STANDBY EQUITY DISTRIBUTION AGREEMENT

Distribution Agreement

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Title: STANDBY EQUITY DISTRIBUTION AGREEMENT
Governing Law: New Jersey Date: 12/14/2005
Law Firm: Wilson Sonsini Goodrich & Rosati

STANDBY EQUITY DISTRIBUTION AGREEMENT

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THIS AGREEMENT dated as of the 8th day of December 2005 (the "Agreement")

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between CORNELL CAPITAL PARTNERS, LP, a Delaware limited partnership (the

"Investor"), and ZANN CORP., a corporation organized and existing under the laws

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of the State of Nevada (the "Company").

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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

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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

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regulations promulgated thereunder (the "Securities Act"), and or upon such

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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

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Agent"), to act as the Company's exclusive placement agent in connection with

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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").

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NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I.

CERTAIN DEFINITIONS

Section 1.1. "Advance" shall mean the portion of the Commitment Amount

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that the Company shall sell to the Investor.

Section 1.2. "Advance Date" shall mean the first (1st) Trading Day

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after expiration of the applicable Pricing Period for each Advance.

Section 1.3. "Advance Notice" shall mean a written notice in the form

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of Exhibit A attached hereto to the Investor executed by an officer of the

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Company and setting forth the Advance amount that the Company requests from the

Investor.

Section 1.4. "Advance Notice Date" shall mean each date the Company

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delivers (in accordance with Section 2.2(b) of this Agreement) to the Investor

an Advance Notice requiring the Investor to advance funds to the Company,

subject to the terms of this Agreement.

Section 1.5. "Bid Price" shall mean, on any date, the closing bid price

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(as reported by Bloomberg L.P.) of the Common Stock on the Principal Market or

if the Common Stock is not

<PAGE>

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

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sale of Common Stock pursuant to Section 2.3.

Section 1.7. "Commitment Amount" shall mean the aggregate amount of up

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to Five Million Dollars ($5,000,000) 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

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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 2.4, 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

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value $0.001 per share.

Section 1.10. "Condition Satisfaction Date" shall have the meaning set

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forth in Section 7.2.

Section 1.11. "Damages" shall mean any loss, claim, damage, liability,

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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

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first declares effective a Registration Statement registering the resale of the

Registrable Securities as set forth in Section 7.2(a).

Section 1.13 "Exchange Act" shall mean the Securities Exchange Act of

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1934, as amended, and the rules and regulations promulgated thereunder.

Section 1.14 "Knowledge" shall mean the actual knowledge of the

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Chairman - Chief Executive Officer and the Chief Financial Officer of the

Company.

Section 1.13. "Losses" shall mean any and all actions, causes of

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action, suits, claims, losses, costs and expenses (including reasonable

attorneys' fees and disbursements), penalties, fees, liabilities and damages.

Section 1.14. "Material Adverse Effect" means any continuing effect on

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the business, operations, properties or financial condition of the Company and

its consolidated subsidiaries that is material and adverse to the Company and

such subsidiaries, taken as a whole, and/or any condition, circumstance, or

situation that would prohibit or otherwise interfere with the ability of the

Company to perform any of its obligations under this Agreement, the Registration

Rights Agreement or the Warrant in any material respect; provided, that none of

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the following shall

<PAGE>

constitute a "Material Adverse Effect": (i) any changes or effects resulting

from the announcement or consummation of the transactions contemplated by this

Agreement, including, without limitation, any changes or effects associated with

any particular Advance, and (ii) changes in the market price of the Common

Stock.

Section 1.15. "Market Price" shall mean the lowest closing Bid Price of

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the Common Stock during the Pricing Period.

Section 1.16. "Maximum Advance Amount" shall be Two Hundred Fifty

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Thousand Dollars ($250,000) per Advance Notice.

Section 1.17. "NASD" shall mean the National Association of Securities

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Dealers, Inc.

Section 1.18. "Person" shall mean an individual, a corporation, a

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partnership, an association, a trust or other entity or organization, including

a government or political subdivision or an agency or instrumentality thereof.

Section 1.19. "Placement Agent" shall mean Monitor Capital, Inc., a

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registered broker-dealer.

