements or arrangements under which obligations on the part of the Company or any of its Subsidiaries is obligated subsidiaries to register for public sale any Company Securities, and (v) obligations on the sale part of the Company or any of its subsidiaries or, to the knowledge of the Company, of any stockholder of the Company or their other person for the voting of Company Securities in any manner whatsoever. "Company Securities" means (i) shares of capital stock or other voting securities under of the 1933 Act 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, and (iii) there are no anti-dilution options, warrants or price adjustment provisions contained in any security issued by other rights to acquire from the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretoits subsidiaries.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of of: (i) 50,000,000 750,000,000 shares of Common Stock, of which 16,036,625 approximately 49,209,761 shares are issued and outstanding; and (ii) 5,000,000 shares of preferred stock, of which 1,000,100 are issued and 2,068,000 outstanding. Except as disclosed in the SEC Documents, no shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(hstock option plans, no shares are reserved for issuance pursuant to securities (other than the Note and any other convertible promissory note issued to the Buyer) below); and (ii) 1,000,000 exercisable for, or convertible into or exchangeable for shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingCommon Stock. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)the SEC Documents, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the The authorized capital stock of the Company consists of (i) 50,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.0001 per share (the “Preferred Stock”). After giving effect to the Merger, but immediately before the Initial Closing, the Company will have 9,333,333 shares of which 16,036,625 Common Stock (on a fully-diluted basis) and no shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such the outstanding shares of Common Stock and of the capital stock are, or upon issuance will be, of each of the Company’s subsidiaries have been duly authorized, validly issued, issued and are fully paid and nonassessable. No Immediately after giving effect to the Closing of the Minimum Offering Amount or the Maximum Offering Amount (in each case, assuming no sales pursuant to the Over-Subscription Option), the pro forma outstanding capitalization of the Company will be as set forth under “Pro Forma Capitalization” in Schedule 3c. After giving effect to the Merger: (i) no shares of capital stock of the Company are or any of its subsidiaries will be subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions suffered or failure to act of permitted by the Company. Except ; (ii) except as disclosed in set forth on Schedule 5(c)3c(ii) and as contemplated by the Transaction Documents and Placement Agent Warrants, as of the effective date of this Agreement, (i) there are will be no outstanding options, preferred stockwarrants, scrip, rights to subscribe forto, puts, calls, rights of first refusal, agreements, understandings, claims calls or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for into, any shares of capital stock of the Company or any of its Subsidiariessubsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, subsidiaries; (iiiii) there are will be no outstanding debt securities of the Company or any of its subsidiaries other than indebtedness as set forth in Schedule 3c(iii); (iv) other than pursuant to the Registration Rights Agreement or as set forth in Schedule 3c(iv), there will be no agreements or arrangements under which the Company or any of its Subsidiaries subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and Securities Act; (iiiv) there are will be no outstanding registration statements of the Company or any of its subsidiaries, and there will be no outstanding comment letters from the SEC or any other regulatory agency; (vi) except as provided in this Agreement or as set forth in Schedule 3c(vi), there will be no securities or instruments of the Company or any of its subsidiaries containing anti-dilution or similar provisions, including the right to adjust the exercise, exchange or reset price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) under such securities, that will be triggered by the issuance of the NotesShares as described in this Agreement; and (vii) no co-sale right, right of first refusal or other similar right will exist with respect to the Shares or the issuance and sale thereof. Upon request, the Preferred Stock, or the Conversion Shares. The Company has furnished will make available to the Buyer Purchaser true and correct copies of the Company’s Articles Certificate of Incorporation Incorporation, as in effect on as of the date hereof (“Articles of Incorporation”)Initial Closing, and the Company’s Bylaws, as in effect on as of the date hereof (the “Bylaws”)Initial Closing, and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretothereto other than stock options issued to officers, directors, employees and consultants.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate of this Agreement, the authorized capital stock of the Company consists of (i) 50,000,000 shares 60,000,000 Class A Shares with a nominal or par value of Common StockUSD$1.00 each, of which 16,036,625 approximately 5,426,381 shares are issued and outstanding, and 2,068,000 shares are outstanding or otherwise reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to securities (other than the Company’s covenant set forth in Section 6(hConverted Shares) below); exercisable for, or convertible into or exchangeable for shares of Class A Shares, and (ii) 1,000,000 shares 40,000,000 Class B Ordinary Shares with a nominal or par value of undesignated preferred stock USDS1.00 each (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation“Class B Shares”), of which none 22,437,754 shares are issued and outstanding. All outstanding or otherwise reserved for issuance pursuant to securities exercisable for, or convertible into or exchangeable for shares of Class B Shares, provided that (A) the Company acting by its board of directors shall have power to purchase and/or redeem any or all of such outstanding shares of and to increase or reduce the said capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are and to sub-divide or consolidate the said shares or any of them subject to preemptive rights or any other similar rights the provisions of the shareholders Cayman Islands Company Law (2016 Revision) (as amended) (“Company Law”) and the articles of association (the “Articles”) of the Company and to issue all or any liens part of its capital whether original, purchased, redeemed, increased or encumbrances imposed through reduced with or without any preference, priority or special privilege or subject to any restrictions whatsoever and so that unless the actions conditions of issue shall otherwise expressly provide every issue of shares whether stated to be ordinary, preference or failure otherwise shall be subject to act the powers on the part of the CompanyCompany hereinbefore provided, (B) the holders of Class A Shares are entitled to one vote for each such share and Class A shares are not redeemable at the option of the holders and not convertible into shares of any other class; and (C) the holders of Class B Shares are entitled to ten votes for each such share and the Class B shares are not redeemable at the option of the holders but convertible into Class A Shares at any time after the issuance at the option of the holders on 1 to 1 basis. Except as disclosed in Schedule 5(c)described above, as upon the consummation of the effective date of this Agreementtransactions contemplated hereby, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act (except for the registration rights provisions contained herein) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, Shares or the Preferred StockConverted Shares. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable. No shares of capital stock of the Conversion Shares. The Company has furnished are subject to preemptive rights or any other similar rights of the Buyer true and correct copies stockholders of the Company or any Lien imposed through the actions or failure to act of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized capital stock of the Company consists of (i) 50,000,000 25,000,000 shares of Common Stock, $0.001 par value per share and (ii) 5,000,000 shares of which 16,036,625 Preferred Stock, $0.001 par value per share. As of the Closing Date, there are (y) 3,160,000 shares are of Common Stock issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 all of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No non-assessable and (z) no shares of capital Preferred Stock issued and outstanding. In addition, there are 925,000 shares of Common Stock reserved for issuance pursuant to outstanding options and warrants. There are no shares of any class or series of preferred stock issued or outstanding. All of the Company are subject to preemptive rights or any other similar rights of the shareholders of securities issued by the Company or any liens or encumbrances imposed through the actions or failure to act of the Companyhave been issued in accordance with all applicable federal and state securities laws. Except Other than as disclosed in Schedule 5(c)set forth above, as of the effective date of this Agreement, (i) there are no outstanding other options, preferred stock, scrip, rights to subscribe for, putswarrants, calls, rights of first refusalrights, agreements, understandings, claims or other commitments or rights agreements of any character whatsoever relating toto which the Company is a party or by which the Company is bound or obligating the Company to issue, deliver, sell, repurchase or redeem, or securities cause to be issued, delivered, sold, repurchased or rights convertible into or exchangeable for redeemed, any shares of the capital stock of the Company or obligating the Company to grant, extend or enter into any such option, warrant, call, right, commitment or agreement. There are no preemptive rights or rights of first refusal or similar rights which are binding on the Company permitting any person to subscribe for or purchase from the Company shares of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock pursuant to any provision of the Company or any of its Subsidiarieslaw, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (the “Articles Certificate of Incorporation”), ) or the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”) or by agreement or otherwise. There are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities as described in this Agreement and the Offering Memo. True and correct copies of the Company’s Certificate of Incorporation and By-laws are available to the Subscriber upon request. (b) The Securities (including upon exercise of the Warrant, the Warrant Shares, and upon conversion of the Note, the securities issuable therefor), have been (or, with respect to the Warrant Shares and the terms securities issuable upon conversion of all securities convertible into or exercisable the Note, will be) duly authorized and, when issued, delivered and paid for Common Stock in the manner set forth in this Agreement, the Note and/or the Warrant, will be duly authorized, validly issued, fully paid and non-assessable. No stockholder of the Company and has any right to request or require the material rights Company to register the sale of any shares owned by such stockholder under the Act. No further approval or authority of the holders thereof in respect theretostockholders or the Board of Directors of the Company will be required for the issuance and sale of the Securities to be sold by the Company as contemplated herein.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 300,000,000 shares of Common Stock, of which 16,036,625 [ ] shares are issued and outstanding, [ ] shares are reserved for issuance pursuant to the Company’s stock option plans, [ ] shares are reserved for issuance pursuant to securities (other than the Notes and 2,068,000 the Warrants) exercisable for, or convertible into or exchangeable for shares of Common Stock and, 42,500,000 shares are reserved for issuance upon conversion of the Preferred Stock Notes and exercise of the Warrants (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h4(h) below); and (ii) 1,000,000 [ ] shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none [ ] shares are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c3(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act (except the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred StockWarrants, or the Conversion Shares or Warrant Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive or Chief Financial Officer on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (i) The authorized capital stock of the Company GeoMet consists of (i) 50,000,000 6,000 shares of GeoMet Common Stock, par value $.01 per share, all of which 16,036,625 shares are classified as Series B Voting Common Stock. There are issued and outstanding, and 2,068,000 outstanding 1,250 shares of GeoMet Common Stock. No shares of GeoMet Common Stock are held as treasury shares. A total of 62.5 shares of GeoMet Common Stock have been reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth stock option plans described in Section 6(h) below2.1(c)(ii); and (ii) 1,000,000 . All issued shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred GeoMet Common Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenonassessable and no holder thereof is entitled to preemptive rights. No Except for the Stockholders’ Agreement dated as of December 8, 2000, GeoMet is not a party to, and is not aware of, any voting agreement, voting trust or similar agreement or arrangement relating to any class or series of its capital stock, or any agreement or arrangement providing for registration rights with respect to any capital stock or other securities of GeoMet. (ii) There are outstanding GeoMet Options to purchase an aggregate of 49.625 shares of GeoMet Common Stock under the 2001 Stock Option Plan (the “2001 Plan“). Other than as set forth in Section 2.1(c)(i) and this Section 2.1(c)(ii), there are not now, and at the Effective Time there will not be, any (A) shares of capital stock or other equity securities of GeoMet outstanding other than GeoMet Common Stock issued pursuant to the Company are subject to preemptive rights exercise of GeoMet Options or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, (iB) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims calls or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for for, shares of any shares class of capital stock of the Company or any of its SubsidiariesGeoMet, or contracts, understandings or arrangements to which GeoMet is a party, or by which the Company or any of its Subsidiaries GeoMet is or may become bound be bound, to issue additional shares of capital stock or equity interests or options, warrants, scrip or rights to subscribe for, or securities or rights convertible into or exchangeable for, any additional shares of capital stock or equity interests. (iii) Other than shares of capital stock or partnership interests of the Company GeoMet Subsidiaries owned by GeoMet, there are not now, and at the Effective Time there will not be, any (A) shares of capital stock, partnership interest or other equity securities of the GeoMet Subsidiaries outstanding or (B) outstanding options, warrants, scrip, rights to subscribe for, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of any class of capital stock or partnership interest of the GeoMet Subsidiaries, or contracts, understandings or arrangements to which GeoMet or any of its Subsidiariesthe GeoMet Subsidiaries is a party, (ii) there are no agreements or arrangements under by which the Company GeoMet or any of its the GeoMet Subsidiaries is obligated or may be bound, to register the sale issue additional shares of any of its capital stock, partnership interest or their securities under the 1933 Act and (iii) there are no anti-dilution equity interests or price adjustment provisions contained in any security issued by the Company (options, warrants, scrip or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stocksubscribe for, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities or rights convertible into or exercisable for Common Stock exchangeable for, any additional shares of the Company and the material rights of the holders thereof in respect theretocapital stock, partnership interest or equity interests.