Exhibit 10.2

 

PLACEMENT AGENCY AGREEMENT

 

August 5, 2020

 

Roth Capital Partners, LLC

888 San Clemente Drive, Suite 400

Newport Beach, CA 92660

 

Ladies and Gentlemen:

 

Introduction. Subject to the terms and conditions herein (this “Agreement”),
Quest Resource Holding Corporation, a Nevada corporation (the “Company”), hereby
agrees to sell up to an aggregate of $3,392,500 of registered shares (the
“Shares”) of the Company’s common stock, $0.001 par value per share (the "Common
Stock”), directly to various investors (each, an “Investor” and, collectively,
the “Investors”) through Roth Capital Partners, LLC, as placement agent (the
“Placement Agent”). The documents executed and delivered by the Company and the
Investors in connection with the Offering (as defined below), including, without
limitation, a securities purchase agreement (the “Purchase Agreement”), shall be
collectively referred to herein as the “Transaction Documents.” The purchase
price to the Investors for each Share is $1.15. The Placement Agent may retain
other brokers or dealers to act as sub-agents or selected-dealers on its behalf
in connection with the Offering.

 

The Company hereby confirms its agreement with the Placement Agent as follows:

 

Section 1.                  Agreement to Act as Placement Agent.

 

(a)                On the basis of the representations, warranties and
agreements of the Company herein contained, and subject to all the terms and
conditions of this Agreement, the Placement Agent shall be the exclusive
Placement Agent in connection with the offering and sale by the Company of the
Shares pursuant to the Company's registration statement on Form S-3 (File No.
333-227800) (the “Registration Statement”), with the terms of such offering (the
“Offering”) to be subject to market conditions and negotiations between the
Company, the Placement Agent and the prospective Investors. The Placement Agent
will act on a reasonable best efforts basis and the Company agrees and
acknowledges that there is no guarantee of the successful placement of the
Securities, or any portion thereof, in the prospective Offering. Under no
circumstances will the Placement Agent or any of its “Affiliates” (as defined
below) be obligated to underwrite or purchase any of the Shares for its own
account or otherwise provide any financing. The Placement Agent shall act solely
as the Company’s agent and not as principal. The Placement Agent shall have no
authority to bind the Company with respect to any prospective offer to purchase
Shares and the Company shall have the sole right to accept offers to purchase
Shares and may reject any such offer, in whole or in part. Subject to the terms
and conditions hereof, payment of the purchase price for, and delivery of, the
Securities shall be made at one or more closings (each a “Closing” and the date
on which each Closing occurs, a “Closing Date”). As compensation for services
rendered, on each Closing Date, the Company shall pay to the Placement Agent the
fees and expenses set forth below:

 

(i)                 A cash fee equal to 6% of the gross proceeds received by the
Company from the sale of the Securities at the closing of the Offering (the
“Closing”).

 

 

(ii)               The Company also agrees to reimburse Placement Agent’s
expenses (with supporting invoices/receipts) of $50,000 payable immediately upon
the Closing of the Offering.

 

(b)                The term of the Placement Agent's exclusive engagement will
be until the completion of the Offering (the “Exclusive Term”); provided,
however, that a party hereto may terminate the engagement with respect to itself
at any time upon 10 days written notice to the other parties. Notwithstanding
anything to the contrary contained herein, the provisions concerning
confidentiality, indemnification and contribution contained herein and the
Company’s obligations contained in the indemnification provisions will survive
any expiration or termination of this Agreement, and the Company’s obligation to
pay fees actually earned and payable and to reimburse expenses actually incurred
and reimbursable pursuant to Section 1 hereof and which are permitted to be
reimbursed under Financial Industry Regulatory Authority (“FINRA”) Rule
5110(f)(2)(D), will survive any expiration or termination of this Agreement.
Nothing in this Agreement shall be construed to limit the ability of the
Placement Agent or its Affiliates to pursue, investigate, analyze, invest in, or
engage in investment banking, financial advisory or any other business
relationship with Persons (as defined below) other than the Company. As used
herein (i) “Persons” means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind and (ii) “Affiliate” means any Person that, directly
or indirectly through one or more intermediaries, controls or is controlled by
or is under common control with a Person as such terms are used in and construed
under Rule 405 under the Securities Act of 1933, as amended (the “Securities
Act”).

 

Section 2.                  Representations, Warranties and Covenants of the
Company. Except as set forth in the SEC Reports (as defined below), the Company
hereby represents, warrants and covenants to the Placement Agent as of the date
hereof, and as of each Closing Date, as follows:

 

(a)                Securities Law Filings. The Company has filed with the
Securities and Exchange Commission (the “Commission”) the Registration Statement
under the Securities Act, which was filed on March 15, 2019 and declared
effective on April 8, 2019 for the registration of the Shares under the
Securities Act. Following the determination of pricing among the Company and the
prospective Investors introduced to the Company by Placement Agent, the Company
will file with the Commission pursuant to Rules 430A and 424(b) under the
Securities Act, and the rules and regulations (the “Rules and Regulations”) of
the Commission promulgated thereunder, a final prospectus supplement relating to
the placement of the Shares, their respective pricings and the plan of
distribution thereof and will advise the Placement Agent of all further
information (financial and other) with respect to the Company required to be set
forth therein. Such registration statement, at any given time, including the
exhibits thereto filed at such time, as amended at such time, is hereinafter
called the “Registration Statement”; such prospectus in the form in which it
appears in the Registration Statement at the time of effectiveness, together
with any preliminary prospectus supplement relating to the Offering, is
hereinafter called the “Base Prospectus”; the preliminary prospectus supplement
in the form in which it was filed with the Commission pursuant to Rule 424(b) is
hereinafter called the “Preliminary Prospectus Supplement”; and the final
prospectus supplement, in the form in which it will be filed with the Commission
pursuant to Rule 424(b) (including the Base Prospectus as it may be amended or
supplemented) is hereinafter called the “Final Prospectus.” The Registration
Statement at the time it originally became effective is hereinafter called the
“Original Registration Statement.” Any reference in this Agreement to the
Registration Statement, the Original Registration Statement, the Base
Prospectus, the Preliminary Prospectus Supplement or the Final Prospectus shall
be deemed to refer to and include the documents incorporated by reference
therein (the “Incorporated Documents”), if any, which were or are filed under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), at any
given time, as the case may be; and any reference in this Agreement to the terms
“amend,” “amendment” or “supplement” with respect to the Registration Statement,
the Original Registration Statement, the Base Prospectus, the Preliminary
Prospectus Supplement or the Final Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the date of this
Agreement, or the issue date of the Base Prospectus, the Preliminary Prospectus
Supplement or the Final Prospectus, as the case may be, deemed to be
incorporated therein by reference. All references in this Agreement to financial
statements and schedules and other information which is “contained,” “included,”
“described,” “referenced,” “set forth” or “stated” in the Registration
Statement, the Base Prospectus, the Preliminary Prospectus Supplement or the
Final Prospectus (and all other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in the
Registration Statement, the Base Prospectus, the Preliminary Prospectus
Supplement or the Final Prospectus, as the case may be. As used in this
paragraph and elsewhere in this Agreement, “Time of Sale Disclosure Package”
means the Base Prospectus, any preliminary prospectus supplement, any
subscription agreement between the Company and the Investors, and any issuer
free writing prospectus as defined in Rule 433 of the Act (each, an “Issuer Free
Writing Prospectus”), if any, that the parties hereto shall hereafter expressly
agree in writing to treat as part of the Time of Sale Disclosure Package. The
term “any Prospectus” shall mean, as the context requires, the Base Prospectus,
the Final Prospectus, and any supplement to either thereof. The Company has not
received any notice that the Commission has issued or intends to issue a stop
order suspending the effectiveness of the Registration Statement or the use of
the Base Prospectus or any Prospectus Supplement or intends to commence a
proceeding for any such purpose.

 

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(b)                Assurances. The Original Registration Statement, as amended,
(and any further documents to be filed with the Commission) contains all
exhibits and schedules as required by the Securities Act. Each of the
Registration Statement and any post-effective amendment thereto, at the time it
became effective, complied in all material respects with the Securities Act and
the applicable Rules and Regulations and did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading. The Base Prospectus,
and the Final Prospectus, each as of its respective date, comply or will comply
in all material respects with the Securities Act and the applicable Rules and
Regulations. Each of the Base Prospectus and the Final Prospectus, as amended or
supplemented, did not and will not contain as of the date thereof any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The Incorporated Documents, when they were filed with
the Commission, conformed in all material respects to the requirements of the
Exchange Act and the applicable Rules and Regulations promulgated thereunder,
and none of such documents, when they were filed with the Commission, contained
any untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein (with respect to Incorporated Documents
incorporated by reference in the Base Prospectus or Final Prospectus), in light
of the circumstances under which they were made not misleading. No
post-effective amendment to the Registration Statement reflecting any facts or
events arising after the date thereof which represent, individually or in the
aggregate, a fundamental change in the information set forth therein is required
to be filed with the Commission. Except for this Agreement, there are no
documents required to be filed with the Commission in connection with the
transaction contemplated hereby that (x) have not been filed as required
pursuant to the Securities Act or (y) will not be filed within the requisite
time period. Except for this Agreement, there are no contracts or other
documents required to be described in the Base Prospectus or Final Prospectus,
or to be filed as exhibits or schedules to the Registration Statement, which
have not been described or filed as required.

