Common use of Capitalization; Voting Rights Clause in Contracts

Capitalization; Voting Rights. The authorized capital stock of the Company, immediately prior to the Closing, will consist of 25,000,000 shares of Common Stock, (par value $0.01) per share and 4,000,000 shares of Preferred Stock, (par value $0.01), of which 600,000 are designated Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock"); 1,700,000 are designated Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Stock") and 500,000 shares of Series D Cumulative Convertible Preferred Stock. Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, 0 shares Series A Preferred Stock (subscribed for 600,000 shares), 407,900 shares of Series B Preferred Stock, 371,438 shares of Series C Preferred Stock and 244,898 shares of Series D Preferred Stock will be issued and outstanding. Of the authorized shares of Common Stock, (i) 1.4 million shares are reserved for issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for issuance to employees pursuant to the Company's 1998-B Incentive Stock Option and Non-Statutory Plan (the "1998-B Plan"), (ii) 600,000 shares are reserved for issuance upon the exercise of certain warrants, (iii) 600,000 shares are reserved for issuance upon the conversion of the Series A Preferred Stock, (iv) 1,785,000 shares are reserved for issuance upon the conversion of the Series B Preferred Stock, and (v) 1,650,000 shares are reserved for issuance upon conversion of the Series C Preferred Stock. The Company has reserved 1,500,000 shares of its Common Stock for issuance upon conversion of the Series D Preferred Stock. All issued and outstanding shares of the Company's Common Stock (a) have been duly authorized and validly issued, (b) are fully paid and nonassessable, and (c) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate of Designation. Each series of Preferred Stock is convertible into Common Stock on the basis described in the Reports (as defined below), subject to adjustment as provided in the respective Certificate of Designation. The Conversion Shares have been duly and validly reserved for issuance. Other than as set forth in this Section 3.3 or in the Company's annual, quarterly and 8-K reports, filed with the Securities and Exchange Commission ("Reports"), there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Certificate of Designation, and upon payment of the Purchase Price the 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 Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or in the Registration Rights Agreement or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (1) The authorized capital stock of the Company, immediately prior to the ClosingClosing after giving effect to the Restated Certificate of Incorporation, will consist of 25,000,000 [98,530,700] shares of Series A Common Stock, (par value $0.01) 0.001 per share and 4,000,000 shares of Preferred Stock, (par value $0.01), of which 600,000 are designated the “Series A Cumulative Convertible Preferred Stock ("Series A Preferred Common Stock"); 1,700,000 are designated ,” and together with the Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Stock") and 500,000 shares of Series D Cumulative Convertible Preferred Stock. Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, 0 shares Series A Preferred Stock (subscribed for 600,000 sharesthe “Common Stock”), 407,900 none of which are issued and outstanding, and [98,530,700] shares of which are reserved for future issuance upon conversion of shares of Series B Preferred Common Stock, 371,438 [98,530,700] shares of Series C Preferred Stock and 244,898 shares of Series D Preferred Stock will be issued and outstanding. Of the authorized shares of B Common Stock, (i) 1.4 million [7,095,178] shares of which are issued and outstanding and [16,006,519] shares of which are reserved for issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for future issuance to employees pursuant to the Company's 1998-B Incentive ’s 1998 Stock Option Plan, 2002 Stock Incentive Plan, 2002 California Stock Incentive Plan and Non-Statutory 2005 Stock Incentive Plan (collectively, the "1998-B Plan")“Stock Incentive Plans”) and [74,942,226] shares of Preferred Stock, (ii) 600,000 shares par value $0.001 per share, 8,904,567 of which are reserved for issuance upon the exercise of certain warrants, (iii) 600,000 shares are reserved for issuance upon the conversion of the designated Series A Preferred Stock, (iv) 1,785,000 shares all of which are reserved for issuance upon the conversion issued and outstanding, 7,419,355 of the which are designated Series B Preferred Stock, all of which are issued and (v) 1,650,000 shares outstanding, 6,401,523 of which are reserved for issuance upon conversion of the designated Series C Preferred Stock. The Company has reserved 1,500,000 shares , all of its Common Stock for issuance upon conversion which are issued and outstanding, 12,618,296 of the which are designated as Series D Preferred Stock, all of which are issued and outstanding, 20,500,000 of which are designated as Series E Preferred Stock, 19,633,531 of which are issued and outstanding, 8,000,000 of which are designated as Series F Preferred Stock, all of which are issued and outstanding, 2,083,333 of which are designated as Series G Preferred Stock, none of which are issued and outstanding, 8,333,333 of which are designated as Series H Preferred Stock, 4,141,586 of which are issued and outstanding, and 681,819 of which are designated as Series I Preferred Stock, none of which are issued and outstanding (collectively, the “Preferred Stock”). All issued and outstanding shares of the Company's Common Stock ’s capital stock (a) have been duly authorized and validly issued, (b) are fully paid and nonassessablenon-assessable, and (c) were issued offered, issued, sold and delivered in compliance with all applicable federal and state and federal laws concerning the issuance of securitiessecurities laws. The rights, preferences, privileges and restrictions of the Shares are as stated in the Restated Certificate of DesignationIncorporation. Each series of Preferred Stock is convertible into Series B Common Stock on the basis described in the Reports (as defined below), subject to adjustment as provided in the respective Certificate a one-for-one basis. Each share of DesignationSeries B Common Stock is convertible into a share of Series A Common Stock on a one-for-one basis. The Conversion Shares have been duly and validly reserved for issuance. Other than as set forth in this Section 3.3 or in the Company's annual, quarterly and 8-K reports, filed with the Securities and Exchange Commission ("Reports"), there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Certificate of Designation, and upon payment of the Purchase Price the 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 Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or in the Registration Rights Agreement or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. The authorized capital stock of the Company, immediately prior to the Closing, will consist of 25,000,000 twenty million (20,000,000) shares of Common Stock, (par value $0.01.001) per share share, two million thirty three thousand three hundred ninety (2,033,390) shares of which are issued and 4,000,000 outstanding and one million seven hundred fifty thousand (1,750,000) shares of which are reserved for future issuance to employees, officers, directors and consultants pursuant to the Company's 1999 Equity Incentive Plan and eight million five hundred thousand (8,500,000) shares of Preferred Stock, (par value $0.01).001) per share, all of which 600,000 are designated Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock"); 1,700,000 are designated Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Stock") and 500,000 shares of Series D Cumulative Convertible Preferred Stock. Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, 0 shares Series A Preferred Stock (subscribed for 600,000 shares), 407,900 shares of Series B Preferred Stock, 371,438 shares of Series C Preferred Stock and 244,898 shares of Series D Preferred Stock will be issued and outstanding. Of the authorized shares of Common Stock, (i) 1.4 million shares are reserved for issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for issuance to employees pursuant to the Company's 1998-B Incentive Stock Option and Non-Statutory Plan (the "1998-B Plan"), (ii) 600,000 shares are reserved for issuance upon the exercise of certain warrants, (iii) 600,000 shares are reserved for issuance upon the conversion of the Series A Preferred Stock, (iv) 1,785,000 shares none of which are reserved for issuance upon the conversion of the Series B Preferred Stock, issued and (v) 1,650,000 shares are reserved for issuance upon conversion of the Series C Preferred Stock. The Company has reserved 1,500,000 shares of its Common Stock for issuance upon conversion of the Series D Preferred Stockoutstanding. All issued and outstanding shares of the Company's Common Stock (a) have been duly authorized and validly issued, (b) are fully paid and nonassessable, and (c) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate of DesignationRestated Certificate. Each series of Preferred Stock is convertible into Common Stock on the basis described in the Reports (as defined below), subject to adjustment as provided in the respective Certificate of Designationa one-for-one basis. The Conversion Shares have been duly and validly reserved for issuance. Other than as set forth in this Section 3.3 or in the 1,750,000 shares reserved for issuance under the Company's annual1999 Equity Incentive Plan, quarterly the option to purchase up to four hundred thirty eight thousand five hundred ninety six (438,596) shares of Series A Preferred Stock granted to Kevix Xxxxxxxx xxxsuant to that certain Key Employee Agreement by and 8-K reportsbetween the Company and Kevix Xxxxxxxx xxxed on or about the date hereof, filed with and the Securities and Exchange Commission proposed issuance of up to one million two hundred fifty thousand (1,250,000) shares of Series A Preferred Stock to certain shareholders of Asia Communications Global Limited ("ReportsACGL") pursuant to that certain Asset Purchase Agreement by and between the Company and ACG, Inc., a subsidiary of ACGL, dated on or about the date hereof (the "ACGL Agreement"), and except as may be granted pursuant to this Agreement and the Investor Rights Agreement, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Certificate of DesignationRestated Certificate, and upon payment of the Purchase Price the 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 Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or in the Registration Rights Agreement or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. The authorized capital stock of the Company----------------------------- Company consists of 50,000,000 shares, immediately prior to the Closing, will consist of 25,000,000 such shares being designated as follows: (i) 48,000,000 shares of Common Stockcommon stock, (par value $0.01) .01 per share and 4,000,000 shares of Preferred Stock, (par value $0.01), of which 600,000 are designated Series A Cumulative Convertible Preferred Stock (the "Series A Preferred Stock"); 1,700,000 are designated Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Common Stock") and 500,000 shares of Series D Cumulative Convertible Preferred Stock. Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, 0 shares Series A Preferred Stock which (subscribed for 600,000 shares), 407,900 shares of Series B Preferred Stock, 371,438 shares of Series C Preferred Stock and 244,898 shares of Series D Preferred Stock will be a) 16,405,548 are issued and outstanding. Of the authorized shares of Common Stock, outstanding and (ib) 1.4 million (1) 3,323,700 shares are reserved for issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for future issuance to employees pursuant to the Company's 1998-B Incentive 1997 Equity Compensation Plan adopted by the Company on May 21, 1997, the Company's 1988 Stock Option Plan and Non-Statutory the Company's Stock Option Plan for Directors (the "1998-B PlanStock Option Plans"), ) and (ii2) 600,000 3,000,000 shares are reserved for issuance upon pursuant to the exercise Asset Purchase Agreement, dated February 13, 2001 by and among the Company, Axial Technology Holding AG and Wyzdom Solutions, Inc. (the "Asset Purchase Agreement"); (ii) 2,000,000 shares of certain warrantspreferred stock, (iii) 600,000 par value $.01 per share, consisting of 500,000 shares are reserved for issuance upon the conversion of the Series A Convertible Preferred Stock, (iv) 1,785,000 par value $.10 per share, of which no shares are reserved for issuance upon the conversion issued and outstanding, 200,000 shares of the Series B Convertible Preferred Stock, and (v) 1,650,000 par value $.01 per share, of which no shares are reserved for issuance issued and outstanding, 250,000 shares of Series C Convertible Preferred Stock, par value $.01 per share, of which no shares are issued and outstanding, 9,500 shares of Series D Convertible Preferred Stock, par value $.01 per share, of which no shares are issued and outstanding, 1,800 shares of Series E Redeemable Preferred Stock, par value $.01 per share, of which no shares are issued and outstanding, and 3,000 shares of Series F Convertible Preferred Stock, par value $.01 per share (the "Series F Preferred Stock"), of which 3,000 shares will be upon conversion consummation of the Series C Preferred Stocktransactions contemplated hereby issued and outstanding. The Company has reserved 1,500,000 shares of its Common Stock for issuance Shares have been duly authorized, and upon conversion consummation of the Series D Preferred StockConversion, will be fully paid and non-assessable and issued in compliance with all applicable state and federal laws concerning the issuance of securities. All issued and outstanding shares of the Company's Common Stock and the Shares (ai) have been duly authorized and validly issued, (bii) are fully paid and nonassessable, nonassessable and (ciii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate Designations, which was accepted for filing by the Pennsylvania Department of DesignationState prior to the date hereof. Each series The shares of Preferred Stock is convertible into Common Stock on issuable upon conversion of the basis described in Shares pursuant to the Reports terms of the Designations (as defined below), subject to adjustment as provided in the respective Certificate of Designation. The "Conversion Shares Shares") have been duly and validly reserved for issuance. Other than as set forth in this Section 3.3 or in the Company's annual, quarterly 3,323,700 shares reserved for issuance under the Stock Option Plans and 8-K reports, filed with 3,000,000 shares of Common Stock to be issued pursuant to the Securities and Exchange Commission ("Reports")Asset Purchase Agreement, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. The Shares are free of any liens or encumbrances; provided, however, that the Shares may be subject to restrictions on transfer under state and/or federal securities laws. When issued in compliance with the provisions of this Agreement and the Certificate of DesignationDesignations, and upon payment of the Purchase Price the Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances other than liens and encumbrances; PROVIDEDprovided, HOWEVERhowever, that the Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or in the Registration Rights Agreement or as otherwise required by such laws at the time a transfer is proposedlaws.

