FULLY PAID AND
NONASSESSABLE AND OWNED BY THE COMPANY OR ANOTHER SUBSIDIARY AND IS FREE AND
CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES, OPTIONS, PLEDGES AND SECURITY
INTERESTS (COLLECTIVELY, "LIENS") AND WERE NOT ISSUED IN VIOLATION OF, NOR
SUBJECT TO, ANY PREEMPTIVE, SUBSCRIPTION OR SIMILAR RIGHTS.
THERE ARE NO
OUTSTANDING WARRANTS, OPTIONS, SUBSCRIPTIONS, CALLS, RIGHTS, AGREEMENTS,
CONVERTIBLE OR EXCHANGEABLE SECURITIES OR OTHER COMMITMENTS OR ARRANGEMENTS
RELATING TO THE ISSUANCE, SALE, PURCHASE, RETURN OR REDEMPTION, VOTING OR
TRANSFER OF ANY SHARES, WHETHER ISSUED OR UNISSUED, OF ANY CAPITAL STOCK, EQUITY
INTEREST OR OTHER SECURITIES OF ANY SUBSIDIARY.
THE COMPANY AND THE
SUBSIDIARIES DO NOT OWN ANY EQUITY INTERESTS IN ANY PERSON, OTHER THAN THE
SUBSIDIARIES.
EACH ACTIVE SUBSIDIARY IS DULY ORGANIZED, VALIDLY EXISTING AND IN
GOOD STANDING UNDER THE LAWS OF THE JURISDICTION OF ITS ORGANIZATION AND HAS ALL
REQUISITE POWER AND AUTHORITY TO OWN, LEASE AND OPERATE ITS PROPERTIES AND TO
CONDUCT ITS BUSINESS.
(C)
AS OF THE DATE HEREOF, THE AUTHORIZED CAPITAL STOCK OF THE COMPANY
CONSISTS OF 36,000,000 SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE, AND
10,000,000 SHARES OF PREFERRED STOCK, PAR VALUE $0.01 PER SHARE.
AS OF
SEPTEMBER 1, 2003, (I) 4,593,531 SHARES OF COMMON STOCK WERE ISSUED AND
OUTSTANDING, (II) NO SHARES OF PREFERRED STOCK WERE ISSUED AND OUTSTANDING,
(III) 702,489 SHARES OF COMMON STOCK WERE RESERVED FOR ISSUANCE UPON EXERCISE OF
OUTSTANDING OPTIONS ISSUED OR ISSUABLE UNDER THE COMPANY'S 1996 STOCK PLAN AND
ITS AMENDED AND RESTATED STOCK OPTION PLAN (THE "OPTION PLANS"), (IV) NO SHARES
OF COMMON STOCK ARE RESERVED FOR ISSUANCE UNDER STOCK OPTIONS GRANTED BY THE
COMPANY OUTSIDE THE OPTION PLANS, (V) 1,955,177 SHARES OF COMMON STOCK WERE
RESERVED FOR ISSUANCE UPON THE EXERCISE OF OUTSTANDING WARRANTS AND (VI) 64,285
SHARES OF COMMON STOCK ARE ISSUABLE UPON CONVERSION OF CONVERTIBLE DEBT.
ALL
THE OUTSTANDING SHARES OF COMMON STOCK HAVE BEEN DULY AUTHORIZED AND VALIDLY
ISSUED AND ARE FULLY PAID AND NONASSESSABLE AND FREE OF PREEMPTIVE RIGHTS
CREATED BY OR THROUGH THE COMPANY.
THERE ARE NO OTHER OPTIONS, WARRANTS OR
OTHER RIGHTS, CONVERTIBLE DEBT, AGREEMENTS, ARRANGEMENTS OR COMMITMENTS OF ANY
CHARACTER OBLIGATING THE COMPANY OR ANY OF THE SUBSIDIARIES TO ISSUE OR SELL ANY
SHARES OF CAPITAL STOCK OF OR OTHER EQUITY INTERESTS IN THE COMPANY.
THE
COMPANY IS NOT OBLIGATED TO RETIRE, REDEEM, REPURCHASE OR OTHERWISE REACQUIRE
ANY OF ITS CAPITAL STOCK OR OTHER SECURITIES.
(D)
SUBJECT TO RECEIVING THE CONSENT OF ITS BOARD OF DIRECTORS FOR UP
TO 100% WARRANT COVERAGE AND THE PRICE REDUCTION PROVISIONS CONTAINED IN THE
SECURITIES PURCHASE AGREEMENT, THE COMPANY HAS FULL CORPORATE POWER AND
AUTHORITY TO EXECUTE, DELIVER AND ENTER INTO THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY.
EXCEPT WITH RESPECT TO ANY STOCKHOLDER APPROVALS AS MAY BE REQUIRED
UNDER NASDAQ MARKETPLACE RULES AND RELATED INTERPRETATIONS AND SUBJECT TO
RECEIVING THE CONSENT OF THE COMPANY'S BOARD OF DIRECTORS FOR 100% WARRANT
COVERAGE AND THE PRICE REDUCTION PROVISIONS CONTAINED IN THE SECURITIES PURCHASE
AGREEMENT, ALL ACTION REQUIRED