8% SERIES B UNSECURED
CONVERTIBLE DEBENTURE AND WARRANTS PURCHASE AGREEMENT
Between
Airtrax, Inc.
and
Excalibur Limited Partnership
THIS 8% SERIES B
UNSECURED CONVERTIBLE DEBENTURE AND WARRANTS PURCHASE
AGREEMENT, dated as of May 31, 2005 (the
"Agreement"), is entered into by and
between Excalibur Limited Partnership (the
"Investor") and Airtrax, Inc. (Nasdaq
OTC Bulletin Board: AITX.OB), a corporation
organized and existing under the
laws of the State of New Jersey (the
"Company").
WHEREAS, the
parties desire that, upon the terms and subject to the
conditions contained herein, the Company
shall issue and sell to the Investor,
and the Investor shall purchase from the
Company in the aggregate (i) $500,000
principal amount of the Debenture (as
defined below) and (ii) Warrants (as
defined below) to purchase shares of the
Common Stock (as defined below); and
WHEREAS, such
investments will be made in reliance upon the provisions of
Regulation S ("Regulation S") and/or
Section 4(2) ("Section 4(2)") and/or
Section 4(6) of the United States
Securities Act of 1933, as amended, and/or
Regulation D ("Regulation D") and the other
rules and regulations promulgated
thereunder (the "Securities Act"), and/or
upon such other exemption from the
registration requirements of the Securities
Act as may be available with respect
to any or all of the investments in
securities to be made hereunder.
NOW, THEREFORE,
in consideration of the mutual promises, representations,
warranties, covenants and conditions set
forth in this Agreement, the parties
hereto agree as follows.
ARTICLE I
Certain Definitions
In addition to
the definitions set forth in the text of this Agreement, the
following capitalized terms shall have the
meanings ascribed to them below:
"Capital Shares"
shall mean the Common Stock and any shares of any other
class of common stock whether now or
hereafter authorized, having the right to
participate in the distribution of earnings
and assets of the Company.
<PAGE>
"Capital Shares
Equivalents" shall mean any securities, rights, or
obligations that are convertible into or
exchangeable for or give any right to
subscribe for any Capital Shares of the
Company or any Warrants, options or
other rights to subscribe for or purchase
Capital Shares or any such convertible
or exchangeable securities.
"Closing" shall
mean each closing of the purchase and sale of the Debenture
and Warrants pursuant to Section 2.1.
"Closing Date"
shall mean the closing of the purchase and sale of the
Debenture and Warrants under Section 2.1
hereof.
"Common Stock"
shall mean the Company's common stock, no par value per
share.
"Conversion
Shares" shall mean the shares of Common Stock issuable upon
conversion of the Debenture and any shares
of Common Stock issued as interest on
the Debenture.
"Conversion
Price" shall mean the Conversion Price, as that term is defined
in the Debenture.
"Damages" shall
mean any loss, claim, damage, judgment, penalty,
deficiency, liability, costs and expenses
(including, without limitation,
reasonable attorney's fees and
disbursements and reasonable costs and expenses
of expert witnesses and investigation).
"Debenture"
shall mean the 8% Series B Unsecured Convertible Debenture,
substantially in the form attached hereto
as Exhibit A.
"Disclosure
Schedule" shall mean the written disclosure schedule delivered
on or prior to the date hereof by the
Company to the Investor that is arranged
in paragraphs corresponding to the numbered
and lettered paragraphs contained in
this Agreement.
"Effective Date"
shall mean the date on which the SEC first declares
effective a Registration Statement
registering the resale of the Registrable
Securities applicable to a particular
Closing as set forth in the Registration
Rights Agreement.
"Escrow Agent"
shall have the meaning set forth in the Escrow Agreement.
"Escrow
Agreement" shall mean the Escrow Agreement in substantially the
form of Exhibit D hereto executed and
delivered contemporaneously with this
Agreement.