Capitalization; Voting Rights. The authorized capital stock of the CompanyCompany consists, immediately or will consist prior to the Closing, will consist of 25,000,000 twenty-five million (25,000,000) shares of Common Stock, four million six hundred sixty four thousand seven hundred forty nine (par value $0.014,664,749) per share shares of which shall be issued and 4,000,000 outstanding, and twenty-two million three hundred ninety-eight thousand (22,398,000) shares of Preferred Stock. Of the 22,398,000 shares of Preferred Stock, three hundred twenty-five thousand (par value $0.01)325,000) shares of Preferred Stock are reserved for Series A-1 Preferred Stock, of which 600,000 are designated Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock"); 1,700,000 are designated Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Stock") and 500,000 shares of Series D Cumulative Convertible Preferred Stock. Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, 0 shares Series A Preferred Stock (subscribed for 600,000 shares), 407,900 shares of Series B Preferred Stock, 371,438 shares of Series C Preferred Stock and 244,898 shares of Series D Preferred Stock all will be issued and outstanding. Of the authorized shares of Common Stock, (i) 1.4 million and 325,000 shares are reserved for issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 Series A-Plan") and 1.5 million shares are reserved for issuance to employees pursuant to the Company's 1998-B Incentive Stock Option and Non-Statutory Plan (the "1998-B Plan"), (ii) 600,000 shares are reserved for issuance upon the exercise of certain warrants, (iii) 600,000 shares are reserved for issuance upon the conversion of the Series A N Preferred Stock, (iv) 1,785,000 of which none will be issued or outstanding; 1,804,000 shares are will be reserved for issuance upon the conversion of the Series B B-1 Preferred Stock, of which all will be issued and (v) 1,650,000 outstanding, and 1,804,000 shares are will be reserved for issuance upon conversion of the Series C B-N Preferred Stock, of which none will be issued or outstanding; 4,059,573 shares will be reserved for Series C-1 Preferred Stock, of which all will be issued and outstanding and 4,070,000 shares will be reserved for Series C-N Preferred Stock, of which none will be issued or outstanding; and 2,800,000 shares will be reserved for Series D Preferred Stock of which none will be issued or outstanding prior to the Closing. The Company has reserved 1,500,000 five million six hundred thousand (5,600,000) shares of Common Stock for issuance under the Company's 1995 Stock Incentive Plan to employees, consultants, and directors or officers of the Company, against which 3,299,600 options to purchase shares shall be issued and outstanding immediately after the Closing. In addition to the 3,299,600 options that are outstanding, the Company has issued a total of 661,674 shares of its Common Stock for issuance upon conversion of the Series D Preferred Stockpursuant to stock option exercises. All issued and outstanding shares securities of the Company's Common Stock Company (ai) will have been duly authorized and validly issued, (bii) are will be fully paid and nonassessable, and (ciii) were will have been issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate of Designation. Each series of Preferred Stock is convertible into Common Stock on the basis described in the Reports (as defined below), subject to adjustment as provided in the respective Certificate of DesignationThird Restated Articles. The Conversion Shares have been duly and validly reserved for issuance. Other than as may be set forth in this Section 3.3 or in SCHEDULE II, and except as may be granted pursuant to the Company's annual, quarterly and 8-K reports, filed with the Securities and Exchange Commission ("Reports")Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder stockholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Certificate of Designation, and upon payment of the Purchase Price the 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 Shares and the Conversion Shares Except as may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or in the Registration Rights Agreement or as otherwise required by such laws at Third Restated Articles, the time a transfer is proposedCompany has no obligation to repurchase any of its capital stock.

Capitalization; Voting Rights. The authorized capital stock of the Company, immediately prior to the First Closing and the consummation of the transactions contemplated hereby, will consist of (i) 50,000,000 shares of Common Stock, par value $.001 per share, 16,622,691 shares of which are issued and outstanding, and 2,047,729 shares of which are reserved for future issuance to pursuant to the Company's Stock Option Plans, as amended and restated (the "Option Plan"), 20,084,846 shares of which are reserved for issuance upon exercise of the Initial Series F Warrants and other warrants of the Company, and (ii) 2,000,000 shares of Preferred Stock, par value $.001 per share, 400 of which are designated Series A Preferred Stock, none of which are issued and outstanding, 225 of which are designated Series B Preferred Stock, none of which are issued and outstanding, 500,000 of which are designated Series C Preferred Stock, none of which are issued and outstanding, 25,000 of which are designated Series D Preferred Stock, none of which are issued and outstanding, 65,000 of which are designated Series F Preferred Stock, 41,398.33 of which are issued and outstanding and 700,000 shares of Series A Junior Participating Preferred Stock, none of which is issued or outstanding. The authorized capital stock of the Company immediately after the First Closing, will consist of 25,000,000 (i) 50,000,000 shares of Common Stock, (par value $0.01.001 per share, 16,622,691 shares of which are issued and outstanding, and 2,047,729 shares of which are reserved for future issuance to pursuant to the Company's Stock Option Plans, as amended and restated (the "Option Plan"), 22,205,874 shares of which are reserved for issuance upon exercise of the Warrants, warrants to purchase shares of Common Stock of the Company issued pursuant to the First Series F Purchase Agreement and other warrants of the Company, and (ii) per share and 4,000,000 2,000,000 shares of Preferred Stock, (par value $0.01).001 per share, 400 of which 600,000 are designated Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock"); 1,700,000 , none of which are issued and outstanding, 225 of which are designated Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Stock") and 500,000 shares of Series D Cumulative Convertible Preferred Stock. Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, 0 shares Series A Preferred Stock (subscribed for 600,000 shares), 407,900 shares of Series B Preferred Stock, 371,438 none of which are issued and outstanding, 500,000 of which are designated Series C Preferred Stock, none of which are issued and outstanding, 25,000 of which are designated Series D Preferred Stock, none of which are issued and outstanding, 73,000 of which are designated Series F Preferred Stock, 42,398.33 of which are issued and outstanding and 700,000 shares of Series C A Junior Participating Preferred Stock and 244,898 shares Stock, none of Series D Preferred Stock will be which is issued and or outstanding. Of the authorized shares of Common StockExcept as provided in Schedule 5.3, (i) 1.4 million shares are reserved for issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for issuance to employees pursuant to the Company's 1998-B Incentive Stock Option and Non-Statutory Plan (the "1998-B Plan"), (ii) 600,000 shares are reserved for issuance upon the exercise of certain warrants, (iii) 600,000 shares are reserved for issuance upon the conversion none of the Series A Preferred Stock, (iv) 1,785,000 shares are reserved for issuance upon the conversion of the Series B Preferred Stock, and (v) 1,650,000 shares are reserved for issuance upon conversion of the Series C Preferred Stock. The Company has reserved 1,500,000 shares of its Common Stock for issuance upon conversion of the or Series D Preferred StockStock designated by the Company may be 3 issued at any time. All issued and outstanding shares of the Company's Common Stock and other capital stock (a) have been duly authorized and validly issued, (b) are fully paid and nonassessable, and (c) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate of Designation. Each series of Preferred Stock is convertible into Common Stock on Other than the basis described in the Reports (as defined below), subject to adjustment as provided in the respective Certificate of Designation. The Conversion Shares have been duly and validly 24,193,603 shares reserved for issuance. Other than issuance under the Option Plans, the Warrants, the Initial Series F Warrants and other warrants and except as set forth in may be granted pursuant to this Section 3.3 or in Agreement and the Company's annual, quarterly and 8-K reports, filed with the Securities and Exchange Commission ("Reports")Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder stockholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. Schedule 5.3 sets forth all issued and outstanding options and warrants with an exercise price greater than $3.00 per share. Except as provided in Schedule 5.3, the Company is not a party or subject to any agreement or understanding, and, to the Company's knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company. When issued in compliance with the provisions of this Agreement and the Certificate of Designation, and upon payment of the Purchase Price the Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrancesencumbrances and any restrictions on transfer; PROVIDEDprovided, HOWEVERhowever, that the Shares and the Conversion Shares may be subject to restrictions on transfer under applicable state and/or federal securities laws as set forth herein laws. The consummation of the transactions contemplated by this Agreement and the Related Agreements will not result in acceleration or other changes in the Registration Rights Agreement vesting provisions or as otherwise required other terms of any outstanding options granted by the Company. Each subsidiary of the Company is listed on Schedule 5.2 hereto, and each such laws at the time a transfer subsidiary is proposedwholly-owned.