 

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(c)                Certain Statements. The statements set forth in the
Registration Statement, the Time of Sale Disclosure Package and the Final
Prospectus under the captions “Description of Common Stock”, insofar as they
purport to constitute a summary of (i) the terms of the Company’s outstanding
securities, (ii) the terms of the Shares, (iii) the terms of the documents
referred to therein, and (iv) the provisions of the laws referred to therein,
are accurate, complete and fair in all material respects.

 

(d)                Subsidiaries. All of the direct and indirect subsidiaries of
the Company (the “Subsidiaries”) are set forth in the Incorporated Documents.
The Company owns, directly or indirectly, all of the capital stock or other
equity interests of each Subsidiary free and clear of any liens, charges,
security interests, encumbrances, rights of first refusal, preemptive rights or
other restrictions (collectively, “Liens”), and all of the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.

 

(e)                Organization and Qualification. The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation nor default of
any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not result in: (i) a material adverse effect
on the legality, validity or enforceability of this Agreement or any other
agreement entered into between the Company and the Investors, (ii) a material
adverse effect on the results of operations, assets, business, or financial
condition of the Company and the Subsidiaries, taken as a whole, or (iii) a
material adverse effect on the Company’s ability to perform in any material
respect on a timely basis its obligations under this Agreement or the
transactions contemplated under the Prospectus Supplement (any of (i), (ii) or
(iii), a “Material Adverse Effect”) and no an action, claim, suit, investigation
or proceeding (including, without limitation, an informal investigation or
partial proceeding, such as a deposition), whether commenced or threatened
(“Proceeding”) has been instituted in any such jurisdiction revoking, limiting
or curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.

 

(f)                 Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and the Time of Sale Disclosure Package and
otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of each of this Agreement by the Company and the consummation by it
of the transactions contemplated hereby and thereby and under the Base
Prospectus have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, the Company’s Board of
Directors (the “Board of Directors”) or the Company’s stockholders in connection
therewith other than in connection with the Required Approvals (as defined
below). This Agreement has been duly executed by the Company and, when delivered
in accordance with the terms hereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

 

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(g)                No Conflicts. The execution, delivery and performance by the
Company of this Agreement and the transactions contemplated pursuant to the Time
of Sale Disclosure Package, the issuance and sale of the Shares and the
consummation by it of the transactions contemplated hereby and thereby to which
it is a party do not and will not (i) conflict with or violate any provision of
the Company’s or any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, (ii) conflict with, result
in any violation or breach of, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any right of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) (a “Default Acceleration Event”) of, any
agreement, lease, credit facility, debt, note, bond, mortgage, indenture or
other instrument (the “Contracts”) or obligation to which the Company or any
subsidiary is a party or by which any property or asset of the Company or any
subsidiary is bound or affected or (iii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the properties or assets
of the Company or any Subsidiary, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to
which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iv) subject to the
Required Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected; except in
the case of each of clauses (ii), (iii) and (iv), such as would not result in a
Material Adverse Effect.

 

(h)                Filings, Consents and Approvals. The Company is not required
to obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of this Agreement and the
transactions contemplated pursuant to the Base Prospectus, other than: (i) the
filing with the Commission of the Final Prospectus, (ii) application(s) to the
Nasdaq Capital Market (the “Trading Market”) for the listing of the Shares for
trading thereon in the time and manner required thereby, (iii) such filings as
are required to be made under applicable state securities laws and the rules of
the FINRA and (iv) such consents, approvals, orders, authorizations and filings
the failure of which to make or obtain would not have a Material Adverse Effect
(collectively, the “Required Approvals”).

 

(i)                 Issuance of the Shares; Registration. The Shares are duly
authorized and, when issued and paid for in accordance with the Final
Prospectus, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company. The Company has reserved from its
duly authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to the Final Prospectus.

 

(j)                 Capitalization. The Company has an authorized capitalization
as set forth in the Registration Statement, the Time of Sale Disclosure Package
and the Final Prospectus. All of the issued and outstanding shares of capital
stock of the Company (including the Shares) are duly authorized and validly
issued, fully paid and nonassessable, and have been issued in compliance with
all applicable securities laws, and conform to the description thereof in the
Registration Statement, the Time of Sale Disclosure Package and the Final
Prospectus. All of the issued shares of capital stock of each subsidiary of the
Company have been duly and validly authorized and issued, are fully paid and
non-assessable and, except as set forth in the Registration Statement, the Time
of Sale Disclosure Package and the Final Prospectus, are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances, equities
or claims. Except for the issuances of options or restricted stock in the
ordinary course of business, since the respective dates as of which information
is provided in the Registration Statement, the Time of Sale Disclosure Package
or the Final Prospectus, the Company has not entered into or granted any
convertible or exchangeable securities, options, warrants, agreements, contracts
or other rights in existence to purchase or acquire from the Company any shares
of the capital stock of the Company. The Shares, when issued and paid for as
provided herein, will be duly authorized and validly issued, fully paid and
nonassessable, will be issued in compliance with all applicable securities laws,
and will be free of preemptive, registration or similar rights and will conform
to the description of the capital stock of the Company contained in the
Registration Statement, the Time of Sale Disclosure Package and the Final
Prospectus.

 

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(k)                Stock Options; Other Securities. Except as disclosed in the
Registration Statement, the Time of Sale Disclosure Package or the Final
Prospectus, and except for the issuance of shares upon the exercise of
outstanding options or warrants, or upon the issuance of restricted stock
awards, restricted stock units, or stock appreciation rights under the Company’s
existing stock awards plan, or any new grants thereof in the ordinary course of
business, there are no authorized or outstanding convertible or exchangeable
securities, options, warrants, agreements, contracts or other rights in
existence to purchase or acquire from the Company or any subsidiary any shares
of the capital stock of the Company or any subsidiary. The description of the
Company’s stock option, stock bonus and other stock plans or arrangements and
the options, restricted stock, performance-based restricted stock units, stock
appreciation rights, or other rights granted thereunder, set forth in the Time
of Sale Disclosure Package and the Final Prospectus accurately and fairly
presents in all material respects the information required to be shown with
respect to such plans, arrangements, options and rights.

 

(l)                 SEC Reports; Financial Statements. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by the Company under the Securities Act and the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof
(or such shorter period as the Company was required by law or regulation to file
such material) (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, together with the Prospectus and
any prospectus supplement, being collectively referred to herein as the “SEC
Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act, as applicable, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
Company has never been an issuer subject to Rule 144(i) under the Securities
Act. The financial statements of the Company included in the SEC Reports comply
in all material respects with applicable accounting requirements and the rules
and regulations of the Commission with respect thereto as in effect at the time
of filing. Such financial statements have been prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis during the periods involved (“GAAP”), except as may be otherwise specified
in such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments.

 

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(m)              Material Changes. Except as disclosed in the Registration
Statement, the Time of Sale Disclosure Package or the Final Prospectus, since
the respective dates as of which information is given (including information
incorporated by reference) in the Registration Statement, Time of Sale
Disclosure Package, or Final Prospectus, (i) neither the Company nor any of its
subsidiaries has incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions other than in the ordinary
course of business, (ii) the Company has not declared or paid any dividends or
made any distribution of any kind with respect to its capital stock; (iii) there
has not been any change in the capital stock of the Company or any of its
subsidiaries (other than a change in the number of outstanding shares of Common
Stock due to the issuance of shares upon the exercise of outstanding options or
warrants, upon the conversion of outstanding shares of preferred stock or other
convertible securities or upon the issuance of restricted stock awards,
restricted stock units, or stock appreciation rights under the Company’s
existing stock awards plan, or any new grants thereof in the ordinary course of
business), (iv) there has not been any material change in the Company’s
long-term or short-term debt, and (v) there has not been the occurrence of any
Material Adverse Effect.

