Exhibit 10.5
STANDBY EQUITY DISTRIBUTION AGREEMENT
-------------------------------------
THIS AGREEMENT
dated as of the 7th day of September 2005 (the "Agreement")
between CORNELL CAPITAL PARTNERS, LP, a
Delaware limited partnership (the
"Investor"), and IN VERITAS MEDICAL
DIAGNOSTICS, INC., 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 Ten Million Dollars
($10,000,000) of the Company's common stock,
par value $.001 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 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 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 (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.
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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
Ten Million Dollars ($10,000,000) 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 Ten Million
Dollars ($10,000,000), (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 $.001 per share.
Section 1.10.
"Condition Satisfaction Date" shall have the meaning set
forth in Section 7.2.
Section 1.11.
"Damages" shall mean any loss, claim, damage, liability,
costs and expenses (including, without
limitation, reasonable attorney's fees
and disbursements and costs and expenses of
expert witnesses and investigation).
Section 1.12.
"Effective Date" shall mean the date on which the SEC first
declares effective a Registration Statement
registering the resale of the
Registrable Securities as set forth in
Section 7.2(a).
Section 1.13.
"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 closing Bid Price 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 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 eight 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.
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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
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.
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, or (ii) the Company
shall at any time fail materially to
comply with the requirements of Article VI
and such failure is not cured within
thirty (30) days after receipt of written
notice from the Investor, provided,
however, that this termination provision
shall not apply to any period
commencing upon the filing of a
post-effective amendment to such Registration
Statement and ending upon the date on which
such post effective amendment is
declared effective by the SEC.
Section 2.5.
Agreement to Advance Funds. The Investor agrees to advance the
amount specified in the Advance Notice to
the Company after the completion of
each of the following conditions and the
other conditions set forth in this
Agreement:
(a) the
execution and delivery by the Company, and the Investor, of
this
Agreement and the Exhibits hereto;
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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 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.
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 correct as
of the date hereof and as of each
Advance Date:
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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, and for
investment purposes. The Investor agrees
not to assign or in any way transfer the
Investor's rights to the securities or
any interest therein and acknowledges that
the Company will not recognize any
purported assignment or transfer except in
accordance with applicable Federal
and state securities laws. No other person
has or will have a direct or indirect
beneficial interest in the securities. The
Investor agrees not to sell,
hypothecate or otherwise transfer the
Investor's securities unless the
securities are registered under Federal and
applicable state securities laws or
unless, in the opinion of counsel
satisfactory to the Company, an exemption from
such laws is available.
Section 3.5.
Accredited Investor. The Investor is an "Accredited Investor"
as that term is defined in Rule 501(a)(3)
of Regulation D of the Securities Act.
Section 3.6.
Information. The Investor and its advisors (and its counsel),
if any, have been furnished with all
materials relating to the business,
finances and operations of the Company and
information it deemed material to
making an informed investment decision. The
Investor and its advisors, if any,
have been afforded the opportunity to ask
questions of the Company and its
management. Neither such inquiries nor any
other due diligence investigations
conducted by such Investor or its advisors,
if any, or its representatives shall
modify, amend or affect the Investor's
right to rely on the Company's
representations and warranties contained in
this Agreement. The Investor
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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 July 31, 2004 and Form 10-QSB
for the period ended April 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 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.
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:
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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 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
500,000,000 shares of Common Stock and
50,000,000 shares of Preferred Stock, $0.01
par value per share ("Preferred
Stock"), of which 52,978,517 shares of
Common Stock and 34,343,662 and 23,076
shares of Series A and Series B Preferred
Stock, respectively, 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)
except as set forth on Schedule 4.3
to this Agreement, there are no agreements
or arrangements under which the
Company or any of its subsidiaries is
obligated to register the sale of any of
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their securities under the Securities Act
(except pursuant to the Registration
Rights Agreement). Except as set forth on
Schedule 4.3 to this 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 Rights
Agreement in accordance with the terms
hereof or thereof. All consents,
authorizations, orders, filings and
registrations which the Company is required
to obtain pursuant to the preceding
sentence have been obtained or effected on
or prior to the date hereof. The
Company and its subsidiaries are unaware of
any fact or circumstance which might
give rise to any of the foregoing.
Section 4.5. SEC
Documents; Financial Statements. Since January 1, 2003,
the Company has filed all reports,
schedules, forms, statements and other
documents required to be filed by it with
the SEC under the Exchange Act. The
Company has delivered to the Investor or
its representatives, or made available
through the SEC's website at
http://www.sec.gov, true and complete copies of the
SEC Documents. As of their respective
dates, the financial statements of the
Company disclosed in the SEC Documents (the
"Financial Statements") complied as
to form in all material respects with
applicable accounting requirements and the
published rules and regulations of the SEC
with respect thereto. Such financial
statements have been prepared in accordance
with generally accepted accounting
10
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principles, consistently applied, during
the periods involved (except (i) as may
be otherwise indicated in such financial
statements or the notes thereto, or
(ii) in the case of unaudited interim
statements, to the extent they may exclude
footnotes or may be condensed or summary
statements) and, fairly present in all
material respects the financial position of
the Company as of the dates thereof
and the results of its operations and cash
flows for the periods then ended
(subject, in the case of unaudited
statements, to normal year-end