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 [ ] shares of Common Stock, of which 16,036,625 [ ] shares are issued and outstanding, [ ] shares are reserved for issuance pursuant to the Company’s stock option plans, [ ] shares are reserved for issuance pursuant to securities (other than the Notes and 2,068,000 the Warrants) exercisable for, or convertible into or exchangeable for shares of Common Stock and, [ ] shares are reserved for issuance upon conversion of the Preferred Stock Notes and exercise of the Warrants (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h4(h) below); and (ii) 1,000,000 [ ] shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none no shares are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c3(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act (except the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred StockWarrants, or the Conversion Shares or Warrant Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive or Chief Financial Officer on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to As of October 8, 2019, as disclosed on OTC Markets and in the transactions to be effected at the ClosingSEC Documents, the authorized capital stock of the Company consists of (i) 50,000,000 150,000,000 shares of Common Stock, of which 16,036,625 25,582,688 shares of Common Stock are issued and outstanding, and 2,068,000 (ii) 50,000,000 shares of Preferred Stock, of which 50,000 shares of Series A Preferred Stock are issued and outstanding. Except as disclosed in the SEC Documents, no shares are reserved for issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other than the Notes) exercisable for, or convertible into or exchangeable for shares of Common Stock and 8,000,000 shares of Common Stock are reserved for each Buyer (16,000,000 shares of Common Stock are reserved for the Buyers in the aggregate) for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingNotes. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)the SEC Documents, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer filed in its SEC Documents true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide each Buyer with a written update of this representation signed by the Company’s Chief Executive Officer on behalf of the Company as of each Closing Date.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized capital stock of the Company consists of (i) 50,000,000 80,000,000 shares of Common Stock, without par value, and 30,000,000 shares of which 16,036,625 preferred stock, without par value (the "Preferred Stock"). There were, as of the close of business on November 30, 2002, (i) 56,175,750 shares are of Common Stock issued and outstanding, (ii) no shares of Preferred Stock issued and 2,068,000 outstanding and (iii) no shares are of Common Stock held in the treasury of the Company. As of November 30, 2002, there were 4,087,357 shares of Common Stock reserved for issuance upon conversion exercise of outstanding Company Options. All outstanding shares of the Preferred Stock (subject to adjustment capital stock of the Company are, and all shares which may be issued pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing exercise of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance Company Options will be, when issued in accordance with the respective terms thereof, duly authorized, validly issued, fully paid and nonassessable. No non-assessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, the Company's certificate of incorporation, the Company's by-laws or any contract to which the Company is a party or otherwise bound. (b) As of the date hereof, except as described in Section 4.5(a) herein, there are no outstanding (i) shares of capital stock or other voting securities of the Company, (ii) securities of the Company are subject to preemptive rights convertible into or any other similar rights exchangeable for shares of the shareholders capital stock or voting securities of the Company or (iii) options or other rights to acquire from the Company, or obligations of the Company to issue, any liens capital stock, voting securities or encumbrances imposed through the actions securities convertible into or failure to act exchangeable for capital stock or voting securities of the Company. Except as disclosed in Schedule 5(c), as on Section 4.5(b) of the effective date of this AgreementCompany Disclosure Schedule, (i) there are no outstanding optionsobligations of the Company or any Company Subsidiary to repurchase, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims redeem or otherwise acquire any Common Stock or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any Company Subsidiary or to provide funds to make any investment (in the form of its Subsidiariesa loan, capital contribution or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (iiotherwise) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by Company Subsidiary or other entity, other than loans to Subsidiaries in the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance ordinary course of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretobusiness.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized and outstanding capital stock of the Company consists of (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant Companies is set forth in Section 6(h4.4(a) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingDisclosure Schedule. All of such the Companies' issued and outstanding shares of capital stock are, or upon issuance will be, is duly authorized, validly issued, fully paid paid, nonassessable, free of any preemptive rights, have been issued in compliance with applicable Law and nonassessableis held of record and beneficially by Seller, free and clear of any Encumbrance. No shares The Shares constitute all of the issued and outstanding capital stock of the Company are subject to preemptive rights or any other similar rights Companies. (b) Except as set forth in Section 4.4(b) of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)Disclosure Schedule, as of the effective date of this Agreement, there are (i) there are no outstanding obligations, options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusalconvertible securities or other rights, agreements, understandings, claims arrangements or other commitments or rights of any character whatsoever kind relating to, to the capital stock of the Companies or securities obligating the Companies to issue or rights convertible into sell or exchangeable for otherwise transfer any shares of capital stock of, or any other interest in, the Companies, (ii) no outstanding obligations of the Company Companies to repurchase, redeem or otherwise acquire any shares of their respective capital stock or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person or (iii) no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of their respective capital stock. (c) Section 4.4(c) of the Disclosure Schedule sets forth a true and complete list of all Subsidiaries of the Companies, listing for each Subsidiary its name, its jurisdiction of organization, the percentage of stock or other equity interest of each subsidiary owned by the Companies or a Subsidiary and the authorized and outstanding capital stock of each such Subsidiary. Other than the Subsidiaries or as otherwise set forth in Section 4.4(c) of the Disclosure Schedule, there are no other corporations, partnerships, joint ventures, associations or other similar entities in which the Companies own, of record or beneficially, any direct or indirect equity or other similar interest or any right (contingent or otherwise) to acquire the same. All of its Subsidiariesthe issued and outstanding shares (or voting securities) of each of the Subsidiaries are validly issued, or arrangements by which fully paid, nonassessable, and free of any preemptive rights. Except as set forth in Section 4.4(c) of the Company or any Disclosure Schedule, (i) the Companies own beneficially and of its Subsidiaries is or may become bound to issue additional record all of the outstanding shares of capital stock (or voting securities) of the Company or each Subsidiary free and clear of any of its SubsidiariesEncumbrances, (ii) there are no outstanding obligations, options, warrants, convertible securities or other rights, agreements or arrangements under which commitments of any kind relating to the Company capital stock of any Subsidiary or obligating the Companies or any Subsidiary to issue or sell or otherwise transfer any shares of its Subsidiaries is obligated to register the sale of capital stock of, or any of its or their securities under the 1933 Act and other interest in, any Subsidiary, (iii) there are no anti-dilution outstanding obligations of the Subsidiaries to repurchase, redeem or price adjustment provisions contained otherwise acquire any shares of their respective capital stock or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any security issued other Person, and (iv) there are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of their respective capital stock. (d) Except as set forth on Section 4.4(d) of the Disclosure Schedule, the "Fresh Cut" business of Seller as such business is described in Seller's public filings with the United States Securities and Exchange Commission (the "Business") is conducted exclusively by the Company (or in any agreement providing rights to security holders) that will be triggered by Companies and the issuance Subsidiaries. At Closing, the assets and properties of the Notes, Companies and the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies Subsidiaries will constitute substantially all of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), tangible and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretointangible property historically used by them.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized share capital stock of the Company consists of (i) 50,000,000 600,000 ordinary shares each with a par value of Common Stock€1, of which 16,036,625 600,000 ordinary shares are have been issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion outstanding as at the date of this Agreement. Except as set forth in Part 3.3(a) of the Preferred Stock (subject to adjustment pursuant to Disclosure Schedule, the Company has not declared or paid any dividends on any shares of the Company’s covenant set forth in Section 6(h) below); share capital since April 1999 and (ii) 1,000,000 shares until the date of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingthis Agreement. All of such outstanding shares of capital stock are, or upon issuance will be, the Shares have been duly authorized, authorized and validly issued, and are fully paid and nonassessable. No shares of capital stock , and none of the Company are Shares is subject to preemptive rights any repurchase option, forfeiture provision or any other similar rights restriction on transfer. (b) The Selling Shareholders together own, of record and beneficially, 100% of the shareholders share capital of the Company. There is no and as at the Closing will be no: (i) outstanding subscription, option, call, convertible note, warrant or right (whether or not currently exercisable) to acquire any share capital of the Company or any liens or encumbrances imposed through the actions or failure to act other securities of the Company. Except as disclosed in Schedule 5(c); (ii) outstanding security, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims instrument or other commitments obligation that is or rights of any character whatsoever relating to, or securities or rights may become convertible into or exchangeable for any shares of the Company’s share capital stock (or cash based on the value of such shares, including pursuant to any share appreciation rights) or other securities of the Company or any of its Subsidiaries, or arrangements by Company; (iii) Contract under which the Company or any of its Subsidiaries is or may become bound obligated to sell or otherwise issue additional any shares of the Company’s share capital or any other securities; or (iv) condition or circumstance that may give rise to or provide a basis for the assertion of a claim by any Person to the effect that such Person is entitled to acquire or receive any shares of the Company’s share capital or other securities of the Company. (c) All of the Shares have been issued and granted in compliance with: (i) all applicable Legal Requirements; and (ii) all requirements set forth in all applicable Contracts. None of the Shares were issued in violation of any preemptive rights or other rights to subscribe for or purchase securities of the Company. (d) Except as set forth in Part 3.3(d) of the Disclosure Schedule, as at the date of this Agreement, all of the issued and outstanding shares of capital stock of the Subsidiary are owned, of record and beneficially, by the Company free and clear of any Encumbrance, and as at the Closing, all of the issued and outstanding shares of capital stock of the Subsidiary will be owned, of record and beneficially, by the Company free and clear of any Encumbrance. The outstanding shares of the Subsidiary have been duly authorized and validly issued and are fully paid and nonassessable, have been issued in compliance with all applicable securities laws and other applicable Legal Requirements and were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities of its Subsidiaries, (ii) there the Subsidiary. There are no agreements options, warrants or arrangements other rights outstanding to subscribe for or purchase any shares or other securities of the Subsidiary and the Subsidiary is not subject to any Contract or order, writ, injunction, judgment or decree under which the Company Subsidiary is or any of its Subsidiaries is may become obligated to register the sale of sell or otherwise issue any of its shares or their securities under the 1933 Act and (iii) there other securities. There are no anti-dilution or price adjustment provisions contained in preemptive rights applicable to any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance shares of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretoSubsidiary.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of of: (i) 50,000,000 150,000,000 shares of Common Stock, $0.001 par value per share, of which 16,036,625 138,066,309 shares are issued and outstanding; and (ii) 10,000,000 authorized shares of Preferred Stock, $0.01 par value per share; (iii) 425,000 shares of Series A Preferred Stock, no shares issued or outstanding; 32,000,000 shares are presently reserved for issuance pursuant to the Company’s two notes with ▇▇▇▇▇ Enterprises, Inc., no shares are reserved for issuance pursuant to securities (other than the Note) exercisable for, or convertible into or exchangeable for shares of Common Stock and 2,068,000 11,500,000 shares are reserved for issuance upon conversion of the Preferred Note. The Company and the Investor understand that at this time there are not enough shares of Common Stock (subject to adjustment pursuant effectuate the requested reserve. Upon the effective date of A Definitive 14C increasing the authorized shares to at least 500,000,000 and the filing of an amendment to the Company’s covenant set forth certificate of Incorporation authorizing said increase in Section 6(h) below); and (ii) 1,000,000 the number of authorized shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of Common Stock, the Amendment to the Articles of Incorporation), of which none are issued and outstandingreserve shall go into effect. