Common use of Capitalization of the Company Clause in Contracts

Capitalization of the Company. The authorized capital stock of the Company consists of 12,000,000 shares of Company Common Stock and 4,000,000 shares of Series A Preferred Stock, and the Company has no authority to issue any other capital stock. There are 4,651,550 shares of Company Common Stock issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstanding, and such shares are duly authorized, validly issued, fully paid and nonassessable, and none of such shares have been issued in violation of the preemptive rights of any person. After the (i) amendment of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”), and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each of the holders of Series A Preferred Stock providing for the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred Stock.

Capitalization of the Company. The authorized capital stock of the Company consists of 12,000,000 1,000 shares of Company Common Stock common stock, $.01 par value per share, of which 100 shares (constituting the Shares) are issued and 4,000,000 outstanding. The Shares have been duly authorized and validly issued, are fully paid and nonassessable and are owned of record and beneficially solely by Seller free and clear of any lien, pledge, security interest, claim or other encumbrances (collectively, “Encumbrances”), under Article 8 of the Uniform Commercial Code of the State of Minnesota or otherwise, other than restrictions under federal and state securities laws. The Shares were issued in compliance with applicable federal and state securities laws, and were not issued in violation of any Person’s preemptive rights. There are no shares of Series A Preferred Stockthe Company’s capital stock reserved for any purpose. There are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, “phantom” stock, redemption rights, agreements, arrangements or commitments to issue or sell any shares of capital stock or other securities of the Company or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any securities of the Company, and no securities or obligations evidencing such rights are authorized, issued or outstanding. The Company does not have outstanding any bonds, debentures, notes or other obligations the Company has holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) on any matter. There are no authority agreements relating to issue the voting of the Company’s capital stock, or restrictions on the transferability of the Company’s capital stock (by agreement, certificate of incorporation, bylaws, statute or otherwise), except pursuant to federal and state securities laws. There are no agreements among the Company, Seller and/or any other Person relating to the Company’s capital stock. There When the Shares are 4,651,550 shares of Company Common Stock issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstandingdelivered to Buyer at the Closing pursuant to this Agreement, and such shares are the Shares will be duly authorized, validly issued, fully paid and nonassessable, and none will be free and clear of such shares have been issued in violation all Encumbrances, under Article 8 of the preemptive rights of any person. After the (i) amendment Uniform Commercial Code of the Company’s Certificate State of Incorporation Minnesota or otherwise, other than restrictions on transfer pursuant to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”), federal and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each of the holders of Series A Preferred Stock providing for the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred Stock.

Capitalization of the Company. The Company's authorized capital stock consists solely of the (a) 20,000,000 shares of common stock, $0.10 par value per share ("Company consists Common Stock") and (b) 5,000,000 shares of 12,000,000 preferred stock, no par value per share ("Company Preferred Stock"). As of June 30, 1997, (i) 9,466,486 shares of Company Common Stock were issued and 4,000,000 shares of Series A Preferred Stockoutstanding, and the Company has no authority to issue any other capital stock. There are 4,651,550 (ii) 450,000 shares of Company Common Stock issued were issuable upon the exercise or conversion of outstanding options, warrants or convertible securities granted or issuable (on a contingent basis or otherwise) by the Company, and outstanding and 100,000 (iii) no shares of Series A Company Preferred Stock were issued and outstanding. Since June 30, 1997, the Company has not issued any shares of its capital stock except upon the exercise of such options, warrants or convertible securities. Each outstanding share of Company capital stock is duly authorized and such shares are duly authorized, validly issued, fully paid and nonassessable, nonassessable and none free of such shares have been issued in violation any preemptive rights. As of the preemptive date hereof, other than as set forth above, in the Company SEC Documents (as defined in Section 4.7) or in Section 4.4 to the Company Disclosure Schedule, there are no outstanding shares of capital stock or subscriptions, options, warrants, puts, calls, agreements, understandings, claims or other commitments or rights of any person. After type relating to the (i) amendment issuance, sale or transfer by the Company of any securities of the Company’s Certificate of Incorporation to provide , nor are there outstanding any securities which are convertible into or exchangeable for a 1.719-for-1 forward stock split (the “Company Stock Split”), and (ii) conversion into any shares of Company Common Stock capital stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), Company; and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5, the Company has no outstanding options, rights or commitments obligation of any kind to issue Company Common Stock any additional securities or other Equity Securities to pay for securities of the Company, and there are no outstanding securities convertible Company or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Companyany predecessor. The Company has received written waivers executed by each of no outstanding bonds, debentures, notes or other similar obligations the holders of Series A Preferred Stock providing for which have the waiver right to vote generally with holders of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred Company Common Stock.

Capitalization of the Company. (a) The authorized share capital stock of the Company, as of immediately prior to the Closing, consists solely of 10,000,000 Company Ordinary Shares, of which 1,671,280 Company Ordinary Shares, are issued and outstanding as of the Agreement Date. The Company holds no treasury shares. As of the Agreement Date, there are no other issued and outstanding shares of Company Share Capital and no outstanding commitments or Contracts to issue any shares of Company Share Capital including not under any outstanding Company options except as set forth in Schedule 3.4(a) of the Company consists Disclosure Letter. As of 12,000,000 immediately prior to the Closing, the Seller is the only owner and registered owner of 1,671,280 Company Ordinary Shares which constitute as of the Agreement Date and shall constitute as of the Closing Date 100% of the issued and outstanding Fully-Diluted Company Shares. The number of such shares owned by Seller constitutes the entire interest of Seller in the issued and outstanding Company Share Capital or voting securities of the Company and no such shares shall be issued or outstanding as of the Closing Date that are not set forth above. All issued and outstanding shares of Company Common Stock and 4,000,000 shares of Series A Preferred Stock, and the Company has no authority to issue any other capital stock. There are 4,651,550 shares of Company Common Stock issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstanding, and such shares are Share Capital have been duly authorized, validly issued, fully paid and nonassessablenon-assessable and are free of any Encumbrances, and none of such shares have been issued in violation of the outstanding subscriptions, preemptive rights, rights of first refusal or “put” or “call” rights created by statute, the Charter Documents or any personContract to which the Company is a party or by which the Company or any of its assets is bound. After the (i) amendment of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split (the “The Company Stock Split”), and (ii) conversion into has never declared or paid any dividends on any shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), Share Capital. There is no Liability for dividends accrued and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of unpaid by the Company. The Company has received written waivers executed by each is not under any obligation to register under the Securities Act, applicable Israeli securities law or the rules and regulations promulgated thereunder, any other Applicable Law or “blue sky” laws, any shares of Company Share Capital, any equity interests or any other securities of the holders Company, whether currently outstanding or that may subsequently be issued. All issued and outstanding shares of Series A Preferred Stock providing for the waiver of payment of any Company Share Capital were issued in compliance with all Applicable Law and all accrued but unpaid dividends under requirements set forth in the terms Charter Documents and any applicable Contracts to which the Company is a party or by which the Company or any of the Series A Preferred Stockits assets is bound.

