Common use of Authorized Capital Stock Clause in Contracts

Authorized Capital Stock. The Company has authorized, issued ------------------------ and outstanding capital stock as set forth in the Company's reports (the "34 Act Reports") filed by it with the Securities and Exchange Commission (the "Commission") since January 1, 2001 pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports). The issued and outstanding shares of the Company's preferred stock, par value $.001 per share (the "Preferred Stock"), and Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe for or purchase securities, and conform to the description thereof contained in the 34 Act Reports. Except as disclosed in the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 and except as set forth on Schedule 3.2, the Company does not have outstanding any options or warrants to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock of the Company or any such options, rights convertible securities or obligations. The description of the Company's capital stock, stock bonus and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rights.

Authorized Capital Stock. The Company has authorized, issued ------------------------ and outstanding Tercica’s authorized capital stock consists of (i) 100,000,000 shares of Common Stock, of which as set forth in the Company's reports of March 31, 2007 (A) 50,162,610 shares of Common Stock were issued and outstanding, (B) 1,683,729 shares of Common Stock were reserved for future issuance under Tercica’s 2004 Stock Plan, 2002 Stock Plan, 2002 Executive Stock Plan and 2004 Employee Stock Purchase Plan (the "34 Act Reports"“Plans”), (C) filed by it with 5,196,012 shares of Common Stock were reserved for issuance upon the Securities exercise of outstanding options granted under the Plans, (D) 8,405,524 shares of Common Stock were reserved for issuance upon the exercise of an outstanding warrant and Exchange Commission the conversion of a senior convertible promissory note, in each case issued to Ipsen and (E) 260,000 shares were reserved for issuance upon the "Commission"exercise of an outstanding warrant issued to Kingsbridge Capital Limited, and (ii) 5,000,000 shares of Preferred Stock, 1,000,000 of which are designated Series A Junior Participating Preferred Stock, none of which are issued and outstanding. Tercica has not issued any shares since January 1March 31, 2001 2007 other than pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit equity incentive plans or purchase plans approved by the exercise Board of convertible securities referred to in the 34 Act Reports)Directors of Tercica. The issued and outstanding shares of the Company's preferred stock, par value $.001 per share (the "Preferred Stock"), and Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance with all federal and state securities laws and were not issued in violation of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe for or purchase securities, and conform to the description thereof contained in the 34 Act Reports. Except as disclosed in the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 and except as set forth on Schedule 3.2, the Company Tercica does not have outstanding any options or warrants to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock and there are no agreements or any shares of commitments obligating Tercica to repurchase, redeem, or otherwise acquire capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock of the Company or any such options, rights convertible securities or obligations. The description of the Company's capital stock, stock bonus and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required securities of Tercica. There are no agreements to be shown which Tercica is a party or by which it is bound with respect to such capital stockthe voting (including voting trusts or proxies), plansregistration under the Securities Act, arrangementsor sale or transfer (including agreements relating to pre-emptive rights, options and rights of first refusal, co-sale rights or “drag-along” rights) of any securities of Tercica.

Authorized Capital Stock. (a) The Company has authorized, issued ------------------------ and outstanding authorized capital stock of the Corporation consists of 37,500,000 shares of Common Stock and 10,000,000 shares of Preferred Stock, par value $.001 per share, of which 5,250,000 shares have been designated Series A 9% Convertible Preferred Stock (the "Series A Preferred Stock"). On October 30, 1998, 7,756,006 shares of Common Stock and 5,000,000 shares of Series A Preferred Stock will be validly issued and outstanding, fully paid and nonassessable with no personal liability attaching to the ownership thereof. The Series A Preferred Stock is the only series of Preferred Stock of the Corporation issued and outstanding. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of each class and series of authorized capital stock of the Corporation are as set forth in the Company's reports Charter and the Certificate of Designation of the Series A Preferred Stock and amendments thereto (the "34 Act ReportsCertificate of Designation"), and all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable and in accordance with all applicable laws. Except as set forth in the Charter, Certificate of Designation or SEC Documents (as defined herein), (i) filed no subscription, warrant, option, convertible security, or other right (contingent or otherwise) to purchase or otherwise acquire equity securities of the Corporation from the Corporation or any of its subsidiaries is authorized or outstanding and (ii) there is no commitment by it the Corporation to issue shares, subscriptions, warrants, options, convertible securities, or other such rights or to distribute to holders of any of its equity securities any evidence of indebtedness or asset. Except as provided for in the Charter or the Certificate of Designation or as set forth in the SEC Documents, the Corporation has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any of its equity securities or any interest therein or to pay any dividend or make any other distribution in respect thereof. The Corporation does not know of any voting trusts or agreements, stockholders agreements, pledge agreements, buy-sell agreements, rights of first refusal, preemptive rights or proxies relating to any securities of the Corporation or any of its subsidiaries (whether or not any of them is a party thereto), except for this Agreement and the Stockholders Agreement. All of the outstanding securities of the Corporation have been issued in compliance in all material respects with all applicable Federal and state securities laws. Except for the Registration Rights Agreement, or as set forth in the SEC Documents or as set forth in Schedule 2.4 hereof, there are no agreements or understandings granting to any Person any right to cause the Corporation to effect the registration under the Securities and Exchange Commission (the "Commission") since January 1, 2001 pursuant to the Securities and Exchange Act of 19341933, as amended (the "Exchange Securities Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports). The issued and outstanding shares of the Company's preferred stock, par value $.001 per share (the "Preferred Stock"), and Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe for or purchase securities, and conform to the description thereof contained in the 34 Act Reports. Except as disclosed in the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 and except as set forth on Schedule 3.2, the Company does not have outstanding any options or warrants to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock of the Company or any such options, rights convertible securities or obligations. The description of the Company's capital stock, stock bonus and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rights.

Authorized Capital Stock. The Company has authorizedAs of August 31, issued ------------------------ and outstanding 2004, (i) the authorized capital stock as set forth in of the Company's reports Company consisted of twenty four million (the "34 Act Reports"24,000,000) filed by it with the Securities shares of Common Stock and Exchange Commission two million (the "Commission"2,000,000) since January 1shares of Preferred Stock, 2001 of which thirteen million nine hundred seventy seven thousand twenty-three (13,977,023) shares of Common Stock and no shares of Preferred Stock were issued and outstanding; (ii) there were outstanding options granted pursuant to the Securities Company’s stock option plans (as described in Section 4.2(iii)) to purchase a total of three hundred ninety-three thousand eight hundred forty-eight (393,848) shares of Common Stock; (iii) there were available for issuance under the Company’s stock option and Exchange Act purchase plans a total of 1934, as amended eight hundred thousand (800,000) shares of Common Stock; and (iv) there were one hundred sixty-seven thousand eight hundred twenty-eight (167,828) shares of Common Stock reserved for issuance under the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports)Company’s dividend reinvestment plan. The issued and outstanding shares of the Company's preferred stock, par value $.001 per share (the "Preferred Stock"), and ’s Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance with all federal and state securities laws and were not issued in violation of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe for or purchase securities, and conform in all material respects to the description thereof contained in the 34 Act ReportsPrivate Placement Memorandum or incorporated by reference in the Private Placement Memorandum. Except for stock options and other awards granted under the option, award and purchase plans of the Company described in the Private Placement Memorandum or except as otherwise disclosed in or contemplated by the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 and except as set forth on Schedule 3.2Private Placement Memorandum, the Company does not have outstanding any options or warrants to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock of the Company or any such options, rights rights, convertible securities or obligations. The description of the Company's capital ’s stock, stock bonus and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained set forth or incorporated by reference in the 34 Act Reports Private Placement Memorandum accurately and fairly presents the in all material respects all information required to be shown with respect pertaining to such capital stock, plans, arrangements, options and rights. With respect to each Subsidiary, (i) all the issued and outstanding shares of the Subsidiary’s capital stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in compliance with applicable federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and (ii) there are no outstanding options to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of the Subsidiary’s capital stock or any such options, rights, convertible securities or obligations. Except as disclosed on Schedule 4.1, the Company directly or indirectly owns 100% of the outstanding equity of each Subsidiary.

