Common use of Parent and Merger Sub Capitalization Clause in Contracts

Parent and Merger Sub Capitalization. (a) The authorized capital stock of Parent consists solely of 100,000,000 shares of Parent Common Stock, of which there were 47,782,087 shares issued and outstanding as of the close of business on July 31, 2007, 2,666,667 shares of Series A Convertible Preferred Stock, par value $0.001 per share (“Parent Series A Preferred Stock”), and 2,333,333 shares of undesignated Preferred Stock, par value $0.001 per share (“Parent Undesignated Preferred Stock” and together with the Parent Series A Preferred Stock, the “Parent Preferred Stock”), of which no shares are issued or outstanding as of the date hereof. All outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid and nonassessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of Parent or any agreement or document to which Parent is a party or by which it is bound. (b) As of the close of business on July 31, 2007, 7,389,822 shares of Parent Common Stock have been authorized and remain reserved for issuance, of which (i) 5,264,206 shares remain reserved for issuance pursuant to Parent’s 2001 Stock Option and Incentive Plan (the “Parent Stock Option Plan”), subject to adjustment on the terms set forth in the Parent Stock Option Plan, (ii) 1,645,553 shares remain reserved for issuance upon the exercise of outstanding stock options to purchase Parent Common Stock that were not granted under the Parent Stock Option Plan, (iii) 174,536 shares remain reserved for issuance pursuant to Parent’s 2001 Employee Stock Purchase Plan, as amended, and (iv) 305,527 shares were authorized and remain reserved for issuance upon the exercise of outstanding warrants to purchase shares of Parent Common Stock. As of the close of business on July 31, 2007, there were outstanding options to purchase 4,203,199 shares of Parent Common Stock under the Parent Stock Option Plan, and options to purchase 1,061,007 shares of Parent Common Stock remain available for grant thereunder. All shares of Parent Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. Except as otherwise set forth in this Section 3.2, as of the date hereof there are no equity securities of any class of Parent equity security, or any securities exchangeable or convertible into or exercisable for such equity securities issued, reserved for issuance or outstanding other than such equity securities that do not, in the aggregate, represent in excess of 1% of outstanding shares of Parent Common Stock, on a fully diluted as converted basis. (c) The authorized capital stock of Merger Sub consists of 1,000 shares of Merger Sub Common Stock, all of which, as of the date hereof, are issued and outstanding and are held by Parent. All of the outstanding shares of Merger Sub Common Stock have been duly authorized and validly issued, and are fully paid and nonassessable. Merger Sub was formed for the purpose of consummating the Merger and has no material assets or liabilities except as necessary for such purpose. (d) The Parent Common Stock to be issued in the Merger, when issued in accordance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable and not subject to preemptive rights created by statute, the Parent Charter Documents or any agreement or document to which Parent is a party or by which it or its assets is bound.

Parent and Merger Sub Capitalization. (a) The authorized capital stock of Parent consists solely of 100,000,000 150,000,000 shares of Parent Common Stock, of which there were 47,782,087 96,856,165 shares issued and outstanding as of the close of business on July 31, 2007, 2,666,667 shares of Series A Convertible Preferred Stock, par value $0.001 per share (“Parent Series A Preferred Stock”), and 2,333,333 shares of undesignated Preferred Stock, par value $0.001 per share (“Parent Undesignated Preferred Stock” and together with the Parent Series A Preferred Stock, the “Parent Preferred Stock”), of which no shares are issued or outstanding as of the date hereof. All outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid and nonassessable and are not subject to preemptive rights 44 created by statute, the Certificate Articles of Incorporation or Bylaws of Parent or any agreement or document to which Parent is a party or by which it is bound. (b) As of the close of business on July 31March 21, 20072001, 7,389,822 (i) 8,931,943 shares of Parent Common Stock have been authorized and remain reserved for issuance, of which (i) 5,264,206 shares remain reserved for are subject to issuance pursuant to Parent’s 2001 Stock Option and Incentive Plan (the “Parent Stock Option Plan”), subject to adjustment on the terms set forth in the Parent Stock Option Plan, (ii) 1,645,553 shares remain reserved for issuance upon the exercise of outstanding stock options to purchase Parent Common Stock for a weighted average aggregate exercise price of $10.10; (ii) 7,047,100 shares of HostPro, Inc. common stock, $0.01 par value per share ("HOSTPRO COMMON STOCK") are subject to issuance pursuant to outstanding options to purchase HostPro Common Stock for a weighted average aggregate exercise price of $1.51 under HostPro's 2000 Equity Incentive Plans I & II, which shall be adopted by Parent such that were not granted these options to purchase shares of HostPro Common Stock shall be converted into options to purchase Parent Common Stock as described in Section 6.3(h); and (iii) 1,456,600 shares of Parent Common Stock are reserved for future issuance under the Parent ESPP. Parent's 1995 Equity Incentive Plan and HostPro's 2000 Equity Incentive Plans I & II are together referred to as the "PARENT STOCK OPTION PLANS." Options to purchase Parent Common Stock or HostPro Common Stock pursuant to the Parent Stock Option Plan, Plans are referred to as the "PARENT OPTIONS." Part 3.2(b)(1) of the Parent Disclosure Letter sets forth the following information with respect to each Parent Option outstanding as of the date of this Agreement: (i) the name of the optionee; (ii) the number of shares of Parent Common Stock subject to such Parent Option; (iii) 174,536 shares remain reserved for issuance pursuant to Parent’s 2001 Employee Stock Purchase Plan, as amended, and the exercise price of such Parent Option; (iv) 305,527 shares were authorized the date on which such Parent Option was granted or assumed; (v) the date on which such Parent