Common use of Capitalization; Voting Rights Clause in Contracts

Capitalization; Voting Rights. (1) The authorized capital stock of the Company, immediately prior to the Closing after giving effect to the Restated Certificate of Incorporation, will consist of [98,530,700] shares of Series A Common Stock, par value $0.001 per share (the “Series A Common Stock,” and together with the Series B Common Stock, the “Common Stock”), none of which are issued and outstanding, and [98,530,700] shares of which are reserved for future issuance upon conversion of shares of Series B Common Stock, [98,530,700] shares of Series B Common Stock, [7,095,178] shares of which are issued and outstanding and [16,006,519] shares of which are reserved for future issuance to employees pursuant to the Company’s 1998 Stock Option Plan, 2002 Stock Incentive Plan, 2002 California Stock Incentive Plan and 2005 Stock Incentive Plan (collectively, the “Stock Incentive Plans”) and [74,942,226] shares of Preferred Stock, par value $0.001 per share, 8,904,567 of which are designated Series A Preferred Stock, all of which are issued and outstanding, 7,419,355 of which are designated Series B Preferred Stock, all of which are issued and outstanding, 6,401,523 of which are designated Series C Preferred Stock, all of which are issued and outstanding, 12,618,296 of which are designated as Series D Preferred Stock, all of which are issued and outstanding, 20,500,000 of which are designated as Series E Preferred Stock, 19,633,531 of which are issued and outstanding, 8,000,000 of which are designated as Series F Preferred Stock, all of which are issued and outstanding, 2,083,333 of which are designated as Series G Preferred Stock, none of which are issued and outstanding, 8,333,333 of which are designated as Series H Preferred Stock, 4,141,586 of which are issued and outstanding, and 681,819 of which are designated as Series I Preferred Stock, none of which are issued and outstanding (collectively, the “Preferred Stock”). All issued and outstanding shares of the Company’s capital stock (a) have been duly authorized and validly issued, (b) are fully paid and non-assessable, and (c) were offered, issued, sold and delivered in compliance with all applicable federal and state securities laws. The rights, preferences, privileges and restrictions of the Shares are as stated in the Restated Certificate of Incorporation. Each series of Preferred Stock is convertible into Series B Common Stock on a one-for-one basis. Each share of Series B Common Stock is convertible into a share of Series A Common Stock on a one-for-one basis. The Conversion Shares have been duly and validly reserved for issuance.

Capitalization; Voting Rights. (1) The authorized capital stock of the Company, immediately prior to the Closing after giving effect to the Restated Certificate of IncorporationClosing, will consist of [98,530,700] 25,000,000 shares of Common Stock, (par value $0.01) per share and 4,000,000 shares of Preferred Stock, (par value $0.01), of which 600,000 are designated Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock"); 1,700,000 are designated Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Stock") and 500,000 shares of Series A D Cumulative Convertible Preferred Stock. Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, par value $0.001 per share (the “0 shares Series A Common Stock,” and together with the Series B Common Stock, the “Common Stock”Preferred Stock (subscribed for 600,000 shares), none of which are issued and outstanding, and [98,530,700] shares of which are reserved for future issuance upon conversion of 407,900 shares of Series B Preferred Stock, 371,438 shares of Series C Preferred Stock and 244,898 shares of Series D Preferred Stock will be issued and outstanding. Of the authorized shares of Common Stock, [98,530,700] (i) 1.4 million shares of Series B Common Stock, [7,095,178] shares of which are issued and outstanding and [16,006,519] shares of which are reserved for future issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for issuance to employees pursuant to the Company’s 1998 's 1998-B Incentive Stock Option Plan, 2002 Stock Incentive Plan, 2002 California Stock Incentive Plan and 2005 Stock Incentive Non-Statutory Plan (collectivelythe "1998-B Plan"), (ii) 600,000 shares are reserved for issuance upon the “Stock Incentive Plans”exercise of certain warrants, (iii) and [74,942,226] 600,000 shares are reserved for issuance upon the conversion of Preferred Stock, par value $0.001 per share, 8,904,567 of which are designated the Series A Preferred Stock, all (iv) 1,785,000 shares are reserved for issuance upon the conversion of which are issued and outstanding, 7,419,355 of which are designated the Series B Preferred Stock, all and (v) 1,650,000 shares are reserved for issuance upon conversion of which are issued and outstanding, 6,401,523 of which are designated the Series C Preferred Stock, all . The Company has reserved 1,500,000 shares of which are issued and outstanding, 12,618,296 its Common Stock for issuance upon conversion of which are designated as the Series D Preferred Stock, all of which are issued and outstanding, 20,500,000 of which are designated as Series E Preferred Stock, 19,633,531 of which are issued and outstanding, 8,000,000 of which are designated as Series F Preferred Stock, all of which are issued and outstanding, 2,083,333 of which are designated as Series G Preferred Stock, none of which are issued and outstanding, 8,333,333 of which are designated as Series H Preferred Stock, 4,141,586 of which are issued and outstanding, and 681,819 of which are designated as Series I Preferred Stock, none of which are issued and outstanding (collectively, the “Preferred Stock”). All issued and outstanding shares of the Company’s capital stock 's Common Stock (a) have been duly authorized and validly issued, (b) are fully paid and non-assessablenonassessable, and (c) were offered, issued, sold and delivered issued in compliance with all applicable state and federal and state securities lawslaws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Restated Certificate of IncorporationDesignation. Each series of Preferred Stock is convertible into Series B Common Stock on a one-for-one basis. Each share the basis described in the Reports (as defined below), subject to adjustment as provided in the respective Certificate of Series B Common Stock is convertible into a share of Series A Common Stock on a one-for-one basisDesignation. The Conversion Shares have been duly and validly reserved for issuance. Other than as set forth in this Section 3.3 or in the Company's annual, quarterly and 8-K reports, filed with the Securities and Exchange Commission ("Reports"), there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Certificate of Designation, and upon payment of the Purchase Price the Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; PROVIDED, HOWEVER, that the Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or in the Registration Rights Agreement or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (1) The authorized capital stock of the Company, immediately prior to the Closing after giving effect to the Restated Certificate of Incorporation, will consist of [98,530,700] Company consists of: (A) 50,000,000 shares of Series A Common Stock, par value $0.001 .00001 per share share, of which, as of January 31, 2003 (the “Series A Common Stock,” and together with the Series B Common Stock, the “Common StockReference Date”), none of which (i) 14,912,899 shares are issued and outstanding, and [98,530,700] (ii) 1,419,225 shares of which are reserved for future issuance upon conversion of subject to outstanding options, (iii) 1,245,825 shares of Series B Common Stock, [98,530,700] shares of Series B Common Stock, [7,095,178] shares of which are issued and outstanding and [16,006,519] shares of which are reserved for future issuance to employees employees, directors and consultants pursuant to the Company’s 1998 Stock Option Planstock option plans, 2002 Stock Incentive Plan(iv) 2,105,380 shares are subject to outstanding warrants, 2002 California Stock Incentive Plan and 2005 Stock Incentive Plan (collectively, the “Stock Incentive Plans”v) 1,173,766 shares are issuable upon conversion of outstanding convertible promissory notes; and [74,942,226] (B) 5,000,000 shares of Preferred Stock, par value $0.001 .00001 per share, 8,904,567 of which (i) 350,000 shares are designated Series A Preferred Stock, all no shares of which are issued and outstandingoutstanding as of the Reference Date, 7,419,355 of which (ii) 250,000 shares are designated Series B Preferred Stock, all no shares of which are issued and outstandingoutstanding as of the Reference Date, 6,401,523 of which (iii) 300,000 shares are designated as Series C Preferred