Authorized Capital Stock. The Company has authorized, issued ------------------------ and outstanding authorized capital stock as set forth in of the Company's reports Company consists of (the "34 Act Reports"i) filed by it with the Securities and Exchange Commission (the "Commission") since January 1, 2001 pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports). The issued and outstanding 10,000,000 shares of the Company's preferred stockPreferred Stock, no par value $.001 per share (the "Preferred Stock"), and Common Stock of which 750,000 shares have been duly authorized designated Series A Preferred Stock, no par value, and validly (ii) 30,000,000 shares of Company Common Stock, no par value. Immediately prior to the Initial Closing, 3,513,524 shares of Company Common Stock, no shares of Series A Preferred Stock, and no shares of Preferred Stock will have been issued. The shareholders of record and holders of subscriptions, are fully paid and nonassessablewarrants, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe for or purchase options, convertible securities, and conform other rights (contingent or other) to the description thereof contained in the 34 Act Reports. Except as disclosed in the 34 Act Reports and options issued under purchase or otherwise acquire equity securities of the Company's stock plans after March 31, 2001 and except the number of shares of Company Common Stock and the number of such subscriptions, warrants, options, convertible securities, and other such rights held by each, are as set forth on in the attached Schedule 3.22.04(a)(i). There is no commitment by the Company to issue shares, subscriptions, warrants, options, convertible securities, or other such rights or to distribute to holders of any of its equity securities any evidence of indebtedness or asset. As of the date hereof, the Company does not have outstanding any options or warrants to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, Shareholders own shares of its capital stock or any shares Company Common Stock and Preferred Stock having sufficient voting power to adopt and approve the Agreement of capital stock Merger under applicable law. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of any subsidiary each class and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares series of authorized capital stock of the Company are as set forth in the Charter Documents, and all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable and in accordance with all applicable laws. Except as set forth in the Charter Documents, the Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any of its equity securities or any such optionsinterest therein or to pay any dividend or make any other distribution in respect thereof. To the knowledge of the Company after reasonable inquiry, except as set forth in the attached Schedule 2.04(a)(ii), there are no voting trusts or agreements, shareholders' agreements, pledge agreements, buy-sell agreements, rights convertible of first refusal, preemptive rights or proxies relating to any securities or obligations. The description of the Company's capital stock, stock bonus Company (whether or not the Company is a party thereto). All of the outstanding securities of the Company were issued in compliance with all applicable Federal and other stock plans or arrangements state securities laws. Immediately after the Initial Closing and the options or other rights granted and exercised thereunderconsummation of the sale of the Purchaser Preferred Shares to Purchaser, contained the capitalization of the Company will be as set forth in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rightsSchedule 2.04(a)(iii).

Authorized Capital Stock. The Company has authorized, issued ------------------------ and outstanding capital stock as set forth in the Company's reports (the "34 Act Reports") filed by it with the Securities and Exchange Commission (the "Commission") since January 1, 2001 pursuant to the Securities and Exchange Act total number of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports). The issued and outstanding shares of common stock which the Company's preferred stock, Corporation is authorized to issue is 125,000,000 at a par value of $.001 per share (the "“Common Stock”) and the total number of shares of preferred stock which the corporation is authorized to issue is 50,000,000 at a par value of $.001 per share (“Preferred Stock"”). The board of directors is hereby expressly authorized to provide, out of the unissued shares of Preferred Stock, for one or more series of Preferred Stock and, with respect to each such series, to fix the number of shares constituting such series and the designation of such series, the voting powers, if any, of the shares of such series, and Common Stock have been duly authorized the preferences and validly issuedrelative, are fully paid and nonassessableparticipating, were not issued in violation of or are not otherwise subject to any preemptive optional or other similar rights or other rights to subscribe for or purchase securitiesspecial rights, if any, and conform to any qualifications, limitations or restrictions thereof, of the description thereof contained in shares of such series. The powers, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the 34 Act Reportsqualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. Except as disclosed in otherwise provided by law or by the 34 Act Reports resolution or resolutions adopted by the board of directors designating the rights, powers and options issued under preferences of any series of Preferred Stock, the Company's stock plans after March 31Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes. Each share of Common Stock shall have one vote on each matter properly submitted to the stockholders of the Corporation for their vote, 2001 and the holders of the Common Stock shall vote together as a single class; provided, however, that, except as set forth otherwise required by law, holders of Common Stock shall not be entitled to vote on Schedule 3.2any amendment to this certificate of incorporation (including certificates of designations filed with the Secretary of State of the State of Delaware from time to time, the Company does not have “Certificate of Incorporation”) that relates solely to the terms of one or more outstanding any options series of Preferred Stock if the holders of such affected series are entitled, either separately or warrants together as a class with the holders of one or more other such series, to purchase, or any preemptive rights or other rights vote thereon pursuant to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares the Certificate of its capital stock or any shares of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock of the Company or any such options, rights convertible securities or obligations. The description of the Company's capital stock, stock bonus and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rightsIncorporation.

Authorized Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of 75,000,000 shares of Common Stock, $0.01 par value, and 10,000,000 shares of Preferred Stock, $0.01 par value. As of the date hereof, approximately 12,669,804 shares of Common Stock and no shares of Preferred Stock are validly issued and outstanding, and each outstanding share of Common Stock is fully paid and nonassessable. The Company has authorizedreserved (i) 5,622,565 shares of Common Stock for issuance pursuant to the Company’s 2006 Equity Incentive Plan and (ii) 1,150,000 shares of Common Stock for issuance pursuant to the Company’s 2006 Employee Stock Purchase Plan (the “Purchase Plan”), issued ------------------------ and has outstanding options to purchase 3,406,837 shares of Common Stock under the 2006 Equity Incentive Plan as of the date hereof. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of each class and series of authorized capital stock of the Company are as set forth in the Company's ’s articles of incorporation. The issued and outstanding shares of Common Stock conform to the description thereof contained in the reports (the "34 “Exchange Act Reports"”) filed by it the Company with the Securities and Exchange Commission (the "Commission"“SEC”) since January 1, 2001 pursuant to the Securities and Exchange Act of 1934, as amended (the "“Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports”). The issued and outstanding shares of the Company's preferred stock, par value $.001 per share (the "Preferred Stock"), and Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe Except for or purchase securities, and conform to the description thereof contained in the 34 Act Reports. Except as disclosed in the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 ’s 2006 Equity Incentive Plan and except as set forth on Schedule 3.2the obligations under the Purchase Plan, the Company does not have outstanding any options or warrants to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary stock, and there is no commitment, plan or arrangement to issue or by which the Company may become bound to issue, any securities or obligations convertible into any shares of capital stock of the Company or any such options, rights convertible securities or obligations. The description There are no securities or instruments containing anti-dilution or similar provisions. As of the Company's capital stockClosing, stock bonus and other stock plans or arrangements and the options there will be no outstanding debt securities, notes, credit agreements, credit facilities or other rights granted agreements, documents or instruments evidencing Indebtedness (as defined below) of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound, other than in connection with the Transaction Documents, and exercised thereunderthere will be no financing statements or other liens or security securing obligations in any material amounts, contained either singly or in the 34 Act Reports accurately and fairly presents aggregate, filed in connection with the information required to be shown Company or any of its Subsidiaries, other than in connection with respect to such capital stock, plans, arrangements, options and rightsthe Transaction Documents.

