Exhibit 10.4
STANDBY EQUITY DISTRIBUTION AGREEMENT
THIS STANDBY EQUITY
DISTRIBUTION AGREEMENT
(the "Agreement") dated as
of August 27, 2004 by and between CORNELL CAPITAL PARTNERS, LP, a Delaware
limited partnership (the "Investor"), and POWER TECHNOLOGY, INC., a Nevada
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 Five Million Dollars
($5,000,000) of the
Company's common
stock,
par value $0.001 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 Butler
Gonzalez LLP
Escrow Account is in receipt of the funds
from the Investor and Butler Gonzalez
LLP, as the Investor's Counsel, is in
possession of free trading shares from the
Company and therefore an Advance by the
Investor to the Company can be made and
Butler Gonzalez LLP can release the free
trading shares to the Investor. No
Advance Date shall be more than one (1)
Trading Day after expiration of the
Pricing Period for the applicable
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.
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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 seven (7) Trading
Days after the prior
Advance Notice
Date.
Section 1.5. "Bid Price" shall mean, on any date, the closing bid
price
(as reported by Bloomberg L.P.) of the Common Stock on the
Principal Market
or
if the Common Stock is not traded on a
Principal Market,
the highest
reported
bid price for the Common Stock, as furnished by the National Association of
Securities Dealers, Inc.
Section 1.6. "Closing" shall mean one of the closings of a purchase
and
sale of Common Stock pursuant to Section
2.3.
Section 1.7.
"Commitment Amount" shall mean the aggregate amount of up
to Five Million Dollars ($5,000,000) that the Investor has
agreed to provide to
the Company in order to purchase
the Company's Common Stock pursuant to the
terms and conditions of this Agreement.
Section 1.8.
"Commitment Period"
shall mean the period
commencing on
the earlier to occur of (i) the Effective
Date, or (ii) such earlier date as the
Company and the Investor may mutually agree in writing, and expiring on the
earliest to occur of (x) the date on which
the Investor shall
have made payment
of Advances pursuant to this Agreement in the
aggregate amount of
Five Million
Dollars ($5,000,000), (y) the date this Agreement is terminated pursuant to
Section 2.5, 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 $0.001 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 Butler
Gonzalez LLP, 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 Two Hundred Fifty
Thousand Dollars ($250,000) 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
seven percent
(97%) of the Market Price during the
Pricing Period.
Section 1.24
"Registrable
Securities" shall mean the shares of Common
Stock to be issued hereunder (i) in respect
of which the Registration Statement
has not been declared effective by the SEC, (ii) which
have not been sold under
circumstances meeting all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the
Securities Act ("Rule 144") or (iii)
which have not been otherwise transferred to a holder who may
trade such shares
without restriction under the Securities Act, and the Company has delivered
a
new certificate or other evidence of
ownership for such securities not bearing a
restrictive legend.
Section 1.25
"Registration
Rights
Agreement"
shall
mean the
Registration Rights Agreement dated the
date hereof, regarding the filing of the
Registration Statement for the resale of the
Registrable
Securities,
entered
into between the Company and the
Investor.
Section 1.26
"Registration
Statement"
shall mean a registration
statement on Form S-1 or SB-2 (if use of such form is then available to the
Company pursuant to the rules of the SEC and, if not, on such other form
promulgated by the SEC for which the Company
then qualifies
and which counsel
for the Company shall deem appropriate, and which form shall be available
for
the resale of the Registrable Securities to be registered thereunder in
accordance with the provisions of this Agreement and
the Registration
Rights
Agreement, and in accordance with the intended method of distribution of such
securities), for the registration of the resale by the Investor of the
Registrable Securities under the Securities
Act.
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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 seven (7)
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 12:00 noon Eastern
Time, or (ii) the immediately succeeding Trading Day if it is received by
facsimile or otherwise after 12:00 noon Eastern Time on a
Trading Day or at any
time on a day which is not a Trading Day. No Advance Notice may be deemed
delivered on a day that is not a Trading
Day.