 

(n)                No Undisclosed Contracts; Descriptions of Contracts. There is
no Contract required by the Securities Act to be described in the Registration
Statement, the Time of Sale Disclosure Package or in the Final Prospectus or to
be filed as an exhibit to the Registration Statement which is not so described
or filed therein as required. All descriptions of any such Contracts or
documents contained or incorporated by reference in the Registration Statement,
the Time of Sale Disclosure Package and the Final Prospectus are accurate and
complete descriptions of such documents in all material respects. Other than as
described in the Registration Statement, the Time of Sale Disclosure Package and
the Final Prospectus, no such Contract has been suspended or terminated for
convenience or default by the Company, its subsidiaries, or any of the other
parties thereto, and neither the Company nor its subsidiaries has received
notice, or has knowledge, of any such pending or threatened suspension or
termination, except for such pending or threatened suspensions or terminations
that would not have a Material Adverse Effect.

 

(o)                No Undisclosed Relationships. No relationship, direct or
indirect, exists between or among the Company or any of its subsidiaries on the
one hand, and the directors, officers, stockholders (or analogous interest
holders), customers or suppliers of the Company or any of its subsidiaries on
the other hand, which is required to be described in the Registration Statement,
the Time of Sale Disclosure Package or the Final Prospectus and which is not so
described.

 

(p)                Absence of Proceedings. Except as disclosed in the
Registration Statement, the Time of Sale Disclosure Package or the Final
Prospectus, there is no pending or, to the knowledge of the Company, threatened
action, suit or proceeding to which the Company or any of its subsidiaries is a
party or of which any property or assets of the Company or any of its
subsidiaries is the subject before or by any arbitrator, court, governmental
body, regulatory body, administrative agency or other authority, body or agency
(whether foreign or domestic) having jurisdiction over the Company or its
subsidiaries or any of their respective properties, assets or operations (a
“Governmental Entity”) which would have a Material Adverse Effect.

 

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(q)                Employment Matters. There is no unfair labor practice
complaint pending against the Company or its subsidiaries, nor to the Company’s
knowledge, threatened against it, before the National Labor Relations Board, any
state or local labor relation board or any foreign labor relations board, and no
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or its subsidiaries, or,
to the Company’s knowledge, threatened against the Company or its subsidiaries.
No labor dispute or disturbance with the employees of the Company, employees of
the Company’s subsidiaries, or, to the actual knowledge of the Company, material
subcontractors of the Company or its subsidiaries exists or, to the knowledge of
the Company, is threatened or imminent, in each case that would have a Material
Adverse Effect. The Company is not aware that any key employee or significant
group of employees of the Company plans to terminate employment with the
Company.

 

(r)                 ERISA Compliance. No “prohibited transaction” (as defined in
Section 406 of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder (“ERISA”), or
Section 4975 of the Internal Revenue Code of 1986, as amended from time to time
(the “Code”)) or “accumulated funding deficiency” (as defined in Section 302 of
ERISA) or any of the events set forth in Section 4043(b) of ERISA (other than
events with respect to which the thirty (30)-day notice requirement under
Section 4043 of ERISA has been waived) has occurred or could reasonably be
expected to occur with respect to any employee benefit plan of the Company or
any of its subsidiaries which would have a Material Adverse Effect. Each
employee benefit plan of the Company or any of its subsidiaries is in compliance
with applicable law, including ERISA and the Code, except where the failure to
comply would not have a Material Adverse Effect. The Company and its
subsidiaries have not incurred and could not reasonably be expected to incur
liability under Title IV of ERISA with respect to the termination of, or
withdrawal from, any pension plan (as defined in ERISA). Each pension plan for
which the Company or any of its subsidiaries would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified, and
to the Company’s knowledge nothing has occurred, whether by action or by failure
to act, which could, singularly or in the aggregate, cause the loss of such
qualification.

 

(s)                 Compliance. Neither the Company nor any Subsidiary: (i) is
in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any judgment, decree or order of any court, arbitrator or
governmental authority or (iii) is or has been in violation of any statute,
rule, ordinance or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case would not result in
a Material Adverse Effect.

 

(t)                 Environmental Laws. The Company and its subsidiaries are in
compliance with all foreign, federal, state and local rules, laws and
regulations relating to the use, treatment, storage and disposal of hazardous or
toxic substances or waste and protection of health and safety or the environment
which are applicable to their businesses, except where the failure to comply
would not have a Material Adverse Effect. To the Company’s knowledge, there has
been no storage, generation, transportation, handling, treatment, disposal,
discharge, emission, or other release of any kind of toxic or other wastes or
other hazardous substances by, due to, or caused by the Company or any of its
subsidiaries (or, to the Company’s knowledge, any other entity for whose acts or
omissions the Company or any of its subsidiaries is or may otherwise be liable)
upon any of the properties now or previously owned or leased by the Company or
any of its subsidiaries, or upon any other property, in violation of any law,
statue, ordinance, rule, regulation, order, judgment, decree or permit or which
would, under any law, statute, ordinance, rule (including rule of common law),
regulation, order, judgment, decree or permit, give rise to a liability, except
for any violation or liability which would not have a Material Adverse Effect.

 

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(u)                Permits. The Company and each of its subsidiaries holds, and
is in compliance with, all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates and orders (“Permits”) of any
Governmental Entity required for the conduct of its business, and all such
Permits are in full force and effect, in each case except where the failure to
hold, or comply with, any of them would not have a Material Adverse Effect.

 

(v)                Title to Assets. The Company and each of its subsidiaries
have good and marketable title to all property (whether real or personal)
described in the Registration Statement, the Time of Sale Disclosure Package,
and the Final Prospectus as being owned by them that are material to the
business of the Company, in each case free and clear of all liens, claims,
security interests, other encumbrances or defects, except those that are
disclosed in the Registration Statement, the Time of Sale Disclosure Package and
the Final Prospectus or as would not have a Material Adverse Effect. The
property held under lease by the Company and its subsidiaries is held by them
under valid, subsisting and enforceable leases with only such exceptions with
respect to any particular lease as do not interfere in any material respect with
the conduct of the business of the Company and its subsidiaries.

 

(w)              Intellectual Property. Except as disclosed in the Registration
Statement, the Time of Sale Disclosure Package or the Final Prospectus, the
Company and its subsidiaries own or have valid, binding and enforceable licenses
(subject to field of use and other terms and conditions contained in the
applicable license agreements) for the patents and patent applications,
copyrights, trademarks, trademark registrations, service marks, service mark
registrations, trade names, service names and know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and all other technology and intellectual
property rights that (1) are described in the Registration Statement, the Time
of Sale Disclosure Package, and the Final Prospectus as owned by or licensed to
the Company or its subsidiaries or (2) to the Company’s knowledge, are necessary
for, or used in the conduct, or the proposed conduct, of the business of the
Company and its subsidiaries in the manner described in the Registration
Statement, the Time of Sale Disclosure Package, and the Final Prospectus
(collectively, the “Company Intellectual Property”). Except as disclosed in the
Registration Statement, the Time of Sale Disclosure Package or the Final
Prospectus, (A) the intellectual property owned by the Company or any of its
subsidiaries is free and clear of all material liens and encumbrances; (B) to
the knowledge of the Company, the patents, trademarks and copyrights owned or
licensed by the Company or any of its subsidiaries are valid, enforceable and
subsisting; and (C) the Company and its subsidiaries have complied in all
material respects with the terms of each agreement pursuant to which
intellectual property has been licensed to the Company or any subsidiary, and
all such agreements that have not expired or been intentionally terminated by
the Company or any subsidiary are in full force and effect. Other than as
disclosed in the Registration Statement, the Time of Sale Disclosure Package or
the Final Prospectus, (i) neither the Company nor any of its subsidiaries is
obligated to pay a material royalty, grant a license or provide other material
consideration to any third party in connection with the Company Intellectual
Property, (ii) no action, suit, claim or other proceeding is pending, or, to the
knowledge of the Company, threatened, challenging the validity, enforceability,
scope, registration, ownership or use of any of the patents or patent
applications included in the Company Intellectual Property, or challenging the
Company’s or any of its subsidiaries’ rights in or to any Company Intellectual
Property, (iii) neither the Company nor any of its subsidiaries has received
notice of any written claim of infringement, misappropriation or conflict with
any asserted rights of others with respect to any of the Company Intellectual
Property, (iv) to the knowledge of the Company, the development, manufacture,
and sale of any of the processes of the Company or any of its subsidiaries
referred to in the Registration Statement, the Time of Sale Disclosure Package,
and the Final Prospectus do not currently infringe any right or valid patent
claim of any third party in any material respect, (v) the Company and its
subsidiaries have taken reasonable measures to protect their confidential
information and trade secrets and to maintain and safeguard the confidentiality
of the confidential information and trade secrets within the Company
Intellectual Property, and (vi) to the knowledge of the Company, there is no
infringement by third parties of any Company Intellectual Property that would
have a Material Adverse Effect.