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as As of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of of: (i) 50,000,000 750,000,000 shares of Common Stock, of which 16,036,625 approximately 11,603,840 shares are issued and outstanding; and (ii) 5,000,000 shares of preferred stock, of which 1,000,100 are issued and 2,068,000 outstanding. Except as disclosed in the SEC Documents, no shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(hstock option plans, no shares are reserved for issuance pursuant to securities (other than the Note and any other convertible promissory note issued to the Buyer) below); and (ii) 1,000,000 exercisable for, or convertible into or exchangeable for shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingCommon Stock. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)the SEC Documents, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the The authorized capital stock of the Company on the date hereof, consists of (i) 50,000,000 250,000,000 shares of Common Stock, 121,082,543 shares of which 16,036,625 are issued and outstanding, 825,000 shares of Series A convertible preferred stock, 21,645 shares of which are issued and outstanding, 825,000 shares of series B convertible preferred stock, no shares of which are issued and outstanding, 625,000 shares of Series C convertible preferred stock, 614,177 are issued and outstanding and 100,000 shares of series D junior participating preferred stock, no shares of which are issued and outstanding, and 2,068,000 no other capital stock. All issued and outstanding shares of the Company’s Common Stock (a) have been duly authorized and validly issued, and (b) are fully paid and non-assessable. The rights, preferences, privileges and restrictions of the Common Stock are as stated in the Certificate of Incorporation currently on file with the Delaware Secretary of State and the Registration Rights Agreement. Except as set forth in the periodic reports that the Company has filed on or prior to the date hereof with the U.S. Securities and Exchange Commission (the “SEC”) (including the exhibits incorporated by reference) in accordance with its obligations under the Exchange Act and the rules and regulations promulgated thereunder (the “SEC Reports”), as of the date hereof, no other capital stock, options, units, warrants, rights to purchase (including any preemptive rights, calls or commitments of any character whatsoever) or otherwise acquire or securities that are exercisable, exchangeable or convertible into any shares of Common Stock or other ownership interests in the Company are authorized, issued, reserved for issuance upon conversion of the Preferred Stock or outstanding (subject to adjustment other than herein and pursuant to the Company’s covenant Warrant Purchase Agreement). Except as set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 the SEC Reports, the Company has no authorized or outstanding bonds, debentures, notes or other indebtedness the holders of which will be designated Series A Convertible Preferred Stock upon filing of have the Amendment right to the Articles of Incorporation)vote (or which are convertible into, of which none are issued and outstanding. All of such outstanding shares of capital stock areexchangeable for, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares evidence the right to subscribe for or acquire securities having the right to vote) with the holders of capital stock of the Company are subject to preemptive rights or on any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Companymatter. Except as disclosed set forth in Schedule 5(c)the SEC Reports, as of the effective date of this Agreement, (i) there are no outstanding optionscontracts to which the Company is party or by which it is bound to (x) repurchase, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims redeem or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for otherwise acquire any shares of capital stock of the Company or (y) vote or dispose of any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there Company. There are no irrevocable proxies and no voting agreements or arrangements under which the Company or with respect to any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies capital stock of the Company’s Articles . Except as set forth in the SEC Reports, other than the Registration Rights Agreement, the Company has no agreement, arrangement or understandings to register any securities of Incorporation as the Company under the Securities Act or under any state securities law and has not granted registration rights to any person (other than agreements, arrangements or understandings with respect to registration rights that are no longer in effect on as of the date hereof (“Articles of Incorporation”this Agreement). Immediately following the Closing, and notwithstanding anything contained herein to the contrary, the Company’s Bylaws, as in effect on shares of Common Stock issued pursuant to this Agreement will represent 4.99% of the date hereof (the “Bylaws”), issued and the terms of all securities convertible into or exercisable for outstanding Common Stock of the Company and the material rights of the holders thereof in respect theretoon a non-diluted basis.

Capitalization. Before giving effect to the transactions to be effected at the ClosingAs of March 1, 2019, the authorized capital stock of the Company consists of (i) 50,000,000 500,000,000 shares of Common Stock, of which 16,036,625 approximately 114,218,092 shares are issued and outstandingoutstanding and 0 shares of Preferred Stock authorized. Except as disclosed in the SEC Documents, no shares are reserved for issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other than the Note) exercisable for, or convertible into or exchangeable for shares of Common Stock and 2,068,000 2,000,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingNote. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)the SEC Documents, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer filed in its SEC Documents true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the The authorized capital stock of the Company consists of (i) 50,000,000 34,000,000 shares of Common Stockcommon stock, $0.01 par value per share, of which 16,036,625 12,484,644 shares are were issued and outstandingoutstanding on June 30, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); 2001, and (ii) 1,000,000 23,000,000 shares of undesignated preferred stock (517,000 stock, $0.01 par value per share, none of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and or outstanding. All of such the outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company and its Subsidiaries have been duly authorized and validly issued and are subject fully paid and nonassessable. The Company has no outstanding stock appreciation rights, phantom stock or similar rights. All outstanding shares of capital stock or other equity interests of the Subsidiaries of the Company are owned by the Company or a direct or indirect wholly-owned Subsidiary of the Company, free and clear of all liens, pledges, charges, encumbrances, claims and options of any nature. Except for options to purchase 2,457,706 Company Shares issued pursuant to the 1997 Stock Incentive Plan, the Amended and Restated 1998 Stock Incentive Plan and the 1999 Non-Employee Director Stock Option Plan and 801,220 Company Shares to be issued pursuant to the 1999 Employee Stock Purchase Plan (collectively, the "Company Option Plans") and warrants to purchase 1,370,056 Company Shares, there are no outstanding or authorized options, warrants, calls, rights (including preemptive rights rights), commitments or any other similar rights agreements of the shareholders of any character which the Company or any liens of its Subsidiaries is a party to, or encumbrances imposed through may be bound by, requiring it to issue, transfer, grant, sell, purchase, redeem or acquire any shares of capital stock or any of its securities or rights convertible into, exchangeable for, or evidencing the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights right to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries. Upon consummation of the Merger, the Company Warrants shall convert into Substitute Warrants which will entitle the holder to purchase a number of Parent Shares equal to the number of Company Shares issuable upon exercise of the Company Warrants immediately prior to the Effective Time multiplied by the Exchange Ratio. There are no stockholder agreements, voting trusts or arrangements by other agreements or understandings to which the Company is a party or to which it is bound relating to the voting of any of its Subsidiaries is or may become bound to issue additional shares of the capital stock of the Company. No existing rights with respect to the registration of Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities Shares under the 1933 Act and (iii) there are no antiSecurities Act, including, but not limited to, demand rights or piggy-dilution back registration rights, shall apply with respect to any Parent Shares issuable in connection with the Merger or price adjustment provisions contained in any security issued by the Company (upon exercise of Substitute Options or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion SharesSubstitute Warrants. The Company has furnished provided to the Buyer true and correct copies Parent a list, as of June 30, 2001 of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”)outstanding options and warrants to acquire Company Shares, the Company’s Bylawsname of the holder of such option or warrant, the exercise price of such option or warrant, the number of shares as to which such option or warrant will have vested at such date and whether the exercisability of such option or warrant will be accelerated in effect on any way by the date hereof (transactions contemplated by this Agreement and the “Bylaws”)extent of acceleration, if any, and any adjustments to such options or warrants resulting from the terms of all securities convertible into or exercisable for Common Stock consummation of the Company and the material rights of the holders thereof in respect theretotransactions contemplated by this Agreement. Since June 30, 2001 no options or warrants have been issued or accelerated or had their terms modified.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of of: (i) 50,000,000 6 billion shares of Common Stock, $0.001 par value per share, of which 16,036,625 approximately 4,581,060,559 shares are issued and outstanding; and (ii) 0 shares of Preferred Stock, no par value per share, of which no shares are issued and 2,068,000 outstanding. Except as disclosed on Schedule 3(c) hereof, no shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth stock option plans. Except as disclosed in Section 6(h) below); and (ii) 1,000,000 the SEC Documents no shares are reserved for issuance pursuant to securities exercisable for, or convertible into or exchangeable for shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingCommon Stock. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as As of the effective date of this Agreement, and except as disclosed in the SEC Documents, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized authorized, issued and outstanding capital stock of the Company consists of (i) 50,000,000 is as set forth on Schedule 4.3 hereto and no other shares of Common Stock, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion capital stock of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which Company will be designated Series A Convertible Preferred Stock upon filing outstanding as of the Amendment to the Articles of Incorporation), of which none are issued and outstandingClosing Date. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders stockholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except Other than as disclosed in set forth on Schedule 5(c)4.3 hereto, as of the effective date of this Agreementhereof, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, and (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is are obligated to register the sale of any of its or their securities under the 1933 Securities Act (except pursuant to the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Convertible Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.,

Capitalization. Before giving effect to The capitalization of the transactions to be effected at Company as of the Closingdate hereof, including the authorized capital stock stock, the number of the Company consists of (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares are issued and outstanding, the number of shares issuable and 2,068,000 reserved for issuance pursuant to the Company's stock option plans, the number of shares are issuable and reserved for issuance pursuant to securities (other than the Preferred Shares and Warrants) exercisable or exchangeable for, or convertible into, any shares of capital stock and the number of shares to be reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to Shares and exercise of the Company’s covenant Warrants is set forth in Section 6(h) belowon SCHEDULE 3(D); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock arehave been, or upon issuance in accordance with the terms of any such warrants, options or preferred stock, will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company (including the Preferred Shares, the Conversion Shares and the Warrant Shares) are subject to preemptive rights or any other similar rights of the shareholders stockholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Companyencumbrances. Except for the Securities and as disclosed in Schedule 5(cset forth on SCHEDULE 3(D), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe forto, puts, calls, rights of first refusal, agreements, understandings, claims calls or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exercisable or exchangeable for for, any shares of capital stock of the Company or any of its Subsidiariessubsidiaries, or arrangements by which the Company or any of its Subsidiaries subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiariessubsidiaries, and (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Securities Act and (iiiexcept the Registration Rights Agreement). Except as set forth on SCHEDULE 3(D), (i) there are no anti-dilution securities or price adjustment instruments containing Antidilution or similar provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the NotesSecurities in accordance with the terms of this Agreement, the Preferred Stock, Statement of Designation or the Conversion SharesWarrants, (ii) there are no outstanding securities or instruments of the Company or any of its subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its subsidiaries is or may become bound to redeem a security of the Company or any of its subsidiaries, and (iii) the Company does not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement. The Company has furnished to the Buyer Purchasers true and correct copies of the Company’s Articles 's Certificate of Incorporation as in effect on the date hereof (“Articles of Incorporation”"CERTIFICATE OF INCORPORATION"), the Company’s Bylaws, 's By-laws as in effect on the date hereof (the “Bylaws”"BY-LAWS"), and the terms of all other instruments and agreements governing securities convertible into or exercisable or exchangeable for Common Stock capital stock of the Company and Company. The Statement of Designation, in the material rights form attached hereto, will be duly filed prior to Closing with the Secretary of State of the holders thereof State of Texas and, upon the issuance of the Preferred Shares in respect theretoaccordance with the terms hereof, each Purchaser shall be entitled to the rights set forth therein.