(c) Pre-Closing
Share Credit. Within two (2) business days
after the Advance Notice Date, the Company shall
credit shares of the Company's
Common Stock to the Investor's counsel's balance account with The Depository
Trust Company through its Deposit
Withdrawal At
Custodian system, in
an amount
equal to the amount of the requested
Advance divided by the closing Bid Price of
the Company's Common Stock as of the
Advance Notice Date multiplied by one point
one (1.1). Any adjustments to the number of shares to be
delivered to the
Investor at the Closing as a result of
fluctuations in the
closing Bid Price of
the Company's Common Stock shall be made as of the date
of the Closing.
Any
excess shares shall be credited to the next Advance. In no event shall the
number of shares issuable to the Investor pursuant to an Advance cause the
Investor to own in excess of nine and 9/10 percent (9.9%) of the then
outstanding Common Stock of the
Company.
(d) Hardship.
In the event the
Investor sells the
Company's
Common Stock pursuant to subsection
(c) above and the
Company fails to perform
its obligations as mandated in Section 2.5
and 2.2 (c), and
specifically fails
to provide the Investor with the shares of Common
Stock for the
applicable
Advance, the Company acknowledges that the Investor shall suffer financial
hardship and therefore shall be liable for any and all
losses, commissions,
fees, or financial hardship caused to the
Investor.
Section 2.3. Closings.
On each Advance Date,
which shall be the first
Trading Day after expiration of the Pricing
Period of an applicable Advance, (i)
the Company shall deliver to the Investor's
Counsel, as defined
pursuant to the
Escrow Agreement, shares of the Company's Common
Stock, representing the amount
of the Advance by the Investor pursuant to
Section 2.1 herein, registered in the
name of the Investor which shall be delivered to the
Investor, or otherwise
in
accordance with the Escrow Agreement and (ii) the Investor shall deliver to
Butler Gonzalez LLP (the "Escrow Agent")
the amount of the Advance specified in
the Advance Notice by wire transfer of
immediately available
funds which shall
be delivered to the Company, or otherwise in accordance with the Escrow
Agreement. In addition, on or prior to the
Advance Date, each of the Company and
the Investor shall deliver to the other
through the
Investor's
Counsel, all
documents, instruments and writings
required to be
delivered by either of them
pursuant to this Agreement in order to implement and effect the transactions
contemplated herein. Payment of funds to the Company and delivery of the
Company's Common Stock to the Investor shall occur in accordance with the
conditions set forth above and those contained in the Escrow Agreement;
provided, however, that to the extent the Company has not paid the fees,
expenses, and disbursements of the Investor or the Investor's counsel in
accordance with Section 12.4 hereof, 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.
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Section 2.4. Termination of Investment. The obligation of the Investor
to make an Advance to the Company
pursuant to this
Agreement shall terminate
permanently (including with respect to an Advance Date that has not yet
occurred) in the event that (i) there shall
occur any stop order or suspension
of the effectiveness of the Registration Statement for an aggregate of
fifty
(50) Trading Days, other than due to the acts of the
Investor, during the
Commitment Period, and (ii) the Company shall at any time fail
materially to
comply with the requirements of Article VI and
such failure is not cured within
thirty (30) days after receipt of written
notice from the
Investor, provided,
however, that this termination provision shall not apply to any period
commencing upon the filing of a
post-effective
amendment to such
Registration
Statement and ending upon the date on which
such post effective
amendment is
declared effective by the SEC.
Section 2.5. Agreement
to Advance Funds.
(a) The Investor agrees to advance the amount specified in the
Advance Notice to the Company after the completion of each of the following
conditions and the other conditions set
forth in this Agreement:
(i) the execution
and delivery by the
Company, and
the Investor, of this Agreement and the
Exhibits hereto;
(ii) Investor's
Counsel shall have received the
shares of Common Stock applicable to the Advance in accordance with Section
2.2(c) hereof;
(iii) the Company's Registration Statement with
respect to the resale of the Registrable
Securities in accordance with the terms
of the Registration Rights Agreement shall have been
declared effective by
the
SEC;
(iv) the Company shall
have obtained
all material
permits and qualifications required by any applicable
state for the offer
and
sale of the Registrable Securities, or
shall have the availability of exemptions
therefrom. The sale and issuance of the
Registrable Securities shall be legally
permitted by all laws and regulations to
which the Company is subject;
(v) the Company shall have filed with the Commission
in a timely manner all reports, notices and other documents required of a
"reporting company" under the Exchange Act and applicable Commission
regulations;
(vi) the fees as set
forth in Section 12.4 below
shall have been paid or can be withheld as
provided in Section 2.3; and
(vii) the conditions
set forth in Section
7.2 shall
have been satisfied.