 

9

 

(x)                Data Privacy. In connection with its collection, storage,
transfer and/or use of any personally identifiable information from any
individuals, including, without limitation, any customers, prospective
customers, employees and/or other third parties (collectively “Private
Information”), the Company is and has been in material compliance with all
applicable laws in all relevant jurisdictions, the Company’s applicable external
privacy policies and the applicable requirements of any Contract. The Company
takes and has taken reasonable steps to protect Private Information against loss
and against unauthorized access, use, modification, disclosure or other misuse.
To the Company’s knowledge, in the past three years, there has been no material
unauthorized access, modification, disclosure or other misuse of any Private
Information. The Company is not subject to any complaints, lawsuits,
proceedings, audits, investigations or claims by any private party, the Federal
Trade Commission, any state attorney general or similar state official, or any
other governmental authority, foreign or domestic, regarding its collection,
use, storage, disclosure, transfer or maintenance of any Private Information and
there are no such complaints, lawsuits, proceedings, audits, investigations or
claims, to the Company’s knowledge, threatened.

 

(y)                Insurance. The Company and each of its subsidiaries carries,
or is covered by, insurance in such amounts and covering such risks as is
commercially reasonable for the conduct of its business and the value of its
properties.

 

(z)                Books and Records. The minute books of the Company have been
made available to the Placement Agent and counsel for the Placement Agent, and
such books (A) contain a complete summary in all material respects of all
meetings and actions of the board of directors (including each board committee)
and stockholders of the Company (or analogous governing bodies and interest
holders, as applicable), and (B) accurately in all material respects reflect all
transactions referred to in such minutes.

 

(aa)             Transactions With Affiliates and Employees. Except as set forth
in the Time of Sale Disclosure Package, none of the officers or directors of the
Company or any Subsidiary and, to the knowledge of the Company, none of the
employees of the Company or any Subsidiary is presently a party to any
transaction with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, providing for the borrowing of
money from or lending of money to or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee, stockholder, member or partner, in
each case in excess of $120,000 other than for: (i) payment of salary or
consulting fees for services rendered, (ii) reimbursement for expenses incurred
on behalf of the Company and (iii) other employee benefits, including stock
option agreements under any stock option plan of the Company.

 

10

 

(bb)            Sarbanes-Oxley; Internal Accounting Controls. The Company is in
compliance in all material respects with all applicable provisions of the
Sarbanes-Oxley Act of 2002, Dodd-Frank Wall Street Reform and Consumer
Protection Act and all rules and regulations promulgated thereunder or
implementing the provisions thereof. The Company maintains systems of “internal
control over financial reporting” (as defined under Rules 13a-15 and 15d-15
under the Exchange Act) that comply with the requirements of the Exchange Act
and have been designed by, or under the supervision of, its principal executive
and principal financial officers, or persons performing similar functions, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with GAAP, including, but not limited to, internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization; (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences; and (v) the interactive data in extensible
Business Reporting Language included or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package and the Final
Prospectus fairly present the information called for in all material respects
and are prepared in accordance with the Commission’s rules and guidelines
applicable thereto. Since the date of the latest audited financial statements
included in the Registration Statement, the Time of Sale Disclosure Package and
the Final Prospectus, there has been no change in the Company’s internal control
over financial reporting that has materially affected, or is reasonably likely
to materially affect, the Company’s internal control over financial reporting.
The Company maintains disclosure controls and procedures that have been designed
to ensure that material information relating to the Company and its subsidiaries
is made known to the Company’s principal executive officer and principal
financial officer by others within those entities; and such disclosure controls
and procedures of the Company are effective.

 

(cc)             Certain Fees. There are no claims, payments, issuances,
arrangements or understandings for services in the nature of a finder’s,
consulting or origination fee with respect to the introduction of the Company to
any Placement Agent or the sale of the Shares hereunder or any other
arrangements, agreements, understandings, payments or issuances with respect to
the Company that may affect the Placement Agent’s compensation, as determined by
FINRA. The Investors shall have no obligation with respect to any fees or with
respect to any claims made by or on behalf of other Persons for fees of a type
contemplated in this Section that may be due in connection with the transactions
contemplated by this Agreement and the transactions contemplated pursuant to the
Base Prospectus.

 

(dd)            No Fees. Except as disclosed to the Placement Agent in writing,
the Company has not made any direct or indirect payments (in cash, securities or
otherwise) to (i) any person, as a finder’s fee, investing fee or otherwise, in
consideration of such person raising capital for the Company or introducing to
the Company persons who provided capital to the Company, (ii) any FINRA member,
or (iii) any person or entity that has any direct or indirect affiliation or
association with any FINRA member within the 12-month period prior to the date
on which the initial Preliminary Prospectus was filed with the Commission
(“Filing Date”) or thereafter.

 

11

 

(ee)             Proceeds. None of the net proceeds of the offering will be paid
by the Company to any participating FINRA member or any affiliate or associate
of any participating FINRA member, except as specifically authorized herein.

 

(ff)               No FINRA Affiliations. To the Company’s knowledge and except
as disclosed to the Placement Agent in writing, no (i) officer or director of
the Company or its subsidiaries, (ii) owner of 5% or more of any class of the
Company’s securities or (iii) owner of any amount of the Company’s unregistered
securities acquired within the 180-day period prior to the Filing Date, has any
direct or indirect affiliation or association with any FINRA member. The Company
will advise the Placement Agent and counsel to the Placement Agent if it becomes
aware that any officer, director of the Company or its subsidiaries or any owner
of 5% or more of any class of the Company’s securities is or becomes an
affiliate or associated person of a FINRA member participating in the offering.

 

(gg)            No Financial Advisor. Other than the Placement Agent, no person
has the right to act as a placement agent or as a financial advisor to the
Company in connection with the transactions contemplated hereby.

 

(hh)            Prior Sales of Securities. Except as set forth in the
Registration Statement, the Time of Sale Disclosure Package and the Final
Prospectus, the Company has not sold or issued any shares of Common Stock during
the six-month period preceding the date hereof, including any sales pursuant to
Rule 144A under, or Regulations D or S of, the Securities Act, other than shares
issued pursuant to employee benefit plans, stock option plans or other employee
compensation plans or pursuant to outstanding preferred stock, options, rights
or warrants or other outstanding convertible securities.

 

(ii)               Investment Company. The Company is not and, after giving
effect to the offering and sale of the Shares and the application of the net
proceeds thereof, will not be an “investment company,” as such term is defined
in the Investment Company Act of 1940, as amended.

 

(jj)               Registration Rights. No person or entity has the right to
require registration of shares of Common Stock or other securities of the
Company or any of its subsidiaries within ninety days of the date hereof because
of the filing or effectiveness of the Registration Statement or otherwise,
except for persons and entities who have expressly waived such right in writing
or who have been given timely and proper written notice and have failed to
exercise such right within the time or times required under the terms and
conditions of such right. Except as described in the Registration Statement, the
Time of Sale Disclosure Package and the Final Prospectus, there are no persons
with registration rights or similar rights to have any securities registered by
the Company or any of its subsidiaries under the Securities Act.

 

(kk)            Listing and Maintenance Requirements. The Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act nor has the Company received any notification that the Commission
is contemplating terminating such registration. The Company has not, in the 12
months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements. The Common Stock is currently eligible for
electronic transfer through the Depository Trust Company or another established
clearing corporation and the Company is current in payment of the fees to the
Depository Trust Company (or such other established clearing corporation) in
connection with such electronic transfer.

 

12

 

(ll)               Application of Takeover Protections. The Company and the
Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s certificate of incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Investors as a result of the Investors and the
Company fulfilling their obligations or exercising their rights under this
Agreement and the transactions contemplated pursuant to the Prospectus
Supplement, including without limitation as a result of the Company’s issuance
of the Securities and the Investors’ ownership of the Shares.

 

(mm)        Disclosure. Except with respect to the material terms and conditions
of the transactions contemplated by this Agreement and the transactions
contemplated pursuant to the Base Prospectus, the Company confirms that neither
it nor any other Person acting on its behalf has provided any of the Investors
or their agents or counsel with any information that it believes constitutes or
might constitute material, non-public information which is not otherwise
disclosed in the Time of Sale Disclosure Package. The Company understands and
confirms that the Investors will rely on the foregoing representation in
effecting transactions in securities of the Company. All of the disclosure
furnished by or on behalf of the Company to the Investors regarding the Company
and, its Subsidiaries, their respective businesses and the transactions
contemplated hereby, including the Time of Sale Disclosure Package, is true and
correct and does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading. The
press releases disseminated by the Company during the twelve months preceding
the date of this Agreement taken as a whole do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made and when made, not misleading.

 

(nn)            No Integrated Offering. Neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Shares to be integrated with prior offerings by the Company for purposes of any
applicable shareholder approval provisions of any Trading Market on which any of
the securities of the Company are listed or designated.