Stock, all 10,000 shares of which are issued outstanding as of the Reference Date and outstandingare convertible into 40,792 shares of Common Stock as of the Reference Date, 12,618,296 of which (iv) 250,000 shares are designated as Series D Preferred Stock, all 85,000 of which are issued outstanding as of the Reference Date and outstanding, 20,500,000 of which (v) 350,000 shares are designated as Series E Preferred Stock, 19,633,531 none of which which, prior to the Closing, are issued and outstanding, 8,000,000 of which are designated as Series F Preferred Stock, all of which are issued and outstanding, 2,083,333 of which are designated as Series G Preferred Stock, none of which are issued and outstanding, 8,333,333 of which are designated as Series H Preferred Stock, 4,141,586 of which are issued and outstanding, and 681,819 of which are designated as Series I Preferred Stock, none of which are issued and outstanding (collectively, the “Preferred Stock”). All issued and outstanding shares of the Company’s capital stock Common Stock (a) have been duly authorized and validly issued, and (b) are fully paid and non-assessable, and (c) were offered, issued, sold and delivered in compliance with all applicable federal and state securities lawsnonassessable. The rights, preferences, privileges and restrictions of the Shares are as stated in the Restated Certificate Charter. 1,076,924 shares of Incorporation. Each series of Preferred Stock is convertible into Series B Common Stock on a one-for-one basis. Each share of Series B Common Stock is convertible into a share of Series A Common Stock on a one-for-one basis. The Conversion Shares have been duly and validly reserved for issuanceissuance as Conversion Shares, and the Company will take all reasonable measures to ensure that, at all times, a sufficient number of shares of its Common Stock are reserved for issuance upon conversion of the Shares and exercise of the Warrants. As of the Reference Date, other than the shares of capital stock issuable upon exercise or conversion of the foregoing outstanding options, warrants, convertible promissory notes and convertible securities, and except as may be granted pursuant to this Agreement or the Warrants, there are no outstanding options, warrants, rights (including conversion, anti-dilution or preemptive rights and rights of first refusal), proxy or stockholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Charter, the Securities and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (1) The authorized capital stock of the Company, immediately prior to the Closing after giving effect to and the Restated Certificate consummation of Incorporationthe transactions contemplated hereby, will consist of [98,530,700] (i) 50,000,000 shares of Series A Common Stock, par value $0.001 .001 per share (the “Series A Common Stock,” and together with the Series B Common Stockshare, the “Common Stock”), none 16,622,691 shares of which are issued and outstanding, and [98,530,700] shares of which are reserved for future issuance upon conversion of shares of Series B Common Stock, [98,530,700] shares of Series B Common Stock, [7,095,178] shares of which are issued and outstanding and [16,006,519] 2,047,729 shares of which are reserved for future issuance to employees pursuant to the Company’s 1998 's Stock Option Plans, as amended and restated (the "Option Plan"), 2002 22,727,492 shares of which are reserved for issuance upon exercise of the warrants issued pursuant to the Series F Preferred Stock Incentive PlanPurchase Agreement dated January 18, 2002 California 2001 and the Second Series F Preferred Stock Incentive Plan and 2005 Stock Incentive Plan Warrant Purchase Agreement dated March 29, 2001 (collectively, the “Stock Incentive Plans”"Initial Series F Warrants") and [74,942,226] other warrants of the Company, and (ii) 2,000,000 shares of Preferred Stock, par value $0.001 .001 per share, 8,904,567 400 of which are designated Series A Preferred Stock, all of which are issued and outstanding, 7,419,355 of which are designated Series B Preferred Stock, all of which are issued and outstanding, 6,401,523 of which are designated Series C Preferred Stock, all of which are issued and outstanding, 12,618,296 of which are designated as Series D Preferred Stock, all of which are issued and outstanding, 20,500,000 of which are designated as Series E Preferred Stock, 19,633,531 of which are issued and outstanding, 8,000,000 of which are designated as Series F Preferred Stock, all of which are issued and outstanding, 2,083,333 of which are designated as Series G Preferred Stock, none of which are issued and outstanding, 8,333,333 225 of which are designated as Series H Preferred Stock, 4,141,586 of which are issued and outstanding, and 681,819 of which are designated as Series I B Preferred Stock, none of which are issued and outstanding (collectivelyoutstanding, the “500,000 of which are designated Series C Preferred Stock”, none of which are issued and outstanding, 25,000 of which are designated Series D Preferred Stock, none of which are issued and outstanding, 73,000 of which are designated Series F Preferred Stock, 45,398.33 of which are issued and outstanding and 700,000 shares of Series A Junior Participating Preferred Stock, none of which is issued or outstanding. The authorized capital stock of the Company 4 immediately after the Closing, will consist of (i) 50,000,000 shares of Common Stock, par value $.001 per share, 16,622,691 shares of which are issued and outstanding, and 2,047,729 shares of which are reserved for future issuance to pursuant to the Company's Stock Option Plans, as amended and restated (the "Option Plan"), 43,881,426 shares of which are reserved for issuance upon exercise of the Warrants (subject to the approval and filing of an amendment to the Company's Certificate of Incorporation to increase the number of shares of Common Stock the Company is authorized to issue), warrants to purchase shares of Common Stock of the Company issued pursuant to the First Series F Purchase Agreement and other warrants of the Company, and (ii) 2,000,000 shares of Preferred Stock, par value $.001 per share, 400 of which are designated Series A Preferred Stock, none of which are issued and outstanding, 225 of which are designated Series B Preferred Stock, none of which are issued and outstanding, 500,000 of which are designated Series C Preferred Stock, none of which are issued and outstanding, 25,000 of which are designated Series D Preferred Stock, none of which are issued and outstanding, 116,000 of which are designated Series F Preferred Stock, 66,398.33 of which are issued and outstanding and 700,000 shares of Series A Junior Participating Preferred Stock, none of which is issued or outstanding. Except as provided in Schedule 5.3, none of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock designated by the Company may be issued at any time. All issued and outstanding shares of the Company’s 's Common Stock and other capital stock (a) have been duly authorized and validly issued, (b) are fully paid and non-assessablenonassessable, and (c) were offered, issued, sold and delivered issued in compliance with all applicable state and federal and state securities lawslaws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Restated Certificate of IncorporationDesignation. Other than the 2,047,729 shares reserved for issuance under the Option Plans, the Warrants, the Initial Series F Warrants and other warrants and except as may be granted pursuant to the Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. Schedule 5.3 sets forth all issued and outstanding options and warrants with an exercise price greater than $3.00 per share. Except as provided in Schedule 5.3, the Company is not a party or subject to any agreement or understanding, and, to the Company's knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company. When issued in compliance with the provisions of this Agreement and the Certificate of Designation, the Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances and any restrictions on transfer; provided, however, that the Shares may be subject to restrictions on transfer under applicable state and/or federal securities laws. The consummation of the transactions contemplated by this Agreement and the Related Agreements will not result in acceleration or other changes in the vesting provisions or other terms of any outstanding options granted by the Company. Each series subsidiary of Preferred Stock the Company is convertible into Series B Common Stock listed on a oneSchedule 5.2 hereto, and each such subsidiary is wholly-for-one basis. Each share of Series B Common Stock is convertible into a share of Series A Common Stock on a one-for-one basis. The Conversion Shares have been duly and validly reserved for issuanceowned.

