Exhibit 10.1
STANDBY EQUITY DISTRIBUTION
AGREEMENT
THIS AGREEMENT dated as of the 20 th day
of March 2006 (the “ Agreement ”) between
CORNELL CAPITAL PARTNERS, LP , a Delaware limited
partnership (the “ Investor ”), and CHINA
AUTOMOTIVE SYSTEMS, INC. , a corporation organized and existing
under the laws of the State of Delaware (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, from time to time as provided herein, and
the Investor shall purchase from the Company up to Fifteen Million
Dollars ($15,000,000) of the Company’s common stock, par
value $0.0001 per share (the “ Common Stock ”);
and
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 (1 st ) 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 (in accordance with
Section 2.2(b) of this Agreement) 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 Fifteen Million Dollars
($15,000,000) 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 ,
provided that, the Company shall not effect any sale under
this Agreement and the Investor shall not have the right or the
obligation to purchase shares of Common Stock under this Agreement
to the extent that after giving effect to such purchase and sale
the aggregate number of shares issued under this Agreement and the
shares acquired under the Securities Purchase Agreement dated the
date hereof would exceed four million five hundred fourteen
thousand nine hundred eight (4,514,907) shares of Common Stock
(which is less than 20% of the _twenty two million five hundred
seventy four thousand five hundred forty three (22,574,543)
outstanding shares of Common Stock as of the date of
this Agreement) unless or until the Company obtains any
necessary shareholder approval or consent in accordance with
Nasdaq rules prior to such issuance.
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 Fifteen Million Dollars ($15,000,000), (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 $0.0001 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. “ Exchange Act ” shall mean the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
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Section
1.14. “ 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
1.15. “ Market Price ” shall mean the
lowest daily VWAP of the Common Stock during the Pricing
Period.
Section
1.16. “ Maximum Advance Amount ”
shall be Five Million Dollars ($5,000,000) per Advance
Notice subject to the limitations set forth in Section 1.7 of this
Agreement.
Section
1.17. “ NASD ” shall mean the
National Association of Securities Dealers, Inc.
Section
1.18. “ 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
1.19. “ Placement Agent ” shall mean
Newbridge Securities Corporation, a registered
broker-dealer.
Section
1.20. “ Pricing Period ” shall mean
the five (5) consecutive Trading Days after the Advance Notice
Date.
Section
1.21. “ Principal Market ” shall mean
the Nasdaq National Market, the Nasdaq Capital 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
1.22. “ Purchase Price ” shall
be set at ninety eight and one half percent (98½ %) of the
Market Price during the Pricing Period.
Section
1.23. “ 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
1.24. “ Registration Rights Agreement
” shall mean the 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
1.25. “ Registration Statement
” shall mean a registration statement on Form S-1, S-3 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 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.
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Section
1.26. “ Regulation D ” shall
have the meaning set forth in the recitals of this
Agreement.
Section
1.27. “ SEC ” shall mean the
Securities and Exchange Commission.
Section
1.28. “ Securities Act ” shall
have the meaning set forth in the recitals of this
Agreement.
Section
1.29. “ SEC Documents ” shall
mean Annual Reports on Form 10-K or Form 10-KSB, Quarterly Reports
on Form 10-Q, 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
1.30. “ Trading Day ” shall
mean any day during which the New York Stock Exchange shall be open
for business.
Section
1.31. “ 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 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.
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(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 5:00 pm Eastern Time, or (ii) the immediately succeeding
Trading Day if it is received by facsimile or otherwise after 5:00
pm 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.
(c)
Minimum Acceptable Price . The
minimum price (“ Minimum Acceptable Price ”),
below which no purchase or sale of Common Stock shall occur, shall,
in connection with each Advance Notice delivered by the Company, be
equal to an amount not less than ninety percent (90%) of the
closing Bid Price of the Common Stock the Trading Day immediately
preceding the Advance Notice Date for each Advance Notice.
Upon the issuance by the Company of an Advance Notice along with a
Minimum Acceptable Price, (i) the amount of the Advance set forth
in such Advance Notice shall automatically be reduced by twenty
percent (20%) for each Trading Day during the Pricing Period the
VWAP of the Common Stock is below the Minimum Acceptabl e Price
(each such day, an “ Excluded Day ”) and (ii)
the Market Price shall be the lowest daily VWAP of the Common Stock
during the Pricing Period days which are not Excluded Days.
The number of shares of Common Stock to be delivered to the
Investor at the Closing (in accordance with Section 2.3 of this
Agreement) shall correspond with the reduced Advance Notice
amount. The Company, and only the Company, may waive the
Minimum Acceptable Price with respect to any particular Advance
Notice by providing the Investor with written notice of waiver on
or prior to the Advance Notice Date.
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. To 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.
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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.
(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) 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; and
(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;
(i) The
Company’s transfer agent shall be DWAC eligible.
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Section
2.6. 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 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 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 and the applicable prospectus is
delivered in connection with such sale, hypothecation or other
transfer or unless, in the opinion of counsel satisfactory to the
Company, an exemption from such laws is available.
7
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 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 Forms 10-Q for the periods ended March
31, 2005, June 30, 2005 and September 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
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).
8
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 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 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 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 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 Registration Rights Agreement, the
Placement Agent Agreement and any related agreements have been duly
executed and delivered by the Company, (iv) this Agreement, the
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 80,000,000 shares of Common Stock and 20,000,000 shares
of Preferred Stock, $0.0001 par value per share (“
Preferred Stock ”), of which 22,574,543 shares of
Common Stock and no shares of Preferred Stock are issued and
outstanding. All of such outstanding shares have been validly
issued and are fully paid and nonassessable. Except as
disclosed (or arising under plans disclosed in) in the SEC
Documents, no shares of Common Stock are subject
9
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, (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); and (v) 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
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 Certificate 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