Capitalization; Voting Rights. The authorized capital stock of the Company, immediately prior to the First Closing and the consummation of the transactions contemplated hereby, will consist of (i) 50,000,000 shares of Common Stock, par value $.001 per share, 16,622,691 shares of which are issued and outstanding, and 2,047,729 shares of which are reserved for future issuance to pursuant to the Company's Stock Option Plans, as amended and restated (the "Option Plan"), 20,084,846 shares of which are reserved for issuance upon exercise of the Initial Series F Warrants and other warrants of the Company, and (ii) 2,000,000 shares of Preferred Stock, par value $.001 per share, 400 of which are designated Series A Preferred Stock, none of which are issued and outstanding, 225 of which are designated Series B Preferred Stock, none of which are issued and outstanding, 500,000 of which are designated Series C Preferred Stock, none of which are issued and outstanding, 25,000 of which are designated Series D Preferred Stock, none of which are issued and outstanding, 65,000 of which are designated Series F Preferred Stock, 41,398.33 of which are issued and outstanding and 700,000 shares of Series A Junior Participating Preferred Stock, none of which is issued or outstanding. The authorized capital stock of the Company immediately after the First Closing, will consist of 25,000,000 (i) 50,000,000 shares of Common Stock, (par value $0.01.001 per share, 16,622,691 shares of which are issued and outstanding, and 2,047,729 shares of which are reserved for future issuance to pursuant to the Company's Stock Option Plans, as amended and restated (the "Option Plan"), 22,205,874 shares of which are reserved for issuance upon exercise of the Warrants, warrants to purchase shares of Common Stock of the Company issued pursuant to the First Series F Purchase Agreement and other warrants of the Company, and (ii) per share and 4,000,000 2,000,000 shares of Preferred Stock, (par value $0.01).001 per share, 400 of which 600,000 are designated Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock"); 1,700,000 , none of which are issued and outstanding, 225 of which are designated Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Stock") and 500,000 shares of Series D Cumulative Convertible Preferred Stock. Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, 0 shares Series A Preferred Stock (subscribed for 600,000 shares), 407,900 shares of Series B Preferred Stock, 371,438 none of which are issued and outstanding, 500,000 of which are designated Series C Preferred Stock, none of which are issued and outstanding, 25,000 of which are designated Series D Preferred Stock, none of which are issued and outstanding, 73,000 of which are designated Series F Preferred Stock, 42,398.33 of which are issued and outstanding and 700,000 shares of Series C A Junior Participating Preferred Stock and 244,898 shares Stock, none of Series D Preferred Stock will be which is issued and or outstanding. Of the authorized shares of Common StockExcept as provided in Schedule 5.3, (i) 1.4 million shares are reserved for issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for issuance to employees pursuant to the Company's 1998-B Incentive Stock Option and Non-Statutory Plan (the "1998-B Plan"), (ii) 600,000 shares are reserved for issuance upon the exercise of certain warrants, (iii) 600,000 shares are reserved for issuance upon the conversion none of the Series A Preferred Stock, (iv) 1,785,000 shares are reserved for issuance upon the conversion of the Series B Preferred Stock, and (v) 1,650,000 shares are reserved for issuance upon conversion of the Series C Preferred Stock. The Company has reserved 1,500,000 shares of its Common Stock for issuance upon conversion of the or Series D Preferred StockStock designated by the Company may be issued at any time. All issued and outstanding shares of the Company's Common Stock and other capital stock (a) have been duly authorized and validly issued, (b) are fully paid and nonassessable, and (c) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate of Designation. Each series of Preferred Stock is convertible into Common Stock on Other than the basis described in the Reports (as defined below), subject to adjustment as provided in the respective Certificate of Designation. The Conversion Shares have been duly and validly 24,193,603 shares reserved for issuance. Other than issuance under the Option Plans, the Warrants, the Initial Series F Warrants and other warrants and except as set forth in may be granted pursuant to this Section 3.3 or in Agreement and the Company's annual, quarterly and 8-K reports, filed with the Securities and Exchange Commission ("Reports")Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder stockholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. Schedule 5.3 sets forth all issued and outstanding options and warrants with an exercise price greater than $3.00 per share. Except as provided in Schedule 5.3, the Company is not a party or subject to any agreement or understanding, and, to the Company's knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company. When issued in compliance with the provisions of this Agreement and the Certificate of Designation, and upon payment of the Purchase Price the Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrancesencumbrances and any restrictions on transfer; PROVIDEDprovided, HOWEVERhowever, that the Shares and the Conversion Shares may be subject to restrictions on transfer under applicable state and/or federal securities laws as set forth herein laws. The consummation of the transactions contemplated by this Agreement and the Related Agreements will not result in acceleration or other changes in the Registration Rights Agreement vesting provisions or as otherwise required other terms of any outstanding options granted by the Company. Each subsidiary of the Company is listed on Schedule 5.2 hereto, and each such laws at the time a transfer subsidiary is proposedwholly-owned.

