STANDBY EQUITY DISTRIBUTION AGREEMENT

 

                   STANDBY EQUITY DISTRIBUTION AGREEMENT

 

        THIS AGREEMENT dated as of the 16th day of March 2005 (the

"Agreement") between CORNELL CAPITAL PARTNERS, LP, a Delaware limited

partnership (the "Investor"), and HEADLINERS ENTERTAINMENT GROUP INC., a

Delaware Corporation   (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 Thirty Million U.S. Dollars ($30,000,000)

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 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 Date shall be less than five (5) Trading Days after the

prior Advance Notice Date.

                                    -1-

 

        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 Thirty   Million U.S. Dollars ($30,000,000) 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 Thirty Million U.S. Dollars ($30,000,000), (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.

 

        Section 1.16.    "Market Price" shall mean the lowest VWAP of the

Common Stock during the Pricing Period.

 

        Section 1.17.    "Maximum Advance Amount" shall be One Hundred Fifty

Thousand U.S. Dollars (US$150,000) per Advance Notice.

 

                                     -2-

 

        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 (985%) 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.

 

                                    -3-

 

        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.

 

                (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

 

                                     -4-

 

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;

 

                 (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;

 

                                    -5-

 

                 (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'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.

 

      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 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,

 

                                    -6-

 

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.

 

                                    -7-

 

        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 ___________ and Form 10-QSB for the period ended ____________; 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 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

                                    -8-

 

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 _________ shares of

Common Stock, par value $0.001 per share and _________ shares of Preferred

Stock of which ________ shares of Common Stock and _________ 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

 

                                    -9-

 

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 violatio