Authorized Capital Stock. The Company has authorized, issued ------------------------ and outstanding authorized capital stock of the Company consists of 8,540,000 shares of Preferred Stock, and 17,000,000 shares of Common Stock. Immediately prior to the Closing, 2,592,610 shares of Common Stock and 6,790,001 shares of Preferred Stock will be validly issued and outstanding, fully paid and nonassessable with no personal liability attaching to the ownership thereof. The stockholders of record and holders of subscriptions, warrants, options, convertible securities, and other rights (contingent or other), if any, to purchase or otherwise acquire equity securities of the Company prior to the Closing Date (the "Original Shareholders") and the number of shares of Common Stock and the number of such subscriptions, warrants, options, convertible securities, and other such rights, if any, held by each, are as set forth in the Company's reports (the "34 Act Reports") filed by it with the Securities and Exchange Commission (the "Commission") since January 1, 2001 pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports)Memorandum. The issued designations, powers, preferences, rights, qualifications, limitations and outstanding shares restrictions in respect of the Company's preferred stock, par value $.001 per share (the "Preferred Stock"), and Common Stock have been duly each class of authorized and validly issued, are fully paid and nonassessable, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe for or purchase securities, and conform to the description thereof contained in the 34 Act Reports. Except as disclosed in the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 and except as set forth on Schedule 3.2, the Company does not have outstanding any options or warrants to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock of the Company are as set forth in the Articles, a copy of which has previously been delivered to each Purchaser, and all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable and in accordance with all applicable laws. Except as set forth in the attached Schedule 6.04 or in the Memorandum, (a) no person owns of record or is known to the Company to own beneficially any share of Common Stock, (b) no subscription, warrant, option, convertible security, or other right (contingent or other) to purchase or otherwise acquire equity securities of the Company is authorized or outstanding and (c) there is no commitment by the Company to issue shares, subscriptions, warrants, options, convertible securities, or other such rights or to distribute to holders of any of its equity securities any evidence of indebtedness or asset. Except as provided for in the Articles or as set forth herein, the Company has no obligation (contingent or other) to purchase, redeem or otherwise acquire any of its equity securities or any such optionsinterest therein or to pay any dividend or make any other distribution in respect thereof. Except as set forth herein or in the Memorandum, there are no voting trusts or agreements, stockholders agreements, pledge agreements, buy-sell agreements, rights convertible of first refusal, preemptive rights or proxies relating to any securities or obligations. The description of the Company's capital stock, stock bonus Company (whether or not the Company is a party thereto). All of the outstanding securities of the Company were issued in compliance with all applicable Federal and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rightsstate securities laws.

Authorized Capital Stock. The Company has authorized, issued ------------------------ and outstanding authorized capital stock as set forth in the Company's reports of AVI consists of (the "34 Act Reports"a) filed by it with the Securities and Exchange Commission (the "Commission") since January 150,000,000 shares of Common Stock, 2001 pursuant to the Securities and Exchange Act par value $0.0001, of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports). The which 21,575,267shares are issued and outstanding outstanding, and (b) 2,000,000 shares of the Company's preferred stock, par value $.001 per share (the "Preferred 0.0001, none of which are issued and outstanding. There are issued and outstanding options to purchase an aggregate 2,866,335 shares of Common Stock"), warrants to purchase an aggregate 7,352,003 shares of Common Stock, and Common Stock have been duly authorized and validly issuedno other outstanding subscriptions, are fully paid and nonassessablewarrants, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights options, convertible securities, or other rights (contingent or other) to subscribe purchase or otherwise acquire Common Stock or other equity securities of AVI. There are no agreements or arrangements under which AVI is obligated to register the sale of any of its securities under the Securities Act. Except for an existing warrant held by SuperGen, Inc. to acquire ten percent of the outstanding securities (as defined therein at the time of exercise), there are no anti-dilution or purchase securitiesprice adjustment provisions contained in any security issued by AVI (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Purchased Securities. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of each class of authorized equity securities of AVI are as set forth in AVI's Articles of Incorporation, a true and correct copy of which has been provided to Investor, and conform to the description thereof contained all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable and in the 34 Act Reportsaccordance with all applicable laws. Except as disclosed provided for in the 34 Act Reports and options issued under the CompanyAVI's stock plans after March 31Articles of Incorporation, 2001 and except as set forth on Schedule 3.2, the Company does not have outstanding any options AVI has no obligation (contingent or warrants other) to purchase, redeem or otherwise acquire any of the equity securities or any interest therein or rights to acquire such securities or to pay any dividend or make any other distribution in respect thereof. To AVI's knowledge, there are no voting trusts or agreements, stockholders' agreements, pledge agreements, buy-sell agreements, rights of first refusal, preemptive rights or other rights proxies relating to subscribe for or to purchase, any securities of AVI (whether or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there not AVI is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock a party thereto). All of the Company or any such options, rights convertible outstanding securities or obligations. The description of the Company's capital stock, stock bonus AVI were issued in compliance with all applicable federal and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rightsstate securities laws.

Authorized Capital Stock. The Company has authorized, issued ------------------------ and outstanding authorized capital stock as set forth in of the Company's reports Corporation consists of (the "34 Act Reports"i) filed by it with the Securities and Exchange Commission (the "Commission") since January 1, 2001 pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports). The issued and outstanding 700,000 shares of the Company's preferred stockPreferred Stock, $.001 par value $.001 per share (the "Preferred Stock"), of which 200,000 have been designated as shares of Series A Preferred Stock and 500,000 have been designated as shares of Series B Preferred Stock, and (ii) 11,000,000 shares of Common Stock. Immediately prior to the Closing, 200,000 shares of Series A Preferred Stock and 2,140,000 shares of Common Stock have been duly authorized will be validly issued and validly issuedoutstanding, are fully paid and nonassessablenonassessable with no personal liability attaching to the ownership thereof. The stockholders of record and holders of subscriptions, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe for or purchase warrants, options, convertible securities, and conform other rights (contingent or other) to purchase or otherwise acquire equity securities of the description thereof contained Corporation, and the number of shares of Series A Preferred Stock or of Common Stock and the number of such subscriptions, warrants, options, convertible securities, and other such rights held by each, are as set forth in the 34 Act Reportsattached Schedule 4.4. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of each class and series of authorized capital stock of the Corporation are as set forth in the Restated Certificate of Incorporation, and all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable and in accordance with all applicable laws. As of the date hereof, each outstanding share of Series A Preferred Stock is convertible into one share of Common Stock. Except as disclosed provided for in the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 and except Restated Certificate of Incorporation or as set forth on in the attached Schedule 3.24.4, (i) no Person owns of record or is known to the Company does not have outstanding Corporation to own beneficially any options or warrants to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares share of capital stock of the Company Corporation, (ii) no subscription, warrant, option, convertible security, or other right (contingent or other) to purchase or otherwise acquire equity securities of the Corporation is authorized or outstanding and (iii) there is no commitment by the Corporation to issue shares, subscriptions, warrants, options, convertible securities, or other such rights or to distribute to holders of any of its equity securities any evidence of indebtedness or asset. Except as provided for in the Restated Certificate of Incorporation or as set forth in the attached Schedule 4.4, the Corporation has no obligation (contingent or other) to purchase, redeem or otherwise acquire any of its equity securities or any such optionsinterest therein or to pay any dividend or make any other distribution in respect thereof. Except as set forth in any of the Related Documents, to the best of the Corporation's knowledge, there are no voting trusts or agreements, stockholders' agreements, pledge agreements, buy-sell agreements, rights convertible of first refusal, preemptive rights or proxies relating to any securities or obligations. The description of the Company's capital stock, stock bonus Corporation (whether or not the Corporation is a party thereto). All of the outstanding securities of the Corporation were issued in compliance with all applicable Federal and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rightsstate securities laws.