Capitalization; Voting Rights. The authorized capital stock of the Company, immediately prior to the First Closing, will consist of 25,000,000 of: (i) forty-five million (45,000,000) shares of Common Stock, (par value $0.01A) per share and 4,000,000 seven million two hundred five thousand (7,205,000) shares of which are issued and outstanding, (B) one million nine hundred thousand (1,900,000) shares of which are reserved for issuance to employees, officers or directors of, or consultants or advisors to, the Company (including members of the Company's Scientific Advisory Board) or any subsidiary, pursuant to stock purchase or stock option plans or other arrangements that are approved by the Board of Directors of the Company, of which shares one million one hundred seventy thousand (1,170,000) shares have been issued and are outstanding and are reflected as such in clause (i)(A) of this Section 3.2, (C) twelve million one hundred ninety thousand three hundred seventy-five (12,190,375) shares of which are reserved for issuance upon conversion into Common Stock of outstanding shares, or shares that the Company is obligated to issue pursuant to any rights or agreements outstanding as of the date hereof, of Series A Preferred Stock, (par value $0.01), of which 600,000 are designated Series A Cumulative Convertible Preferred Stock US$0.001 per share (the "Series A Preferred Stock"), and (D) one million one hundred thirty-seven thousand eight hundred fourteen (1,137,814) shares of which are reserved for issuance upon conversion of Series A Preferred Stock issuable upon exercise of the outstanding warrants for Series A Preferred Stock (the "Series A Preferred Warrants"); 1,700,000 and (ii) thirty million (30,000,000) shares of Preferred Stock, (A) thirteen million four hundred thousand (13,400,000) shares of which are designated Series A Preferred Stock, eleven million eight hundred ninety thousand three hundred seventy-five (11,890,375) shares of which are issued and outstanding, and one million one hundred thirty-seven thousand eight hundred fourteen (1,137,814) shares of which are reserved for issuance upon exercise of the Series A Preferred Warrants and three hundred thousand (300,000) shares of which are reserved for issuance pursuant to that certain Settlement Agreement by and between the Company and Beth Xxxael Deaconess Medical Center, Inc. dated as of December 31, 1997, (B) five million (5,000,000) shares of which are designated Series B Cumulative Convertible Preferred Stock Stock, par value US$0.001 per share (the "Series B Preferred Stock"); , none of which is issued and 1,225,000 outstanding, and (C) four million five hundred eighty-three thousand three hundred thirty-four (4,583,334) shares of which are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Stock") and 500,000 shares of Series D Cumulative Convertible Preferred Stock. Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, 0 shares Series A Preferred Stock (subscribed for 600,000 shares), 407,900 shares of Series B Preferred Stock, 371,438 shares none of Series C Preferred Stock and 244,898 shares of Series D Preferred Stock will be which is issued and outstanding. Of the authorized shares of Common Stock, (i) 1.4 million shares are reserved for issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for issuance to employees pursuant to the Company's 1998-B Incentive Stock Option and Non-Statutory Plan (the "1998-B Plan"), (ii) 600,000 shares are reserved for issuance upon the exercise of certain warrants, (iii) 600,000 shares are reserved for issuance upon the conversion of the Series A Preferred Stock, (iv) 1,785,000 shares are reserved for issuance upon the conversion of the Series B Preferred Stock, and (v) 1,650,000 shares are reserved for issuance upon conversion of the Series C Preferred Stock. The Company has reserved 1,500,000 shares of its Common Stock for issuance upon conversion of the Series D Preferred Stock. All issued and outstanding shares of the Company's Common Stock and Series A Preferred Stock (ax) have been duly authorized and validly issuedissued to the persons listed on Exhibit F, (by) are fully paid and nonassessable, and (cz) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate of Designation. Each series of Preferred Stock is convertible into Common Stock on the basis described in the Reports (as defined below), subject to adjustment as provided in the respective Certificate of Designation. The Conversion Shares have been duly and validly reserved for issuance. Other than as set forth in this Section 3.3 or in the Company's annual, quarterly and 8-K reports, filed with the Securities and Exchange Commission ("Reports"), there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Certificate of Designation, and upon payment of the Purchase Price the 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 Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or in the Registration Rights Agreement or as otherwise required by such laws at the time a transfer is proposed.in

Capitalization; Voting Rights. The authorized capital stock of the Company consists of: (A) 50,000,000 shares of Common Stock, par value $.00001 per share, of which, as of January 31, 2003 (the “Reference Date”), (i) 14,912,899 shares are issued and outstanding, (ii) 1,419,225 shares are subject to outstanding options, (iii) 1,245,825 shares are reserved for future issuance to employees, directors and consultants pursuant to the Company’s stock option plans, immediately (iv) 2,105,380 shares are subject to outstanding warrants, and (v) 1,173,766 shares are issuable upon conversion of outstanding convertible promissory notes; and (B) 5,000,000 shares of Preferred Stock, par value $.00001 per share, of which (i) 350,000 shares are designated Series A Preferred Stock, no shares of which are outstanding as of the Reference Date, (ii) 250,000 shares are designated Series B Preferred Stock, no shares of which are outstanding as of the Reference Date, (iii) 300,000 shares are designated as Series C Preferred Stock, 10,000 shares of which are outstanding as of the Reference Date and are convertible into 40,792 shares of Common Stock as of the Reference Date, (iv) 250,000 shares are designated Series D Preferred Stock, 85,000 of which are outstanding as of the Reference Date and (v) 350,000 shares are designated Series E Preferred Stock, none of which, prior to the Closing, will consist of 25,000,000 shares of Common Stock, (par value $0.01) per share and 4,000,000 shares of Preferred Stock, (par value $0.01), of which 600,000 are designated Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock"); 1,700,000 are designated Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Stock") and 500,000 shares of Series D Cumulative Convertible Preferred Stock. Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, 0 shares Series A Preferred Stock (subscribed for 600,000 shares), 407,900 shares of Series B Preferred Stock, 371,438 shares of Series C Preferred Stock and 244,898 shares of Series D Preferred Stock will be issued and outstanding. Of the authorized shares of Common Stock, (i) 1.4 million shares are reserved for issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for issuance to employees pursuant to the Company's 1998-B Incentive Stock Option and Non-Statutory Plan (the "1998-B Plan"), (ii) 600,000 shares are reserved for issuance upon the exercise of certain warrants, (iii) 600,000 shares are reserved for issuance upon the conversion of the Series A Preferred Stock, (iv) 1,785,000 shares are reserved for issuance upon the conversion of the Series B Preferred Stock, and (v) 1,650,000 shares are reserved for issuance upon conversion of the Series C Preferred Stock. The Company has reserved 1,500,000 shares of its Common Stock for issuance upon conversion of the Series D Preferred Stock. All issued and outstanding shares of the Company's ’s Common Stock (a) have been duly authorized and validly issued, and (b) are fully paid and nonassessable, and (c) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate Charter. 