Exhibit 10.1
AMENDED AND RESTATED STANDBY EQUITY DISTRIBUTION AGREEMENT
THIS
AGREEMENT
dated
as
of
the
___
day
of
November
2005
(the
"AGREEMENT")
between
CORNELL
CAPITAL
PARTNERS,
LP,
a
Delaware
limited
partnership (the
"INVESTOR"),
and ENCLAVES GROUP, INC. (f/k/a Alliance Towers,
Inc.),
a
corporation
organized
and
existing
under the laws of the State of
Delaware (the "COMPANY").
WHEREAS,
on
or
about
December
28,
2004,
Enclaves
Group,
Inc.
("ENCLAVES"),
a Delaware corporation,
entered into that certain Standby Equity
Distribution Agreement with the Investor.
Enclaves was subsequently acquired by
the Company (f/k/a Alliance
Towers,
Inc., a Florida
corporation) on April 27,
2005 (the
"ACQUISITION").
The Company
assumed
obligations of Enclaves to the
Investor under the Standby Equity Distribution Agreement dated
December 28, 2004
pursuant to that certain Assignment and Assumption
Agreement dated July 1, 2005
(the "ASSUMPTION AGREEMENT") by and between the Company and
Enclaves,
consented
to by the Investor and Montgomery
Equity
Partners,
Ltd. This Agreement
shall
amend and restate the Standby Equity
Distribution
Agreement dated December 28,
2004;
WHEREAS,
the parties
desire
that,
upon the terms and subject to the
conditions
contained herein,
the Company shall issue and sell to the Investor,
from time to time as provided
herein,
and the Investor shall purchase from the
Company up to Forty Six Million Dollars
($46,000,000)
of the Company's
common
stock, par value $0.001 per share (the "COMMON STOCK");
WHEREAS,
such investments will be made in reliance upon the provisions
of Regulation D ("REGULATION D") of the Securities Act of 1933, as
amended,
and
the 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 to be
made hereunder;
WHEREAS, the Company has engaged Newbridge Securities
Corporation (the
"PLACEMENT
AGENT"),
to act as
the
Company's
exclusive
placement
agent
in
connection with the sale of the Company's Common Stock to the
Investor hereunder
pursuant to the Placement Agent Agreement dated the date hereof by
and among the
Company, the Placement Agent and the Investor (the "PLACEMENT AGENT
AGREEMENT").
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I.
CERTAIN DEFINITIONS
Section 1.1.
"ADVANCE" shall mean the portion of the Commitment Amount
requested by the Company in the Advance Notice.
Section
1.2.
"ADVANCE
DATE" shall mean the first
(1st)
Trading Day
after expiration of the applicable Pricing Period for each Advance.
Section 1.3.
"ADVANCE
NOTICE" shall mean a written notice in the form
of
EXHIBIT A
attached
hereto to the
Investor
executed
by an officer of the
Company and setting forth the Advance amount that the Company
requests from the
Investor.
Section
1.4.
"ADVANCE
NOTICE
DATE" shall mean each date the Company
delivers to the
Investor an Advance
Notice
requiring
the Investor to advance
funds to the Company,
subject to the terms of this Agreement. No Advance Notice
Date shall be less than five (5)
Trading
Days after the prior
Advance
Notice
Date.
Section 1.5. "BID PRICE" shall mean, on any date, the closing bid
price
(as reported by Bloomberg
L.P.) of the Common Stock on the Principal
Market or
if the Common Stock is not traded on a Principal
Market,
the highest
reported
bid price for the Common
Stock,
as furnished by the
National
Association
of
Securities Dealers, Inc.
Section 1.6. "CLOSING" shall mean one of the closings of a purchase
and
sale of Common Stock pursuant to Section 2.3.
Section 1.7.
"COMMITMENT AMOUNT" shall mean the aggregate amount of up
to Forty Six Million
Dollars
($46,000,000)
which the
Investor
has agreed to
provide to the Company in order to purchase the Company's
Common Stock pursuant
to the terms and conditions of this Agreement.
Section 1.8.
