OF THE DATE HEREOF AND IMMEDIATELY
PRIOR TO THE ISSUANCE OF THE PREFERRED STOCK AND WARRANTS HEREUNDER, THE
AUTHORIZED CAPITAL STOCK OF THE COMPANY CONSISTS OF (I) 40,000,000 SHARES OF
COMMON STOCK, OF WHICH AS OF THE DATE HEREOF, 8,112,685 SHARES ARE ISSUED AND
OUTSTANDING, (II) 4,000,000 SHARES OF PREFERRED STOCK, PAR VALUE $0.01 PER
SHARE, OF WHICH (A) 100,000 SHARES ARE DESIGNATED AS "SERIES A PARTICIPATING
PREFERRED STOCK, OF WHICH AS OF THE DATE HEREOF NO SHARES ARE ISSUED OR
OUTSTANDING AND (B) 1,500,000 SHARES ARE DESIGNATED AS THE PREFERRED STOCK, OF
WHICH AS OF THE DATE HEREOF NO SHARES ARE ISSUED OR OUTSTANDING.
ALL OF THE
OUTSTANDING SHARES HAVE BEEN VALIDLY ISSUED AND ARE FULLY PAID AND
NONASSESSABLE.
NO SHARES OF COMMON STOCK ARE SUBJECT TO PREEMPTIVE RIGHTS OR
ANY OTHER SIMILAR RIGHTS OR ANY LIENS OR ENCUMBRANCES SUFFERED OR PERMITTED BY
THE COMPANY.
EXCEPT AS SET FORTH IN THE SEC REPORTS, AS OF THE DATE HEREOF, (I)
THERE ARE NO OUTSTANDING OPTIONS (EXCEPT FOR OPTIONS GRANTED UNDER THE COMPANY'S
EXISTING EQUITY INCENTIVE PLANS), WARRANTS, SCRIP, RIGHTS TO SUBSCRIBE TO, CALLS
OR COMMITMENTS OF ANY CHARACTER WHATSOEVER RELATING TO, OR SECURITIES OR RIGHTS
CONVERTIBLE INTO, ANY SHARES OF CAPITAL STOCK OF THE COMPANY, OR CONTRACTS,
COMMITMENTS, UNDERSTANDINGS OR ARRANGEMENTS BY WHICH THE COMPANY IS OR MAY
BECOME BOUND TO ISSUE ADDITIONAL SHARES OF CAPITAL STOCK OF THE COMPANY AND (II)
THERE ARE NO AGREEMENTS OR ARRANGEMENTS UNDER WHICH THE COMPANY IS OBLIGATED TO
REGISTER THE SALE OF ANY OF ITS SECURITIES UNDER THE SECURITIES ACT.
THERE ARE
NO SECURITIES OR INSTRUMENTS CONTAINING ANTI-DILUTION OR SIMILAR PROVISIONS THAT
WILL BE TRIGGERED BY THE ISSUANCE OF ANY OF THE SECURITIES AS DESCRIBED IN THIS
AGREEMENT.
THE COMPANY HAS FURNISHED TO THE PURCHASER TRUE AND CORRECT COPIES
OF THE COMPANY CHARTER DOCUMENTS, AS IN EFFECT ON THE DATE HEREOF.
(E)
GOVERNMENTAL CONSENTS.
NO CONSENT, APPROVAL, ORDER OR AUTHORIZATION
OF, OR REGISTRATION, QUALIFICATION, DESIGNATION, DECLARATION OR FILING WITH, ANY
FEDERAL, STATE OR LOCAL GOVERNMENTAL AUTHORITY ON THE PART OF THE COMPANY IS
REQUIRED IN CONNECTION WITH THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, EXCEPT FOR THE NOTIFICATION PURSUANT TO AN APPLICATION FOR
LISTING OF ADDITIONAL SHARES TO THE NASDAQ STOCK MARKET AND FILINGS PURSUANT TO
APPLICABLE STATE SECURITIES LAWS AND REGULATION D OF THE SECURITIES ACT.
(F)
PRIVATE PLACEMENT.
SUBJECT TO THE TRUTH AND ACCURACY OF THE
PURCHASER'S REPRESENTATIONS SET FORTH IN THIS AGREEMENT, THE OFFER, SALE AND
ISSUANCE OF THE SECURITIES AS CONTEMPLATED BY THIS AGREEMENT IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND NEITHER THE COMPANY NOR ANY
AUTHORIZED AGENT ACTING ON ITS BEHALF WILL TAKE ANY ACTION HEREAFTER THAT WOULD
CAUSE THE LOSS OF SUCH EXEMPTION.
(G)
SEC REPORTS; FINANCIAL STATEMENTS.
(I)
THE COMPANY HAS FILED ALL FORMS, REPORTS AND DOCUMENTS REQUIRED TO
BE FILED BY IT WITH THE COMMISSION, AND HAS HERETOFORE MADE AVAILABLE TO THE
PURCHASER IN THE FORM FILED WITH THE COMMISSION (EXCLUDING ANY EXHIBITS THERETO)
(I) ITS ANNUAL REPORT ON