Capitalization of the Company. The As of the date hereof, the authorized capital stock of the Company consists of 12,000,000 two billion five hundred million (2,500,000,000) shares of Company Common Stock Stock, par value $0.0001 per share, and 4,000,000 twenty-five million (25,000,000) shares of preferred stock, par value $0.0001 per share of which 10,000 shares of preferred stock have been designated Series A B Preferred Stock, par value $0.0001 per share and 1,000 shares of preferred stock have been designated Series C Preferred Stock, par value $0.0001 per share. Except as described in the Private Placement Memorandum, there are no additional outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any person any right to subscribe for or acquire from the Company, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company has no authority or any Subsidiary is or may become bound to issue any other capital stock. There are 4,651,550 additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. The issuance and sale of the Units will not obligate the Company to issue shares of Common Stock issued or other securities to any person (other than the Subscriber or as otherwise described in the Private Placement Memorandum) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. None of the outstanding and 100,000 shares of Series A Preferred Common Stock issued and outstandingor options, and such shares are duly authorizedwarrants, validly issued, fully paid and nonassessable, and none of such shares have rights or other securities entitling the holders to acquire Common Stock has been issued in violation of the preemptive rights of any personsecurity holder of the Company. After Except as described in the (i) amendment Private Placement Memorandum, no other holder of any of the Company’s Certificate of Incorporation securities has any rights, “demand,” “piggy-back” or otherwise, to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”), and (ii) conversion into shares of Company Common Stock have such securities registered by reason of the outstanding shares intention to file, filing or effectiveness of Series A Convertible Preferred Stocka registration statement. The Securities to be issued to each such Subscriber pursuant to this Agreement, par value $.01 per share (when issued and delivered in accordance with the “Series A Preferred Stock”)terms of this Agreement, will be duly and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior validly issued and will be fully paid and nonassessable and free from all taxes or liens with respect to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance issue thereof and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are shall not be subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5, the Company has no outstanding options, preemptive rights or commitments to issue Company Common Stock or other Equity Securities similar rights of stockholders of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each of the holders of Series A Preferred Stock providing for the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred Stock.

Capitalization of the Company. The Immediately after the effective time of the Share Exchange (but before the closing of this Offering), the authorized capital stock the capitalization of the Company will consist of 100,000,000 shares of Common Stock, $0.001 par value per share and 10,000,000 shares of “blank check” Preferred Stock, par value $0.001 per share. Of the authorized capital stock of the Company consists Company, immediately after the effective time of 12,000,000 the Share Exchange (taking into account the cancellation of 3,025,000 shares of Company the Company’s outstanding Common Stock, but before the closing of this Offering), there will be outstanding 2,375,000 shares of Common Stock, no warrants to purchase shares of Common Stock (excluding warrants to be issued to the Placement Agent as described in the Offering Documents), and 4,000,000 no options to purchase shares of Series A Preferred Common Stock. Except as disclosed in the SEC Reports or the Offering Documents, there are no additional outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any person any right to subscribe for or acquire from the Company, any shares of Common Stock, and or contracts, commitments, understandings or arrangements by which the Company has no authority or any subsidiary is or may become bound to issue any other capital stock. There are 4,651,550 additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. Except as described in the Offering Documents, the issuance and sale of the Shares will not obligate the Company to issue shares of Common Stock or other securities to any person (other than the Subscribers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. The shares of the Company’s capital stock outstanding immediately after the effective time of the Share Exchange (but before the closing of the Offering) are or will be duly authorized and validly issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstanding, and such shares are duly authorized, validly issued, or will be fully paid and nonassessable. None of the outstanding shares of Common Stock or options, and none of such shares have warrants, or rights or other securities entitling the holders to acquire Common Stock has been issued in violation of the preemptive rights of any personsecurity holder of the Company. After the (i) amendment No holder of any of the Company’s Certificate securities has any rights, “demand,” “piggy-back” or otherwise, to have such securities registered by reason of Incorporation the intention to provide for a 1.719-for-1 forward stock split file, filing or effectiveness of the Registration Statement (the “Company Stock Split”as defined below), except as contemplated by the Exchange Agreement. The Shares to be issued to the Subscriber have been duly authorized, and (ii) conversion into shares of Company when issued and paid for in accordance with this Subscription Agreement, the Common Stock of the outstanding shares of Series A Convertible Preferred Stockwill be duly and validly issued, par value $.01 per share (the “Series A Preferred Stock”)fully paid and non-assessable will be duly and validly issued, fully paid and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each of the holders of Series A Preferred Stock providing for the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred Stocknon-assessable.

Capitalization of the Company. (a) The authorized capital stock of (i) the Company consists of 12,000,000 200,000,000 shares of Company Common Stock and 4,000,000 Stock, (ii) 1,000,000 shares of Series A Preferred Stock, and $0.01 par value per share (the “Company has no authority to issue any other capital stockPreferred Stock”). There are 4,651,550 As of the Measurement Date, there were 82,746,933 shares of Company Common Stock issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstanding, and such no shares are duly authorized, validly issued, fully paid of Company Preferred Stock issued and nonassessable, and none of such shares have been issued in violation outstanding. As of the preemptive rights Measurement Date, no shares of any person. After Common Stock were reserved for issuance except for 8,897,647 shares of Common Stock that were reserved for issuance upon the (i) amendment exercise of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split outstanding options and warrants (the “Company Stock SplitOptions or Warrants”), and (ii) conversion into shares of Company Common Stock of . Between the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), Measurement Date and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5date hereof, the Company has no outstanding options, rights or commitments to issue Company not issued any shares of Common Stock (other than pursuant to the exercise of Company Options or other Equity Securities Warrants) or awarded any Company Options or Warrants. All issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and non-assessable. As of the Companydate hereof, except as set forth above and except for shares of Common Stock issuable pursuant to the Company Options or Warrants outstanding as of the Measurement Date, there are no outstanding securities or authorized options, warrants, rights, calls, commitments, preemptive rights, subscriptions, claims of any character, convertible or exercisable into exchangeable securities, or exchangeable for Company other Contracts, contingent or otherwise, relating to Common Stock or any capital stock or capital stock equivalent or other nominal interest in the Company or any of its Subsidiaries which relate to the Company (collectively, “Company Equity Securities Interests”) pursuant to which the Company or any of its Subsidiaries is or may become obligated to issue or sell shares of its capital stock or other equity interests or any securities convertible into, or exchangeable for, or evidencing the right to subscribe for, any Company Equity Interests. There are no outstanding obligations of the Company. The Company has received written waivers executed by each to repurchase, redeem or otherwise acquire any outstanding securities of the holders of Series A Preferred Stock providing for Company or any Company Equity Interests. No bonds, debentures, notes or other indebtedness having the waiver of payment of right to vote on any and all accrued but unpaid dividends under the terms matters on which Company stockholders may vote are issued or outstanding as of the Series A Preferred Stockdate hereof.

Capitalization of the Company. (a) The authorized capital stock of the Company consists of 12,000,000 (i) 200,000,000 shares of Company Common Stock Stock, and 4,000,000 (ii) 1,000,000 shares of Series A Preferred Stock, and $0.01 par value per share (the “Company has no authority to issue any other capital stockPreferred Stock”). There are 4,651,550 As of the Measurement Date, there were 82,746,933 shares of Company Common Stock issued and outstanding and 100,000 no shares of Series A Company Preferred Stock issued and outstanding, and such shares are duly authorized, validly issued, fully paid and nonassessable, and none of such shares have been issued in violation . As of the preemptive rights of any person. After the (i) amendment of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”)Measurement Date, and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such no shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such reserved for issuance except for 8,897,647 shares of Company Common Stock are subject to a right that were reserved for issuance upon the exercise of withdrawal outstanding options and warrants (the “Company Options or a right of rescission under any federal or state securities or blue sky lawWarrants”). Except as disclosed in Schedule 2.5Between the Measurement Date and the date hereof, the Company has not issued any shares of Company Common Stock (other than pursuant to (x) the exercise of Company Options or Warrants outstanding as of the Measurement Date and (y) the Existing Stock Purchase Agreement) or awarded any Company Options or Warrants. All issued and outstanding shares of Company Common Stock have been duly authorized and validly issued and are fully paid and non-assessable. As of the date hereof, except as set forth above and except for shares of Company Common Stock issuable pursuant to the Company Options or Warrants outstanding as of the Measurement Date, there are no outstanding or authorized options, rights warrants, rights, calls, commitments, preemptive rights, subscriptions, claims of any character, convertible or commitments exchangeable securities, or other Contracts, contingent or otherwise, relating to issue the Company Common Stock or any capital stock or capital stock equivalent or other nominal interest in the Company or any of its Subsidiaries (collectively, “Company Equity Securities Interests”) pursuant to which the Company or any of its Subsidiaries is or may become obligated to issue or sell shares of its capital stock or other equity interests or any securities convertible into, or exchangeable for, or evidencing the Companyright to subscribe for, and there any Company Equity Interests. There are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any outstanding securities convertible of the Company or exercisable into or exchangeable for any Company Common Stock Equity Interests. No bonds, debentures, notes or other Equity Securities indebtedness having the right to vote on any matters on which Company stockholders may vote are issued or outstanding as of the Company. The Company has received written waivers executed by each of the holders of Series A Preferred Stock providing for the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred Stockdate hereof.