1,076,924 shares of Designation. Each series of Preferred Stock is convertible into Common Stock on the basis described in the Reports (as defined below), subject to adjustment as provided in the respective Certificate of Designation. The Conversion Shares have been duly and validly reserved for issuanceissuance as Conversion Shares, and the Company will take all reasonable measures to ensure that, at all times, a sufficient number of shares of its Common Stock are reserved for issuance upon conversion of the Shares and exercise of the Warrants. Other As of the Reference Date, other than the shares of capital stock issuable upon exercise or conversion of the foregoing outstanding options, warrants, convertible promissory notes and convertible securities, and except as set forth in may be granted pursuant to this Section 3.3 Agreement or in the Company's annual, quarterly and 8-K reports, filed with the Securities and Exchange Commission ("Reports")Warrants, there are no outstanding options, warrants, rights (including conversion conversion, anti-dilution or preemptive rights and rights of first refusal), proxy or shareholder stockholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Certificate of DesignationCharter, and upon payment of the Purchase Price the Shares Securities 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 Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or in the Registration Rights Agreement or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. The authorized capital stock of the Company, immediately prior to the Closing and the consummation of the transactions contemplated hereby, will consist of (i) 50,000,000 shares of Common Stock, par value $.001 per share, 16,622,691 shares of which are issued and outstanding, and 2,047,729 shares of which are reserved for future issuance to pursuant to the Company's Stock Option Plans, as amended and restated (the "Option Plan"), 22,727,492 shares of which are reserved for issuance upon exercise of the warrants issued pursuant to the Series F Preferred Stock Purchase Agreement dated January 18, 2001 and the Second Series F Preferred Stock and Warrant Purchase Agreement dated March 29, 2001 (collectively, the "Initial Series F Warrants") and other warrants of the Company, and (ii) 2,000,000 shares of Preferred Stock, par value $.001 per share, 400 of which are designated Series A Preferred Stock, none of which are issued and outstanding, 225 of which are designated Series B Preferred Stock, none of which are issued and outstanding, 500,000 of which are designated Series C Preferred Stock, none of which are issued and outstanding, 25,000 of which are designated Series D Preferred Stock, none of which are issued and outstanding, 73,000 of which are designated Series F Preferred Stock, 45,398.33 of which are issued and outstanding and 700,000 shares of Series A Junior Participating Preferred Stock, none of which is issued or outstanding. The authorized capital stock of the Company 4 immediately after the Closing, will consist of 25,000,000 (i) 50,000,000 shares of Common Stock, (par value $0.01.001 per share, 16,622,691 shares of which are issued and outstanding, and 2,047,729 shares of which are reserved for future issuance to pursuant to the Company's Stock Option Plans, as amended and restated (the "Option Plan"), 43,881,426 shares of which are reserved for issuance upon exercise of the Warrants (subject to the approval and filing of an amendment to the Company's Certificate of Incorporation to increase the number of shares of Common Stock the Company is authorized to issue), warrants to purchase shares of Common Stock of the Company issued pursuant to the First Series F Purchase Agreement and other warrants of the Company, and (ii) per share and 4,000,000 2,000,000 shares of Preferred Stock, (par value $0.01).001 per share, 400 of which 600,000 are designated Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock"); 1,700,000 , none of which are issued and outstanding, 225 of which are designated Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Stock") and 500,000 shares of Series D Cumulative Convertible Preferred Stock. Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, 0 shares Series A Preferred Stock (subscribed for 600,000 shares), 407,900 shares of Series B Preferred Stock, 371,438 none of which are issued and outstanding, 500,000 of which are designated Series C Preferred Stock, none of which are issued and outstanding, 25,000 of which are designated Series D Preferred Stock, none of which are issued and outstanding, 116,000 of which are designated Series F Preferred Stock, 66,398.33 of which are issued and outstanding and 700,000 shares of Series C A Junior Participating Preferred Stock and 244,898 shares Stock, none of Series D Preferred Stock will be which is issued and or outstanding. Of the authorized shares of Common StockExcept as provided in Schedule 5.3, (i) 1.4 million shares are reserved for issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for issuance to employees pursuant to the Company's 1998-B Incentive Stock Option and Non-Statutory Plan (the "1998-B Plan"), (ii) 600,000 shares are reserved for issuance upon the exercise of certain warrants, (iii) 600,000 shares are reserved for issuance upon the conversion none of the Series A Preferred Stock, (iv) 1,785,000 shares are reserved for issuance upon the conversion of the Series B Preferred Stock, and (v) 1,650,000 shares are reserved for issuance upon conversion of the Series C Preferred Stock. The Company has reserved 1,500,000 shares of its Common Stock for issuance upon conversion of the or Series D Preferred StockStock designated by the Company may be issued at any time. All issued and outstanding shares of the Company's Common Stock and other capital stock (a) have been duly authorized and validly issued, (b) are fully paid and nonassessable, and (c) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate of Designation. Each series of Preferred Stock is convertible into Common Stock on Other than the basis described in the Reports (as defined below), subject to adjustment as provided in the respective Certificate of Designation. The Conversion Shares have been duly and validly 2,047,729 shares reserved for issuance. Other than issuance under the Option Plans, the Warrants, the Initial Series F Warrants and other warrants and except as set forth in this Section 3.3 or in may be granted pursuant to the Company's annual, quarterly and 8-K reports, filed with the Securities and Exchange Commission ("Reports")Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder stockholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. Schedule 5.3 sets forth all issued and outstanding options and warrants with an exercise price greater than $3.00 per share. Except as provided in Schedule 5.3, the Company is not a party or subject to any agreement or understanding, and, to the Company's knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company. When issued in compliance with the provisions of this Agreement and the Certificate of Designation, and upon payment of the Purchase Price the Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrancesencumbrances and any restrictions on transfer; PROVIDEDprovided, HOWEVERhowever, that the Shares and the Conversion Shares may be subject to restrictions on transfer under applicable state and/or federal securities laws as set forth herein laws. The consummation of the transactions contemplated by this Agreement and the Related Agreements will not result in acceleration or other changes in the Registration Rights Agreement vesting provisions or as otherwise required other terms of any outstanding options granted by the Company. Each subsidiary of the Company is listed on Schedule 5.2 hereto, and each such laws at the time a transfer subsidiary is proposedwholly-owned.