"Exchange Act"
shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated
thereunder.
"GAAP" shall
mean generally accepted accounting principles in the United
States as shall be in effect from time to
time.
2
<PAGE>
"Irrevocable
Transfer Agent Instructions" shall mean the Irrevocable
Transfer Agent Instructions, in the form of
Exhibit F attached hereto, from the
Company to the Company's transfer
agent.
"Issue Date"
shall mean the date on which Debenture and Warrants are issued
pursuant to Article II.
"Legend" shall
mean the legend set forth in Section 9. 1.
"Material
Adverse Effect" shall mean any effect on the business,
operations, properties, prospects, stock
price or financial condition of the
Company that is material and adverse to the
Company, taken as a whole, and/or
any condition, circumstance, or situation
that would prohibit or otherwise
interfere with the ability of the Company
to enter into and perform any of its
obligations under the Transaction Documents
in any material respect.
"Outstanding"
when used with reference to Shares, shall mean, at any date
as of which the number of such Shares is to
be determined, all issued and
outstanding Shares, and shall include all
such Shares issuable in respect of
outstanding scrip or any certificates
representing fractional interests in such
Shares; provided, however, that
"Outstanding" shall not mean any such Shares
then directly or indirectly owned or held
by or for the account of the Company.
"Person" shall
mean an individual, a corporation, a partnership, a limited
liability company, an association, a trust
or other entity or organization,
including a government or political
subdivision or an agency or instrumentality
thereof.
"Principal
Market" shall mean the American Stock Exchange, the New York
Stock Exchange, the NASDAQ National Market,
or the NASDAQ Small-Cap Market,
whichever is at the time the principal
trading exchange or market for the Common
Stock in the United States, based upon
share volume, or if the Common Stock is
not then traded on an exchange or market,
the Nasdaq OTC Bulletin Board.
"Purchase Price"
shall mean the principal amount of the Debenture to be
purchased pursuant to Section 2.1.
"Registrable
Securities" shall mean the Conversion Shares and the Warrant
Shares until (i) the Registration Statement
has been declared effective by the
SEC, and all Conversion Shares and Warrant
Shares have been disposed of pursuant
to the Registration Statement, (ii) all
Conversion Shares and Warrant Shares
have been sold under circumstances under
which all of the applicable conditions
of Rule 144 (or any similar provision then
in force) under the Securities Act
("Rule 144") are met, (iii) all Conversion
Shares and Warrant Shares have been
otherwise transferred to holders who may
trade such shares without restriction
under the Securities Act, and the Company
has delivered a new certificate or
other evidence of ownership for such
securities not bearing a restrictive legend
or (iv) such time as, in the opinion of
counsel to the Company, all Conversion
Shares and Warrant Shares may be sold
within a 90-day period pursuant to Rule
144 (or any similar provision then in
effect) under the Securities Act.
3
<PAGE>
"Registration
Rights Agreement" shall mean the agreement regarding the
filing of the Registration Statement for
the resale of the Registrable
Securities, entered into between the
Company and the Investor as of the Closing
Date substantially in the form annexed
hereto as Exhibit C.
"Registration
Statement" shall mean one or more registration statements on
Form S-3 (if use of such form is then
available to the Company pursuant to the
rules of the SEC and, if not, on Form SB-2
or such other form promulgated by the
SEC for which the Company then qualifies
and which counsel for the Company shall
deem appropriate, and which form shall be
available for the resale by the
Investor of the Registrable Securities to
be registered thereunder in accordance
with the provisions of this Agreement, the
Registration Rights Agreement and in
accordance with the intended method of
distribution of such securities), for the
registration of the resale by the Investor
of the Registrable Securities under
the Securities Act.
"SEC" shall mean
the Securities and Exchange Commission.
"Securities"
shall mean the Debenture, the Warrants, the Conversion Shares
and the Warrant Shares, collectively.