 

(oo)            Solvency. Based on the consolidated financial condition of the
Company as of each Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder, (i) the
Company’s assets do not constitute unreasonably small capital to carry on its
business as now conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company,
consolidated and projected capital requirements and capital availability
thereof, and (ii) to the knowledge of the Company, the current cash flow of the
Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its
liabilities when such amounts are required to be paid. The Company does not
currently intend to incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be payable on or
in respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for reorganization or
liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one year from each Closing Date. The Time of Sale Disclosure Package and
the SEC Reports incorporate as of the date hereof all outstanding secured and
unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments. For the purposes of this Agreement,
“Indebtedness” means (x) any liabilities for borrowed money or amounts owed in
excess of $50,000 (other than trade accounts payable incurred in the ordinary
course of business), (y) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or
should be reflected in the Company’s consolidated balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(z) the present value of any lease payments in excess of $50,000 due under
leases required to be capitalized in accordance with GAAP. Neither the Company
nor any Subsidiary is in default in any material respect with respect to any
Indebtedness.

  

13

 

(pp)            Taxes. Each of the Company and its subsidiaries has (a) filed
all foreign, federal, state and local tax returns (as defined below) required to
be filed with taxing authorities prior to the date hereof or has duly obtained
extensions of time for the filing thereof and (b) paid all taxes (as defined
below) shown as due and payable on such returns that were filed and has paid all
taxes imposed on or assessed against the Company or such respective subsidiary
that are due and payable, except as currently being contested in good faith and
for which appropriate reserves have been established on the books and records of
the Company or any of its subsidiaries to the extent required by GAAP. The
provisions for taxes payable, if any, shown on the financial statements included
or incorporated by reference in the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus are sufficient for all accrued and
unpaid taxes, whether or not disputed, and for all periods to and including the
dates of such consolidated financial statements. To the knowledge of the
Company, no issues have been raised (and are currently pending) by any taxing
authority in connection with any of the returns or taxes asserted as due from
the Company, and no waivers of statutes of limitation with respect to the
returns or collection of taxes have been given by or requested from the Company
except as would not have a Material Adverse Effect on the Company. The term
“taxes” mean all federal, state, local, foreign, and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, lease, service, service use, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits, customs,
duties or other taxes, fees, assessments, or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax, or additional
amounts with respect thereto. The term “returns” means all returns,
declarations, reports, statements, and other documents required to be filed in
respect to taxes.

 

(qq)            Foreign Corrupt Practices. None of (i) the Company or its
subsidiaries or (ii) to the knowledge of the Company, any director or officer,
employee, representative, agent or affiliate of the Company or its subsidiaries
or any other person acting on behalf of the Company or any of its subsidiaries
is aware of or has taken any action, directly or indirectly, that would result
in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder (the “FCPA”), including,
without limitation, making use of the mails or any means or instrumentality of
interstate commerce in furtherance of an offer, payment, promise to pay or
authorization of the payment of any money, or other property, gift, promise to
give, or authorization of the giving of anything of value to any “foreign
official” (as such term is defined in the FCPA) or any foreign political party
or official thereof or any candidate for foreign political office, in
contravention of the FCPA and the Company and its subsidiaries have conducted
their businesses in compliance with the FCPA and have instituted and maintain
policies and procedures designed to ensure, and which are reasonably expected to
continue to ensure, continued compliance therewith.

 

14

 

(rr)               Accountants. To the Company’s knowledge, Semple, Marchal and
Cooper, LLP, which has expressed its opinion with respect to the audited
financial statements and schedules incorporated by reference as a part of the
Registration Statement, the Time of Sale Disclosure Package and the Final
Prospectus, is an independent public accounting firm with respect to the Company
within the meaning of the Securities Act.

 

(ss)              Regulation M Compliance.  The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
any of the Shares, (ii) sold, bid for, purchased, or, paid any compensation for
soliciting purchases of, any of the Shares, or (iii) paid or agreed to pay to
any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii),
compensation paid to the Company’s placement agent in connection with the
placement of the Shares.

 

(tt)               Office of Foreign Assets Control. None of (i) the Company or
its subsidiaries or (ii) to the knowledge of the Company, any director or
officer, employee, representative, agent or affiliate of the Company or its
subsidiaries or any other person acting on behalf of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

 

(uu)            U.S. Real Property Holding Corporation. The Company is not and
has never been a U.S. real property holding corporation within the meaning of
Section 897 of the Internal Revenue Code of 1986, as amended, and the Company
shall so certify upon Investor’s request.

 

(vv)            Bank Holding Company Act. Neither the Company nor any of its
Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956,
as amended (the “BHCA”) and to regulation by the Board of Governors of the
Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of
its Subsidiaries or Affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding shares of any class of voting securities
or twenty-five percent or more of the total equity of a bank or any entity that
is subject to the BHCA and to regulation by the Federal Reserve. Neither the
Company nor any of its Subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.

 

(ww)         Money Laundering. The operations of the Company and its
subsidiaries are and have been conducted in compliance in all material respects
with applicable financial recordkeeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations thereunder
and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any Governmental Entity (collectively, the “Money
Laundering Laws”); and no action, suit or proceeding by or before any
Governmental Entity involving the Company or its subsidiaries with respect to
the Money Laundering Laws is pending or, to the knowledge of the Company,
threatened.

 

(xx)            Certificates. Any certificate signed by an officer of the
Company and delivered to the Placement Agent or to counsel for the Placement
Agent shall be deemed to be a representation and warranty by the Company to the
Placement Agent as to the matters set forth therein.

 

(yy)            Reliance. The Company acknowledges that the Placement Agent will
rely upon the accuracy and truthfulness of the foregoing representations and
warranties and hereby consents to such reliance.

 

15

 

(zz)             Forward-Looking Statements. The Company had a reasonable basis
for, and made in good faith, each “forward-looking statement” (within the
meaning of Section 27A of the Securities Act or Section 21E of the Exchange Act)
contained or incorporated by reference in the Registration Statement, the Time
of Sale Disclosure Package or the Final Prospectus or the Marketing Materials
(as defined below).

 

(aaa)          Marketing Materials. The Company has not distributed any
prospectus or other offering material in connection with the offering and sale
of the Shares other than the Time of Sale Disclosure Package and the roadshow or
investor presentations delivered to and approved by the Placement Agent for use
in connection with the marketing of the offering of the Shares (the “Marketing
Materials”). Except for Marketing Materials approved in writing by the Placement
Agent, no Marketing Materials have been provided to investors or prospective
investors.

 

(bbb)        Statistical or Market-Related Data. All statistical or
market-related data included or incorporated by reference in the Registration
Statement, the Time of Sale Disclosure Package or the Final Prospectus, or
included in the Marketing Materials, are based on or derived from sources that
the Company reasonably believes to be reliable and accurate, and the Company has
obtained the written consent to the use of such data from such sources, to the
extent required.

 

(ccc)          Paycheck Protection Program Loan. The Company was eligible for a
loan under the Paycheck Protection Program promulgated pursuant to Section 1102
of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (the “PPP
Loan”) at the time of the application for, acceptance of, and use of the
proceeds of such PPP Loan, and at all relevant times has been and remains in
compliance in all material respects with the terms and conditions of the PPP
Loan and all laws applicable thereto. Any certifications, representations or
information supplied by the Company in connection with the PPP Loan were and
remain true, complete and correct in all material respects.

 

(ddd)        No Definitive Acquisition. As of the date hereof, the Company has
entered into two (2) letters of intent regarding potential acquisitions, correct
and complete copies of which have been provided to the Placement Agent.   The
Company believes it has a reasonable basis to conclude that neither acquisition
is “probable” within the meaning of SEC Regulation S-X or any corresponding GAAP
concept, and accordingly no financial statements relating to the target
companies, or pro forma financial information giving effect to the acquisitions,
is required to be included in the Registration Statement, the Time of Sale
Disclosure Package or the Final Prospectus.   Without limitation of the
foregoing, the Company has not completed negotiation of or entered into
definitive agreements, secured financing for, obtained final board of directors
approval for, or completed due diligence in respect of either acquisition, and
no assurance can be given that any of these items will be satisfied.

 

Section 3.                  Delivery and Payment. Each Closing shall occur at
the offices of the DLA Piper LLP (US), 2525 E. Camelback Road, Suite 1000,
Phoenix, Arizona 85016 (“Placement Agent Counsel”) (or at such other place as
shall be agreed upon by the Placement Agent and the Company). Subject to the
terms and conditions hereof, at each Closing payment of the purchase price for
the Shares sold on such Closing Date shall be made by Federal Funds wire
transfer, against delivery of such Shares, and such Shares shall be registered
in such name or names and shall be in such denominations, as the Placement Agent
may request at least one business day before the time of purchase (as defined
below).

 

Deliveries of the documents with respect to the purchase of the Shares, if any,
shall be made at the offices of Placement Agent Counsel. All actions taken at a
Closing shall be deemed to have occurred simultaneously.

