Common use of Capitalization; Voting Rights Clause in Contracts

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of which 1,000,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the Parent, as Company consists of the date hereof consists 1,010,502,000 of which 1,000,000,000 are 40 million shares of Common Stock, par value $0.001 per share, 99,776,704 shares of which of which are issued Stock and outstanding and 10,502,000 are two million shares of preferred stock, par value $0.001 0.01 per share (“Preferred Stock”), of which 378,061 40,000 shares are (or upon filing of the Certificate of Designation, will be) designated as Series A Preferred Stock. As of November 1, 2006, 19,982,038 shares of Series A preferred stock are Common Stock were issued and outstanding and no shares of Preferred Stock were issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(cprovided in the Company’s filings with the United States Securities and Exchange Commission (the “SEC”), other than: (i) and except for the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary AgreementsSecurities, there are no outstanding options, warrants, scrip, rights (including conversion conversion, anti-dilution or preemptive rights and rights of first refusalrefusal or similar rights), proxy or stockholder agreementscontracts, or arrangements commitments, understandings or agreements of any kind for by which the purchase Company or acquisition from the Parent any of its Subsidiaries is or may become bound to issue any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting are any such securitiesissuances, contracts, commitments, understandings or arrangements contemplated. (iiic) All issued and outstanding shares of capital stock of the Parent's Common Stock: Company (i) have been duly authorized and validly issued and are fully paid and nonassessable; , and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The Company does not have any shareholder rights plan, “poison pill” or other anti-takeover plans or similar arrangements. (e) Except as set forth in the Company’s filings with the SEC, there are no proxy, stockholder agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders. (f) The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by Applicable Law) to receive dividends and distributions on, all shares of capital stock of its Subsidiaries as owned by the Company or any such Subsidiary. (g) The rights, preferences, privileges and restrictions of the shares of the Common Stock Securities are as stated in the Parent's Certificate of Incorporation (and the "Charter")Certificate of Designations. The Note Shares, the Option Shares Securities are duly authorized and the Warrant Shares have been duly and validly reserved for issuance. When when issued in compliance with the provisions of this Agreement Agreement, the Certificate of Designations and the Parent's CharterCertificate of Incorporation, (i) the Securities will be validly issued, fully paid and nonassessablenon-assessable, and will be free of any liens liens, taxes, claims or encumbrances; other Encumbrances and (ii) will not be subject to preemptive rights, rights of first refusal or other similar rights of stockholders of the Company or any other person provided, however, that the Securities Shares and the Conversion Shares may be subject to restrictions on transfer under the Registration Rights Agreement, state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. As of the Closing Date, the Company shall have reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Conversion Shares at least equal to the Required Minimum on the date hereof.

Capitalization; Voting Rights. Except as set forth on Schedule 4.3: (ia) The authorized capital stock of the ParentCompany, as immediately prior to the Closing, consists of the date hereof consists 1,010,502,000 of which 1,000,000,000 are (i) 50,000,000 shares of Common Stock, par value $0.001 per share, 99,776,704 14,549,651 shares of which of which are issued and outstanding as of August 13, 2001, and 10,502,000 are (ii) 10,000,000 shares of preferred stockPreferred Stock, par value $0.001 per share share, no shares of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c), other than: Other than (i) the shares reserved for issuance under the ParentCompany's stock option plans; Stock Option Plan and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance sale of any of the Note, the Options Notes or the Warrants, or the issuance of any of the Note Shares, the Option Conversion Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: Stock and Preferred Stock (to the extent Preferred Stock has been issued) (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of Preferred Stock and the Common Stock are as stated in the Parent's Certificate Articles of Incorporation (the "Charter"). The Note Shares, the Option Conversion Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities Notes, Warrants, Conversion Shares and Warrant Shares (sometimes collectively referred to herein as the "Securities") will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. (e) No stock plan, stock purchase, stock option or other agreement or understanding between the Company and any holder of any equity securities or rights to purchase equity securities provides for acceleration or other changes in the vesting provisions or other terms of such agreement or understanding as the result of any merger, consolidated sale of stock or assets, change in control or any other transaction(s) by the Company, including the transactions contemplated hereunder.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of 96,000,000 shares, of which 1,000,000,000 95,000,000 are shares of Common Stock, par value $0.001 0.005 per share, 99,776,704 shares of which 44,641,388shares of which are issued and outstanding outstanding, and 10,502,000 1,000,000 are shares of preferred stock, par value $0.001 1.75 per share of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's ’s stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options Note or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's ’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's ’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's ’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 175,000,000 shares, of which 1,000,000,000 170,000,000 are shares of Common Stock, par value $0.001 0.0001 per share, 99,776,704 48,766,494 shares of which of which are issued and outstanding outstanding, and 10,502,000 5,000,000 are shares of preferred stock, par value $0.001 0.01 per share share, of which 378,061 100,000 shares of have been designated Series A preferred stock Convertible Preferred Stock, 35,557 of which shares are issued and outstanding, and 1,000,000 shares have been designated Series B Convertible Preferred Stock, all of which shares are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)3.3. (iib) Except as disclosed on Schedule 12(c)3.3 or as disclosed in any Exchange Act Filings, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)3.3 or as disclosed in any Exchange Act Filings, neither the offer offer, issuance or issuance sale of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant SharesSecurities, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Company’s Certificate of Incorporation Incorporation, including its Certificates of Designation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Company’s Charter, the Securities Shares and Warrant Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities Shares and Warrant Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (a) As of September 14, 2000, the capitalization of the Company consisted of the following: (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of which 1,000,000,000 are 110,000,000 shares of Common Stock, of which (A) 46,383,304 shares are issued and outstanding, and (B) 16,151,723 shares have been reserved for issuance under the Company's Stock Option Plans (as defined below) of which (1) options to purchase 11,019,802 shares are outstanding, and (2) options to purchase 1,120,360 shares have been exercised; and (ii) 10,000,000 shares of Preferred Stock, par value $0.001 per share$ .0001 (the "Preferred Shares"), 99,776,704 shares of which none of which are issued and outstanding and 10,502,000 are outstanding. Since June 30, 2000 no shares of preferred stock, par value $0.001 per share Common Stock or Preferred Shares have been issued except for issuances of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, Common Stock under any Stock Option Plan. (b) All issued and outstanding shares of the Company's capital stock (i) have been duly authorized and validly issued, (ii) are fully paid and nonassessable, (iii) were issued in compliance with all applicable state and federal laws concerning the issuance of each Subsidiary securities and (iv) were not issued in violation of, or subject to, any preemptive, subscription or other similar rights of each any other Person. (c) The Company is has made available to the Purchasers a copy of the Company's (i) 1999 Non-Employee Directors' Stock Option Plan, (ii) 1997 Stock Option Plan, (iii) ZoneXxxxxxx.xxx, Xxc. 1996 Stock Option Plan, (iv) option agreements pursuant to which stock options have been granted outside of the plans described in clauses (i) through (iii) above and (v) 1999 Employee Stock Purchase Plan (collectively the stock option plans described in clauses (i) through (iv) are hereinafter referred to as the "Stock Option Plans"). Other than the 16,151,723 shares of Common Stock which were reserved for future issuance to employees pursuant to outstanding stock option grants under the Stock Options Plans (as defined above) and 1,000,000 shares of Common Stock which were reserved for future issuance to employees pursuant to the Employee Stock Purchase Plan, the stock options issued pursuant to the Stock Option Plans, and except as may be granted pursuant to this Agreement or as set forth on Schedule 12(c). (ii3.3(c) Except as disclosed on Schedule 12(c), other than: (i) to the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary AgreementsDisclosure Letter, there are no outstanding subscriptions, options, calls, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.the

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 21,000,000 shares, of which 1,000,000,000 20,000,000 are authorized as shares of Common Stockcommon stock, par value $0.001 per shareshare (the “Common Stock”), 99,776,704 and 16,756,438 shares of which of which Common Stock are issued and outstanding outstanding, and 10,502,000 1,000,000 are authorized as shares of preferred stock, par value $0.001 per share of which 378,061 (the “Preferred Stock”), and 37,908.56 shares of Series A preferred stock Preferred Stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except (i) as disclosed on Schedule 12(c)4.3 or provided in any Related Agreement, other than: (iii) the shares reserved for issuance under the Parent's stock option plans; plans of the Company and its Subsidiaries, and (iiiii) warrants, rights and shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its equity securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the Warrants, or nor the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby hereby, will result in a change in the price or number of any equity securities of the Parent outstanding, Company outstanding under anti-dilution or other similar provisions contained in or affecting any such equity securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock and Preferred Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Company’s Certificate of Incorporation (the "“Charter"”). The Note SharesExcept as disclosed on Schedule 4.3 or provided in any Related Agreement, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement Agreement, the Related Agreements and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities are subject to the provisions of this Agreement, the Related Agreements and applicable law other than to the extent effectively waived hereunder or thereunder (including, without limitation, the Uniform Commercial Code in the case of the Note) and may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized and issued capital stock of the Parent, Company and of each Subsidiary as of the date hereof consists 1,010,502,000 of which 1,000,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth described on Schedule 12(c)3.2 annexed hereto. (ii) Except as disclosed on in Schedule 12(c)3.2, other than: (i) the shares than Common Stock reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including including, but not limited to, conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or other arrangements or agreements of any kind for the purchase or acquisition from the Parent Company or its Subsidiaries, of any of its their securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance sale of any of the Note, the Options or the Warrantsof, or the issuance of any of the Note Sharesof, the Option Shares or the Warrant Shares, nor the consummation of any transaction transactions contemplated hereby hereby, will result in a change in the price or number of any securities of the Parent outstanding, Company or its Subsidiaries authorized or issued under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) The issuance of the Shares contemplated hereby is not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with. (iv) All issued and outstanding shares securities of the Parent's Common Stock: Company and its Subsidiaries (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securitieslaws. (ivv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's CharterAgreement, the Securities Shares will be validly issued, fully paid and nonassessable, and will be free of any liens liens, charges, encumbrances, options, rights of first refusal, security interests, claims, liens, mortgages, pledges, charges, easements, covenants, restrictions, (except as contained herein) obligations, or encumbrances; providedany other encumbrances (including, howeverwithout limitation, that any conditional sale or other title retention agreement or any lease in the Securities may be subject nature thereof and any agreement to restrictions on transfer under state and/or federal securities laws as set forth herein grant or as otherwise required by such laws at to permit or suffer to exist any of the time a transfer is proposedforegoing) or third party rights or equitable interests of any nature whatsoever.

