PREFERRED STOCK") AND 45,000 SHARES HAVE BEEN DESIGNATED
"SERIES H JUNIOR PREFERRED STOCK" (THE "SERIES H PREFERRED STOCK").
AT THE DATE
HEREOF, 15,612,834 SHARES OF THE COMPANY COMMON STOCK, 2,178,982 SHARES OF
SERIES B PREFERRED STOCK AND NO SHARES OF SERIES H PREFERRED STOCK WERE ISSUED
AND OUTSTANDING AND STOCK OPTIONS TO ACQUIRE 516,442 SHARES OF THE COMPANY
COMMON STOCK AND 24,630 RESTRICTED STOCK UNITS WERE OUTSTANDING UNDER THE
COMPANY EMPLOYEE BENEFIT PLANS.
ALL THE ISSUED AND OUTSTANDING SHARES OF
CAPITAL STOCK ARE VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE AND FREE OF
PREEMPTIVE RIGHTS.
OTHER THAN (I) AS SET FORTH ABOVE, (II) THE RIGHTS TO
PURCHASE SHARES OF SERIES H PREFERRED STOCK (THE "RIGHTS"), ISSUED PURSUANT TO
THE RIGHTS AGREEMENT DATED AS OF JANUARY 23, 2002, BETWEEN THE COMPANY AND
REGISTRAR AND TRANSFER COMPANY, AS RIGHTS AGENT, AS AMENDED (THE "RIGHTS
AGREEMENT"), (III) THE WARRANT DATED JANUARY 23, 2003 TO PURCHASE UP TO 336,835
8
SHARES OF THE COMPANY COMMON STOCK (THE "WARRANT"), AND (IV) AS SET FORTH IN
SCHEDULE 2.2(A) OF THE COMPANY LETTER, AS OF THE DATE HEREOF, THERE ARE NO
SHARES OF CAPITAL STOCK ISSUED OR OUTSTANDING, NO OUTSTANDING OPTIONS, WARRANTS
OR RIGHTS TO ACQUIRE, OR OTHER SECURITIES CONVERTIBLE INTO, CAPITAL STOCK, AND
NO AGREEMENTS OR COMMITMENTS OBLIGATING THE COMPANY TO ISSUE, SELL OR ACQUIRE
ANY SHARES OF CAPITAL STOCK.
SCHEDULE 2.2(A) OF THE COMPANY LETTER ALSO SETS
FORTH AS OF
SEPTEMBER 27, 2005 THE NAMES AND ADDRESSES OF THE RECORD HOLDERS OF
THE SERIES B PREFERRED STOCK, INCLUDING, IN THE CASE OF COMMERCIAL DEPOSITORIES
OR THEIR NOMINEES HOLDING SERIES B PREFERRED STOCK, THE NAMES AND ADDRESSES OF
THE PARTICIPANTS IN SUCH DEPOSITORIES FOR WHICH THE SERIES B PREFERRED STOCK IS
HELD.
(B)
EXCEPT AS DISCLOSED IN SCHEDULE 2.2(B) OF THE COMPANY LETTER, ALL
THE OUTSTANDING SHARES OF CAPITAL STOCK OF EACH OF THE COMPANY'S SUBSIDIARIES
ARE BENEFICIALLY OWNED BY THE COMPANY, DIRECTLY OR INDIRECTLY, FREE AND CLEAR OF
ANY RESTRICTIONS ON TRANSFER (OTHER THAN RESTRICTIONS UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (TOGETHER WITH THE RULES AND REGULATIONS PROMULGATED
THEREUNDER, THE "SECURITIES ACT"), AND STATE OR FOREIGN SECURITIES LAWS) OR
LIENS (AS HEREINAFTER DEFINED) AND ALL SUCH SHARES ARE DULY AUTHORIZED, VALIDLY
ISSUED, FULLY PAID, NONASSESSABLE AND FREE OF PREEMPTIVE RIGHTS.
"LIENS" MEANS
SECURITY INTERESTS, LIENS, CLAIMS, PLEDGES, MORTGAGES, OPTIONS, RIGHTS OF FIRST
REFUSAL, AGREEMENTS, LIMITATIONS ON VOTING RIGHTS, CHARGES, EASEMENTS,
SERVITUDES, ENCUMBRANCES AND OTHER RESTRICTIONS OF ANY NATURE WHATSOEVER.
(C)
EXCEPT AS DISCLOSED IN SCHEDULE 2.2(C) OF THE COMPANY LETTER,
(I) THERE ARE NO VOTING TRUSTS, PROXIES OR OTHER AGREEMENTS OR UNDERSTANDINGS TO
WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES IS A PARTY OR BY WHICH THE COMPANY
OR ANY OF ITS SUBSIDIARIES IS BOUND WITH RESPECT TO THE VOTING OF THE CAPITAL
STOCK OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR, TO THE KNOWLEDGE OF THE
COMPANY (AS HEREINAFTER DEFINED), ANY OTHER SUCH TRUSTS, PROXIES, AGREEMENTS OR
UNDERSTANDINGS AFFECTING THE COMPANY OR ANY OF ITS SUBSIDIARIES AND (II) NONE OF