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Exhibit 10.1
STANDBY EQUITY DISTRIBUTION AGREEMENT
THIS AGREEMENT dated as of the ___ day of May 2005 (the
"Agreement")
between CORNELL CAPITAL PARTNERS, LP, a
Delaware limited partnership (the
"Investor"), and HEALTHRENU MEDICAL, INC.,
a corporation organized and existing
under the laws of the State of Nevada (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 $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 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 to the Investor an Advance Notice
requiring the Investor to advance
funds to the Company, subject to the terms
of this Agreement. No Advance Notice
Date shall be less than five (5) Trading
Days after the prior Advance Notice
Date.
Section 1.5. "Bid Price" shall mean, on any date, the closing bid
price
(as reported by Bloomberg L.P.) of the
Common Stock on the Principal Market or
if the Common Stock is not traded on a
Principal Market, the highest reported
bid price for the Common Stock, as
furnished by the National Association of
Securities Dealers, Inc.
Section 1.6. "Closing" shall mean one of the closings of a purchase
and
sale of Common Stock pursuant to Section
2.3.
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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 $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 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 Three Hundred
Fifty
Thousand Dollars ($350,000) 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 seven
percent
(97%) of the Market Price during the
Pricing Period.
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Section 1.24. "Registrable Securities" shall mean the shares of
Common
Stock to be issued hereunder (i) in respect
of which the Registration Statement
has not been declared effective by the SEC,
(ii) which have not been sold under
circumstances meeting all of the applicable
conditions of Rule 144 (or any
similar provision then in force) under the
Securities Act ("Rule 144") or (iii)
which have not been otherwise transferred
to a holder who may trade such shares
without restriction under the Securities
Act, and the Company has delivered a
new certificate or other evidence of
ownership for such securities not bearing a
restrictive legend.
Section 1.25. "Registration Rights Agreement" shall mean the
Registration Rights Agreement dated the
date hereof, regarding the filing of the
Registration Statement for the resale of
the Registrable Securities, entered
into between the Company and the
Investor.
Section 1.26. "Registration Statement" shall mean a
registration
statement on Form S-1 or SB-2 (if use of
such form is then available to the
Company pursuant to the rules of the SEC
and, if not, on such other form
promulgated by the SEC for which the
Company then qualifies and which counsel
for the Company shall deem appropriate, and
which form shall be available for
the resale of the Registrable Securities to
be registered thereunder in
accordance with the provisions of this
Agreement and the Registration Rights
Agreement, and in accordance with the
intended method of distribution of such
securities), for the registration of the
resale by the Investor of the
Registrable Securities under the Securities
Act.
Section 1.27. "Regulation D" shall have the meaning set forth in
the
recitals of this Agreement.
Section 1.28. "SEC" shall mean the Securities and Exchange
Commission.
Section 1.29. "Securities Act" shall have the meaning set forth in
the
recitals of this Agreement.
Section 1.30. "SEC Documents" shall mean Annual Reports on Form
10-KSB,
Quarterly Reports on Form 10-QSB, Current
Reports on Form 8-K and Proxy
Statements of the Company as supplemented
to the date hereof, filed by the
Company for a period of at least twelve
(12) months immediately preceding the
date hereof or the Advance Date, as the
case may be, until such time as the
Company no longer has an obligation to
maintain the effectiveness of a
Registration Statement as set forth in the
Registration Rights Agreement.
Section 1.31. "Trading Day" shall mean any day during which the
New
York Stock Exchange shall be open for
business.
Section 1.32. "VWAP" shall mean the volume weighted average price
of
the Company's Common Stock as quoted by
Bloomberg, LP.
ARTICLE II.
ADVANCES
Section 2.1. Investments.
(a) Advances. Upon the terms and conditions set forth herein
(including, without limitation, the
provisions of Article VII hereof), on any
Advance Notice Date the Company may request
an Advance by the Investor by the
delivery of an Advance Notice. The number
of shares of Common Stock that the
Investor shall receive for each Advance
shall be determined by dividing the
amount of the Advance by the Purchase
Price. No fractional shares shall be
issued. Fractional shares shall be rounded
to the next higher whole number of
shares. The aggregate maximum amount of all
Advances that the Investor shall be
obligated to make under this Agreement
shall not exceed the Commitment Amount.
Section 2.2. Mechanics.