Capitalization; Voting Rights. (i) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 100,050,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, no par value $0.001 per share, 99,776,704 shares of which 10,000,000shares of which are issued and outstanding outstanding, and 10,502,000 50,000 are shares of preferred stock, no par value $0.001 per share of which 378,061 0 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c12 (c). (iii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c), neither the offer offer, issuance or issuance sale of any of the NoteNotes, the Options Option or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiiii) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iviii) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of which 1,000,000,000 are 1,000,000 shares of Common Stock, par value $0.001 0.0001 per share, 99,776,704 shares of which of which 29,172,635 are issued and outstanding outstanding[, and 10,502,000 are 10,000,000 shares of preferred stock, par value $0.001 per share share, of which 378,061 248,460 shares of are issued and outstanding as Series A preferred stock C Preferred Stock, par value $0.001 per share, and 4,884 shares are issued and outstanding as Series D-1 Preferred Stock, par value $0.001 per share are issued and outstanding]. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's ’s stock option and employee stock purchase plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Grant Shares or the Warrant Additional Grant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's ’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's ’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Grant Shares and the Warrant Additional Grant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's ’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of 100,000,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 12,611,140 shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c)) or as disclosed in any Exchange Act Filings, other than: (i) the shares reserved for issuance under the Parent's ’s stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options Notes or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's ’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's ’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's ’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the ParentCompany, as immediately prior to the Closing, consists of the date hereof consists 1,010,502,000 of which 1,000,000,000 are Fifteen Million (15,000,000) shares of Common Stock, no par value $0.001 per share, 99,776,704 (a) 1,025,674.76 shares of which of which are issued and outstanding and 10,502,000 are outstanding, (b) 1,047,848 shares of preferred stockwhich are reserved for future issuance to key employees pursuant to the Company's 1984 Stock Option Plan, as amended, and the 1995 Stock Option Plan (collectively, the "Stock Option Plans"), and (c) Eight Million (8,000,000) shares of Preferred Stock, no par value $0.001 per share value, (i) 41,300 of which 378,061 shares of are designated Series A preferred stock Preferred Stock, none of which are issued and outstanding, (ii) 115,446 of which are designated as Series B Preferred Stock, none of which are issued and outstanding, (iii) 450,481 of which are designated as Series C Preferred Stock, none of which are issued and outstanding, and (iv) 6,800,000 of which are designated Series D Preferred Stock, 1,184,133 of which are issued and outstanding. The authorized, All issued and outstanding capital stock shares of each Subsidiary the Company's Common Stock and Preferred Stock (A) have been duly authorized and validly issued to the persons listed an Exhibit D hereto, (B) are fully paid and nonassessable, and (C) were issued in compliance with all applicable state, federal and foreign laws concerning the issuance of each Company securities. The rights, preferences, privileges and restrictions of the Shares and the Exchange Series D Shares are as stated in the Restated Articles. Each series of Preferred Stock is convertible into Common Stock on a one-for-one basis. The Conversion Shares have been duly and validly reserved for issuance. Other than as set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary AgreementsExhibit E, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder shareholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's CharterRestated Articles, the Securities Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities Shares, the Exchange Series D Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the ParentCompany, as immediately prior to the Closing, will consist of the date hereof consists 1,010,502,000 of which 1,000,000,000 are 35,000,000 shares of Common Stock, (par value $0.001 $ .001) per share, 99,776,704 10,203,600 shares of which of which are issued and outstanding and 10,502,000 are as of the date of this Agreement, 5,000,000 shares of preferred stockPreferred Stock, (par value $0.001 $ .001) per share share, 300,000 of which 378,061 shares of are designated Series A preferred stock Preferred Stock, none of which are issued and outstandingoutstanding as of the date of this Agreement. The authorized, All issued and outstanding capital stock shares of each Subsidiary the Company's Common Stock (a) have been duly authorized and validly issued and (b) are fully paid and nonassessable. The rights, preferences, privileges and restrictions of each the Shares are as stated in the Certificate of Designations; all such rights, preferences, privileges and restrictions are valid, binding and enforceable against the Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) and in accordance with applicable laws. The Conversion Shares have been duly and validly reserved for issuance. Other than the 977,310 shares reserved for issuance under the ParentCompany's stock option plans; 1993 Long Term Incentive Plan and (iioutstanding warrants to purchase an aggregate of 2,961,104 shares of Common Stock and 44,006 shares reserved for issuance under the Company's 401(k) shares which may be issued pursuant to this Agreement and the Ancillary Agreementsplan, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder shareholder agreements, or arrangements or agreements of any kind authorized or outstanding for the purchase or acquisition from the Parent Company of any of its securitiessecurities or any interest therein. Except as disclosed on Schedule 12(c)set forth herein, neither there is no commitment by the offer Company to issue shares, subscriptions, warrants, options, convertible securities, or issuance other such rights or to distribute to holders of any of the Noteits equity securities any evidence of indebtedness or asset. The Company has no obligation (contingent or otherwise) to purchase, the Options redeem or the Warrants, or the issuance of otherwise acquire any of its equity securities or any interest therein or to pay any dividend (other than dividends payable on the Note Shares, the Option Shares ) or the Warrant Shares, nor the consummation of to make any transaction contemplated hereby will result other distribution in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuancerespect thereof. When issued in compliance with the provisions of this Agreement and the Parent's CharterCertificate of Designations, the Securities Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as immediately prior to the Closing, consists of the date hereof consists 1,010,502,000 of which 1,000,000,000 are (i) [*] shares of Common Stock, par value $0.001 per share, 99,776,704 [*] shares of which of which are issued and outstanding outstanding, and 10,502,000 are (ii) [*] shares of preferred stockPreferred Stock, par value $0.001 per share share, all of which 378,061 shares of are designated Series A preferred stock Preferred Stock, none of which are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(cUnder the Company’s 2003 Equity Incentive Plan (the “Plan”), other than: (i) no shares have been issued pursuant to restricted stock purchase agreements and/or the exercise of outstanding options, (ii) no options to purchase shares have been granted or are currently outstanding, and (iii) [*] shares of Common Stock remain available for future issuance to officers, directors, employees and consultants of the Company. (c) Other than the shares reserved for issuance under the Parent's stock option plans; Plan, and (ii) shares which except as may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiid) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) Stock have been duly authorized and validly issued and are fully paid and nonassessable; and , (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities; and (iii) with respect to common stock only, are subject to a right of first refusal in favor of the Company upon transfer. (ive) The rights, preferences, privileges and restrictions of the shares of the Common Stock Shares are as stated in the Parent's Certificate of Incorporation (the "Restated Charter"). The Note Shares, the Option Shares and the Warrant Conversion Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Restated Charter, the Securities Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrancesencumbrances other than (i) liens and encumbrances created by or imposed upon Purchasers and (ii) any right of first refusal set forth in the Company’s Bylaws; provided, however, that the Securities Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. (f) All options granted and Common Stock issued vest as follows: [*] of the shares vest [*] following the vesting commencement date, with the remaining [*] vesting in [*] (the “Normal Vesting Schedule”). No stock plan, stock purchase, stock option or other agreement or understanding between the Company and any holder of any equity securities or rights to purchase equity securities provides for acceleration or other changes in the vesting 3. [*] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof September 30, 2004, consists 1,010,502,000 of 105,000,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, par value $0.001 0.01 per share, 99,776,704 36,323,274 shares of which of which are issued and outstanding outstanding, and 10,502,000 5,000,000 are shares of preferred stock, par value $0.001 0.01 per share share, of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c)4.3, another Schedule to this Agreement or in any Exchange Act Filings, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, another Schedule to this Agreement or in any Exchange Act Filings, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Company’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 45,000,000 shares, of which 1,000,000,000 40,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 9,325,305 shares of which of which are issued and outstanding outstanding, and 10,502,000 5,000,000 are shares of preferred stock, par value $0.001 per share share, 2,000,000 of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Term Notes or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance in all material respects with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate Company’s Articles of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuanceissuance (other than the Note Shares and Warrant Shares that will be issuable only after approval, adoption and effectiveness of the Share Increase Amendment, such Note Shares and Warrant Shares to be duly and validly reserved for issuance upon effectiveness of the Share Increase Amendment). When issued in compliance with the provisions of this Agreement and the Parent's CharterCompany’s Charter (and to the extent the Note Shares and Warrant Shares are not presently authorized, subject to and conditioned on the approval, adoption and effectiveness of the Share Increase Amendment with respect to the Note Shares and Warrant Shares) the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentBuyer consists of (i) 300,000,000 shares of Buyer Common Stock of which, as of the date hereof consists 1,010,502,000 of which 1,000,000,000 are August 18, 2023, (A) 70,988,774 shares of Common Stock, par value $0.001 per share, 99,776,704 shares of which of which are were issued and outstanding, (B) 1,524,052 shares were issuable upon the exercise of stock options outstanding or issuable upon vesting of restricted stock units and 10,502,000 are awards granted under the Buyer’s equity incentive plans, and (C) 4,530,632 shares were reserved for issuance in connection with future grants of awards pursuant to the Buyer’s equity incentive plans, and (ii) 10,000,000 shares of preferred stock, par value $0.001 per share of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, All of the issued and outstanding capital stock shares of each Subsidiary Buyer Common Stock (1) have been duly authorized and validly issued, (2) are fully paid and non-assessable and (3) were issued in compliance in all material respects with applicable United States federal and state securities laws and not in violation of each Company is set forth on Schedule 12(c)any preemptive rights or similar rights to subscribe for or purchase securities. (iib) All of the authorized shares of Buyer Common Stock are entitled to one vote per share. (c) Except as disclosed on Schedule 12(c), other than: (i) described or referred to in the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary AgreementsBuyer SEC Filings, there are no (i) outstanding equity securities, options, warrants, rights (including conversion or preemptive rights and rights, rights of first refusal), proxy rights of first purchase, purchase options, call options or stockholder agreementssubscription rights) or other agreements pursuant to which the Buyer is or may become obligated to issue or sell any shares of its capital stock or any other securities of the Buyer other than equity securities that may have been granted pursuant to its stock incentive plans, which plans are described in the Buyer SEC Filings, (ii) restrictions on the transfer of capital stock of the Buyer other than pursuant to federal or arrangements state securities laws or agreements of any kind for the purchase as set forth in this Agreement or acquisition from the Parent of (iii) obligations (contingent or otherwise) to repurchase, redeem or otherwise acquire any of its securities. Except as disclosed on Schedule 12(c), neither the offer equity securities or issuance of any of the Note, the Options interests therein or the Warrants, to pay any dividend or the issuance of make any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result distribution in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securitiesrespect thereof. (iiid) All issued and outstanding The Buyer is not a party to or subject to any Contract or understanding relating to the voting of shares of capital stock of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning Buyer or the issuance giving of securitieswritten consents by a stockholder or director of the Buyer. (ive) The rights, preferences, privileges and restrictions of Buyer does not have outstanding any stockholder rights plan or “poison pill” or any similar arrangement in effect giving any Person the shares of the Common Stock are as stated right to purchase any equity interest in the Parent's Certificate Buyer upon the occurrence of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposedcertain events.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 100,050,000 shares, of which 1,000,000,000 are 100,000,000are shares of Common Stock, no par value $0.001 per share, 99,776,704 shares of which 10,000,000shares of which are issued and outstanding outstanding, and 10,502,000 are 50,000,000are shares of preferred stock, no par value $0.001 per share of which 378,061 0 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c4.3(a). (iib) Except as disclosed on Schedule 12(c4.3(b), other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c4.3(b), neither the offer offer, issuance or issuance sale of any of the Note, the Options Option or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 101,000,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, par value $0.001 0.0001 per share, 99,776,704 22,161,832 shares of which of which are issued and outstanding as of the date of this Agreement, and 10,502,000 1,000,000 are shares of preferred stock, par value $0.001 0.01 per share of which 378,061 there are no shares of Series A preferred stock are issued and outstandingoutstanding as of the date of this Agreement. The authorized, issued and outstanding capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(cin the Exchange Act Filings (as hereafter defined), other than: (i) , the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance of any sale of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby hereby, will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's common stock, par value, $0.0001 (the "Common Stock: "): (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance) or as set forth under Delaware corporate law. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities Note may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of which 1,000,000,000 are shares of Common Stock500,000,000 shares, par value $0.001 0.0001 per share, 99,776,704 491,413,360 shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued authorized and outstanding capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Option or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Company’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as immediately prior to the Closing, consists of the date hereof consists 1,010,502,000 of which 1,000,000,000 are (i) 100,000,000 shares of Common Stock, par value $0.001 per share, 99,776,704 ________________ shares of which of which are issued and outstanding as of January 10, 2002, and 10,502,000 are (ii)10,000,000 shares of preferred stockPreferred Stock, par value $0.001 per share none of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorizedoutstanding as of January 10, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c)2002. (iib) Except as disclosed on Schedule 12(c), other than: Other than (i) the shares reserved for issuance under the ParentCompany's stock option plansplans and the Company's Convertible Note with Street Capital, Inc.; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance sale of any of the Note, the Options Notes or the Warrants, or the issuance of any of the Note Shares, the Option Conversion Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a material change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate Articles of Incorporation (the "Charter"). The Note Shares, the Option Conversion Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; providedPROVIDED, howeverHOWEVER, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. (e) No stock plan, stock purchase, stock option or other agreement or understanding between the Company and any holder of any equity securities or rights to purchase equity securities provides for acceleration or other changes in the vesting provisions or other terms of such agreement or understanding as the result of any merger, consolidated sale of stock or assets, change in control or any other transaction(s) by the Company, including the transactions contemplated hereunder.