Common use of Company Capital Structure Clause in Contracts

Company Capital Structure. The authorized capital stock of the Company consists of 30,000,000 shares of Common Stock, $.001 par value, of which there were 13,738,832 shares issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof and 2,000,000 shares of Preferred Stock, $.001 par value ("Company Preferred Stock"), of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Stock are issued and outstanding as of the date hereof and there will be no such shares outstanding as of the Effective Time. The registered holders of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B Stock. The description and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors of the Company amended the Company Rights Agreement to provide that the Parent and Merger Sub are not "Acquiring Persons" as defined in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to this Agreement. All outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of the Company or any agreement or document to which the Company is a party or by which it is bound. As of the date hereof, the Company had reserved 5,515,624 shares of Company Capital Stock, net of exercises, for issuance to employees pursuant to the Company Stock Option Plans, under which options are outstanding for 4,783,397 shares of Company Capital Stock minus any options exercised on the date hereof. All shares of Company Capital Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessable. The Company Schedules include a list for each outstanding option as of the date hereof, of the following: (i) the name of the holder of such option, (ii) the number of shares subject to such option, and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value of the Company Capital Stock on the first day of the current offering period), there would be an aggregate of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure of the Company other than issuances of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase Plan.

Company Capital Structure. (a) The authorized capital stock of the Company consists of 30,000,000 (i) 25,000,000 shares of Company Common Stock, $.001 par value, of which there were 13,738,832 13,763,661 shares issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof and 2,000,000 shares of Preferred Stock, $.001 par value ("Company Preferred Stock"), of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Stock are issued and outstanding as of the date hereof and there will be no such (ii) 2,500,000 shares of Company Preferred Stock, of which 2,500,000 shares are designated Series A Preferred Stock, of which 1,852,749 are issued and outstanding as of the Effective Timedate hereof. The registered holders As of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B Stock. The description and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors capitalization of the Company amended is as set forth in Section 2.2(a) of the Disclosure Schedule. Assuming the same total capitalization as on the date hereof, the total number of shares of Company Rights Agreement Common Stock outstanding as of immediately prior to provide that the Parent Effective Time (assuming the conversion, exercise or exchange of all securities convertible into, or exercisable or exchangeable for, shares of Company Common Stock, and Merger Sub are not "Acquiring Persons" the exercise of all Company Options) will be as defined set forth in Section 2.2(a) of the Company Rights Agreement with respect to their rights to acquire Disclosure Schedule. The Company Capital Stock pursuant to this Agreementis held by the persons with the domicile addresses and in the amounts set forth in Section 2.2(a) of the Disclosure Schedule. All outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Certificate articles of Incorporation incorporation or Bylaws bylaws of the Company Company, or any agreement or document to which the Company is a party or by which it is bound. As of the date hereof, the Company had reserved 5,515,624 shares of Company Capital Stock, net of exercises, for issuance to employees pursuant to the Company Stock Option Plans, under which options are All outstanding for 4,783,397 shares of Company Capital Stock minus and Company Options have been issued or repurchased (in the case of shares that were outstanding and repurchased by the Company) in compliance with all applicable federal, state, foreign or local statutes, laws, rules or regulations, including federal and state securities laws. The Company has not, and will not have, suffer or incur any, liability (contingent or otherwise) or Loss (as defined in Section 7.2(a)) relating to or arising out of the issuance or repurchase of any options exercised on Company Capital Stock or Company Options. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of the date hereofCompany Preferred Stock are as set forth in the Company's Articles of Incorporation. All There are not outstanding any adjustments made or required to be made to the conversion rates applicable to Company Preferred Stock set forth in the Company's Articles of Incorporation. There are no declared or accrued but unpaid dividends with respect to any shares of Company Capital Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessableCommon Stock. The Company Schedules include has no other capital stock authorized, issued or outstanding. The requisite vote required to approve the Merger under applicable law, the Company's Articles of Incorporation, the Company's Bylaws, and any other agreement to which the Company or any other shareholder of the Company is bound is as follows: the affirmative vote of a list for majority of the outstanding shares of Company Common Stock and a majority of the outstanding shares of Company Preferred Stock, each outstanding option voting as a separate class. Each share of Company Preferred Stock is convertible to Company Common Stock on a one-to-two basis and as of the date hereofEffective Time, each share of Company Preferred Stock will be converted to Company Common Stock. Holders of Company Common Stock and Company Preferred Stock sufficient to approve the following: (i) the name Merger, each of the holder of such option, (ii) the number of shares subject to such option, and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value whom is an "affiliate" of the Company Capital Stock on as defined in Rule 12b-2 promulgated under the first day Securities Exchange Act of 1934, as amended (the current offering period"Exchange Act"), there would be an aggregate of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31have each executed a Voting Agreement or, 1996, there have been no changes in the capital structure case of NEC, the Company other than issuances of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase PlanShareholder Agreement.

Company Capital Structure. (a) The authorized capital stock issued Company Capital Shares consists solely of (i) 26,874,397 Company Ordinary Shares, and (ii) 98,069,431 Company Preferred Shares. There are no other issued and outstanding Company Capital Shares and no commitments or Contracts to issue any Company Capital Shares other than pursuant to the exercise of Company Options set forth on Schedule 3.5(b)-1 of the Disclosure Letter, and the Company Warrants set forth on Schedule 3.5(c) of the Disclosure Letter. The Company holds no treasury shares. Schedule 3.5(a) of the Disclosure Letter sets forth, as of the Agreement Date a true, correct and complete list of the Company consists Shareholders, and which further sets forth for each such Person: (i) the number and type of 30,000,000 shares of Common Stock, $.001 par value, of which there were 13,738,832 shares issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof and 2,000,000 shares of Preferred Stock, $.001 par value ("Company Preferred Stock"), of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Stock are issued and outstanding as of the date hereof and there will be no such shares outstanding as of the Effective Time. The registered holders of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B Stock. The description and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors of the Company amended the Company Rights Agreement to provide that the Parent and Merger Sub are not "Acquiring Persons" as defined in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to this Agreement. All outstanding shares of Company Capital Stock Shares so owned by each such Company Shareholder, (ii) the applicable stock certificate number(s) representing such shares, (iii) the extent to which the shares are Company Restricted Stock, (iv) whether any of such shares are or were eligible for an election under Section 83(b) of the Code or section 431 of ITEPA, including the date of issuance of such shares, and, to the Company’s Knowledge, whether such election under Section 83(b) of the Code or section 431 of ITEPA (as applicable) was timely made, and (v) whether any of such shares were issued upon the “early exercise” of a Company Option that was granted so as to qualify as an “incentive stock option” as defined in Section 422 of the Code. Each Company Preferred Share is convertible on a one-share for one-share basis into Company Ordinary Shares. All issued and outstanding Company Capital Shares are duly authorized, validly issued, fully paid and non-assessable and are not subject free of any Encumbrances, other than any restrictions pursuant to federal or state securities Laws outstanding subscriptions, preemptive rights or “put” or “call” rights created by statute, the Certificate of Incorporation or Bylaws of the Company Charter Documents or any agreement or document Contract to which the Company is a party or by which it the Company or any of its assets is bound. As of the date hereof, the The Company had reserved 5,515,624 shares of has never declared or paid any dividends on any Company Capital Stock, net of exercises, Shares. There is no Liability for issuance to employees pursuant to dividends accrued and unpaid by the Company Stock Option Plans, under which options are outstanding for 4,783,397 shares of Company Capital Stock minus any options exercised on the date hereof. All shares of Company Capital Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessableCompany. The Company Schedules include a list for each outstanding option as is not under any obligation to register under the Securities Act or any other Law any Company Capital Shares, any Equity Interests or any other securities of the date hereofCompany, whether currently outstanding or that may subsequently be issued. To the Knowledge of the following: (i) Company, no Company Shareholder that is a limited partnership or a limited liability company has any limited partners or members who are employees of Purchaser. All issued and outstanding Company Capital Shares and all Company Options, Company Warrants and any other securities convertible into Company Capital Shares were issued in compliance with Law and all requirements set forth in the name of the holder of such option, (ii) the number of shares subject Charter Documents and any applicable Contracts to such option, and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value of which the Company Capital Stock on the first day of the current offering period), there would be an aggregate of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure of is a party or by which the Company other than issuances or any of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase Planits assets is bound.

