2005 AND REAFFIRMED ON FEBRUARY 10, 2006 BY AND AMONG CERTAIN SUBSIDIARIES OF
THE COMPANY AND THE PURCHASER (AS AMENDED, MODIFIED AND/OR SUPPLEMENTED FROM
TIME TO TIME, THE "SUBSIDIARY SECURITY AGREEMENT") AND (C) THAT CERTAIN
CONTINUING GUARANTY AGREEMENT DATED AS OF AUGUST 25, 2005 AND REAFFIRMED ON
FEBRUARY 10, 2006 AMONG CERTAIN SUBSIDIARIES OF THE COMPANY AND THE PURCHASER
(AS AMENDED, MODIFIED AND/OR OR SUPPLEMENTED FROM TIME TO TIME, THE "CONTINUING
GUARANTY"); (V) THE FUNDS ESCROW AGREEMENT DATED AS OF THE DATE HEREOF AMONG THE
COMPANY, THE PURCHASER AND THE ESCROW AGENT REFERRED TO THEREIN, SUBSTANTIALLY
IN THE FORM OF EXHIBIT D HERETO (AS AMENDED, MODIFIED AND/OR SUPPLEMENTED FROM
TIME TO TIME, THE "ESCROW AGREEMENT") AND (VI) ALL OTHER DOCUMENTS, INSTRUMENTS
AND AGREEMENTS ENTERED INTO IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY (THE PRECEDING CLAUSES (III) THROUGH (VI), COLLECTIVELY, THE
"RELATED AGREEMENTS"); (2) ISSUE AND SELL THE NOTE; (3) ISSUE AND SELL THE
WARRANT AND THE WARRANT SHARES; AND (5) CARRY OUT THE PROVISIONS OF THIS
AGREEMENT AND THE RELATED AGREEMENTS AND TO CARRY ON ITS BUSINESS AS PRESENTLY
CONDUCTED. EACH OF THE COMPANY AND EACH OF ITS SUBSIDIARIES IS DULY QUALIFIED
AND IS AUTHORIZED TO DO BUSINESS AND IS IN GOOD STANDING AS A FOREIGN
CORPORATION, PARTNERSHIP OR LIMITED LIABILITY COMPANY, AS THE CASE MAY BE, IN
ALL JURISDICTIONS IN WHICH THE NATURE OR LOCATION OF ITS ACTIVITIES AND OF ITS
PROPERTIES (BOTH OWNED AND LEASED) MAKES SUCH QUALIFICATION NECESSARY, EXCEPT
FOR THOSE JURISDICTIONS IN WHICH FAILURE TO DO SO HAS NOT, OR COULD NOT
REASONABLY BE EXPECTED TO HAVE, INDIVIDUALLY OR IN THE AGGREGATE, A MATERIAL
ADVERSE EFFECT ON THE BUSINESS, ASSETS, LIABILITIES, CONDITION (FINANCIAL OR
OTHERWISE), PROPERTIES, OPERATIONS OR PROSPECTS OF THE COMPANY AND ITS
SUBSIDIARIES, TAKEN INDIVIDUALLY AND AS A WHOLE (A "MATERIAL ADVERSE EFFECT").
4.2
SUBSIDIARIES. EACH OF ITS DIRECT AND INDIRECT SUBSIDIARIES, THE
DIRECT OWNER OF EACH SUCH SUBSIDIARY AND ITS PERCENTAGE OWNERSHIP THEREOF, IS
SET FORTH ON SCHEDULE 4.2.
4.3
CAPITALIZATION; VOTING RIGHTS.
(A)
THE AUTHORIZED CAPITAL STOCK OF THE COMPANY, AS OF THE DATE HEREOF
CONSISTS OF 100,000,000 SHARES, PAR VALUE $0.001 PER SHARE, THE NUMBER OF SHARES
ISSUED AND OUTSTANDING ARE AS SET FORTH ON SCHEDULE 4.3, AND 25,000,000 ARE
SHARES OF PREFERRED STOCK, PAR VALUE $0.001 PER SHARE OF WHICH NO SHARES OF
PREFERRED STOCK ARE ISSUED AND OUTSTANDING. THE AUTHORIZED, ISSUED AND
OUTSTANDING CAPITAL STOCK OF EACH SUBSIDIARY OF THE COMPANY IS SET FORTH ON
SCHEDULE 4.3.
(B)
EXCEPT AS DISCLOSED ON SCHEDULE 4.3, OTHER THAN:
(I) THE SHARES
RESERVED FOR ISSUANCE UNDER THE COMPANY'S STOCK OPTION PLANS; AND (II) SHARES
WHICH MAY BE GRANTED PURSUANT TO THIS AGREEMENT AND THE RELATED AGREEMENTS,
THERE ARE NO OUTSTANDING OPTIONS, WARRANTS, RIGHTS (INCLUDING CONVERSION OR
PREEMPTIVE RIGHTS AND RIGHTS OF FIRST REFUSAL), PROXY OR STOCKHOLDER AGREEMENTS,
OR ARRANGEMENTS OR AGREEMENTS OF ANY KIND FOR
3
THE PURCHASE OR ACQUISITION FROM THE COMPANY OF ANY OF ITS SECURITIES. EXCEPT AS
DISCLOSED ON SCHEDULE 4.3, NEITHER THE OFFER, ISSUANCE OR