"COMMITMENT
PERIOD" shall mean the period
commencing on
the earlier to occur of (i) the Effective Date, or (ii) such
earlier date as the
Company and the
Investor
may
mutually
agree in writing,
and expiring on the
earliest to occur of (x) the date on which the Investor
shall have made payment
of Advances
pursuant to this
Agreement
in the
aggregate
amount of Forty Six
Million
Dollars
($46,000,000),
(y) the
date
this
Agreement
is
terminated
pursuant to Section 2.4, or (z) the date occurring twenty-four (24)
months after
the Effective Date.
Section 1.9.
"COMMON STOCK" shall mean the Company's common stock, par
value $0.001 per share.
Section 1.10. "CONDITION
SATISFACTION DATE" shall have the meaning set
forth in Section 7.2.
Section 1.11. "DAMAGES" shall mean any loss, claim, damage,
liability,
costs and expenses (including,
without limitation,
reasonable
attorney's fees
and disbursements and costs and expenses of expert witnesses and
investigation).
Section
1.12.
"EFFECTIVE
DATE"
shall mean the date on which the SEC
first declares effective a Registration
Statement registering the resale of the
Registrable Securities as set forth in Section 7.2(a).
Section 1.13.
INTENTIONALLY OMITTED.
Section 1.14.
"EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder.
2
Section
1.15.
"MATERIAL
ADVERSE
EFFECT"
shall mean any
condition,
circumstance, or situation that would prohibit or otherwise
materially interfere
with the ability of the Company to enter into and perform any of
its obligations
under this
Agreement
or the
Registration
Rights
Agreement
in any
material
respect.
Section 1.16.
"MARKET
PRICE" shall mean the lowest VWAP of the Common
Stock during the Pricing Period.
Section
1.17.
"MAXIMUM
ADVANCE
AMOUNT"
shall be One
Million
Five
Hundred Thousand Dollars ($1,500,000) per Advance otice.
Section 1.18. "NASD" shall mean the National
Association of Securities
Dealers, Inc.
Section 1.19.
"PERSON"
shall mean an
individual,
a
corporation,
a
partnership, an association, a trust or other entity or
organization,
including
a government or political subdivision or an agency or
instrumentality thereof.
Section
1.20.
"PLACEMENT
AGENT"
shall
mean
Newbridge
Securities
Corporation, a registered broker-dealer.
Section
1.21.
"PRICING
PERIOD"
shall mean the five (5)
consecutive
Trading Days after the Advance Notice Date.
Section 1.22. "PRINCIPAL MARKET" shall mean the Nasdaq National
Market,
the Nasdaq SmallCap Market, the American Stock Exchange,
the OTC Bulletin Board
or the New York Stock Exchange,
whichever is at the time the principal
trading
exchange or market for the Common Stock.
Section
1.23.
"PURCHASE
PRICE" shall be set at ninety seven
percent
(97%) of the Market Price during the Pricing Period.
Section 1.24. "REGISTRABLE
SECURITIES" shall mean the shares of Common
Stock to be issued hereunder (i) in respect of which the
Registration
Statement
has not been declared
effective by the SEC, (ii) which have not been sold under
circumstances
meeting
all of the
applicable
conditions
of Rule
144 (or any
similar
provision then in force) under the Securities Act ("RULE 144") or
(iii)
which have not been otherwise
transferred to a holder 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.
Section 1.25.
"REGISTRATION
RIGHTS
AGREEMENT" shall mean the Amended
and Restated Registration Rights Agreement dated the date hereof,
regarding the
filing
of
the
Registration
Statement
for
the
resale
of
the
Registrable
Securities, entered into between the Company and the Investor.
Section
1.26.
"REGISTRATION
STATEMENT"
shall
mean
a
registration
statement
on Form S-1 or SB-2
(if use of such
form is then
available
to the
Company
pursuant
to the
rules
of the SEC and,
if not,
on 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
3
the
resale
of
the
Registrable
Securities
to be
registered
thereunder
in
accordance
with the
provisions of this Agreement and 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.
Section
1.27.
"REGULATION
D" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.28. "SEC" shall mean the Securities and Exchange
Commission.
Section 1.29.