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 85,000,000 shares, of which 1,000,000,000 75,000,000 are shares of Common Stock, par value $0.001 0.0001 per share, 99,776,704 27,350,795 shares of which of which are issued and outstanding outstanding, and 10,502,000 10,000,000 are shares of “blank check” preferred stock, par value $0.001 0.0001 per share of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Company’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of 41,000,000 shares, of which 1,000,000,000 40,000,000 are shares of Common Stock, par value $0.001 0.01 per share, 99,776,704 20,306921 shares of which of which are issued and outstanding outstanding, and 10,502,000 1,000,000 are shares of preferred stock, par value $0.001 1.00 per share of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer offer, issuance or issuance sale of any of the Note, the Options Notes or the Warrants, Warrants or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessablenon-assessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of which 1,000,000,000 are shares 100,000,000 of Common Stock, par value $0.001 per share, 99,776,704 29,065,152 shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's ’s stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Closing Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's ’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's ’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Closing Shares have been duly and validly reserved for issuanceissued. When issued in compliance with the provisions of this Agreement and the Parent's ’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof November 8, 2002, consists 1,010,502,000 of which 1,000,000,000 are (i) 150,000,000 shares of Common Stock, par value $0.001 .01 per share, 99,776,704 17,405,150 shares of which of which are issued and outstanding and 10,502,000 are (ii) 5,000,000 shares of preferred stockPreferred Stock, par value $0.001 .01 per share share, none of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued Company will at all times have authorized and outstanding capital stock reserved a sufficient number of each Subsidiary shares of each Company is set forth on Schedule 12(c)Common Stock to provide for conversion of the Note and exercise of the Warrants. (iib) Except as disclosed on Schedule 12(c)4.3, other than: than (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal) to subscribe to, call or commitment of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company (such Schedule 4.3 shall provide the exercise or conversion term, exercise or conversion price, vesting period, holders of such options, warrants or convertible securities and the amount granted or issued to each holder), . There exists no proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) together with the offer and sale of all convertible securities, rights, warrants, or options of the Company were issued in compliance with all applicable state and federal laws concerning the issuance of securities, and no stockholder has a right of rescission or damages against the Company with respect thereto. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "CharterCHARTER"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; providedPROVIDED, howeverHOWEVER, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. (e) No stock plan, stock purchase, stock option or other agreement or understanding between the Company and any holder of any equity securities of the Company or rights to purchase equity securities of the Company provides for acceleration or other changes in the vesting provisions or other terms of such agreement or understanding as the result of any merger, consolidated sale of stock or assets, change in control or any other transaction(s) by the Company, including the transactions contemplated hereunder.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of 32,000,000 shares, of which 1,000,000,000 30,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 12,704,087 shares of which of which are issued and outstanding and 10,502,000 2,000,000 are shares of preferred stock, par value $0.001 0.01 per share shares of which 378,061 130,000 are designated as Series A Preferred Stock, 15,000 of which are designated as Series B Preferred Stock and 11 300,000 of which are designated as Series C 7% Convertible Preferred Stock ("Parent Series C Stock") of which 2,000 shares of Parent Series A preferred stock C Stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, Notes or the issuance of any of the Note Shares, the Option Shares or the Warrant Closing Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Closing Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized and issued capital stock of the Parent, Company as of the date hereof consists 1,010,502,000 is as disclosed in the Company’s filings that are required by the Securities Act of which 1,000,000,000 are shares 1933, as amended (the “Securities Act”) and the Securities Exchange Act of Common Stock1934, par value $0.001 per share, 99,776,704 shares of which of which are issued as amended (the “Securities Exchange Act”) (the “SEC Reports”) to be filed with the Securities and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(cExchange Commission (“SEC”). (ii) Except as disclosed on Schedule 12(c)in the SEC Reports, other than: (i) the shares Common Stock reserved for issuance under the Parent's Company’s stock option plans; plans and (ii) shares which may be issued pursuant to this Agreement and the Ancillary AgreementsWarrants, there are no outstanding options, warrants, rights (including including, but not limited to, conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or other arrangements or agreements of any kind for the purchase or acquisition from the Parent Company or its Subsidiaries, of any of its their securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance sale of any of the Note, the Options or the Warrantsof, or the issuance of any of the Note Sharesof, the Option Shares or the Warrant Issued Shares, nor the consummation of any transaction transactions contemplated hereby hereby, will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution Company or other similar provisions contained in its Subsidiaries authorized or affecting any such securitiesissued. (iii) All issued and outstanding shares of the Parent's Common Stocksecurities: (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securitieslaws. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's CharterWarrants, the Securities Warrant Shares will be validly issued, fully paid and nonassessable, and will be free of any liens liens, charges, encumbrances, options, rights of first refusal, security interests, claims, mortgages, pledges, charges, easements, covenants, restrictions, (except as contained herein) obligations, or encumbrances; providedany other encumbrances (including, howeverwithout limitation, that any conditional sale or other title retention agreement or any lease in the Securities may nature thereof and any agreement to grant or to permit or suffer to exist any of the foregoing) or third party rights or equitable interests of any nature whatsoever or any Liens all of the above shall be subject referred to restrictions on transfer under state and/or federal securities laws herein as set forth herein or as otherwise required by such laws at the time a transfer is proposed“Lien”.

Capitalization; Voting Rights. (ia) The authorized and issued capital stock of the Parent, Company as of the date hereof consists 1,010,502,000 is as disclosed in the Company’s filings that are required by the Securities Act of which 1,000,000,000 are shares 1933, as amended (the “Securities Act”) and the Securities Exchange Act of Common Stock1934, par value $0.001 per share, 99,776,704 shares of which of which are issued as amended (the “Securities Exchange Act”) (the “SEC Reports”) to be filed with the Securities and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(cExchange Commission (“SEC”). (iib) Except as disclosed on Schedule 12(c)in the SEC Reports, other than: (i) the shares Common Stock reserved for issuance under the Parent's Company’s stock option plans; plans and (ii) shares which may be issued pursuant to this Agreement and the Ancillary AgreementsShares, there are no outstanding options, warrants, rights (including including, but not limited to, conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or other arrangements or agreements of any kind for the purchase or acquisition from the Parent Company or its Subsidiaries, of any of its their securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance sale of any of the Note, the Options or the Warrantsof, or the issuance of any of the Note Sharesof, the Option Additional Shares or and the Warrant 2008 Shares, nor the consummation of any transaction transactions contemplated hereby hereby, will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution Company or its Subsidiaries authorized or issued other similar provisions contained in or affecting any such securitiesthan pursuant to Amendment No. 3 to the Loan Agreement and the transactions contemplated therein. (iiic) All issued and outstanding shares of the Parent's Common Stocksecurities: (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securitieslaws. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Additional Shares and the Warrant 2008 Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement Agreement, the Additional Shares and the Parent's Charter, the Securities 2008 Shares will be validly issued, fully paid and nonassessable, and will be free of any liens liens, charges, encumbrances, options, rights of first refusal, security interests, claims, mortgages, pledges, charges, easements, covenants, restrictions, (except as contained herein) obligations, or encumbrances; providedany other encumbrances (including, howeverwithout limitation, that any conditional sale or other title retention agreement or any lease in the Securities may nature thereof and any agreement to grant or to permit or suffer to exist any of the foregoing) or third party rights or equitable interests of any nature whatsoever or any Liens all of the above shall be subject referred to restrictions on transfer under state and/or federal securities laws herein as set forth herein or as otherwise required by such laws at the time a transfer is proposed“Lien”.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as immediately prior to the Closing, consists of the date hereof consists 1,010,502,000 of which 1,000,000,000 are (i) 10,000,000 shares of Common Stock, par value $0.001 per share, 99,776,704 share and (ii) 20,000,000 shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stockClass B Common Stock, par value $0.001 per share share, [8,221,101] shares of Common Stock of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c), other than: Other than (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Conversion Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Conversion Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. (e) No stock plan, stock purchase, stock option or other agreement or understanding between the Company and any holder of any equity securities or rights to purchase equity securities provides for acceleration or other changes in the vesting provisions or other terms of such agreement or understanding as the result of any merger, consolidated sale of stock or assets, change in control or any other transaction(s) by the Company, including the transactions contemplated hereunder.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as immediately prior to the Closing, consists of the date hereof consists 1,010,502,000 of which 1,000,000,000 are (i) __________ shares of Common Stock, par value $0.001 per share, 99,776,704 15,867,212 shares of which of which are issued and outstanding as of August 13, 2001, and 10,502,000 are (ii) __________ shares of preferred stockPreferred Stock, par value $0.001 per share share, _______ shares of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c), other than: Other than (i) the shares reserved for issuance under the ParentCompany's stock option plansStock Option Plan; (ii) those shares of Common Stock which may be issued upon conversion of the shares of Preferred Stock; and (iiiii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance sale of any of the Note, the Options Notes or the WarrantsShares, or the issuance of any of the Note Shares, the Option Shares or the Warrant Conversion Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: Stock and Preferred Stock (to the extent Preferred Stock has been issued) (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of Preferred Stock and the Common Stock are as stated in the Parent's Certificate Articles of Incorporation (the "" Charter"). The Note Shares, the Option Conversion Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities Notes, Shares and Conversion Shares (sometimes collectively referred to herein as the "Securities") will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. (e) No stock plan, stock purchase, stock option or other agreement or understanding between the Company and any holder of any equity securities or rights to purchase equity securities provides for acceleration or other changes in the vesting provisions or other terms of such agreement or understanding as the result of any merger, consolidated sale of stock or assets, change in control or any other transaction(s) by the Company, including the transactions contemplated hereunder.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 250,000,000 shares, of which 1,000,000,000 200,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 19,650,135 shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, as of the date hereof, neither the offer offer, issuance or issuance sale of any of the Note, the Options Notes or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The As of the date hereof, the rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Company’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of which 1,000,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 shares of which of which are issued Company and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c12 (c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c), neither the offer offer, issuance or issuance sale of any of the NoteNotes, the Options Option or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 90,000,000 shares, of which 1,000,000,000 85,000,000 are shares of Common Stock, par value $0.001 0.0001 per share, 99,776,704 46,306,588 shares of which of which are issued and outstanding outstanding, and 10,502,000 5,000,000 are shares of preferred stock, par value $0.001 0.01 per share share, 44,557 shares of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3 or as disclosed in any Exchange Act Filings, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3 or as disclosed in any Exchange Act Filings, neither the offer offer, issuance or issuance sale of any of the Note, the Options Notes or the Warrants, or the issuance of any of the Note Shares, the Option Conversion Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Company’s Certificate of Incorporation Incorporation, including its Certificates of Designation (the "“Charter"”). The Note Company does not currently have a sufficient number of authorized shares of Common Stock to enable it to issue the Conversion Shares and Warrant Shares. However, the Option Company intends to hold a shareholders meeting on or about February 22, 2006 (the “Shareholder Meeting”) at which the Company will seek shareholder approval for a Charter amendment to increase the number of its authorized shares of Common Stock from 85,000,000 to 170,000,000. Such an increase would provide a sufficient number of Conversion Shares and the Warrant Shares have been to be duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital of the Company consists of 1,000,000 shares of common stock, no par value (the "Common Stock"). As of the date hereof, 215,141 ------------ shares of Common Stock are issued and outstanding, have been validly subscribed and issued, are fully paid, or at Closing will be fully paid, and non-assessable as of the date hereof, and represent all of the issued and outstanding shares of capital stock of the ParentCompany, as set forth on Exhibit A attached hereto. --------- Simultaneous with the Closing, the holders of the date hereof consists 1,010,502,000 of which 1,000,000,000 are options to purchase 28,688 shares of Common StockStock described in paragraph (b) below shall exercise all such options and the Company shall repurchase the 62,344 ESOP Shares pursuant to Section 6.5 hereof, par value $0.001 per sharewith result being that, 99,776,704 shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stockupon the Closing, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, the issued and outstanding capital stock of each Subsidiary the Company shall consist of each Company is 181,485 shares of Common Stock, fully paid and non-assessable and which shall represent all of the issued and outstanding shares of capital stock of the Company. The Shareholders listed on Exhibit A constitute all of the --------- record and beneficial owners of the Shares as of the date hereof. Except as set forth on Schedule 12(c).4.3: ------------ (iia) Except as disclosed on Schedule 12(c)there is no outstanding security of the Company convertible into or exchangeable for any share or shares of the capital stock of the Company; (b) there is no outstanding subscription, other than: option, warrant, call, commitment, agreement or understanding (ioral or written or otherwise) obligating the Company to issue any share or shares reserved of its capital stock or any security or securities of any class or kind which in any way relate to the authorized or issued capital stock of the Company or any interest therein: (c) except for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary AgreementsAgreement, there are is no agreement or understanding (oral or written or otherwise) which grants to any Person the right to purchase or otherwise acquire any share or shares of the issued and outstanding optionscapital stock of the Company or any interest therein, warrantsincluding, rights (including conversion or without limitation, any preemptive rights and rights right, right of first refusal), proxy refusal or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under antico-dilution or other similar provisions contained in or affecting any such securities.sale right; (iiid) All there is no voting trust or voting agreement or pooling agreement or proxy (oral or written or otherwise) with respect to any issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessablecapital stock of the Company; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities.or (ive) The rights, preferences, privileges and restrictions there is no obligation of the Company (oral or written or otherwise) to purchase, redeem, or otherwise acquire any shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance its capital stock or any interest therein or to pay any dividend or distribution with the provisions of this Agreement and the Parent's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposedrespect thereto.