THE LEGALITY, VALIDITY OR ENFORCEABILITY OF
ANY TRANSACTION DOCUMENT, (II) HAVE OR RESULT IN A MATERIAL ADVERSE EFFECT ON
THE RESULTS OF OPERATIONS, ASSETS, LIABILITIES, BUSINESS OR FINANCIAL CONDITION
OF THE COMPANY AND ITS SUBSIDIARIES, TAKEN AS A WHOLE ON A CONSOLIDATED BASIS,
OR (III) MATERIALLY AND ADVERSELY IMPAIR THE COMPANY'S ABILITY TO
4
PERFORM FULLY ON A TIMELY BASIS ITS OBLIGATIONS UNDER ANY OF THE TRANSACTION
DOCUMENTS (ANY OF (I), (II) OR (III), A "MATERIAL ADVERSE EFFECT").
3.2
CAPITALIZATION.
AS OF AUGUST 12, 2009, THE AUTHORIZED CAPITAL STOCK OF
THE COMPANY CONSISTS OF (I) 200,000,000 SHARES OF COMMON STOCK, OF WHICH
66,678,118 SHARES ARE OUTSTANDING AND (II) 5,000,000 SHARES OF PREFERRED STOCK,
OF WHICH NO SHARES ARE OUTSTANDING.
AS OF AUGUST 12, 2009, EXCEPT WITH RESPECT
TO THE 8,755,192 SHARES OF COMMON STOCK SUBJECT TO OUTSTANDING OPTIONS OR AWARDS
MADE UNDER THE COMPANY'S 2005 INCENTIVE PLAN, 2001 EQUITY INCENTIVE PLAN AND
1997 EQUITY INCENTIVE PLAN, 3,714,487 SHARES OF WHICH WILL BE, AS OF JANUARY 31,
2010, SUBJECT TO VESTED AWARDS OR VESTED OPTIONS WITH EXERCISE PRICES BELOW
$14.00 PER SHARE, IN EACH CASE BASED UPON THE TERMS AND CONDITIONS OF SUCH
OPTIONS OR AWARDS AS THEY EXISTED ON AUGUST 12, 2009, THERE ARE NO EXISTING
OPTIONS, WARRANTS, CALLS, PREEMPTIVE (OR SIMILAR) RIGHTS, SUBSCRIPTIONS OR OTHER
RIGHTS, AGREEMENTS, ARRANGEMENTS OR COMMITMENTS OF ANY CHARACTER OBLIGATING THE
COMPANY TO ISSUE, TRANSFER OR SELL, OR CAUSE TO BE ISSUED, TRANSFERRED OR SOLD,
ANY SHARES OF THE CAPITAL STOCK OF THE COMPANY OR OTHER EQUITY INTERESTS IN THE
COMPANY OR ANY SECURITIES CONVERTIBLE INTO OR EXCHANGEABLE FOR SUCH SHARES OF
CAPITAL STOCK OR OTHER EQUITY INTERESTS, AND THERE ARE NO OUTSTANDING
CONTRACTUAL OBLIGATIONS OF THE COMPANY TO REPURCHASE, REDEEM OR OTHERWISE
ACQUIRE ANY SHARES OF ITS CAPITAL STOCK OR OTHER EQUITY INTERESTS.
BETWEEN
AUGUST 12, 2009 AND THE DATE HEREOF, THE COMPANY HAS NOT ISSUED ANY EQUITY
SECURITIES EXCEPT THROUGH EMPLOYEE OR DIRECTOR STOCK OPTION EXERCISES IN THE
ORDINARY COURSE.
3.3
AUTHORIZATION; ENFORCEMENT.
THE COMPANY HAS THE REQUISITE CORPORATE
AUTHORITY TO ENTER INTO AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, THE SETTLEMENT AGREEMENT AND THE JOINT DEVELOPMENT, MARKETING AND
SALES AGREEMENT DATED AS OF THE DATE HEREOF BETWEEN THE COMPANY AND ORMCO (THE
"COLLABORATION AGREEMENT" AND TOGETHER WITH THE AGREEMENT AND THE SETTLEMENT
AGREEMENT, THE "TRANSACTION DOCUMENTS") AND OTHERWISE TO CARRY OUT ITS
OBLIGATIONS HEREUNDER AND THEREUNDER.
THE EXECUTION AND DELIVERY OF THE
TRANSACTION DOCUMENTS BY THE COMPANY AND THE CONSUMMATION BY IT OF THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY HAVE BEEN DULY AUTHORIZED BY ALL
NECESSARY CORPORATE ACTION ON THE PART OF THE COMPANY AND NO FURTHER CONSENT OR
ACTION IS REQUIRED BY THE COMPANY, ITS BOARD OF DIRECTORS OR ITS STOCKHOLDERS.
EACH OF THE TRANSACTION DOCUMENTS IS DULY EXECUTED BY THE COMPANY AND IS, OR
WHEN DELIVERED IN ACCORDANCE WITH THE TERMS HEREOF AND THEREOF, WILL CONSTITUTE,
THE VALID AND BINDING OBLIGATION OF THE COMPANY ENFORCEABLE AGAINST THE COMPANY
IN ACCORDANCE WITH ITS TERMS, EXCEPT AS MAY BE