 

16

 

Section 4.                  Covenants and Agreements of the Company. The Company
further covenants and agrees with the Placement Agent as follows:

 

(a)                Registration Statement Matters. The Company will advise the
Placement Agent promptly after it receives notice thereof of the time when any
amendment to the Registration Statement has been filed or becomes effective or
any supplement to the Base Prospectus or the Final Prospectus has been filed and
will furnish the Placement Agent with copies thereof, for so long as the
delivery of a prospectus is required in connection with the Offering. The
Company will file promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission pursuant to
Section 13(a), 14 or 15(d) of the Exchange Act subsequent to the date of any
Prospectus and for so long as the delivery of a prospectus is required in
connection with the Offering. The Company will advise the Placement Agent,
promptly after it receives notice thereof (i) of any request by the Commission
to amend the Registration Statement or to amend or supplement any Prospectus or
for additional information, and (ii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or any order directed at any Incorporated
Document, if any, or any amendment or supplement thereto or any order preventing
or suspending the use of the Base Prospectus or the Final Prospectus or any
prospectus supplement or any amendment or supplement thereto or any
post-effective amendment to the Registration Statement, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, of the
institution or threatened institution of any proceeding for any such purpose, or
of any request by the Commission for the amending or supplementing of the
Registration Statement or a Prospectus or for additional information. The
Company shall use its best efforts to prevent the issuance of any such stop
order or prevention or suspension of such use.  If the Commission shall enter
any such stop order or order or notice of prevention or suspension at any time,
the Company will use its best efforts to obtain the lifting of such order at the
earliest possible moment, or will file a new registration statement and use its
best efforts to have such new registration statement declared effective as soon
as practicable.  Additionally, the Company agrees that it shall comply with the
provisions of Rules 424(b), 430A, 430B and 430C, as applicable, under the
Securities Act, including with respect to the timely filing of documents
thereunder, and will use its reasonable efforts to confirm that any filings made
by the Company under such Rule 424(b) are received in a timely manner by the
Commission.

 

(b)                Blue Sky Compliance. The Company will cooperate with the
Placement Agent and the Investors in endeavoring to qualify the Shares for sale
under the securities laws of such jurisdictions (United States and foreign) as
the Placement Agent and the Investors may reasonably request and will make such
applications, file such documents, and furnish such information as may be
reasonably required for that purpose, provided the Company shall not be required
to qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to file
such a consent, and provided further that the Company shall not be required to
produce any new disclosure document. The Company will, from time to time,
prepare and file such statements, reports and other documents as are or may be
required to continue such qualifications in effect for so long a period as the
Placement Agent may reasonably request for distribution of the Shares. The
Company will advise the Placement Agent promptly of the suspension of the
qualification or registration of (or any such exemption relating to) the Shares
for offering, sale or trading in any jurisdiction or any initiation or threat of
any proceeding for any such purpose, and in the event of the issuance of any
order suspending such qualification, registration or exemption, the Company
shall use its best efforts to obtain the withdrawal thereof at the earliest
possible moment.

 

17

 

(c)                Amendments and Supplements to a Prospectus and Other Matters.
The Company will comply with the Securities Act and the Exchange Act, and the
rules and regulations of the Commission thereunder, so as to permit the
completion of the distribution of the Shares as contemplated in this Agreement,
the Incorporated Documents and any Prospectus. If during the period in which a
prospectus is required by law to be delivered in connection with the
distribution of Shares contemplated by the Incorporated Documents or any
Prospectus (the “Prospectus Delivery Period”), any event shall occur as a result
of which, in the judgment of the Company or in the opinion of the Placement
Agent or counsel for the Placement Agent, it becomes necessary to amend or
supplement the Incorporated Documents or any Prospectus in order to make the
statements therein, in the light of the circumstances under which they were
made, as the case may be, not misleading, or if it is necessary at any time to
amend or supplement the Incorporated Documents or any Prospectus or to file
under the Exchange Act any Incorporated Document to comply with any law, the
Company will promptly prepare and file with the Commission, and furnish at its
own expense to the Placement Agent and to dealers, an appropriate amendment to
the Registration Statement or supplement to the Registration Statement, the
Incorporated Documents or any Prospectus that is necessary in order to make the
statements in the Incorporated Documents and any Prospectus as so amended or
supplemented, in the light of the circumstances under which they were made, as
the case may be, not misleading, or so that the Registration Statement, the
Incorporated Documents or any Prospectus, as so amended or supplemented, will
comply with law. Before amending the Registration Statement or supplementing the
Incorporated Documents or any Prospectus in connection with the Offering, the
Company will furnish the Placement Agent with a copy of such proposed amendment
or supplement and will not file any such amendment or supplement without first
reasonably considering any comments from the Placement Agent.

 

(d)                Copies of any Amendments and Supplements to a Prospectus. The
Company will furnish the Placement Agent, without charge, during the period
beginning on the date hereof and ending on the later of the last Closing Date of
the Offering, as many copies of any Prospectus or prospectus supplement and any
amendments and supplements thereto, as the Placement Agent may reasonably
request.

 

(e)                Free Writing Prospectus. The Company covenants that it will
not, unless it obtains the prior written consent of the Placement Agent, make
any offer relating to the Shares that would constitute an Company Free Writing
Prospectus or that would otherwise constitute a “free writing prospectus” (as
defined in Rule 405 of the Securities Act) required to be filed by the Company
with the Commission or retained by the Company under Rule 433 of the Securities
Act. In the event that the Placement Agent expressly consents in writing to any
such free writing prospectus (a “Permitted Free Writing Prospectus”), the
Company covenants that it shall (i) treat each Permitted Free Writing Prospectus
as an Company Free Writing Prospectus, and (ii) comply with the requirements of
Rule 164 and 433 of the Securities Act applicable to such Permitted Free Writing
Prospectus, including in respect of timely filing with the Commission, legending
and record keeping.

 

(f)                 Transfer Agent. The Company will maintain, at its expense, a
registrar and transfer agent for the Common Stock.

 

(g)                Earnings Statement. As soon as practicable and in accordance
with applicable requirements under the Securities Act, but in any event not
later than 18 months after the last Closing Date, the Company will make
generally available to its security holders and to the Placement Agent an
earnings statement, covering a period of at least 12 consecutive months
beginning after the last Closing Date, that satisfies the provisions of Section
11(a) and Rule 158 under the Securities Act.

 

18

 

(h)                Periodic Reporting Obligations. During the Prospectus
Delivery Period, the Company will duly file, on a timely basis, with the
Commission and the Trading Market all reports and documents required to be filed
under the Exchange Act within the time periods and in the manner required by the
Exchange Act.

 

(i)                 Additional Documents. The Company will enter into any
subscription, purchase or other customary agreements as the Placement Agent or
the Investors deem necessary or appropriate to consummate the Offering, all of
which will be in form and substance reasonably acceptable to the Placement Agent
and the Investors. The Company agrees that the Placement Agent may rely upon,
and each is a third party beneficiary of, the representations and warranties,
and applicable covenants, set forth in any such purchase, subscription or other
agreement with Investors in the Offering.

 

(j)                 No Manipulation of Price.  The Company will not take,
directly or indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the stabilization or
manipulation of the price of any securities of the Company.

 

(k)                Acknowledgment. The Company acknowledges that any advice
given by the Placement Agent to the Company is solely for the benefit and use of
the Board of Directors of the Company and may not be used, reproduced,
disseminated, quoted or referred to, without the Placement Agent's prior written
consent, except as required by legal process or applicable law.

 

(l)                 Announcement of Offering. The Company acknowledges and
agrees that the Placement Agent may, subsequent to the Closing, make public its
involvement with the Offering.

 

(m)              Reliance on Others. The Company confirms that it will rely on
its own counsel and accountants for legal and accounting advice.

 

(n)                Research Matters. By entering into this Agreement, the
Placement Agent does not provide any promise, either explicitly or implicitly,
of favorable or continued research coverage of the Company and the Company
hereby acknowledges and agrees that the Placement Agent’s selection as a
placement agent for the Offering was in no way conditioned, explicitly or
implicitly, on the Placement Agent providing favorable or any research coverage
of the Company. In accordance with FINRA Rule 2711(e), the parties acknowledge
and agree that the Placement Agent has not directly or indirectly offered
favorable research, a specific rating or a specific price target, or threatened
to change research, a rating or a price target, to the Company or inducement for
the receipt of business or compensation.