Company Capital Structure. (a) The authorized capital stock of the Company consists of 30,000,000 20,000,000 shares of Common Company Capital Stock, $.001 par value, of which there were 13,738,832 shares issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof and (i) 2,000,000 shares of Preferred Stock, $.001 par value are authorized as Company Class A Stock ("Company Preferred Stock"), of which 300,000 1,524,684 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Stock are issued and outstanding outstanding), and (ii) 18,000,000 shares are authorized as Company Class B Stock (of which 9,440,916 shares are issued and outstanding). There are no shares held in the treasury of the date hereof and there will be no such shares outstanding as Company. All of the Effective Time. The registered holders of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B Stock. The description issued and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors of the Company amended the Company Rights Agreement to provide that the Parent and Merger Sub are not "Acquiring Persons" as defined in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to this Agreement. All outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to any Liens, preemptive rights created by statute, the Certificate of Incorporation Charter Documents, or Bylaws of any agreement to which the Company or any agreement or document to which Subsidiary of the Company is a party or by which it is bound. As All of the date hereof, issued and outstanding equity securities of each Subsidiary of the Company had reserved 5,515,624 shares of Company Capital Stock, net of exercises, for issuance to employees pursuant to the Company Stock Option Plans, under which options are outstanding for 4,783,397 shares of Company Capital Stock minus any options exercised on the date hereof. All shares of Company Capital Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessablenon-assessable and are not subject to any Liens, preemptive rights created by statute, organizational documents, or any agreement to which the Company or any Subsidiary of the Company is a party or by which it is bound and have not been cancelled or redeemed. The As of the date hereof, the Company Schedules include a list Capital Stock is held by the Persons with the domicile addresses and in the amounts of each class as set forth on Section 3.2(a) of the Company Disclosure Schedule, which further sets forth for each such Person the number, class and series of shares held by such Person, the percentage held by such Person relative to each class or series of shares such Person owns and the total issued and outstanding option shares of Company Capital Stock as of the date hereof, of the following: (i) the name of the holder of such option, (ii) and the number of shares subject to the applicable stock certificates representing such option, and (iiishares. Except as set forth on Section 3.2(a) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value of the Company Disclosure Schedule (which provides an accurate and complete description of the vesting schedule (including any acceleration terms), the number of vested and unvested shares as of the date hereof, and each repurchase and redemption right held by the Company to which any shares of Company Capital Stock on the first day of the current offering periodare subject), there would be an aggregate are no outstanding shares of approximately 10,055 shares issuable pursuant Company Capital Stock or any equity securities of any Subsidiary of the Company that constitute restricted stock or that are otherwise subject to a repurchase or redemption right. Except as set forth on Section 3.2(a) of the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996Company Disclosure Schedule, there have been no changes in the capital structure of the Company (interim) dividends or other than issuances distributions with respect to any shares of Company Capital Stock or any equity securities of any Subsidiary of the Company, and there are no declared or accrued but unpaid (iinterim) upon dividends or other distributions with respect to any shares of Company Capital Stock or any equity securities of any Subsidiary of the exercise of options granted under Company. Except as set forth in this Section 3.2(a), the Company Stock Option Plans and (ii) pursuant to the Stock Purchase Planhas no other capital stock authorized, issued or outstanding.

Company Capital Structure. The authorized capital stock of the Company consists of 30,000,000 shares of Common Stock, $.001 par value, of which there were 13,738,832 shares issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof and 2,000,000 shares of Preferred Stock, $.001 par value ("Company Preferred Stock"), of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Stock are issued and outstanding as of the date hereof and there will be no such shares outstanding as of the Effective Time. The registered holders of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B Stock. The description and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Xxxxxx Trust and Savings BaxxBank, xs as Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors of the Company amended the Company Rights Agreement to provide that the Parent and Merger Sub are not "Acquiring Persons" as defined in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to this Agreement. All outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of the Company or any agreement or document to which the Company is a party or by which it is bound. As of the date hereof, the Company had reserved 5,515,624 shares of Company Capital Stock, net of exercises, for issuance to employees pursuant to the Company Stock Option Plans, under which options are outstanding for 4,783,397 shares of Company Capital Stock minus any options exercised on the date hereof. All shares of Company Capital Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessable. The Company Schedules include a list for each outstanding option as of the date hereof, of the following: (i) the name of the holder of such option, (ii) the number of shares subject to such option, and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value of the Company Capital Stock on the first day of the current offering period), there would be an aggregate of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure of the Company other than issuances of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase Plan.

Company Capital Structure. (a) The authorized capital stock of the Company consists of 30,000,000 1,000,000 shares of Common Stock, $.001 par value, of which there were 13,738,832 113,001 shares issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof and 2,000,000 shares of Preferred Stock, $.001 par value ("Company Preferred Stock"), of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Stock are issued and outstanding as outstanding. As of the date hereof and there will be no such shares outstanding as of the Effective Time. The registered holders of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B Stock. The description and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors capitalization of the Company amended is as set forth in Section 2.2(a)(1) of the Disclosure Schedule. Assuming the same total capitalization as on the date hereof, the total number of shares of Company Rights Agreement Common Stock outstanding as of immediately prior to provide that the Parent and Merger Sub are not "Acquiring Persons" as defined in Effective Time (assuming the Company Rights Agreement with respect to their rights to acquire conversion, exercise, or exchange of all securities convertible into, or exercisable or exchangeable for, shares of Company Capital Stock and the issuance of any Company Common Stock pursuant to this Agreementthe Company Stock Issuance Plan) will be as set forth in Section 2.2(a)(1) of the Disclosure Schedule. The Company Capital Stock is held by the persons with the domicile addresses and in the amounts set forth in Section 2.2(a)(1) of the Disclosure Schedule. All outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws Charter Documents of the Company Company, or any agreement or document to which the Company is a party or by which it is bound. As of the date hereof, the Company had reserved 5,515,624 All outstanding shares of Company Capital Stock, net of exercises, for issuance including any shares issued or to employees pursuant to be issued in connection with the Company Stock Option PlansIssuance Plan, under which and Company Warrants have been issued or repurchased (in the case of shares that were outstanding and repurchased by the Company or any Shareholder of the Company) in compliance with all applicable federal, state, foreign, or local statutes, laws, rules, or regulations, including federal and state securities laws. The Company has not, and will not have, suffered or incurred any liability (contingent or otherwise) or claim, loss, liability, damage, deficiency, cost or expense relating to or arising out of the issuance or repurchase of any Company Capital Stock or options or warrants to purchase Company Capital Stock, or out of any agreements or arrangements relating thereto (including any amendment of the terms of any such agreement or arrangement). There are outstanding for 4,783,397 no declared or accrued but unpaid dividends with respect to any shares of Company Capital Stock minus Stock. The Company has no other capital stock authorized, issued or outstanding. No vesting provisions applicable to any options exercised on the date hereof. All shares of Company Capital Stock subject Stock, to issuance as aforesaidCompany Warrants, upon issuance on the terms and conditions specified in the instruments pursuant or to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessable. The Company Schedules include a list for each outstanding option as of the date hereof, of the following: (i) the name of the holder of such option, (ii) the number of shares subject any other rights to such option, and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value of the Company Capital Stock on the first day will accelerate as a result of the current offering period), there would be an aggregate Merger or as a result of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure of the Company any other than issuances of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase Planevents.

