EXHIBIT 10.2
STANDBY EQUITY DISTRIBUTION AGREEMENT
-------------------------------------
THIS AGREEMENT dated as of the 28th day of April 2005 (the
"AGREEMENT")
between CORNELL CAPITAL PARTNERS, LP, a Delaware limited partnership (the
"INVESTOR"), and VALENTEC 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 $0.01 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 date the David
Gonzalez
Attorney Trust Account is in receipt of the funds
from the Investor and
David
Gonzalez, Esq., 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, Esq. 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
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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.
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 $0.01 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, Esq., 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.
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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 Five Hundred Thousand
Dollars ($500,000) per Advance Notice.
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
eight percent
(98%) of the Market Price during the
Pricing Period.
Section 1.24. "REGISTRABLE SECURITIES" shall mean the shares
of Common
Stock to be issued hereunder, including 10% of the Common Stock
of the Company
held by Armament Systems International, Inc. and the Warrant Shares (as such
term is defined in the Warrant issued by the Company to the Investor of even
date herewith) (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
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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.
The Company
acknowledges that the Investor may sell shares of the
Company's Common Stock
corresponding with a particular Advance Notice
on the day the Advance Notice is
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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,
which shall be the first
(1st) Trading Day after expiration of the applicable Pricing Period for each
Advance, (i) the Company shall deliver to David Gonzalez, Esq. (the "ESCROW
AGENT") 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
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, 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) 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. 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;
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(b) The Escrow Agent
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 Heard, McElroy & Vestal,
LLP 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.
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 Escrow
Agent 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 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
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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
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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; and
(iii) 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 3.10.
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. PUBLIC COMPANY. No Investor makes any representation or
warranty regarding the Company's ability to
successfully become a public company
or to have any registration statement filed by the Company pursuant to the
Registration Rights Agreement or otherwise
declared effective by the SEC. The
Company has the sole obligation to make any and all such filings as may be
necessary to become a public company and to have any registration statement
declared effective by the SEC.
Section 3.12. The Company acknowledges that the Investor is
relying on
the representations and warranties made by the Company
hereunder and that such
representations and warranties are a material inducement to the Investor
purchasing the Convertible Debentures. The Company further acknowledges that
without such representations and warranties of
the Company made hereunder, the
Investor would not enter into this
Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as stated below, on the Disclosure Schedules (the "DISCLOSURE
SCHEDULE") attached hereto as Exhibit "B," the Company
hereby represents and
warrants to, and covenants with, the Investor that the following
are true and
correct as of the date hereof:
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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 shares of Common
Stock, par value
$0.01 per share and no shares of
Preferred Stock of which 100 shares of
Common
Stockare issued and outstanding. All of such outstanding shares have been
validly issued and are fully paid and
nonassessable. Except
as disclosed in the
Disclosure Schedule, 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
Disclosure Schedule,
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 Section 1.24 above and 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
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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
Disclosure Schedule, 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