"SECURITIES ACT" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.30. "SEC DOCUMENTS" shall mean Annual Reports on Form
10-KSB,
Quarterly
Reports
on
Form
10-QSB,
Current
Reports
on Form
8-K and
Proxy
Statements
of the
Company as
supplemented
to the date
hereof,
filed by the
Company for a period of at least twelve (12) months
immediately
preceding
the
date
hereof or the
Advance
Date,
as the case may be,
until such time as the
Company
no
longer
has
an
obligation
to
maintain
the
effectiveness
of a
Registration Statement as set forth in the Registration Rights
Agreement.
Section
1.31.
"TRADING
DAY" shall mean any day during
which the New
York Stock Exchange shall be open for business.
Section 1.32.
"VWAP" shall mean the volume
weighted
average price of
the Company's Common Stock as quoted by Bloomberg, LP.
ARTICLE II.
ADVANCES
Section 2.1.
ADVANCES.
Upon the terms and
conditions
set forth
herein
(including,
without
limitation,
the
provisions
of Article VII
hereof),
the Company may
request an Advance by the
Investor by the
delivery of an Advance
Notice.
The
number of shares of Common Stock that the Investor
shall
purchase
pursuant to
each Advance
shall be
determined
by dividing the amount of the Advance by the
Purchase Price. No fractional shares shall be issued. Fractional
shares shall be
rounded to the next higher whole number of shares.
The aggregate maximum amount
of all
Advances
that
the
Investor
shall be
obligated
to make
under
this
Agreement shall not exceed the Commitment Amount.
Section 2.2.
MECHANICS.
(a)
ADVANCE
NOTICE.
At any time
during the
Commitment
Period,
the Company may deliver an Advance
Notice to the Investor,
subject to
the conditions set forth in Section 7.2; provided,
however, the amount for each
Advance as designated by the Company in the applicable
Advance Notice shall not
be more than the Maximum
Advance Amount.
The aggregate
amount of the Advances
pursuant to this Agreement shall not exceed the Commitment
Amount.
The Company
acknowledges
that the
Investor may sell shares of the
Company's
Common Stock
4
corresponding
with a
particular
Advance
Notice
after the Advance
Notice is
received by the
Investor.
There
shall be a minimum of five (5)
Trading
Days
between each Advance Notice Date.
(b)
DATE OF DELIVERY OF ADVANCE NOTICE. An Advance Notice
shall be deemed
delivered on (i) the Trading Day it is received by facsimile or
otherwise by the Investor if such notice is received prior to 12:00
noon Eastern
Time,
or (ii) the
immediately
succeeding
Trading
Day if it is
received
by
facsimile or otherwise
after 12:00 noon Eastern Time on a Trading Day or at any
time on a day
which is not a
Trading
Day.
No
Advance
Notice
may be deemed
delivered on a day that is not a Trading Day.
Section
2.3.
CLOSINGS.
On each Advance Date (i) the Company shall
deliver to the Investor shares of the Company's
Common Stock,
representing the
amount of the Advance
specified in such Advance Notice
pursuant to Section 2.1
herein,
registered
in the name of the
Investor
and (ii) upon receipt of such
shares,
the
Investor
shall
deliver to the
Company the amount of the Advance
specified in the Advance Notice by wire transfer of immediately
available funds.
In
addition,
on or prior to the
Advance
Date,
each of the
Company
and the
Investor
shall
deliver to the other all
documents,
instruments
and writings
required to be delivered by either of them
pursuant to this
Agreement in order
to implement and effect the
transactions
contemplated
herein.
The extent the
Company has not paid the fees,
expenses,
and
disbursements of the Investor or
the Company's
counsel in accordance with Section 12.4, the amount of such fees,
expenses,
and
disbursements may be deducted by the Investor (and shall be paid
to the
relevant
party)
directly
out of the
proceeds of the Advance
with no
reduction in the amount of shares of the Company's
Common Stock to be delivered
on such Advance Date.
Section 2.4.
TERMINATION
OF
INVESTMENT.