"Securities Act"
shall have the meaning set forth in the recitals of this
Agreement.
"SEC Documents"
shall mean each report, proxy statement or registration
statement filed by the Company with the SEC
pursuant to the Exchange Act or the
Securities Act from the initial filing with
the SEC through the date hereof.
"Shares" shall
mean shares of Common Stock or Capital Shares.
"Trading Day"
shall mean any day during which the Principal Market
shall be open for business.
"Transaction
Documents" shall mean this Agreement, the Registration Rights
Agreement, the Escrow Agreement, the
Debenture, the Warrants, the Irrevocable
Transfer Agent Instructions and each of the
other agreements, documents and
instruments entered into and delivered by
the parties hereto in connection with
the transactions contemplated by this
Agreement.
"Warrants" shall
mean the Warrants issued at Closing substantially in the
form of Exhibit B to be issued to the
Investor hereunder.
"Warrant Shares"
shall mean all shares of Common Stock or other securities
issued or issuable pursuant to exercise of
the Warrants.
4
<PAGE>
ARTICLE II
Purchase and Sale of Convertible Debenture and Warrants
Section 2.1. Investment.
-----------
(a) Upon the
terms and subject to the conditions set forth herein, on the
Closing Date, the Company shall sell, and
the Investor shall purchase, $500,000
in principal amount of the Debenture at the
applicable Purchase Price and
Warrants in an amount and with an exercise
price as provided in Section 2.1(c).
(b) The Closing
shall occur on the Closing Date at the Escrow Agent's
offices, at which time the Escrow Agent (x)
shall release to the Investor the
Debenture and Warrants to be issued on such
Closing Date and (y) shall release
to the Company the Purchase Price in
immediately available funds (after all fees
have been paid as set forth in the Escrow
Agreement to be paid on the Closing
Date), pursuant to the terms of the Escrow
Agreement.
(c) The number
of Warrants to be issued to the Investor at the Closing
shall be 384,615 (calculated as an amount
equal to 100% of the quotient of (i)
the principal amount of the Debenture
issued at the Closing divided by (ii) the
Conversion Price on the Closing Date). The
exercise price of the Warrants shall
be $2.11 per share, subject to adjustment
as provided in the Warrant. The
Warrants shall have a term of five years
from the Issue Date.
(d) Company
Closing Conditions. The obligation of the Company hereunder to
issue and sell the Debenture and Warrants
to the Investor at the Closing is
subject to the satisfaction, at or before
the Closing Date, of each of the
following conditions, provided that these
conditions are for the Company's sole
benefit and may be waived by the Company at
any time in its sole discretion by
providing the Investor with prior written
notice thereof:
(i) The Investor shall have executed each of the Transaction
Documents
to be executed
by them and delivered the same to the Company.
(ii) The Escrow Agent shall have delivered to the Company the
Purchase
Price for the
Debenture and the Warrants being purchased by the Investor at
the Closing
(less any amounts withheld pursuant to the Escrow Agreement) by
wire transfer of
immediately available funds pursuant to the written wire
instructions
provided by the Company.
(iii) The representations and warranties of the Investor shall be
true
and correct as
of the date when made and as of the Closing Date as though
made at that
time (except for representations and warranties that speak as
of a specific
date), and the Investor shall have performed, satisfied and
complied with
the covenants, agreements and conditions required by the
Transaction
Documents to be performed, satisfied or complied with by it at
or prior to the
Closing Date.
5
<PAGE>
(e) Investor
Closing Conditions. The obligation of the Investor hereunder
to purchase the Debenture and Warrants at
the Closing is subject to the
satisfaction, at or before the Closing Date
thereof, of each of the following
conditions, provided that these conditions
are for the Investor's sole benefit
and may be waived by the Investor at any
time in its sole discretion by
providing the Company with prior written
notice thereof:
(i) The Company shall have executed each of the Transaction
Documents
to be executed
by it and delivered the same to the Investor.