Capitalization. Before giving effect to the transactions to be effected at the Closing, Set forth on SCHEDULE 4.3 hereto is the authorized and outstanding capital stock of the Company consists and each of (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingits Subsidiaries. All of such the issued and outstanding shares of Company Capital Stock and of the capital stock are, or upon issuance will be, duly authorized, of each Subsidiary of the Company are validly issued, fully paid paid, non-assessable and nonassessable. No shares free of capital stock of the Company are subject to preemptive rights or any other similar rights created by statute, the Articles of the shareholders Incorporation or Bylaws of the Company or any liens agreement to which the Company is a party or encumbrances imposed through by which the actions Company is bound. SCHEDULE 4.3 hereto lists all the holders of Company Capital Stock and the amount of shares of Company Capital Stock held by each. There are no options, warrants, subscriptions, calls, claims, rights, convertible securities or failure other agreements or commitments obligating the Company to act issue, sell or transfer any securities, whether written or oral (collectively, "STOCK EQUIVALENTS"), outstanding as of the Companydate hereof. Except as disclosed in Schedule 5(c)set forth on SCHEDULE 4.3 hereto, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock contractual obligations of the Company or any of its SubsidiariesSubsidiaries to repurchase, redeem or arrangements by which the Company or otherwise acquire any of its Subsidiaries is or may become bound to issue additional shares of capital stock of any of the Company Company's Subsidiaries or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any of the Company's Subsidiaries or any of its Subsidiaries, (ii) there other person. There are no agreements shareholders' agreements, voting trusts or other agreements, arrangements under which or understandings applicable to the Company exercise of voting or any of its Subsidiaries is obligated other rights with respect to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance share capital of the Notes, the Preferred Stock, or the Conversion SharesCompany. The Company has furnished Capital Stock was not issued in violation of any preemptive, subscription or other right of any person to acquire securities and constitutes in the Buyer true aggregate all the issued and correct copies outstanding capital stock of all classes of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to The capitalization of the transactions to be effected at Company as of the Closingdate -------------- hereof, including the authorized capital stock stock, the number of the Company consists of (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares are issued and outstanding, the number of shares issuable and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant 's stock option plans, the number of shares issuable and reserved for issuance pursuant to securities exercisable for, or convertible into or exchangeable for any shares of capital stock and the number of Adjustment Shares to be reserved for issuance as required by Section 1(c) hereof and the number of Warrant Shares to be issued upon the exercise of the Warrants is set forth in Section 6(h) belowon Schedule 3(c); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock arehave been, or ------------- upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No Except as set forth on Schedule 3(c), no shares of capital stock of the Company (including ------------ the Initial Shares, the Adjustment Shares and the Warrant Shares) are subject to preemptive rights or any other similar rights of the shareholders stockholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Companyencumbrances. Except for the Securities and as disclosed in Schedule 5(c3(c), as of the effective date of this Agreement, (i) there are no outstanding ------------- options, preferred stockwarrants, scrip, rights to subscribe forto, puts, calls, rights of first refusal, agreements, understandings, claims calls or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exercisable or exchangeable for for, any shares of capital stock of the Company or any of its Subsidiariessubsidiaries, or arrangements by which the Company or any of its Subsidiaries subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiariessubsidiaries, and (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Securities Act and (iii) except the Registration Rights Agreement). Except as set forth on Schedule -------- 3(c), there are no anti-dilution securities or price adjustment instruments containing antidilution or similar ---- provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, Securities in accordance with the Preferred Stock, terms of this Agreement or the Conversion SharesWarrants and the holders of the securities and instruments listed on such Schedule 3(c) have waived any ------------- rights they may have under such antidilution or similar provisions in connection with the issuance of the Securities in accordance with the terms of this Agreement or the Warrants. The Company has furnished made available to the Buyer Purchaser true and correct copies of the Company’s Articles 's Certificate of Incorporation as in effect on the date hereof (“Articles of Incorporation”"CERTIFICATE OF INCORPORATION"), the Company’s Bylaws, 's By-laws as in effect on the date hereof (the “Bylaws”"BY-LAWS"), and the terms of all other instruments and agreements governing securities convertible into or exercisable or exchangeable for Common Stock capital stock of the Company and the material rights Company, except for stock options granted under any employee benefit plan or director stock option plan of the holders thereof in respect theretoCompany.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the The authorized capital stock of the Company consists of 20,000,000 shares of Company Common Stock and 1,000,000 shares of preferred stock, par value $1.00 per share (the "Company Preferred Stock"). As of November 12, 1999, there were outstanding: (i) 50,000,000 7,192,264 shares of Company Common Stock and 2,575,811 shares of Company Common Stock held in treasury; (ii) no shares of Company Preferred Stock; and (iii) Company Options to purchase an aggregate of 443,003 shares of Company Common Stock, . The items in clauses (i) through (iii) above are herein referred to collectively as the "Company Securities." All outstanding shares of which 16,036,625 shares are Company Common Stock have been duly authorized and validly issued and outstanding, are fully paid and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant nonassessable and free from any preemptive rights. Except as set forth in this Section 6(h4.6, there are outstanding (i) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding no shares of capital stock areor other voting securities of the Company, (ii) no securities issued by the Company convertible into or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No exchangeable for shares of capital stock or voting securities of the Company, (iii) no options or other rights to acquire from the Company, and no obligation of the Company are subject to preemptive rights issue, any capital stock, voting securities or any securities convertible into or exchangeable for capital stock or other similar rights voting securities of the shareholders Company and (iv) no equity equivalents, or interests in the ownership or earnings of the Company or its subsidiaries to repurchase, redeem or otherwise acquire any of the Company Securities or ownership interest of the Subsidiaries. Except as provided in Section 2.4, there are no outstanding obligations of the Company or any liens Company Subsidiaries to repurchase, redeem or encumbrances imposed through the actions otherwise acquire any Company Securities or failure to act ownership interests of the CompanySubsidiaries. No holder of Company Securities has, as of the date hereof, any contractual right to require the Company to file any registration statement under the Securities Act or to include any such securities in any registration statement proposed to be filed by the Company under the Securities Act. Except as disclosed in Schedule 5(c)written information made available to Parent, as all of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company Company's Subsidiaries is owned by the Company, directly or indirectly, free and clear of any Lien or any of its Subsidiaries, other limitation or arrangements by which the Company or restriction (including any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect restriction on the date hereof (“Articles right to vote or sell the same, except as may be provided as a matter of Incorporation”law), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the authorized capital stock of the Company consists of (ia) 50,000,000 shares of Common Stock, of which 16,036,625 shares There are 100 Membership Units issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 all of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued duly subscribed for and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Companypaid. Except as disclosed described in Schedule 5(c)this Section 5.3 or in Section 5.3 of CYL Disclosure Schedule, as of the effective date of this Agreement, (i) no Membership Units are reserved for any other purpose. Except as set forth in Section 5.3 of the CYL Disclosure Schedule, CYL has not granted any options in, or any other rights to purchase, Membership Units and there are no such options or rights outstanding. Each CYL Member is the owner of record and beneficially of the number of Membership Units set forth in Schedule 4.1, which total amount equals all outstanding Membership Units. Set forth in Section 5.3 of the CYL Disclosure Schedule is a schedule showing in sufficient detail the amounts expended to date by Development Holdings in the organization of CYL, including a description of the uses of such expended amounts, which schedule shall also be updated through and delivered at the Closing. (b) Except as set forth in Section 5.3(a) above or otherwise contemplated hereby, as of the date of this Agreement, there are no options, preferred stock, scrip, warrants or other rights to subscribe for, puts, calls, rights of first refusal(including registration rights), agreements, understandings, claims arrangements or other commitments or rights of any character whatsoever to which CYL is a party relating to the issued or unissued Membership Units or other securities of CYL, or obligating CYL to grant, issue or sell any Membership Units or other securities of CYL, by sale, lease, license or otherwise. There are no obligations, contingent or otherwise, of CYL to (x) repurchase, redeem or otherwise acquire any Membership Units; or (y) provide funds to, or securities make any investment in (in the form of a loan, capital contribution or rights otherwise), or provide any guarantee with respect to the obligations of CYL or any other person. As of the date of this Agreement, CYL neither owns nor has agreed to purchase or otherwise acquire, any capital stock of, or any interest convertible into or exchangeable for or exercisable for, any shares of capital stock of the Company any corporation, partnership, joint venture or other business association or entity. Except as set forth in Section 5.3 of CYL Disclosure Schedule, there are no agreements, arrangements or commitments of any of its Subsidiaries, character (contingent or arrangements by otherwise) pursuant to which the Company or any of its Subsidiaries person is or may become bound be entitled to issue additional shares receive any payment based on the revenues or earnings, or calculated in accordance therewith, of capital stock of the Company or any of its Subsidiaries, (ii) there CYL. There are no voting trusts, proxies or other agreements or arrangements under understandings to which the Company CYL is a party or any of its Subsidiaries is obligated relating to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished CYL with respect to the Buyer true and correct copies voting of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretoMembership Units.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 20,000,000 shares of Common Stock, of which 16,036,625 (i) 8,632,826 shares are validly issued and outstanding, (ii) no shares are issued and outstandingheld in treasury, and 2,068,000 (iii) 915,190 shares are reserved for issuance upon conversion exercise of the Preferred Stock existing Company Options (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) as defined below); and (ii) 1,000,000 . No shares of undesignated preferred stock (517,000 Common Stock are held by any Subsidiary. Each outstanding share of which will be designated Series A Convertible Preferred Common Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, is duly authorized, validly issued, fully paid and nonassessable, and has not been issued in violation of any preemptive or similar rights. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except Other than as disclosed set forth in Schedule 5(c), 2.3 and as of contemplated by the effective date of this Agreement, Option Agreements: (i) there are no outstanding subscriptions, options, preferred stock, scrip, rights to subscribe forwarrants, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever type relating toto the issuance, sale, repurchase or transfer by the Company of any Common Stock or other securities of the Company (the "Company Options"), or by the Company or any Subsidiary of any securities or rights of a Subsidiary, (ii) there are no outstanding securities which are convertible into or exchangeable for any shares of capital stock or other securities of the Company or any of its SubsidiariesSubsidiary, or arrangements by which and (iii) neither the Company or nor any Subsidiary has any obligation of its Subsidiaries is or may become bound any kind to issue any additional shares of capital stock or other securities to pay for or repurchase any shares of capital stock or other securities of any Subsidiary or any predecessor thereof. The Primary Shares being delivered herewith have been duly authorized, validly issued, fully paid and nonassessable, are being delivered free and clear of all claims, liens, encumbrances and security interests, and are eligible for NASDAQ NMS trading without further consents or actions other than registration with the Securities and Exchange Commission (the "Commission") thereof pursuant to the Registration Rights Agreement. The shares of Common Stock which will be issued upon exercise of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act Options have been authorized and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”)reserved for issuance, and when issued and delivered in accordance with the terms of all securities convertible into the applicable Option Agreement, will be validly issued, fully paid and nonassessable and will be eligible for NASDAQ NMS trading without further consents or exercisable for Common Stock of actions other than registration thereof pursuant to the Company and the material rights of the holders thereof in respect theretoRegistration Rights Agreement.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized capital stock of the Company consists of (i) 50,000,000 100,000,000 shares of Company Common Stock, and (ii) 10,000,000 shares of which 16,036,625 Preferred Stock, par value $.01 per share (the "Preferred Stock"). As of the date hereof, (v) 26,951,712 shares of Company Common Stock are issued and outstanding, and 2,068,000 (w) 4,060,000 shares of Company Common Stock are reserved for issuance upon conversion exercise of outstanding Options (whether or not exercisable and granted under the Option Plans), (x) 300,000 shares of Company Common Stock are reserved for issuance under the Stock Purchase Plan, (y) no shares of Preferred Stock are issued and outstanding and (z) 1,637,160 shares of Company Common Stock are held in the Company's treasury. All the outstanding shares of the Preferred Company Common Stock (subject to adjustment are, and all shares which may be issued pursuant to the Company’s covenant set forth exercise of outstanding Options when issued in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of accordance with the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will respective terms thereof shall be, duly authorized, validly issued, fully paid and nonassessablenon-assessable and free of preemptive rights. No There are no bonds, debentures, notes or other indebtedness having general voting rights (or convertible into securities having such rights) ("Voting Debt") of the Company or any of its Subsidiaries issued and outstanding. Except (a) as set forth above,(b) for the transactions contemplated by this Agreement, as of the date hereof, and (c) as set forth in Schedule 3.2(a), (i) there are no shares of capital stock of the Company are subject to preemptive rights authorized, issued or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreementoutstanding, (iii) there are no outstanding existing options, preferred stock, scrip, rights to subscribe for, putswarrants, calls, rights of first refusalpre-emptive rights, subscriptions or other rights, agreements, understandings, claims arrangements or other commitments or rights of any character whatsoever character, relating to, to the issued or securities or rights convertible into or exchangeable for any shares of unissued capital stock of the Company or any of its Subsidiaries, or arrangements by which obligating the Company or any of its Subsidiaries is to issue, transfer or may become bound sell or cause to issue additional be issued, transferred or sold any shares of capital stock or Voting Debt of, or other equity interest in, the Company or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interests, or obligating the Company or any of its Subsidiaries to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment, and (iii) there are no outstanding contractual obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Shares, or capital stock of the Company or any Subsidiary or affiliate of its Subsidiariesthe Company. The Company has provided Parent and Purchaser with a true and complete list, as of the date hereof, of (i) all Options to purchase Company Common Stock that have been granted by the Company, (ii) there are no agreements or arrangements under which the Company or any holder of its Subsidiaries is obligated to register each of the sale of any of its or their securities under the 1933 Act and Options, (iii) there are no anti-dilution or price adjustment provisions contained in any security issued the Option Plan under which each Option was issued, (iv) the number of Options held by each such holder, (v) the Company exercise prices of each such Option, (or in any agreement providing rights to security holdersvi) that will be triggered by the issuance date of grant of such Option, (vii) the expiration date of such Option, (viii) whether such Option has vested as of the Notesdate hereof, and (ix) whether such Option is a non-qualified stock option or an "incentive stock option" within the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies meaning of Section 422(b) of the Company’s Articles Code. No shares of Incorporation restricted stock or other equity-based awards have been granted under the Option Plans or otherwise. (b) Except as in effect set forth on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.Schedule 3.2

Capitalization. Before giving effect to (a) As of the transactions to be effected at the Closingdate of this Agreement, the PubCo’s authorized capital stock of the Company consists solely of (i) 50,000,000 100,000,000 shares of PubCo Common Stock, and (ii) 10,000,000 shares of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the PubCo Preferred Stock Stock. (subject to adjustment pursuant to the Company’s covenant b) Except as set forth in Section 6(h4.06(a) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment PubCo Disclosure Letter, to the Articles extent expressly permitted under Section 5.02 (including as required by applicable Law) or as set forth in Section 4.06(g) of Incorporation)the PubCo Disclosure Letter, of which none (i) there are issued and outstanding. All of such no outstanding shares of capital stock areof any PubCo Entity (subject to any exercise of PubCo Stock Options after the date of this Agreement each in accordance with their terms), (ii) there are no outstanding subscriptions, options, warrants, calls, convertible securities, rights of first refusal, preemptive rights, or upon other similar rights (whether or not currently exercisable), agreements or commitments (other than this Agreement) relating to the issuance will beor acquisition of capital stock to which any of the PubCo Entities or any of their respective Subsidiaries is a party obligating the PubCo Entities or any of their respective Subsidiaries to (A) issue, transfer or sell any shares of capital stock or other equity interests of any of the PubCo Entities or any of their respective Subsidiaries or securities convertible into or exchangeable for such shares or equity interests, or (B) grant, extend or enter into any such subscription, option, warrant, call, convertible securities or other similar right, agreement or arrangement, (C) redeem, repurchase or otherwise acquire any such shares of capital stock or other equity interests, or (D) provide an amount of funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in PubCo or any of its Subsidiaries or any other Person, and (iii) other than pursuant to this Agreement, there is no condition or circumstance that could be reasonably likely to give rise to or provide a basis for the assertion of a claim by any Person to the effect that such Person is entitled to acquire or receive any shares of PubCo Capital Stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation or other similar rights with respect to the Company or its Subsidiaries. (c) All outstanding shares of PubCo Common Stock have been duly authorized and are validly issued, fully paid and non-assessable and not subject to any pre-emptive rights, right of participation, right of maintenance or any similar right. All outstanding shares of PubCo Common Stock and PubCo Stock Options were offered, sold and issued in compliance in all material respects with applicable securities Laws and were not issued in violation in any material respect of (i) the PubCo Organizational Documents or (ii) any Contract. (d) Each outstanding share of capital stock or other equity interests of each Subsidiary of the PubCo Entities is duly authorized, validly issued, fully paid and nonassessable. No shares non-assessable, in each case, to the extent such concepts are applicable to such capital stock or other equity interests, and not subject to any pre-emptive rights, right of participation, right of maintenance, or any similar right. (e) Except as set forth in this Section 4.06, there are no outstanding contractual obligations of the PubCo Entities or any of their respective Subsidiaries to repurchase, redeem or otherwise acquire any capital stock of the Company PubCo Entities, including shares of PubCo Common Stock, or capital stock of any Subsidiary of PubCo. (f) There are subject no voting trusts, proxies or similar agreements, arrangements or commitments to preemptive rights which the PubCo Entities or any other similar rights of their respective Subsidiaries is a party with respect to the shareholders voting of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of any of the Company PubCo Entities or any of its their respective Subsidiaries. There are no bonds, debentures, notes or arrangements by which other instruments of indebtedness of the Company PubCo Entities or any of its their respective Subsidiaries is or may become bound that entitle the holder of such instruments of indebtedness to issue additional shares of capital stock vote together with stockholders of the Company PubCo Entities on any matters with respect to the PubCo Entities or any of its their respective Subsidiaries. (g) Except for the PubCo Equity Plans, PubCo does not have any stock option plan or any other plan, program, agreement or arrangement providing for any equity-based compensation for any Person. Section 4.06(g) of the PubCo Disclosure Letter sets forth the following information with respect to each PubCo Stock Option outstanding as of the date of this Agreement: (i) the name of the optionee; (ii) there are no agreements or arrangements under which the Company or any number of its Subsidiaries is obligated shares of PubCo Common Stock subject to register such PubCo Stock Option at the sale time of any of its or their securities under the 1933 Act and grant; (iii) there are no antithe number of shares of PubCo Common Stock subject to such PubCo Stock Option as of the date of this Agreement; (iv) the exercise price of such PubCo Stock Option; (v) the date on which such PubCo Stock Option was granted; (vi) the applicable vesting schedule, including the number of vested and unvested shares as of the date of this Agreement and any acceleration provisions; (vii) the date on which such PubCo Stock Option expires; and (viii) whether such PubCo Stock Option is intended to constitute an “incentive stock option” (as defined in the Code) or a non-dilution or price adjustment provisions contained in any security issued by qualified stock option. PubCo has made available to the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance an accurate and complete copy of the Notes, PubCo Equity Plan and a form of stock option agreement that is consistent in all material respects with the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretostock option agreements evidencing outstanding options granted thereunder.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 75,000,000 shares of Common Stock, of which 16,036,625 25,198,270 shares are issued and outstanding, and 2,068,000 3,643,405 shares are reserved for issuance pursuant to the Company's stock option plans, 3,461,091 shares are reserved for issuance pursuant to securities (other than the Warrants) exercisable for, or convertible into or exchangeable for shares of Common Stock, 3,958,418 shares are reserved for issuance upon conversion exercise of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below)Warrants; and (ii) 1,000,000 2,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation)stock, of which none no shares are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders stockholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)3.3, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Securities Act (except the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the NotesShares, the Preferred Stock, Warrants or the Conversion Warrant Shares. The Company has furnished made available to counsel for the Buyer Investors true and correct copies of the Company’s Articles 's Restated Certificate of Incorporation as in effect on the date hereof (“Articles "Certificate of Incorporation”"), the Company’s 's Bylaws, as in effect on the date hereof (the “"Bylaws”"), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretothereto except for stock options granted under any benefit plan of the Company.