Capitalization of the Company. The entire authorized capital stock of the Company consists of 12,000,000 Two Million Five Hundred Thousand (2,500,000) shares of Common Stock, of which One Million One Hundred Sixty-Nine Thousand Three Hundred Ten (1,169,310) shares are issued and outstanding. There are no other equity securities or classes of capital stock of Company other than the Common Stock. The Shares represent all of the issued and outstanding shares of Common Stock and 4,000,000 are owned (beneficially and of record) by the Shareholders, free and clear of all Encumbrances, including rights of first refusal and restrictions and other impediments on the Shareholder’s rights of disposition or voting rights pertaining thereto. The Shares are owned by the Shareholders in the amounts set forth in Schedule A. All of the outstanding shares of Series A Preferred Stock, and the Company has no authority to issue any other capital stock. There are 4,651,550 shares of Company Common Stock issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstanding, and such shares are duly authorized, validly issued, fully paid and nonassessable. None of the capital stock or other securities of the Company are entitled or subject to preemptive rights or registration rights. No legend or other reference to any purported Encumbrances appears on any certificate representing the Common Stock. No authorization or consent of any Person is required in order to consummate the transactions contemplated herein by virtue of any such Person having an equitable or beneficial interest in the Common Stock. There are no voting trusts or other agreements or understandings to which the Company or Shareholders is or are a party or is or are bound with respect to the voting of the Common Stock. All outstanding shares of Common Stock were offered, sold and none of such shares have been issued in violation of the preemptive rights of any personmaterial compliance with all applicable Laws, including federal and state securities Laws. After the (i) amendment There are no warrants, options, subscriptions, convertible instruments, agreements or other commitments or obligations of the Company’s Certificate of Incorporation , either firm or conditional, to provide for a 1.719-for-1 forward issue, deliver or sell, whether under offers, stock split (the “Company Stock Split”)option agreements, and (ii) stock bonus agreements, stock purchase plans, incentive compensation plans, warrants, conversion into rights or otherwise, to issue any shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each of the holders of Series A Preferred Stock providing for the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred Stock.

Capitalization of the Company. The As of the Effective Date, the authorized capital stock of the Company consists will consist entirely of 12,000,000 shares of Company New Common Stock, the number of which shall be as set forth in the amended and restated Certificate of Incorporation of Reorganized Keystone. As of the Effective Date, the only shares of New Common Stock and 4,000,000 shares of Series A Preferred Stock, and the Company has no authority to issue any other capital stock. There are 4,651,550 shares of Company Common Stock that shall be issued and outstanding and 100,000 shall be those shares of Series A Preferred New Common Stock that shall have been issued in accordance with the Plan and outstandingthis Agreement. Except as set forth on Schedule 2.2 hereto, or as expressly contemplated by this Agreement, as of the Effective Date, there will be no options, warrants, securities or rights that are or may become exercisable or exchangeable for, convertible into, or that otherwise give any Person any right to acquire, shares of capital stock or other securities of the Company. As of the Effective Date, and such except as provided hereunder or contemplated by the Plan, there will be no Contracts relating to the issuance, grant, sale or transfer of any equity securities, options, warrants, convertible securities or other securities of the Company. Except as contemplated by the Plan, as of the Effective Date, there will be no Contracts of the Company to repurchase, redeem or otherwise acquire any of its equity securities, options, warrants, convertible securities or other securities and, other than pursuant to the New Registration Rights Agreement, the Company will not have granted any registration rights with respect to any of its securities or any securities of any of its Subsidiaries. As of the Effective Date, all of the outstanding shares are of New Common Stock (including, without limitation, the Shares) will have been duly authorized, authorized and validly issued, fully paid and nonassessable, and none of such shares have been will not be issued in violation of the preemptive rights of Securities Act or any person. After the (i) amendment of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”), and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws (including state “blue sky” laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each of the holders of Series A Preferred Stock providing for the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred Stock).

Capitalization of the Company. The authorized capital stock of the Company consists of 12,000,000 Twenty Million (20,000,000) shares of Company Common Stock, of which 16,025,663 shares are issued and outstanding and Five Hundred Thousand (500,000) shares of preferred stock, $.001 par value per share (“Preferred Stock”), of which 120,800 shares are issued and outstanding. Such outstanding shares of Company Common Stock and 4,000,000 shares of Series A Preferred Stock, and the Company has no authority to issue any other capital stock. There are 4,651,550 shares of Company Common Stock issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstanding, and such shares are duly authorized, validly issued, fully paid and nonassessablenon-assessable, and none of such shares have been issued in violation of the preemptive rights of any natural person. After the , corporation, business trust, association, limited liability company, partnership, joint venture, other entity, government, agency or political subdivision (i) amendment of the Company’s Certificate of Incorporation to provide for each, a 1.719-for-1 forward stock split (the “Company Stock SplitPerson”), and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock and Preferred Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “Securities Act”), (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of outstanding Company Common Stock or Preferred Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky “Blue Sky” law. Except as disclosed otherwise set forth in this Agreement or any Schedule 2.5hereto, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities (as defined below) of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company, except as set forth on the Ledger. The Company has received written waivers executed by each For purposes of the holders this Agreement, “Equity Security” shall mean any stock or similar security of Series A Preferred Stock providing an issuer or any security (whether stock or Indebtedness for the waiver of payment of Borrowed Money (as defined below)) convertible, with or without consideration, into any and all accrued but unpaid dividends under the terms of the Series A Preferred Stockstock or other equity security, or any security (whether stock or Indebtedness for Borrowed Money) carrying any warrant or right to subscribe to or purchase any stock or similar security, or any such warrant or right.

Capitalization of the Company. The authorized capital stock of the Company consists of 12,000,000 3,000,000 shares of Company Common Stock Class A common stock, of which 880,000 shares are issued and 4,000,000 outstanding, 3,000,000 shares of Series A Preferred StockClass B common stock, and the Company has no authority to issue any other capital stock. There of which 225,000 shares are 4,651,550 shares of Company Common Stock issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstanding, and such 3,000,000 shares of preferred stock, par value $0.001 per share, none of which are issued and outstanding. Such shares are duly authorized, validly issued, fully paid and nonassessablenon-assessable, and none of such shares have been issued in violation of the preemptive rights of any natural person. After the , corporation, business trust, association, limited liability company, partnership, joint venture, other entity, government, agency or political subdivision (i) amendment of the Company’s Certificate of Incorporation to provide for each, a 1.719-for-1 forward stock split (the “Company Stock SplitPerson”), and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “Securities Act”), (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Common Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky “Blue Sky” law. Except as disclosed otherwise set forth in this Agreement or any Schedule 2.5hereto, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities (as defined below) of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each For purposes of the holders this Agreement, “Equity Security” shall mean any stock or similar security of Series A Preferred Stock providing an issuer or any security (whether stock or Indebtedness for the waiver of payment of Borrowed Money (as defined below)) convertible, with or without consideration, into any and all accrued but unpaid dividends under the terms of the Series A Preferred Stockstock or other equity security, or any security (whether stock or Indebtedness for Borrowed Money) carrying any warrant or right to subscribe to or purchase any stock or similar security, or any such warrant or right.