Capitalization; Voting Rights. (1) The authorized capital stock of the CompanyCompany consists of 50,000,000 shares, immediately prior to the Closing after giving effect to the Restated Certificate of Incorporation, will consist of [98,530,700] such shares being designated as follows: (i) 48,000,000 shares of Series A Common Stockcommon stock, par value $0.001 .01 per share (the “Series A "Common Stock,” and together with the Series B Common Stock, the “Common Stock”), none ") of which are issued and outstanding, and [98,530,700] shares of which are reserved for future issuance upon conversion of shares of Series B Common Stock, [98,530,700] shares of Series B Common Stock, [7,095,178] shares of which (a) 16,405,548 are issued and outstanding and [16,006,519] (b) (1) 3,323,700 shares of which are reserved for future issuance to employees pursuant to the Company’s 1998 's 1997 Equity Compensation Plan adopted by the Company on May 21, 1997, the Company's 1988 Stock Option Plan, 2002 Stock Incentive Plan, 2002 California Stock Incentive Plan and 2005 the Company's Stock Incentive Option Plan for Directors (collectively, the “"Stock Incentive Option Plans”") and [74,942,226] (2) 3,000,000 shares are reserved for issuance pursuant to the Asset Purchase Agreement, dated February 13, 2001 by and among the Company, Axial Technology Holding AG and Wyzdom Solutions, Inc. (the "Asset Purchase Agreement"); (ii) 2,000,000 shares of preferred stock, par value $.01 per share, consisting of 500,000 shares of Series A Convertible Preferred Stock, par value $0.001 .10 per share, 8,904,567 of which are designated Series A Preferred Stock, all of which no shares are issued and outstanding, 7,419,355 200,000 shares of which are designated Series B Convertible Preferred Stock, all par value $.01 per share, of which no shares are issued and outstanding, 6,401,523 250,000 shares of which are designated Series C Convertible Preferred Stock, all par value $.01 per share, of which no shares are issued and outstanding, 12,618,296 9,500 shares of which are designated as Series D Convertible Preferred Stock, all par value $.01 per share, of which no shares are issued and outstanding, 20,500,000 1,800 shares of which are designated as Series E Redeemable Preferred Stock, 19,633,531 par value $.01 per share, of which are issued and outstanding, 8,000,000 of which are designated as Series F Preferred Stock, all of which are issued and outstanding, 2,083,333 of which are designated as Series G Preferred Stock, none of which are issued and outstanding, 8,333,333 of which are designated as Series H Preferred Stock, 4,141,586 of which no shares are issued and outstanding, and 681,819 3,000 shares of which are designated as Series I F Convertible Preferred Stock, none par value $.01 per share (the "Series F Preferred Stock"), of which are 3,000 shares will be upon consummation of the transactions contemplated hereby issued and outstanding (collectivelyoutstanding. The Shares have been duly authorized, and upon consummation of the “Preferred Stock”)Conversion, will be fully paid and non-assessable and issued in compliance with all applicable state and federal laws concerning the issuance of securities. All issued and outstanding shares of the Company’s capital stock Common Stock and the Shares (ai) have been duly authorized and validly issued, (bii) are fully paid and non-assessable, nonassessable and (ciii) were offered, issued, sold and delivered issued in compliance with all applicable state and federal and state securities lawslaws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Restated Certificate Designations, which was accepted for filing by the Pennsylvania Department of IncorporationState prior to the date hereof. Each series The shares of Preferred Stock is convertible into Series B Common Stock on a one-for-one basis. Each share issuable upon conversion of Series B Common Stock is convertible into a share the Shares pursuant to the terms of Series A Common Stock on a one-for-one basis. The the Designations (the "Conversion Shares Shares") have been duly and validly reserved for issuance. Other than the 3,323,700 shares reserved for issuance under the Stock Option Plans and 3,000,000 shares of Common Stock to be issued pursuant to the Asset Purchase Agreement, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. The Shares are free of any liens or encumbrances; provided, however, that the Shares may be subject to restrictions on transfer under state and/or federal securities laws. When issued in compliance with the provisions of the Designations, the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances other than liens and encumbrances; provided, however, that the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws.

Capitalization; Voting Rights. (1) The authorized capital stock of the Company, immediately prior to the First Closing after giving effect to and the Restated Certificate consummation of Incorporationthe transactions contemplated hereby, will consist of [98,530,700] (i) 50,000,000 shares of Series A Common Stock, par value $0.001 .001 per share (the “Series A Common Stock,” and together with the Series B Common Stockshare, the “Common Stock”), none 16,622,691 shares of which are issued and outstanding, and [98,530,700] shares of which are reserved for future issuance upon conversion of shares of Series B Common Stock, [98,530,700] shares of Series B Common Stock, [7,095,178] shares of which are issued and outstanding and [16,006,519] 2,047,729 shares of which are reserved for future issuance to employees pursuant to the Company’s 1998 's Stock Option Plans, as amended and restated (the "Option Plan"), 2002 Stock Incentive Plan20,084,846 shares of which are reserved for issuance upon exercise of the Initial Series F Warrants and other warrants of the Company, 2002 California Stock Incentive Plan and 2005 Stock Incentive Plan (collectively, the “Stock Incentive Plans”ii) and [74,942,226] 2,000,000 shares of Preferred Stock, par value $0.001 .001 per share, 8,904,567 400 of which are designated Series A Preferred Stock, all of which are issued and outstanding, 7,419,355 of which are designated Series B Preferred Stock, all of which are issued and outstanding, 6,401,523 of which are designated Series C Preferred Stock, all of which are issued and outstanding, 12,618,296 of which are designated as Series D Preferred Stock, all of which are issued and outstanding, 20,500,000 of which are designated as Series E Preferred Stock, 19,633,531 of which are issued and outstanding, 8,000,000 of which are designated as Series F Preferred Stock, all of which are issued and outstanding, 2,083,333 of which are designated as Series G Preferred Stock, none of which are issued and outstanding, 8,333,333 225 of which are designated as Series H Preferred Stock, 4,141,586 of which are issued and outstanding, and 681,819 of which are designated as Series I B Preferred Stock, none of which are issued and outstanding (collectivelyoutstanding, the “500,000 of which are designated Series C Preferred Stock”, none of which are issued and outstanding, 25,000 of which are designated Series D Preferred Stock, none of which are issued and outstanding, 65,000 of which are designated Series F Preferred Stock, 41,398.33 of which are issued and outstanding and 700,000 shares of Series A Junior Participating Preferred Stock, none of which is issued or outstanding. The authorized capital stock of the Company immediately after the First Closing, will consist of (i) 50,000,000 shares of Common Stock, par value $.001 per share, 16,622,691 shares of which are issued and outstanding, and 2,047,729 shares of which are reserved for future issuance to pursuant to the Company's Stock Option Plans, as amended and restated (the "Option Plan"), 22,205,874 shares of which are reserved for issuance upon exercise of the Warrants, warrants to purchase shares of Common Stock of the Company issued pursuant to the First Series F Purchase Agreement and other warrants of the Company, and (ii) 2,000,000 shares of Preferred Stock, par value $.001 per share, 400 of which are designated Series A Preferred Stock, none of which are issued and outstanding, 225 of which are designated Series B Preferred Stock, none of which are issued and outstanding, 500,000 of which are designated Series C Preferred Stock, none of which are issued and outstanding, 25,000 of which are designated Series D Preferred Stock, none of which are issued and outstanding, 73,000 of which are designated Series F Preferred Stock, 42,398.33 of which are issued and outstanding and 700,000 shares of Series A Junior Participating Preferred Stock, none of which is issued or outstanding. Except as provided in Schedule 5.3, none of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock designated by the Company may be issued at any time. All issued and outstanding shares of the Company’s 's Common Stock and other capital stock (a) have been duly authorized and validly issued, (b) are fully paid and non-assessablenonassessable, and (c) were offered, issued, sold and delivered issued in compliance with all applicable state and federal and state securities lawslaws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Restated Certificate of IncorporationDesignation. Other than the 24,193,603 shares reserved for issuance under the Option Plans, the Warrants, the Initial Series F Warrants and other warrants and except as may be granted pursuant to this Agreement and the Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. Schedule 5.3 sets forth all issued and outstanding options and warrants with an exercise price greater than $3.00 per share. Except as provided in Schedule 5.3, the Company is not a party or subject to any agreement or understanding, and, to the Company's knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company. When issued in compliance with the provisions of this Agreement and the Certificate of Designation, the Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances and any restrictions on transfer; provided, however, that the Shares may be subject to restrictions on transfer under applicable state and/or federal securities laws. The consummation of the transactions contemplated by this Agreement and the Related Agreements will not result in acceleration or other changes in the vesting provisions or other terms of any outstanding options granted by the Company. Each series subsidiary of Preferred Stock the Company is convertible into Series B Common Stock listed on a oneSchedule 5.2 hereto, and each such subsidiary is wholly-for-one basis. Each share of Series B Common Stock is convertible into a share of Series A Common Stock on a one-for-one basis. The Conversion Shares have been duly and validly reserved for issuanceowned.