The
obligation
of the
Investor to make an Advance to the
Company
pursuant
to this
Agreement
shall
terminate
permanently
(including
with respect to an Advance Date that has not
yet
occurred)
in the
event
that (i)
there
shall
occur
any stop
order or
suspension of the
effectiveness of the Registration
Statement for an aggregate
of fifty (50) Trading Days,
other than due to the acts of the Investor,
during
the Commitment
Period, or (ii) the Company shall at any time fail materially to
comply with the
requirements of Article VI and such failure is not cured within
thirty (30) days after receipt of written
notice from the
Investor,
PROVIDED,
HOWEVER,
that
this
termination
provision
shall
not
apply
to
any
period
commencing upon the filing of a
post-effective
amendment to such
Registration
Statement
and ending upon the date on which such post
effective
amendment
is
declared effective by the SEC.
Section 2.5.
AGREEMENT TO ADVANCE
FUNDS.
The Investor
agrees to
advance
the amount
specified
in the Advance
Notice to the Company
after the
completion
of each of the following
conditions
and the other
conditions
set
forth in this Agreement:
(a)
the
execution
and delivery by the Company,
and the
Investor, of this Agreement and the Exhibits hereto;
(b)
The Investor shall have received the shares of Common
Stock
applicable
to the Advance in
accordance
with Section 2.3.
Such shares
shall be free of restrictive legends.
5
(c)
the Company's
Registration Statement with respect to
the resale of the
Registrable
Securities in
accordance
with the terms of the
Registration Rights Agreement shall have been declared effective by
the SEC;
(d)
the Company shall have obtained all material
permits
and
qualifications
required by any applicable
state for the offer and sale of
the
Registrable
Securities,
or shall
have
the
availability
of
exemptions
therefrom.
The sale and issuance of the Registrable Securities shall be
legally
permitted by all laws and regulations to which the Company is
subject;
(e)
for
the
period
after
the
effective
date of this
Agreement,
the Company shall have filed with the
Commission in a timely manner
all reports, notices and other documents required of a "reporting
company" under
the Exchange Act and applicable Commission regulations;
(f)
the fees as set forth in
Section
12.4
below
shall
have been paid or can be withheld as provided in Section 2.3;
(g)
the
conditions
set forth in Section
7.2 shall have
been satisfied;
(h)
the Company
shall have
provided to the
Investor an
acknowledgement,
from the Company's independent certified public accountants as
to its ability to provide all consents
required in order to file a registration
statement in connection with this transaction; and
(i)
The Company's transfer agent shall be DWAC eligible.
Section
2.6.
LOCK UP PERIOD. On the date hereof, the Company shall
obtain from each officer and director a lock-up agreement,
as defined below, in
the form annexed hereto as Schedule 2.6 agreeing to only sell in
compliance with
the volume limitation of Rule 144.
Section 2.7.
HARDSHIP.
In the event the Investor
sells shares of
the Company's
Common Stock after
receipt of an Advance
Notice and the Company
fails to perform its
obligations
as mandated in Section 2.3, and
specifically
the Company
fails to deliver to the
Investor on the Advance Date the shares of
Common Stock corresponding to the applicable Advance,
the Company
acknowledges
that the Investor shall suffer financial
hardship and therefore shall be liable
for any and all losses,
commissions,
fees, or financial hardship caused to the
Investor.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor
hereby
represents
and
warrants
to, and agrees
with,
the
Company that the
following are true and correct as of the date hereof and as of
each Advance Date:
Section
3.1.
ORGANIZATION AND AUTHORIZATION.
The Investor is duly
incorporated
or
organized
and
validly
existing in the
jurisdiction
of its
incorporation
or
organization
and has all
requisite
power and
authority to
purchase and hold the securities issuable hereunder.
The decision to invest and
the execution and delivery of this Agreement by such Investor,
the
performance
by such
Investor of its
obligations
hereunder
and the
consummation
by such
6
Investor of the transactions
contemplated
hereby have been duly authorized and
requires no other
proceedings on the part of the Investor.
The undersigned has
the right,
power and
authority to execute and deliver this
Agreement
and all
other
instruments
(including,
without
limitations,
the Registration
Rights
Agreement), on behalf of the Investor. This Agreement has been duly
executed and
delivered by the Investor and,
assuming the
execution and delivery
hereof and
acceptance thereof by the Company,
will constitute the legal, valid and binding
obligations of the Investor, enforceable against the Investor in
accordance with
its terms.