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) Its authorized share capital stock and issued and outstanding share capital as of the Company consists date set forth in ‎Section 3.02(a) of (i) 50,000,000 shares of Common Stockthe PRE Disclosure Letter, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are including any capital reserved for issuance upon conversion the exercise or payments of outstanding warrants, share options, share appreciation rights or other equity-related securities or awards (such share option and other equity-related award plans, agreements and programs, each an “Equity Award”), are described in ‎Section 3.02(a) of the Preferred Stock PRE Disclosure Letter. None of its share capital, equity-related securities or warrants are held by it or by its Subsidiaries. ‎Section 3.02(a) of the PRE Disclosure Letter also sets forth a true and complete list of all outstanding Equity Awards outstanding as of the date of this Agreement and the name of each holder thereof and the number of PRE Common Shares for which any such warrant, option, share appreciation right, restricted share, restricted share unit or other equity-related security or award is exercisable for as of the date of this Agreement (subject without regard to adjustment pursuant any vesting or other limitations with respect thereof). (b) Except as described in this ‎Section 3.02, as of the date hereof, there are: (i) no shares or securities of, or other equity or voting interests in, it; (ii) no issued and outstanding shares or securities of it that are convertible into or exchangeable for share capital of, or other equity or voting interests in, it; (iii) no outstanding options, warrants, rights or other commitments or agreements to acquire from it, or that obligate it to issue, any shares or securities, or other equity or voting interests in, it; (iv) no obligations of it to grant, extend or enter into any subscription, warrant, right, convertible or exchange security or other similar agreement or commitment relating to any shares or securities of, or other equity or voting interests in it (the Company’s covenant set forth items in Section 6(hclauses ‎(i), ‎(ii), ‎(iii) belowand ‎(iv) being referred to, collectively, as its “Securities”); and (v) no other obligations by it or any of its Subsidiaries to make any payments based on the price or value of any of its Securities, or dividends paid thereon. (c) With respect to the Equity Awards: (i) each grant of an Equity Award was duly authorized no later than the date on which the grant of such Equity Award was by its terms to be effective (the “Grant Date”) by all necessary corporate action, including, as applicable, approval by the PRE Board, or a committee thereof or such committee’s designee (as the case may be) and any required approval by its shareholders; (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing each such grant was made in accordance with all applicable Laws, including the rules of the Amendment NYSE; (iii) the per share exercise price of each PRE Option was not less than the fair market value of a respective PRE Common Share on the applicable Grant Date; (iv) each such grant qualifies in all material respects for the Tax and accounting treatment afforded to such Equity Awards in its Tax Returns and its SEC Reports, respectively; and (v) no material modifications have been made to any such grants after the Articles Grant Date and all such grants either comply in all material respects with or are exempt from Section 409A of Incorporation), the Code. The treatment of which none the Equity Awards provided in ‎Section 2.03 will comply with all applicable Laws and the terms and conditions of the PRE Share Plans and the applicable Equity Award agreements. (d) All PRE Common Shares and PRE Preferred Shares that are issued and outstanding. All of such outstanding shares of capital stock or that are subject to issuance prior to the Effective Time upon the terms and subject to the conditions specified in the instruments under which they are issuable: (i) are, or upon issuance or, in the case of shares issued after the date hereof, will be, duly authorized, validly issued, fully paid and nonassessable. No non-assessable, and issued in compliance with applicable Law and the terms and provisions of its applicable Organizational Documents; and (ii) are not, or, in the case of shares of capital stock of issued after the Company are date hereof, will not be, subject to preemptive rights any pre-emptive or any other similar rights rights, purchase option call or right of the shareholders of the Company first refusal or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, similar rights. (ie) there There are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights contractual obligations of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company it or any of its Subsidiaries: (i) to repurchase, redeem or arrangements otherwise acquire any PRE Common Shares, PRE Preferred Shares, bonds, debentures, notes or other indebtedness of it or share capital, bonds, debentures, notes or other indebtedness of any Subsidiary of it; or (ii) to provide any funds to or make any investment in (A) any Subsidiary of it that is not wholly owned by which the Company it or (B) any other Person. No holder of securities in it or any of its Subsidiaries is has any right to have such securities registered by it or may become bound to issue additional shares any of capital stock its Subsidiaries under the Exchange Act. (f) The PRE Common Shares and PRE Preferred Shares constitute the only issued and outstanding classes of securities of it or its Subsidiaries registered under the Exchange Act. (g) ‎Section 3.02(g) of the Company PRE Disclosure Letter contains a list of all insurance linked securities, sidecars, catastrophe bonds or weather-related bonds or similar instruments issued, guaranteed or sponsored by it or any of its Subsidiaries, . (iih) there are no agreements or arrangements under which It has not guaranteed the Company or any of its Subsidiaries is obligated to register the sale obligations of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretoSubsidiaries.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (a) The authorized share capital stock of the Company consists of (i) 50,000,000 shares an unlimited number of Common StockShares, of which 16,036,625 shares which, as at the date hereof, 119,411,077 Shares are validly issued and outstanding, outstanding as fully paid and 2,068,000 non-assessable shares are reserved for issuance upon conversion in the capital of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares an unlimited number of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation)shares, issuable in series, of which none have been issued or are issued and outstanding. All As at the date hereof, there are outstanding Options issued under the Stock Option Plan to purchase an aggregate of such outstanding shares 7,468,700 Shares. (b) Except as set out in the Company Disclosure Letter, there are no options, rights, warrants or other Contracts of capital stock areany character whatsoever requiring the issuance, sale or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock transfer by the Company or any Subsidiary of the Company are subject to preemptive rights or of any other similar rights of the shareholders securities of the Company or such Subsidiary (including Shares) or any liens securities convertible into, or encumbrances imposed through the actions exchangeable or failure exercisable for, or otherwise evidencing a right to act acquire, any securities of the CompanyCompany or such Subsidiary (including Shares). Except as disclosed in Schedule 5(c), as No Shareholder is entitled to any pre-emptive or similar right granted by the Company or any of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights its Subsidiaries to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims acquire any Shares or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries. (c) A list of all of the holders of all outstanding Options, the number of Options held by each of them, and the exercise prices and expiration date of each grant to such holders is set out in the Company Disclosure Letter. All Shares issuable upon exercise of outstanding Options in accordance with their respective terms will be duly authorized and validly issued as fully paid and non-assessable Shares. (d) There are no outstanding bonds, debentures or arrangements by which other evidences of indebtedness of the Company or any of its Subsidiaries is that carry the right to vote or may become bound to issue additional shares of capital stock are convertible into Shares of the Company or any of its Subsidiaries, . (iie) there There are no agreements or arrangements under which outstanding obligations of the Company or any of its Subsidiaries is obligated to register repurchase, redeem or otherwise acquire any outstanding shares or with respect to the sale voting or disposition of any outstanding securities of the Company or any its or their Subsidiaries. No holder of securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or any of its Subsidiaries has any right to compel the Company to register or otherwise qualify securities for public sale in any agreement providing rights to security holders) that will be triggered by the issuance of the NotesCanada, the Preferred StockUnited States, Peru or the Conversion Shares. elsewhere. (f) The Company has furnished never adopted a Rights Plan and is not a party to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretoany agreement that relates to a Rights Plan.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of of: (i) 50,000,000 14,991,000,000 shares of Common Stock, of which 16,036,625 approximately 12,189,293,609 shares are issued and outstanding; and (ii) 5,000,000 shares of preferred stock, of which 13 are issued and 2,068,000 outstanding. Except as disclosed in the SEC Documents, no shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(hstock option plans, no shares are reserved for issuance pursuant to securities (other than the Note and any other convertible promissory note issued to the Buyer) below); and (ii) 1,000,000 exercisable for, or convertible into or exchangeable for shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingCommon Stock. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)the SEC Documents, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized authorized, issued and outstanding capital stock of the Company consists of (i) 50,000,000 is as set forth on Schedule 4.3 hereto and except as set forth on Schedule 4.3 no other shares of Common Stock, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion capital stock of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which Company will be designated Series A Convertible Preferred Stock upon filing outstanding as of the Amendment to the Articles of Incorporation), of which none are issued and outstandingClosing Date. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders stockholders of the Company (other than those rights in favor of holders of the Preferred Stock) or any liens or encumbrances imposed through the actions or failure to act of the Company. Except Other than as disclosed in set forth on Schedule 5(c)4.3 hereto, as of the effective date of this Agreementhereof, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, and (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is are obligated to register the sale of any of its or their securities under the 1933 Securities Act (except pursuant to the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion SharesSecurities. The Company has furnished to the Buyer Purchaser true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”)Corporate Documents, and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the The Company has an authorized capital stock capitalization of the Company consists of (i) 50,000,000 200 million shares of Common Stock, and 50 million shares of which 16,036,625 shares are issued preferred stock, par value $.01 per share (the “Preferred Stock”) and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant an outstanding capitalization as set forth in Section 6(h) below)the General Disclosure Package and the Prospectus; and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock areor partnership or membership interests, or upon issuance will beof the Company and each subsidiary of the Company, including the Operating Partnership and its subsidiaries (each, a “Subsidiary” and collectively, the “Subsidiaries”), as applicable, have been duly authorized, and validly issued, authorized and issued and are fully paid and, with respect to shares of capital stock, membership interests and nonassessable. No limited partnership interests, non-assessable (except to the extent such non-assessability may be affected by Section 17-607 of the Delaware Revised Uniform Limited Partnership Act or Section 18-607 of the Delaware Limited Liability Company Act), and, except as disclosed in Exhibit A to the Agreement of Limited Partnership of the Operating Partnership (the “Partnership Agreement”), all of the outstanding shares of capital stock or partnership or membership interests of the Company Subsidiaries are subject to preemptive rights directly or any other similar rights indirectly owned of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of record and beneficially by the Company. Except , free and clear of any pledge, lien, encumbrance, security interest or other claim, except for security interests in favor of lenders created pursuant to or in connection with loan documents disclosed in the General Disclosure Package and the Prospectus, and, except as disclosed in Schedule 5(c)the Registration Statement, as of the effective date of this AgreementGeneral Disclosure Package and the Prospectus, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or (i) securities or rights convertible into or exchangeable for any shares of capital stock obligations of the Company or any of its Subsidiaries, the Subsidiaries convertible into or arrangements by which the Company exchangeable or redeemable for any of its Subsidiaries is or may become bound to issue additional shares of capital stock or other equity interests of the Company or any of its SubsidiariesSubsidiary, (ii) there are no agreements warrants, rights or arrangements under which options to subscribe for or purchase from the Company or any of its Subsidiaries is obligated to register the sale of Subsidiary any of its such capital stock or their other equity interests or any such convertible or exchangeable securities under the 1933 Act and or obligations, or (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock obligations of the Company and the material or any Subsidiary to issue any shares of capital stock or other equity interests, any convertible or exchangeable or redeemable securities or obligation, or any warrants, rights of the holders thereof in respect theretoor options.