Section 1.20. "Pricing Period" shall mean the five (5) consecutive

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Trading Days after the Advance Notice Date.

Section 1.21. "Principal Market" shall mean the Nasdaq National Market,

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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 1.22. "Purchase Price" shall be set at ninety five percent

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(95%) of the Market Price during the Pricing Period.

Section 1.23. "Register," "registered," and "registration" refer to a

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registration effected by preparing and filing one or more Registration

Statements (as defined below) in compliance with the Securities Act and pursuant

to Rule 415 under the Securities Act or any successor rule providing for

offering securities on a continuous or delayed basis ("Rule 415"), and the

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declaration or ordering of effectiveness of such Registration Statement(s) by

the SEC.

Section 1.24. "Registrable Securities" means (i) the shares of Common

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Stock issued to the Investor pursuant to this Agreement, (ii) the Warrant

Shares, and (iii) any securities issued or issuable with respect to any of the

foregoing by way of exchange, stock dividend or stock split or in connection

with a combination of shares, recapitalization, merger, consolidation or other

reorganization or otherwise. As to any particular Registrable Securities, once

issued such securities shall cease to be Registrable Securities when (w) the

Registration Statement has been declared effective by the SEC and such

Registrable Securities have been disposed of pursuant to the Registration

Statement, (x) such Registrable Securities have been sold under circumstances

under which all of the applicable conditions of Rule 144 (or any similar

provision then in force) under the Securities Act ("Rule 144") are met, (y) such

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time as such Registrable Securities have been otherwise transferred to holders

who may trade such shares without restriction under the

<PAGE>

Securities Act, and the Company has delivered a new certificate or other

evidence of ownership for such securities not bearing a restrictive legend or

(z) such Registrable Securities may be sold without registration and without

any time, volume or manner limitations pursuant to Rule 144(k) (or any similar

provision then in effect) under the Securities Act.

Section 1.25. "Registration Rights Agreement" shall mean the

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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

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statement on Form 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

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recitals of this Agreement.

Section 1.28. "SEC" shall mean the Securities and Exchange Commission.

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Section 1.29. "Securities Act" shall have the meaning set forth in the

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recitals of this Agreement.

Section 1.30. "SEC Documents" shall mean Annual Reports on Form 10-KSB,

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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 since December 1, 2004.

Section 1.31. "Trading Day" shall mean any day during which the New

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York Stock Exchange shall be open for business.

Section 1.32. "Transaction Documents" shall mean, collectively, this

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Agreement, the Warrant, the Registration Rights Agreement, the Placement Agent

Agreement and the exhibits and schedules annexed thereto. .

Section 1.33. "Warrant" shall mean the Warrant to Purchase 4,000,000

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shares of Company Common Stock, dated as of even date herewith, which shall,

inter alia, be for a term of four (4) years, and have an exercise price equal to

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$0.0388.

Section 1.34. "Warrant Shares" shall mean the 4,000,000 shares of

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Common Stock underlying the Warrant.

<PAGE>

ARTICLE II.

ADVANCES

Section 2.1. Advances.

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Upon the terms and conditions set forth herein (including, without

limitation, the provisions of Article VII hereof), 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 purchase pursuant to 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.

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(a) Advance Notice. At any time during the Commitment Period, the

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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 after 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

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be deemed delivered on (i) the Trading Day it is received by facsimile or

otherwise by the Investor if such notice is received prior to 5:00 pm Eastern

Time, or (ii) the immediately succeeding Trading Day if it is received by

facsimile or otherwise after 5:00 pm Eastern Time on a Trading Day or at any

time on a day which is not a Trading Day. No Advance Notice may be deemed

delivered on a day that is not a Trading Day.

Section 2.3. Closings. On each Advance Date (i) the Company shall

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deliver to the Investor such number of shares of the Company's Common Stock

registered in the name of the Investor as shall equal (x) the amount of the

Advance specified in such Advance Notice pursuant to Section 2.1 herein divided

by (y) the Purchase Price and (ii) the Investor shall deliver to the Company the

amount of the Advance specified in the Advance Notice by wire transfer of

immediately available funds. In addition, on or prior to the Advance Date, each

of the Company and the Investor shall deliver to the other 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. The extent the Company has not paid the fees, expenses, and

disbursements of the Investor 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) directly out of the proceeds of the Advance

with no reduction in the amount of shares of the Company's Common Stock to be

delivered on such Advance Date.