Capitalization; Voting Rights. (1) The authorized capital stock of the Company, immediately prior to the Closing after giving effect to the Restated Certificate of IncorporationClosing, will consist of [98,530,700] twenty million (20,000,000) shares of Series A Common Stock, (par value $0.001 .001) per share share, two million thirty three thousand three hundred ninety (the “Series A Common Stock,” and together with the Series B Common Stock, the “Common Stock”), none of which are issued and outstanding, and [98,530,700] shares of which are reserved for future issuance upon conversion of shares of Series B Common Stock, [98,530,700] shares of Series B Common Stock, [7,095,178] 2,033,390) shares of which are issued and outstanding and [16,006,519] one million seven hundred fifty thousand (1,750,000) shares of which are reserved for future issuance to employees employees, officers, directors and consultants pursuant to the Company’s 1998 Stock Option Plan, 2002 Stock Incentive Plan, 2002 California Stock 's 1999 Equity Incentive Plan and 2005 Stock Incentive Plan eight million five hundred thousand (collectively, the “Stock Incentive Plans”8,500,000) and [74,942,226] shares of Preferred Stock, (par value $0.001 .001) per share, 8,904,567 all of which are designated Series A Preferred Stock, all of which are issued and outstanding, 7,419,355 of which are designated Series B Preferred Stock, all of which are issued and outstanding, 6,401,523 of which are designated Series C Preferred Stock, all of which are issued and outstanding, 12,618,296 of which are designated as Series D Preferred Stock, all of which are issued and outstanding, 20,500,000 of which are designated as Series E Preferred Stock, 19,633,531 of which are issued and outstanding, 8,000,000 of which are designated as Series F Preferred Stock, all of which are issued and outstanding, 2,083,333 of which are designated as Series G Preferred Stock, none of which are issued and outstanding, 8,333,333 of which are designated as Series H Preferred Stock, 4,141,586 of which are issued and outstanding, and 681,819 of which are designated as Series I Preferred Stock, none of which are issued and outstanding (collectively, the “Preferred Stock”). All issued and outstanding shares of the Company’s capital stock 's Common Stock (a) have been duly authorized and validly issued, (b) are fully paid and non-assessablenonassessable, and (c) were offered, issued, sold and delivered issued in compliance with all applicable state and federal and state securities lawslaws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Restated Certificate of IncorporationCertificate. Each series of Preferred Stock is convertible into Series B Common Stock on a one-for-one basis. Each share of Series B Common Stock is convertible into a share of Series A Common Stock on a one-for-one basis. The Conversion Shares have been duly and validly reserved for issuance. Other than the 1,750,000 shares reserved for issuance under the Company's 1999 Equity Incentive Plan, the option to purchase up to four hundred thirty eight thousand five hundred ninety six (438,596) shares of Series A Preferred Stock granted to Kevix Xxxxxxxx xxxsuant to that certain Key Employee Agreement by and between the Company and Kevix Xxxxxxxx xxxed on or about the date hereof, and the proposed issuance of up to one million two hundred fifty thousand (1,250,000) shares of Series A Preferred Stock to certain shareholders of Asia Communications Global Limited ("ACGL") pursuant to that certain Asset Purchase Agreement by and between the Company and ACG, Inc., a subsidiary of ACGL, dated on or about the date hereof (the "ACGL Agreement"), and except as may be granted pursuant to this Agreement and the Investor Rights Agreement, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Restated Certificate, the Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (1) The authorized capital stock of the Company, immediately prior to the First Closing after giving effect to and the Restated Certificate consummation of Incorporationthe transactions contemplated hereby, will consist of [98,530,700] (i) 50,000,000 shares of Series A Common Stock, par value $0.001 .001 per share (the “Series A Common Stock,” and together with the Series B Common Stockshare, the “Common Stock”), none 16,622,691 shares of which are issued and outstanding, and [98,530,700] shares of which are reserved for future issuance upon conversion of shares of Series B Common Stock, [98,530,700] shares of Series B Common Stock, [7,095,178] shares of which are issued and outstanding and [16,006,519] 2,047,729 shares of which are reserved for future issuance to employees pursuant to the Company’s 1998 's Stock Option Plans, as amended and restated (the "Option Plan"), 2002 Stock Incentive Plan20,084,846 shares of which are reserved for issuance upon exercise of the Initial Series F Warrants and other warrants of the Company, 2002 California Stock Incentive Plan and 2005 Stock Incentive Plan (collectively, the “Stock Incentive Plans”ii) and [74,942,226] 2,000,000 shares of Preferred Stock, par value $0.001 .001 per share, 8,904,567 400 of which are designated Series A Preferred Stock, all of which are issued and outstanding, 7,419,355 of which are designated Series B Preferred Stock, all of which are issued and outstanding, 6,401,523 of which are designated Series C Preferred Stock, all of which are issued and outstanding, 12,618,296 of which are designated as Series D Preferred Stock, all of which are issued and outstanding, 20,500,000 of which are designated as Series E Preferred Stock, 19,633,531 of which are issued and outstanding, 8,000,000 of which are designated as Series F Preferred Stock, all of which are issued and outstanding, 2,083,333 of which are designated as Series G Preferred Stock, none of which are issued and outstanding, 8,333,333 225 of which are designated as Series H Preferred Stock, 4,141,586 of which are issued and outstanding, and 681,819 of which are designated as Series I B Preferred Stock, none of which are issued and outstanding (collectivelyoutstanding, the “500,000 of which are designated Series C Preferred Stock”, none of which are issued and outstanding, 25,000 of which are designated Series D Preferred Stock, none of which are issued and outstanding, 65,000 of which are designated Series F Preferred Stock, 41,398.33 of which are issued and outstanding and 700,000 shares of Series A Junior Participating Preferred Stock, none of which is issued or outstanding. The authorized capital stock of the Company immediately after the First Closing, will consist of (i) 50,000,000 shares of Common Stock, par value $.001 per share, 16,622,691 shares of which are issued and outstanding, and 2,047,729 shares of which are reserved for future issuance to pursuant to the Company's Stock Option Plans, as amended and restated (the "Option Plan"), 22,205,874 shares of which are reserved for issuance upon exercise of the Warrants, warrants to purchase shares of Common Stock of the Company issued pursuant to the First Series F Purchase Agreement and other warrants of the Company, and (ii) 2,000,000 shares of Preferred