Authorized Capital Stock. The Company has authorized, issued ------------------------ and outstanding authorized capital stock of the ------------------------ Company consists of (i) 30,000,000 shares of Common Stock and (ii) 5,000,000 shares of preferred stock, of which 4,250,000 shares have been designated Series B Preferred Stock. 8,894,426 shares of Common Stock are validly issued and outstanding, fully paid and nonassessable with no personal liability attaching to the ownership thereof, 3,893,604 shares of Common Stock are reserved for issuance upon exercise of outstanding options and warrants, and another 793,777 shares have been reserved for issuance under the 1994 Long-Term Incentive and Stock Option Plan and the 1996 Directors' Stock Option Plan, and no Series B Shares shall have been issued. The shareholders of record, and holders by name or by category of subscriptions, warrants, options, convertible debt or equity securities, and other rights (contingent or other) to purchase or otherwise acquire equity securities of the Company, and the number of shares of Common Stock and the number of such subscriptions, warrants, options, convertible securities, and other such rights held by each, are as set forth on Schedule -------- 2.04. Schedule 2.04 also identifies, to the extent known to the Company, all the ---- ------------- beneficial owners of such securities, to the extent the record holders are not the beneficial owners of such securities. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of each class and series of authorized capital stock of the Company are as set forth in the Company's reports Articles of Incorporation, and all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable and in accordance with all applicable laws. Except as contemplated by this Agreement or set forth in the attached Schedule 2.04, (the "34 Act Reports"i) filed by it with the Securities and Exchange Commission (the "Commission") since January 1, 2001 pursuant no Person owns ------------- of record or is known to the Securities Company to own beneficially any share of Common Stock, (ii) no subscription, warrant, option, convertible security, or other right (contingent or other) to purchase or otherwise acquire equity securities of the Company is authorized or outstanding, (iii) there is no commitment by the Company to issue shares, subscriptions, warrants, options, convertible equity or debt securities, or other such rights or to distribute to holders of any of its equity or debt securities any evidence of indebtedness or asset and Exchange Act (iv) there are no options, warrants, rights, convertible or exchangeable securities, "phantom" stock rights, stock appreciation rights, stock-based performance units, commitments, contracts, arrangements or undertakings of 1934any kind to which the Company is a party or by which it is bound (x) obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible into, or exercisable for or exchangeable for, any capital stock of or other equity interest in, the Company, (y) obligating the Company to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, contract, arrangement or undertaking, or (z) that give any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of Common Stock. Except as amended provided for in the Articles of Incorporation or as set forth in the attached Schedule 2.04, the Company has no obligation (the "Exchange Act"contingent ------------- or other) (except to purchase, redeem or otherwise acquire any of its securities or any interest therein or to pay any dividend or make any other distribution in respect thereof. Except as set forth on Schedule 3.2 2.04 and except for subsequent issuancesin the Series B ------------- Certificate, if anyor as expressly contemplated by the terms of this Agreement, pursuant to this Agreement there are no voting trusts or pursuant to agreements, employee or director benefit plans or the exercise shareholders' agreements, pledge agreements, buy-sell agreements, rights of convertible securities referred to in the 34 Act Reports). The issued and outstanding shares of the Company's preferred stockfirst refusal, par value $.001 per share (the "Preferred Stock"), and Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe for or purchase securities, and conform to the description thereof contained in the 34 Act Reports. Except as disclosed in the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 and except as set forth on Schedule 3.2, the Company does not have outstanding any options or warrants to purchase, or any preemptive rights or other rights proxies relating to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock of the Company whether or any such options, rights convertible securities or obligationsnot the Company is a party thereto. The description All of the Company's capital stock, stock bonus outstanding securities of the Company were issued in compliance with all applicable federal and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rightsstate securities laws.

Authorized Capital Stock. The Company has authorized, issued ------------------------ and outstanding authorized capital stock as set forth in of the Company's reports Company consists of (the "34 Act Reports"i) filed by it with the Securities and Exchange Commission (the "Commission") since January 1, 2001 pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports). The issued and outstanding 8,000,000 shares of the Company's preferred stockPreferred Stock, $1.00 par value $.001 per share (the "Preferred Stock"), of which 7,246,000 shares have been designated Series A Preferred Stock, and (ii) 12,000,000 shares of Common Stock. Immediately prior to the Closing, 1,545,000 shares of Common Stock have been duly authorized will be validly issued and validly issuedoutstanding, are fully paid and nonassessablenonassessable with no personal liability attaching to the ownership thereof and no shares of Preferred Stock will have been issued. The Company has committed to issue 857,706 shares of Preferred Stock to Centocor, were not Inc., which shares may be issued in violation of or shortly after Closing. There are not otherwise subject to any preemptive or no other similar rights subscriptions, warrants, options, convertible securities, or other rights (contingent or other) to subscribe purchase or otherwise acquire equity securities of the Company currently outstanding although the Company has reserved 1,073,690 shares of Common Stock and for or purchase securitiesPreferred Stock for issuance pursuant to incentive compensation plans. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of the Series A Preferred Stock are as set forth in the Certificate of Designation attached to the Memorandum as Exhibit D, and conform to the description thereof contained all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable and in the 34 Act Reportsaccordance with all applicable laws. Except as disclosed provided for in the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 and except as set forth on Schedule 3.2Certificate of Designation, the Company does not have outstanding any options has no obligation (contingent or warrants other) to purchase, redeem or otherwise acquire any of its equity securities or any preemptive rights or other rights to subscribe for interest therein or to purchasepay any dividend or make any other distribution in respect thereof. Except for the Stockholders' Agreement, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock of the Company or any such options, rights convertible securities or obligations. The description best of the Company's capital stockknowledge there are no voting trusts or agreements, stock bonus stockholders' agreements, pledge agreements, buy-sell agreements, rights of first refusal, preemptive rights or proxies relating to any securities of the Company (whether or not the Company is a party thereto). All of the outstanding securities of the Company were issued in compliance with all applicable Federal and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rightsstate securities laws.

Authorized Capital Stock. The Company has authorized, issued ------------------------ and outstanding authorized capital stock as set forth in of the Company's reports Company consists of (the "34 Act Reports"i) filed by it with the Securities and Exchange Commission (the "Commission") since January 1, 2001 pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports). The issued and outstanding 5,000,000 shares of the Company's preferred stock, $.01 par value $.001 per share (the "Preferred Stock"), of which no shares have been designated, and (ii) 50,000,000 shares of Common Stock. As of March 2, 1999, 6,746,681 shares of Common Stock have been duly authorized were validly issued and validly issuedoutstanding, are fully paid and nonassessablenonassessable with no personal liability attaching to the ownership thereof and no shares of Preferred Stock had been issued. The holders of subscriptions, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe for or purchase warrants, options, convertible securities, and conform other rights (contingent or other) to purchase or otherwise acquire equity securities of the description thereof contained Company, and the number of shares of Common Stock and the number of such subscriptions, warrants, options, convertible securities, and other such rights held by each, are as set forth in Section 2.04 of the 34 Act Reportsattached Schedule II. Except as disclosed set forth in Section 2.04 of the attached Schedule II, (i) no person owns of record or is known to the Company to own beneficially any share of Common Stock, (ii) no subscription, warrant, option, convertible security, or other right (contingent or other) to purchase or otherwise acquire equity securities of the Company is authorized or outstanding and (iii) there is no commitment by the Company to issue shares, subscriptions, warrants, options, convertible securities, or other such rights or to distribute to holders of any of its equity securities any evidence of indebtedness or asset. Except as provided for in the 34 Act Reports and options issued under Charter or as set forth in Section 2.04 of the attached Schedule II, the Company has no obligation (contingent or other) to purchase, redeem or otherwise acquire any of its equity securities or any interest therein or to pay any dividend or make any other distribution in respect thereof. Except as set forth in the Transaction Documents or Section 2.04 of Schedule II, to the best of the Company's stock plans after March 31knowledge there are no voting trusts or agreements, 2001 and except as set forth on Schedule 3.2stockholders' agreements, the Company does not have outstanding any options or warrants to purchasepledge agreements, or any buy-sell agreements, rights of first refusal, preemptive rights or other rights proxies relating to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock of the Company or any such options, rights convertible securities of its subsidiaries (whether or obligationsnot the Company or any of its subsidiaries is a party thereto). The description All of the Company's capital stock, stock bonus outstanding securities of the Company were issued in compliance with all applicable Federal and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rightsstate securities laws.