Capitalization. Before giving effect Except as disclosed in the SEC Documents and except for 20,000,000 shares reserved for First Fire Global Opportunities Fund, LLC in connection with a $150,000.00 convertible promissory note, no shares are reserved for issuance pursuant to the transactions Company’s stock option plans, no shares are reserved for issuance pursuant to be effected at securities (other than the ClosingNote) exercisable for, the authorized capital stock of the Company consists of (i) 50,000,000 or convertible into or exchangeable for shares of Common Stock, of which 16,036,625 shares are issued Stock and outstanding, and 2,068,000 sufficient shares are reserved for issuance upon conversion of the Preferred Stock Note (subject to adjustment pursuant to as required by the Company’s covenant set forth in Section 6(h) belowNote and transfer agent share reserve letter); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)the SEC Documents, the 500,000 warrants held by First Fire Global Opportunities Fund, LLC in connection with a $150,000.00 convertible promissory note and possible conversions thereunder, and the right of ▇▇▇▇ ▇▇▇▇▇▇▇▇ to acquire 2,000,000 shares at a price of $0.15 per share, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer filed in its SEC Documents true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to (a) All of the transactions to be effected at the Closing, the authorized capital stock issued and outstanding units of the Company consists of (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, have been duly authorized, are validly issued, fully paid and nonassessable. No shares non-assessable, and are held of capital stock record and beneficially owned by HMA LP, free and clear of any restrictions on transfer, other than any restrictions under the Company Securities Act and state securities laws or Permitted Encumbrances. (b) There are subject to preemptive rights no pre-emptive rights, right of first refusal, or any other similar rights with respect to any equity interest in the Company or any of the shareholders Subsidiaries. Upon the release of liens contemplated by Section 4.2(i), there will be no encumbrances on the ownership, transfer or voting of any equity interest in either the Company or any of the Subsidiaries, or otherwise affecting the rights of any holder of the equity interest in such Company or the Subsidiaries. Except for the transactions contemplated hereunder, there is no contractual obligation or provision in the organizational documents of the Company or of any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed Subsidiaries which obligates it to purchase, redeem or otherwise acquire, or make any payment (including any dividend or distribution) in Schedule 5(c), as respect of any equity interest in such Company or any of the effective date Subsidiaries. Neither the Company nor any of this Agreementthe Subsidiaries owns any equity interests in, (i) and is not a party to any contractual obligation to purchase any equity interests in, any Person, and there are is no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock contractual obligation of the Company or any of its Subsidiariesthe Subsidiaries which obligates it to provide funds to, or arrangements by which make any investment (in the form of a loan, capital contribution or otherwise) in, any Person. There are no existing rights with respect to registration under any Securities Act of any equity interest of the Company or the Subsidiaries. There are no securities convertible into or exchangeable for equity interests in either the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of of: (i) 50,000,000 250,000,000 shares of Common Stock, $0.001 par value per share, of which 16,036,625 122,841,922 shares are issued and outstanding; and (ii) there are no authorized shares of Preferred Stock; no shares are reserved for issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other than the Note) exercisable for, or convertible into or exchangeable for shares of Common Stock and 2,068,000 21,250,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingNote. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as As of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character 5 whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the authorized capital stock All of the Company consists of (i) 50,000,000 shares of Common Stock, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as As of the effective date of this Agreement, and except as disclosed in the SEC Documents, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company At its option, Buyer has furnished had the opportunity to the Buyer review true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of of: (i) 50,000,000 200,000,000 authorized shares of Common Stock, $0.001 par value per share, of which 16,036,625 38,556,508 shares are issued and outstanding; and (ii) 5,000,000 authorized shares of Preferred Stock, $0.001 par value per share, of which no shares are issued and 2,068,000 outstanding; no shares are reserved for issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other than the Note) exercisable for, or convertible into or exchangeable for shares of Common Stock and 5,360,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingNote. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as As of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 25,000,000 shares, consisting of two classes: 22,500,000 shares of Common Stock and 2,500,000 shares of preferred stock, par value $.01 per Share (the "Preferred Stock"). According to a certificate from the Company's transfer agent dated November 12, 2000, an aggregate of which 16,036,625 11,887,307 shares are of the Company's Common Stock were issued and outstandingoutstanding as of the date of such transfer agent certificate. No shares of the Company's Preferred Stock are outstanding as of the date hereof. As of the date hereof, and 2,068,000 there is an aggregate of 4,630,599 shares are of the Company's Common Stock reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to under the Company’s covenant set forth in Section 6(h) below); 's stock option plans and (ii) 1,000,000 shares of undesignated preferred employee stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingpurchase plan. All of such outstanding shares of the Company's capital stock arehave been, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No Except as set forth in this Section 4(c) or on the disclosure schedule (the "Schedule") referencing this Section 4(c), no shares of capital stock of the Company (including the Shares) or any of its subsidiaries are subject to preemptive rights or any other similar rights of the shareholders stockholders of the Company or any liens or encumbrances imposed through the actions created or failure to act of incurred by the Company. Except for the Shares and as disclosed in this Section 4(c) or Schedule 5(c4(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe forto, puts, calls, rights of first refusal, agreements, understandings, claims calls or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exercisable or exchangeable for for, any shares of capital stock of the Company or any of its Subsidiariessubsidiaries, or arrangements by which the Company or any of its Subsidiaries subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiariessuch subsidiaries, and (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Securities Act (except as provided in Section 1.04(d) and 1.09 of the Purchase Agreement and the Registration Rights Agreement, dated February 18, 2000 (iii) the "Registration Rights Agreement"), among the Company, the Purchaser and the other investors identified therein). Except as set forth on Schedule 4(c), there are no antisecurities or instruments containing price-dilution based antidilution or price adjustment similar provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will may be triggered by the issuance of the Notes, Shares in accordance with the Preferred Stock, terms of this Agreement or the Conversion SharesRegistration Rights Agreement and the holders of the securities and instruments listed on such Schedule 4(c) have waived any rights they may have under any such antidilution or similar provisions in connection with the issuance of the Shares in accordance with the terms of this Agreement or the Registration Rights Agreement. The Company has furnished made available to the Buyer Purchaser and counsel for the Purchaser true and correct copies of the Company’s Articles 's Certificate of Incorporation as in effect on the date hereof (“Articles "Certificate of Incorporation”"), the Company’s Bylaws, 's By-laws as in effect on the date hereof (the “Bylaws”), "By-laws") and the terms of all other instruments and agreements governing securities convertible into or exercisable or exchangeable for Common Stock capital stock of the Company and the material rights Company, except for stock options granted under any employee benefit plan or director stock option plan of the holders thereof in respect theretoCompany.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the (1) The authorized capital stock of the Company consists of 1,000 shares of Company Common Stock. As of the date hereof, (i) 50,000,000 100 shares of Company Common Stock, of which 16,036,625 shares Stock are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); outstanding and (ii) 1,000,000 no shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Company Common Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingheld in the treasury of the Company. All of such the outstanding shares of the Company's capital stock are, or upon issuance will be, are duly authorized, validly issued, fully paid and nonassessablenon-assessable and are owned, directly or indirectly, by the Selling Stockholder. No Except as set forth on Schedule 3.2(a) of the Disclosure Schedule, there are no existing (i) options, warrants, calls, pre-emptive rights, subscriptions or other rights, convertible securities, agreements or commitments of any character obligating the Company or any of its Subsidiaries to issue, transfer or sell any shares of capital stock of or other equity interest in the Company are subject to preemptive rights or any other similar rights of the shareholders its Subsidiaries or securities convertible into or exchangeable for such shares or equity interests, (ii) contractual obligations of the Company or any liens of its Subsidiaries to repurchase, redeem or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of otherwise acquire any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any Subsidiary of its Subsidiariesthe Company, (iii) voting trusts or arrangements by similar agreements to which the Company is a party with respect to the voting of the capital stock of the Company, or any of its Subsidiaries is (iv) liens, claims, charges, security interests, mortgages, pledges or may become bound to issue additional other restrictions or encumbrances (collectively, "Liens") on the shares of capital stock of the Company. (2) Set forth on Schedule 3.2(b) of the Disclosure Schedule is a complete list of (i) each Subsidiary of the Company and its jurisdiction of incorporation or any of its Subsidiariesorganization, (ii) there are no agreements or arrangements under which the Company or any number of its Subsidiaries is obligated to register the sale issued and outstanding shares of any each class of its or their securities under the 1933 Act capital stock of each Subsidiary and (iii) there are no anti-dilution or price adjustment provisions contained each jurisdiction in any security issued by which each Subsidiary is qualified to do business. Except as set forth on Schedule 3.2(b) of the Company Disclosure Schedule, all of the outstanding shares of capital stock (or in any agreement providing rights to security holdersequivalent equity interests of entities other than corporations) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies each of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”)'s Subsidiaries are beneficially owned, directly or indirectly, by the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), free and the terms clear of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretoLiens.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the The authorized capital stock of the Company consists of (i) 50,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.0001 per share (the “Preferred Stock”). Immediately before the First Subsequent Closing, the Company will have 35,513,987 shares of which 16,036,625 Common Stock and no shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All of such the outstanding shares of Common Stock and of the capital stock are, or upon issuance will be, of each of the Company’s subsidiaries have been duly authorized, validly issued, issued and are fully paid and nonassessablenon-assessable. No The outstanding capitalization of the Company (i) immediately after the Initial Closing, and (ii) assuming that the Company issues and sells 1,666,667 Shares in the First Subsequent Closing will be as set forth in the “Post-Closing Capitalization Table” in Schedule 3(c). Immediately following the First Subsequent Closing: (i) no shares of capital stock of the Company are or any of its subsidiaries will be subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions (other than as contemplated by Section 5(f) hereof) suffered or failure to act of permitted by the Company. Except ; (ii) except as disclosed in Schedule 5(c)set forth on the Super 8-K and as contemplated by the Transaction Documents and Placement Agent Warrants, as of the effective date of this Agreement, (i) there are will be no outstanding options, preferred stockwarrants, scrip, rights to subscribe forto, puts, calls, rights of first refusal, agreements, understandings, claims calls or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for into, any shares of capital stock of the Company or any of its Subsidiariessubsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, subsidiaries; (iiiii) there are will be no outstanding debt securities of the Company or any of its subsidiaries other than indebtedness as disclosed in Schedule 3c(iii) or the Super 8-K; (iv) other than pursuant to the Registration Rights Agreement or as set forth in Schedule 3(c)(iv) or disclosed in the Super 8-K, there will be no agreements or arrangements under which the Company or any of its Subsidiaries subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and Securities Act; (iiiv) there are will be no outstanding registration statements of the Company or any of its subsidiaries, and there will be no outstanding comment letters from the SEC or any other regulatory agency; (vi) except as provided in this Agreement or as set forth in Schedule 3c(vi) or disclosed in the Super 8-K, there will be no securities or instruments of the Company or any of its subsidiaries containing anti-dilution or similar provisions, including the right to adjust the exercise, exchange or reset price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) under such securities, that will be triggered by the issuance of the NotesShares as described in this Agreement; and (vii) no co-sale right, right of first refusal or other similar right will exist with respect to the Shares or the issuance and sale thereof. Upon request, the Preferred Stock, or the Conversion Shares. The Company has furnished will make available to the Buyer Purchaser true and correct copies of the Company’s Articles Certificate of Incorporation Incorporation, as in effect on as of the date hereof (“Articles of Incorporation”)First Subsequent Closing, and the Company’s Bylaws, as in effect on as of the date hereof (the “Bylaws”)First Subsequent Closing, and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretothereto other than stock options issued to officers, directors, employees and consultants.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of of: (i) 50,000,000 1,000,000,000 authorized shares of Common Stock, $0.0001 par value per share, of which 16,036,625 385,431,636 shares are issued and outstanding; and (ii) 100,000,000 authorized shares of Preferred Stock, $0.001 par value per share, of which162,181 shares are issued and 2,068,000 outstanding; no shares are reserved for issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other than the Note) exercisable for, or convertible into or exchangeable for shares of Common Stock and 19,000,0000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingNote. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as As of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of of: (i) 50,000,000 250,000,000 authorized shares of Common Stock, $0.0001 par value per share, of which 16,036,625 104,329,703 shares are issued and outstanding; and (ii) 104,329,703 authorized shares of Preferred Stock, $0.0001 par value per share, of which no shares are issued and 2,068,000 outstanding; no shares are reserved for issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other than the Note) exercisable for, or convertible into or exchangeable for shares of Common Stock and 17,000,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstandingNote. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessablenon-assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as As of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, Note or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 200,000,000 shares of Class A Common Stock, 200,000,000 shares of Class B Common Stock super voting 1000 to 1, par value $.001 per share, and 2 shares of Class C Preferred Stock super voting with veto rights, par value $.001 per share and 100,000,000 of Class A Blank Check Preferred of which 16,036,625 193,427,792, 545,455, 2 and 0 shares are issued and outstanding, respectively upon reversing the outstanding 200 to 1 except for the Class C and 2,068,000 keeping the authorized at 200,000,000, 150,000,000 Class A Common shares are reserved for issuance, and 50,000,000 Class A Common shares are reserved for issuance upon conversion of the Preferred Stock Notes and the Additional Notes (as defined in Section 4(l)) and exercise of the Warrants and the Additional Warrants (as defined in Section 4(l)) (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h4(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. .. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c3(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its SubsidiariesSubsidiary, or arrangements by which the Company or any of its Subsidiaries Subsidiary is or may become bound to issue additional shares of capital stock of the Company or any of its SubsidiariesSubsidiary, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries Subsidiary is obligated to register the sale of any of its or their securities under the 1933 Act (except the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred StockWarrants, or the Conversion Shares or Warrant Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Articles Certificate of Incorporation as in effect on the date hereof (“Articles Certificate of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive or Chief Financial Officer on behalf of the Company as of the Closing Date.