Stock, par value $.001 per share, 400 of which are designated Series A Preferred Stock, none of which are issued and outstanding, 225 of which are designated Series B Preferred Stock, none of which are issued and outstanding, 500,000 of which are designated Series C Preferred Stock, none of which are issued and outstanding, 25,000 of which are designated Series D Preferred Stock, none of which are issued and outstanding, 73,000 of which are designated Series F Preferred Stock, 42,398.33 of which are issued and outstanding and 700,000 shares of Series A Junior Participating Preferred Stock, none of which is issued or outstanding. Except as provided in Schedule 5.3, none of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock designated by the Company may be 3 issued at any time. All issued and outstanding shares of the Company’s 's Common Stock and other capital stock (a) have been duly authorized and validly issued, (b) are fully paid and non-assessablenonassessable, and (c) were offered, issued, sold and delivered issued in compliance with all applicable state and federal and state securities lawslaws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Restated Certificate of IncorporationDesignation. Other than the 24,193,603 shares reserved for issuance under the Option Plans, the Warrants, the Initial Series F Warrants and other warrants and except as may be granted pursuant to this Agreement and the Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. Schedule 5.3 sets forth all issued and outstanding options and warrants with an exercise price greater than $3.00 per share. Except as provided in Schedule 5.3, the Company is not a party or subject to any agreement or understanding, and, to the Company's knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by a director of the Company. When issued in compliance with the provisions of this Agreement and the Certificate of Designation, the Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances and any restrictions on transfer; provided, however, that the Shares may be subject to restrictions on transfer under applicable state and/or federal securities laws. The consummation of the transactions contemplated by this Agreement and the Related Agreements will not result in acceleration or other changes in the vesting provisions or other terms of any outstanding options granted by the Company. Each series subsidiary of Preferred Stock the Company is convertible into Series B Common Stock listed on a oneSchedule 5.2 hereto, and each such subsidiary is wholly-for-one basis. Each share of Series B Common Stock is convertible into a share of Series A Common Stock on a one-for-one basis. The Conversion Shares have been duly and validly reserved for issuanceowned.

Capitalization; Voting Rights. (1) The authorized capital stock of the CompanyCompany consists, immediately or will consist prior to the Closing after giving effect to the Restated Certificate Closing, of Incorporation, will consist of [98,530,700] twenty-five million (25,000,000) shares of Series A Common Stock, par value $0.001 per share four million six hundred sixty four thousand seven hundred forty nine (the “Series A Common Stock,” and together with the Series B Common Stock, the “Common Stock”), none 4,664,749) shares of which are shall be issued and outstanding, and [98,530,700] twenty-two million three hundred ninety-eight thousand (22,398,000) shares of which are reserved for future issuance upon conversion of shares of Series B Common Preferred Stock, [98,530,700] shares of Series B Common Stock, [7,095,178] shares of which are issued and outstanding and [16,006,519] shares of which are reserved for future issuance to employees pursuant to . Of the Company’s 1998 Stock Option Plan, 2002 Stock Incentive Plan, 2002 California Stock Incentive Plan and 2005 Stock Incentive Plan (collectively, the “Stock Incentive Plans”) and [74,942,226] 22,398,000 shares of Preferred Stock, par value $0.001 per share, 8,904,567 three hundred twenty-five thousand (325,000) shares of which Preferred Stock are designated reserved for Series A A-1 Preferred Stock, all of which are issued and outstanding, 7,419,355 of which are designated Series B Preferred Stock, all of which are issued and outstanding, 6,401,523 of which are designated Series C Preferred Stock, all of which are issued and outstanding, 12,618,296 of which are designated as Series D Preferred Stock, all of which are issued and outstanding, 20,500,000 of which are designated as Series E Preferred Stock, 19,633,531 of which are issued and outstanding, 8,000,000 of which are designated as Series F Preferred Stock, all of which are issued and outstanding, 2,083,333 of which are designated as Series G Preferred Stock, none of which are issued and outstanding, 8,333,333 of which are designated as Series H Preferred Stock, 4,141,586 of which are will be issued and outstanding, and 681,819 of which 325,000 shares are designated as reserved for Series I A-N Preferred Stock, none of which are none will be issued or outstanding; 1,804,000 shares will be reserved for Series B-1 Preferred Stock, of which all will be issued and outstanding, and 1,804,000 shares will be reserved for Series B-N Preferred Stock, of which none will be issued or outstanding; 4,059,573 shares will be reserved for Series C-1 Preferred Stock, of which all will be issued and outstanding and 4,070,000 shares will be reserved for Series C-N Preferred Stock, of which none will be issued or outstanding; and 2,800,000 shares will be reserved for Series D Preferred Stock of which none will be issued or outstanding prior to the Closing. The Company has reserved five million six hundred thousand (collectively5,600,000) shares of Common Stock for issuance under the Company's 1995 Stock Incentive Plan to employees, consultants, and directors or officers of the Company, against which 3,299,600 options to purchase shares shall be issued and outstanding immediately after the Closing. In addition to the 3,299,600 options that are outstanding, the “Preferred Stock”)Company has issued a total of 661,674 shares of its Common Stock pursuant to stock option exercises. All issued and outstanding shares securities of the Company’s capital stock Company (ai) will have been duly authorized and validly issued, (bii) are will be fully paid and non-assessablenonassessable, and (ciii) were offered, issued, sold and delivered will have been issued in compliance with all applicable state and federal and state securities lawslaws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Third Restated Certificate of Incorporation. Each series of Preferred Stock is convertible into Series B Common Stock on a one-for-one basis. Each share of Series B Common Stock is convertible into a share of Series A Common Stock on a one-for-one basisArticles. The Conversion Shares have been duly and validly reserved for issuance. Other than as may be set forth in SCHEDULE II, and except as may be granted pursuant to the Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. Except as may be set forth in the Third Restated Articles, the Company has no obligation to repurchase any of its capital stock.