Option expires; (vi) whether the exercisability of such option will be accelerated in any way by the transactions contemplated by this Agreement, and remain reserved for issuance upon indicates the exercise extent of any such acceleration; and (vii) whether such Parent Option remains exercisable at any time after the 90th day after termination of service. Parent has made available to Company an accurate and complete copy of the Parent Stock Option Plans and the form of all stock option agreements evidencing Parent Options. There are no options outstanding warrants to purchase shares of Parent Common Stock. As of the close of business on July 31, 2007, there were outstanding options Stock other than pursuant to purchase 4,203,199 shares of Parent Common Stock under the Parent Stock Option Plan, and options to purchase 1,061,007 shares of Parent Common Stock remain available for grant thereunderPlans. All shares of Parent Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. Except as otherwise set forth in this Section 3.2, as on Part 3.2(b) of the date hereof Parent Disclosure Letter, there are no equity securities commitments or agreements of any class character to which Parent is bound obligating Parent to accelerate the vesting of any Parent equity security, or any securities exchangeable or convertible into or exercisable for such equity securities issued, reserved for issuance or outstanding other than such equity securities that do not, in Option as a result of the aggregate, represent in excess of 1% of outstanding merger. All shares of Parent Common StockStock subject to issuance as aforesaid, upon issuance on a the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully diluted paid and nonassessable. Except as converted basisset forth in Part 3.2(b) of the Parent Disclosure Letter, no Parent Option has had its vesting, exercise or exercise price provisions amended or modified since December 31, 2000, and no Parent Option has been issued in replacement of another Parent Option. (c) The authorized capital stock of Merger Sub consists of 1,000 shares of Merger Sub Common Stockcommon stock, $0.01 par value, all of which, as of the date hereof, are issued and outstanding and are held by Parent. All of the outstanding shares of Merger Sub Common Stock Sub's common stock have been duly authorized and validly issued, and are fully paid and nonassessable. Merger Sub was formed for the purpose of consummating the Merger and has no material assets or liabilities except as necessary for such purpose. (d) Except as set forth on Part 3.2(d) of the Parent Disclosure Letter, all outstanding shares of Parent Common Stock, all outstanding Parent Options, and all outstanding shares of capital stock of each subsidiary of Parent have been issued and granted in compliance with (i) all applicable federal and state securities laws and other applicable material Legal Requirements and (ii) all material requirements set forth in applicable agreements or instruments. (e) The Parent Common Stock to be issued in the Merger, when issued in accordance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable and not subject to nonassessable. There are no statutory or contractual preemptive rights created by statute, or rights of first refusal with respect to the issuance of the Parent Charter Documents or any agreement or document to which Common Stock upon consummation of the Merger. (f) Each Subsidiary of Parent is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, has all powers and governmental licenses, authorizations, consents and approvals required to carry out its business as now conducted, except for those the absence of which would not, individually or in the aggregate, have a party Material Adverse Effect on Parent or by which it or its assets is boundthe Houdini Business.

Parent and Merger Sub Capitalization. (a) The authorized capital stock of Parent consists solely of 100,000,000 1,000,000,000 shares of Parent Common Stock, par value $0.001 per share, of which there were 47,782,087 94,325,615 shares issued and outstanding as of the close of business on July 31April 6, 20072001, 2,666,667 and 5,000,000 shares of Series A Convertible Preferred Stock, par value $0.001 per share (“Parent Series A Preferred Stock”), and 2,333,333 shares of undesignated Preferred Stock, par value $0.001 per share (“Parent Undesignated Preferred Stock” and together with the Parent Series A Preferred Stock, the “Parent Preferred Stock”)share, of which no shares are issued or outstanding as of the date hereofoutstanding. All outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid and nonassessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of Parent or any agreement or document to which Parent is a party or by which it is bound. As of the close of business on April 5, 2001, there are no shares of Parent Common Stock held in treasury by the Parent. No material change in such capitalization has occurred between December 31, 2000 and the date of this Agreement. (b) As of the close of business on July 31April 5, 20072001, 7,389,822 (i) 19,503,810 shares of Parent Common Stock have been authorized and remain reserved for issuance, of which (i) 5,264,206 shares remain reserved for are subject to issuance pursuant to Parent’s 2001 Stock Option and Incentive Plan (the “Parent Stock Option Plan”), subject to adjustment on the terms set forth in the Parent Stock Option Plan, (ii) 1,645,553 shares remain reserved for issuance upon the exercise of outstanding stock options to purchase Parent Common Stock that were not granted ("Parent Options") for a weighted average aggregate exercise price of approximately $41.56, (ii) 1,630,148 shares of Parent Common Stock are reserved for future issuance under the Parent's 1999 Employee Stock Purchase Plan (the "Parent Stock Option PlanESPP"), (iii) 174,536 no shares remain of Parent Common Stock are reserved for future issuance pursuant to under the Parent’s 2001 Employee Stock Purchase 's 401(k) Plan, as amended, and (iv) 305,527 shares were authorized and remain reserved for issuance upon the exercise of outstanding warrants to purchase shares of Parent Common Stock. As of the close of business on July 31, 2007, there were outstanding options to purchase 4,203,199 1,057,000 shares of Parent Common Stock under are subject to issuance pursuant to outstanding warrants ("Parent Warrants"). Part 