Authorized Capital Stock. The (a) Upon the filing and acceptance by the office of the Maryland State Department of Assessments and Taxation of the Articles Supplementary: (i) the authorized capital stock of the Company has authorizedwill consist of 9,984,490 shares of Common Stock, of which 7,984,490 shares are classified as Class A Common Stock, par value $0.01 per share, of which 5,590,101 shares will be issued ------------------------ and outstanding as of the date hereof, and 2,000,0000 shares of which are classified as Class B Common Stock, par value $0.01 per share, none of which are issued and outstanding as of the date hereof, and 15,510 shares of preferred stock, all of which have been designated Series A Convertible Preferred Stock, par value $0.01 per share, none of which are issued and outstanding as of the date hereof and (ii) the designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of each class and series of authorized capital stock of the Company as set forth in the Company's reports (Charter will be valid, binding and enforceable and in accordance with all applicable laws. Except for this Agreement, the "34 Act Reports") filed by it with Registration Rights Agreement, the Securities Initial Warrant and Exchange Commission (the "Commission") since January 1, 2001 pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth described on Schedule 3.2 and except for subsequent issuances2.04 hereto, if any(i) there is no commitment by the Company to issue any shares of capital stock, pursuant to this Agreement or pursuant to agreementssubscriptions, employee or director benefit plans or the exercise of warrants, options, convertible securities referred to in the 34 Act Reports). The issued and outstanding shares of the Company's preferred stock, par value $.001 per share (the "Preferred Stock"), and Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights to purchase or receive Company securities or to distribute to the holders of any of its equity securities any evidence of indebtedness, cash or other rights to subscribe for or purchase securitiesassets, and conform to the description thereof contained in the 34 Act Reports. Except as disclosed in the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 and except as set forth on Schedule 3.2, (ii) the Company does not have outstanding any options is under no obligation (contingent or warrants otherwise) to purchase, redeem or otherwise acquire any of its equity or debt securities or any interest therein or to pay any dividend or make any other distribution in respect thereof, and (iii) there are no voting trusts or similar agreements, stockholders' agreements, pledge agreements, buy-sell agreements, rights of first refusal, preemptive rights or other rights proxies relating to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock of the Company or any such options, rights convertible securities or obligations. The description of the Company's capital stock, stock bonus and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rights.

Authorized Capital Stock. The Company has authorized, issued ------------------------ and outstanding authorized capital stock as set forth in of the Company's reports Corporation consists of (the "34 Act Reports"i) filed by it with the Securities and Exchange Commission (the "Commission") since January 1, 2001 pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports). The issued and outstanding 700,000 shares of the Company's preferred stockPreferred Stock, $.001 par value $.001 per share (the "Preferred Stock"), of which 200,000 have been designated as shares of Series A Preferred Stock and 500,000 have been designated as shares of Series B Preferred Stock, and (ii) 11,000,000 shares of Common Stock. Immediately prior to the Closing, 200,000 shares of Series A Preferred Stock and 2,140,000 shares of Common Stock have been duly authorized will be validly issued and validly issuedoutstanding, are fully paid and nonassessablenonassessable with no personal liability attaching to the ownership thereof. The stockholders of record and holders of subscriptions, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe for or purchase warrants, options, convertible securities, and conform other rights (contingent or other) to purchase or otherwise acquire equity securities of the description thereof contained Corporation, and the number of shares of Series A Preferred Stock or of Common Stock and the number of such subscriptions, warrants, options, convertible securities, and other such rights held by each, are as set forth in the 34 Act Reportsattached Schedule 4.4. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of each class and series of authorized capital stock of the Corporation are as set forth in the Restated Certificate of Incorporation, and all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable and in accordance with all applicable laws. As of the date hereof, each outstanding share of Series A Preferred Stock is convertible into one share of Common Stock. Except as disclosed provided for in the 34 Act Reports * Confidential treatment requested: material has been omitted and options issued under filed separately with the Company's stock plans after March 31, 2001 and except Commission. Restated Certificate of Incorporation or as set forth on in the attached Schedule 3.24.4, (i) no Person owns of record or is known to the Company does not have outstanding Corporation to own beneficially any options or warrants to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares share of capital stock of the Company Corporation, (ii) no subscription, warrant, option, convertible security, or other right (contingent or other) to purchase or otherwise acquire equity securities of the Corporation is authorized or outstanding and (iii) there is no commitment by the Corporation to issue shares, subscriptions, warrants, options, convertible securities, or other such rights or to distribute to holders of any of its equity securities any evidence of indebtedness or asset. Except as provided for in the Restated Certificate of Incorporation or as set forth in the attached Schedule 4.4, the Corporation has no obligation (contingent or other) to purchase, redeem or otherwise acquire any of its equity securities or any such optionsinterest therein or to pay any dividend or make any other distribution in respect thereof. Except as set forth in any of the Related Documents, to the best of the Corporation's knowledge, there are no voting trusts or agreements, stockholders' agreements, pledge agreements, buy-sell agreements, rights convertible of first refusal, preemptive rights or proxies relating to any securities or obligations. The description of the Company's capital stock, stock bonus Corporation (whether or not the Corporation is a party thereto). All of the outstanding securities of the Corporation were issued in compliance with all applicable Federal and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rightsstate securities laws.