Capitalization of the Company. The Immediately after the effective time of the Merger (but before the closing of this Offering), the authorized capital stock of the Company consists will consist of 12,000,000 50,000,000 shares of Company Common Stock and 4,000,000 Stock, $0.001 par value per share. Of the authorized capital stock of the Company, immediately after the effective time of the Merger (but before the closing of this Offering), there will be outstanding 19,853,115 shares of Series A Preferred Common Stock, options to purchase an aggregate of 2,592,641 shares of Common Stock, and warrants to purchase an aggregate of 2,715,737 shares of Common Stock, including warrants to be issued by the Company has to certain Ironclad investors upon consummation of the Merger, but excluding any warrants to be issued to the Placement Agents as described in the Offering Documents. Except as a result of the purchase and sale of the Units, as contemplated in the Merger Agreement or as disclosed in the SEC Reports or the Offering Documents, there are no authority additional outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any person any right to subscribe for or acquire from the Company, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any subsidiary is or may become bound to issue any other capital stock. There are 4,651,550 additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. Except as described in the Offering Documents, the issuance and sale of the Units will not obligate the Company to issue shares of Common Stock or other securities to any person (other than the Subscribers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. The shares of the Company's capital stock outstanding immediately after the effective time of the Merger (but before the closing of the Offering) are or will be duly authorized and validly issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstanding, and such shares are duly authorized, validly issued, or will be fully paid and nonassessable. None of the outstanding shares of Common Stock or options, and none of such shares have warrants, or rights or other securities entitling the holders to acquire Common Stock has been issued in violation of the preemptive rights of any person. After the (i) amendment of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”), and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities security holder of the Company. The Company has received written waivers executed by each No holder of any of the holders Company's securities has any rights, "demand," "piggy-back" or otherwise, to have such securities registered by reason of Series A Preferred the intention to file, filing or effectiveness of the Registration Statement (as defined below), except as contemplated by the Merger Agreement and as described in the Offering Documents. The Common Stock providing and the Warrants to be issued to the Subscriber have been duly authorized, and when issued and paid for in accordance with this Subscription Agreement, the Common Stock will be duly and validly issued, fully paid and non-assessable, and the Warrant Shares, when issued upon exercise of the Warrants in exchange for the waiver of payment of any and all accrued but unpaid dividends under the terms in full of the Series A Preferred Stockexercise price for such Warrant Share therein specified, will be duly and validly issued, fully paid and non-assessable. The Common Stock is eligible for quotation on the NASD OTC Bulletin Board, the Company and the Common Stock meets the criteria for continued quotation and trading on the OTC Bulletin Board, and no suspension of trading in the Common Stock is in effect.

Capitalization of the Company. The As of the date of this Agreement, the Company’s authorized capital stock consisted solely of the 30,000,000 shares of (a) Company consists Common Stock, par value $0.001 per share, and (b) 5,000,000 shares of 12,000,000 preferred stock, par value $0.001 per share (“Company Preferred Stock”), of which (i) 6,503,128 and 0 shares Company Common Stock and Company Preferred Stock, respectively, were issued and outstanding (of which 0 shares of Company Common Stock and 4,000,000 were held in treasury), (ii) 1,436,800 shares of Series A Company Common Stock were reserved for issuance upon the exercise of outstanding Company Stock Options, (ii) 13,600 shares of Company Common Stock have been issued as, and are still subject to, Company Stock Awards, and (iv) no shares of Company Common Stock or Company Preferred Stock were reserved for future issuance under other option, warrant or conversion agreements or arrangements. All Company Stock Awards automatically vest 100% in connection with a change in control of the Company. Each outstanding share of the Company Common Stock is duly authorized and validly issued, fully paid and non-assessable, and has not been issued in violation of any preemptive or similar rights. Other than as set forth in the first sentence of this section and in the Option Schedule (as defined below) and the Company’s obligations under the Rights Agreement, dated as of November 5, 2010 (the “Rights Agreement”), between the Company and Registrar and Transfer Company, as rights agent, and the Rights (as defined in the Rights Agreement) issued thereunder, there are no outstanding subscriptions, options, warrants, puts, calls, agreements, understandings, claims or other commitments or rights of any type relating to the issuance, sale, repurchase or transfer by the Company of any securities of the Company, nor are there outstanding any securities which are convertible into or exchangeable for any shares of the Company Common Stock, and the Company has no authority obligation of any kind to issue any other capital stockadditional securities or to pay for or repurchase any securities of the Company or any predecessor. There are 4,651,550 No shares of Company Common Stock issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstanding, and such shares are duly authorized, validly issued, fully paid and nonassessable, and none of such shares have been issued held in violation of the preemptive rights of any person. After the (i) amendment of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”), and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstandingtreasury. The offer, issuance and sale of such all of the shares of Company Common Stock were (a) exempt from the registration capital stock described in this Section 5.4 have been in compliance in all material respects with federal and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each previously delivered to Parent a certified schedule (the “Option Schedule”) accurately setting forth as of the date of this Agreement the names of all holders of Series A Preferred Stock providing for options to purchase the waiver Company Common Stock, the number of payment shares of each class issuable to each such holder upon exercise of such option, and the exercise price and vesting schedule with respect to those options. The Company has no existing agreements to register any and all accrued but unpaid dividends securities of the Company under the terms of the Series A Preferred StockSecurities Act or under any state securities law or granted registration rights to any person or entity.

Capitalization of the Company. (a) The authorized capital stock of the Company consists and each Subsidiary is set forth on Schedule 4.7. All securities set forth on Schedule 4.7 will be, as of 12,000,000 the Initial Closing and the Subsequent Closing, duly and validly issued, outstanding, fully paid and nonassessable. Neither the Company nor any of its Subsidiaries has issued any other shares of Company Common Stock its capital stock and, except as set forth on Schedule 4.7, there are no outstanding warrants, options or other rights to purchase or acquire any of such shares, nor any outstanding securities convertible into such shares or outstanding warrants, options or other rights to acquire any such convertible securities. After giving effect to the Initial Closing and 4,000,000 the Subsequent Closing and assuming the accuracy of the Purchaser representations set forth herein, all of the outstanding shares of Series A Preferred Stock, and capital stock of the Company has no authority will have been offered, issued, sold and delivered in compliance with applicable federal and state securities laws not subject to issue preemptive rights in favor of any other capital stock. There are 4,651,550 Person and will not result in the issuance of additional shares of capital stock of the Company Common Stock issued and outstanding and 100,000 shares or the triggering of Series A any antidilution or similar rights contained in any agreement to which the Company is a party. The Preferred Stock issued has been duly and outstandingvalidly authorized and, when delivered and such shares are duly authorizedpaid for pursuant to this Agreement, will be validly issued, fully paid and nonassessable. The pro-forma capitalization of the Company immediately following the Initial Closing and the Subsequent Closing is set forth in Section 4.7, subject to the assumptions included therein. The Company has authorized and reserved for issuance upon conversion of the Preferred Stock sufficient shares of its Class C Common Stock, and none of the shares issuable upon such shares have been conversion will be, when issued in violation accordance with the charter of the Company, duly and validly authorized and issued, fully paid and nonassessable. Except as set forth on Schedule 4.7 or pursuant to the Stockholders Agreement or the Company’s charter, there are no preemptive rights, rights of any person. After first refusal, put or call rights or obligations or anti-dilution rights with respect to the (i) amendment issuance, sale or redemption of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”)capital stock. Except as set forth on Schedule 4.7, and (ii) conversion into shares of Company Common Stock no officer, director or employee of the outstanding shares of Series A Convertible Preferred StockCompany or any other person or entity has, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under claims to have or has any right to claim to have any interest in the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky lawcapital stock. Except as disclosed in Schedule 2.54.7, there are no restrictions on the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities transfer of the Company’s capital stock other than those arising from federal and state securities laws, and FCC rules or pursuant to the Stockholders Agreement. Except as set forth on Schedule 4.7, or pursuant to the Stockholders Agreement, there are no outstanding securities convertible rights, obligations, or exercisable into or exchangeable for Company Common Stock or other Equity Securities restrictions on the voting of any of the Company. The Company has received written waivers executed by each ’s capital stock or the registration of such capital stock for offering to the holders of Series A Preferred Stock providing for public pursuant to the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred StockSecurities Act.