3.2(b) of the Parent Stock Disclosure Letter sets forth the following information with respect to each Parent Option Plan, and options to purchase 1,061,007 Parent Warrant outstanding as of the date of this Agreement: (i) the name of the optionee or warrant holder; (ii) the number of shares of Parent Common Stock remain subject to such Parent Option or Parent Warrant; (iii) the exercise price of such Parent Option or Parent Warrant; (iv) the date on which such Parent Option was granted or assumed; (v) the date on which such Parent Option or Parent Warrant expires and (vi) whether the exercisability of such Parent Option or Parent Warrant will be accelerated in any way by the transactions contemplated by this Agreement, and indicates the extent of any such acceleration. Parent has made available for grant thereunderto Company an accurate and complete copies of the form of all stock option agreements evidencing Parent Options. All shares of Parent Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. Except as otherwise set forth in this Section 3.2, as of the date hereof there are no equity securities of any class of Parent equity security, or any securities exchangeable or convertible into or exercisable for such equity securities issued, reserved for issuance or outstanding other than such equity securities that do not, in the aggregate, represent in excess of 1% of outstanding shares of Parent Common Stock, on a fully diluted as converted basis. (c) The authorized capital stock of Merger Sub consists of 1,000 shares of Merger Sub Common Stockcommon stock, $0.01 par value, all of which, as of the date hereof, are issued and outstanding and are held by Parent. All of the outstanding shares of Merger Sub Common Stock Sub's common stock have been duly authorized and validly issued, and are fully paid and nonassessable. Merger Sub was formed for the purpose of consummating the Merger and has no material assets or liabilities except as necessary for such purpose. (d) All outstanding shares of Parent Common Stock, all outstanding Parent Options, all outstanding Parent Warrants and all outstanding shares of capital stock of each subsidiary of Parent have been issued and granted in compliance with (i) all applicable securities laws and other applicable material Legal Requirements and (ii) all material requirements set forth in applicable agreements or instruments. (e) The Parent Common Stock to be issued in the Merger, when issued in accordance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable and not subject to preemptive rights created by statute, the Parent Charter Documents or any agreement or document to which Parent is a party or by which it or its assets is boundnonassessable.

Parent and Merger Sub Capitalization. (a) The authorized capital stock of Parent consists solely of 100,000,000 150,000,000 shares of Parent Common Stock, of which there were 47,782,087 96,856,165 shares issued and outstanding as of the close of business on July 31, 2007, 2,666,667 shares of Series A Convertible Preferred Stock, par value $0.001 per share (“Parent Series A Preferred Stock”), and 2,333,333 shares of undesignated Preferred Stock, par value $0.001 per share (“Parent Undesignated Preferred Stock” and together with the Parent Series A Preferred Stock, the “Parent Preferred Stock”), of which no shares are issued or outstanding as of the date hereof. All outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid and nonassessable and are not subject to preemptive rights created by statute, the Certificate Articles of Incorporation or Bylaws of Parent or any agreement or document to which Parent is a party or by which it is bound. (b) As of the close of business on July 31March 21, 20072001, 7,389,822 (i) 8,931,943 shares of Parent Common Stock have been authorized and remain reserved for issuance, of which (i) 5,264,206 shares remain reserved for are subject to issuance pursuant to Parent’s 2001 Stock Option and Incentive Plan (the “Parent Stock Option Plan”), subject to adjustment on the terms set forth in the Parent Stock Option Plan, (ii) 1,645,553 shares remain reserved for issuance upon the exercise of outstanding stock options to purchase Parent Common Stock for a weighted average aggregate exercise price of $10.10; (ii) 7,047,100 shares of HostPro, Inc. common stock, $0.01 par value per share ("HOSTPRO COMMON STOCK") are subject to issuance pursuant to outstanding options to purchase HostPro Common Stock for a weighted average aggregate exercise price of $1.51 under HostPro's 2000 Equity Incentive Plans I & II, which shall be adopted by Parent such that were not granted these options to purchase shares of HostPro Common Stock shall be converted into options to purchase Parent Common Stock as described in Section 6.3(h); and (iii) 1,456,600 shares of Parent Common Stock are reserved for future issuance under the Parent ESPP. Parent's 1995 Equity Incentive Plan and HostPro's 2000 Equity Incentive Plans I & II are together referred to as the "PARENT STOCK OPTION PLANS." Options to purchase Parent Common Stock or HostPro Common Stock pursuant to the Parent Stock Option Plan, Plans are referred to as the "PARENT OPTIONS." Part 3.2(b)(1) of the Parent Disclosure Letter sets forth the following information with respect to each Parent Option outstanding as of the date of this Agreement: (i) the name of the optionee; (ii) the number of shares of Parent Common Stock subject to such Parent Option; (iii) 174,536 shares remain reserved for issuance pursuant to Parent’s 2001 Employee Stock Purchase Plan, as amended, and the exercise price of such Parent Option; (iv) 305,527 shares were authorized the date on which such Parent Option was granted or assumed; (v) the date on which such Parent Option expires; (vi) whether the exercisability of such option will be accelerated in any way by the transactions contemplated by this Agreement, and remain reserved for issuance upon indicates the exercise extent of any such acceleration; and (vii) whether such Parent Option remains exercisable at any time after the 90th day after termination of service. Parent has made available to Company an accurate and complete copy of the Parent Stock Option Plans and the form of all stock option agreements evidencing Parent Options. There are no options outstanding warrants to purchase shares of Parent Common Stock. As of the close of business on