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof hereof, consists 1,010,502,000 of which 1,000,000,000 are of: (i) 45,000,000 shares of Common Stock, par value $0.001 per share, 99,776,704 shares of which of which there are 7,245,863 shares issued and 7,145,863 shares are issued and outstanding outstanding, and 10,502,000 are (ii) 5,000,000 shares of preferred stock, par value $0.001 per share .001, of which: (A) 1,647,059 are designated as Series A Convertible Preferred Stock, all of which 378,061 shares are issued and outstanding and (B) 941,177 are designated as Series B Convertible Preferred Stock, of Series A preferred stock which 341,176 are issued and outstanding. The authorized, issued authorized and outstanding capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; (ii) publicly-traded warrants to purchase 2,085,000 shares of Common Stock at an exercise price of $6.30 per share as of the date hereof; (iii) shares of Common Stock issuable upon conversion the Company’s currently outstanding shares of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock and (iiiv) shares which may be issued pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common StockStock issued on or after June 24, 2002: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Company’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement Agreement, the Note, the Warrant and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 110,000,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 28,328,471 shares of which of which are issued and outstanding outstanding, and 10,502,000 10,000,000 are shares of preferred stock, par value $0.001 per share of which 378,061 zero shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3 or in the Company’s Exchange Act filings, as defined below, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate Company’s Articles of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The Company is authorized capital stock to issue an unlimited number of the Parentcommon shares (“Common Shares”), as of the date hereof consists 1,010,502,000 of which 1,000,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock two hundred (200) are issued and outstanding. The authorizedImmediately after giving effect to the transactions contemplated by this Agreement, there will be eight hundred (800) Common Shares issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c)outstanding. (iib) The Company does not have any option or similar equity incentive plans. The Company has not made any representations regarding equity incentives to any officer, employee, director or consultant. (c) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder shareholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiid) All of the Company’s issued and outstanding shares of the Parent's Common Stock: Shares (i) have been duly authorized and validly issued and are fully paid and nonassessable; non-assessable and (ii) were issued in compliance with all applicable provincial, state and federal laws and regulations concerning the issuance of securitiessecurities (“Securities Laws”). (ive) The rights, preferences, privileges and restrictions of the shares of the Common Stock Shares are as stated in the Parent's Certificate of Incorporation (the "Charter")Articles. The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's CharterArticles, the Securities Shares will be validly issued, fully paid and nonassessablenon-assessable, and will be free of any liens or encumbrancesencumbrances other than liens and encumbrances created by or imposed upon the Purchaser; provided, however, that the Securities Shares may be subject to restrictions on transfer under state and/or federal and subject to securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. The sale of the Shares is not subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with. (f) No share plan, share purchase, share option or other agreement or understanding between the Company and any holder of any equity securities or rights to purchase equity securities provides for acceleration or other changes in the vesting provisions or other terms of such agreement or understanding as the result of (i) termination of employment or consulting services (whether actual or constructive); (ii) any merger, consolidated sale of shares or assets, change in control or any other transaction(s) by the Company; or (iii) the occurrence of any other event or combination of events.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of which 1,000,000,000 are 250,000,000 shares of Common Stock, common stock par value $0.001 per share, 99,776,704 0.0001 of which 64,922,909 are issued and outstanding and 5,000,000 shares of preferred stock par value $0.0001, of which 141,000 are designated as Series A Preferred Stock, all of which are issued and outstanding and 10,502,000 2,517,233 shares are shares of preferred stockdesignated as Series B Preferred Stock, par value $0.001 per share none of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Warrant or the WarrantsOption, or the issuance of any of the Note Shares, the Option Warrant Shares or the Warrant Option Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued by the Company in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter")) and pursuant to applicable law. The Note Shares, the Option Warrant Shares and the Warrant Option Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 110,000,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, par value $0.001 0.01 per share, 99,776,704 16,791,688 shares of which of which are issued and outstanding outstanding, and 10,502,000 10,000,000 are shares of preferred stock, par value $0.001 0.01 per share of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c)4.3 or in the Exchange Act Filings, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3 or in the Exchange Act Filings, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the ParentCompany, as immediately prior to the Closing, will consist of the date hereof consists 1,010,502,000 of which 1,000,000,000 are twenty million (20,000,000) shares of Common Stock, par value $0.001 per share, 99,776,704 one million three hundred sixty-two thousand five hundred twenty-one (1,362,521) shares of which of which are issued and outstanding and 10,502,000 are six hundred thousand (600,000) shares of preferred stockwhich are reserved for future issuance to key employees pursuant to the Company's 1996 Stock Option Plan and one million four hundred thousand (1,400,000) shares of Preferred Stock, par value $0.001 per share all of which 378,061 shares of are designated Series A preferred stock Preferred Stock, none of which are issued and outstanding. The authorized, All issued and outstanding capital stock shares of each Subsidiary the Company's Common Stock (i) have been duly authorized and validly issued to the persons listed on Exhibit H hereto, (ii) are fully paid and nonassessable, and (iii) were issued in compliance with all applicable state and federal laws concerning the issuance of each Company is securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Restated Articles. The Conversion Shares have been duly and validly reserved for issuance. Other than as set forth on Schedule 12(c). (ii) Except Exhibit H, and except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder shareholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's CharterRestated Articles, the Securities Shares, the Warrant Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; providedPROVIDED, howeverHOWEVER, that the Securities Shares, the Warrant Shares, the Warrants and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof ___________, 2004, consists 1,010,502,000 of which 1,000,000,000 are (i) no shares of Common Stockpreferred stock, and (ii) 100,000,000 shares of common stock, par value $0.001 .001 per shareshare (the "Common Stock"), 99,776,704 ___________ shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c)2.3, other than: than (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary AgreementsTransaction Documents, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal) to subscribe to, call or commitment of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company (such Schedule 2.3 shall provide the exercise or conversion term, exercise or conversion price, vesting period, holders of such options, warrants or convertible securities and the amount granted or issued to each holder), . There exists no proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Conversion Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) together with the offer and sale of all convertible securities, rights, warrants, or options of the Company were issued in compliance with all applicable state and federal laws concerning the issuance of securities, and no stockholder has a right of rescission or damages against the Company with respect thereto. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate Articles of Incorporation Organization, as amended to date (the "Charter"). The Note Shares, the Option Conversion Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed, except to the extent that such restrictions shall be eliminated by virtue of the Registration Rights Agreement. (e) No stock plan, stock purchase, stock option or other agreement or understanding between the Company and any holder of any equity securities of the Company or rights to purchase equity securities of the Company provides for acceleration or other changes in the vesting provisions or other terms of such agreement or understanding as the result of any merger, consolidated sale of stock or assets, change in control or any other transaction(s) by the Company, including the transactions contemplated hereunder.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 205,000,000 shares, of which 1,000,000,000 200,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 14,361,293 shares of which of which are issued and outstanding outstanding, and 10,502,000 5,000,000 are shares of preferred stock, par value $0.001 per share share, 2,466,971 of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans2000 Equity Incentive Plan or the Company's Executive Bonus Plan; (ii) the Company's 2006 Stock Option Plan; and (iiiii) shares which may be issued granted pursuant to this Agreement Agreement, the Related Agreements and other agreements between the Company and the Ancillary AgreementsPurchaser, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance of any sale of the Note, the Options Notes or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of 61,000,000 shares, of which 1,000,000,000 60,000,000 are shares of Common Stock, par value $0.001 0.01 per share, 99,776,704 36,969,397 shares of which of which are issued and outstanding outstanding, and 10,502,000 1,000,000 are shares of preferred stock, par value $0.001 0.01 per share of which 378,061 10,000 shares of Series A preferred stock C Preferred Stock have been authorized and 8,765.7122 shares of Series C Preferred Stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's ’s stock option plansplans or employee stock purchase plan; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options Note or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's ’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate ’s Articles of Incorporation Incorporation, as amended (as so amended, the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's ’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 51,000,000 shares, of which 1,000,000,000 50,000,000 are shares of Common Stock, par value $0.001 0.10 per share, 99,776,704 16,839,282 shares of which of which are issued and outstanding outstanding, and 10,502,000 1,000,000 of which are shares of preferred stockPreferred Stock, par value $0.001 0.10 per share share, no shares of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 150,000,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 45,349,729 shares of which of which are issued and outstanding outstanding; and 10,502,000 of which 50,000,000 are shares of preferred stockPreferred Stock, par value $0.001 per share share, -0- shares of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof May 10, 2005, consists 1,010,502,000 of which 1,000,000,000 are 30,000,000 shares of Common Stock, par value $0.001 0.01 per share, 99,776,704 shares of which of which 18,777,790 are issued and outstanding and 10,502,000 are 10,000,000 shares of preferred stock, par value $0.001 1.00 per share of which 378,061 shares of Series A preferred stock 180,000 are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c)4.3, other than: than (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 310,000,000 shares, of which 1,000,000,000 300,000,000 are shares of Common Stock, par value $0.001 0.01 per share, 99,776,704 19,262,095 shares of which of which are issued and outstanding outstanding[, and 10,502,000 10,000,000 are shares of preferred stock, par value $0.001 10.00 per share of which 378,061 619 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c).4.3. Acceris Communications Confidential Materials October 14, 2004 (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Company’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of ----------------------------- the Parent, as Borrower consists of the date hereof consists 1,010,502,000 of which 1,000,000,000 are 30,000,000 shares of Common Stock, par value $0.001 per share, 99,776,704 14,657,655 shares of which of which are issued and outstanding outstanding, and 10,502,000 are 3,000,000 shares of preferred stockPreferred Stock, no par value $0.001 per share value, none of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, All issued and outstanding capital stock shares of each Subsidiary the Borrower's Common Stock have been duly authorized and validly issued and are fully paid and nonassessable. The rights, preferences, privileges and restrictions of each Company is the Borrower's Common Stock are as stated in the Borrower's articles of incorporation. The shares of Borrower's Common Stock issuable upon conversion of the Note have been duly and validly reserved for issuance. Other than as set forth on the Borrower Disclosure Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) or in the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary AgreementsSEC Documents, there are no outstanding securities, options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder shareholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Borrower of any of its securities. Except as disclosed on Schedule 12(c), neither the offer securities or issuance of any of the Note, the Options which are convertible into or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any exercisable for securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuanceBorrower. When issued in compliance with the provisions of this Agreement and the Parent's CharterNote, the Securities shares of Borrower's Common Stock issuable upon conversion of the Note will be duly authorized, validly issued, fully paid and nonassessable, and will be free of any liens restrictions, limits, claims, Liens or encumbrances; provided, however, that other encumbrances (except those imposed in the Securities may be subject to restrictions on transfer under state and/or federal ordinary course by applicable securities laws laws). Except as set forth herein on the Borrower Disclosure Schedule or in the SEC Documents, no stock plan, stock purchase, stock option or other agreement or understanding between the Borrower and any holder of any equity securities or rights to purchase equity securities provides for acceleration or other changes in the vesting provisions or other terms of such agreement or understanding as otherwise required the result of any merger, consolidated sale of stock or assets, change in control or other similar transaction by such laws at the time a transfer is proposedBorrower.