Capitalization of the Company. The Immediately after the effective time of the Share Exchange (but before any Closing of this Offering), the authorized capital stock of the Company consists will consist of 12,000,000 100,000,000 shares of Company Common Stock, $0.0001 par value per share and 10,000,000 shares of “blank check” Preferred Stock, par value $0.0001 per share. Of the authorized capital stock of the Company, immediately after the effective time of the Share Exchange and including the Shares of Common Stock issued in the Offering, assuming it is fully subscribed at such effective time, and assuming the cancellation of the Maximum Cancelled Shares and the Maximum Cancelled Warrants pursuant to the Share and Warrant Cancellation Agreement at the effective time (as such terms are defined in the Share and Warrant Cancellation Agreement), there will be outstanding 25,706,481 shares of Common Stock and 4,000,000 2,293,519 warrants to purchase shares of Series A Preferred Common Stock, and no options to purchase shares of Common Stock. Except as disclosed in the SEC Reports or the Offering Documents, there are no additional outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any person any right to subscribe for or acquire from the Company, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company has no authority or any subsidiary is or may become bound to issue any other capital stock. There are 4,651,550 additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. Except as described in the Offering Documents, the issuance and sale of the Shares will not obligate the Company to issue shares of Common Stock or other securities to any person (other than the Subscribers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. The shares of the Company’s capital stock outstanding immediately after the effective time of the Share Exchange (but before the closing of the Offering) are or will be duly authorized and validly issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstanding, and such shares are duly authorized, validly issued, or will be fully paid and nonassessable. None of the outstanding shares of Common Stock or options, and none of such shares have warrants, or rights or other securities entitling the holders to acquire Common Stock has been issued in violation of the preemptive rights of any personsecurity holder of the Company. After the (i) amendment No holder of any of the Company’s Certificate securities has any rights, “demand,” “piggy-back” or otherwise, to have such securities registered by reason of Incorporation the intention to provide for a 1.719-for-1 forward stock split file, filing or effectiveness of the Registration Statement (the “Company Stock Split”as defined below), except as contemplated by the Exchange Agreement. The Shares to be issued to the Subscriber have been duly authorized, and (ii) conversion into shares of Company when issued and paid for in accordance with this Subscription Agreement, the Common Stock of the outstanding shares of Series A Convertible Preferred Stockwill be duly and validly issued, par value $.01 per share (the “Series A Preferred Stock”)fully paid and non-assessable will be duly and validly issued, fully paid and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each of the holders of Series A Preferred Stock providing for the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred Stocknon-assessable.

Capitalization of the Company. The authorized capital stock of the Company consists solely of 12,000,000 100,000,000 shares of Company Common Stock and 4,000,000 1,000,000 shares of Series A Preferred Stock. As of the date hereof, there are issued and outstanding 18,715,000 shares of Common Stock owned of record and beneficially by the Persons and in the amounts specified on Schedule 2.5 attached hereto, free and clear of all Liens. As of the date hereof, no shares of Preferred Stock are issued and outstanding. As of the date hereof, there are no shares of Common Stock, and no shares of Preferred Stock, and held by the Company has as treasury stock. All of the issued and outstanding shares of Common Stock are validly issued, fully paid, non-assessable and are without, and were not issued in violation of, any preemptive rights. Except as set forth on Schedule 2.5, there are no authority options, warrants, calls, subscriptions, conversion or other rights, agreements or commitments to issue acquire from the Company or any Stockholder any shares of capital stock of the Company, or any other securities convertible into, exchangeable for or evidencing the right to subscribe for any shares of capital stock of the Company, or any other security of the Company. There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to the Company. There are no voting agreements, voting trust agreements, proxies or stockholder or similar agreements relating to the capital stock of the Company. All of the issued and outstanding shares of Common Stock were issued either (i) in compliance with any applicable registration, filing or registration requirements under the Securities Act of 1933, as amended (the "Securities Act"), and applicable state blue sky laws or (ii) pursuant to valid exemptions from any such otherwise applicable registration, filing or qualification requirements. The Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock. There are 4,651,550 shares of Company Common Stock issued Upon delivery and outstanding and 100,000 shares of Series A Preferred Stock issued and outstandingpayment for the New Shares as herein provided, and such shares are New Shares shall be duly authorized, validly issued, fully paid and nonassessable, non-assessable and none of such shares have been will not be issued in violation of the applicable preemptive rights of any person. After the (i) amendment of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”), and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each of the holders of Series A Preferred Stock providing for the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred Stockrights.

Capitalization of the Company. The authorized capital stock of the Company consists of 12,000,000 20,000,000 shares of Company Common Stock, of which 12,556,963 shares are issued and outstanding as of the date of this Agreement. Section 2.3 of the Company Disclosure Letter sets forth the number of shares of Company Common Stock and 4,000,000 shares held by each of Series A Preferred Stock, and the Company has no authority to issue any other capital stockStockholders as of the date of this Agreement. There are 4,651,550 All outstanding shares of Company Common Stock issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstanding, and such shares are duly authorized, validly issued, fully paid and nonassessable, nonassessable and none of such shares have been were issued in violation of the preemptive rights of compliance with all applicable Laws, including pursuant to registration under, or valid exemptions from, federal securities Laws and any personapplicable state securities (or blue sky) Laws. After the (iA) amendment of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”), and (ii) conversion into No shares of Company Common Capital Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal preemptive rights or a right of rescission under any federal other similar rights or state securities any Liens suffered or blue sky law. Except as disclosed in Schedule 2.5, permitted by the Company has Company; (B) there are no outstanding options, rights rights, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exercisable for, any shares of Capital Stock of the Company, or agreements or other arrangements by which the Company is or may become bound to issue additional shares of Capital Stock of the Company Common or options, rights, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exercisable for, any shares of Capital Stock of the Company; (C) there are no agreements or other Equity arrangements under which the Company is obligated to register the sale of any of its securities under the Securities Act; (D) there are no outstanding securities or instruments of the Company that contain any redemption or similar provisions, and there are no agreements or other arrangements by which the Company is or may become bound to redeem a security of the Company, and there are no other stockholder agreements or similar agreements to which the Company, or, to the knowledge of the Company, any holder of Capital Stock of the Company is a party, including any agreement that provides the Company with the right to require that any stockholder of the Company sign any lock-up agreement to be effective after the Merger other than as contemplated by Section 5.1(j); (E) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and (F) to the Company’s knowledge, no officer or director of the Company or beneficial owner of any outstanding securities convertible or exercisable into or exchangeable for shares of Company Common Stock has pledged shares of Company Common Stock in connection with a margin account or other Equity Securities loan secured by such Company Common Stock. There is no voting trust, agreement or arrangement among any of the Company. The record or beneficial holders of Company has received written waivers executed by each Common Stock affecting the nomination or election of directors or the exercise of the holders voting rights of Series A Preferred Stock providing for the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred Company Common Stock.