July 31, 2007, there were outstanding options Stock other than pursuant to purchase 4,203,199 shares of Parent Common Stock under the Parent Stock Option Plan, and options to purchase 1,061,007 shares of Parent Common Stock remain available for grant thereunderPlans. All shares of Parent Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. Except as otherwise set forth in this Section 3.2, as on Part 3.2(b) of the date hereof Parent Disclosure Letter, there are no equity securities commitments or agreements of any class character to which Parent is bound obligating Parent to accelerate the vesting of any Parent equity security, or any securities exchangeable or convertible into or exercisable for such equity securities issued, reserved for issuance or outstanding other than such equity securities that do not, in Option as a result of the aggregate, represent in excess of 1% of outstanding merger. All shares of Parent Common StockStock subject to issuance as aforesaid, upon issuance on a the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully diluted paid and nonassessable. Except as converted basisset forth in Part 3.2(b) of the Parent Disclosure Letter, no Parent Option has had its vesting, exercise or exercise price provisions amended or modified since December 31, 2000, and no Parent Option has been issued in replacement of another Parent Option. (c) The authorized capital stock of Merger Sub consists of 1,000 shares of Merger Sub Common Stockcommon stock, $0.01 par value, all of which, as of the date hereof, are issued and outstanding and are held by Parent. All of the outstanding shares of Merger Sub Common Stock Sub's common stock have been duly authorized and validly issued, and are fully paid and nonassessable. Merger Sub was formed for the purpose of consummating the Merger and has no material assets or liabilities except as necessary for such purpose. (d) Except as set forth on Part 3.2(d) of the Parent Disclosure Letter, all outstanding shares of Parent Common Stock, all outstanding Parent Options, and all outstanding shares of capital stock of each subsidiary of Parent have been issued and granted in compliance with (i) all applicable federal and state securities laws and other applicable material Legal Requirements and (ii) all material requirements set forth in applicable agreements or instruments. (e) The Parent Common Stock to be issued in the Merger, when issued in accordance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable and not subject to nonassessable. There are no statutory or contractual preemptive rights created by statute, or rights of first refusal with respect to the issuance of the Parent Charter Documents or any agreement or document to which Common Stock upon consummation of the Merger. (f) Each Subsidiary of Parent is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, has all powers and governmental licenses, authorizations, consents and approvals required to carry out its business as now conducted, except for those the absence of which would not, individually or in the aggregate, have a party Material Adverse Effect on Parent or by which it or its assets is boundthe Houdini Business.

Parent and Merger Sub Capitalization. (a) The authorized capital stock of Parent consists solely of 100,000,000 150,000,000 shares of Parent Common Stock, of which there were 47,782,087 96,856,165 shares issued and outstanding as of the close of business on July 31, 2007, 2,666,667 shares of Series A Convertible Preferred Stock, par value $0.001 per share (“Parent Series A Preferred Stock”), and 2,333,333 shares of undesignated Preferred Stock, par value $0.001 per share (“Parent Undesignated Preferred Stock” and together with the Parent Series A Preferred Stock, the “Parent Preferred Stock”), of which no shares are issued or outstanding as of the date hereof. All outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid and nonassessable and are not subject to preemptive rights -38- 45 created by statute, the Certificate Articles of Incorporation or Bylaws of Parent or any agreement or document to which Parent is a party or by which it is bound. (b) As of the close of business on July 31March 21, 20072001, 7,389,822 (i) 8,931,943 shares of Parent Common Stock have been authorized and remain reserved for issuance, of which (i) 5,264,206 shares remain reserved for are subject to issuance pursuant to Parent’s 2001 Stock Option and Incentive Plan (the “Parent Stock Option Plan”), subject to adjustment on the terms set forth in the Parent Stock Option Plan, (ii) 1,645,553 shares remain reserved for issuance upon the exercise of outstanding stock options to purchase Parent Common Stock for a weighted average aggregate exercise price of $10.10; (ii) 7,047,100 shares of HostPro, Inc. common stock, $0.01 par value per share ("HOSTPRO COMMON STOCK") are subject to issuance pursuant to outstanding options to purchase HostPro Common Stock for a weighted average aggregate exercise price of $1.51 under HostPro's 2000 Equity Incentive Plans I & II, which shall be adopted by Parent such that were not granted these options to purchase shares of HostPro Common Stock shall be converted into options to purchase Parent Common Stock as described in Section 6.3(h); and (iii) 1,456,600 shares of Parent Common Stock are reserved for future issuance under the Parent ESPP. Parent's 1995 Equity Incentive Plan and HostPro's 2000 Equity Incentive Plans I & II are together referred to as the "PARENT STOCK OPTION PLANS." Options to purchase Parent Common Stock or HostPro Common Stock pursuant to the Parent Stock Option Plan, Plans are referred to as the "PARENT OPTIONS." Part 3.2(b)(1) of the Parent Disclosure Letter sets forth the following information with respect to each Parent Option outstanding as of the date of this Agreement: (i) the name of the optionee; (ii) the number of shares of Parent Common Stock subject to such Parent Option; (iii) 174,536 shares remain reserved for issuance pursuant to Parent’s 2001 Employee Stock Purchase Plan, as amended, and the exercise price of such Parent Option; (iv) 305,527 shares were authorized the date on which such Parent Option was granted or assumed; (v) the date on which such Parent Option expires; (vi) whether the exercisability of such option will be accelerated in any way by the transactions contemplated by this Agreement, and remain reserved for issuance