<PAGE>

Section 2.4. Termination of Investment. The obligation of the Investor

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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, Yorkville

Advisors, LLC, or any of their respective affiliates, agents or reprenetatives,

during the Commitment Period, or (ii) the Company shall at any time fail

materially to comply with the requirements of Article VI and such failure is not

cured within thirty (30) days after receipt of written notice thereof from the

Investor, provided, however, that this termination provision shall not apply to

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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

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advance the amount specified in the Advance Notice to the Company on the Advance

Date provided that the following conditions shall have been satisfied or waived

by the Investor:

(a) the execution and delivery by the Company, and the Investor,

of this Agreement and the Exhibits hereto;

(b) The Company shall have delivered to the Investor the shares of

Common Stock and certificates representing such shares of Common Stock, which

shall be free of all restrictive legends, applicable to the Advance, as

determined pursuant to Section 2.3;

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,

and the sale and issuance of the Registrable Securities shall be to the

Company's Knowledge legally permitted by all laws and regulations to which the

Company is subject;

(e) the Company shall have filed with the Commission in a timely

manner all reports, notices and other documents required of a "reporting

company" under the Exchange Act and applicable Commission regulations;

(f) the fees as set forth in Section 12.4 a(i), b, and c(ii) of

this Agreement shall have been paid or shall be deemed paid if withheld as

provided in Section 2.3; and

(g) the conditions set forth in Section 7.2 shall have been

satisfied.

(h) the Company shall have provided to the Investor an

acknowledgement, from the Company's independent certified public accountants as

to its ability to provide all consents required in order to file a registration

statement in connection with this transaction;

(i) The Company's transfer agent shall be DWAC eligible.

<PAGE>

Section 2.6. Lock Up Period. On the date hereof, the Company shall

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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

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Company's Common Stock after receipt of an Advance Notice and the Company fails

to deliver to the Investor 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 the Company shall be

liable to the Investor for the lesser of (x) the amount of any and all Losses

incurred by Investor as a result of the Company's failure to deliver the shares

of Common Stock, and (y) $5,000,000. The parties acknowledge and agree that

this Section 2.7 shall not expand the Company's indemnification and contribution

obligations set forth in Section 5.1 below.

ARTICLE III.

REPRESENTATIONS, WARRANTIES, AND COVENANTS OF INVESTOR

Investor hereby represents and warrants to, and agrees with, the Company

that the following are true and correct as of the date hereof and as of each

Advance Date:

Section 3.1. Organization and Authorization. The Investor is duly

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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, constitutes a valid and binding

obligation of the Investor enforceable against the Investor in accordance with

its terms, except as such enforceability may be limited by applicable

bankruptcy, securities, insolvency, or similar laws relating to, or affecting

generally the enforcement of creditors' rights and remedies, or indemnification

or by other equitable principles of general application.

Section 3.2. Evaluation of Risks. The Investor has such knowledge and

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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 and can withstand the effects of a loss of its entire

investment in the Company.

Section 3.3. No Legal Advice From the Company. The Investor

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acknowledges that it had the opportunity to review this Agreement and the

transactions contemplated by this Agreement with its own legal counsel and

investment and tax advisors. The Investor is relying

<PAGE>

solely on such counsel and advisors and not on any statements or representations

of the Company, its legal counsel, 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 shares of Common Stock, Warrant

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and Warrant Shares being purchased in the transactions contemplated herein are

being purchased by the Investor for its own account, and solely for investment

purposes. The Investor hereby agrees not to assign or in any way transfer the

Investor's rights to such shares of Common Stock, Warrant and Warrant Shares or

any interest therein and acknowledges that the Company will not recognize any

purported assignment or transfer except in accordance with applicable Federal,

state and foreign 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

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Investor" as that term is defined in Rule 501(a)(3) of Regulation D of the

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Securities Act.