 

Section 5.                  Conditions of the Obligations of the Placement
Agent. The obligations of the Placement Agent hereunder shall be subject to the
accuracy of the representations and warranties on the part of the Company set
forth in Section 2 hereof, in each case as of the date hereof and as of each
Closing Date as though then made, to the timely performance by each of the
Company of its covenants and other obligations hereunder on and as of such
dates, and to each of the following additional conditions:

 

(a)                Accountant’s Comfort Letter. On the date hereof, the
Placement Agent shall have received, and the Company shall have caused to be
delivered to the Placement Agent, a “comfort” letter from Semple, Marchal and
Cooper, LLP (the independent registered public accounting firm of the Company),
addressed to the Placement Agent, dated as of the date hereof, in form and
substance satisfactory to the Placement Agent. The letter shall not disclose any
change in the condition (financial or other), earnings, operations, business or
prospects of the Company from that set forth in the Incorporated Documents or
the applicable Prospectus or prospectus supplement, which, in the Placement
Agent's sole judgment, is material and adverse and that makes it, in the
Placement Agent's sole judgment, impracticable or inadvisable to proceed with
the Offering of the Shares as contemplated by such Prospectus.

 

19

 

(b)                Compliance with Registration Requirements; No Stop Order; No
Objection from the FINRA. Each Prospectus (in accordance with Rule 424(b)) and
“free writing prospectus” (as defined in Rule 405 of the Securities Act), if
any, shall have been duly filed with the Commission, as appropriate; no stop
order suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; no order preventing or
suspending the use of any Prospectus shall have been issued and no proceeding
for that purpose shall have been initiated or threatened by the Commission; no
order having the effect of ceasing or suspending the distribution of the Shares
or any other securities of the Company shall have been issued by any securities
commission, securities regulatory authority or stock exchange and no proceedings
for that purpose shall have been instituted or shall be pending or, to the
knowledge of the Company, contemplated by any securities commission, securities
regulatory authority or stock exchange; all requests for additional information
on the part of the Commission shall have been complied with; and the FINRA shall
have raised no objection to the fairness and reasonableness of the placement
terms and arrangements.

 

(c)                Corporate Proceedings. All corporate proceedings and other
legal matters in connection with this Agreement, the Registration Statement and
each Prospectus, and the registration, sale and delivery of the Shares, shall
have been completed or resolved in a manner reasonably satisfactory to the
Placement Agent's counsel, and such counsel shall have been furnished with such
papers and information as it may reasonably have requested to enable such
counsel to pass upon the matters referred to in this Section 5.

 

(d)                No Material Adverse Change. Subsequent to the execution and
delivery of this Agreement and prior to each Closing Date, in the Placement
Agent's sole judgment after consultation with the Company, there shall not have
occurred any Material Adverse Change or Material Adverse Effect.

 

(e)                Opinion of Counsel for the Company. The Placement Agent shall
have received on each Closing Date the favorable opinion of Olshan Frome Wolosky
LLP, legal counsel to the Company, dated as of such Closing Date, including,
without limitation, a negative assurance letter addressed to the Placement Agent
and in form and substance satisfactory to the Placement Agent.

 

(f)                 Officers’ Certificate. The Placement Agent shall have
received on each Closing Date a certificate of the Company, dated as of such
Closing Date, signed by the Chief Executive Officer and Chief Financial Officer
of the Company, to the effect that, and the Placement Agent shall be satisfied
that, the signers of such certificate have reviewed the Registration Statement,
the Incorporated Documents, any Prospectus Supplement, and this Agreement and to
the further effect that:

 

(i)                 The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of such Closing Date, and
the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to such Closing
Date;

 

(ii)               No stop order suspending the effectiveness of the
Registration Statement or the use of any Prospectus has been issued and no
proceedings for that purpose have been instituted or are pending or, to the
Company’s knowledge, threatened under the Securities Act; no order having the
effect of ceasing or suspending the distribution of the Securities or any other
securities of the Company has been issued by any securities commission,
securities regulatory authority or stock exchange in the United States and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, contemplated by any securities commission, securities
regulatory authority or stock exchange in the United States;

 

20

 

(iii)             When the Registration Statement became effective, at the time
of sale, and at all times subsequent thereto up to the delivery of such
certificate, the Registration Statement and the Incorporated Documents, if any,
when such documents became effective or were filed with the Commission, and any
Prospectus, contained all material information required to be included therein
by the Securities Act and the Exchange Act and the applicable rules and
regulations of the Commission thereunder, as the case may be, and in all
material respects conformed to the requirements of the Securities Act and the
Exchange Act and the applicable rules and regulations of the Commission
thereunder, as the case may be, and the Registration Statement and the
Incorporated Documents, if any, and any Prospectus, did not and do not include
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading
(provided, however, that the preceding representations and warranties contained
in this paragraph (iii) shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing to the
Company by the Placement Agent expressly for use therein) and, since the
effective date of the Registration Statement, there has occurred no event
required by the Securities Act and the rules and regulations of the Commission
thereunder to be set forth in the Incorporated Documents which has not been so
set forth; and

 

(iv)              Subsequent to the respective dates as of which information is
given in the Registration Statement, the Incorporated Documents and any
Prospectus, there has not been: (a) any Material Adverse Change; (b) any
transaction that is material to the Company and the Subsidiaries taken as a
whole, except transactions entered into in the ordinary course of business; (c)
any obligation, direct or contingent, that is material to the Company and the
Subsidiaries taken as a whole, incurred by the Company or any Subsidiary, except
obligations incurred in the ordinary course of business; (d) any material change
in the capital stock (except changes thereto resulting from the exercise of
outstanding stock options or warrants) or outstanding indebtedness of the
Company or any Subsidiary; (e) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company; or (f) any loss or
damage (whether or not insured) to the property of the Company or any Subsidiary
which has been sustained or will have been sustained which has a Material
Adverse Effect.

 

(g)                Chief Financial Officer’s Certificate. The Company shall have
furnished to the Placement Agent and its counsel on the date hereof and each
Closing Date a certificate from the Chief Financial Officer of the Company, in
substantially the form heretofore approved by the Placement Agent.

 

(h)                Bring-down Comfort Letter.  On each Closing Date,
the Placement Agent shall have received from Semple, Marchal and Cooper, LLP, or
such other independent registered public accounting firm of the Company, a
bringdown “comfort” letter dated as of such Closing Date, in form and substance
satisfactory to the Placement Agent, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (a) of this
Section 5, except that the specified date referred to therein for the carrying
out of procedures shall be no more than three business days prior to such
Closing Date.

 

21

 

(i)                 Stock Exchange Listing. The Common Stock shall be registered
under the Exchange Act and shall be listed on the Trading Market, and the
Company shall not have taken any action designed to terminate, or likely to have
the effect of terminating, the registration of the Common Stock under the
Exchange Act or delisting or suspending from trading the Common Stock from the
Trading Market, nor shall the Company have received any information suggesting
that the Commission or the Trading Market is contemplating terminating such
registration or listing.

 

(j)                 Additional Documents. On or before each Closing Date, the
Placement Agent and counsel for the Placement Agent shall have received such
information and documents as they may reasonably require for the purposes of
enabling them to pass upon the issuance and sale of the Shares as contemplated
herein, or in order to evidence the accuracy of any of the representations and
warranties, or the satisfaction of any of the conditions or agreements, herein
contained.

 

If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the Placement
Agent by notice to the Company at any time on or prior to a Closing Date, which
termination shall be without liability on the part of any party to any other
party, except that Section 6 (Payment of Expenses), Section 7 (Indemnification
and Contribution) and Section 8 (Representations and Indemnities to Survive
Delivery) shall at all times be effective and shall survive such termination.

 

Section 6.                  Payment of Expenses. The Company agrees to pay all
costs, fees and expenses incurred by the Company in connection with the
performance of its obligations hereunder and in connection with the transactions
contemplated hereby, including, without limitation: (i) all expenses incident to
the issuance, delivery and qualification of the Shares (including all printing
and engraving costs); (ii) all fees and expenses of the registrar and transfer
agent of the Common Stock; (iii) all necessary issue, transfer and other stamp
taxes in connection with the issuance and sale of the Shares; (iv) all fees and
expenses of the Company’s counsel, independent public or certified public
accountants and other advisors; (v) all costs and expenses incurred in
connection with the preparation, printing, filing, shipping and distribution of
the Registration Statement (including financial statements, exhibits, schedules,
consents and certificates of experts), the Base Prospectus, the Final Prospectus
and each Prospectus Supplement, and all amendments and supplements thereto, and
this Agreement; (vi) all filing fees, reasonable attorneys’ fees and expenses
incurred by the Company or the Placement Agent in connection with qualifying or
registering (or obtaining exemptions from the qualification or registration of)
all or any part of the Shares for offer and sale under the state securities or
blue sky laws or the securities laws of any other country, and, if requested by
the Placement Agent, preparing and printing a “Blue Sky Survey,” an
“International Blue Sky Survey” or other memorandum, and any supplements
thereto, advising the Placement Agent of such qualifications, registrations and
exemptions; (vii) if applicable, the filing fees incident to the review and
approval by the FINRA of the Placement Agent's participation in the offering and
distribution of the Shares; (viii) the fees and expenses associated with
including the Shares on the Trading Market; (ix) all costs and expenses incident
to the travel and accommodation of the Company’s and the Placement Agent's
employees on the “roadshow,” if any; and (x) all other fees, costs and expenses
referred to in Part II of the Registration Statement; provided that the
Company’s obligations to pay expenses and fees of the Placement Agent hereunder
shall not exceed $50,000.

