AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE PREFERRED
STOCK (THE "CONVERSION SHARES"), TO ISSUE AND SELL THE WARRANT AND THE WARRANT
SHARES, AND TO CARRY OUT THE PROVISIONS OF THIS AGREEMENT AND THE RELATED
AGREEMENTS AND TO CARRY ON ITS BUSINESS AS PRESENTLY CONDUCTED AND AS PRESENTLY
PROPOSED TO BE CONDUCTED.
THE COMPANY IS DULY QUALIFIED AND IS AUTHORIZED TO DO
BUSINESS AND IS IN GOOD STANDING AS A FOREIGN CORPORATION IN ALL JURISDICTIONS
IN WHICH THE NATURE 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 WOULD NOT HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY
OR ITS BUSINESS.
4.2
SUBSIDIARIES.
EXCEPT AS SET FORTH IN THE SEC REPORTS, THE COMPANY
DOES NOT OWN OR CONTROL ANY EQUITY SECURITY OR OTHER INTEREST OF ANY OTHER
CORPORATION, LIMITED PARTNERSHIP OR OTHER BUSINESS ENTITY.
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, 6,948,746
SHARES OF WHICH ARE ISSUED AND OUTSTANDING AS OF
SEPTEMBER 30, 2003, AND (II) 5,000,000 SHARES OF PREFERRED STOCK, PAR VALUE
$0.10 PER SHARE, 450,000 OF WHICH ARE ISSUED AND OUTSTANDING ON THE DATE HEREOF.
(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.
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.
(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
3
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