Capitalization; Voting Rights. (1) The authorized capital stock of the Company, immediately prior to the Closing after giving effect to the Restated Certificate of IncorporationClosing, will consist of [98,530,700] twenty million (20,000,000) shares of Series A Common Stockcommon stock, par value $0.001 per share (the “Series A Common Stock,” and together with the Series B Common Stock, the “Common Stock”), none of which (i) one million four hundred six thousand two hundred eighty nine (1,406,289) shares are issued and outstanding, and [98,530,700] (ii) eight hundred forty five thousand nine hundred seventy (845,970) shares of which are reserved for future issuance upon conversion of shares of Series B Common Stock, [98,530,700] shares of Series B Common Stock, [7,095,178] shares of which are issued and outstanding and [16,006,519] shares of which are reserved for future issuance to employees pursuant to the Company’s 1998 's Amended and Restated 1996 Stock Option Plan, 2002 (iii) seven hundred twenty one thousand seven hundred eighty (721,780) shares are subject to outstanding options pursuant to the 1996 Stock Incentive Plan, 2002 California Stock Incentive Plan and 2005 Stock Incentive Option Plan (collectivelyprovided, however, the “Stock Incentive Plans”Company on the date hereof shall issue to Mr. Xxxxxx Xxxxxx an option to purchase six percent (6%) of the fully diluted shares of the Company outstanding immediately after the Closing of this transaction) and [74,942,226] (iv) ten thousand (10,000) shares are subject to outstanding warrants to purchase common stock, and eight million (8,000,000) shares of Preferred Stock, par value $0.001 per share, 8,904,567 of which (A) one million three hundred one thousand four hundred (1,301,400) are designated Series A Preferred Stock, all one million two hundred five thousand (1,205,000) of which are issued and outstanding, 7,419,355 outstanding and ninety-six thousand four hundred (96,400) of which are reserved for issuance pursuant to outstanding warrants to purchase Series A Preferred Stock, (B) one million nine hundred eighty-one thousand five hundred thirty-five (1,981,535) are designated Series B Preferred Stock, all one million nine hundred thirty-four thousand five hundred twenty-six (1,934,526) of which are issued and outstanding, 6,401,523 outstanding and forty-seven thousand and nine (47,009) of which are designated reserved for issuance pursuant to outstanding warrants to purchase Series B Preferred Stock and (C) three million seven hundred thousand (3,700,000) are designed Series C Preferred Stock, all of which are issued and outstanding, 12,618,296 of which are designated as Series D Preferred Stock, all of which are issued and outstanding, 20,500,000 of which are designated as Series E Preferred Stock, 19,633,531 of which are issued and outstanding, 8,000,000 of which are designated as Series F Preferred Stock, all of which are issued and outstanding, 2,083,333 of which are designated as Series G Preferred Stock, none of which are issued and outstanding, 8,333,333 of which are designated as Series H Preferred Stock, 4,141,586 of which are issued and outstanding, and 681,819 of which are designated as Series I Preferred Stock, none of which are issued and outstanding (collectively, as of the “Preferred Stock”)date immediately prior to the date hereof. All issued and outstanding shares of the Company’s capital 's common stock and preferred stock (aI) have been duly authorized and validly issuedissued to the persons listed on EXHIBIT G hereto, (bII) are fully paid and non-assessablenonassessable, and (cIII) were offered, issued, sold and delivered issued in compliance with all applicable state and federal and state securities lawslaws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Restated Certificate of Incorporation. Each series of Preferred Stock is convertible into Series B Common Stock on a one-for-one basis. Each share of Series B Common Stock is convertible into a share of Series A Common Stock on a one-for-one basisCertificate. The Conversion Shares have been duly and validly reserved for issuance. Other than as set forth on EXHIBIT G, and except as may be granted pursuant to the Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, voting agreements or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Restated Certificate, the Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; PROVIDED, HOWEVER, that the Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (1) The authorized capital stock of the Company----------------------------- Company consists of 50,000,000 shares, immediately prior to the Closing after giving effect to the Restated Certificate of Incorporation, will consist of [98,530,700] such shares being designated as follows: (i) 48,000,000 shares of Series A Common Stockcommon stock, par value $0.001 .01 per share (the “Series A "Common Stock,” and together with the Series B Common Stock, the “Common Stock”), none ") of which are issued and outstanding, and [98,530,700] shares of which are reserved for future issuance upon conversion of shares of Series B Common Stock, [98,530,700] shares of Series B Common Stock, [7,095,178] shares of which (a) 16,405,548 are issued and outstanding and [16,006,519] (b) (1) 3,323,700 shares of which are reserved for future issuance to employees pursuant to the Company’s 1998 's 1997 Equity Compensation Plan adopted by the Company on May 21, 1997, the Company's 1988 Stock Option Plan, 2002 Stock Incentive Plan, 2002 California Stock Incentive Plan and 2005 the Company's Stock Incentive Option Plan for Directors (collectively, the “"Stock Incentive Option Plans”") and [74,942,226] (2) 3,000,000 shares are reserved for issuance pursuant to the Asset Purchase Agreement, dated February 13, 2001 by and among the Company, Axial Technology Holding AG and Wyzdom Solutions, Inc. (the "Asset Purchase Agreement"); (ii) 2,000,000 shares of preferred stock, par value $.01 per share, consisting of 500,000 shares of Series A Convertible Preferred Stock, par value $0.001 .10 per share, 8,904,567 of which are designated Series A Preferred Stock, all of which no shares are issued and outstanding, 7,419,355 200,000 shares of which are designated Series B Convertible Preferred Stock, all par value $.01 per share, of which no shares are issued and outstanding, 6,401,523 250,000 shares of which are designated Series C Convertible Preferred Stock, all par value $.01 per share, of which no shares are issued and outstanding, 12,618,296 9,500 shares of which are designated as Series D Convertible Preferred Stock, all par value $.01 per share, of which no shares are issued and outstanding, 20,500,000 1,800 shares of which are designated as Series E Redeemable Preferred Stock, 19,633,531 par value $.01 per share, of which are issued and outstanding, 8,000,000 of which are designated as Series F Preferred Stock, all of which are issued and outstanding, 2,083,333 of which are designated as Series G Preferred Stock, none of which are issued and outstanding, 8,333,333 of which are designated as Series H Preferred Stock, 4,141,586 of which no shares are issued and outstanding, and 681,819 3,000 shares of which are designated as Series I F Convertible Preferred Stock, none par value $.01 per share (the "Series F Preferred Stock"), of which are 3,000 shares will be upon consummation of the transactions contemplated hereby issued and outstanding (collectivelyoutstanding. The Shares have been duly authorized, and upon consummation of the “Preferred Stock”)Conversion, will be fully paid and non-assessable and issued in compliance with all applicable state and federal laws concerning the issuance of securities. All issued and outstanding shares of the Company’s capital stock Common Stock and the Shares (ai) have been duly authorized and validly issued, (bii) are fully paid and non-assessable, nonassessable and (ciii) were offered, issued, sold and delivered issued in compliance with all applicable state and federal and state securities lawslaws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Restated Certificate Designations, which was accepted for filing by the Pennsylvania Department of IncorporationState prior to the date hereof. Each series The shares of Preferred Stock is convertible into Series B Common Stock on a one-for-one basis. Each share issuable upon conversion of Series B Common Stock is convertible into a share the Shares pursuant to the terms of Series A Common Stock on a one-for-one basis. The the Designations (the "Conversion Shares Shares") have been duly and validly reserved for issuance. Other than the 3,323,700 shares reserved for issuance under the Stock Option Plans and 3,000,000 shares of Common Stock to be issued pursuant to the Asset Purchase Agreement, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. The Shares are free of any liens or encumbrances; provided, however, that the Shares may be subject to restrictions on transfer under state and/or federal securities laws. When issued in compliance with the provisions of the Designations, the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances other than liens and encumbrances; provided, however, that the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws.