Capitalization; Voting Rights. (i) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 120,000,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, par value $0.001 0.0001 per share, 99,776,704 42,396,317 shares of which of which are issued and outstanding outstanding, and 10,502,000 20,000,000 shares are shares of preferred stock, par value $0.001 0.0001 per share share, of which 378,061 1,000,000 shares of have been designated as Series A preferred stock Preferred Stock, of which zero are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iia) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiib) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivc) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation Incorporation, including its Certificate of Designations (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of which 1,000,000,000 are 40,000,000 shares of Common Stock, par value $0.001 per share, 99,776,704 7,477,294 shares of which of which are issued and outstanding outstanding, and 10,502,000 10,000,000 are shares of preferred stock, par value $0.001 per share of which 378,061 814,998 shares of 7% Convertible Preferred Stock and 746,157 shares of Series A preferred stock B 7% Convertible Preferred Stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's ’s stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options Note or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's ’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's ’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's ’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof June 10, 2004, consists 1,010,502,000 of which 1,000,000,000 are (i) no shares of Common Stockpreferred stock, and (ii) 100,000,000 shares of common stock, par value $0.001 .01 per shareshare (the "Common Stock"), 99,776,704 20,599,034 shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c)2.3, other than: than (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary AgreementsTransaction Documents, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal) to subscribe to, call or commitment of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company (such Schedule 2.3 shall provide the exercise or conversion term, exercise or conversion price, vesting period, holders of such options, warrants or convertible securities and the amount granted or issued to each holder), . There exists no proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Conversion Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) together with the offer and sale of all convertible securities, rights, warrants, or options of the Company were issued in compliance with all applicable state and federal laws concerning the issuance of securities, and no stockholder has a right of rescission or damages against the Company with respect thereto. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate Articles of Incorporation Organization, as amended to date (the "Charter"). The Note Shares, the Option Conversion Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed, except to the extent that such restrictions shall be eliminated by virtue of the Registration Rights Agreement. (e) No stock plan, stock purchase, stock option or other agreement or understanding between the Company and any holder of any equity securities of the Company or rights to purchase equity securities of the Company provides for acceleration or other changes in the vesting provisions or other terms of such agreement or understanding as the result of any merger, consolidated sale of stock or assets, change in control or any other transaction(s) by the Company, including the transactions contemplated hereunder.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany on the Closing Date, as consists of the date hereof consists 1,010,502,000 of which 1,000,000,000 are (i) no shares of Common Stockpreferred stock, and (ii) 100,000,000 shares of common stock, par value $0.001 .01 per shareshare (the “Common Stock”), 99,776,704 28,377,965.80 shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c)2.3, other than: than (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary AgreementsTransaction Documents, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal) to subscribe to, call or commitment of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company (such Schedule 2.3 shall provide the exercise or conversion term, exercise or conversion price, vesting period, holders of such options, warrants or convertible securities and the amount granted or issued to each holder), . There exists no proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance of any of the Note, the Options or the Warrants, or the issuance sale of any of the Note Shares, the Option Shares or the Warrant Closing Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) together with the offer and sale of all convertible securities, rights, warrants, or options of the Company were issued in compliance with all applicable state and federal laws concerning the issuance of securities, and no stockholder has a right of rescission or damages against the Company with respect thereto. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate Articles of Incorporation Organization, as amended to date (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Closing Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed, except to the extent that such restrictions shall be eliminated by virtue of the Registration Rights Agreement. (e) No stock plan, stock purchase, stock option or other agreement or understanding between the Company and any holder of any equity securities of the Company or rights to purchase equity securities of the Company provides for acceleration or other changes in the vesting provisions or other terms of such agreement or understanding as the result of any merger, consolidated sale of stock or assets, change in control or any other transaction(s) by the Company, including the transactions contemplated hereunder.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 90,000,000 shares, of which 1,000,000,000 85,000,000 are shares of Common Stock, par value $0.001 0.01 per share, 99,776,704 38,433,829 shares of which of which are issued and outstanding , and 10,502,000 5,000,000 are shares of preferred stock, par value $0.001 0.01 per share share, 75,682 shares of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3 or as disclosed in any Exchange Act Filings, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3 or as disclosed in any Exchange Act Filings, neither the offer offer, issuance or issuance sale of any of the Note, the Options Notes or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate Company’s Articles of Incorporation Incorporation, including its Certificates of Designation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof hereof, consists 1,010,502,000 of 155,000,000 shares, of which 1,000,000,000 150,000,000 are shares of Common Stock, par value $0.001 0.01 per share, 99,776,704 18,917,154 shares of which of which are issued and outstanding outstanding, and 10,502,000 5,000,000 are shares of preferred stock, par value $0.001 0.01 per share share, of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital ----------------------------- stock of the Parent, as Liberty Digital consists of the date hereof consists 1,010,502,000 of which 1,000,000,000 are (i) 1,755,000,000 shares of Common Stockcommon stock, par value $0.001 .01 per share, 99,776,704 shares of which of which (A) 1,000,000,000 shares are issued LDIG Common Stock and outstanding (B) 755,000,000 shares are Series B common stock ("LDIG Series B Stock") and 10,502,000 are (ii) 5,000,000 shares of preferred stock, par value $0.001 .01 per share share, of which 378,061 150,000 shares are designated as Class B Preferred Stock ("LDIG Preferred Stock"). (b) As of the close of business on January 31, 2000 (i) 26,638,479 shares of LDIG Common Stock and 171,950,167 shares of LDIG Series A preferred stock are B Stock were issued and outstanding, respectively, (ii) no shares of LDIG Common Stock were in treasury, (iii) 171,950,167 shares of LDIG Common Stock were reserved for issuance upon conversion of shares of LDIG Series B Stock, (iv) 25,764,600 shares of LDIG Series B Stock was reserved for issuance upon conversion of the LDIG Preferred Stock, and (v) 150,000 shares of LDIG Preferred Stock were issued and outstanding. The authorizedAs of December 31, issued and outstanding capital stock 1999, 2,514,531 shares of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares LDIG Common Stock were reserved for future issuance to employees pursuant to outstanding stock options under the ParentLiberty Digital's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentLiberty Digital's Common Stock: capital stock (i) have been duly authorized and validly issued and issued, (ii) are fully paid and nonassessable; and , (iiiii) were issued issued, offered and sold in compliance with all applicable state and federal laws concerning the issuance issuance, offer and sale of securitiessecurities and (iv) were not issued in violation of, or subject to, any preemptive, subscription or other similar rights of any other Person. (ivd) Except as set forth in Liberty Digital's SEC Reports, as of the date hereof, (x) there are no outstanding obligations of Liberty Digital or any of its Subsidiaries to repurchase, redeem or otherwise acquire any securities of Liberty Digital or any voting or equity securities or interests of any of its Subsidiaries, and (y) there are no voting trust, proxy, stockholder or other agreements or understandings to which Liberty Digital or any of its Subsidiaries or, to the knowledge of Liberty Digital, any of its stockholders is a party or is bound with respect to the voting or transfer of the capital stock or other voting securities of Liberty Digital or any of its Subsidiaries. The consummation of the transactions contemplated by this Agreement and the applicable Registration Rights Agreement will not trigger the anti-dilution provisions or other price adjustment mechanisms of any subscriptions, options, calls, warrants, commitments, contracts, preemptive rights, rights of first refusal, demands, conversion rights or other agreements or arrangements of any character or nature whatsoever outstanding on the date hereof under which Liberty Digital is or may be obligated to issue or acquire shares of any of its capital stock. The sale of the LDIG Shares is not and will not be subject to any preemptive rights, rights of first refusal, subscription or similar rights that have not been properly waived. (e) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant LDIG Purchase Shares have been duly and validly reserved for issuance. When authorized and when the LDIG Purchase Shares are issued and sold in compliance accordance with the provisions of this Agreement and the Parent's CharterOption, the Securities such shares will be duly authorized, validly issued, fully paid and nonassessable, will not be issued in violation of any preemptive, subscription or other similar rights of any Person and will be delivered to the Company free and clear of any liens all Encumbrances (other than those (x) imposed by federal or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required (y) placed thereon by such laws at or on behalf of the time a transfer is proposedCompany).

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of 15,000,000 shares, of which 1,000,000,000 10,000,000 are shares of Common Stock, par value $0.001 0.01 per share, 99,776,704 4,333,333 shares of which of which are issued and outstanding outstanding, and 10,502,000 5,000,000 are shares of preferred stock, par value $0.001 0.01 per share of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options Note or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 110,000,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 23,570,799 shares of which of which are issued and outstanding as of September 15, 2004, and 10,502,000 10,000,000 are shares of preferred stock, par value $0.001 per share of which 378,061 0 (zero) shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate Articles of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 101,000,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, par value $0.001 0.10 per share, 99,776,704 10,559,843 shares of which of which are issued and outstanding outstanding, and 10,502,000 1,000,000 are shares of preferred stock, par value $0.001 0.10 per share of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate Articles of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the ParentCompany, as consists of (a) 500,000,000 shares of the date hereof consists 1,010,502,000 of which 1,000,000,000 are shares of Company's Common Stock, par value $0.001 per shareshare (the "Common Stock"), 99,776,704 114,002,422 shares of which of which are issued and outstanding and 10,502,000 are outstanding, 13,354,869 shares of preferred stockwhich are currently reserved for issuance pursuant to outstanding option agreements, and (b) 50,000,000 shares of Preferred Stock, par value $0.001 0.0001 per share (the "Preferred Stock"), 6,400,000 of which 378,061 shares are designated Series B Preferred Stock, none of Series A preferred stock which are issued and outstanding. The authorized, All issued and outstanding capital stock shares of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: the Common Stock (i) the shares reserved for issuance under the Parent's stock option plans; have been duly authorized and validly issued, and (ii) shares which are fully paid and nonassessable. The rights, preferences, privileges and restrictions of the Shares, upon the Closing, will be as stated in the Certificate. Except as may be issued granted pursuant to this Agreement and the Ancillary Agreementsexcept as set forth above, there are no outstanding options, warrants, puts, calls, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from from, sale to or exchange, with the Parent of Company or any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance Subsidiaries of any shares of any class or series of capital stock of the Note, Company or any of its Subsidiaries or other restrictions on the Options incidents of ownership or the Warrants, or the issuance transfer of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stockcapital stock created by: (i) the charter documents of the Company or any of its Subsidiaries, (ii) any agreement to which the Company or any of its Subsidiaries is a party, by which any of them is bound or of which any of them has Knowledge, or, (iii) to the Company's Knowledge, any statute (other than Federal and state securities laws). The Shares have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rightsand, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When when issued in compliance with the provisions of this Agreement and the Parent's CharterCertificate, the Securities will be validly issuedissued (including, without limitation, issued in compliance with applicable state and federal securities laws, assuming the accuracy of Purchasers' representations in Section 4 hereof), fully paid and nonassessable, nonassessable and will be free of any liens or encumbrancesLiens (other than Liens created by Purchasers); provided, however, that the Securities Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof hereof, consists 1,010,502,000 of 21,000,000 shares, of which 1,000,000,000 20,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 shares 11,389,481shares of which of which are were issued and outstanding as of May 12, 2004, and 10,502,000 1,000,000 are shares of preferred stock, par value $0.001 per share share, of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's CharterCharter and, as applicable, the Note and the Warrant, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of which 1,000,000,000 are shares of Common Stock, par 8,750,000 Ordinary Shares nominal value $0.001 NIS 4.00 per share, 99,776,704 shares of which which, as of which December 31, 2003, 4,167,509 Ordinary Shares are issued and outstanding and 10,502,000 4,162,126 Ordinary Shares are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c)4.3, the Exchange Act Filings or the Financial Statements, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder shareholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, the Exchange Act Filings or the Financial Statements, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares Ordinary Shares of the Parent's Common StockCompany: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock Ordinary Shares are as stated in the ParentCompany's Certificate Articles of Incorporation Association (the "CharterArticles"). The Note Shares, the Option Shares and the Warrant Shares shall have been been, on or before the Closing Date, duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's CharterArticles, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state state, federal and/or federal Israeli securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of 32,000,000 shares, of which 1,000,000,000 30,000,000 are shares of Common Stock, no par value $0.001 per share, 99,776,704 10,470,654 shares of which of which are issued and outstanding outstanding, and 10,502,000 2,000,000 are shares of preferred stock, no par value $0.001 per share of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer offer, issuance or issuance sale of any of the Note, the Options Notes or the Warrants, Warrants