Section 3.6. Information. The Company has made available to the

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Investor and its advisors (including its legal counsel), if any, the materials

relating to the business, finances and operations of the Company requested by

them. The Investor and its advisors, if any, have been afforded the opportunity

to ask questions of the Company and its management. The Investor has reviewed

all information it has deemed material to making an informed investment decision

with respect to the Investor's investment in the shares of Common Stock, Warrant

and Warrant Shares contemplated herein. Neither such inquiries nor any other

due diligence investigations conducted by such Investor or its advisors or its

representatives, if any, shall modify, amend or affect the Investor's right to

rely on the Company's representations and warranties contained in this

Agreement. 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 legal counsel

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have reviewed in their entirety: (i) each of the Transaction Documents to which

it is a party; (ii) all due diligence and other information the Investor has

deemed necessary in order to make an informed investment decision with respect

to Investor's investment in the shares of Common Stock, Warrant and Warrant

Shares contemplated herein; (iii) the Company's Form 10-KSB for the year ended

December 31, 2004 and Form 10-QSB for the period ended June 30, 2005; and (iv)

answers to all questions the Investor submitted to the Company regarding an

investment in the Company; and the Investor has relied on the information

contained therein and has not been furnished any other documents, literature,

memorandum or prospectus.

Section 3.8. Registration Rights Agreement. The parties have entered

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into the Registration Rights Agreement dated the date hereof.

<PAGE>

Section 3.9. No General Solicitation. Neither the Company, nor any of

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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 securities contemplated herein.

Section 3.10. Not an Affiliate. The Investor is not an officer,

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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

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405 of the Securities Act).

Section 3.11. Trading Activities and Restrictions. The Investor

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covenants that neither the Investor, nor any entity managed or controlled by the

Investor, nor any of their respective affiliates, will, or cause or assist any

Person to enter into or execute any "short sale" (including, without limitation,

as such term is defined in Rule 200 of Regulation SHO promulgated by the SEC

under the Securities Exchange Act of 1934, as amended) with respect to any

securities of the Company or any similar transaction with similar effect. 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.

Section 3.12. Warrant. The Company has issued the Warrant to the

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Investor as of the date hereof.

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

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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

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Instruments. (i) The Company has the requisite corporate power and authority to

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enter into and perform each of the Transaction Documents to which it is a party,

in accordance with the terms thereof, (ii) the execution and delivery of each

such Transaction Document by the Company and the consummation by it of the

transactions contemplated therein, 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) each such Transaction

Document has been duly executed and delivered by the Company, (iv) assuming the

execution and delivery thereof and acceptance by the Investor each such

Transaction Document and any related

<PAGE>

agreements constitute a valid and binding obligation of the Company enforceable

against the Company in accordance with its terms, except as such enforceability

may be limited by applicable bankruptcy, securities insolvency, or similar laws

relating to, or affecting generally, the enforcement of creditors' rights and

remedies or indemnification or by other equitable principles of general

application.

Section 4.3. Capitalization. The authorized capital stock of the

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Company consists of (a) 4,000,000,000 shares of Common Stock, of which

31,645,359 shares are issued and outstanding as of December 2, 2005, and (b)

350,000,000 shares of Preferred Stock, $0.001 par value per share ("Preferred

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Stock"), of which (i) 2,447,700 are issued and outstanding as Series A Preferred

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Stock as of December 2, 2005, (ii) 293,501 are issued and outstanding as Series

B Preferred Stock as of December 2, 2005, and (iii) 10,000,000 are issued and

outstanding as Series C Preferred Stock as of December 2, 2005. All of such

outstanding shares have been validly issued and are fully paid and

nonassessable. Except as contemplated in the Transaction Documents or disclosed

in the SEC Documents, as of the date hereof, 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 contemplated in

the Transaction Documents or 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. There are no securities or instruments containing anti-dilution or similar

provisions that will be triggered by any of the Transaction Documents or the

consummation of the transactions described herein or therein. The Company has

made available 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

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the date hereof (the "By-laws"), and the terms of all securities convertible

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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

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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

<PAGE>

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, except to the extent such violation or default would not

constitute a Material Adverse Effect, 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. To

the Company's Knowledge, the b

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