Capitalization of the Company. The authorized capital stock of the Company consists of 12,000,000 2,000,000 shares of Company Common Stock. As of the date of this Agreement there were 160,065 shares of Company Common Stock outstanding and 4,000,000 shares of Series A Preferred Stock, and the Company has no authority to issue any other capital stock. There are 4,651,550 8,450 shares of Company treasury stock and a list of certificates representing the Company treasury shares is set forth in Section 4.5 of the Company Disclosure Schedule. As of the date hereof, there are no bonds, debentures, notes or other indebtedness having the right to vote on any matters on which the Company's stockholders may vote issued or outstanding. Section 4.5 of the Company Disclosure Schedule sets forth a true and complete list as of the date indicated the holders of all outstanding Company Stock Options, showing as to each such holder the number of Company Stock Options so held, such holder's mailing address and the date of grant, vesting schedules and exercise price of all such Company Stock Options. A list of shareholders who will be parties to the Voting Agreement, together with their respective holdings of the Company Common Stock, is set forth in Section 4.5 of the Company Disclosure Schedule. All outstanding shares of the Company Common Stock issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstanding, and such shares are duly authorized, authorized and are validly issued, fully paid and nonassessablenonassessable and free of preemptive rights, and none of such shares have been issued in violation except as otherwise provided pursuant to Section 630 of the preemptive rights New York Corporation Law. Except as set forth in Section 4.5 of any person. After the Company Disclosure Schedule, there is no (i) amendment outstanding option, warrant, call, unsatisfied preemptive right or other agreement of any kind binding upon the Company to purchase or otherwise to receive from the Company any of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”)outstanding, and (ii) conversion into authorized but unissued, unauthorized or treasury shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all any other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities security of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each of the holders of Series A Preferred Stock providing for the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred Stock.(ii) outstanding

Capitalization of the Company. The authorized capital stock of the Company consists of 12,000,000 (i) 62,500,000 shares of Company Common Stock and 4,000,000 (ii) 5,000,000 shares of Preferred Stock, $1.00 par value, of which 7,000 shares have been designated as Company Series A Preferred Stock and 50,000 shares have been designated as Series B Participating Cumulative Preferred Stock (the "Company Series B Preferred Stock, and the Company has no authority to issue any other capital stock"). There are 4,651,550 6,370,000 shares of Company Common Stock are issued and outstanding outstanding, all of which are validly issued, fully paid and 100,000 nonassessable, and 1,495,244 of such 6,370,000 shares of Company Common Stock are held in treasury. 7,000 shares of Company Series A Preferred Stock are issued and outstanding, all of which are validly issued, fully paid and nonassessable, and no shares of Company Series A Preferred Stock are held in treasury. No shares of Company Series B Preferred Stock are issued and outstanding. Except as set forth in Section 2.3(a) of the written disclosure schedule delivered on or prior to the date hereof by the Company to Parent and MergerCo that is arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Article II (the "Company Disclosure Schedule"), there are no options, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company or any of its wholly owned Subsidiaries or obligating the Company or any of its wholly owned Subsidiaries to issue or sell any shares of capital stock of, or other equity interests in, the Company or any of its wholly owned Subsidiaries. No shares of Company Common Stock or Company Series A Preferred Stock are held by Subsidiaries of the Company. As of the date hereof, there are no accrued and unpaid dividends with respect to the Company Series A Preferred Stock. None of the outstanding securities of the Company was issued in violation of the Securities Act of 1933, as amended (the "Securities Act"), or the securities or blue sky laws of any state or jurisdiction. Except as disclosed in Section 2.3(a) of the Company Disclosure Schedule, there are no obligations, contingent or otherwise, of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of Company Stock or the capital stock of any Subsidiary or to provide funds to or make any investment (in the form of a loan, capital contribution, guaranty or otherwise) in any such Subsidiary. Except as set forth in Section 2.3(a) of the Company Disclosure Schedule, all of the outstanding shares are of capital stock of each of the Company's Subsidiaries is duly authorized, validly issued, fully paid and nonassessable, and, except for the shares of capital stock of CCC's Subsidiaries and none except for the shares of capital stock of CCC not owned by the Company or the Company's wholly-owned Subsidiaries, all such shares have been issued are owned by the Company or its wholly-owned Subsidiaries free and clear of all security interests, liens, claims, pledges, agreements, limitations in violation of the preemptive rights Company's voting rights, charges or other encumbrances of any person. After the nature whatsoever (i) amendment of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”collectively, "Liens"), and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each of the holders of Series A Preferred Stock providing except for the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred StockStockholders Agreement .

Capitalization of the Company. The As of the date hereof, the authorized capital stock Company Capital Stock consists of 90,000,000 shares of the Company consists Common Stock and 10,000,000 shares of 12,000,000 the Company Preferred Stock. As of the date hereof and immediately prior to the Closing Date, there are 11,708,010 shares of the Company Common Stock, par value $0.001, issued and outstanding, no shares of the Company Preferred Stock issued or outstanding, 209,442 shares of Company Common Stock issuable upon exercise of outstanding options and 4,000,000 1,686,510 shares of Series A Preferred StockCompany Common Stock issuable upon exercise of outstanding warrants. Except the foregoing, and the Company has no authority outstanding options, warrants, rights or commitments to issue shares of the Company Common Stock or any Company Capital Stock or other capital stocksecurities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for shares of the Company Common Stock or any Company Capital Stock or other securities of the Company. There are 4,651,550 After giving effect to the issuance of the Purchased Shares hereunder, there will be 52,519,896 shares of Company Common Stock issued and outstanding outstanding. Except as identified in the Company Disclosure Schedule, all options and 100,000 warrants to purchase shares of Series A Preferred Company Common Stock will terminate at Closing. There is no voting trust, agreement or arrangement among any of the beneficial holders of the Company Common Stock affecting the nomination or election of directors or the exercise of the voting rights of the Company Common Stock. There are no registration rights or similar rights applicable to any shares of the Company Common Stock or any Company Capital Stock or other securities of the Company. All outstanding shares of the capital stock of the Company are validly issued and outstanding, and such shares are duly authorized, validly issued, fully paid and nonassessablenon-assessable, and none of such shares have been issued in violation of the preemptive rights of any person. After the (i) amendment All of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”), and (ii) conversion into shares of the Company Common Stock of the issued and outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will Closing Date have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of been issued in compliance with the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all Act and applicable state securities laws and (ca) accomplished pursuant to effective registration statements filed with the Securities and Exchange Commission and/or (b) in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal reliance on valid exemptions from registration or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each of the holders of Series A Preferred Stock providing for the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred Stockqualification thereunder.

Capitalization of the Company. The authorized As of the date hereof and as of the Closing Effective Date, the entire issued and outstanding shares of capital stock of the Company consists of 12,000,000 125 shares of Company Common Stock and 4,000,000 Stock. All of the outstanding shares of Series A Preferred Stock, and capital stock of the Company has no authority to issue any other capital stock. There are 4,651,550 shares of Company Common Stock issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstanding, and such shares are have been duly authorized, validly issued, and are fully paid and nonassessable, and none of such shares have been issued in violation of the non-assessable. The Company has not violated any preemptive or other similar rights of any personPerson in connection with the issuance or redemption of any of its equity interests. After the (i) amendment The Company holds no shares of its respective capital stock in its treasuries. The Shares represent all of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”), issued and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities capital stock of the Company. The Company has received written waivers executed by delivered to the Buyer true, accurate and complete copies of the stock ledger of the Company which reflects all issuances, transfers, repurchases and cancellations of shares of its capital stock. All of the outstanding equity interests in each of the holders Company’s Subsidiaries are validly issued, fully paid and non-assessable. The Company is the beneficial owner and the record owner of Series A Preferred Stock providing all of the equity interests in the Company’s Subsidiaries and holds such equity interests free and clear of all Encumbrances except as are imposed by applicable securities laws. The Company does not own, directly or indirectly, any membership interests, partnership interests or voting securities of, or other equity interests in, or any interest convertible into or exchangeable or exercisable for, any membership interests, partnership interests or voting securities of, or other equity interests in, any firm, corporation, partnership, company, limited liability company, trust, joint venture, association or other entity. There are no preemptive rights or other similar rights in respect of any equity interests in the Company. To the Company’s Knowledge, except as imposed by applicable securities laws, there are no Encumbrances on, or other contractual obligations relating to, the ownership, transfer or voting of any equity interests in the Company, or otherwise affecting the rights of any holder of the equity interests in the Company. Except for the waiver Contemplated Transactions, there is no contractual obligation, or provision in the organizational documents of the Company which obligates it to purchase, redeem or otherwise acquire, or make any payment (including any dividend or distribution) in respect of, any equity interests in the Company and (d) there are no existing rights with respect to registration under the 1933 Act of any and all accrued but unpaid dividends under equity interests in the terms Company. As of the Series A Preferred Stockdate of this Agreement, there are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character that have been issued or agreed, or are otherwise known, by the Company relating to any equity ownership interests in the Company. As of the date of this Agreement, there are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character obligating the Sellers to issue or sell any interest in the Company. As of the Closing Effective Date, there will not be any outstanding or authorized options, warrants, convertible securities, or other rights, agreements, arrangements or commitments of any character relating to any equity ownership interests of the Company or obligating the Sellers or the Company to issue or sell any interest in the Company. The Company does not have any outstanding, or authorized any, equity appreciation, phantom equity, profit participation or similar rights. To the Company’s Knowledge there are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Shares.