upon indicates the exercise extent of any such acceleration; and (vii) whether such Parent Option remains exercisable at any time after the 90th day after termination of service. Parent has made available to Company an accurate and complete copy of the Parent Stock Option Plans and the form of all stock option agreements evidencing Parent Options. There are no options outstanding warrants to purchase shares of Parent Common Stock. As of the close of business on July 31, 2007, there were outstanding options Stock other than pursuant to purchase 4,203,199 shares of Parent Common Stock under the Parent Stock Option Plan, and options to purchase 1,061,007 shares of Parent Common Stock remain available for grant thereunderPlans. All shares of Parent Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. Except as otherwise set forth in this Section 3.2, as on Part 3.2(b) of the date hereof Parent Disclosure Letter, there are no equity securities commitments or agreements of any class character to which Parent is bound obligating Parent to accelerate the vesting of any Parent equity security, or any securities exchangeable or convertible into or exercisable for such equity securities issued, reserved for issuance or outstanding other than such equity securities that do not, in Option as a result of the aggregate, represent in excess of 1% of outstanding merger. All shares of Parent Common StockStock subject to issuance as aforesaid, upon issuance on a the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully diluted paid and nonassessable. Except as converted basisset forth in Part 3.2(b) of the Parent Disclosure Letter, no Parent Option has had its vesting, exercise or exercise price provisions amended or modified since December 31, 2000, and no Parent Option has been issued in replacement of another Parent Option. (c) The authorized capital stock of Merger Sub consists of 1,000 shares of Merger Sub Common Stockcommon stock, $0.01 par value, all of which, as of the date hereof, are issued and outstanding and are held by Parent. All of the outstanding shares of Merger Sub Common Stock Sub's common stock have been duly authorized and validly issued, and are fully paid and nonassessable. Merger Sub was formed for the purpose of consummating the Merger and has no material assets or liabilities except as necessary for such purpose. (d) Except as set forth on Part 3.2(d) of the Parent Disclosure Letter, all outstanding shares of Parent Common Stock, all outstanding Parent Options, and all outstanding shares of capital stock of each subsidiary of Parent have been issued and granted in compliance with (i) all applicable federal and state securities laws and other applicable material Legal Requirements and (ii) all material requirements set forth in applicable agreements or instruments. (e) The Parent Common Stock to be issued in the Merger, when issued in accordance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable and not subject to nonassessable. There are no statutory or contractual preemptive rights created by statute, or rights of first refusal with respect to the issuance of the Parent Charter Documents or any agreement or document to which Common Stock upon consummation of the Merger. (f) Each Subsidiary of Parent is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, has all powers and governmental licenses, authorizations, consents and approvals required to carry out its business as now conducted, except for those the absence of which would not, individually or in the aggregate, have a party Material Adverse Effect on Parent or by which it or its assets is boundthe Houdini Business.

Parent and Merger Sub Capitalization. (a) The Prior to the Reverse Split, the authorized capital stock of Parent consists solely consisted of 100,000,000 shares of Parent Common Stock, par value $0.01 per share, of which there were 47,782,087 52,522,452 shares issued and outstanding as of the close of business on July 31, 2007, 2,666,667 and 5,000,000 shares of Series A Convertible Preferred Stockpreferred stock, par value $0.001 0.01 per share (“Parent Series A Preferred Stock”)share, and 2,333,333 shares of undesignated Preferred Stock, par value $0.001 per share (“Parent Undesignated Preferred Stock” and together with the Parent Series A Preferred Stock, the “Parent Preferred Stock”), none of which no shares are were issued or outstanding as of the date hereofoutstanding. All outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid and nonassessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of Parent or any agreement or document to which Parent is a party or by which it is bound. Prior to the Reverse Split, 166,533 shares of Parent Common Stock were held in treasury by Parent. (b) As of Prior to the close of business on July 31Reverse Split, 2007, 7,389,822 8,777,035 shares of Parent Common Stock have been authorized and remain reserved for issuance, of which (i) 5,264,206 shares remain reserved for were subject to issuance pursuant to Parent’s 2001 Stock Option and Incentive Plan (the “Parent Stock Option Plan”), subject to adjustment on the terms set forth in the Parent Stock Option Plan, (ii) 1,645,553 shares remain reserved for issuance upon the exercise of outstanding stock options to purchase Parent Common Stock that were not granted under the Parent Stock Option Planfor an aggregate exercise price of $4,499,530.60, (iii) 174,536 shares remain reserved for issuance pursuant to Parent’s 2001 Employee Stock Purchase Plan, as amended, and (iv) 305,527 shares were authorized and remain reserved for issuance upon the exercise of outstanding warrants to purchase shares of Parent Common Stock. As of the close of business on July 31, 2007, there were outstanding options to purchase 4,203,199 6,358,846 shares of Parent Common Stock under the Parent Stock Option Planwere subject to issuance pursuant to outstanding warrants for an aggregate exercise price of $4,835,769.00, and options up to purchase 1,061,007 500,000 shares of Parent Common Stock remain were subject to issuance under Parent's Employee Stock Purchase Plan. Part 3.2(b) of the Parent Disclosure Schedule sets forth the following information with respect to each Parent option and warrant outstanding as of the date of this Agreement: (i) the name of the optionee or warrantholder; (ii) the number of shares of Parent Common Stock subject to such