Section 3.2.
EVALUATION OF RISKS.
The Investor has such knowledge
and
experience
in
financial,
tax and
business
matters
as to be capable of
evaluating
the merits and risks of, and bearing the economic risks entailed
by,
an investment in the Company and of protecting its interests in
connection
with
this
transaction.
It recognizes that its investment in the Company
involves a
high degree of risk.
Section
3.3.
NO
LEGAL
ADVICE
FROM
THE
COMPANY.
The
Investor
acknowledges
that it had the
opportunity
to
review
this
Agreement
and the
transactions
contemplated
by this
Agreement with his or its own legal counsel
and investment and tax advisors.
The Investor is relying solely on such counsel
and advisors and not on any statements or
representations of the Company or any
of its
representatives
or agents
for legal,
tax or
investment
advice
with
respect to this investment,
the transactions
contemplated by this Agreement or
the securities laws of any jurisdiction.
Section 3.4.
INVESTMENT
PURPOSE.
The
securities
are
being
purchased by the Investor for its own account, and for investment
purposes.
The
Investor
agrees not to assign or in any way transfer the
Investor's
rights to
the securities or any interest
therein and
acknowledges
that the Company will
not
recognize any purported
assignment or transfer
except in accordance
with
applicable Federal and state securities laws. No other person has
or will have a
direct or indirect
beneficial
interest in the securities.
The Investor agrees
not to sell,
hypothecate or otherwise transfer the Investor's securities unless
the securities are registered under Federal and applicable state
securities laws
or unless, in the opinion of counsel
satisfactory to the Company,
an exemption
from such laws is available.
Section
3.5.
ACCREDITED
INVESTOR.
The Investor is an "ACCREDITED
INVESTOR"
as that term is
defined in Rule
501(a)(3)
of
Regulation
D of the
Securities Act.
Section
3.6.
INFORMATION.
The Investor and its advisors
(and its
counsel),
if any,
have
been
furnished
with all
materials
relating
to the
business,
finances
and
operations
of the Company and
information
it deemed
material
to
making an
informed
investment
decision.
The
Investor
and its
advisors,
if any,
have been afforded the
opportunity
to ask questions of the
Company and its
management.
Neither such inquiries nor any other due diligence
investigations
conducted
by such
Investor
or its
advisors,
if any,
or its
representatives
shall modify,
amend or affect the Investor's
right to rely on
the Company's
representations and warranties
contained in this Agreement.
The
Investor
understands
that its
investment
involves a high degree of risk. The
Investor is in a position
regarding the Company,
which, based upon employment,
family
relationship
or economic
bargaining
power,
enabled and enables
such
Investor to obtain
information from the Company in order to evaluate the merits
7
and risks of this investment. The Investor has sought such
accounting, legal and
tax
advice,
as it has
considered
necessary
to make an
informed
investment
decision with respect to this transaction.
Section 3.7.
RECEIPT OF
DOCUMENTS.
The
Investor and its counsel
have received and read in their
entirety:
(i) this
Agreement and the Exhibits
annexed hereto; (ii) all due diligence and other information
necessary to verify
the accuracy and completeness of such representations, warranties
and covenants;
(iii) the
Company's
Form 10-KSB for the year ended
December 31, 2004 and Form
10-QSB for the periods ended March 31, 2005 and June 30, 2005;
and (iv) answers
to all questions the Investor
submitted to the Company
regarding an investment
in the Company; and the Investor has relied on the information
contained therein
and has not been
furnished
any
other
documents,
literature,
memorandum
or
prospectus.
Section 3.8.
REGISTRATION
RIGHTS
AGREEMENT.
The
parties
have
entered into the Amended and Restated
Registration
Rights
Agreement dated the
date hereof.
Section 3.9.
NO GENERAL SOLICITATION. Neither the Company, nor any
of its affiliates,
nor any person acting on its or their behalf, has engaged in
any form of general
solicitation or general
advertising (within the meaning of
Regulation D under the Securities
Act) in connection
with the offer or sale of
the shares of Common Stock offered hereby.
Section
3.10.