Capitalization; Voting Rights. (1) The authorized capital stock of the Company, immediately prior to the Closing after giving effect to the Restated Certificate of IncorporationFirst Closing, will consist of [98,530,700] of: (i) forty-five million (45,000,000) shares of Series A Common Stock, par value $0.001 per share (the “Series A Common Stock,” and together with the Series B Common Stock, the “Common Stock”), none A) seven million two hundred five thousand (7,205,000) shares of which are issued and outstanding, and [98,530,700] (B) one million nine hundred thousand (1,900,000) shares of which are reserved for future issuance upon conversion to employees, officers or directors of, or consultants or advisors to, the Company (including members of shares the Company's Scientific Advisory Board) or any subsidiary, pursuant to stock purchase or stock option plans or other arrangements that are approved by the Board of Series B Common StockDirectors of the Company, [98,530,700] shares of Series B Common Stock, [7,095,178] shares of which are shares one million one hundred seventy thousand (1,170,000) shares have been issued and are outstanding and [16,006,519] are reflected as such in clause (i)(A) of this Section 3.2, (C) twelve million one hundred ninety thousand three hundred seventy-five (12,190,375) shares of which are reserved for future issuance upon conversion into Common Stock of outstanding shares, or shares that the Company is obligated to employees issue pursuant to any rights or agreements outstanding as of the Company’s 1998 date hereof, of Series A Preferred Stock, par value US$0.001 per share (the "Series A Preferred Stock"), and (D) one million one hundred thirty-seven thousand eight hundred fourteen (1,137,814) shares of which are reserved for issuance upon conversion of Series A Preferred Stock Option Plan, 2002 issuable upon exercise of the outstanding warrants for Series A Preferred Stock Incentive Plan, 2002 California Stock Incentive Plan (the "Series A Preferred Warrants"); and 2005 Stock Incentive Plan (collectively, the “Stock Incentive Plans”ii) and [74,942,226] thirty million (30,000,000) shares of Preferred Stock, par value $0.001 per share, 8,904,567 (A) thirteen million four hundred thousand (13,400,000) shares of which are designated Series A Preferred Stock, all eleven million eight hundred ninety thousand three hundred seventy-five (11,890,375) shares of which are issued and outstanding, 7,419,355 and one million one hundred thirty-seven thousand eight hundred fourteen (1,137,814) shares of which are reserved for issuance upon exercise of the Series A Preferred Warrants and three hundred thousand (300,000) shares of which are reserved for issuance pursuant to that certain Settlement Agreement by and between the Company and Beth Xxxael Deaconess Medical Center, Inc. dated as of December 31, 1997, (B) five million (5,000,000) shares of which are designated Series B Preferred Stock, all par value US$0.001 per share (the "Series B Preferred Stock"), none of which are is issued and outstanding, 6,401,523 and (C) four million five hundred eighty-three thousand three hundred thirty-four (4,583,334) shares of which are designated Series C Preferred Stock, all none of which are is issued and outstanding, 12,618,296 of which are designated as Series D Preferred Stock, all of which are issued and outstanding, 20,500,000 of which are designated as Series E Preferred Stock, 19,633,531 of which are issued and outstanding, 8,000,000 of which are designated as Series F Preferred Stock, all of which are issued and outstanding, 2,083,333 of which are designated as Series G Preferred Stock, none of which are issued and outstanding, 8,333,333 of which are designated as Series H Preferred Stock, 4,141,586 of which are issued and outstanding, and 681,819 of which are designated as Series I Preferred Stock, none of which are issued and outstanding (collectively, the “Preferred Stock”). All issued and outstanding shares of the Company’s capital stock 's Common Stock and Series A Preferred Stock (ax) have been duly authorized and validly issuedissued to the persons listed on Exhibit F, (by) are fully paid and non-assessablenonassessable, and (cz) were offered, issued, sold and delivered in compliance with all applicable federal and state securities laws. The rights, preferences, privileges and restrictions of the Shares are as stated in the Restated Certificate of Incorporation. Each series of Preferred Stock is convertible into Series B Common Stock on a one-for-one basis. Each share of Series B Common Stock is convertible into a share of Series A Common Stock on a one-for-one basis. The Conversion Shares have been duly and validly reserved for issuance.issued in

Capitalization; Voting Rights. (1) The authorized capital stock of the Company, immediately prior to the Closing after giving effect to the Restated Certificate of IncorporationClosing, will consist of [98,530,700] thirty nine million eight hundred twenty one thousand four hundred forty (39,821,440) shares, twenty two million seven hundred fifty eight thousand five hundred forty six (22,758,546) shares of which shall be Common Stock (the "Common Stock") and seventeen million sixty two thousand eight hundred ninety four (17,062,894) shares of which shall be Preferred Stock (the "Preferred Stock"). Of the Preferred Stock, six million seven hundred thousand (6,700,000) shares are designated "Series A Preferred Stock" (the "Series A Preferred"), nine million thirty two thousand seven hundred eighty six (9,032,786) shares are designated "Series B Preferred Stock" (the "Series B Preferred"), five hundred thousand (500,000) shares are hereby designated "Series S-1 Preferred Stock" (the "Series S-1 Preferred"), four hundred thirty thousand one hundred eight (430,108) shares are designated "Series R Preferred Stock" (the "Series R Preferred"), and four hundred thousand (400,000) shares are designated "Series T Preferred Stock" (the "Series T Preferred"). On the date hereof, three million seven hundred twelve thousand two hundred eighty six (3,712,286) shares of Common Stock are issued and outstanding, six million seven hundred thousand (6,700,000) shares of Series A Common StockPreferred Stock are issued and outstanding, par value $0.001 per share nine million thirty two thousand seven hundred eighty six (the “Series A Common Stock,” and together with the 9,032,786) shares of Series B Common StockPreferred Stock are issued and outstanding, the “Common Stock”), none two hundred thousand (200,000) shares of which Series S-1 Preferred Stock are issued and outstanding, and [98,530,700] shares of which are reserved for future issuance upon conversion of four hundred thirty thousand one hundred eight (430,108) shares of Series B Common Stock, [98,530,700] shares of Series B Common Stock, [7,095,178] shares of which are issued and outstanding and [16,006,519] shares of which are reserved for future issuance to employees pursuant to the Company’s 1998 R Preferred Stock Option Plan, 2002 Stock Incentive Plan, 2002 California Stock Incentive Plan and 2005 Stock Incentive Plan (collectively, the “Stock Incentive Plans”) and [74,942,226] shares of Preferred Stock, par value $0.001 per share, 8,904,567 of which are designated Series A Preferred Stock, all of which are issued and outstanding, 7,419,355 of which are designated Series B Preferred Stock, all of which are issued and outstanding, 6,401,523 of which are designated Series C Preferred Stock, all of which are issued and outstanding, 12,618,296 of which are designated as Series D Preferred Stock, all of which are issued and outstanding, 20,500,000 of which are designated as Series E Preferred Stock, 19,633,531 of which are issued and outstanding, 8,000,000 of which are designated as Series F Preferred Stock, all of which are issued and outstanding, 2,083,333 of which are designated as Series G Preferred Stock, none of which are issued and outstanding, 8,333,333 of which are designated as Series H Preferred Stock, 4,141,586 of which are issued and outstanding, and 681,819 of which are designated as Series I Preferred Stock, none of which are issued and outstanding (collectively, the “Preferred Stock”). All issued and outstanding shares of the Company’s 's capital stock (ai) have been duly authorized and validly issued, (bii) are fully paid and non-assessablenonassessable, and (ciii) were offered, issued, sold and delivered issued in compliance with all applicable state and federal and state securities lawslaws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Amended and Restated Certificate of Incorporation. Each series of Preferred Stock is convertible into Series B Common Stock on a one-for-one basis. Each share of Series B Common Stock is convertible into a share of Series A Common Stock on a one-for-one basisArticles. The Conversion Shares have been duly and validly reserved for issuance. Other than options outstanding to acquire one million three hundred eighty two thousand seven hundred eight (1,382,708) shares of Common Stock held by officers, employees and consultants of the Company, and the First Amended Investor Rights Agreement between the Company, certain holders of its Common Stock, and the holders of its Series A Preferred Stock and Series B Preferred Stock, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Amended and Restated Articles, the Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. Except as may be set forth in the Amended and Restated Articles, the Company has no obligation to repurchase any of its stock.