Company Capital Structure. (a) The authorized capital stock of the Company consists of 30,000,000 shares (i) an unlimited number of Common Stock, $.001 par valueShares, of which there were 13,738,832 shares issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof and 2,000,000 shares of Preferred Stock, $.001 par value ("Company Preferred Stock"), of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Stock 20,771,503 are issued and outstanding as of the date hereof hereof, (ii) an unlimited number of preferred shares, of which none are issued and there will be no such shares outstanding as of the Effective Timedate hereof, and (iii) up to 3,333,333 of Company Preferred Shares, all of which are issued and outstanding as of the date hereof. The registered holders of Company Capital Stock have the right (Preferred Shares are convertible on a "one-share for one-share basis into Company Right") to purchase from the Company shares of Series B StockCommon Shares or may be redeemed for cash under certain conditions. The description Company Preferred Shares are held by the Persons and terms of in the Company Rights are amounts set forth in a Rights Agreement (the "Company Rights Agreement"Section 3.2(a) between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors of the Disclosure Letter, which further sets forth for each such person: (i) such Person’s address; and (ii) the number of Company amended the Company Rights Agreement to provide that the Parent and Merger Sub are not "Acquiring Persons" as defined in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to this AgreementPreferred Shares held by such Person. All outstanding shares of Company Capital Stock Shares are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of the Company Constating Documents, or any agreement or document to which the Company is a party or by which it is bound. As All outstanding options, warrants and other securities of the date hereof, the Company had reserved 5,515,624 shares of Company Capital Stock, net of exercises, for issuance to employees pursuant to the Company Stock Option Plans, under which options are outstanding for 4,783,397 shares of Company Capital Stock minus any options exercised on the date hereof. All shares of Company Capital Stock subject to issuance as aforesaid, upon issuance on the terms have been issued and conditions specified granted in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessable. The Company Schedules include a list for each outstanding option as of the date hereof, of the following: compliance with (i) the name of the holder of such optionall applicable securities laws, (ii) the number of shares subject to such optionincluding Canadian Securities Laws, and (iii) the exercise price of such option. No repricing of options has taken place since December 31other applicable Laws, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value of the Company Capital Stock on the first day of the current offering period), there would be an aggregate of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure of the Company other than issuances of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant all requirements set forth in applicable Contracts. All outstanding options, warrants and other securities of the Company have been issued, transferred or repurchased (in the case of securities that were outstanding and repurchased by the Company or any Shareholder of the Company) in compliance with all applicable federal, state, provincial, foreign, or local statutes, laws, rules, or regulations, including federal, provincial and state securities laws and the rules and policies of the TSX Venture Exchange, and were issued, transferred and repurchased (in the case of securities that were outstanding and repurchased by the Company or any Shareholder of the Company) in accordance with any right of first refusal or similar right or limitation, including those in the Constating Documents. No Shareholder has exercised any right of redemption, if any, provided in the Constating Documents with respect to the Stock Purchase PlanCompany Preferred Shares, and the Company has not received notice that any Shareholder intends to exercise such rights. There are no declared or accrued but unpaid dividends with respect to any Company Shares, and since the Interim Date, the Company has not declared or paid any dividends or declared or made any other distribution on any of its Company Shares or other securities and has not redeemed, purchased or otherwise acquired any of its shares or other securities or agreed to do any of the foregoing. No Company Shares are unvested. For purposes of this Agreement, a Company Share shall be deemed “unvested” if such share is not vested or is subject to a repurchase option, risk of forfeiture or other condition under any applicable stock restriction agreement or other agreement with the Company.

Company Capital Structure. (a) The authorized registered share capital stock of the Company consists as of immediately prior to Closing is NIS 450,000 divided into 30,000,000 shares of Common Stock, $.001 par valueCompany Shares, of which there were 13,738,832 shares issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof and 2,000,000 shares of Preferred Stock, $.001 par value ("[15,898,965] Company Preferred Stock"), of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Stock Shares are issued and outstanding as of the date hereof hereof. No Company Shares are dormant shares nor held in treasury by any member of the Company Group. The aggregate number of Company Shares issued and there will be no such shares outstanding as of the Effective Time. The registered holders of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B Stock. The description and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or immediately prior to the date hereof, the Board of Directors of the Company amended the Company Rights Agreement to provide that the Parent and Merger Sub are not "Acquiring Persons" Closing is as defined stated in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock certificate delivered pursuant to this AgreementSection ‎2.4(a). All outstanding shares of Company Capital Stock are Shares, when issued, were duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Certificate Charter Documents of Incorporation the Company, or Bylaws any agreement to which the Company is or was a party or by which it is or was bound, that were not complied with or waived. No holder of Company Shares is in default in payment of any sum referred to in Article 13 of the Charter Documents. All outstanding Company Shares have been issued (X) in compliance with all applicable securities laws and other applicable Legal Requirements, and (Y) in material compliance with all applicable requirements set forth in Contracts. The Company has not, and will not have, suffered or incurred any Liability relating to or arising out of the issuance or repurchase of any Company Shares, or out of any agreements or arrangements relating thereto (including any amendment of the terms of any such agreement or arrangement), which Liabilities have not been fully satisfied and fulfilled. There are no declared or accrued but unpaid dividends with respect to any Company Shares. Except for the Proxy and proxies given by beneficial holders of Company Shares holding such shares through brokers, authorizing their brokers to vote such Company Shares, there are no voting trusts, proxies, or other agreements or understandings with respect to the voting shares of any member of the Company or any agreement or document Group to which the Company is a party or by which it is bound. As Other than as listed in Section ‎3.2‎(a)(2) of the date hereofDisclosure Schedule, the Company had reserved 5,515,624 shares of Company Capital Stock, net of exercises, for issuance to employees pursuant to the Company Stock Option Plans, under which options there are outstanding for 4,783,397 shares of Company Capital Stock minus any options exercised on the date hereof. All shares of Company Capital Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant no agreements to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessable. The Company Schedules include a list for each outstanding option as of the date hereof, of the following: (i) the name of the holder of such option, (ii) the number of shares subject to such option, and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value any member of the Company Capital Stock on the first day of the current offering period), there would be an aggregate of approximately 10,055 shares issuable pursuant Group is a party relating to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31registration, 1996sale or transfer (including agreements relating to rights of first refusal, there have been no changes in the co-sale rights or “drag-along” rights) of any capital structure stock of any member of the Company other than issuances of Company Capital Stock Group (i) upon which shall have been terminated by and superseded with the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase PlanRegistration Rights Agreement).

Company Capital Structure. (a) The authorized capital stock of the Company consists of 30,000,000 (i) 27,500,000 shares of Company Common Stock, $.001 par value, of which there were 13,738,832 9,048,152 shares are issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof hereof, and 2,000,000 (ii) 10,100,000 shares of Preferred Company Class A Common Stock, $.001 par value ("Company Preferred Stock"), of which 300,000 10,037,808 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Stock are issued and outstanding as of on the date hereof and there will be no such shares outstanding as of the Effective Timehereof. The registered holders of Company Capital Stock have is held by the right (a "Company Right") to purchase from Persons and in the Company shares of Series B Stock. The description and terms of the Company Rights are amounts set forth in a Rights Agreement (the "Company Rights Agreement"Section 2.5(a) between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors of the Company amended Disclosure Schedule which further sets forth for each such Person the Company Rights Agreement to provide that number of shares held, class and/or series of such shares and the Parent and Merger Sub are not "Acquiring Persons" as defined in number of the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to this Agreementapplicable stock certificates representing such shares (if any). All outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are at the Effective Time will not be subject to preemptive rights created by statute, the Certificate Charter Documents, or any Company Contract. The Company does not hold any Company Capital Stock in its treasury. (b) All outstanding shares of Incorporation Company Capital Stock and Company Options have been issued or Bylaws repurchased (in the case of shares that were outstanding and repurchased by the Company or any stockholder of the Company) in compliance with all applicable Legal Requirements, and were issued, transferred and repurchased (in the case of shares that were outstanding and repurchased by the Company or any stockholder of the Company) in accordance with any right of first refusal or similar right or limitation Known to the Company. The Company has not, and will not have, suffered or incurred any liability (contingent or otherwise) or claim, loss, liability, damage, deficiency, cost or expense relating to or arising out of the issuance or repurchase of any Company Capital Stock, or out of any agreements or arrangements relating thereto (including any amendment of the terms of any such agreement or document to which arrangement). Other than the Company is a party or by which it is bound. As Capital Stock set forth in Section 2.5(a) of the date hereofDisclosure Schedule, the Company had reserved 5,515,624 has no other capital stock authorized, issued or outstanding. There are no declared or accrued but unpaid dividends with respect to any shares of Company Capital Stock. True, net correct and complete copies of exercises, for issuance to employees pursuant to the Company Stock Option Plans, under which options are outstanding for 4,783,397 shares of Company Capital Stock minus any options exercised on the date hereof. All shares of Company Capital Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessable. The Company Schedules include a list for each outstanding option as of the date hereof, of the following: (i) the name of the holder of such option, (ii) the number of shares subject to such option, and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value of the Company Capital Stock on the first day of the current offering period), there would be an aggregate of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure of the Company other than issuances of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase Plan.agreements