or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessablenon-assessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation Incorporation, as amended (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 160,000,000shares, of which 1,000,000,000 150,000,000 are shares of Common Stock, par value $0.001 .001 per share, 99,776,704 25,450,000 shares of which of which are issued and outstanding outstanding, and 10,502,000 10,000,000 are shares of preferred stock, par value $0.001 .001 per share of which 378,061 no shares are issued outstanding. The authorized capital stock of the Subsidiary, as of the date hereof consists of 1,250,000 shares, of which 1,250,000 are shares of Series A preferred stock Common Stock, par value 0.001 GB pence per share, 1,000,000 shares of which are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c)outstandxxx. (iib) Except as disclosed on Schedule 12(c)4.3, other than: than (i) the shares reserved for issuance under the ParentBorrower's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Borrower of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Borrower outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate Articles of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of which 1,000,000,000 are shares of Common Stock, par 8,750,000 Ordinary Shares nominal value $0.001 NIS 4.00 per share, 99,776,704 shares of which which, as of which are issued and outstanding and 10,502,000 are shares of preferred stockSeptember 29, par value $0.001 per share of which 378,061 shares of Series A preferred stock 2005, 6,356,782 Ordinary Shares are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c)4.3, the Exchange Act Filings or the Financial Statements, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder shareholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, the Exchange Act Filings or the Financial Statements, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares Ordinary Shares of the Parent's Common StockCompany: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock Ordinary Shares are as stated in the Parent's Certificate Company’s Articles of Incorporation Association (the "Charter"“Articles”). The Note Shares, the Option Shares and the Warrant Shares shall have been been, on or before the Closing Date, duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's CharterCompany’s Articles, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state state, federal and/or federal Israeli securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of [335,000,000] shares, of which 1,000,000,000 [300,000,000] are shares of Common Stock, par value $0.001 per share, 99,776,704 [20,558,931] shares of which of which are issued and outstanding outstanding, and 10,502,000 [35,000,000] are shares of preferred stock, par value $0.001 per share of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options Notes or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate Articles of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized and issued capital stock of the Parent, Company as of the date hereof consists 1,010,502,000 is as disclosed in the Company’s filings that are required by the Securities Act of which 1,000,000,000 are shares 1933, as amended (the “Securities Act”) and the Securities Exchange Act of Common Stock1934, par value $0.001 per share, 99,776,704 shares of which of which are issued as amended (the “Securities Exchange Act”) (the “SEC Reports”) to be filed with the Securities and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(cExchange Commission (“SEC”). (iib) Except as disclosed on Schedule 12(c)in the SEC Reports, other than: (i) the shares Common Stock reserved for issuance under the Parent's Company’s stock option plans; plans and (ii) shares which may be issued pursuant to this Agreement and the Ancillary AgreementsWarrant, there are no outstanding options, warrants, rights (including including, but not limited to, conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or other arrangements or agreements of any kind for the purchase or acquisition from the Parent Company or its Subsidiaries, of any of its their securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance sale of any of the Note, the Options or the Warrantsof, or the issuance of any of the Note Sharesof, the Option Shares or the Warrant Issued Shares, nor the consummation of any transaction transactions contemplated hereby hereby, will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution Company or other similar provisions contained in its Subsidiaries authorized or affecting any such securitiesissued. (iiic) All issued and outstanding shares of the Parent's Common Stocksecurities: (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securitieslaws. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's CharterWarrant, the Securities Warrant Shares will be validly issued, fully paid and nonassessable, and will be free of any liens liens, charges, encumbrances, options, rights of first refusal, security interests, claims, mortgages, pledges, charges, easements, covenants, restrictions, (except as contained herein) obligations, or encumbrances; providedany other encumbrances (including, howeverwithout limitation, that any conditional sale or other title retention agreement or any lease in the Securities may nature thereof and any agreement to grant or to permit or suffer to exist any of the foregoing) or third party rights or equitable interests of any nature whatsoever or any Liens all of the above shall be subject referred to restrictions on transfer under state and/or federal securities laws herein as set forth herein or as otherwise required by such laws at the time a transfer is proposed“Lien”.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 101,000,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, par value $0.001 0.00001 per share, 99,776,704 98,983,899 shares of which are issued, 97,928,899 shares of which are issued outstanding, and outstanding and 10,502,000 1,000,000 are shares of preferred stock, par value $0.001 0.10 per share of which 378,061 100,000 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable, except as set forth with regard to a certain dispute with a former consultant as more fully described on Schedule 4.3; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note SharesSubject to shareholder approval to increase the Company's authorized common stock, which will occur no later than August 28, 2004, the Option Note Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of 110,000,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, par value $0.001 0.01 per share, 99,776,704 25,492,713 shares of which of which are issued and outstanding outstanding, and 10,502,000 10,000,000 are shares of preferred stock, par value $0.001 .001 per share share. Additionally, 10,000 shares of such preferred stock have been designated as 6% Series A Convertible Preferred Stock of which 378,061 5,000 of such shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Eligible Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c)) or in any of the Parent's SEC Reports or Exchange Act Filings, other than: (i) the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options Notes or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of 110,000,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, par value $0.001 0.000001 per share, 99,776,704 52,925,896 shares of which of which are issued and outstanding outstanding, and 10,502,000 10,000,000 are shares of preferred stock, par value $0.001 0.01 per share of which 378,061 15,000 shares have been designated as Series B redeemable Preferred Stock and 14,550 shares of Series A preferred stock such series are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's ’s stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's ’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in material compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's ’s Certificate of Incorporation Incorporation, as amended (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's ’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrancesencumbrances (other than those granted by Laurus); provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws and all other law applicable to Certified Air Carriers as set forth herein or as otherwise required by such laws at the time a transfer is proposed. Except as set forth in Schedule 12(c), no Company is presently under any obligation, and has not granted any rights to register any of its presently outstanding securities or any of its securities that may hereafter be issued. Except as set forth in Schedule 12(c), to knowledge of the Companies, none of their stockholders have entered into any agreement with respect to its voting of equity securities.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 150,000,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 approximately 53,188,558 shares of which of which are issued and outstanding outstanding; and 10,502,000 of which 50,000,000 are shares of preferred stockPreferred Stock, par value $0.001 per share share, -0- shares of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, and assuming that Laurus has either assigned or terminated all of its rights under the Loan Documents, neither the offer offer, issuance or issuance of any sale of the Note, the Options or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate Articles of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 160,000,000 shares, of which 1,000,000,000 150,000,000 are shares of Common Stock, par value $0.001 0.0001 per share, 99,776,704 32,071,215 shares of which of which are issued and outstanding and 10,502,000 outstanding, 1,300,000 are shares of Series A preferred stock, par value $0.001 0.01 per share of which 378,061 1,300,000 shares of Series A preferred stock are issued and outstanding, 50,000 are shares of Series B preferred stock, par value $0.01 per share of which no shares of Series B preferred stock are issued and outstanding and 8,650,000 are shares of non-designated preferred stock, no par value per share of which no shares of non-designated preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.2. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; (ii) shares reserved for issuance pursuant to warrants issued to key employees of the Company as part of incentive programs, (iii) shares reserved for issuance pursuant to warrants or options issued by the Company in connection with acquisitions of wholly-owned Subsidiaries in which neither the Company nor any of its Subsidiaries receives any cash consideration) and (iiiv) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Warrant or the WarrantsOption, or the issuance of any of the Note Shares, the Option Warrant Shares or the Warrant Option Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securitiessecurities to the extent that non-compliance in respect of this clause (ii) could not reasonably be expected to have a Material Adverse Effect. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note Shares, Warrant Shares and Option Shares have been duly and validly reserved for issuance; it being understood that, notwithstanding the foregoing, prior to the earlier to occur of (x) December 31, 2005 and (y) the date of the Company's next shareholder's meeting (the "Additional Authorization Date"), the number of shares otherwise required to be reserved by the Company hereunder may be less than that sufficient to provide for the issuance of Conversion Shares upon the full conversion of the Note, the Warrant and the Option; provided that, the number of shares reserved for issuance shall at no time be less than 90,000,000 (subject to proportionate reduction upon conversion of the Note, the Warrant or the Option); provided further that, on and after the Additional Authorization Date, 100% of the Note Shares, the Warrant Shares and the Option Shares and the Warrant Shares have been shall be duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The With respect to Garwood, the authorized capital stock of the Parent, caxxxxx xtock as of the date hereof Closing Date consists 1,010,502,000 of 1,000,000 shares, of which 1,000,000,000 1,000,000 are shares of Garwood Common Stock, par value xxxxx $0.001 .001 per share, 99,776,704 and 5,500 shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) than the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, as of the Closing Date there are will be no outstanding options(A) securities of Garwood convertible into, xx exchangeable or exercisable for, shares of capital stock or other voting securities of Garwood; or (B) outstandinx xxxxxns, warrants, rights (including conversion or preemptive rights and rights of first refusal), commitments, proxy or stockholder agreements, or arrangements or agreements to which Garwood is a party ox xx which it is bound, in any case relating to the issued or unissued capital stock of Garwood or obligating Garwxxx xx issue, deliver, xell, purchase, redeem, repurchase or acquire, or cause to be issued, delivered, sold, purchased, redeemed, repurchased or acquired, shares of capital stock or other voting securities of Garwood, or obligating Garxxxx to grant, exxxxx or enter into any kind for the purchase such option, warrant, call, right, commitment, arrangement or acquisition from the Parent of any of its securitiesagreement. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance of any sale of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Garwood outstanding, under antixxxx-dilution xilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentGarwood's Common Stock: (ix) have xave been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as Garwood's common stock xxx xx stated in the ParentGarwood's Certificate xx Xxxxxles of Incorporation (the Garwood's "Charter"). The Note Shares, the Option Shares and the Warrant Xxxxxxx Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentGarwood's Charter, the Securities Xxxxxxx Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 40,000,000shares, of which 1,000,000,000 are 20,000,000are shares of Common Stock, no par value $0.001 per share, 99,776,704 shares of which 14,354,521shares of which are issued and outstanding outstanding, and 10,502,000 are no shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c)4.3 or disclosed in any Exchange Act Filings, other than: than (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3 or as disclosed in any Exchange Act Filings, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate Articles of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized and issued capital stock of the Parent, Company and of each Subsidiary as of the date hereof consists 1,010,502,000 of which 1,000,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth described on Schedule 12(c)3.2 annexed hereto. (ii) Except as disclosed on in Schedule 12(c)3.2, other than: (i) the shares Common Stock reserved for issuance under the Parent's Company’s stock option plans; plans and (ii) shares which may be issued pursuant to this Agreement and the Ancillary AgreementsWarrant, there are no outstanding options, warrants, rights (including including, but not limited to, conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or other arrangements or agreements of any kind for the purchase or acquisition from the Parent Company or its Subsidiaries, of any of its their securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance sale of any of the Note, the Options or the Warrantsof, or the issuance of any of the Note Sharesof, the Option Shares Warrant or the Warrant Shares, nor the consummation of any transaction transactions contemplated hereby hereby, will result in a change in the price or number of any securities of the Parent outstanding, Company or its Subsidiaries authorized or issued under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) The issuance of the Warrant is not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with. (iv) All issued and outstanding shares securities of the Parent's Common Stock: Company and its Subsidiaries (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securitieslaws. (ivv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's CharterWarrant, the Securities Warrant Shares will be validly issued, fully paid and nonassessable, and will be free of any liens liens, charges, encumbrances, options, rights of first refusal, security interests, claims, liens, mortgages, pledges, charges, easements, covenants, restrictions, (except as contained herein) obligations, or encumbrances; providedany other encumbrances (including, howeverwithout limitation, that any conditional sale or other title retention agreement or any lease in the Securities may be subject nature thereof and any agreement to restrictions on transfer under state and/or federal securities laws as set forth herein grant or as otherwise required by such laws at to permit or suffer to exist any of the time a transfer is proposedforegoing) or third party rights or equitable interests of any nature whatsoever.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 110,000,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 28,630,419 shares of which of which are issued and outstanding outstanding, and 10,502,000 10,000,000 are shares of preferred stock, par value $0.001 per share of which 378,061 zero shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3 or in the Company’s Exchange Act filings, as defined below, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate Company’s Articles of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.. NY483949.3 20389110047 06/07/2006 :lh 4