Authorized Capital Stock. (a) The Company has authorized, issued ------------------------ and outstanding authorized capital stock of the Company consists of (1) 8,540,000 shares of Preferred Stock, and (2) 17,000,000 shares of Common Stock. Immediately prior to the Closing, 2,592,610 shares of Common Stock and 5,540,000 shares of Preferred Stock will be validly issued and outstanding, fully paid and nonassessable with no personal liability attaching to the ownership thereof. The stockholders of record and holders of subscriptions, warrants, options, convertible securities, and other rights (contingent or other), if any, to purchase or otherwise acquire equity securities of the Company prior to the Closing Date (the "Original Shareholders") and the number of shares of Common Stock and the number of such subscriptions, warrants, options, convertible securities, and other such rights, if any, held by each, are as set forth in the Company's reports (the "34 Act Reports") filed by it with the Securities and Exchange Commission (the "Commission") since January 1, 2001 pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports)Memorandum. The issued designations, powers, preferences, rights, qualifications, limitations and outstanding shares restrictions in respect of the Company's preferred stock, par value $.001 per share (the "Preferred Stock"), and Common Stock have been duly each class of authorized and validly issued, are fully paid and nonassessable, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe for or purchase securities, and conform to the description thereof contained in the 34 Act Reports. Except as disclosed in the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 and except as set forth on Schedule 3.2, the Company does not have outstanding any options or warrants to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock of the Company are as set forth in the Articles, a copy of which has previously been delivered to each Purchaser, and all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable and in accordance with all applicable laws. Except as set forth in the attached Schedule 6.04 or in the Memorandum, (a) no person owns of record or is known to the Company to own beneficially any share of Common Stock, (b) no subscription, warrant, option, convertible security, or other right (contingent or other) to purchase or otherwise acquire equity securities of the Company is authorized or outstanding and (c) there is no commitment by the Company to issue shares, subscriptions, warrants, options, convertible securities, or other such rights or to distribute to holders of any of its equity securities any evidence of indebtedness or asset. Except as provided for in the Articles or as set forth herein, the Company has no obligation (contingent or other) to purchase, redeem or otherwise acquire any of its equity securities or any such optionsinterest therein or to pay any dividend or make any other distribution in respect thereof. Except as set forth herein or in the Memorandum, there are no voting trusts or agreements, stockholders agreements, pledge agreements, buy-sell agreements, rights convertible of first refusal, preemptive rights or proxies relating to any securities or obligations. The description of the Company's capital stock, stock bonus Company (whether or not the Company is a party thereto). All of the outstanding securities of the Company were issued in compliance with all applicable Federal and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rightsstate securities laws.

Authorized Capital Stock. The authorized capital stock of the Company has authorizedconsists of (a) 100,000,000 shares of preferred stock, par value $.001, 500,000 of which have been designated as Series A 10% Convertible Preferred Stock (so called herein), and (b) 100,000,000 shares of Common Stock. Immediately prior to the Closing, 283,172 shares of Series A Preferred Stock are issued ------------------------ and outstanding capital stock and 18,332,948 shares of Common Stock are issued and 18,320,748 shares are outstanding, fully paid and nonassessable with no personal liability attaching to the ownership thereof. The powers, preferences, rights, qualifications, limitations and restrictions in respect of the Preferred Stock and Common Stock are set forth in the Company's Articles, Bylaws, and the Certificate of Designation of the Series A Preferred Stock, and all such powers, preferences, rights, qualification, limitations and restrictions are valid, binding and enforceable in accordance with all applicable laws. Except as set forth in the attached Schedule 5.4, (i) no person owns of record any shares of Preferred Stock or Common Stock other than as set forth on the Company's shareholder list, (ii) no subscription, warrant, option, convertible security, or other right (contingent or other) to purchase or otherwise acquire equity securities of the Company is authorized or outstanding, and (iii) there is no commitment by the Company to issue shares, subscriptions, warrants, options, convertible securities, or other rights or to distribute to holders of any of its equity securities or any evidence of indebtedness or asset. Except as set forth in the Company's reports Articles, the Company has no obligation (the "34 Act Reports"contingent or otherwise) filed by it with the Securities and Exchange Commission (the "Commission") since January 1to purchase, 2001 pursuant redeem, or otherwise acquire any of its equity securities or any interest therein or to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement pay any dividend or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to make any other distribution in the 34 Act Reports)respect thereof. The issued and outstanding shares of To the Company's preferred stockKnowledge, par value $.001 per share (the "Preferred Stock")there are no voting trusts or agreements, and Common Stock have been duly authorized and validly issuedpledge agreements, are fully paid and nonassessablebuy-sell agreements, were not issued in violation rights of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe for or purchase securitiesfirst refusal, and conform to the description thereof contained in the 34 Act Reports. Except as disclosed in the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 and except as set forth on Schedule 3.2, the Company does not have outstanding any options or warrants to purchase, or any preemptive rights or other rights proxies relating to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock of the Company (whether or any such options, rights convertible securities or obligationsnot the Company is a party thereto). The description All of the Company's capital stock, stock bonus outstanding securities of the Company were issued in compliance with all applicable federal and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rightsstate securities laws.

Authorized Capital Stock. The Company has authorized, issued ------------------------ and outstanding authorized capital stock of the Company consists of 12,200,000 shares of Preferred Stock, and 21,500,000 shares of Common Stock. Immediately prior to the Closing, 2,829,735 shares of Common Stock and 9,451,766 shares of Preferred Stock will be validly issued and outstanding, fully paid and nonassessable with no personal liability attaching to the ownership thereof. The stockholders of record and holders of subscriptions, warrants, options, convertible securities, and other rights (contingent or other), if any, to purchase or otherwise acquire equity securities of the Company prior to the Closing Date and the number of shares of Common Stock and the number of such subscriptions, warrants, options, convertible securities, and other such rights, if any, held by each, are as set forth in the Company's reports (the "34 Act Reports") filed by it with the Securities and Exchange Commission (the "Commission") since January 1, 2001 pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth on Disclosure Statement and/or in Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports)6.4 attached hereto. The issued designations, powers, preferences, rights, qualifications, limitations and outstanding shares restrictions in respect of the Company's preferred stock, par value $.001 per share (the "Preferred Stock"), and Common Stock have been duly each class of authorized and validly issued, are fully paid and nonassessable, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe for or purchase securities, and conform to the description thereof contained in the 34 Act Reports. Except as disclosed in the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 and except as set forth on Schedule 3.2, the Company does not have outstanding any options or warrants to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock of the Company are as set forth in the Amended Articles, a copy of which has previously been delivered to the Purchaser, and all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable and in accordance with all applicable laws. Except as set forth in the attached Schedule 6.4 or in the Disclosure Statement, (a) no person owns of record or is known to the Company to own beneficially any share of Common Stock, (b) no subscription, warrant, option, convertible security, or other right (contingent or other) to purchase or otherwise acquire equity securities of the Company is authorized or outstanding and (c) there is no commitment by the Company to issue shares, subscriptions, warrants, options, convertible securities, or other such rights or to distribute to holders of any of its equity securities any evidence of indebtedness or asset. Except as provided for in the Amended Articles or as set forth herein, the Company has no obligation (contingent or other) to purchase, redeem or otherwise acquire any of its equity securities or any such optionsinterest therein or to pay any dividend or make any other distribution in respect thereof. Except as set forth herein or in the Disclosure Statement, there are no voting trusts or agreements, stockholders agreements, pledge agreements, buy-sell agreements, rights convertible of first refusal, preemptive rights or proxies relating to any securities or obligations. The description of the Company's capital stock, stock bonus Company (whether or not the Company is a party thereto). All of the outstanding securities of the Company were issued in compliance with all applicable Federal and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rightsstate securities laws.