Capitalization; Voting Rights. The authorized capital stock of the CompanyCompany consists of 50,000,000 shares, immediately prior to the Closing, will consist of 25,000,000 such shares being designated as follows: (i) 48,000,000 shares of Common Stockcommon stock, (par value $0.01) .01 per share and 4,000,000 shares of Preferred Stock, (par value $0.01), of which 600,000 are designated Series A Cumulative Convertible Preferred Stock (the "Series A Preferred Stock"); 1,700,000 are designated Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Common Stock") and 500,000 shares of Series D Cumulative Convertible Preferred Stock. Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, 0 shares Series A Preferred Stock which (subscribed for 600,000 shares), 407,900 shares of Series B Preferred Stock, 371,438 shares of Series C Preferred Stock and 244,898 shares of Series D Preferred Stock will be a) 16,405,548 are issued and outstanding. Of the authorized shares of Common Stock, outstanding and (ib) 1.4 million (1) 3,323,700 shares are reserved for issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for future issuance to employees pursuant to the Company's 1998-B Incentive 1997 Equity Compensation Plan adopted by the Company on May 21, 1997, the Company's 1988 Stock Option Plan and Non-Statutory the Company's Stock Option Plan for Directors (the "1998-B PlanStock Option Plans"), ) and (ii2) 600,000 3,000,000 shares are reserved for issuance upon pursuant to the exercise Asset Purchase Agreement, dated February 13, 2001 by and among the Company, Axial Technology Holding AG and Wyzdom Solutions, Inc. (the "Asset Purchase Agreement"); (ii) 2,000,000 shares of certain warrantspreferred stock, (iii) 600,000 par value $.01 per share, consisting of 500,000 shares are reserved for issuance upon the conversion of the Series A Convertible Preferred Stock, (iv) 1,785,000 par value $.10 per share, of which no shares are reserved for issuance upon the conversion issued and outstanding, 200,000 shares of the Series B Convertible Preferred Stock, and (v) 1,650,000 par value $.01 per share, of which no shares are reserved for issuance issued and outstanding, 250,000 shares of Series C Convertible Preferred Stock, par value $.01 per share, of which no shares are issued and outstanding, 9,500 shares of Series D Convertible Preferred Stock, par value $.01 per share, of which no shares are issued and outstanding, 1,800 shares of Series E Redeemable Preferred Stock, par value $.01 per share, of which no shares are issued and outstanding, and 3,000 shares of Series F Convertible Preferred Stock, par value $.01 per share (the "Series F Preferred Stock"), of which 3,000 shares will be upon conversion consummation of the Series C Preferred Stocktransactions contemplated hereby issued and outstanding. The Company has reserved 1,500,000 shares of its Common Stock for issuance Shares have been duly authorized, and upon conversion consummation of the Series D Preferred StockConversion, will be fully paid and non-assessable and issued in compliance with all applicable state and federal laws concerning the issuance of securities. All issued and outstanding shares of the Company's Common Stock and the Shares (ai) have been duly authorized and validly issued, (bii) are fully paid and nonassessable, nonassessable and (ciii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate Designations, which was accepted for filing by the Pennsylvania Department of DesignationState prior to the date hereof. Each series The shares of Preferred Stock is convertible into Common Stock on issuable upon conversion of the basis described in Shares pursuant to the Reports terms of the Designations (as defined below), subject to adjustment as provided in the respective Certificate of Designation. The "Conversion Shares Shares") have been duly and validly reserved for issuance. Other than as set forth in this Section 3.3 or in the Company's annual, quarterly 3,323,700 shares reserved for issuance under the Stock Option Plans and 8-K reports, filed with 3,000,000 shares of Common Stock to be issued pursuant to the Securities and Exchange Commission ("Reports")Asset Purchase Agreement, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. The Shares are free of any liens or encumbrances; provided, however, that the Shares may be subject to restrictions on transfer under state and/or federal securities laws. When issued in compliance with the provisions of this Agreement and the Certificate of DesignationDesignations, and upon payment of the Purchase Price the Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances other than liens and encumbrances; PROVIDEDprovided, HOWEVERhowever, that the Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or in the Registration Rights Agreement or as otherwise required by such laws at the time a transfer is proposedlaws.

Capitalization; Voting Rights. The authorized capital stock of the Company, immediately prior to the Closing, will consist of 25,000,000 twenty million (20,000,000) shares of Common Stock, (par value $0.01) per share and 4,000,000 shares of Preferred Stock, (par value $0.01)common stock, of which 600,000 (i) one million four hundred six thousand two hundred eighty nine (1,406,289) shares are designated Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock"); 1,700,000 are designated Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Stock") and 500,000 shares of Series D Cumulative Convertible Preferred Stock. Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, 0 shares Series A Preferred Stock (subscribed for 600,000 shares), 407,900 shares of Series B Preferred Stock, 371,438 shares of Series C Preferred Stock and 244,898 shares of Series D Preferred Stock will be issued and outstanding. Of the authorized shares of Common Stock, (iii) 1.4 million eight hundred forty five thousand nine hundred seventy (845,970) shares are reserved for issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for future issuance to employees pursuant to the Company's 1998-B Incentive Amended and Restated 1996 Stock Option and Non-Statutory Plan, (iii) seven hundred twenty one thousand seven hundred eighty (721,780) shares are subject to outstanding options pursuant to the 1996 Stock Option Plan (provided, however, the "1998Company on the date hereof shall issue to Mr. Xxxxxx Xxxxxx an option to purchase six percent (6%) of the fully diluted shares of the Company outstanding immediately after the Closing of this transaction) and (iv) ten thousand (10,000) shares are subject to outstanding warrants to purchase common stock, and eight million (8,000,000) shares of Preferred Stock, of which (A) one million three hundred one thousand four hundred (1,301,400) are designated Series A Preferred Stock, one million two hundred five thousand (1,205,000) of which are issued and outstanding and ninety-B Plan"), six thousand four hundred (ii96,400) 600,000 shares of which are reserved for issuance upon the exercise of certain warrants, (iii) 600,000 shares are reserved for issuance upon the conversion of the pursuant to outstanding warrants to purchase Series A Preferred Stock, (ivB) 1,785,000 shares one million nine hundred eighty-one thousand five hundred thirty-five (1,981,535) are reserved for issuance upon the conversion of the designated Series B Preferred Stock, one million nine hundred thirty-four thousand five hundred twenty-six (1,934,526) of which are issued and outstanding and forty-seven thousand and nine (v47,009) 1,650,000 shares of which are reserved for issuance upon conversion of the pursuant to outstanding warrants to purchase Series B Preferred Stock and (C) three million seven hundred thousand (3,700,000) are designed Series C Preferred Stock. The Company has reserved 1,500,000 shares , none of its Common Stock for issuance upon conversion which are issued and outstanding as of the Series D Preferred Stockdate immediately prior to the date hereof. All issued and outstanding shares of the Company's Common Stock common stock and preferred stock (aI) have been duly authorized and validly issuedissued to the persons listed on EXHIBIT G hereto, (bII) are fully paid and nonassessable, and (cIII) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate of Designation. Each series of Preferred Stock is convertible into Common Stock on the basis described in the Reports (as defined below), subject to adjustment as provided in the respective Certificate of DesignationRestated Certificate. The Conversion Shares have been duly and validly reserved for issuance. Other than as set forth in this Section 3.3 or in on EXHIBIT G, and except as may be granted pursuant to the Company's annual, quarterly and 8-K reports, filed with the Securities and Exchange Commission ("Reports")Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, voting agreements or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Certificate of DesignationRestated Certificate, and upon payment of the Purchase Price the 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 Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or in the Registration Rights Agreement or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. The authorized capital stock of the Company, immediately prior to the Closing, will consist of 25,000,000 shares of Common Stock, (par value $0.01) per share and 4,000,000 3,525,000 shares of Preferred Stock, (par value $0.01), of which 600,000 are designated Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock"); 1,700,000 are designated Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Stock") and 500,000 800,000 shares of Series D Cumulative Convertible Preferred Stock. Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, 0 shares Series A Preferred Stock (subscribed for 600,000 shares), 407,900 shares of Series B Preferred Stock, 371,438 shares of Series C Preferred Stock and 244,898 163,268 shares of Series D Preferred Stock will be issued and outstanding. Of the authorized shares of Common Stock, (i) 1.4 million shares are reserved for issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for issuance to employees pursuant to the Company's 1998-B Incentive Stock Option and Non-Statutory Plan (the "1998-B Plan"), (ii) 600,000 shares are reserved for issuance upon the exercise of certain warrants, (iii) 600,000 shares are reserved for issuance upon the conversion of the Series A Preferred Stock, (iv) 1,785,000 shares are reserved for issuance upon the conversion of the Series B Preferred Stock, and (v) 1,650,000 shares are reserved for issuance upon conversion of the Series C Preferred Stock. The Company has reserved 1,500,000 shares of its Common Stock for issuance upon conversion of the Series D Preferred Stock. All issued and outstanding shares of the Company's Common Stock (a) have been duly authorized and validly issued, (b) are fully paid and nonassessable, and (c) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate of Designation. Each series of Preferred Stock is convertible into Common Stock on the basis described in the Reports (as defined below), subject to adjustment as provided in the respective Certificate of Designation. The Conversion Shares have been duly and validly reserved for issuance. Other than as set forth in this Section 3.3 or in the Company's annual, quarterly and 8-K reports, filed with the Securities and Exchange Commission ("Reports"), there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Certificate of Designation, and upon payment of the Purchase Price the 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 Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or in the Registration Rights Agreement or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. The authorized capital stock of the Company, immediately prior to the first Closing, will consist of 25,000,000 shares of Common Stock, (par value $0.01) per share and 4,000,000 3,525,000 shares of Preferred Stock, (par value $0.01), of which 600,000 are designated Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock")) ; 1,700,000 are designated Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Stock") and 500,000 shares of Series D Cumulative Convertible Preferred Stock). Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, 0 shares Series A Preferred Stock (subscribed for 600,000 shares), 407,900 shares of Series B Preferred Stock, 371,438 shares of Series C Preferred Stock and 244,898 no shares of Series D Preferred Stock will be issued and outstanding. Of the authorized shares of Common Stock, (i) 1.4 million shares are reserved for issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for issuance to employees pursuant to the Company's 1998-B Incentive Stock Option and Non-Statutory Plan (the "1998-B Plan"), (ii) 600,000 shares are reserved for issuance upon the exercise of certain warrants, (iii) 600,000 shares are reserved for issuance upon the conversion of the Series A Preferred Stock, (iv) 1,785,000 shares are reserved for issuance upon the conversion of the Series B Preferred Stock, and (v) 1,650,000 shares are reserved for issuance upon conversion of the Series C Preferred Stock. The Company has reserved 1,500,000 intends to reserve 714,300 shares of its Common Stock for issuance upon conversion of the Series D Preferred Stock. All issued and outstanding shares of the Company's Common Stock (a) have been duly authorized and validly issued, (b) are fully paid and nonassessable, and (c) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate of DesignationDesignations. Each series of Preferred Stock is convertible into Common Stock on the basis described in the Reports (as defined below), subject to adjustment as provided in the respective Certificate certificate of Designationdesignations. The Conversion Shares have been duly and validly reserved for issuance. Other than as set forth in this Section 3.3 or as disclosed in the Company's annual, quarterly and 8-K reports, filed with the Securities and Exchange Commission ("Reports")Schedule 3.3 hereto, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Certificate of DesignationDesignations, and upon payment of the Purchase Price the 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 Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or in the Registration Rights Agreement or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. The authorized capital stock of the Company, immediately prior to the Closing, will consist of 25,000,000 thirty nine million eight hundred twenty one thousand four hundred forty (39,821,440) shares, twenty two million seven hundred fifty eight thousand five hundred forty six (22,758,546) shares of which shall be Common Stock (the "Common Stock, ") and seventeen million sixty two thousand eight hundred ninety four (par value $0.0117,062,894) per share and 4,000,000 shares of which shall be Preferred Stock (the "Preferred Stock"). Of the Preferred Stock, six million seven hundred thousand (par value $0.01), of which 600,000 6,700,000) shares are designated Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock" (the "Series A Preferred"); 1,700,000 , nine million thirty two thousand seven hundred eighty six (9,032,786) shares are designated Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock" (the "Series B Preferred"); and 1,225,000 , five hundred thousand (500,000) shares are hereby designated "Series S-1 Preferred Stock" (the "Series S-1 Preferred"), four hundred thirty thousand one hundred eight (430,108) shares are designated Series C Cumulative Convertible Preferred Stock ("Series C R Preferred Stock" (the "Series R Preferred"), and four hundred thousand (400,000) and 500,000 shares of are designated "Series D Cumulative Convertible T Preferred Stock" (the "Series T Preferred"). Immediately prior to On the effective date of this Agreementhereof, 5,460,449 three million seven hundred twelve thousand two hundred eighty six (3,712,286) shares of Common StockStock are issued and outstanding, 0 six million seven hundred thousand (6,700,000) shares of Series A Preferred Stock are issued and outstanding, nine million thirty two thousand seven hundred eighty six (subscribed for 600,000 shares), 407,900 9,032,786) shares of Series B Preferred StockStock are issued and outstanding, 371,438 two hundred thousand (200,000) shares of Series C S-1 Preferred Stock are issued and 244,898 outstanding, and four hundred thirty thousand one hundred eight (430,108) shares of Series D R Preferred Stock will be are issued and outstanding. Of the authorized shares of Common Stock, (i) 1.4 million shares are reserved for issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for issuance to employees pursuant to the Company's 1998-B Incentive Stock Option and Non-Statutory Plan (the "1998-B Plan"), (ii) 600,000 shares are reserved for issuance upon the exercise of certain warrants, (iii) 600,000 shares are reserved for issuance upon the conversion of the Series A Preferred Stock, (iv) 1,785,000 shares are reserved for issuance upon the conversion of the Series B Preferred Stock, and (v) 1,650,000 shares are reserved for issuance upon conversion of the Series C Preferred Stock. The Company has reserved 1,500,000 shares of its Common Stock for issuance upon conversion of the Series D Preferred Stock. All issued and outstanding shares of the Company's Common Stock capital stock (ai) have been duly authorized and validly issued, (bii) are fully paid and nonassessable, and (ciii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate of Designation. Each series of Preferred Stock is convertible into Common Stock on the basis described in the Reports (as defined below), subject to adjustment as provided in the respective Certificate of DesignationAmended and Restated Articles. The Conversion Shares have been duly and validly reserved for issuance. Other than as set forth in this Section 3.3 or in options outstanding to acquire one million three hundred eighty two thousand seven hundred eight (1,382,708) shares of Common Stock held by officers, employees and consultants of the Company's annual, quarterly and 8-K reportsthe First Amended Investor Rights Agreement between the Company, filed with certain holders of its Common Stock, and the Securities holders of its Series A Preferred Stock and Exchange Commission ("Reports")Series B Preferred Stock, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Certificate of DesignationAmended and Restated Articles, and upon payment of the Purchase Price the 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 Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or in the Registration Rights Agreement or as otherwise required by such laws at the time a transfer is proposed. Except as may be set forth in the Amended and Restated Articles, the Company has no obligation to repurchase any of its stock.