(viii) The
Company shall have provided to the
Investor an acknowledgement, from Beckstead and Watts, LLP as
to its ability to
provide all consents required in order to file a registration statement in
connection with this transaction;
(ix) The Company's transfer agent shall be DWAC
eligible.
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Section 2.5.0.0.0.1.10. Lock Up Period. Except as may
otherwise be permitted pursuant to the
following, during the
Commitment Period,
the Company shall not 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.
(xi) On the date
hereof, the Company
shall obtain
from each officer and director a lock-up
agreement,
as defined
below, in the
form annexed hereto as Schedule 2.6
agreeing to only sell in compliance with the
volume limitation of Rule 144.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor hereby
represents
and warrants to, and agrees with, the
Company that the following are true and as of the date
hereof and as of
each
Advance Date:
Section 3.1.
Organization
and Authorization. The Investor is duly
incorporated or organized and validly existing in the jurisdiction of its
incorporation or organization and has all requisite power and authority to
purchase and hold the securities issuable
hereunder. The
decision to invest and
the execution and delivery of this
Agreement by such Investor, the performance
by such Investor of its obligations hereunder and the consummation by such
Investor of the transactions contemplated hereby have been duly authorized
and
requires no other proceedings on the part of the
Investor. The
undersigned has
the right, power and authority to execute and deliver
this Agreement
and all
other instruments (including, without limitations, the Registration Rights
Agreement), on behalf of the Investor. This
Agreement has been duly executed and
delivered by the Investor and, assuming the execution and delivery
hereof and
acceptance thereof by the Company,
will constitute the
legal, valid and binding
obligations of the Investor, enforceable
against the Investor in accordance with
its terms.
Section 3.2.
Evaluation of Risks.
The Investor has such knowledge and
experience in financial tax and business
matters as to be
capable of evaluating
the merits and risks of, and bearing the economic risks entailed by, an
investment in the Company and of protecting
its interests in connection
with
this transaction. It recognizes that its investment
in the Company
involves a
high degree of risk.
Section 3.3.
No Legal Advice From the Company. The Investor
acknowledges that it had the opportunity to review this Agreement and the
transactions contemplated by this Agreement with his or its own
legal counsel
and investment and tax advisors.
The Investor is
relying solely on such counsel
and advisors and not on any statements or
representations of the
Company or any
of its representatives or agents for legal, tax or investment advice with
respect to this investment, the transactions contemplated by this Agreement
or
the securities laws of any
jurisdiction.
Section 3.4. Investment Purpose. The securities are being purchased
by
the Investor for its own account,
for investment and without any view to the
distribution, assignment or resale to
others or fractionalization in whole or in
part. The Investor agrees not to assign or in any way
transfer the
Investor's
rights to the securities or any interest therein and acknowledges that the
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Company will not recognize any purported assignment or transfer except in
accordance with applicable Federal and state securities laws. No other person
has or will have a direct or indirect
beneficial interest in the securities. The
Investor agrees not to sell, hypothecate or otherwise
transfer the
Investor's
securities unless the securities are registered under Federal and applicable
state securities laws or unless,
in the opinion of
counsel satisfactory
to the
Company, an exemption from such laws is
available.
Section 3.5.
Accredited
Investor. The Investor is an "Accredited
Investor" as that term is defined in Rule 501(a)(3) of Regulation D of the
Securities Act.
Section 3.6.
Information.
The Investor and its advisors (and its
counsel), if any, have been furnished with all materials relating to the
business, finances and operations of the Company and information it deemed
material to making an informed investment decision. The Investor and its
advisors, if any, have been afforded the
opportunity
to ask questions of
the
Company and its management. Neither such inquiries nor any
other due diligence
investigations conducted by such Investor or its advisors, if any, or its
representatives shall modify, amend or affect the Investor's
right to rely on
the Company's representations and warranties
contained in this
Agreement. The
Investor understands that its investment involves a high degree of risk.