Parent option or warrant; (iii) the exercise price of such Parent option or warrant; (iv) the date on which such Parent option or warrant was granted; (v) the date on which the Parent option or warrant expires; (vi) the Parent option plan pursuant to which such Parent option was granted, and (vii) whether the exercisability of such Parent option or warrant will be accelerated in any way by the transactions contemplated by this Agreement, and indicates the extent of such acceleration. The Parent has delivered or made available for grant thereunderto Company an accurate and complete copy of the Parent option plans and each form of stock option agreement evidencing any Parent options and an accurate and complete copy of the form of each Parent warrant. All shares of Parent Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. Except as otherwise set forth in this Section 3.2, as Part 3.2(b) of the date hereof Parent Disclosure Schedule, there are no commitments or agreements of any character to which the Parent is bound obligating the Parent to accelerate the vesting of any Parent Option as a result of the Merger. (c) All outstanding shares of Parent Common Stock, all outstanding Parent Options, all outstanding Parent warrants and all outstanding shares of capital stock of each subsidiary of Parent have been issued and granted in compliance with (i) all applicable securities laws and other applicable material Legal Requirements and (ii) all material requirements set forth in applicable agreements or instruments except such noncompliance as would not, individually or in the aggregate, cause the Parent to lose any material benefit or incur any material liability. (d) There are no equity securities securities, partnership interests or similar ownership interests of any class of Parent equity security, or any securities exchangeable or convertible into or exercisable for such equity securities securities, partnership interests or similar ownership interests, issued, reserved for issuance or outstanding other than as expressly described herein or in the Parent Disclosure Schedule. Except for securities Parent owns free and clear of all claims and Encumbrances (as defined below), directly or indirectly through one or more subsidiaries, as of the date of this Agreement, there are no equity securities, partnership interests or similar ownership interests of any class of equity security of any subsidiary of Parent, or any security exchangeable or convertible into or exercisable for such equity securities that do notsecurities, partnership interests or similar ownership interests, issued, reserved for issuance or outstanding. Except as set forth in Part 3.2 of the aggregateParent Disclosure Schedule, represent in excess there are no subscriptions, options, warrants, equity securities, convertible debt, partnership interests or similar ownership interests, calls, rights (including preemptive rights), commitments or agreements of 1% any character to which Parent or any of outstanding its subsidiaries is a party or by which it is bound obligating Parent or any of its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or acquisition of, any shares of capital stock, partnership interests or similar ownership interests of Parent Common Stockor any of its subsidiaries or obligating Parent or any of its subsidiaries to grant, on extend, accelerate the vesting of or enter into any such subscription, option, warrant, equity security, call, right, commitment or agreement. Except as contemplated by this Agreement or as set forth in Part 3.2(d) of the Parent Disclosure Schedule, there are no registration rights, and there is no voting trust, proxy, rights agreement, "poison pill" anti-takeover plan or other agreement or understanding to which Parent is a fully diluted as converted basisparty or by which it is bound with respect to any equity security of any class of Parent or with respect to any equity security, partnership interest or similar ownership interest of any class of any of its subsidiaries. (ce) The authorized capital stock of Merger Sub consists of 1,000 100,000 shares of Merger Sub Common Stockcommon stock, $0.01 par value per share, all of which, as of the date hereof, are issued and outstanding and are held by Parent. All of the outstanding shares of Merger Sub Common Stock Sub's common stock have been duly authorized and validly issued, and are fully paid and nonassessable. Merger Sub was formed for the purpose of consummating the Merger and Merger, has no material assets or liabilities except as necessary for such purpose, has engaged in no other business activities and has conducted its operations only as contemplated by this Agreement. Merger Sub, except for a subscription agreement pursuant to which all of its authorized capital stock was issued to Parent, is not a party to any agreement other than this Agreement and the other documents contemplated hereby. (df) The Parent Common Stock to be issued in the MergerMerger and issuable upon exercise of Parent Warrants, when issued in accordance with the provisions of this AgreementAgreement and the Parent Warrants, will be validly issued, fully paid and nonassessable nonassessable. (g) After giving effect to the Reverse Split and not accompanying reduction in the authorized capital stock of Parent, the authorized capital stock of Parent will consist of 50,000,000 shares of Parent Common Stock, par value $0.01 per share, of which there will be approximately 5,252,245 shares issued and outstanding immediately after the Reverse Split and 5,000,000 shares of preferred stock, par value $0.01 per share, none of which are issued or outstanding. In addition, immediately after the Reverse Split, 16,653 shares of Parent Common Stock will be held in treasury by Parent; approximately 877,704 shares of Parent Common Stock will be subject to preemptive rights created by statuteissuance pursuant to outstanding options to purchase Parent Common Stock for an aggregate exercise price of $4,499,530.60 approximately, the 635,884 shares of Parent Charter Documents or any agreement or document Common Stock will be subject to which issuance pursuant to outstanding warrants for an aggregate exercise price of $4,835,769.00, and up to 50,000 shares of Parent is a party or by which it or its assets is boundCommon Stock will be subject to issuance under Parent's Employee Stock Purchase Plan.