Capitalization of the Company. (a) The authorized capital stock of the Company consists and each Subsidiary is set forth on Schedule 4.7. All securities set forth on Schedule 4.7 will be, as of 12,000,000 the Initial Closing and the Subsequent Closing, duly and validly issued, outstanding, fully paid and nonassessable. Neither the Company nor any of its Subsidiaries has issued any other shares of Company Common Stock its capital stock and, except as set forth on Schedule 4.7, there are no outstanding warrants, options or other rights to purchase or acquire any of such shares, nor any outstanding securities convertible into such shares or outstanding warrants, options or other rights to acquire any such convertible securities. After giving effect to the Initial Closing and 4,000,000 the Subsequent Closing and assuming the accuracy of the Purchaser representations set forth herein, all of the outstanding shares of Series A Preferred Stock, and capital stock of the Company has no authority will have been offered, issued, sold and delivered in compliance with applicable federal and state securities laws not subject to issue preemptive rights in favor of any other capital stock. There are 4,651,550 Person and will not result in the issuance of additional shares of capital stock of the Company Common Stock issued and outstanding and 100,000 shares or the triggering of Series A any antidilution or similar rights contained in any agreement to which the Company is a party. The Preferred Stock issued has been duly and outstandingvalidly authorized and, when delivered and such shares are duly authorizedpaid for pursuant to this Agreement, will be validly issued, fully paid and nonassessable. The pro-forma capitalization of the Company immediately following the Initial Closing and the Subsequent Closing is set forth in Section 4.7, subject to the assumptions included therein. The Company has authorized and reserved for issuance upon conversion of the Preferred Stock sufficient shares of its Class C Common Stock, and none of the shares issuable upon such shares have been conversion will be, when issued in violation of accordance with the preemptive rights of any person. After the (i) amendment charter of the Company’s Certificate , duly and validly authorized and issued, fully paid and nonassessable. Except as set forth on Schedule 4.7 or pursuant to the Stockholders Agreement or the Company's charter, there are no preemptive rights, rights of Incorporation first refusal, put or call rights or obligations or anti-dilution rights with respect to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”)issuance, and (ii) conversion into shares of Company Common Stock sale or redemption of the outstanding shares Company's capital stock. Except as set forth on Schedule 4.7, no officer, director or employee of Series A Convertible Preferred Stockthe Company or any other person or entity has, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under claims to have or has any right to claim to have any interest in the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law's capital stock. Except as disclosed in Schedule 2.54.7, there are no restrictions on the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities transfer of the Company's capital stock other than those arising from federal and state securities laws, and FCC rules or pursuant to the Stockholders Agreement. Except as set forth on Schedule 4.7, or pursuant to the Stockholders Agreement, there are no outstanding securities convertible rights, obligations, or exercisable into or exchangeable for Company Common Stock or other Equity Securities restrictions on the voting of any of the Company. The Company has received written waivers executed by each 's capital stock or the registration of such capital stock for offering to the holders of Series A Preferred Stock providing for public pursuant to the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred StockSecurities Act.

Capitalization of the Company. The authorized capital stock of the Company consists of 12,000,000 100,000,000 shares of Company Common Stock and 4,000,000 common stock, of which 25,749,371 shares of Series A Preferred Stock, and the Company has no authority to issue any other capital stock. There are 4,651,550 shares of Company Common Stock issued and outstanding (it being understood that the Company shall effect a 1:4.97179 reverse split of its authorized and 100,000 issued and outstanding shares prior to Closing (the “Company Reverse Split”) such that the authorized capital stock of the Company at Closing consists of 20,113,481 shares of Series A Preferred Stock common stock, of which 5,179,095 shares are issued and outstanding, and such . Such shares are duly authorized, validly issued, fully paid and nonassessablenon-assessable, and none of such shares have been issued in violation of the preemptive rights of any natural person. After the , corporation, business trust, association, limited liability company, partnership, joint venture, other entity, government, agency or political subdivision (i) amendment of the Company’s Certificate of Incorporation to provide for each, a 1.719-for-1 forward stock split (the “Company Stock SplitPerson”), and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “Securities Act”), (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Common Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky “Blue Sky” law. Except as disclosed otherwise set forth in this Agreement or any Schedule 2.5hereto, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities (as defined below) of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each For purposes of the holders this Agreement, “Equity Security” shall mean any stock or similar security of Series A Preferred Stock providing an issuer or any security (whether stock or Indebtedness for the waiver of payment of Borrowed Money (as defined below)) convertible, with or without consideration, into any and all accrued but unpaid dividends under the terms of the Series A Preferred Stockstock or other equity security, or any security (whether stock or Indebtedness for Borrowed Money) carrying any warrant or right to subscribe to or purchase any stock or similar security, or any such warrant or right.

Capitalization of the Company. The authorized capital stock of the Company consists of 12,000,000 Twenty Million (20,000,000) shares of Company Common Stock, of which 11,025,000 shares are issued and outstanding and Five Hundred Thousand (500,000) shares of preferred stock, $.001 par value per share (“Preferred Stock”), of which 120,800 shares are issued and outstanding. Such outstanding shares of Company Common Stock and 4,000,000 shares of Series A Preferred Stock, and the Company has no authority to issue any other capital stock. There are 4,651,550 shares of Company Common Stock issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstanding, and such shares are duly authorized, validly issued, fully paid and nonassessablenon-assessable, and none of such shares have been issued in violation of the preemptive rights of any natural person. After the , corporation, business trust, association, limited liability company, partnership, joint venture, other entity, government, agency or political subdivision (i) amendment of the Company’s Certificate of Incorporation to provide for each, a 1.719-for-1 forward stock split (the “Company Stock SplitPerson”), and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock and Preferred Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “Securities Act”), (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of outstanding Company Common Stock or Preferred Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky “Blue Sky” law. Except as disclosed otherwise set forth in this Agreement or any Schedule 2.5hereto, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities (as defined below) of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company, except as set forth on Schedule 2.03 attached hereto. The Company has received written waivers executed by each For purposes of the holders this Agreement, “Equity Security” shall mean any stock or similar security of Series A Preferred Stock providing an issuer or any security (whether stock or Indebtedness for the waiver of payment of Borrowed Money (as defined below)) convertible, with or without consideration, into any and all accrued but unpaid dividends under the terms of the Series A Preferred Stockstock or other equity security, or any security (whether stock or Indebtedness for Borrowed Money) carrying any warrant or right to subscribe to or purchase any stock or similar security, or any such warrant or right.

Capitalization of the Company. The authorized capital stock of the Company consists of 12,000,000 22,000,000 shares of Company Common Stock and 4,000,000 3,474,492 shares of Preferred Stock, of which a total of 563,381 shares are designated as Series A Preferred Stock, a total of 1,111,111 shares are designated as Series B Preferred Stock, a total of 1,000,000 shares are designated as Series C Preferred Stock, and a total of 800,000 shares are designated as Series D Preferred Stock, and the Company has no authority to issue any other capital stock. There are 4,651,550 3,396,774 shares of Company Common Stock issued and outstanding and 100,000 outstanding, 563,380 shares of Series A Preferred Stock issued and outstanding, 897,778 shares of Series B Preferred Stock issued and outstanding, 138,700 shares of Series C Preferred Stock issued and outstanding and 279,191 shares of Series D Preferred Stock issued and outstanding, and such shares are duly authorized, validly issued, fully paid and nonassessablenon-assessable, and none of such shares have been issued in violation of the preemptive rights of any person. After the (i) amendment of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”), and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue blue-sky law. Except as disclosed otherwise set forth in Schedule 2.5this Agreement, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each of the holders of Series A Preferred Stock providing for the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred Stock.