NOT AN
AFFILIATE.
The
Investor
is not an officer,
director
or
a
person
that
directly,
or
indirectly
through
one
or
more
intermediaries,
controls or is controlled
by, or is under common
control with
the Company or any
"AFFILIATE"
of the Company (as that term is defined in Rule
405 of the Securities Act).
Section 3.11.
TRADING ACTIVITIES. The Investor's trading activities
with
respect to the
Company's
Common
Stock shall be in
compliance
with all
applicable
federal and state
securities
laws,
rules and
regulations and the
rules and
regulations
of the Principal
Market on which the
Company's
Common
Stock is listed or traded. Neither the Investor nor its Affiliates
(as that term
is defined in Rule 144 promulgated under the Securities Act of
1933, as amended)
has an open short
position in the Common
Stock of the
Company,
the
Investor
agrees that it shall not, and that it will cause its
Affiliates
not to, engage
in any short sales of or hedging
transactions with respect to the Common Stock,
PROVIDED
that the
Company
acknowledges
and
agrees
that upon
receipt of an
Advance Notice the Investor has the right to sell the shares to be
issued to the
Investor pursuant to the Advance Notice during the applicable
Pricing Period.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as stated below, on the disclosure
schedules attached hereto or
in the SEC Documents (as defined
herein),
the Company
hereby
represents
and
warrants to, and
covenants
with,
the Investor that the following are true and
correct as of the date hereof:
Section
4.1.
ORGANIZATION AND
QUALIFICATION.
The Company is duly
incorporated
or
organized
and
validly
existing in the
jurisdiction
of its
incorporation or organization
and has all requisite
corporate power to own its
properties
and to carry on its
business
as now being
conducted.
Each of the
Company and its
subsidiaries
is duly qualified as a foreign
corporation to do
business and is in good
standing in every
jurisdiction
in which the nature of
8
the business conducted by it makes such qualification
necessary,
except to the
extent that the failure to be so qualified or be in good standing
would not have
a Material Adverse Effect on the Company and its subsidiaries taken
as a whole.
Section
4.2.
AUTHORIZATION,
ENFORCEMENT,
COMPLIANCE
WITH
OTHER
INSTRUMENTS.
(i) The Company has the requisite corporate power and authority to
enter into and perform this
Agreement,
the Amended and
Restated
Registration
Rights Agreement,
the Placement Agent Agreement and any related agreements,
in
accordance with the terms hereof and thereof, (ii) the execution
and delivery of
this Agreement,
the Amended and Restated
Registration
Rights
Agreement,
the
Placement
Agent
Agreement
and any related
agreements
by the Company and the
consummation by it of the
transactions
contemplated
hereby and thereby,
have
been duly
authorized by the Company's Board of Directors and no further
consent
or
authorization
is required by the
Company,
its Board of
Directors
or its
stockholders, (iii) this Agreement, the Amended and Restated
Registration Rights
Agreement,
the Placement Agent
Agreement and any related
agreements have been
duly executed and delivered by the Company, (iv) this Agreement,
the Amended and
Restated
Registration
Rights
Agreement,
the
Placement
Agent
Agreement and
assuming the execution and delivery
thereof and
acceptance by the Investor and
any
related
agreements
constitute
the valid and binding
obligations
of the
Company
enforceable
against the Company in accordance with their terms, except
as such
enforceability
may be
limited
by
general
principles
of
equity or
applicable bankruptcy,
insolvency,
reorganization,
moratorium, liquidation or
similar laws relating to, or affecting generally,
the enforcement of creditors'
rights and remedies.
Section
4.3.
CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of Five Billion
(5,000,000,000) shares of
Common Stock, par value $0.001 per share and Ten Million
(10,000,000) shares of
Preferred
Stock,
$0.001
par
value per share
("PREFERRED
STOCK"),
of which
87,242,533
shares of Common Stock and 1,250,000
shares of Preferred Stock were
issued and outstanding.
All of such outstanding shares have been validly issued
and are fully paid and nonassessable.
