(I) A CORPORATION OR OTHER ENTITY WHOSE SHARES OF STOCK
OR OTHER OWNERSHIP INTERESTS HAVING ORDINARY VOTING POWER (OTHER THAN STOCK OR
OTHER OWNERSHIP INTERESTS HAVING SUCH POWER ONLY BY REASON OF THE HAPPENING OF A
CONTINGENCY) TO ELECT A MAJORITY OF THE DIRECTORS OF SUCH CORPORATION, OR OTHER
3
PERSONS OR ENTITIES PERFORMING SIMILAR FUNCTIONS FOR SUCH PERSON OR ENTITY, ARE
OWNED, DIRECTLY OR INDIRECTLY, BY SUCH PERSON OR ENTITY OR (II) A CORPORATION OR
OTHER ENTITY IN WHICH SUCH PERSON OR ENTITY OWNS, DIRECTLY OR INDIRECTLY, MORE
THAN 50% OF THE EQUITY INTERESTS AT SUCH TIME.
4.3
CAPITALIZATION; VOTING RIGHTS.
(A)
THE AUTHORIZED CAPITAL STOCK OF THE COMPANY, IMMEDIATELY PRIOR TO
THE CLOSING, CONSISTS OF (I) 20,000,000 SHARES OF COMMON STOCK, PAR VALUE $0.10
PER SHARE, 10,756,842 SHARES OF WHICH ARE ISSUED AND OUTSTANDING AS OF JUNE 30,
2005, AND (II) 5,000,000 SHARES OF PREFERRED STOCK, PAR VALUE $0.10 PER SHARE,
NONE OF WHICH ARE ISSUED AND OUTSTANDING ON THE DATE HEREOF.
THE AUTHORIZED,
ISSUED AND OUTSTANDING CAPITAL STOCK OF EACH SUBSIDIARY IS SET FORTH ON
SCHEDULE 4.3 HERETO.
(B)
OTHER THAN (I) THE SHARES RESERVED FOR ISSUANCE UNDER THE
COMPANY'S STOCK OPTION PLANS, STOCK GRANT AGREEMENTS AND OUTSTANDING WARRANTS;
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 THE
PURCHASE OR ACQUISITION FROM THE COMPANY OF ANY OF ITS SECURITIES, EXCEPT AS SET
FORTH IN THE SEC REPORTS OR AS LISTED IN SCHEDULE 4.3 (A).
NEITHER THE OFFER,
ISSUANCE OR SALE OF ANY OF THE PREFERRED STOCK OR WARRANT, OR THE ISSUANCE OF
ANY OF THE CONVERSION SHARES OR WARRANT SHARES, NOR THE CONSUMMATION OF ANY
TRANSACTION CONTEMPLATED HEREBY WILL RESULT IN A CHANGE IN THE PRICE OR NUMBER
OF ANY SECURITIES OF THE COMPANY OUTSTANDING, UNDER ANTI-DILUTION OR OTHER
SIMILAR PROVISIONS CONTAINED IN OR AFFECTING ANY SUCH SECURITIES OTHER THAN AS
LISTED IN SCHEDULE 4.3 (A).
(C)
ALL ISSUED AND OUTSTANDING SHARES OF THE COMPANY'S COMMON STOCK
(I) HAVE BEEN DULY AUTHORIZED AND VALIDLY ISSUED AND ARE FULLY PAID AND
NONASSESSABLE AND (II) WERE ISSUED IN COMPLIANCE WITH ALL APPLICABLE STATE AND
FEDERAL LAWS CONCERNING THE ISSUANCE OF SECURITIES.
(D)
THE RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF THE SHARES
OF THE COMMON STOCK ARE AS STATED IN THE AMENDED AND RESTATED ARTICLES OF
ORGANIZATION (THE "CHARTER").
THE CONVERSION SHARES AND WARRANT SHARES HAVE
BEEN DULY AND VALIDLY RESERVED FOR ISSUANCE.
WHEN ISSUED IN COMPLIANCE WITH THE
PROVISIONS OF THIS AGREEMENT AND THE COMPANY'S CHARTER, THE SECURITIES WILL BE
VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE, AND WILL BE FREE OF ANY LIENS OR
ENCUMBRANCES; PROVIDED, HOWEVER, THAT THE SECURITIES MAY BE SUBJECT TO
RESTRICTIONS ON TRANSFER UNDER STATE AND/OR FEDERAL SECURITIES LAWS AS SET FORTH
HEREIN OR AS OTHERWISE REQUIRED BY SUCH LAWS AT THE TIME A TRANSFER IS PROPOSED.
(E)