Parent and Merger Sub Capitalization. (a) The authorized capital stock of Parent consists solely of 100,000,000 shares of Parent Common Stock, of which there were 47,782,087 46,616,277 shares issued and outstanding as of the close of business on July May 31, 2007, 2,666,667 shares of Series A Convertible Preferred Stock, par value $0.001 per share (“Parent Series A Preferred Stock”), and 2,333,333 shares of undesignated Preferred Stock, par value $0.001 per share (“Parent Undesignated Preferred Stock” and together with the Parent Series A Preferred Stock, the “Parent Preferred Stock”), of which no shares are issued or outstanding as of the date hereof. All outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid and nonassessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of Parent or any agreement or document to which Parent is a party or by which it is bound. (b) As of the close of business on July May 31, 2007, 7,389,822 7,716,082 shares of Parent Common Stock have been authorized and remain reserved for issuance, of which (i) 5,264,206 6,462,545 shares remain reserved for issuance pursuant to Parent’s 2001 Stock Option and Incentive Plan (the “Parent Stock Option Plan”), subject to adjustment on the terms set forth in the Parent Stock Option Plan, (ii) 1,645,553 744,527 shares remain reserved for issuance upon the exercise of outstanding stock options to purchase Parent Common Stock that were not granted under the Parent Stock Option Plan, (iii) 174,536 203,483 shares remain reserved for issuance pursuant to Parent’s 2001 Employee Stock Purchase Plan, as amended, and (iv) 305,527 shares were authorized and remain reserved for issuance upon the exercise of outstanding warrants to purchase shares of Parent Common Stock. As of the close of business on July May 31, 2007, there were outstanding options to purchase 4,203,199 4,892,719 shares of Parent Common Stock under the Parent Stock Option Plan, and options to purchase 1,061,007 1,569,826 shares of Parent Common Stock remain available for grant thereunder. All shares of Parent Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. Except as otherwise set forth in this Section 3.2, as of the date hereof there are no equity securities of any class of Parent equity security, or any securities exchangeable or convertible into or exercisable for such equity securities issued, reserved for issuance or outstanding other than such equity securities that do not, in the aggregate, represent in excess of 1% of outstanding shares of Parent Common Stock, on a fully diluted as converted basis. (c) The authorized capital stock of Merger Sub consists of 1,000 shares of Merger Sub Common Stock, all of which, as of the date hereof, are issued and outstanding and are held by Parent. All of the outstanding shares of Merger Sub Common Stock have been duly authorized and validly issued, and are fully paid and nonassessable. Merger Sub was formed for the purpose of consummating the Merger and has no material assets or liabilities except as necessary for such purpose. (d) The Parent Common Stock to be issued in the Merger, when issued in accordance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable and not subject to preemptive rights created by statute, the Parent Charter Documents or any agreement or document to which Parent is a party or by which it or its assets is bound.

Parent and Merger Sub Capitalization. (a) The authorized capital stock of Parent consists solely of 100,000,000 shares of Parent Common Stock, par value $0.01 per share, of which there were 47,782,087 52,510,452 shares issued and outstanding as of the close date of business on July 31, 2007, 2,666,667 this Agreement and 5,000,000 shares of Series A Convertible Preferred Stockpreferred stock, par value $0.001 0.01 per share (“Parent Series A Preferred Stock”)share, and 2,333,333 shares of undesignated Preferred Stock, par value $0.001 per share (“Parent Undesignated Preferred Stock” and together with the Parent Series A Preferred Stock, the “Parent Preferred Stock”), none of which no shares are issued or outstanding as of the date hereofoutstanding. All outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid and nonassessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of Parent or any agreement or document to which Parent is a party or by which it is bound. As of the date of this Agreement, 178,533 shares of Parent Common Stock are held in treasury by Parent. (b) As of the close date of business on July 31this Agreement, 2007, 7,389,822 8,789,635 shares of Parent Common Stock have been authorized and remain reserved for issuance, of which (i) 5,264,206 shares remain reserved for are subject to issuance pursuant to Parent’s 2001 Stock Option and Incentive Plan (the “Parent Stock Option Plan”), subject to adjustment on the terms set forth in the Parent Stock Option Plan, (ii) 1,645,553 shares remain reserved for issuance upon the exercise of outstanding stock options to purchase Parent Common Stock that were not granted under the Parent Stock Option Planfor an aggregate exercise price of $4,503,682.50, (iii) 174,536 shares remain reserved for issuance pursuant to Parent’s 2001 Employee Stock Purchase Plan, as amended, and (iv) 305,527 shares were authorized and remain reserved for issuance upon the exercise of outstanding warrants to purchase shares of Parent Common Stock. As of the close of business on July 31, 2007, there were outstanding options to purchase 4,203,199 6,358,846 shares of Parent Common Stock under the Parent Stock Option Planare subject to issuance pursuant to outstanding warrants for an aggregate exercise price of $4,835,769.00, and options up to purchase 1,061,007 500,000 shares of Parent Common Stock remain are subject to issuance under Parent’s Employee Stock Purchase Plan. Part 3.2(b) of the Parent Disclosure Schedule sets forth the following information with respect to each Parent option and warrant outstanding as of the date of this Agreement: (i) the name of the optionee or warrantholder; (ii) the number of shares of Parent Common Stock subject to such Parent option or warrant; (iii) the exercise price of such Parent option or warrant; (iv) the date on which such Parent option or warrant was granted; (v) the date on which the Parent option or warrant expires; (vi) the Parent option plan pursuant to which such Parent option was granted, and (vii) whether the exercisability of such Parent option or warrant will be accelerated in any way by the transactions contemplated by this Agreement, and indicates the extent of such acceleration. The Parent has delivered or made available for grant thereunderto Company an accurate and complete copy of the Parent option plans and each form of stock option agreement evidencing any Parent options and an accurate and complete copy of the form of each Parent warrant. All shares of Parent Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. Except as otherwise set forth in this Section 3.2, as Part 3.2(b) of the date hereof Parent Disclosure Schedule, there are no commitments or agreements of any character to which the Parent is bound obligating the Parent to accelerate the vesting of any Parent Option as a result of the Merger. (c) All outstanding shares of Parent Common Stock, all outstanding Parent Options, all outstanding Parent warrants and all outstanding shares of capital stock of each subsidiary of Parent have been issued and granted in compliance with (i) all applicable securities