Authorized Capital Stock. The Company has authorized, issued ------------------------ and outstanding authorized capital stock as set forth in of the Company's reports ------------------------ Company consists of (the "34 Act Reports"i) filed by it with the Securities and Exchange Commission (the "Commission") since January 1, 2001 pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports). The issued and outstanding 4,000,000 shares of the Company's preferred stockPreferred Stock, $.001 par value $.001 per share (the "Preferred Stock"), all of which have been designated Series A Convertible Preferred Stock, and (ii) 12,000,000 shares of Common Stock. Immediately prior to the Closing, 2,929,600 shares of Common Stock have been duly authorized will be validly issued and validly issuedoutstanding, are fully paid and nonassessablenonassessable with no personal liability attaching to the ownership thereof and no shares of Preferred Stock shall have been issued. Immediately after giving effect to the Closing, were not issued in violation the stockholders of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe for or purchase record and holders of subscriptions, warrants, options, convertible securities, and conform other rights (contingent or other) to the description thereof contained in the 34 Act Reports. Except as disclosed in the 34 Act Reports and options issued under purchase or otherwise acquire equity securities of the Company's stock plans after March 31, 2001 and except the number of shares of Common Stock and the number of such subscriptions, warrants, options, convertible securities, and other such rights held by each, will be as set forth on in the attached Schedule 3.2-------- III. The designations, the Company does not have outstanding any options or warrants to purchasepowers, or any preemptive rights or other rights to subscribe for or to purchasepreferences, any securities or obligations convertible intorights, or any contracts or commitments to issue or sellqualifications, shares limitations --- and restrictions in respect of its capital stock or any shares each class and series of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of authorized capital stock of the Company are as set forth in the Charter, a copy of which is attached as Exhibit G, and all such designations, powers, preferences, rights, --------- qualifications, limitations and restrictions are valid, binding and enforceable and in accordance with all applicable laws. Except as set forth in the attached Schedule III, (i) no person owns of record or is known to the Company to own ------------ beneficially any share of Common Stock, (ii) no subscription, warrant, option, convertible security, or other right (contingent or other) to purchase or otherwise acquire equity securities of the Company is authorized or outstanding and (iii) except as provided by this Agreement and the Charter, there is no commitment by the Company to issue shares, subscriptions, warrants, options, convertible securities, or other such rights or to distribute to holders of any of its equity securities any evidence of indebtedness or asset. Except as provided for in the Charter, the Company has no obligation (contingent or other) to purchase, redeem or otherwise acquire any of its equity securities or any such optionsinterest therein or to pay any dividend or make any other distribution in respect thereof. Except as provided for in the Charter, the Founders Agreements, Stockholders Agreements and the Voting Agreement, there are no voting trusts or agreements, pledge agreements, buy-sell agreements, rights convertible of first refusal, preemptive rights or proxies relating to any securities of the Company or obligations. The description any of its subsidiaries to which the Company or any of its subsidiaries or, to the Company's capital stockknowledge, stock bonus any other person or entity, is a party. All of the outstanding securities of the Company were issued in compliance with all applicable Federal and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rightsstate securities laws.

Authorized Capital Stock. The (a) At closing: (i) the authorized capital stock of the Company has authorizedwill consist of 10,000,000 shares of Common Stock, of which 8,000,000 shares are classified as Class A Common Stock, par value $0.01 per share, of which 5,365,101 shares are issued ------------------------ and outstanding as of the date hereof, and 2,000,0000 shares of which are classified as Class B Common Stock, par value $0.01 per share, none of which are issued and outstanding as of the date hereof and (ii) the designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of each class and series of authorized capital stock of the Company as set forth in the Company's reports (Charter will be valid, binding and enforceable and in accordance with all applicable laws. Except for this Agreement, the "34 Act Reports") filed by it with Registration Rights Agreement or the Securities Preferred Stock Purchase Agreement and Exchange Commission (the "Commission") since January 1, 2001 pursuant associated Registration Rights Agreement relative to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports). The issued and outstanding issuance 15,510 shares of the Company's preferred stocknewly classified Series A Convertible Preferred Stock (together, par value $.001 per share (the "Preferred StockStock Agreement"), and Common Stock have been duly authorized and validly issued(i) there is no commitment by the Company to issue any shares of capital stock, are fully paid and nonassessablesubscriptions, were not issued in violation of or are not otherwise subject to any preemptive warrants, options, convertible securities or other similar rights to purchase or receive Company securities or to distribute to the holders of any of its equity securities any evidence of indebtedness, cash or other rights to subscribe for or purchase securitiesassets, and conform to the description thereof contained in the 34 Act Reports. Except as disclosed in the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 and except as set forth on Schedule 3.2, (ii) the Company does not have outstanding any options is under no obligation (contingent or warrants otherwise) to purchase, redeem or otherwise acquire any of its equity or debt securities or any interest therein or to pay any dividend or make any other distribution in respect thereof, and (iii) there are no voting trusts or similar agreements, stockholders' agreements, pledge agreements, buy-sell agreements, rights of first refusal, preemptive rights or other rights proxies relating to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock of the Company or any such options, rights convertible securities or obligations. The description of the Company's capital stock, stock bonus and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rights.

Authorized Capital Stock. ()The Company has authorized, issued ------------------------ and outstanding authorized capital stock as set forth in the Company's reports (the "34 Act Reports") filed by it with the Securities and Exchange Commission (the "Commission") since January 1, 2001 pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports). The issued and outstanding shares of the Company's preferred stockCompany consists of (i) 10,000 Special Shares, without par value $.001 per share (the "Preferred Stock"), of which 1,000 shares have been designated Series A Preferred Stock, 1,500 shares have been designated Series B Preferred Stock and 3,000 shares have been designated Series C Convertible Preferred Stock and (ii) 10,000 shares of Common Stock. Except for the Series B Preferred Stock, all of which will be redeemed on the Closing Date, no shares of Common Stock or Preferred Stock have been duly authorized and validly issued, are fully paid and nonassessable, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe for or purchase securities, and conform to the description thereof contained in the 34 Act Reports. Except as disclosed in the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 and except as set forth on Schedule 3.2, reacquired by the Company does not have outstanding any options or warrants to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares and are held in its treasury. There are no restrictions on the transfer of its capital stock or any shares of capital stock of the Company other than those imposed by the Charter and By- laws, applicable Federal and state securities laws, the Restrictive Stock Transfer Agreements described in the Disclosure Schedule executed by certain holders of Common Stock and/or Series A Preferred Stock, those restrictions applicable to the Series B Preferred Stock as set forth in the Charter, and those restrictions on transfer expressly set forth in this Agreement, the Company Ancillary Documents, the Purchaser Ancillary Documents and the Executive Shareholder Ancillary Documents. To the knowledge of the Company and the Executive Shareholders, other than as provided in the preceding sentence, there are no agreements, understandings, trusts or other collaborative arrangements concerning the voting or transfer of shares of capital stock of the Company. The shareholders of record and holders of subscriptions, warrants, options, convertible securities and other rights (contingent or other) to purchase or otherwise acquire from the Company equity securities of the Company, and the number of shares of capital stock and the number of such subscriptions, warrants, options, convertible securities and other such rights held by each such holder, are as set forth in the Disclosure Schedule. The designations, powers, preferences, rights, qualifications, limitations and restrictions of each class and series of authorized capital stock of the Company are as set forth in the Charter, a copy of which is included in the Disclosure Schedule, and all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable and in accordance with all applicable laws. The Company is not in arrears with respect to dividends payable under the terms of any subsidiary and there is series of Preferred Stock. Except as provided in this Agreement or as set forth in the Disclosure Schedule, (i) no commitment, plan or arrangement to issue, any securities or obligations convertible into person owns of record any shares of capital stock of the Company, (ii) no subscription, warrant, option, convertible security or other right (contingent or other) to purchase or otherwise acquire from the Company equity securities of the Company is authorized or any such outstanding and (iii) there is no commitment by the Company to issue shares, subscriptions, warrants, options, rights convertible securities or obligationsother such rights or, except for the redemption of the Series B Preferred Stock and the warrants issued to the holders thereof, to distribute to holders of any of its equity securities any evidence of indebtedness or asset in respect of such equity securities. All of the outstanding securities of the Company were issued in compliance with all applicable Federal and state securities laws. The description offering of the shares of Series A Preferred Stock and shares of Common Stock referenced in the Blue Sky Memorandum dated November 29, 1993 of Xxxxx & Xxxxxxx, counsel to the Company's capital stock, stock bonus and other stock plans or arrangements as supplemented by the Supplemental Blue Sky Memorandum, dated December 17, 1993, a copy of which is included in the Disclosure Schedule (the "Blue Sky Memorandum"), was conducted as described in the Blue Sky Memorandum, all facts assumed in the Blue Sky Memorandum relating to the Company were true as of any relevant time and, to the knowledge of the Company and the options or other rights granted and exercised thereunderExecutive Shareholders, contained all facts assumed in the 34 Act Reports accurately and fairly presents Blue Sky Memorandum other than those relating to the information required to be shown with respect to such capital stock, plans, arrangements, options and rightsCompany were true as of any relevant time .