Capitalization of the Company. The As of the date of this Agreement, the Company’s authorized capital stock consisted solely of 8,000,000 shares of Company Common Stock, of which (i) 4,020,334 shares were issued and outstanding, (ii) 329,100 shares were reserved for issuance upon the exercise of outstanding Company Stock Options, and (iii) 270,000 shares were reserved for future issuance under the Warrants. Each outstanding share of the Company consists Common Stock is duly authorized and validly issued, fully paid and non-assessable, and has not been issued in violation of 12,000,000 any preemptive or similar rights. Other than as set forth in the first sentence of this section and in the Option and Warrant Schedule (as defined below), there are no outstanding subscriptions, options, warrants, puts, calls, agreements, understandings, claims or other commitments or rights of any type relating to the issuance, sale, repurchase or transfer by the Company or any Company subsidiary of any securities of the Company or any Company subsidiary, nor are there outstanding any securities which are convertible into or exchangeable for any shares of the Company Common Stock or any equity interests in any Company subsidiary, and neither the Company nor any of its subsidiaries has any obligation of any kind to issue any additional securities or to pay for or repurchase any securities of the Company or any Company subsidiary or any predecessors of any thereof. No subsidiary of the Company owns any shares of Company Common Stock and 4,000,000 shares of Series A Preferred Stock, and the Company has no authority to issue any other capital stock. There are 4,651,550 430,767 shares of Company Common Stock issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstanding, and such shares are duly authorized, validly issued, fully paid and nonassessable, and none of such shares have been issued held in violation of the preemptive rights of any person. After the (i) amendment of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”), and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstandingtreasury. The offer, issuance and sale of such all of the shares of Company Common Stock were (a) exempt from the registration capital stock described in this Section 5.4 have been in compliance in all material respects with federal and prospectus delivery requirements of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None The Company has previously delivered to Parent a certified schedule (the “Option and Warrant Schedule”) accurately setting forth as of such shares the date of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5this Agreement, the Company has no outstanding names of all holders of options, warrants and other rights or commitments to issue purchase the Company Common Stock or any equity interests in any Company subsidiary, the number of shares or other Equity interests of each class issuable to each such holder upon exercise of such option, warrant or other right, and the exercise price and vesting schedule with respect to those options, warrants and other rights. The Company has no existing agreements to register any securities of the Company under the Securities Act or under any state securities law and has not granted registration rights to any person or entity. The Company is not a party to any, and, to the knowledge of the Company, and there are no outstanding securities convertible no, voting trusts, proxies, stockholders agreements or exercisable into other agreements or exchangeable for understandings with respect to the Company Common Stock Stock. No bonds, debentures, notes or other Equity Securities indebtedness having the right to vote on any matters on which stockholders may vote in respect of the Company. The Company has received written waivers executed by each of the holders of Series A Preferred Stock providing for the waiver of payment of or any and all accrued but unpaid dividends under the terms of the Series A Preferred StockCompany subsidiary are issued or outstanding.

Capitalization of the Company. The authorized capital stock of the Company consists of 12,000,000 (i) 70,000,000 shares of Company Common Stock and 4,000,000 shares of Series A Preferred Stock, and the Company has no authority to issue any other capital stock. There of which there are 4,651,550 23,113,000 shares of Company Common Stock issued and outstanding and 100,000 shares of Series A Preferred Stock issued and outstanding, and such (ii) 5,000,000 shares of preferred stock, par value $0.001 per share, of which no shares have been issued or designated as any series of preferred stock. The shares of Company Common Stock are duly authorized, validly issued, fully paid and nonassessablenon-assessable, and none of such shares have been issued in violation of the preemptive rights of any natural person. After the , corporation, business trust, association, limited liability company, partnership, joint venture, other entity, government, agency or political subdivision (i) amendment of the Company’s Certificate of Incorporation to provide for each, a 1.719-for-1 forward stock split (the “Company Stock SplitPerson”), and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “Securities Act”), (b) registered or qualified (or were exempt from registration or qualification) under the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Common Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky “Blue Sky” law. Except as disclosed otherwise set forth in this Agreement or any Schedule 2.5hereto1 , the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities (as defined below) of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each For purposes of the holders this Agreement, “Equity Security” shall mean any stock or similar security of Series A Preferred Stock providing an issuer or any security (whether stock or Indebtedness for the waiver of payment of Borrowed Money (as defined below)) convertible, with or without consideration, into any and all accrued but unpaid dividends under the terms of the Series A Preferred Stockstock or other equity security, or any security (whether stock or Indebtedness for Borrowed Money) carrying any warrant or right to subscribe to or purchase any stock or similar security, or any such warrant or right.

Capitalization of the Company. The After giving effect to the issuance and sale of the Preferred Stock (all 4,000,000 shares) and Common Stock pursuant to the Asset Purchase Agreement and this Agreement, the authorized capital stock of the Company consists will consist of 12,000,000 shares of Company Common Stock and 4,000,000 shares of Series A Preferred Stock, and the Company has no authority to issue any other capital stock. There are 4,651,550 shares $.01 par value, all of Company Common Stock which will be issued and outstanding and 100,000 owned of record by the Purchasers, and 6,000,000 shares of Series A Common Stock, of which 399,835 shares will be issued and outstanding and owned of record and, to the knowledge of the Company, beneficially as set forth in Exhibit 5B, and a sufficient number of shares of Common Stock will be reserved for issuance upon conversion of the Preferred Stock. When issued as contemplated by this Agreement, the Preferred Stock will be duly and validly issued and outstanding, and such shares are duly authorized, validly issued, fully paid and nonassessablenon-assessable: Shares of Common Stock issued upon conversion of shares of Preferred Stock, when issued, will be duly and none validly issued and fully paid and non-assessable. Except for the right of holders of shares of Preferred Stock to convert such shares have been issued in violation into shares of Common Stock and except for options granted under the preemptive rights Company's 1994 Stock Option Plan, there are no existing options, puts, calls, warrants, conversion privileges, exchange rights, pledges, Liens, repurchase or redemption rights, profit participation or stock appreciation rights, transfer restrictions or commitments of any person. After the (i) amendment character relating to any issued or unissued shares of capital stock of the Company’s Certificate of Incorporation to provide for a 1.719-for-1 forward stock split (the “Company Stock Split”), and (ii) conversion into shares of Company Common Stock of the outstanding shares of Series A Convertible Preferred Stock, par value $.01 per share (the “Series A Preferred Stock”), and the balance owed under the Company’s outstanding Shareholder Notes (the “Shareholder Notes”), immediately prior . There are no preemptive or other preferential rights applicable to the Effective Time, the Company will have 9,500,000 shares of Company Common Stock outstanding. The offer, issuance and sale of such shares of Company Common Stock were (a) exempt from the registration and prospectus delivery requirements Company's capital stock. Except for the rights of the Securities Act, (b) registered or qualified (or were exempt from registration or qualification) under Purchasers in the registration or qualification requirements of all applicable state securities laws and (c) accomplished in conformity with all other applicable securities laws. None of such shares of Company Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or blue sky law. Except as disclosed in Schedule 2.5Registration Agreement, the Company has no outstanding options, not granted registration rights or commitments to issue Company Common Stock or other Equity Securities of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company. The Company has received written waivers executed by each of the holders of Series A Preferred Stock providing for the waiver of payment of any and all accrued but unpaid dividends under the terms of the Series A Preferred StockSecurities Act with respect to any securities.