Company Capital Structure. (a) The authorized capital stock of the Company consists of 30,000,000 25,000,000 shares of authorized Common Stock, $.001 par value, of which there were 13,738,832 5,828,403 shares are issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof outstanding, and 2,000,000 11,665,000 shares of authorized Preferred Stock, $.001 par value Stock (the "Company Preferred Stock"). The authorized Preferred Stock consists of 1,175,000 shares of authorized Series A Preferred, all of which 300,000 shares have been designated as are issued and outstanding, 5,230,000 shares of authorized Series B Participating Preferred Stock ("Series B Stock"). No Preferred, all of which shares of the Company Preferred Stock are issued and outstanding as and 5,250,000 shares of the date hereof authorized Series C Preferred, of which 5,000,000 shares are issued and there outstanding. It is contemplated that all outstanding shares of Preferred Stock will be no such converted into an equal number of shares outstanding as of Company Common Stock immediately prior to the Effective Time. The registered holders Company Capital Stock, including all shares subject to the Company's right of repurchase, is held of record by the persons, with the addresses of record and in the amounts set forth on SCHEDULE 2.3(a). SCHEDULE 2.3(a) also indicates for each Company shareholder whether any shares of Company Capital Stock have held by such shareholder are subject to a repurchase right in favor of the right (a "Company Right") Company, the lapsing schedule for any such restricted shares, including whether the lapsing is subject to purchase from acceleration by the transactions contemplated by this Agreement. Except as provided in that certain Amended and Restated Investors Rights Agreement dated as of June 11, 1998 among the Company shares of Series B Stock. The description and terms of the Company Rights are set forth in a Rights Agreement Investors (the as defined therein)(the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxx), xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors of the Company amended the Company Rights Agreement to provide that the Parent and Merger Sub are not "Acquiring Persons" as defined in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to this Agreement. All all outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Certificate Articles of Incorporation or Bylaws of the Company or any agreement or document to which the Company is a party or by which it is bound. As All preferential rights of the date hereof, Preferred Stock in connection with the sale of substantially all of the assets of the Company had reserved 5,515,624 shares of Company Capital Stock, net of exercises, for issuance to employees pursuant to or a merger involving the Company Stock Option Plans, under which options are set forth in the Articles of Incorporation of the Company. All issued and outstanding for 4,783,397 shares of Company Capital Stock minus any options exercised on the date hereof. All shares of Company Capital Stock subject to issuance as aforesaid, upon issuance on the terms have been offered and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessable. The Company Schedules include a list for each outstanding option as of the date hereof, of the following: (i) the name of the holder of such option, (ii) the number of shares subject to such option, and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value of sold by the Company Capital Stock on the first day of the current offering period), there would be an aggregate of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan in compliance with applicable federal and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure of the Company other than issuances of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase Planstate securities laws or exemptions therefrom.

Company Capital Structure. (a) The authorized capital stock of the Company consists of 30,000,000 (i) Ten Million (10,000,000) shares of Common Stock, $.001 par value, of which there Nine Hundred Eighteen Thousand Three Hundred Ninety-Eight (918,398) shares were 13,738,832 shares issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof March 21, 2001 and 2,000,000 (ii) no shares of Preferred Stock, $.001 par value ("Company Preferred Stock"). As of March 21, of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares 2001, the capitalization of the Company was as set forth in Section 2.2(a) -------------- of the Disclosure Schedule. Upon the filing of the Company's Restated Articles of Incorporation in connection with Parent's investment in the Company, the total number of shares of Company Common Stock and Company Preferred Stock are issued and outstanding as of immediately prior to the date hereof and there Effective Time (assuming neither the conversion, exercise or exchange of all securities convertible into, or exercisable or exchangeable for, shares of Company Common Stock, nor the exercise of any Company Options) will be no such shares outstanding as set forth in Section 2.2(a) of the Effective Time-------------- Disclosure Schedule. The registered holders of Company Capital Stock have is held by the right (a "Company Right") to purchase from persons with the Company shares of Series B Stock. The description domicile addresses and terms of in the Company Rights are amounts set forth in a Rights Agreement (the "Company Rights Agreement"Section 2.2(a) between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors of the Company amended the Company Rights Agreement to provide that the Parent and Merger Sub are not "Acquiring Persons" as defined in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to this Agreement-------------- Disclosure Schedule. All outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Certificate articles of Incorporation incorporation or Bylaws bylaws of the Company Company, or any agreement or document to which the Company is a party or by which it is bound. As of the date hereof, the Company had reserved 5,515,624 shares of Company Capital Stock, net of exercises, for issuance to employees pursuant to the Company Stock Option Plans, under which options are All outstanding for 4,783,397 shares of Company Capital Stock minus and Company Options have been issued or repurchased (in the case of shares that were outstanding and repurchased by the Company) in compliance with all applicable federal, state, foreign or local statutes, laws, rules or regulations, including federal and state securities laws. The Company has not, and will not have, suffer or incur any, liability (contingent or otherwise) or Loss (as defined in Section 7.2(a)) -------------- relating to or arising out of the issuance or repurchase of any options exercised on Company Capital Stock or Company Options. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of the date hereofCompany Preferred Stock are as set forth in the Company's Articles of Incorporation. All There are not outstanding any adjustments made or required to be made to the conversion rates applicable to Company Preferred Stock set forth in the Company's Articles of Incorporation. There are no declared or accrued but unpaid dividends with respect to any shares of Company Capital Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessableCommon Stock. The Company Schedules include a list for each outstanding option as has no other capital stock authorized, issued or outstanding. The requisite vote required to approve the Merger under applicable law, the Company's Articles of Incorporation, the date hereof, of the following: (i) the name of the holder of such option, (ii) the number of shares subject to such optionCompany's Bylaws, and (iii) any other agreement to which the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value Company or any other shareholder of the Company Capital Stock on the first day is bound is as follows: a majority of the current offering period), there would votes entitled to be an aggregate of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure of the Company other than issuances of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase Plancast.

Company Capital Structure. (a) The authorized capital stock of the Company consists of 30,000,000 15,000 shares of Common Stock, $.001 par value, of which there were 13,738,832 1,450 shares issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof and 2,000,000 shares of Preferred Stock, $.001 par value ("Company Preferred Stock"), of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Stock are issued and outstanding as of the date hereof and there will be no such shares outstanding as hereof. As of the Effective Time. The registered holders of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B Stock. The description and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors capitalization of the Company amended is as set forth in Section 2.2(a) of the Disclosure Schedule. Assuming the same -------------- total capitalization as on the date hereof, the total number of shares of Company Rights Agreement Common Stock outstanding as of immediately prior to provide that the Parent Effective Time (assuming the conversion, exercise or exchange of all securities convertible into, or exercisable or exchangeable for, shares of Company Common Stock, but not including the exercise of all Company Options) will be as set forth in Section 2.2(a) of the Disclosure Schedule. The issued and Merger Sub are not "Acquiring Persons" as defined outstanding Company -------------- Common Stock is held by the Stockholders with the domicile addresses and in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to this Agreementamounts set forth in Section 2.2(a) of the Disclosure Schedule. All Except as -------------- provided in Section 2.2(a) of the Disclosure Schedule, all outstanding shares of -------------- Company Capital Common Stock are duly authorized, validly issued, fully paid and non-non- assessable and are not subject to preemptive rights created by statute, the Certificate certificate of Incorporation incorporation or Bylaws bylaws of the Company Company, or any agreement or document to which the Company is a party or by which it is bound, and have been issued in compliance with federal and state securities laws. As of the date hereof, the Company had reserved 5,515,624 All outstanding shares of Company Capital Common Stock have been issued in compliance with all applicable federal, state, foreign, or local statues, laws, rules, or regulations, including federal and state securities laws. The Company has not, and will not have, suffered or incurred any liability (contingent or otherwise) or Loss (as defined in Section ------- 7.2 hereof) relating to or arising out of the issuance or repurchase of any --- Company Common Stock, net or out of exercises, for issuance any agreements or arrangements relating thereto. There are no declared or accrued but unpaid dividends with respect to employees pursuant to the Company Stock Option Plans, under which options are outstanding for 4,783,397 any shares of Company Capital Stock minus any options exercised on Common Stock. The Company has no other capital stock authorized, issued or outstanding. Except as provided in Section 2.2(a) of the date hereof. All Disclosure Schedule, -------------- no shares of Company Capital Common Stock are subject to issuance as aforesaid, upon issuance on a right of repurchase by the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessable. The Company Schedules include a list for each outstanding option as of the date hereof, of the following: (i) the name of the holder of such option, (ii) the number of shares subject to such option, and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value of the Company Capital Stock on the first day of the current offering period), there would be an aggregate of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure of the Company other than issuances of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase PlanCompany.