(ii) The Common Stock shall be authorized for quotation on the
Principal
Market, trading in the Common Stock shall not have been
suspended
by the Principal
Market or the SEC at any time beginning on the date hereof
and through and
including the Closing Date, and the Company shall not have
been notified of
any pending or threatened proceeding or other action to
delist or
suspend trading in the Common Stock.
(iii) The representations and warranties of the Company shall be
true
and correct as
of the date when made and as of the Closing Date as though
made at that
time (except for representations and warranties that speak as
of a specific
date), and the Company shall have performed, satisfied and
complied with
the covenants, agreements and conditions required by the
Transaction
Documents to be performed, satisfied or complied with by the
Company at or
prior to the Closing Date. The Investor shall have received a
certificate,
executed by the Company's Chief Executive Officer, dated as of
the Closing
Date, to the foregoing effect.
(iv) The Investor shall have received the opinion of the
Company's
counsel dated as
of the Closing Date, in form, scope and substance
reasonably
satisfactory to the Investor and in substantially the form of
Exhibit G
attached hereto.
(v) The Company shall have executed and delivered (or shall
have
caused the
Escrow Agent to deliver) to the Investor the Debenture (in such
denominations as
the Investor shall request) being purchased by the
Investor at the
Closing.
(vi) The Company shall have executed and delivered (or shall
have
caused the
Escrow Agent to deliver) to the Investor the Warrants (in such
denominations as
the Investor shall request) being purchased by the
Investor at the
Closing.
(vii) As of the Closing Date, the Company shall have reserved out
of
its authorized
and unissued Common Stock, solely for the purpose of
effecting the
issuance of the shares of Common Stock issuable in connection
with this
Agreement, a number of shares of Common Stock equal to at least
120% of the
number of (x) Conversion Shares issuable upon conversion of the
Debenture to be
outstanding on the Closing Date (assuming all the Debenture
were fully
convertible on such date regardless of any limitations on the
timing or amount
of such conversions) and (y) Warrant Shares issuable upon
exercise of the
Warrants to be outstanding on the Closing Date (assuming
all such
Warrants were fully exercisable on such date regardless of any
limitation on
the timing or amount of such exercises).
6
<PAGE>
(viii) The Company shall have delivered the Irrevocable Transfer
Agent
Instructions to
its Transfer Agent, and such Transfer Agent shall have
acknowledged
receipt thereof in writing.
(ix) The Company shall have delivered to the Investor a
certificate
evidencing the
good standing of the Company in New Jersey (and in any
states where the
Company is required to be qualified to do business) issued
by the Secretary
of State of such states as of a date within fifteen (15)
days of the
Closing Date.
(x) The Company shall have delivered to the Investor a certified
copy
of its
Certificate of Incorporation as certified by the Secretary of
State
of the State of
New Jersey dated within fifteen (15) days of the Closing
Date.
(xi) The Company shall have delivered to the Investor a
certificate,
executed by the
Company's Secretary dated the Closing Date, as to (i) the
Resolutions
described in Section 4.2, (ii) the Certificate of Incorporation
and (iii) the
Bylaws, each as in effect on the Closing Date.
(xii) The Company shall have delivered to the Investor such
other
documents
relating to the transactions contemplated by this Agreement as
the Investor or
its counsel may reasonably request.
Section 2.2. Liquidated Damages. The
parties hereto acknowledge and agree that
the sums payable pursuant to the
Registration Rights Agreement shall constitute
liquidated damages and not penalties. The
parties further acknowledge that (a)
the amount of loss or damages likely to be
incurred is incapable or is difficult
to precisely estimate, (b) the amounts
specified in the Registration Rights
Agreement and the Debenture bear a
reasonable proportion and are not plainly or
grossly disproportionate to the probable
loss likely to be incurred by the
Investor in connection with the failure by
the Company to timely cause the
registration of the Registrable Securities
and (c) the parties are sophisticated
business parties and have been represented
by sophisticated and able legal and
financial counsel and negotiated this
Agreement at arm's length.