Capitalization; Voting Rights. (ia) The authorized capital stock of the Parent, as Company consists of the date hereof consists 1,010,502,000 of which 1,000,000,000 are 40 million shares of Common Stock, par value $0.001 per share, 99,776,704 shares of which of which are issued Stock and outstanding and 10,502,000 are two million shares of preferred stock, par value $0.001 0.01 per share ("Preferred Stock"), of which 378,061 40,000 shares are (or upon filing of the Certificate of Designation, will be) designated as Series A Preferred Stock. As of November 1, 2006, 19,982,038 shares of Series A preferred stock are Common Stock were issued and outstanding and no shares of Preferred Stock were issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(cprovided in the Company's filings with the United States Securities and Exchange Commission (the "SEC"), other than: (i) and except for the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary AgreementsSecurities, there are no outstanding options, warrants, scrip, rights (including conversion conversion, anti-dilution or preemptive rights and rights of first refusalrefusal or similar rights), proxy or stockholder agreementscontracts, or arrangements commitments, understandings or agreements of any kind for by which the purchase Company or acquisition from the Parent any of its Subsidiaries is or may become bound to issue any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting are any such securitiesissuances, contracts, commitments, understandings or arrangements contemplated. (iiic) All issued and outstanding shares of capital stock of the Parent's Common Stock: Company (i) have been duly authorized and validly issued and are fully paid and nonassessable; , and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The Company does not have any shareholder rights plan, "poison pill" or other anti-takeover plans or similar arrangements. (e) Except as set forth in the Company's filings with the SEC, there are no proxy, stockholder agreements, voting agreements or other similar agreements with respect to the Company's capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company's stockholders. (f) The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by Applicable Law) to receive dividends and distributions on, all shares of capital stock of its Subsidiaries as owned by the Company or any such Subsidiary. (g) The rights, preferences, privileges and restrictions of the shares of the Common Stock Securities are as stated in the Parent's Certificate of Incorporation (and the "Charter")Certificate of Designations. The Note Shares, the Option Shares Securities are duly authorized and the Warrant Shares have been duly and validly reserved for issuance. When when issued in compliance with the provisions of this Agreement Agreement, the Certificate of Designations and the Parent's CharterCertificate of Incorporation, (i) the Securities will be validly issued, fully paid and nonassessablenon-assessable, and will be free of any liens liens, taxes, claims or encumbrances; other Encumbrances and (ii) will not be subject to preemptive rights, rights of first refusal or other similar rights of stockholders of the Company or any other person provided, however, that the Securities Shares and the Conversion Shares may be subject to restrictions on transfer under the Registration Rights Agreement, state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. As of the Closing Date, the Company shall have reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Conversion Shares at least equal to the Required Minimum on the date hereof.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 40,000,000 shares, of which 1,000,000,000 20,000,000 are shares of Common Stock, no par value $0.001 per share, 99,776,704 14,532,157 shares of which of which are issued and outstanding outstanding, and 10,502,000 are no shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c)4.3 or disclosed in any Exchange Act Filings, other than: than (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3 or as disclosed in any Exchange Act Filings, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate Articles of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 60,000,000 shares, of which 1,000,000,000 50,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 10,962,663 shares of which of which are issued and outstanding outstanding, and 10,502,000 10,000,000 are shares of preferred stock, par value $0.001 per share of which 378,061 22,010 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the Parent, as As of the date hereof hereof, the authorized capital of the Company consists 1,010,502,000 of which 1,000,000,000 are 33,333,333 shares of Common Stock, $0.001 par value $0.001 per share. As of March 31, 99,776,704 2006, there were 15,964,948 shares of which of which are Common Stock issued and outstanding and 10,502,000 are no shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are Preferred Stock issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 90,000,000 shares, of which 1,000,000,000 85,000,000 are shares of Common Stock, par value $0.001 0.01 per share, 99,776,704 44,344,250 shares of which of which are issued and outstanding outstanding, and 10,502,000 5,000,000 are shares of preferred stock, par value $0.001 0.01 per share (the “Preferred Stock”) of which 378,061 51,182 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3 or as disclosed in any Exchange Act Filings, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3 or as disclosed in any Exchange Act Filings, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Company’s Certificate of Incorporation Incorporation, including its Certificate of Designations (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 1,100,000,000 shares, of which 1,000,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 12,403,082 shares of which of which are issued and outstanding outstanding, and 10,502,000 100,000,000 are shares of preferred stock, par value $0.001 per share share, none of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Notes or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessablenon-assessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Company’s Certificate or Articles of Incorporation (the "Charter")Incorporation. The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's CharterCompany’s Certificate or Articles of Incorporation, the Securities will be validly issued, fully paid and nonassessablenon-assessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 205,000,000 shares, of which 1,000,000,000 200,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 13,087,142 shares of which of which are issued and outstanding outstanding, and 10,502,000 5,000,000 are shares of preferred stock, par value $0.001 per share share, 2,450,457 of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the Parent's stock option plansCompany’s 2000 Equity Incentive Plan or the 2006 Stock Option Plan; and (ii) shares which may be issued granted pursuant to this Agreement Agreement, the Related Agreements and other agreements between the Company and the Ancillary AgreementsPurchaser, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance of any sale of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Company’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital of the Company (“Capital Stock”) is as set forth or otherwise described in the Company’s filings with the U.S. Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder (collectively, the “Exchange Act”). The Notes and Warrants, when issued and paid for in accordance with the terms hereof and thereof, and the Warrant Shares, when issued upon exercise of the Warrants, shall be validly issued, fully paid, non-assessable and free from any restrictions on transfer, except for restrictions imposed by federal or state securities or “blue-sky” laws and except for those imposed pursuant to this Agreement or any other Transaction Document. The Company has authorized and reserved for issuance sufficient shares of its Common Stock for issuance upon the conversion of all of the Notes and the exercise of all of the Warrants. Except as disclosed in Schedule 4.2(a): (i) none of the Company's capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital stock of the Parent, as Company or any of the date hereof consists 1,010,502,000 Affiliated Companies, or contracts, commitments, understandings or arrangements by which the Company or any of which 1,000,000,000 are the Affiliated Companies is or may become bound to issue additional shares of Common Stock, par value $0.001 per share, 99,776,704 shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary the Company or any of the Affiliated Companies or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital stock of the Company or any of the Affiliated Companies; (iii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any of the Affiliated Companies or by which the Company or any of the Affiliated Companies is or may become bound; (iv) there are no financing statements securing obligations in any material amounts, either singly or in the aggregate, filed in connection with the Company or any of the Affiliated Companies; (v) there are no agreements or arrangements under which the Company or any of the Affiliated Companies is obligated to register the sale of any of their securities under the 1933 Act; (vi) there are no outstanding securities or instruments of the Company or any of the Affiliated Companies which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of the Affiliated Companies is or may become bound to redeem a security of the Company or any of the Affiliated Companies; (vii) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (viii) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and (ix) the Company and the Affiliated Companies have no liabilities or obligations required to be disclosed in the SEC Documents but not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s or any of the Affiliated Companies’ respective businesses and which, individually or in the aggregate, do not or would not have a Material Adverse Effect. (b) The authorized capital of each of the Affiliated Companies (“Affiliated Company Capital Stock”) is as set forth on Schedule 12(c). (ii4.2(b) hereto. The issued and outstanding Affiliated Company Capital Stock of the Company is held in such amounts as set forth on Schedule 4.2(b) hereto. All issued and outstanding shares of Affiliated Company Capital Stock have been duly authorized and validly issued and are fully paid and non-assessable. Except as disclosed set forth on Schedule 12(c), other than: (i4.2(b) the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreementshereto, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from any of the Parent Affiliated Companies of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of 110,000,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, no par value $0.001 per share, 99,776,704 42,855,513 shares of which of which are issued and outstanding outstanding, and 10,502,000 10,000,000 are shares of preferred stock, no par value $0.001 per share of which 378,061 1,000,000 shares of Series A 7% preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c).. --------------- (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares --------------- reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), -------------- neither the offer offer, issuance or issuance sale of any of the Note, the Options Notes or the Warrants, 7% Preferred Stock or the issuance of any of the Note Shares, the Option Shares or the Warrant Preferred Conversion Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessablenon-assessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate Articles of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Preferred Conversion Shares have been duly and validly reserved ------ for issuance; it being understood that, notwithstanding the foregoing, prior to October 2, 2006 (the "Authorization Deadline Date"), the number of shares of --------------------------- Common Stock otherwise required to be reserved by the Issuer hereunder may be less than that sufficient to provide for the issuance of Preferred Conversion Shares upon the full conversion of the 7% Preferred Stock; provided that, on and after the Authorization Deadline Date, -------- ---- 100% of the required Preferred Conversion Shares shall be duly and validly authorized and reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to -------- ------- restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof June 30, 2003, consists 1,010,502,000 of which 1,000,000,000 are 20,000,000 shares of Common Stock, par value $0.001 0.01 per share, 99,776,704 13,937,738 shares of which of which are issued and outstanding and 10,502,000 are 10,000,000 shares of preferred stock, par value $0.001 1.00 per share of which 378,061 235,000 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c)4.3, other than: than (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of 32,000,000 shares, of which 1,000,000,000 30,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 3,322,182 shares of which of which are issued and outstanding outstanding, and 10,502,000 2,000,000 are shares of preferred stock, par value $0.001 per share of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock or limited liability company membership interests, as applicable, of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's stock option plansplans or upon exercise of warrants granted by the Parent to key employees in connection with employee incentive programs; (ii) the shares reserved for issuance upon exercise of warrants or options issued by the Parent in connection with acquisitions of wholly-owned Subsidiaries in which neither the Parent nor any of its Subsidiaries receives any cash consideration and (iiiii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options Notes or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.and

Capitalization; Voting Rights. (ia) The authorized capital stock of the Parent, Company as of the date hereof consists 1,010,502,000 of which 1,000,000,000 are 100,000,000 shares of Common Stock, no par value of which 32,146,716 shares are issued and outstanding. The authorized capital stock of Iview as of the date hereof consists of an unlimited number of Common Shares, of which 100 shares are issued and outstanding. The authorized capital stock of Iview Parent consists of 1,000 shares of Common Stock, $0.001 0.01 par value per share, 99,776,704 of which 80 shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock Common Stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company the Company, Iview and of Iview Parent is set forth on Schedule 12(c4.3(a). (iib) Except as disclosed on Schedule 12(c4.3(b), other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, and (iii) those shares issued or reserved for issuance to the Purchaser, there are no outstanding options, warrants, rights (including conversion or preemptive pre-emptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c4.3(b), neither the offer offer, issuance or issuance sale of any of the Company Note, the Options Iview Note or Iview Option, or the Warrants, Company Warrant or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Company, Iview or Iview Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s common stock (the “Company Common Stock: ”): (i) have been duly authorized and validly issued and are fully paid and nonassessablenon-assessable; and (ii) were issued in compliance with all applicable state provincial and federal laws concerning the issuance of securities. All issued and outstanding shares of Iview’s Common Stock (the “Iview Common Stock”): (i) have been duly authorized and validly issued and are fully paid and non-assessable; and (ii) were issued in compliance with all applicable provincial and federal laws concerning the issuance of securities. All issued and outstanding shares of Iview Parent’s common stock (the “Iview Parent Common Stock”): (i) have been duly authorized and validly issued and are fully paid and non-assessable; and (ii) were issued in compliance with all applicable federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Company Common Stock are as stated in the Parent's Company’s Certificate of Incorporation (the "“Company Charter"”). The Note Sharesrights, preferences, privileges and restrictions of the shares of the Iview Common Stock are as stated in Iview’s Certificate of Incorporation (the “Iview Charter”). The rights, preferences, privileges and restrictions of the shares of Iview Parent Common Stock are as stated in Iview Parent’s Certificate of Incorporation (the “Iview Parent Charter”). The Iview Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and Agreement, the Company’s Charter, Iview’s Charter, and/or Iview Parent's ’s Charter, as applicable, the Securities will be validly issued, fully paid and nonassessablenon-assessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state state, provincial and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposedproposed or pursuant to the terms of the Securities or of related shareholder or similar agreements entered into by the Purchaser.