Company Capital Structure. (a) The authorized capital stock of the Company consists of 30,000,000 15,000,000 shares of authorized Common Stock, $.001 par value, of which there were 13,738,832 5,754,279 shares are issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof outstanding, and 2,000,000 5,000,000 shares of authorized Preferred Stock (the “Preferred Stock, $.001 par value ("Company Preferred Stock"), ”) of which 300,000 875,000 shares have been designated as Series B Participating A Preferred Stock ("Series B Stock"). No and 437,063 shares of the Company Series A Preferred Stock are issued and outstanding outstanding. The Company has reserved 10,000 shares of Company Preferred Stock for issuance upon exercise of the Preferred Warrant. Schedule 2.3(a) of the Company Schedules sets forth the name of the holder of the Preferred Warrant and exercise price of such Warrant. The Company Capital Stock, including all shares subject to the Company’s right of repurchase, is held of record by the persons, with the addresses of record and in the amounts set forth on Schedule 2.3(a) of the Company Schedules. Schedule 2.3(a) of the Company Schedules also indicates for each Company shareholder (i) the share certificate numbers held by such person and (ii) whether any shares of Company Capital Stock held by such shareholder are subject to a repurchase right in favor of the Company, the lapsing schedule for any such restricted shares, including the extent to which any such repurchase right has lapsed as of the date hereof of this Agreement and there whether (and to what extent) the lapsing will be no such shares outstanding as of accelerated by the Effective Time. The registered holders of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B Stock. The description and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors of the Company amended the Company Rights Agreement to provide that the Parent and Merger Sub are not "Acquiring Persons" as defined in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to transactions contemplated by this Agreement. All outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Certificate Articles of Incorporation or Bylaws of the Company or any agreement or document to which the Company is a party or by which it is bound. As All preferential rights of the date hereof, Company Preferred Stock in connection with the sale of substantially all of the assets of the Company had reserved 5,515,624 shares of Company Capital Stock, net of exercises, for issuance to employees pursuant to or a merger involving the Company Stock Option Plans, under which options are set forth in the Articles of Incorporation of the Company. All issued and outstanding for 4,783,397 shares of Company Capital Stock minus any options exercised on have been offered, sold and delivered by the date hereof. All shares of Company Capital Stock subject to issuance as aforesaidin compliance with applicable federal and state securities laws and the Preferred Warrant has been offered, upon issuance on the terms issued and conditions specified delivered in the instruments pursuant to which they are issuablecompliance with applicable federal and state securities laws and all requirements set forth in applicable contracts, shall be duly authorized, validly issued, fully paid agreements and nonassessableinstruments. The Company Schedules include a list for each outstanding option as holder of the date hereofPreferred Warrant has been or will be given, of the following: (i) the name of the holder of such optionor shall have properly waived, (ii) the number of shares subject to such option, and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value of the Company Capital Stock on the first day of the current offering period), there would be an aggregate of approximately 10,055 shares issuable pursuant any required notice prior to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure of the Company other than issuances of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase PlanMerger.

Company Capital Structure. The authorized capital stock of the Company consists of 30,000,000 50,000,000 shares of Common Stock, par value $.001 par valueper share, of which there were 13,738,832 24,474,818 shares issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof September 1, 2000, and 2,000,000 5,000,000 shares of Preferred Stock, par value $.001 par value ("Company Preferred Stock")per share, of which 300,000 no shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Stock are issued and or outstanding as of the date hereof and there will be no such shares outstanding as of the Effective Time. The registered holders of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B Stock. The description and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings BaxxSeptember 1, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors of the Company amended the Company Rights Agreement to provide that the Parent and Merger Sub are not "Acquiring Persons" as defined in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to this Agreement2000. All outstanding shares of Company Capital Common Stock are duly authorized, validly issued, fully paid paid, and non-assessable nonassessable, and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of the Company Company, or any agreement or document to which the Company is a party or by which it is bound. As of the date hereofClosing, the there is no Company stock option plan or other incentive plan. As of September 1, 2000, Company had reserved 5,515,624 an aggregate of approximately 5,100,000 shares of Company Capital Stock, net of exercises, Common Stock for issuance to employees pursuant holders of warrants to the purchase Company Common Stock Option Plans, under which ("COMPANY WARRANTS") and Company options are outstanding for 4,783,397 shares of to purchase Company Capital Stock minus any options exercised on the date hereofcommon stock. All shares of Company Capital Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, shall would be duly authorized, validly issued, fully paid paid, and nonassessable. The Schedule 2.2 of the Company Schedules include a list for Schedule lists (i) each outstanding option as to acquire shares of the date hereofCompany Common Stock at September 1, of the following: (i) 2000, the name of the holder of such option, (ii) the number of shares subject to such option, and (iii) the exercise price of such option. No repricing , the number of options has taken place since December 31shares as to which such option will have vested at such date, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming vesting schedule for such option and whether the purchase price exercisability of such shares to option will be 85% accelerated in any way by the transactions contemplated by this Agreement or for any other reason, and indicates the extent of the fair market value of the Company Capital Stock on the first day of the current offering period)acceleration, there would be an aggregate of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31if any, 1996, there have been no changes in the capital structure of the Company other than issuances of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant each outstanding Company Warrant at September 1, 2000, the name of the holder of such Company Warrant, the number of shares subject to such Company Warrant, the Stock Purchase Planexercise price of such Company Warrant, the number of shares as to which such Company Warrant will have vested at such date, the vesting schedule for such Company Warrant and whether the exercisability of such Company Warrant will be accelerated in any way by the transactions contemplated by this Agreement or for any other reason, and indicates the extent of acceleration, if any.

Company Capital Structure. (a) The authorized capital stock Shares set forth on Section ‎5.2(a)(i) of the Company consists of 30,000,000 Disclosure Schedule are the only shares of Common Stock, $.001 par value, the share capital of which there were 13,738,832 shares the Company issued and outstanding outstanding, and, as of the date hereof plus any shares issued on Closing Date, the date hereof upon exercise of options outstanding on the date hereof and 2,000,000 shares of Preferred Stock, $.001 par value ("Company Preferred Stock"), of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No has no shares of the Company Preferred Stock are issued and outstanding as share capital of the date hereof and there will be no Company, other than such shares outstanding as Shares, authorized, issued or outstanding. As of the Effective Time. The registered holders of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B Stock. The description and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors Company Securities are held by the Persons with the registered addresses and in the numbers as set forth on Section ‎5.2(a)(ii) of the Company amended the Company Rights Agreement to provide that the Parent and Merger Sub are not "Acquiring Persons" as defined in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to this AgreementDisclosure Schedule. All issued and outstanding shares of Company Capital Stock Shares are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws Charter Documents of the Company Company, or any agreement or document Contract to which the Company is a party or by which it is boundbound (save for the Shareholders Agreement which will be terminated with regard to the Securityholders on the Closing Date subject to Closing occurring), and have been issued in compliance with all applicable Laws. As All certificates representing Shares have been correctly and validly issued and not been cancelled. Neither the Company nor any of the Company Subsidiaries has or will have suffered or incurred any Liability, arising out of the issuance, redemption, or repurchase of any Company Securities or the repayment, conversion or purported conversion of the Company Promissory Notes, or out of any Contracts or arrangements relating to any of the Company Securities (including any amendment of the terms of any such Contract or arrangement). Except as contemplated in this Agreement, there are no declared or accrued but unpaid dividends with respect to any of the Shares. A complete and detailed description of the capitalization of each of the Company Subsidiaries, including the names and amounts held by the holders of interests in each of the Company Subsidiaries as of the date hereof, is set forth on Section ‎5.2(a)(iv) of the Company had reserved 5,515,624 Disclosure Schedule. All issued and outstanding shares of Company Capital Stock, net of exercises, for issuance to employees pursuant to or equity interests in the Company Stock Option Plans, under which options Subsidiaries are outstanding for 4,783,397 shares of Company Capital Stock minus any options exercised on the date hereof. All shares of Company Capital Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessable. The Company Schedules include a list for each outstanding option as of the date hereof, of the following: (i) the name of the holder of such option, (ii) the number of shares non-assessable and are not subject to such optionpreemptive rights created by statute, and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value organizational documents of the Company Capital Stock on the first day of the current offering period)Subsidiaries, there would be an aggregate of approximately 10,055 shares issuable pursuant or any Contract to the Stock Purchase Plan which a Company Subsidiary is a party or by which it is bound, and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes issued in the capital structure of the Company other than issuances of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase Plancompliance with all applicable Laws.