ARTICLE III
Representations and Warranties of the Investor
The Investor represents and warrants to the
Company that:
Section 3.1. Intent. The Investor is
entering into this Agreement for its own
account for investment purposes only and
not with a view to or for sale in
connection with any distribution of the
Securities. The Investor has no present
arrangement (whether or not legally
binding) at any time to sell the Securities
to or through any person or entity;
provided, however, that by making the
representations herein, the Investor does
not agree to hold such securities for
any minimum or other specific term and
reserves the right to dispose of the
Conversion Shares and Warrant Shares at any
time in accordance with federal and
state securities laws applicable to such
disposition.
7
<PAGE>
Section 3.2. Sophisticated Investor. The
Investor is a sophisticated investor
(as described in Rule 506(b)(2)(ii) of
Regulation D) and an accredited investor
(as defined in Rule 501 of Regulation D),
and Investor has such knowledge and
experience in business and financial
matters that it has the capacity to protect
its own interests in connection with this
transaction and is capable of
evaluating the merits and risks of an
investment in the Securities. The Investor
acknowledges that an investment in the
Securities is speculative and involves a
high degree of risk.
Section 3.3. Authority. This Agreement and
each agreement attached as an Exhibit
hereto that is required to be executed by
Investor has been duly authorized and
validly executed and delivered by the
Investor and is a valid and binding
obligation of the Investor enforceable
against it in accordance with its terms,
except as enforceability may be limited by
applicable bankruptcy, insolvency, or
similar laws relating to, or affecting
generally the enforcement of, creditors'
rights and remedies or by other equitable
principles of general application.
Section 3.4. Not an Affiliate. The Investor
is not an officer, director or
"affiliate" (as that term is defined in
Rule 405 of the Securities Act) of the
Company.
Section 3.5. Disclosure; Access to
Information. The Investor has received all
documents, records, books and other
publicly available information pertaining to
Investor's investment in the Company that
have been requested by the Investor.
The Company is subject to the periodic
reporting requirements of the Exchange
Act, and the Investor has reviewed copies
of all SEC Documents deemed relevant
by Investor in order for it to make an
informed decision to purchase the
Securities.
Section 3.6 Not a U. S. Person. The
Investor is not a U. S. Person (as defined
for purposes of Regulation S) and is not
acquiring the Securities for the
account or benefit of a U. S. Person.
Section 3.7. Manner of Sale. At no time was
Investor presented with or solicited
by or through any leaflet, public
promotional meeting, television advertisement
or any other form of general solicitation
or advertising.
ARTICLE IV
Representations and Warranties of the Company
The Company
represents and warrants to the Investor that, except as set
forth on the Disclosure Schedule, if any,
prepared by the Company and delivered
herewith:
Section 4.1. Organization of the Company.
The Company is a corporation duly
incorporated and existing in good standing
under the laws of the State of New
Jersey and has all requisite corporate
authority to own its properties and to
carry on its business as now being
conducted. The Company has no subsidiaries.
The Company is duly qualified and is in
good standing as a foreign corporation
to do business in every jurisdiction in
which the nature of the business
conducted or property owned or leased by it
makes such qualification necessary,
other than those in which the failure so to
qualify would not have a Material
Adverse Effect.