The
Investor is in a position regarding the Company,
which, based upon
employment,
family relationship or economic bargaining power, enabled and enables such
Investor to obtain information from the Company in
order to evaluate the merits
and risks of this investment. The Investor
has sought such accounting, legal and
tax advice, as it has considered necessary to make an informed investment
decision with respect to this
transaction.
Section 3.7. Receipt
of Documents.
The Investor and its
counsel have
received and read in their entirety: (i)
this Agreement and the Exhibits annexed
hereto; (ii) all due diligence and other information necessary to verify the
accuracy and completeness of such representations, warranties and covenants;
(iii) the Company's Form 10-KSB for the year ended
year ended June 30, 2003 and
Form 10-QSB for the period ended March 31, 2004; and (iv) answers to all
questions the Investor submitted to the Company
regarding an
investment in the
Company; and the Investor has relied on the
information contained
therein and
has not been furnished any other documents, literature, memorandum or
prospectus.
Section 3.8.
Registration Rights
Agreement and Escrow Agreement. The
parties have entered into the Registration Rights Agreement and the Escrow
Agreement, each dated the date hereof.
Section 3.9. No General Solicitation. Neither the Company, nor any
of
its affiliates, nor any person acting on
its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities
Act) in connection
with the offer or sale
of
the shares of Common Stock offered
hereby.
Section 3.10.
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). Neither the Investor nor its
Affiliates has an open
short position in the Common Stock of the
Company, and the
Investor agrees that
it will not, and that it will cause its
Affiliates
not to, engage in any
short
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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 will sell the Shares to be issued to the Investor pursuant to the
Advance Notice, even if the Shares have not
been delivered to the Investor.
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 and, except as set forth
below, the Investor shall not and will
cause its affiliates not to engage in any
short sale as defined in any applicable SEC or National Association of
Securities Dealers rules on any hedging
transactions with
respect to the Common
Stock. Without limiting the foregoing,
the Investor agrees
not to engage in any
naked short transactions in excess of the amount of shares owned (or an
offsetting long position) during the Commitment Period. The Investor shall be
entitled to sell Common Stock during the
applicable Pricing Period.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as stated below, on the disclosure schedules attached hereto or
in the SEC Documents (as defined
herein), the Company hereby represents and
warrants to, and covenants with, the Investor that the following
are true and
correct as of the date hereof:
Section 4.1.
Organization
and Qualification. The Company is duly
incorporated or organized and validly existing in the jurisdiction of its
incorporation or organization and has all requisite power and authority
corporate power to own its properties and to
carry on its business as now being
conducted. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is
in good standing in every jurisdiction
in which the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so
qualified or be in
good standing would not have a Material
Adverse Effect on the Company and its
subsidiaries taken as a whole.
Section 4.2.
Authorization,
Enforcement,
Compliance
with Other
Instruments. (i) The Company has the requisite
corporate power and authority to
enter into and perform this Agreement,
the Registration
Rights Agreement,
the
Escrow Agreement, the Placement Agent Agreement and
any related agreements, in
accordance with the terms hereof and
thereof, (ii) the execution and delivery of
this Agreement, the Registration Rights Agreement, the Escrow Agreement, the
Placement Agent Agreement and any related agreements by the Company and the
consummation by it of the transactions contemplated hereby and thereby, have
been duly authorized by the Company's Board
of Directors and no further consent
or authorization is required by the Company, its Board of Directors or its
stockholders, (iii) this Agreement, the Registration Rights Agreement, the
Escrow Agreement, the Placement Agent Agreement and
any related agreements have
been duly executed and delivered by the Company, (iv) this Agreement, the
Registration Rights Agreement, the Escrow Agreement, the Placement Agent
Agreement and assuming the execution and
delivery thereof and
acceptance by the
Investor and any related agreements
constitute the valid and binding obligations
of the Company enforceable against the Company in accordance
with their terms,
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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
750,000,000 shares of Common Stock, par
value $0.001 per share and 1,000,000
shares of Preferred
Stock. As of the
date
hereof, there were 99,839,628 shares of Common Stock and 0
shares of Preferred
Stock issued and outstanding. 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 Articles of Incorporation, as
amended and as in effect on the date hereof
(the "Articles 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
Articles 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
10
<PAGE>
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