Capitalization. Before giving effect to the transactions to be effected at the Closing, the authorized capital stock of the Company consists of (i) 50,000,000 There are currently approximately 40,922,196 shares of Common Stock, of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation), of which none are issued and outstanding. All The aggregate number of such shares and type of all authorized, issued and outstanding shares classes of capital stock arestock, options and other securities of the Company (whether or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No not presently convertible into or exercisable or exchangeable for shares of capital stock of the Company are subject to preemptive rights or any other similar rights of Company) is specified in the shareholders SEC Reports (as defined below). Except as specified in the SEC Reports, no securities of the Company are entitled to preemptive or similar rights, and no person has any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c), as of the effective date of this Agreement, (i) there are no outstanding options, preferred stock, scrip, rights to subscribe for, puts, calls, rights right of first refusal, agreementspreemptive right, understandingsright of participation, claims or any similar right to participate in the transactions contemplated by the Transaction Documents; except as specified in the SEC Reports, the Company has not issued any other options, warrants or scrip rights to subscribe to, calls or commitments or rights of any character whatsoever relating to, or securities securities, rights or rights obligations convertible into or exchangeable for, or entered into any agreement giving any person any right to subscribe for or acquire, any shares of capital stock of Common Stock; except as specified in the Company or any of its SubsidiariesSEC Reports, there are no contracts, commitments, understandings, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of the capital stock of the Company or any options, securities or rights convertible into shares of its Subsidiariescapital stock of the Company; except for customary adjustments as a result of stock dividends, (ii) there are no agreements stock splits, combination of shares, reorganizations, recapitalizations, reclassifications or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) other similar events, there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by and the issuance and sale of the NotesShares will not obligate the Company to issue shares of common stock or other securities to any person (other than the Purchasers) and will not result in a right of any holder of securities to adjust the exercise, conversion, exchange or reset price under such securities; the Preferred StockCompany is not a party to, and it has no knowledge of, any agreement restricting the voting or transfer of any shares of the Conversion Shares. The Company has furnished to the Buyer true and correct copies capital stock of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before giving effect to As of the transactions to be effected at the Closingdate hereof, the authorized capital stock of the Company consists of (i) 50,000,000 490,000,000 shares of Common Stock, of which 16,036,625 [ ] shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); outstanding and (ii) 1,000,000 10,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation)stock, of which none no shares are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)the SEC Documents, as of the effective date of this Agreement, (i) there are no outstanding options, preferred stockwarrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Notes, the Preferred Stock, or the Conversion SharesSecurities. The Company has furnished to the Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s BylawsBy-laws, as in effect on the date hereof (the “BylawsBy-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto.

Capitalization. Before (a) Section 3.3(a) of the Company and Sellers’ Disclosure Letter sets forth with respect to each RSI Company as of the Effective Date, (i) its name and jurisdiction of organization or formation, (ii) its form of organization or formation and (iii) the Equity Interests issued by each RSI Company (including the number and class (as applicable) of vested and unvested Equity Interests) and the record and beneficial ownership (including the percentage interests held thereby) thereof. The Equity Interests set forth on Section 3.3(a) of the Company and Sellers’ Disclosure Letter comprise all of the capital stock, limited liability company interests or other equity interests, as applicable, of the RSI Companies that are issued and outstanding as of the Effective Date, immediately prior to giving effect to the transactions occurring on the Closing Date (including prior to be effected at the Closing, Recapitalization) set forth in this Agreement and in the authorized capital stock Ancillary Agreements. (b) Except as set forth on Section 3.3(b) of the Company consists and Sellers’ Disclosure Letter, or set forth in this Agreement, the Recapitalization Agreement, the Put-Call Agreements, and if applicable, as further detailed in the Ancillary Agreements or the Governing Documents of the RSI Companies: (i) 50,000,000 shares there are no outstanding options, warrants, Contracts, calls, puts, rights to subscribe, conversion rights or other similar rights to which any RSI Company is a party or which are binding upon any RSI Company providing for the offer, issuance, redemption, exchange, conversion, voting, transfer, disposition or acquisition of Common Stock, any of which 16,036,625 shares are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); and its Equity Interests; (ii) 1,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing none of the Amendment RSI Companies is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any of its Equity Interests; (iii) none of the RSI Companies is a party to any voting trust, proxy or other agreement or understanding with respect to the Articles voting of Incorporationany of its Equity Interests; (iv) there are no contractual equityholder preemptive or similar rights, rights of first refusal, rights of first offer or registration rights in respect of Equity Interests of any of the RSI Companies to which any RSI Company is a party; (v) none of the RSI Companies has violated in any material respect any applicable securities Laws or any preemptive or similar rights created by Law, Governing Document or Contract to which such RSI Company is a party in connection with the offer, sale or issuance of any of its Equity Interests; and (vi) other than pursuant to applicable Law (including Applicable Gaming Law), there are no contractual restrictions which prevent the payment of which none are dividends or distributions by any of the RSI Companies. (c) All of the issued and outstanding. All outstanding Equity Interests of such outstanding shares of capital stock are, or upon issuance will be, the RSI Companies (including the Acquired Closing Company Units) have been duly authorized, validly issued, fully paid and nonassessable. No shares non-assessable and free of capital stock of the Company are subject to any preemptive rights or in respect thereto, and were not issued in violation of any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 5(c)preemptive rights, as of the effective date of this Agreement, (i) there are no outstanding call options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreementssubscription rights, understandings, claims transfer restrictions (other than Securities Liens and other than as set forth in the Governing Documents of the RSI Companies) or other commitments or similar rights of any character whatsoever relating toPerson or applicable Law, or securities or rights convertible into or exchangeable other than in each case Securities Liens. Upon delivery of and payment for any shares of capital stock the Acquired Closing Company Units at the Closing, (i) Buyer will acquire good and valid title to all of the Acquired Closing Company Units, free and clear of any Liens (other than Securities Liens and other than as set forth in the Company’s LPA, this Agreement or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, Ancillary Agreements) and (ii) there are no agreements or arrangements under which the Acquired Closing Company or any of its Subsidiaries is obligated to register Units (including the sale of any of its or their securities under Buyer Earnout Company Units) together with the 1933 Act and Retained Company Units (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by including the Sellers Earnout Company (or in any agreement providing rights to security holders) that Units), will be triggered by the issuance represent all of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies Equity Interests of the Company’s Articles of Incorporation , other than as set forth in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, LPA. (d) Except as in effect set forth on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock Section 3.3(d) of the Company and Sellers’ Disclosure Letter, no RSI Company currently owns, directly or indirectly, any Equity Interests in any Person (other than another RSI Company), and no RSI Company has agreed to acquire any Equity Interests of any Person or has any branch, division, establishment or operations outside the material rights of the holders thereof jurisdiction in respect theretowhich it is incorporated, formed or organized (as applicable).

Capitalization. Before giving effect to the transactions to be effected at the ClosingAs of June 6, 2003, the authorized capital stock of the Company consists consisted of (i) 50,000,000 35,000,000 shares of Common Stock, $.01 par value, of which 16,036,625 16,091,762 shares of Common Stock are issued and outstanding, and 2,068,000 shares are reserved for issuance upon conversion of the Preferred Stock (subject to adjustment pursuant to the Company’s covenant set forth in Section 6(h) below); outstanding and (ii) 1,000,000 5,000,000 shares of undesignated preferred stock (517,000 of which will be designated Series A Convertible Preferred Stock upon filing of the Amendment to the Articles of Incorporation)Stock, $.01 par value, authorized of which none are issued and outstanding. All outstanding shares were issued in compliance with all applicable Federal and state securities laws, and the issuance of such outstanding shares of capital stock are, or upon issuance will be, was duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed contemplated by this Agreement or as set forth in Schedule 5(c)the Company Disclosure Letter, as of the effective date of this Agreement, there are (i) there are no outstanding subscriptions, warrants, options, preferred stock, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims conversion privileges or other commitments rights or rights of any character whatsoever relating to, agreements obligating the Company to purchase or securities otherwise acquire or rights convertible into or exchangeable for issue any shares of capital stock of the Company (or any shares reserved for such purpose), (ii) no preemptive rights contained in the Company's Certificate of its SubsidiariesIncorporation, as amended (the "CERTIFICATE OF INCORPORATION"), By-Laws of the Company or arrangements by contracts to which the Company is a party or any rights of its Subsidiaries is or may become bound first refusal with respect to issue the issuance of additional shares of capital stock of the Company, including without limitation the Securities and the Underlying Shares, and (iii) no commitments or understandings (oral or written) of the Company to issue any shares, warrants, options or other rights. Except as set forth in the Company Disclosure Letter, none of the shares of Common Stock are subject to any stockholders' agreement, voting trust agreement or similar arrangement or understanding. Except as set forth in the Company Disclosure Letter, the Company has no outstanding bonds, debentures, notes or other obligations the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter. The Company currently shall not within the next twelve months take any action or agree to take any action providing for an increase in the number of shares reserved for issuance for equity incentives under the Company's Amended 1998 Equity Participation Plan (the "PLAN") or any other employee incentive plan, or any new such plan, by an aggregate of its Subsidiariesmore than 4,000,000 shares of Common Stock. With respect to each Subsidiary, (i) all the issued and outstanding shares of the Subsidiary's capital stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance with applicable federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and (ii) there are no agreements outstanding options to purchase, or arrangements under which any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of the Subsidiary's capital stock or any such options, rights, convertible securities or obligations. Except as disclosed in the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by Disclosure Letter, the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance owns 100% of the Notes, the Preferred Stock, or the Conversion Shares. The Company has furnished to the Buyer true and correct copies outstanding equity of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect theretoeach Subsidiary.