8
<PAGE>
Section 4.2. Authority. (i) The Company has
the requisite corporate power and
corporate authority to enter into and
perform its obligations under the
Transaction Documents and to issue the
Debenture, the Conversion Shares, the
Warrants and the Warrant Shares pursuant to
their respective terms, (ii) the
execution, issuance and delivery of the
Transaction Documents by the Company and
the consummation by it of the transactions
contemplated thereby have been duly
authorized by all necessary corporate
action and no further consent or
authorization of the Company or its Board
of Directors or stockholders is
required, and (iii) the Transaction
Documents have been duly executed and
delivered by the Company and shall
constitute valid and binding obligations of
the Company enforceable against the Company
in accordance with their terms,
except as such enforceability may be
limited by applicable bankruptcy,
insolvency, or similar laws relating to, or
affecting generally the enforcement
of, creditors' rights and remedies or by
other equitable principles of general
application. The Company has duly and
validly authorized and reserved for
issuance shares of Common Stock sufficient
in number for the conversion of the
Debenture and for the exercise of the
Warrants. The Company understands and
acknowledges the potentially dilutive
effect to the Common Stock of the issuance
of the Conversion Shares. The Company
further acknowledges that its obligation
to issue Conversion Shares upon conversion
of the Debenture and Warrant Shares
upon exercise of the Warrants in accordance
with this Agreement is absolute and
unconditional regardless of the dilutive
effect that such issuance may have on
the ownership interests of other
stockholders of the Company.
Section 4.3. Capitalization. The authorized
capital stock of the Company
consists of 100,000,000 shares of Common
Stock, no par value per share, of which
21,764,581 shares were issued and
outstanding as of May 19, 2005. Except for
outstanding options and warrants as set
forth in the SEC Documents, there are no
outstanding Capital Shares Equivalents nor
any agreements or understandings
pursuant to which any Capital Shares
Equivalents may become outstanding. Except
as set forth in the Disclosure Schedule,
the Company is not a party to any
agreement granting preemptive, registration
or anti-dilution rights to any
Person with respect to any of its equity or
debt securities. All of the
outstanding shares of Common Stock of the
Company have been duly and validly
authorized and issued and are fully paid
and non-assessable and were issued in
compliance with all applicable federal and
state securities laws.
Section 4.4. Common Stock. The Company has
registered its Common Stock pursuant
to Section 12(b) or (g) of the Exchange Act
and is in full compliance with all
reporting requirements of the Exchange Act,
and the Company is in compliance
with all requirements for the continued
listing or quotation of its Common
Stock, and such Common Stock is currently
listed or quoted on, the Principal
Market. As of the date hereof, the
Principal Market is the Nasdaq OTC Bulletin
Board and the Company has not received any
notice regarding, and to its
knowledge there is no threat of, the
termination or discontinuance of the
eligibility of the Common Stock for such
posting or listing.
Section 4.5. SEC Documents. The Company has
not provided to the Investor any
information that, according to applicable
law, rule or regulation, should have
been disclosed publicly prior to the date
hereof by the Company, but which has
not been so disclosed. As of their
respective dates, the SEC Documents (a)
complied in all material respects with the
requirements of the Securities Act or
Exchange Act, as the case maybe, and rules
and regulations of the SEC
promulgated thereunder, and (b) did not
contain any untrue statement of a
material fact or omit to state a material
fact required to be stated therein or
necessary in order to make the statements
therein, in light of the circumstances
under which they were made, not misleading.
The financial statements of the
Company included in the SEC Documents
complied in all material respects with
applicable accounting requirements and the
published rules and regulations of
the SEC or other applicable rules and
regulations with respect thereto at the
9
<PAGE>
time of such inclusion. Such financial
statements have been prepared in
accordance with GAAP applied on a
consistent basis during the periods involved
and fairly present in all material respects
the financial position of the
Company as of the dates thereof and the
results of operations and cash flows for
the periods then ended (subject, in the
case of unaudited interim statements, to
normal year-end audit adjustments). The
Company does not have any material
indebtedness, obligations or liabilities of
any kind (whether accrued, absolute,
contingent or otherwise, and whether due or
to become due) that would have been
required to be reflected in, reserved
against or otherwise described in the
financial statements or in the notes
thereto in accordance with GAAP, which was
not fully reflected in, reserved against or
otherwise described in the financial
statements or the notes thereto included in
the SEC Documents or was not
incurred in the ordinary course of business
consistent with the Company's past
practices since the last date of such
financial statements. No other information
provided by or on behalf of the Company to
the Investor that is not included in
the SEC Documents, including, without
limitation, information referred to in
Section 3.5 of this Agreement, contains any
untrue statement of a material fact
or omits to state any material fact
necessary in order to make the statements
therein, in the light of the circumstances
under which they are or were made,
not misleading.