Company Capital Structure. The authorized capital stock of the Company ------------------------- consists of 30,000,000 20,000,000 shares of Common Stock, $.001 par valuecapital stock, of which there were 13,738,832 10,000,000 shares issued are designated Company Common Stock and 10,000,000 shares are designated Preferred Stock. There are no shares of Preferred Stock outstanding as of the date hereof plus hereof, there has never been any shares issued on the date hereof upon exercise of options outstanding on the date hereof and 2,000,000 shares of Preferred StockStock actually or effectively issued since the date of incorporation of the Company, $.001 par value ("Company Preferred Stock"), of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No and 5,917,625 shares of the Company Preferred Common Stock are issued and outstanding as of the date hereof and there will be no such shares outstanding as hereof. As of the Effective Time. The registered holders of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B Stock. The description and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors capitalization of the Company amended is as set forth on Schedule -------- 3.2(a). Assuming the same total capitalization as on the date hereof, the total ------ number of shares of Company Rights Agreement Common Stock outstanding as of immediately prior to provide that the Parent Effective Time (assuming the conversion, exercise or exchange of all securities convertible into, or exercisable or exchangeable for, shares of Company Common Stock, including without limitation the exercise of all vested Company Options and Merger Sub are not "Acquiring Persons" warrants) will be as defined set forth in Schedule 3.2(a). The --------------- Company Common Stock is held by the persons with the domicile addresses and in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to this Agreementamounts set forth on Schedule 3.2(a). All outstanding --------------- shares of Company Capital Common Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Certificate Articles of Incorporation or Bylaws of the Company Company, or any agreement or document to which the Company is a party or by which it is bound. As of the date hereof, the Company had reserved 5,515,624 All outstanding shares of Company Capital Common Stock, net Company Common Stock issued upon exercise of exercises, for issuance Company Options and warrants and Company Options and warrants have been issued or repurchased (in the case of shares that were outstanding and repurchased by the Company) in compliance with all applicable federal and state securities laws. There are no declared or accrued but unpaid dividends with respect to employees pursuant to the Company Stock Option Plans, under which options are outstanding for 4,783,397 any shares of Company Capital Stock minus Common Stock. The Company has no other capital stock authorized, issued or outstanding. The requisite vote required to approve the Merger under applicable law, the Company's Articles of Incorporation, Bylaws and any options exercised on other agreement to which the date hereofCompany or any other Shareholder is bound is the holders of a majority of the outstanding Company Common Stock. All Holders of more than 75% of the outstanding shares of Company Capital Common Stock subject to issuance as aforesaid, upon issuance on have executed the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessable. The Company Schedules include a list for each outstanding option Voting Agreement as of the date hereof, of the following: (i) the name of the holder of such option, (ii) the number of shares subject to such option, and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value of the Company Capital Stock on the first day of the current offering period), there would be an aggregate of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure of the Company other than issuances of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase Plan.

Company Capital Structure. (a) The authorized capital stock Company Units are owned by the Persons and in the amounts set forth on Section 2.2(a) of the Disclosure Schedule, which further sets forth, for each such Person, (A) such Person’s address; (B) the number of Company consists of 30,000,000 shares of Units held by such Person (including whether such Company Units are Company Common StockUnits, $.001 par valueCompany Class A Preferred Units, of which there were 13,738,832 shares issued Company Class B Preferred Units or Company Class C Units); (C) the liquidation preference applicable to each Company Class A Preferred Unit and outstanding as of Company Class B Preferred Unit held by such Person, if any; (D) the date hereof plus any shares issued on of acquisition of such units, (E) the date hereof upon exercise Pro Rata Portion applicable to such Person; (F) the amount of options outstanding on the date hereof and 2,000,000 shares of Preferred Stock, $.001 par value ("Company Preferred Stock"), of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Stock are issued and outstanding as of the date hereof and there will cash to be no such shares outstanding as of the Effective Time. The registered holders of Company Capital Stock have the right (a "Company Right") paid to purchase from the Company shares of Series B Stock. The description and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors of the Company amended the Company Rights Agreement to provide that the Parent and Merger Sub are not "Acquiring Persons" as defined in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock each holder pursuant to this AgreementSection 1.6; and (G) the amount of cash, if any, to be paid by or on behalf of such Person in settlement of Tax withholding obligations pursuant to Section 1.6(d). All outstanding shares of Company Capital Stock Units are duly authorized, validly issued, fully paid and non-assessable and and, except as set forth on Section 2.2(a) of the Disclosure Schedule, are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of the Company Charter Documents or any agreement or document to which the Company is a party or by which it is bound. As All outstanding Company Units and Company Options have been issued or repurchased (in the case of Company Units or Company Options that were outstanding and repurchased by the Company or any Unitholder) in compliance with all applicable federal, state, foreign, or local statutes, Laws, rules or regulations, including federal and state securities Laws, and were issued, transferred and repurchased (in the case of Company Units or Company Options that were outstanding and repurchased by the Company or any Securityholder) in accordance with any right of first refusal or similar right or limitation, including those in the Charter Documents. Except as set forth on Section 2.2(a) of the date hereofDisclosure Schedule, no Securityholder has exercised any right of redemption, if any, provided for in the Operating Agreement with respect to Company Class A Preferred Units or Company Class B Preferred Units, and the Company had reserved 5,515,624 shares has not received notice that any Securityholder intends to exercise such rights. Except as set forth on Section 2.2(a) of the Disclosure Schedule, no Company Capital StockUnits are unvested. For purposes of this Agreement, net of exercises, for issuance a Company Unit shall be deemed to employees pursuant to the be “unvested” if such Company Stock Option Plans, under which options are outstanding for 4,783,397 shares of Company Capital Stock minus any options exercised on the date hereof. All shares of Company Capital Stock Unit is not vested or is subject to issuance a repurchase option, risk of forfeiture or other condition under any applicable unit restriction agreement or other agreement with the Company. Except as aforesaid, upon issuance set forth on the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessable. The Company Schedules include a list for each outstanding option as Section 2.2(a) of the date hereofDisclosure Schedule, of the following: (i) the name of the holder of such option, (ii) the number of shares subject to such option, and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value there are no other “membership interests” of the Company Capital Stock and no outstanding commitments to issue any membership interests after the date of this Agreement. For purposes of this Agreement, a “membership interest” shall be deemed to be an Interest (as such term is defined in the Operating Agreement). Except as set forth on the first day Section 2.2(a) of the current offering period)Disclosure Schedule, there would be an aggregate of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure membership interests of the Company other than issuances are free and clear of Company Capital Stock (i) upon any pledge, lien, security interest, encumbrance, claim or equitable interest, and are not subject to preemptive rights, rights of first refusal, rights of first offer or similar rights created by statute, the exercise of options granted under Operating Agreement or any agreement to which the Company Stock Option Plans is a party or to which it is bound. All of the issued and (ii) pursuant outstanding Company Units have been offered, issued and sold by the Company in compliance with all applicable federal and state securities or “blue sky” Laws. There is no indebtedness having the right to vote on any matters on which the Stock Purchase PlanMembers may vote.