Capitalization; Voting Rights. (1) The authorized capital stock of the Company, immediately prior to the Closing after giving effect to the Restated Certificate of IncorporationClosing, will consist of [98,530,700] 25,000,000 shares of Common Stock, (par value $0.01) per share and 3,525,000 shares of Preferred Stock, (par value $0.01), of which 600,000 are designated Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock"); 1,700,000 are designated Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Stock") and 800,000 shares of Series A D Cumulative Convertible Preferred Stock. Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, par value $0.001 per share (the “0 shares Series A Common Stock,” and together with the Series B Common Stock, the “Common Stock”Preferred Stock (subscribed for 600,000 shares), none of which are issued and outstanding, and [98,530,700] shares of which are reserved for future issuance upon conversion of 407,900 shares of Series B Preferred Stock, 371,438 shares of Series C Preferred Stock and 163,268 shares of Series D Preferred Stock will be issued and outstanding. Of the authorized shares of Common Stock, [98,530,700] (i) 1.4 million shares of Series B Common Stock, [7,095,178] shares of which are issued and outstanding and [16,006,519] shares of which are reserved for future issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for issuance to employees pursuant to the Company’s 1998 's 1998-B Incentive Stock Option Plan, 2002 Stock Incentive Plan, 2002 California Stock Incentive Plan and 2005 Stock Incentive Non-Statutory Plan (collectivelythe "1998-B Plan"), (ii) 600,000 shares are reserved for issuance upon the “Stock Incentive Plans”exercise of certain warrants, (iii) and [74,942,226] 600,000 shares are reserved for issuance upon the conversion of Preferred Stock, par value $0.001 per share, 8,904,567 of which are designated the Series A Preferred Stock, all (iv) 1,785,000 shares are reserved for issuance upon the conversion of which are issued and outstanding, 7,419,355 of which are designated the Series B Preferred Stock, all and (v) 1,650,000 shares are reserved for issuance upon conversion of which are issued and outstanding, 6,401,523 of which are designated the Series C Preferred Stock, all . The Company has reserved 1,500,000 shares of which are issued and outstanding, 12,618,296 its Common Stock for issuance upon conversion of which are designated as the Series D Preferred Stock, all of which are issued and outstanding, 20,500,000 of which are designated as Series E Preferred Stock, 19,633,531 of which are issued and outstanding, 8,000,000 of which are designated as Series F Preferred Stock, all of which are issued and outstanding, 2,083,333 of which are designated as Series G Preferred Stock, none of which are issued and outstanding, 8,333,333 of which are designated as Series H Preferred Stock, 4,141,586 of which are issued and outstanding, and 681,819 of which are designated as Series I Preferred Stock, none of which are issued and outstanding (collectively, the “Preferred Stock”). All issued and outstanding shares of the Company’s capital stock 's Common Stock (a) have been duly authorized and validly issued, (b) are fully paid and non-assessablenonassessable, and (c) were offered, issued, sold and delivered issued in compliance with all applicable state and federal and state securities lawslaws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Restated Certificate of IncorporationDesignation. Each series of Preferred Stock is convertible into Series B Common Stock on a one-for-one basis. Each share the basis described in the Reports (as defined below), subject to adjustment as provided in the respective Certificate of Series B Common Stock is convertible into a share of Series A Common Stock on a one-for-one basisDesignation. The Conversion Shares have been duly and validly reserved for issuance. Other than as set forth in this Section 3.3 or in the Company's annual, quarterly and 8-K reports, filed with the Securities and Exchange Commission ("Reports"), there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Certificate of Designation, and upon payment of the Purchase Price the Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; PROVIDED, HOWEVER, that the Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or in the Registration Rights Agreement or as otherwise required by such laws at the time a transfer is proposed.

Capitalization; Voting Rights. (1) The authorized capital stock of the Company, immediately prior to the Closing after giving effect to the Restated Certificate of Incorporationfirst Closing, will consist of [98,530,700] 25,000,000 shares of Series A Common Stock, (par value $0.001 0.01) per share and 3,525,000 shares of Preferred Stock, (the “par value $0.01), of which 600,000 are designated Series A Common Cumulative Convertible Preferred Stock ("Series A Preferred Stock,” and together with the ") ; 1,700,000 are designated Series B Cumulative Convertible Preferred Stock ("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative Convertible Preferred Stock ("Series C Preferred Stock"). Immediately prior to the effective date of this Agreement, 5,460,449 shares of Common Stock, the “Common Stock”0 shares Series A Preferred Stock (subscribed for 600,000 shares), none of which are issued and outstanding, and [98,530,700] shares of which are reserved for future issuance upon conversion of 407,900 shares of Series B Preferred Stock, 371,438 shares of Series C Preferred Stock and no shares of Series D Preferred Stock will be issued and outstanding. Of the authorized shares of Common Stock, [98,530,700] (i) 1.4 million shares of Series B Common Stock, [7,095,178] shares of which are issued and outstanding and [16,006,519] shares of which are reserved for future issuance to employees pursuant to the 1998-A Incentive Stock Option and Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are reserved for issuance to employees pursuant to the Company’s 1998 's 1998-B Incentive Stock Option Plan, 2002 Stock Incentive Plan, 2002 California Stock Incentive Plan and 2005 Stock Incentive Non-Statutory Plan (collectivelythe "1998-B Plan"), (ii) 600,000 shares are reserved for issuance upon the “Stock Incentive Plans”exercise of certain warrants, (iii) and [74,942,226] 600,000 shares are reserved for issuance upon the conversion of Preferred Stock, par value $0.001 per share, 8,904,567 of which are designated the Series A Preferred Stock, all (iv) 1,785,000 shares are reserved for issuance upon the conversion of which are issued and outstanding, 7,419,355 of which are designated the Series B Preferred Stock, all and (v) 1,650,000 shares are reserved for issuance upon conversion of which are issued and outstanding, 6,401,523 of which are designated the Series C Preferred Stock, all . The Company intends to reserve 714,300 shares of which are issued and outstanding, 12,618,296 its Common Stock for issuance upon conversion of which are designated as the Series D Preferred Stock, all of which are issued and outstanding, 20,500,000 of which are designated as Series E Preferred Stock, 19,633,531 of which are issued and outstanding, 8,000,000 of which are designated as Series F Preferred Stock, all of which are issued and outstanding, 2,083,333 of which are designated as Series G Preferred Stock, none of which are issued and outstanding, 8,333,333 of which are designated as Series H Preferred Stock, 4,141,586 of which are issued and outstanding, and 681,819 of which are designated as Series I Preferred Stock, none of which are issued and outstanding (collectively, the “Preferred Stock”). All issued and outstanding shares of the Company’s capital stock 's Common Stock (a) have been duly authorized and validly issued, (b) are fully paid and non-assessablenonassessable, and (c) were offered, issued, sold and delivered issued in compliance with all applicable state and federal and state securities lawslaws concerning the issuance of securities. The rights, preferences, privileges and restrictions of the Shares are as stated in the Restated Certificate of IncorporationDesignations. Each series of Preferred Stock is convertible into Series B Common Stock on a one-for-one basis. Each share the basis described in the Reports (as defined below), subject to adjustment as provided in the respective certificate of Series B Common Stock is convertible into a share of Series A Common Stock on a one-for-one basisdesignations. The Conversion Shares have been duly and validly reserved for issuance. Other than as set forth in this Section 3.3 or as disclosed in Schedule 3.3 hereto, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or shareholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. When issued in compliance with the provisions of this Agreement and the Certificate of Designations, and upon payment of the Purchase Price the Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; PROVIDED, HOWEVER, that the Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or in the Registration Rights Agreement or as otherwise required by such laws at the time a transfer is proposed.