(a) Advance Notice. At any time during the Commitment Period,
the Company may deliver an Advance Notice
to the Investor, subject to the
conditions set forth in Section 7.2;
provided, however, the amount for each
Advance as designated by the Company in the
applicable Advance Notice, shall not
be more than the
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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 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;
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(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 Ham, Langston &
Brezina, LLP as to its ability to provide
all consents required in order to file a
registration statement in connection
with this transaction; and
(i) The Company's transfer agent shall be DWAC eligible.
Section 2.6. Lock Up Period. On the date hereof, the Company
shall
obtain from each officer and director a
lock-up agreement, as defined below, in
the form annexed hereto as Schedule 2.6
agreeing to only sell in compliance with
the volume limitation of Rule 144.
Section 2.7. Hardship. In the event the Investor sells shares of
the
Company's Common Stock after receipt of an
Advance Notice and the Company fails
to perform its obligations as mandated in
Section 2.3, and specifically the
Company fails to deliver to the Escrow
Agent on the Advance Date the shares of
Common Stock corresponding to the
applicable Advance, the Company acknowledges
that the Investor shall suffer financial
hardship and therefore shall be liable
for any and all losses, commissions, fees,
or financial hardship caused to the
Investor.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor hereby represents and warrants to, and agrees with,
the
Company that the following are true and as
of the date hereof and as of each
Advance Date:
Section 3.1. Organization and Authorization. The Investor is
duly
incorporated or organized and validly
existing in the jurisdiction of its
incorporation or organization and has all
requisite power and authority to
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 and without any
view to the distribution, assignment or
resale to others or
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fractionalization in whole or in part. The
Investor agrees not to assign or in
any way transfer the Investor's rights to
the securities or any interest therein
and acknowledges that the Company will not
recognize any purported assignment or
transfer except in accordance with
applicable Federal and state securities laws.
No other person has or will have a direct
or indirect beneficial interest in the
securities. The Investor agrees not to
sell, hypothecate or otherwise transfer
the Investor's securities unless the
securities are registered under Federal and
applicable state securities laws or unless,
in the opinion of counsel
satisfactory to the Company, an exemption
from such laws is available.
Section 3.5. Accredited Investor. The Investor is an
"Accredited
Investor" as that term is defined in Rule
501(a)(3) of Regulation D of the
Securities Act.
Section 3.6. Information. The Investor and its advisors (and
its
counsel), if any, have been furnished with
all materials relating to the
business, finances and operations of the
Company and information it deemed
material to making an informed investment
decision. The Investor and its
advisors, if any, have been afforded the
opportunity to ask questions of the
Company and its management. Neither such
inquiries nor any other due diligence
investigations conducted by such Investor
or its advisors, if any, or its
representatives shall modify, amend or
affect the Investor's right to rely on
the Company's representations and
warranties contained in this Agreement. The
Investor understands that its investment
involves a high degree of risk. The
Investor is in a position regarding the
Company, which, based upon employment,
family relationship or economic bargaining
power, enabled and enables such
Investor to obtain information from the
Company in order to evaluate the merits
and risks of this investment. The Investor
has sought such accounting, legal and
tax advice, as it has considered necessary
to make an informed investment
decision with respect to this
transaction.
Section 3.7. Receipt of Documents. The Investor and its counsel
have
received and read in their entirety: (i)
this Agreement and the Exhibits annexed
hereto; (ii) all due diligence and other
information necessary to verify the
accuracy and completeness of such
representations, warranties and covenants;
(iii) the Company's Form 10-KSB for the
year ended September 30, 2004, Form
10-QSB for the period ended December 31,
2004 and Form 10-QSB for the period
ended March 31, 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.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as stated below, on the disclosure schedules attached
hereto
(the "Disclosure Schedules") 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 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 any related agreements and
assuming the execution and delivery
thereof and acceptance by the Investor
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
50,000,000 shares of Common Stock, par
value $0.001 per share and 5,000,000 shares
of Preferred Stock, par value $0.001
per share, of which 1,500,000 shares are
designated as Series 2000A Convertible
Preferred Stock and 500,000 shares are
designated as 2003A Preferred Stock. As
of the date hereof, 29,897,531 shares of
Common Stock and 1,763 shares of Series
2000A Convertible 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 Disclosure
Schedules. 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, or made available through the
SEC's website at http://www.sec.gov,
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.
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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 material 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 applicable to it.
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 or effect on or prior to the date
hereof 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