Authorized Capital Stock. (a) The Company has authorized, issued ------------------------ and outstanding authorized capital stock of the Company consists of (1) 8,540,000 shares of Preferred Stock, and (2) 17,000,000 shares of Common Stock. Immediately prior to the Closing, 2,674,953 shares of Common Stock and 8,040,001 shares of Preferred Stock will be validly issued and outstanding, fully paid and nonassessable with no personal liability attaching to the ownership thereof. The stockholders of record and holders of subscriptions, warrants, options, convertible securities, and other rights (contingent or other), if any, to purchase or otherwise acquire equity securities of the Company prior to the Closing Date (the "Original Shareholders") and the number of shares of Common Stock and the number of such subscriptions, warrants, options, convertible securities, and other such rights, if any, held by each, are as set forth in the Company's reports (the "34 Act Reports") filed by it with the Securities and Exchange Commission (the "Commission") since January 1, 2001 pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports)Memorandum. The issued designations, powers, preferences, rights, qualifications, limitations and outstanding shares restrictions in respect of the Company's preferred stock, par value $.001 per share (the "Preferred Stock"), and Common Stock have been duly each class of authorized and validly issued, are fully paid and nonassessable, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe for or purchase securities, and conform to the description thereof contained in the 34 Act Reports. Except as disclosed in the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 and except as set forth on Schedule 3.2, the Company does not have outstanding any options or warrants to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock of the Company are as set forth in the Articles, a copy of which has previously been delivered to each Purchaser, and all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable and in accordance with all applicable laws. Except as set forth in the attached Schedule 6.04 or in the Memorandum, (a) no person owns of record or is known to the Company to own beneficially any share of Common Stock, (b) no subscription, warrant, option, convertible security, or other right (contingent or other) to purchase or otherwise acquire equity securities of the Company is authorized or outstanding and (c) there is no commitment by the Company to issue shares, subscriptions, warrants, options, convertible securities, or other such rights or to distribute to holders of any of its equity securities any evidence of indebtedness or asset. Except as provided for in the Articles or as set forth herein, the Company has no obligation (contingent or other) to purchase, redeem or otherwise acquire any of its equity securities or any such optionsinterest therein or to pay any dividend or make any other distribution in respect thereof. Except as set forth herein or in the Memorandum, there are no voting trusts or agreements, stockholders agreements, pledge agreements, buy-sell agreements, rights convertible of first refusal, preemptive rights or proxies relating to any securities or obligations. The description of the Company's capital stock, stock bonus Company (whether or not the Company is a party thereto). All of the outstanding securities of the Company were issued in compliance with all applicable Federal and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rightsstate securities laws.

Authorized Capital Stock. The Company has authorized, issued ------------------------ and outstanding authorized capital stock as set forth in the Company's reports of AVI consists of (the "34 Act Reports"a) filed by it with the Securities and Exchange Commission (the "Commission") since January 150,000,000 shares of Common Stock, 2001 pursuant to the Securities and Exchange Act par value $0.0001, of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports). The which _21,575,267shares are issued and outstanding outstanding, and (b) 2,000,000 shares of the Company's preferred stock, par value $.001 per share (the "Preferred 0.0001, none of which are issued and outstanding. There are issued and outstanding options to purchase an aggregate 2,866,335 shares of Common Stock"), warrants to purchase an aggregate 7,352,003 shares of Common Stock, and Common Stock have been duly authorized and validly issuedno other outstanding subscriptions, are fully paid and nonassessablewarrants, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights options, convertible securities, or other rights (contingent or other) to subscribe purchase or otherwise acquire Common Stock or other equity securities of AVI. There are no agreements or arrangements under which AVI is obligated to register the sale of any of its securities under the Securities Act. Except for an existing warrant held by SuperGen, Inc. to acquire ten percent of the outstanding securities (as defined therein at the time of exercise), there are no anti-dilution or purchase securitiesprice adjustment provisions contained in any security issued by AVI (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Purchased Securities. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of each class of authorized equity securities of AVI are as set forth in AVI’s Articles of Incorporation, a true and correct copy of which has been provided to Investor, and conform to the description thereof contained all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable and in the 34 Act Reportsaccordance with all applicable laws. Except as disclosed provided for in the 34 Act Reports and options issued under the Company's stock plans after March 31AVI’s Articles of Incorporation, 2001 and except as set forth on Schedule 3.2, the Company does not have outstanding any options AVI has no obligation (contingent or warrants other) to purchase, redeem or otherwise acquire any of the equity securities or any interest therein or rights to acquire such securities or to pay any dividend or make any other distribution in respect thereof. To AVI’s knowledge, there are no voting trusts or agreements, stockholders’ agreements, pledge agreements, buy-sell agreements, rights of first refusal, preemptive rights or other rights proxies relating to subscribe for or to purchase, any securities of AVI (whether or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary and there not AVI is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock a party thereto). All of the Company or any such options, rights convertible outstanding securities or obligations. The description of the Company's capital stock, stock bonus AVI were issued in compliance with all applicable federal and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rightsstate securities laws.

Authorized Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of 75,000,000 shares of Common Stock, $0.01 par value, and 10,000,000 shares of Preferred Stock, $0.01 par value. As of the date hereof, approximately 9,362,987 shares of Common Stock and no shares of Preferred Stock are validly issued and outstanding, and each outstanding share of Common Stock is fully paid and nonassessable. The Company has authorizedreserved (i) 4,762,624 shares of Common Stock for issuance pursuant to the Company's 2006 Equity Incentive Plan and (ii) 1,550,000 shares of Common Stock for issuance pursuant to the Company's 2006 Employee Stock Purchase Plan and 1997 Employee Stock Purchase Plan (together, issued ------------------------ the "Purchase Plans"), and has outstanding options to purchase 2,973,964 shares of Common Stock under the 2006 Equity Incentive Plan as of the date hereof. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of each class and series of authorized capital stock of the Company are as set forth in the Company's articles of incorporation. The issued and outstanding shares of Common Stock conform to the description thereof contained in the reports (the "34 Exchange Act Reports") filed by it the Company with the Securities and Exchange Commission (the "Commission") since January 1, 2001 pursuant to the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (except as set forth on Schedule 3.2 and except for subsequent issuances, if any, pursuant to this Agreement or pursuant to agreements, employee or director benefit plans or the exercise of convertible securities referred to in the 34 Act Reports). The issued and outstanding shares of the Company's preferred stock, par value $.001 per share (the "Preferred Stock"), and Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, were not issued in violation of or are not otherwise subject to any preemptive or other similar rights or other rights to subscribe Except for or purchase securities, and conform to the description thereof contained in the 34 Act Reports. Except as disclosed in the 34 Act Reports and options issued under the Company's stock plans after March 31, 2001 2006 Equity Incentive Plan and except as set forth on Schedule 3.2the obligations under the Purchase Plans, the Company does not have outstanding any options or warrants to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any shares of capital stock of any subsidiary stock, and there is no commitment, plan or arrangement to issue, any securities or obligations convertible into any shares of capital stock of the Company or any such options, rights convertible securities or obligations. The description of the Company's capital stock, stock bonus and other stock plans or arrangements and the options or other rights granted and exercised thereunder, contained in the 34 Act Reports accurately and fairly presents the information required to be shown with respect to such capital stock, plans, arrangements, options and rights.