STANDBY EQUITY DISTRIBUTION AGREEMENT
THIS
AGREEMENT dated as of the 17th day of May 2005 (the
"Agreement")
between CORNELL CAPITAL PARTNERS, LP,
a Delaware limited partnership (the
"Investor"), and TRANSAX INTERNATIONAL, LTD., a corporation organized and
existing under the laws of the State of
Colorado (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 Five Million U.S. Dollars
($5,000,000) of
the Company's common
stock, par value $0.00001 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; and
WHEREAS,
the Company has engaged Monitor Capital, Inc.
(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 date David Gonzalez PC Escrow
Account is in receipt of the funds from the
Investor and David
Gonzalez PC, as
the Investor's Counsel, is in possession of free trading shares
from the
Company and therefore an Advance by the
Investor to the Company can be made and
David Gonzalez PC can release the free
trading shares to the Investor. The
Advance Date shall be 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 to the Investor
setting forth the Advance amount
that the Company requests from the
Investor
and the Advance Date.
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
Five Million U.S. Dollars ($5,000,000)
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 Five Million
U.S. Dollars ($5,000,000), (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 $0.00001 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"Escrow Agreement" shall mean the escrow agreement among
the
Company, the Investor, and David Gonzalez
PC, dated the date hereof.
Section
1.14"Exchange Act"
shall mean the
Securities Exchange
Act of
1934, as amended, and the rules and
regulations promulgated thereunder.
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 Two Hundred Fifty
Thousand
U.S. Dollars (US$250,000) per Advance
Notice, provided that
aggregate Advances
in any thirty (30) day period shall not exceed One Million Dollars
($1,000,000).
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 Monitor Capital, Inc., 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 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 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 Investments.
(a) Advances.
Upon
the terms and conditions set forth
herein
(including, without limitation, the
provisions of
Article VII hereof),
on any
Advance Notice Date 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 receive for 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.
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.
(c) Pre-Closing
Share Credit. Within
two (2) business days after
the Advance Notice Date, the Company shall credit shares of the
Company's
Common Stock to the Investor's counsel's
balance account
with The Depository
Trust Company through its Deposit
Withdrawal At Custodian system, in an amount
equal to the amount of the requested
Advance divided by the closing Bid Price
of the Company's Common Stock as of the
Advance Notice Date multiplied by one
point one (1.1). Any adjustments to the number of
shares to be delivered to
the Investor at the Closing as a result of fluctuations in the closing
Bid
Price of the Company's Common Stock shall
be made as
of the date of the
Closing. Any excess shares shall be
credited to the next Advance. In no event
shall the number of shares issuable to the Investor pursuant to an
Advance
cause the Investor to own in excess of nine
and 9/10 percent (9.9%) of the then
outstanding Common Stock of the
Company.
(d) Hardship.
In the event the
Investor sells the Company's
Common Stock pursuant to subsection
(c) above and the
Company fails to perform
its obligations as mandated in Section
2.5 and 2.2 (c), and
specifically fails
to provide the Investor with the shares of
Common Stock for 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.
Section
2.3 Closings. On
each Advance Date, which shall be the
first
(1st) Trading Day after expiration of the
applicable
Pricing Period for each
Advance, (i) the Company shall deliver to
the Investor's Counsel, as defined
pursuant to the Escrow Agreement, shares of the Company's Common Stock,
representing the amount of the Advance by
the Investor pursuant to Section 2.1
herein, registered in the name of the
Investor which shall be delivered to the
Investor, or otherwise in accordance with the Escrow
Agreement and (ii) the
Investor shall deliver to David
Gonzalez PC (the
"Escrow Agent") the amount of
the Advance specified in the Advance
Notice by wire transfer of immediately
available funds which shall be delivered to the Company,
or otherwise in
accordance with the Escrow Agreement.
In addition, on
or prior to the Advance
Date, each of the Company and the Investor
shall deliver to the other through
the Investor's Counsel, 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. Payment of funds to the
Company and delivery of the Company's
Common Stock to the
Investor shall occur
in accordance with the conditions set forth
above and those
contained in
the
Escrow Agreement; provided, however, that to the extent the Company has
not
paid the fees, expenses, and disbursements
of the Investor, the Investor's
counsel, Kirkpatrick & Lockhart Nicholson Graham LLP, 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) from the
amount 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, and (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.
(a) 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:
(i) the
execution and delivery by the Company, and the
Investor, of this Agreement and the
Exhibits hereto;
(ii) Investor's
Counsel shall have received the shares of
Common Stock applicable to the Advance in accordance with Section 2.2(c)
hereof;
(iii) 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;
(iv) 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;
(v) 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;
(vi) 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
(vii) the conditions set forth in Section 7.2 shall have been
satisfied.
(viii)the Company
shall have provided to
the Investor an
acknowledgement, from Moores Stephens
P.C, as to its ability to provide all
consents required in order to file a
registration statement
in connection with
this transaction;
(ix) The Company's
transfer agent shall be DWAC eligible.
Section
2.6 Lock Up Period.
(i) During
the Commitment Period, the Company
shall not
issue or sell (i) any Common Stock or
Preferred Stock
without consideration or
for a consideration per share less than
the Bid Price on the date of
issuance
or (ii) issue or sell any warrant,
option, right,
contract, call,
or other
security or instrument granting the holder
thereof the right to acquire Common
Stock without consideration or for a
consideration per share less than the Bid
Price on the date of issuance.
(ii) 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.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor
hereby represents and warrants to, and agrees with, the Company
that the following are true and 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 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, for investment and without any view to the
distribution, assignment or resale to
others or fractionalization in whole or
in part. 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
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, 2003
and Form 10-QSB for the period ended September 30, 2004; 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 and Escrow Agreement. The
parties have entered into the Registration Rights Agreement and
the Escrow
Agreement, each 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
3.10Not 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
3.11Trading 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, and the Investor agrees that
it will 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 is permitted 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 power and authority
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 Escrow 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 Escrow
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 Escrow 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 Escrow 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
100,000,000 shares of
Common Stock,
par value $0.00001 per share and
20,000,000 shares of Preferred Stock of which
28,987,210 shares of Common Stock and no
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
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
Righ