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof February 28, 2003, consists 1,010,502,000 of which 1,000,000,000 are 16,000,000 shares of Common Stock, par value $0.001 0.01 per share, 99,776,704 7,167,671 shares of which of which are issued and outstanding and 10,502,000 are 1,000,000 shares of preferred stock, par value $0.001 0.01 per share of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c)4.3, other than: than (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the ParentCompany, as immediately prior to the Closing, will consist of the date hereof consists 1,010,502,000 76,000,000 shares, of which 1,000,000,000 are 50,000,000 shares of Common Stock, par value $0.001 .001 per share, 99,776,704 5,043,706 shares of which of which are issued and outstanding and 10,502,000 are 791,748 shares of preferred stockwhich are reserved for future issuance to employees pursuant to the Stock Option Plan (as hereinafter defined) and 26,000,000 shares of Preferred Stock, par value $0.001 .001 per share share; 8,750,000 of which 378,061 are designated Series B Preferred Stock, 8,572,039 of which are issued and outstanding; 8,500,000 shares of which are designated Series A preferred stock C Preferred Stock, 8,492,749 of which are issued and outstanding; and 2,500,000 shares of which are designated Series D Preferred Stock, none of which are issued and outstanding. The authorized, All issued and outstanding shares of the Company's capital stock (a) have been duly authorized and validly issued, (b) are fully paid and nonassessable, (c) were issued in compliance with all applicable state and federal laws concerning the issuance of each Subsidiary securities. The rights, preferences, privileges and restrictions of each Company is set forth on Schedule 12(c). (ii) Except the Preferred Stock are as disclosed on Schedule 12(c), other than: (i) stated in the Restated Certificate. Other than the 791,748 shares reserved for issuance under the Parent's stock option plans; Stock Option Plan and outstanding warrants to purchase 1,409,734 shares of Common Stock (ii) shares which the "Existing Warrants"), and except as may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder shareholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's CharterRestated Certificate, the Securities Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities such shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or in the Purchasers Rights Agreement or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of 250,000,000 shares, of which 1,000,000,000 200,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 28,253,570 shares of which of which are issued and outstanding outstanding, and 10,502,000 50,000,000 are shares of preferred stock, par value $0.001 per share of which 378,061 250,000 shares of Series A 10% convertible preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer offer, issuance or issuance sale of any of the Note, the Options Notes or the Warrants, Warrants or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessablenon-assessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as immediately prior to the Closing, consists of the date hereof consists 1,010,502,000 of which 1,000,000,000 are (i) 49,000,000 shares of Common Stock, par value $0.001 per share, 99,776,704 30,215,384 shares of which of which are issued and outstanding as of September 30, 2001, and 10,502,000 are (ii) 5,000 shares of preferred stockPreferred Stock, par value $0.001 per share share, none of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (iib) Except as disclosed on Schedule 12(c), other than: Other than (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements; and (iii) set forth on SCHEDULE 4.3, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)Neither the offer, neither the offer issuance or issuance sale of any of the Note, the Options Notes or the Warrants, or the issuance of any of the Note Shares, the Option Conversion Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the ParentCompany's Common Stock: Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable; nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of Preferred Stock and the Common Stock are as stated in the Parent's Certificate Articles of Incorporation (the "CharterCHARTER"). The Note Shares, the Option Conversion Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. (e) No stock plan, stock purchase, stock option or other agreement or understanding between the Company and any holder of any equity securities or rights to purchase equity securities provides for acceleration or other changes in the vesting provisions or other terms of such agreement or understanding as the result of any merger, consolidated sale of stock or assets, change in control or any other transaction(s) by the Company, including the transactions contemplated hereunder.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof consists 1,010,502,000 of 50,000,000 shares, of which 1,000,000,000 50,000,000 are shares of Common Stock, par value $0.001 0.005 per share, 99,776,704 13,601,052 shares of which of which are issued and outstanding as of March 31, 2005, and 10,502,000 10,000,000 are shares of preferred stock, par value $0.001 0.01 per share of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's ’s stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options Notes or the Warrants, or the issuance of any of the Note Shares, the Option Warrant Shares or and/or the Warrant Grant Shares, nor or the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's ’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's ’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Warrant Shares and the Warrant Grant Shares have been duly and validly reserved for issuance. When issued and paid for in compliance with the provisions of this Agreement and the Parent's ’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof hereof, consists 1,010,502,000 of which 1,000,000,000 are of: (i) 45,000,000 shares of Common Stock, par value $0.001 per share, 99,776,704 shares of which of which there are 7,304,687 shares issued and 7,269,197 shares are issued and outstanding outstanding, and 10,502,000 are (ii) 5,000,000 shares of preferred stock, par value $0.001 per share .001, of which: (A) 1,647,059 are designated as Series A Convertible Preferred Stock, all of which 378,061 shares are issued and outstanding and (B) 941,177 are designated as Series B Convertible Preferred Stock, of Series A preferred stock which 341,176 are issued and outstanding. The authorized, issued authorized and outstanding capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; (ii) publicly-traded warrants to purchase 2,085,000 shares of Common Stock at an exercise price of $6.30 per share as of the date hereof; (iii) shares of Common Stock issuable upon conversion the Company’s currently outstanding shares of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock and (iiiv) shares which may be issued pursuant to this Agreement Agreement, the Related Agreements and certain agreements entered into on February 22, 2005 by and between the Company and the Ancillary AgreementsPurchaser, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common StockStock issued on or after June 24, 2002: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Company’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement Agreement, the Note, the Warrant and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 105,000,000 shares, of which 1,000,000,000 100,000,000 are shares of Common Stock, par value $0.001 0.03 per share, 99,776,704 37,647,233 shares of which of which are issued and outstanding outstanding, and 10,502,000 5,000,000 are shares of preferred stock, par value $0.001 0.01 per share of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding authorized capital stock of each Eligible Subsidiary of each the Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c), neither the offer offer, issuance or issuance sale of any of the Note, the Options Notes or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the ParentCompany's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Restated Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement Agreement, the Ancillary Agreements and the ParentCompany's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws laws, as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the Parent, as of the date hereof hereof, consists 1,010,502,000 of 350,000,000 shares, of which 1,000,000,000 300,000,000 are shares of Common Stock, par value $0.001 per share, 99,776,704 199,478,763 shares of which of which are issued and outstanding and 10,502,000 outstanding, 10,000,000 are shares of preferred Series C Preferred stock, par value $0.001 0.01 per share of which 378,061 425 shares are issued and outstanding, 10,000,000 are shares of Series A preferred stock E Preferred stock, par value $0.01 per share of which 51 shares are issued and outstanding, 10,000,000 are shares of Series F Preferred stock, par value $0.01 per share of which 1,700 shares are issued and outstanding, 10,000,000 are shares of Series H Preferred stock, par value $0.01 per share of which 1,035 shares are issued and outstanding and 10,000,000 are shares of Series I Preferred stock, par value $0.01 per share of which 541 shares are issued and outstanding. The authorized, issued and outstanding capital stock of each other Company and each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's ’s stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options Notes or the Warrants, or the issuance of any of the Note Shares, the Option Warrant Shares or the Warrant Note Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iii) All issued and outstanding shares of the Parent's ’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessablenon-assessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's ’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Warrant Shares and the Warrant Note Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's ’s Charter, the Securities will be validly issued, fully paid and nonassessablenon-assessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of which 1,000,000,000 are 100,000,000 shares of Common Stock, par value $0.001 per share, 99,776,704 shares of which of which 22,212,012 are shares are issued and outstanding and 10,502,000 are shares as of preferred stockFebruary 22, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding2005. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3 and the Exchange Act Filings, other than: (i) the shares reserved for issuance under the ParentCompany's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Note or the WarrantsWarrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the ParentCompany's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 50,000,000 shares, of which 1,000,000,000 all are shares of Common Stock, par value $0.001 0.01 per share, 99,776,704 19,623,348 shares of which of which are issued and outstanding and 10,502,000 are no shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are authorized, issued and or outstanding. The authorized, issued and outstanding authorized capital stock of each Subsidiary of each the Company is set forth on Schedule 12(c)4.2. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any of the Note, the Options Shares, the Warrant or the WarrantsAmended Warrant, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the exercise or conversion price or number of any securities of the Parent Company issuable upon exercise or conversion of any options, warrants, rights or other convertible securities outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Company’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. The Warrant Shares issuable upon the exercise of the Amended Warrant have been registered pursuant to an effective registration statement no. 333-122135. When issued in compliance with the provisions of this Agreement and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (i) The authorized capital stock of the ParentCompany, as immediately prior to the Closing, consists of the date hereof consists 1,010,502,000 of which 1,000,000,000 are shares of Common Stock, par value $0.001 USD$[<<>>] per share, 99,776,704 [X] shares of which of which are issued and outstanding and 10,502,000 are shares of preferred stock, par value $0.001 per share of which 378,061 shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). (ii) Except as disclosed on Schedule 12(cUnder the Company’s Employee Share Option Plan (the “Plan”), other than: [X] shares of Common Stock remain available for future issuance to officers, directors, employees and consultants of the Company. The Company has not made any representations regarding equity incentives to any officer, employee, director or consultant that are inconsistent with the share amounts set forth at Exhibit A. (iiii) the shares reserved for issuance under the Parent's stock option plans; Other than as set forth on Exhibit A [and (iib) warrants to purchase [X] shares which of [Common] Stock], and except as may be issued granted pursuant to this Agreement and the Ancillary AgreementsAgreement, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiiiv) All issued and outstanding shares of the Parent's Company’s Common Stock: Stock (ia) have been duly authorized and validly issued to the persons listed on Exhibit A hereto and are fully paid and nonassessable; and non-assessable and (iib) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivv) The rights, preferences, privileges and restrictions of the shares of the Common Stock Shares are as stated in the Parent's Certificate of Incorporation (the "Charter"). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Charter, the Securities Shares will be validly issued, fully paid and nonassessablenon-assessable, and will be free of any liens or encumbrancesencumbrances other than (i) liens and encumbrances created by or imposed upon Purchaser; provided, however, that the Securities Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. The sale of the Shares is not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as of the date hereof consists 1,010,502,000 of 60,000,000 shares, of which 1,000,000,000 55,000,000 are shares of Common Stock, par value $0.001 0.01 per share, 99,776,704 19,018,855 shares of which of which are issued and outstanding outstanding, and 10,502,000 5,000,000 are shares of preferred stock, par value $0.001 0.01 per share of which 378,061 no shares of Series A preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each the Company (that is not an Inactive Subsidiary) is set forth on Schedule 12(c)4.3. (iib) Except as disclosed on Schedule 12(c)4.3, other than: (i) the shares reserved for issuance under the Parent's Company’s stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c)4.3, neither the offer offer, issuance or issuance sale of any either of the Note, the Options Notes or either of the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Company’s Common Stock: (i) have been duly authorized and validly issued and are fully paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent's Company’s Certificate of Incorporation (the "“Charter"”). The Note Shares, the Option Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (ia) The authorized capital stock of the ParentCompany, as immediately prior to the Closing, consists of the date hereof consists 1,010,502,000 of which 1,000,000,000 are (i) 50,000,000 shares of Common Stockcommon stock, par value $0.001 .001 per shareshare ("Common Stock"), 99,776,704 10,000,000 shares of which of which are issued and outstanding and 10,502,000 are (ii) 20,000,000 shares of preferred stock, par value $0.001 .001 per share ("Preferred Stock"), 7,000,000 shares of which 378,061 shares of are designated Series A preferred stock Convertible Preferred Stock, none of which are issued and outstanding. The authorizedGP Strategies Corporation, issued and outstanding capital stock a Delaware corporation ("Parent"), currently owns 100% of each Subsidiary the shares of each Company is Common Stock. (b) Other than as set forth on Schedule 12(c). (ii) Except EXHIBIT F, except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under the Parent's stock option plans; and (ii) shares which may be issued granted pursuant to this Agreement and the Ancillary other Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal, whether in favor of the Company or any other person), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent Company of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the Note, the Options or the Warrants, or the issuance of any of the Note Shares, the Option Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. (iiic) All issued and outstanding shares of the Parent's Common Stock: Stock and Preferred Stock (i) have been duly authorized and validly issued and to the persons listed on EXHIBIT F hereto, are fully paid and nonassessable; , and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. (ivd) The rights, preferences, privileges and restrictions of the shares of the Common Stock Shares are as stated in the Parent's Certificate of Incorporation (the "Charter")Certificate. The Note Shares, the Option Shares and the Warrant Conversion Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent's CharterCertificate, as the case may be, the Securities Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and and, except as provided in the Related Agreements, will be free of any liens or encumbrances; provided, however, that the Securities Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.