Company Capital Structure. The authorized capital stock (a) Subject to the implementation of the Company Reorganization pursuant to Article X hereof, the authorized share capital of the Company --------- consists of 30,000,000 shares an unlimited number of Common Stock, $.001 par valuecommon shares, of which there were 13,738,832 only 32,725,490 common shares issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof and 2,000,000 shares of Preferred Stock, $.001 par value ("Company Preferred Stock"), of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Stock are issued and outstanding as of the date hereof and there will be no such shares outstanding as hereof. As of the Effective Time. The registered holders of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B Stock. The description and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors capitalization of the Company amended is as set forth in Section 2.2(a) of -------------- the Disclosure Schedule. The total number of Company Securities outstanding as of immediately prior to the Closing (assuming the conversion, exercise or exchange of all securities, including the Company Rights Agreement to provide Convertible Debenture and the Shareholder Convertible Debentures, convertible into, or exercisable or exchangeable for, Company Shares, the exercise of all Company Options and that the Parent Company Reorganization provided for in Article X is not implemented) will be --------- as set forth in Section 2.2(a) of the Disclosure Schedule indicating in each -------------- case the taxpayer identification number of, and Merger Sub the country in which such persons are not "Acquiring Persons" as defined resident for tax purposes. The Company Securities are held by the persons with the domicile addresses and in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to this Agreementamounts set forth in Section ------- 2.2(a) of the Disclosure Schedule. All outstanding shares of Company Capital Stock Shares are duly ------ authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation articles or Bylaws by-laws of the Company (as amended from time to time), or any agreement or document to which the Company is a party or by which it is bound, and have been issued in compliance with all applicable securities laws. As of the date hereofSchedule A sets forth, the Company had reserved 5,515,624 shares of Company Capital Stock, net of exercises, for issuance to employees pursuant to the Company Stock Option Plans, under which options are outstanding for 4,783,397 shares of Company Capital Stock minus any options exercised on the date hereof. All shares of Company Capital Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessable. The Company Schedules include a list for each outstanding option as of the date hereof, all of the following: (i) the name of the holder of such option, (ii) the number of shares subject to such option, and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value ---------- holders of the Company Capital Stock on Shares and the first day amount of Company Shares owned by each such Shareholder. All outstanding Company Securities and Company Options have been issued or repurchased (in the case of shares that were outstanding and repurchased by the Company or any shareholder of the current offering period)Company) in compliance with all applicable federal, there would be an aggregate state, provincial, foreign, or local statutes, laws, rules, or regulations, including all applicable securities laws. The Company has not, and will not have, suffered or incurred any liability (contingent or otherwise) or Loss (as defined in Section 7.2 hereof) relating to or arising out ----------- of approximately 10,055 shares issuable pursuant the issuance or repurchase of any Company Securities or Company Options, or out of any agreements or arrangements relating thereto. There are no declared or accrued but unpaid dividends with respect to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure any of the Company Shares. The Company has no shares in its capital authorized, issued or outstanding other than issuances the Company Shares. No vesting provisions applicable to any shares of Company Capital Stock (i) upon Restricted Shares, to Company Options, or to any other rights to purchase Company Shares will accelerate as a result of the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase PlanAcquisition.

Company Capital Structure. (a) The authorized capital stock of the Company consists of 30,000,000 (i) Ten Million (10,000,000) shares of Common Stock, $.001 par value, of which there were 13,738,832 One Million Forty-Six Thousand Twenty-Nine (1,046,029) shares issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof and 2,000,000 shares of Preferred Stock, $.001 par value ("Company Preferred Stock"), of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Stock are issued and outstanding as of the date hereof and there will be (ii) no such shares outstanding as of the Effective Time. The registered holders of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B Preferred Stock. The description and terms As of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors capitalization of the Company amended is as set forth in Section 2.2(a) of -------------- the Company Rights Agreement to provide that Disclosure Schedule. Upon the Parent and Merger Sub are not "Acquiring Persons" as defined filing of the Company's Restated Articles of Incorporation in connection with Parent's investment in the Company, the total number of shares of Company Rights Agreement with respect Common Stock and Company Preferred Stock outstanding as of immediately prior to their rights to acquire the Effective Time (assuming neither the conversion, exercise or exchange of all securities convertible into, or exercisable or exchangeable for, shares of Company Common Stock, nor the exercise of any Company Options) will be as set forth in Section 2.2(a) of the Disclosure -------------- Schedule. The Company Capital Stock pursuant to this Agreementis held by the persons with the domicile addresses and in the amounts set forth in Section 2.2(a) of the Disclosure -------------- Schedule. All outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Certificate articles of Incorporation incorporation or Bylaws bylaws of the Company Company, or any agreement or document to which the Company is a party or by which it is bound. As of the date hereof, the Company had reserved 5,515,624 shares of Company Capital Stock, net of exercises, for issuance to employees pursuant to the Company Stock Option Plans, under which options are All outstanding for 4,783,397 shares of Company Capital Stock minus and Company Options have been issued or repurchased (in the case of shares that were outstanding and repurchased by the Company) in compliance with all applicable federal, state, foreign or local statutes, laws, rules or regulations, including federal and state securities laws. The Company has not, and will not have, suffer or incur any, liability (contingent or otherwise) or Loss (as defined in Section 7.2(a)) --------------- relating to or arising out of the issuance or repurchase of any options exercised on Company Capital Stock or Company Options. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of the date hereofCompany Preferred Stock are as set forth in the Company's Articles of Incorporation. All There are not outstanding any adjustments made or required to be made to the conversion rates applicable to Company Preferred Stock set forth in the Company's Articles of Incorporation. There are no declared or accrued but unpaid dividends with respect to any shares of Company Capital Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessableCommon Stock. The Company Schedules include a list for each outstanding option as has no other capital stock authorized, issued or outstanding. The requisite vote required to approve the Merger under applicable law, the Company's Articles of Incorporation, the date hereof, of the following: (i) the name of the holder of such option, (ii) the number of shares subject to such optionCompany's Bylaws, and (iii) any other agreement to which the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value Company or any other shareholder of the Company Capital Stock on the first day is bound is as follows: a majority of the current offering period), there would votes entitled to be an aggregate of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure of the Company other than issuances of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase Plancast.

Company Capital Structure. (a) The authorized capital stock of the Company consists of 30,000,000 15,000,000 shares of Common Stock, $.001 par value, of which there were 13,738,832 11,354,600 shares issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof and 2,000,000 shares of Preferred Stock, $.001 par value ("Company Preferred Stock"), of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Stock are issued and outstanding as of the date hereof and there will be no such shares outstanding as hereof. As of the Effective TimeTHE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. The registered holders of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B StockCONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. The description and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board capitalization of Directors Company is as set forth in Schedule 2.2(a) of the Company amended the Company Rights Agreement to provide that the Parent and Merger Sub are not "Acquiring Persons" as defined in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to this AgreementDisclosure Schedule. All outstanding shares of Company Capital Common Stock are duly authorized, validly issued, fully paid and non-assessable and are free of any Liens and not subject to preemptive rights or rights of first refusal created by statute, the Certificate articles of Incorporation incorporation or Bylaws bylaws of the Company Company, or any agreement or document to which the Company is a party or by which it is bound. As All of the date hereof, the Company had reserved 5,515,624 issued and outstanding shares of Company Capital StockCommon Stock are owned by the persons in the amounts set forth in Schedule 2.2(a) of the Company Disclosure Schedule, net subject to the exercise of exercises, for issuance Company Options which were issued prior to employees the date of this Agreement and the existence of which are disclosed pursuant to Section 2.2(b) below, which exercise is disclosed to Parent promptly and in any event before the Company Stock Option Plans, under which options are Effective Time. All outstanding for 4,783,397 shares of Company Capital Common Stock minus and Company Options have been issued and, in the case of shares that were outstanding and repurchased by Company or any options exercised shareholder of Company, repurchased in compliance with all applicable federal, state, foreign, or local statues, laws, rules, or regulations, including federal and state securities laws except as would not either individually or in the aggregate, have a Material Adverse Effect on Company. Company has not, and will not have, suffered or incurred any liability (contingent or otherwise) or loss relating to or arising out of the date hereofissuance or repurchase of any Company Common Stock or Company Options except as would not either individually or in the aggregate, have a Material Adverse Effect on Company. All There are no declared or accrued but unpaid dividends with respect to any shares of Company Capital Common Stock subject to issuance as aforesaid, upon issuance on that will be payable after the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly Closing. Company has no other capital stock authorized, validly issued, fully paid and nonassessable. The Company Schedules include a list for each outstanding option as of the date hereof, of the following: (i) the name of the holder of such option, (ii) the number of shares subject to such option, and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value of the Company Capital Stock on the first day of the current offering period), there would be an aggregate of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure of the Company other than issuances of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase Planissued or outstanding.