Section 4.6. Exemption from Registration;
Valid Issuances. Subject to the
accuracy of the Investor's representations
in Article III, the sale of the
Debenture, the Conversion Shares, the
Warrants and the Warrant Shares will not
require registration under the Securities
Act and/or any applicable state
securities law (other than any SEC,
Principal Market or state securities filings
that may be required to be made by the
Company subsequent to Closing and any
registration statement that may be filed
pursuant hereto). When issued and paid
for in accordance with the Warrants and
validly converted in accordance with the
terms of the Debenture, the Conversion
Shares and the Warrant Shares will be
duly and validly issued, fully paid, and
non-assessable. Neither the sales of
the Debenture, the Conversion Shares, the
Warrants or the Warrant Shares
pursuant to, nor the Company's performance
of its obligations under, the
Transaction Documents will (i) result in
the creation or imposition by the
Company of any liens, charges, claims or
other encumbrances upon the Debenture,
the Conversion Shares, the Warrants or the
Warrant Shares or, except as
contemplated herein, any of the assets of
the Company, or (ii) entitle the
holders of Outstanding Capital Shares to
preemptive or other rights to subscribe
for or acquire the Capital Shares or other
securities of the Company. None of
the Securities shall subject the Investor
to personal liability to the Company
or its creditors by reason of the
possession thereof.
Section 4.7. No Directed Selling, General
Solicitation or Advertising in Regard
to this Transaction. Neither the Company
nor any of its affiliates nor, to the
knowledge of the Company, any person acting
on its or their behalf (i) has
engaged or will engage in any directed
selling efforts in violation of the
requirements of Regulation S, (ii) has
conducted or will conduct any general
10
<PAGE>
solicitation (as that term is used in Rule
502(c) of Regulation D) or general
advertising with respect to the sale of the
Debenture or the Warrants, or (iii)
made any offers or sales of any security or
solicited any offers to buy any
security under any circumstances that would
require registration of the sale of
the Securities under the Securities
Act.
Section 4.8. No Conflicts. The execution,
delivery and performance of this
Agreement by the Company and the
consummation by the Company of the transactions
contemplated hereby, including without
limitation the issuance of and payment of
interest upon the Debenture, the Conversion
Shares, the Warrants and the Warrant
Shares, do not and will not (i) result in a
violation of the Company's
Certificate of Incorporation or By-Laws or
(ii) conflict with, or constitute a
default (or an event that with notice or
lapse of time or both would become a
default) under, or give to others any
rights of termination, amendment,
acceleration or cancellation of, any
agreement, indenture or instrument, or any
"lock-up" or similar provision of any
underwriting or similar agreement to which
the Company is a party, or (iii) result in
a violation of any federal, state or
local law, rule, regulation, order,
judgment or decree (including federal and
state securities laws and regulations)
applicable to the Company or by which any
property or asset of the Company is bound
or affected, nor is the Company
otherwise in violation of, conflict with or
default under any of the foregoing
(except in each case for such conflicts,
defaults, terminations, amendments,
accelerations, cancellations and violations
as would not have, individually or
in the aggregate, a Material Adverse
Effect). The business of the Company is not
being conducted in violation of any law,
ordinance or regulation of any
governmental entity, except for possible
violations that either singly or in the
aggregate would not result in a Material
Adverse Effect. The Company's business
is not being conducted in violation of any
law, ordinance or regulation of any
governmental entity, except for poss