laws and other applicable material Legal Requirements and (ii) all material requirements set forth in applicable agreements or instruments except such noncompliance as would not, individually or in the aggregate, cause the Parent to lose any material benefit or incur any material liability. (d) There are no equity securities securities, partnership interests or similar ownership interests of any class of Parent equity security, or any securities exchangeable or convertible into or exercisable for such equity securities securities, partnership interests or similar ownership interests, issued, reserved for issuance or outstanding other than as expressly described herein or in the Parent Disclosure Schedule. Except for securities Parent owns free and clear of all claims and Encumbrances (as defined below), directly or indirectly through one or more subsidiaries, as of the date of this Agreement, there are no equity securities, partnership interests or similar ownership interests of any class of equity security of any subsidiary of Parent, or any security exchangeable or convertible into or exercisable for such equity securities that do notsecurities, partnership interests or similar ownership interests, issued, reserved for issuance or outstanding. Except as set forth in Part 3.2 of the aggregateParent Disclosure Schedule, represent in excess there are no subscriptions, options, warrants, equity securities, convertible debt, partnership interests or similar ownership interests, calls, rights (including preemptive rights), commitments or agreements of 1% any character to which Parent or any of outstanding its subsidiaries is a party or by which it is bound obligating Parent or any of its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or acquisition of, any shares of capital stock, partnership interests or similar ownership interests of Parent Common Stockor any of its subsidiaries or obligating Parent or any of its subsidiaries to grant, on extend, accelerate the vesting of or enter into any such subscription, option, warrant, equity security, call, right, commitment or agreement. Except as contemplated by this Agreement or as set forth in Part 3.2(d) of the Parent Disclosure Schedule, there are no registration rights, and there is no voting trust, proxy, rights agreement, “poison pill” anti-takeover plan or other agreement or understanding to which Parent is a fully diluted as converted basisparty or by which it is bound with respect to any equity security of any class of Parent or with respect to any equity security, partnership interest or similar ownership interest of any class of any of its subsidiaries. (ce) The authorized capital stock of Merger Sub consists of 1,000 100,000 shares of Merger Sub Common Stockcommon stock, $0.01 par value per share, all of which, as of the date hereof, are issued and outstanding and are held by Parent. All of the outstanding shares of Merger Sub Common Stock Sub’s common stock have been duly authorized and validly issued, and are fully paid and nonassessable. Merger Sub was formed for the purpose of consummating the Merger and Merger, has no material assets or liabilities except as necessary for such purpose, has engaged in no other business activities and has conducted its operations only as contemplated by this Agreement. Merger Sub, except for a subscription agreement pursuant to which all of its authorized capital stock was issued to Parent, is not a party to any agreement other than this Agreement and the other documents contemplated hereby. (df) The Parent Common Stock to be issued in the MergerMerger and issuable upon exercise of Parent Warrants, when issued in accordance with the provisions of this AgreementAgreement and the Parent Warrants, will be validly issued, fully paid and nonassessable and not subject to preemptive rights created by statute, the Parent Charter Documents or any agreement or document to which Parent is a party or by which it or its assets is boundnonassessable.

Parent and Merger Sub Capitalization. (a) The authorized capital stock of Parent consists solely of 100,000,000 shares of Parent Common Stock, of which there were 47,782,087 46,616,277 shares issued and outstanding as of the close of business on July May 31, 2007, 2,666,667 shares of Series A Convertible Preferred Stock, par value $0.001 per share (“Parent Series "PARENT SERIES A Preferred Stock”PREFERRED STOCK"), and 2,333,333 shares of undesignated Preferred Stock, par value $0.001 per share (“Parent Undesignated Preferred Stock” "PARENT UNDESIGNATED PREFERRED STOCK" and together with the Parent Series A Preferred Stock, the “Parent Preferred Stock”"PARENT PREFERRED STOCK"), of which no shares are issued or outstanding as of the date hereof. All outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid and nonassessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of Parent or any agreement or document to which Parent is a party or by which it is bound. (b) As of the close of business on July May 31, 2007, 7,389,822 7,716,082 shares of Parent Common Stock have been authorized and remain reserved for issuance, of which (i) 5,264,206 6,462,545 shares remain reserved for issuance pursuant to Parent’s 's 2001 Stock Option and Incentive Plan (the “Parent Stock Option Plan”"PARENT STOCK OPTION PLAN"), subject to adjustment on the terms set forth in the Parent Stock Option Plan, (ii) 1,645,553 744,527 shares remain reserved for issuance upon the exercise of outstanding stock options to purchase Parent Common Stock that were not granted under the Parent Stock Option Plan, (iii) 174,536 203,483 shares remain reserved for issuance pursuant to Parent’s 's 2001 Employee Stock Purchase Plan, as amended, and (iv) 305,527 shares were authorized and remain reserved for issuance upon the exercise of outstanding warrants to purchase shares of Parent Common Stock. As of the close of business on July May 31, 2007, there were outstanding options to purchase 4,203,199 4,892,719 shares of Parent Common Stock under the Parent Stock Option Plan, and options to purchase 1,061,007 1,569,826 shares of Parent Common Stock remain available for grant thereunder. All shares of Parent Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. Except as otherwise set forth in this Section 3.2, as of the date hereof there are no equity securities of any class of Parent equity security, or any securities exchangeable or convertible into or exercisable for such equity securities issued, reserved for issuance or outstanding other than such equity securities that do not, in the aggregate, represent in excess of 1% of outstanding shares of Parent Common Stock, on a fully diluted as converted basis. (c) The authorized capital stock of Merger Sub consists of 1,000 shares of Merger Sub Common Stock, all of which, as of the date hereof, are issued and outstanding and are held by Parent. All of the outstanding shares of Merger Sub Common Stock have been duly authorized and validly issued, and are fully paid and nonassessable. Merger Sub was formed for the purpose of consummating the Merger and has no material assets or liabilities except as necessary for such purpose. (d) The Parent Common Stock to be issued in the Merger, when issued in accordance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable and not subject to preemptive rights created by statute, the Parent Charter Documents or any agreement or document to which Parent is a party or by which it or its assets is bound.