Except as disclosed in the SEC Documents,
no shares of Common Stock are subject to preemptive
rights or any other similar
rights or any liens or encumbrances suffered or permitted by the
Company. Except
as
disclosed
in the SEC
Documents,
as of the date
hereof,
(i) there are no
outstanding
options,
warrants,
scrip,
rights
to
subscribe
to,
calls
or
commitments
of any
character
whatsoever
relating to, or securities or rights
convertible
into,
any
shares of
capital
stock of the
Company or any of its
subsidiaries, or contracts, commitments, understandings or
arrangements by which
the
Company
or
any of
its
subsidiaries
is or may
become
bound
to
issue
additional
shares of capital stock of the Company or any of its subsidiaries
or
options,
warrants,
scrip,
rights to subscribe to, calls or commitments of any
character
whatsoever relating to, or securities or rights convertible into,
any
shares of capital
stock of the Company or any of its
subsidiaries,
(ii) there
are no outstanding debt securities
(iii) there are no outstanding
registration
statements
other
than
on
Form
S-8
and
(iv)
there
are no
agreements
or
arrangements
under which the Company or any of its subsidiaries is obligated to
register the sale of any of their
securities
under the
Securities Act (except
pursuant to the
Registration
Rights
Agreement).
There are no
securities
or
instruments
containing
anti-dilution
or
similar
provisions
that
will
be
triggered by this Agreement or any related
agreement or the consummation of the
transactions
described
herein or therein.
The Company
has
furnished
to the
Investor true and correct copies of the Company's
Certificate of Incorporation,
as
amended
and
as
in
effect
on
the
date
hereof
(the
"CERTIFICATE
OF
9
INCORPORATION"), and the Company's By-laws, as in effect on the
date hereof (the
"BY-LAWS"),
and the terms of all securities convertible into or exercisable for
Common Stock and the material rights of the holders thereof in
respect thereto.
Section 4.4.
NO CONFLICT. The execution,
delivery and performance
of this
Agreement
by the
Company and the
consummation
by the Company of the
transactions
contemplated
hereby
will not (i)
result in a
violation
of the
Certificate of Incorporation, any certificate of designations of
any outstanding
series of
preferred
stock of the Company or By-laws or (ii)
conflict
with or
constitute
a default
(or an event
which 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 to which the Company or any of its subsidiaries is a
party, or result
in a
violation
of
any
law,
rule,
regulation,
order,
judgment
or
decree
(including
federal and state
securities laws and regulations and the rules and
regulations
of the
Principal
Market
on which
the
Common
Stock is
quoted)
applicable
to the Company or any of its
subsidiaries
or by which any material
property or asset of the Company or any of its subsidiaries is
bound or affected
and which would cause a Material Adverse Effect.
Except as disclosed in the SEC
Documents,
neither the Company nor its subsidiaries is in violation of any
term
of or in
default
under its
Articles
of
Incorporation
or
By-laws
or their
organizational
charter or
by-laws,
respectively,
or any
material
contract,
agreement, mortgage,
indebtedness,
indenture,
instrument, judgment, decree or
order or any
statute,
rule or
regulation
applicable
to the
Company
or its
subsidiaries.
The
business of the Company
and its
subsidiaries
is not being
conducted
in
violation
of any
material
law,
ordinance,
regulation
of any
governmental entity.
Except as specifically
contemplated by this Agreement and
as required under the Securities Act and any applicable
state
securities laws,
the Company is not required to obtain any consent, authorization or
order of, or
make any filing or registration with, any court or governmental
agency in order
for
it to
execute,
deliver
or
perform
any
of
its
obligations
under
or
contemplated
by
this
Agreement
or
the
Registration
Rights
Agreement
in
accordance
with the terms
hereof or
thereof.
All
consents,
authorizations,
orders,
filings
and
registrations
which the
Company is
required
to obtain
pursuant to the preceding sentence have been obtained or effected
on or prior to
the date
hereof.
The Company and its
subsidiaries
are unaware of any fact or
circumstance which might give rise to any of the foregoing.
Section 4.5.
SEC DOCUMENTS; FINANCIAL STATEMENTS. Since January 1,
2003, the Company has filed all reports,
schedules, forms, statements and other
documents
required to be filed by it with the SEC under the
Exchange
Act. The
Company has delivered to the Investor or its representatives,
