Common use of Vsource Capitalization Clause in Contracts

Vsource Capitalization. (a) The authorized capital stock of Vsource consists solely of (i) 500,000,000 shares of common stock, of which there were 1,863,086 shares issued and outstanding as of the close of business on March 31, 2003, and (ii) 5,000,000 shares of preferred stock. Of the preferred shares, (w) 2,802,000 shares have been designated as Vsource Series 1-A Preferred, of which 1,275,955 are issued or outstanding, (x) 1,672,328 shares have been designated as Vsource Series 2-A Preferred, of which 367,336 are issued or outstanding, (y) 500,000 shares have been designated Series 3-A Convertible Preferred Stock (“Vsource Series 3-A Preferred”), of which no shares are issued or outstanding, and (z) 25,000 shares have been designated as Vsource Series 4-A Preferred (together with the Vsource Series 1-A, Series 2-A and Series 3-A Preferred, the “Vsource Preferred Stock”) of which 17,364 are issued or outstanding. Vsource Common Stock and the Vsource Preferred Stock shall be collectively referred to in this Agreement as “Vsource Capital Stock.” All outstanding shares of Vsource Common Stock are duly authorized, validly issued, fully paid and nonassessable and are not subject to preemptive rights created by statute, the Certificate of Incorporation or Bylaws of Vsource or any Contract to which Vsource is a party or by which it is bound. As of the date of this Agreement, there are 15,000 shares of Vsource Common Stock held in treasury by Vsource. Except as disclosed in Part 1.9 of the Vsource Disclosure Letter, there are no shares of Vsource Restricted Stock issued or outstanding. Each share of Vsource Series 1-A, 2-A, and 4-A Preferred is convertible into 0.378, 0.451 and 1,000 shares, respectively, of Vsource Common Stock (in each case, without accounting for or considering any liquidation preference). (b) As of the close of business on March 31, 2003, (i) 27,394 shares of Vsource Common Stock are subject to issuance pursuant to outstanding options to purchase Vsource Common Stock under the Vsource 2000 Plan and all other outstanding Vsource options not issued pursuant to the Vsource 2001 Plan, (ii) 3,761,916 shares of Vsource Common Stock are subject to issuance pursuant to outstanding options to purchase Vsource Common Stock under the Vsource 2001 Plan, (iii) 367,497 shares of Vsource Common Stock are subject to issuance pursuant to outstanding warrants under the Vsource Warrant Agreements (together with the options set forth in clauses (i) and (ii) above, the “Vsource Options”), and (iv) 334,359 shares of Vsource Common Stock are reserved for future issuance under the Vsource ESPP. The transactions contemplated by this Agreement will not result in an increase in the number of shares issuable (a) under outstanding Vsource options, other than pursuant to Section 5.9 of this Agreement, and (b) under outstanding Vsource warrants, other than increasing the number of shares that may be purchased under the applicable Vsource Warrant Agreement to an amount obtained by multiplying the existing warrants by the Common Stock Exchange Ratio. Part