Company Capital Structure. (a) The authorized capital stock of the Company consists of 30,000,000 45,000,000 shares of Company Common Stock and 5,000,000 shares of Company Preferred Stock, $.001 par value, of which there were 13,738,832 shares issued and outstanding as . As of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof and 2,000,000 this Agreement, (i) 13,863,694 shares of Preferred Stock, $.001 par value ("Company Preferred Stock"), of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Common Stock are issued and outstanding as of the date hereof and there will be no such shares outstanding as of the Effective Time. The registered holders of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B Stock. The description and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxxoutstanding, xs Rights Agent, a true and correct copy all of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors of the Company amended the Company Rights Agreement to provide that the Parent and Merger Sub are not "Acquiring Persons" as defined in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to this Agreement. All outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and nonassessable, (ii) no shares of Company Common Stock are not subject to preemptive rights created by statute, held in the Certificate treasury of Incorporation or Bylaws of the Company or by Subsidiaries of Company, and (iii) 3,238,951 shares of Preferred Stock are issued and outstanding, all of which are duly authorized, validly issued, fully paid and nonassessable and none of which have been issued in violation of any agreement preemptive or document to similar rights, and all of which the Company is a party or by which it is bound. As of are, on the date hereof, and will be on the Closing Date after consummation of the transaction contemplated by Section 1.5 hereof, owned beneficially and of record by the persons and in the amounts as set forth in Section 3.2 of the Company had reserved 5,515,624 Disclosure Schedule. The Options constitute all options to purchase stock of Company which are outstanding as of the date of this Agreement and which will be outstanding on the Closing Date under the Company Stock Plans, except to the extent any of such Options are exercised or by their terms expire prior to Closing and except for Options granted after the date hereof (subject to the limitations set forth in Section 5.2(b) and (c) hereof). Set forth on Section 3.2 of the Company Disclosure Schedule is a complete and accurate list of all holders of Options, indicating the number of Options, the number of shares of Company Capital Stock, net of exercises, for issuance Common Stock subject to employees pursuant to each Option and the Company Stock Option Plans, under which options are outstanding for 4,783,397 shares of Company Capital Stock minus any options exercised on the date hereofexercise price therefor. All shares of Company Capital Common Stock subject to issuance as aforesaidspecified above are duly authorized and reserved and the shares of Company Common Stock, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, shall be validly issued, fully paid and nonassessable. There are no obligations, contingent or otherwise, of Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of Company Common Stock or any other capital stock of Company or any of its Subsidiaries or to provide funds to or make any material investment (in the form of a loan, capital contribution or otherwise) in any Subsidiary of Company or any other entity other than guarantees of bank obligations of Subsidiaries of Company entered into in the ordinary course of business. All of the outstanding shares of capital stock of each of Company's Subsidiaries are duly authorized, validly issued, fully paid and nonassessable. The Company Schedules include a list for each outstanding option as of the date hereof, of the following: (i) the name of the holder of such option, (ii) the number of shares subject to such option, nonassessable and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price none of such shares to be 85% have been issued in violation of the fair market value of the Company Capital Stock on the first day of the current offering period), there would be an aggregate of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan any preemptive or similar rights and no more than 11,000 all such shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure of the owned by Company other than issuances or another Subsidiary of Company Capital Stock (i) upon the exercise free and clear of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase Planall security interests, liens, claims, pledges, agreements, limitations in Company's voting rights, charges or other encumbrances of any nature.

Company Capital Structure. (a) The authorized capital stock of the Company consists of (i) 30,000,000 shares of Common Stock, $.001 par value, of which there were 13,738,832 4,476,500 shares issued and outstanding as of the date hereof plus any shares issued on the date hereof upon exercise of options outstanding on the date hereof and 2,000,000 shares of Preferred Stock, $.001 par value ("Company Preferred Stock"), of which 300,000 shares have been designated as Series B Participating Preferred Stock ("Series B Stock"). No shares of the Company Preferred Stock are issued and outstanding as of the date hereof hereof, and there will be no such (ii) 10,000,000 shares of Preferred Stock, 7,000,000 shares of which have been designated Series A Preferred Stock, of which 6,694,600 are issued and outstanding as of the Effective Timedate hereof. The registered holders As of Company Capital Stock have the right (a "Company Right") to purchase from the Company shares of Series B Stock. The description and terms of the Company Rights are set forth in a Rights Agreement (the "Company Rights Agreement") between the Company and Harris Trust and Savings Baxx, xs Rights Agent, a true and correct copy of which has been delivered to Parent. On or prior to the date hereof, the Board of Directors capitalization of the Company, including the names, addresses and domiciles of the securities holders, is as set forth on Schedule 2.2(a). -------------- Assuming the same total capitalization as on the date hereof, the total number of shares of Company amended Common Stock outstanding as of immediately prior to the Effective Time (assuming the conversion, exercise or exchange of all securities convertible into, or exercisable or exchangeable for, shares of Company Common Stock, including without limitation the Company Rights Agreement to provide that Preferred Stock and the Parent and Merger Sub are not "Acquiring Persons" exercise of all Company Options) will be as defined set forth in the Company Rights Agreement with respect to their rights to acquire Company Capital Stock pursuant to this AgreementSchedule 2.2(a). All --------------- outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of the Company Company, or any agreement or document to which the Company is a party or by which it is bound. As of the date hereof, the Company had reserved 5,515,624 All outstanding shares of Company Capital Stock, net Company Common Stock issued upon exercise of exercisesCompany Options and Company Options have been issued or repurchased (in the case of shares that were outstanding and repurchased by the Company) in compliance with all applicable federal and state securities laws. The designations, for issuance powers, preferences, rights, qualifications, limitations and restrictions in respect of the Company Preferred Stock are as set forth in the Company's Certificate of Incorporation. There are not outstanding any adjustments made or required to employees pursuant be made to the conversion rates applicable to Company Preferred Stock Option Plans, under which options set forth in the Company's Certificate of Incorporation. There are outstanding for 4,783,397 no declared or accrued but unpaid dividends with respect to any shares of Company Capital Stock. The Company has no other capital stock authorized, issued or outstanding. The requisite vote required to approve the Merger under applicable law, the Company's Certificate of Incorporation, Bylaws and any other agreement to which the Company or any other Stockholder of the Company is bound is as follows: holders of a majority of each class of outstanding shares. Each share of Company Preferred Stock minus any options exercised is convertible to Company Common Stock on a one-to-one basis and, as of the date hereofEffective Time, each share of Company Preferred Stock will be converted to Company Common Stock. All shares Holders of Company Capital Stock subject sufficient to issuance as aforesaidapprove the Merger, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, shall be duly authorized, validly issued, fully paid and nonassessable. The Company Schedules include a list for each outstanding option as of the date hereof, of the following: (i) the name of the holder of such option, (ii) the number of shares subject to such option, and (iii) the exercise price of such option. No repricing of options has taken place since December 31, 1995. For the offering period ending March 31, 1998 if all current participants continue to contribute at current levels (assuming the purchase price of such shares to be 85% of the fair market value whom is an "affiliate" of the Company Capital Stock on as defined in Rule 12b-2 promulgated under the first day Securities Exchange Act of 1934, as amended (the current offering period"Exchange Act"), there would be an aggregate of approximately 10,055 shares issuable pursuant to the Stock Purchase Plan and no more than 11,000 shares are issuable for such offering period. Since December 31, 1996, there have been no changes in the capital structure of executed the Company other than issuances of Company Capital Stock (i) upon the exercise of options granted under the Company Stock Option Plans and (ii) pursuant to the Stock Purchase PlanVoting Agreement.