SUBSIDIARY IS IN
COMPLIANCE IN ALL MATERIAL RESPECTS WITH ALL REQUIREMENTS OF LAW AND ALL ORDERS
ISSUED BY ANY COURT OR GOVERNMENTAL AUTHORITY AGAINST THE COMPANY OR ANY
SUBSIDIARY. TO THE COMPANY'S KNOWLEDGE, THERE IS NO EXISTING OR PROPOSED
REQUIREMENT OF LAW WHICH COULD REASONABLY BE EXPECTED TO PROHIBIT OR RESTRICT
THE COMPANY OR ANY SUBSIDIARY FROM, OR OTHERWISE MATERIALLY ADVERSELY EFFECT THE
COMPANY OR ANY SUBSIDIARY IN, CONDUCTING ITS BUSINESS IN ANY JURISDICTION IN
WHICH IT NOW CONDUCTS OR PROPOSES TO CONDUCT ITS BUSINESS.
(B)
THE COMMON STOCK IS REGISTERED PURSUANT TO
SECTION 12(G) OF THE EXCHANGE ACT, AND IS LISTED ON NASDAQ, AND NEITHER THE
COMPANY NOR ANY SUBSIDIARY HAS TAKEN ANY ACTION DESIGNED TO, OR REASONABLY
LIKELY TO HAVE THE EFFECT OF, TERMINATING THE REGISTRATION OF THE COMMON STOCK
UNDER THE EXCHANGE ACT OR DELISTING THE COMMON STOCK FROM THE NASDAQ. THE
COMPANY HAS COMPLIED WITH ALL REQUIREMENTS OF THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC. WITH RESPECT TO THE ISSUANCE OF THE NOTES. NEITHER THE
8
COMPANY NOR ANY SUBSIDIARY HAS TAKEN ANY ACTION DESIGNED TO OR THAT MIGHT
REASONABLY BE EXPECTED TO CAUSE OR RESULT IN UNLAWFUL MANIPULATION OF THE PRICE
OF THE COMMON STOCK TO FACILITATE THE SALE OR RESALE OF THE NOTES.
(C)
(I) THE COMPANY AND EACH SUBSIDIARY HAS ALL
MATERIAL LICENSES, PERMITS AND APPROVALS OF ANY GOVERNMENTAL AUTHORITY
(COLLECTIVELY, "PERMITS") THAT ARE NECESSARY FOR THE CONDUCT OF THE BUSINESS OF
THE COMPANY AND ITS SUBSIDIARIES; (II) SUCH PERMITS ARE IN FULL FORCE AND
EFFECT; AND (III) NO VIOLATIONS ARE OR HAVE BEEN RECORDED IN RESPECT OF ANY
PERMIT, OTHER THAN SUCH VIOLATIONS THAT COULD NOT, INDIVIDUALLY OR IN THE
AGGREGATE, REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON THE
CONDITION OF THE COMPANY.
Section 3.7
Capitalization.
(A)
AS OF THE DATE HEREOF, THE AUTHORIZED
CAPITAL STOCK OF THE COMPANY SHALL CONSIST OF (I) 100,000,000 SHARES OF COMMON
STOCK, 48,999,973 SHARES OF WHICH ARE ISSUED AND OUTSTANDING AND (II) 1,000,000
SHARES OF PREFERRED STOCK, PAR VALUE $0.01 PER SHARE, (A) 1,600 SHARES OF WHICH
ARE DESIGNATED AS SERIES B CONVERTIBLE PREFERRED STOCK, 340 SHARES OF WHICH ARE
ISSUED AND OUTSTANDING (AND CONVERTIBLE INTO 880,829 SHARES OF COMMON STOCK) AND
(B) 998,400 OF WHICH ARE UNDESIGNATED "BLANK CHECK" PREFERRED STOCK. AS OF THE
DATE OF THIS AGREEMENT, THE AGGREGATE NUMBER OF SHARES OF RESTRICTED STOCK AND
OPTIONS TO PURCHASE SHARES OF COMMON STOCK WHICH MAY BE ISSUED UNDER THE STOCK
OPTION PLANS IS 7,515,656, OF WHICH 4,889,579 ARE OUTSTANDING AS OF THE DATE
HEREOF (THE "OPTIONS") AND 4,010,204 OF WHICH OUTSTANDING OPTIONS HAVE VESTED AS
OF THE DATE HEREOF, AND THE AGGREGATE NUMBER OF SHARES OF COMMON STOCK THAT MAY
BE ISSUED UNDER THE COMPANY'S 401(K) PLAN IS 1,012,100. AS OF THE DATE HEREOF,
THE COMPANY HAS ISSUED AND OUTSTANDING WARRANTS TO PURCHASE AN AGGREGATE OF
9,279,127 SHARES OF COMMON STOCK.
(B)
THE NUMBER OF SHARES AND TYPE OF ALL
AUTHORIZED, ISSUED AND OUTSTANDING CAPITAL STOCK, OPTIONS AND OTHER SECURITIES