VALUE PER SHARE, NONE OF WHICH ARE ISSUED AND
OUTSTANDING.
AS OF THE DATE HEREOF, (I) 7,762,128 SHARES OF COMMON STOCK WERE
RESERVED FOR FUTURE ISSUANCE PURSUANT TO OUTSTANDING OPTIONS ISSUED BY THE
COMPANY, (II) 4,187,789 SHARES OF COMMON STOCK WERE RESERVED FOR FUTURE ISSUANCE
PURSUANT TO OUTSTANDING WARRANTS ISSUED BY THE COMPANY AND (III) 443,232 SHARES
OF COMMON STOCK WERE RESERVED FOR FUTURE ISSUANCE UPON CONVERSION OF THE
EXISTING CONVERTIBLE NOTES.
THE WARRANTS TO BE ISSUED AND SOLD HEREUNDER SHALL
CONSTITUTE 8.2% OF THE FULLY DILUTED EQUITY OF THE COMPANY (CALCULATED ASSUMING
EXERCISE OF ALL WARRANTS, RIGHTS OR OPTIONS OUTSTANDING AS OF APRIL 26, 2004
DATE HEREOF).
EXCEPT AS SET FORTH ABOVE AND FOR THE EXERCISE RIGHTS OF THE
WARRANTS AND THE CONVERSION RIGHTS OF THE EXISTING CONVERTIBLE NOTES, AFTER
GIVING EFFECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND EXCEPT AS
SET FORTH ON SCHEDULE 5.4, THERE WILL BE NO OTHER OUTSTANDING OPTIONS, WARRANTS,
RIGHTS (INCLUDING CONVERSION OR PREEMPTIVE RIGHTS) OR ANY AGREEMENT FOR THE
PURCHASE OR ACQUISITION FROM THE COMPANY OF ANY SHARES OF THE COMPANY'S CAPITAL
STOCK OR VOTING AGREEMENTS WITH RESPECT TO EQUITY OF THE COMPANY.
ALL SHARES OF
THE CAPITAL STOCK OF THE COMPANY SUBJECT TO ISSUANCE AS AFORESAID, INCLUDING THE
WARRANTS, UPON ISSUANCE ON THE TERMS AND CONDITIONS SPECIFIED IN THE INSTRUMENTS
PURSUANT TO WHICH THEY ARE ISSUABLE, SHALL BE DULY AUTHORIZED, VALIDLY ISSUED,
FULLY PAID AND NONASSESSABLE.
THERE ARE NO OBLIGATIONS, CONTINGENT OR
OTHERWISE, OF THE COMPANY TO REPURCHASE, REDEEM OR OTHERWISE ACQUIRE ANY SHARES
OF COMMON STOCK OR TO PROVIDE FUNDS TO OR MAKE ANY INVESTMENT (IN THE FORM OF A
LOAN, CAPITAL CONTRIBUTION, GUARANTY OR OTHERWISE) IN ANY OTHER ENTITY.
NONE OF
THE OUTSTANDING SHARES OF CAPITAL STOCK OF THE COMPANY WERE ISSUED IN VIOLATION
OF THE SECURITIES ACT OR ANY STATE SECURITIES LAWS.
5.5.
LITIGATION.
EXCEPT AS DISCLOSED IN THE SEC
REPORTS, NO ACTION, SUIT, PROCEEDING OR INVESTIGATION (WHETHER CONDUCTED BY ANY
JUDICIAL OR REGULATORY BODY OR OTHER PERSON) IS PENDING OR, TO THE KNOWLEDGE OF
THE COMPANY, IS THREATENED AGAINST THE COMPANY (NOR
9
TO THE KNOWLEDGE OF THE COMPANY IS ANY BASIS THEREFOR) WHICH (I) QUESTIONS THE
VALIDITY OF THIS AGREEMENT OR ANY ACTION TAKEN OR TO BE TAKEN PURSUANT HERETO OR
(II) COULD RESULT IN A MATERIAL ADVERSE EFFECT.
5.6.
GOVERNMENTAL APPROVALS.
EXCEPT FOR ANY
REQUIRED FILINGS AND RECORDINGS WHICH HAVE BEEN MADE AND ARE IN FULL FORCE AND
EFFECT, NO ORDER, CONSENT, APPROVAL, LICENSE, AUTHORIZATION OR VALIDATION OF, OR
FILING, RECORDING OR REGISTRATION WITH, OR EXEMPTION BY, ANY FOREIGN OR DOMESTIC
GOVERNMENTAL OR PUBLIC BODY OR AUTHORITY, OR ANY SUBDIVISION THEREOF, IS
REQUIRED TO AUTHORIZE OR IS REQUIRED IN CONNECTION WITH (A) THE EXECUTION,
DELIVERY AND PERFORMANCE OF ANY DOCUMENT OR (B) THE LEGALITY, VALIDITY, BINDING
EFFECT OR ENFORCEABILITY OF ANY DOCUMENT.
5.7.
CONFORMITY TO SECURITIES ACT AND EXCHANGE ACT;
NO MISSTATEMENT OR OMISSION.
EACH OF THE SEC REPORTS AS OF THE DATE IT WAS
FILED WITH THE SEC IN THE CASE OF FILINGS