 

22

 

Section 7.                  Indemnification and Contribution.

 

(a) The Company agrees to indemnify and hold harmless the Placement Agent, its
affiliates and each person controlling the Placement Agent (within the meaning
of Section 15 of the Securities Act), and the directors, officers, agents and
employees of the Placement Agent, its affiliates and each such controlling
person (the Placement Agent, and each such entity or person. an “Indemnified
Person”) from and against any losses, claims, damages, judgments, assessments,
costs and other liabilities (collectively, the “Liabilities”), and shall
reimburse each Indemnified Person for all fees and expenses (including the
reasonable fees and expenses of one counsel for all Indemnified Persons, except
as otherwise expressly provided herein) (collectively, the “Expenses”) as they
are incurred by an Indemnified Person in investigating, preparing, pursuing or
defending any Actions, whether or not any Indemnified Person is a party thereto,
(i) caused by, or arising out of or in connection with, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, any Incorporated Document, any Prospectus or the Marketing Materials
or in any other materials used in connection with the offering of the Shares, or
arise out of or based upon any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (other than untrue
statements or alleged untrue statements in, or omissions or alleged omissions
from, information relating to an Indemnified Person furnished in writing by or
on behalf of such Indemnified Person expressly for use in the Incorporated
Documents) or (ii) otherwise arising out of or in connection with advice or
services rendered or to be rendered by any Indemnified Person pursuant to this
Agreement, the transactions contemplated thereby or any Indemnified Person's
actions or inactions in connection with any such advice, services or
transactions; provided, however, that, in the case of clause (ii) only, the
Company shall not be responsible for any Liabilities or Expenses of any
Indemnified Person that are finally judicially determined to have resulted
primarily from such Indemnified Person's (x) gross negligence or willful
misconduct in connection with any of the advice, actions, inactions or services
referred to above or (y) use of any offering materials or information concerning
the Company in connection with the offer or sale of the Shares in the Offering
which were not authorized for such use by the Company and which use constitutes
gross negligence or willful misconduct. The Company also agrees to reimburse
each Indemnified Person for all Expenses as they are incurred in connection with
enforcing such Indemnified Person's rights under this Agreement.

 

(b)       Upon receipt by an Indemnified Person of actual notice of an Action
against such Indemnified Person with respect to which indemnity may be sought
under this Agreement, such Indemnified Person shall promptly notify the Company
in writing; provided that failure by any Indemnified Person so to notify the
Company shall not relieve the Company from any liability which the Company may
have on account of this indemnity or otherwise to such Indemnified Person,
except to the extent the Company shall have been prejudiced by such failure. The
Company shall, at its option, assume the defense of any such Action including
the employment of counsel reasonably satisfactory to the Placement Agent, which
counsel may also be counsel to the Company. Any Indemnified Person shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless: (i) the Company has failed promptly
to assume the defense and employ counsel or (ii) the named parties to any such
Action (including any impeded parties) include such Indemnified Person and the
Company, and such Indemnified Person shall have been advised in the reasonable
opinion of counsel that there is an actual conflict of interest that prevents
the counsel selected by the Company from representing both the Company (or
another client of such counsel) and any Indemnified Person; provided that the
Company shall not in such event be responsible hereunder for the fees and
expenses of more than one firm of separate counsel for all Indemnified Persons
in connection with any Action or related Actions, in addition to any local
counsel. The Company shall not be liable for any settlement of any Action
effected without its written consent (which shall not be unreasonably withheld).
In addition, the Company shall not, without the prior written consent of the
Placement Agent (which shall not be unreasonably withheld), settle, compromise
or consent to the entry of any judgment in or otherwise seek to terminate any
pending or threatened Action in respect of which indemnification or contribution
may be sought hereunder (whether or not such Indemnified Person is a party
thereto) unless such settlement, compromise, consent or termination includes an
unconditional release of each Indemnified Person from all Liabilities arising
out of such Action for which indemnification or contribution may be sought
hereunder. The indemnification required hereby shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable.

 

23

 

(c)       In the event that the foregoing indemnity is unavailable to an
Indemnified Person other than in accordance with this Agreement, the Company
shall contribute to the Liabilities and Expenses paid or payable by such
Indemnified Person in such proportion as is appropriate to reflect (i) the
relative benefits to the Company, on the one hand, and to the Placement Agent
and any other Indemnified Person, on the other hand, of the matters contemplated
by this Agreement or (ii) if the allocation provided by the immediately
preceding clause is not permitted by applicable law, not only such relative
benefits but also the relative fault of the Company, on the one hand, and the
Placement Agent and any other Indemnified Person, on the other hand, in
connection with the matters as to which such Liabilities or Expenses relate, as
well as any other relevant equitable considerations; provided that in no event
shall the Company contribute less than the amount necessary to ensure that all
Indemnified Persons, in the aggregate, are not liable for any Liabilities and
Expenses in excess of the amount of fees actually received by the Placement
Agent pursuant to this Agreement. For purposes of this paragraph, the relative
benefits to the Company, on the one hand, and to the Placement Agent on the
other hand, of the matters contemplated by this Agreement shall be deemed to be
in the same proportion as (a) the total value paid or contemplated to be paid to
or received or contemplated to be received by the Company in the transaction or
transactions that are within the scope of this Agreement, whether or not any
such transaction is consummated, bears to (b) the fees paid to the Placement
Agent under this Agreement. Notwithstanding the above, no person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of the
Securities Act, as amended, shall be entitled to contribution from a party who
was not guilty of fraudulent misrepresentation.

 

(d)       The Company also agrees that no Indemnified Person shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with advice or services rendered or to be rendered
by any Indemnified Person pursuant to this Agreement, the transactions
contemplated thereby or any Indemnified Person's actions or inactions in
connection with any such advice, services or transactions except for Liabilities
(and related Expenses) of the Company that are finally judicially determined to
have resulted primarily from such Indemnified Person's gross negligence or
willful misconduct in connection with any such advice, actions, inactions or
services.

 

(e)       The reimbursement, indemnity and contribution obligations of the
Company set forth herein shall apply to any modification of this Agreement and
shall remain in full force and effect regardless of any termination of, or the
completion of any Indemnified Person's services under or in connection with,
this Agreement.

 

24

 

Section 8.                  Representations and Indemnities to Survive Delivery.
The respective indemnities, agreements, representations, warranties and other
statements of the Company or any person controlling the Company, of its
officers, and of the Placement Agent set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Placement Agent, the Company, or any of its or their
partners, officers or directors or any controlling person, as the case may be,
and will survive delivery of and payment for the Shares sold hereunder and any
termination of this Agreement. A successor to a Placement Agent, or to the
Company, its directors or officers or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Agreement.

 

Section 9.                  Notices. All communications hereunder shall be in
writing and shall be mailed, hand delivered or e-mailed and confirmed to the
parties hereto as follows:

 

If to the Placement Agent:

Roth Capital Partners, LLC

888 San Clemente Drive, Suite 400

Newport Beach, CA 92660

Attention: General Counsel

Email: rothecm@roth.com

 

with a copy to:

DLA Piper LLP (US)

2525 E. Camelback Road, Suite 1000

Phoenix, Arizona 85016

Attention: Steven D. Pidgeon, Esq.

Email: Steven.Pidgeon@dlapiper.com

 

If to the Company

Quest Resource Holding Corporation

3481 Plano Parkway

The Colony, Texas 75056

Attention: Laurie L. Latham

Email: lauriel@questrmg.com

 

with a copy to:

Olshan Frome Wolosky LLP

1325 Avenue of the Americas

New York, New York 10019

Attention: Kenneth A. Schlesinger, Esq.

Email: KSchlesinger@olshanlaw.com

Attention: Elizabeth R. Gonzalez-Sussman, Esq.

Email: EGonzalez@olshanlaw.com

 

Any party hereto may change the address for receipt of communications by giving
written notice to the others.

 

Section 10.              Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto, and to the benefit of the employees,
officers and directors and controlling persons referred to in Section 7 hereof,
and to their respective successors, and personal representative, and no other
person will have any right or obligation hereunder.

 

25

 

Section 11.              Partial Unenforceability. The invalidity or
unenforceability of any section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.

 

Section 12.              Governing Law Provisions. This Agreement shall be
deemed to have been made and delivered in New York City and both this engagement
letter and the transactions contemplated hereby shall be governed as to
validity, interpretation, construction, effect and in all other respects by the
internal laws of the State of New York, without regard to the conflict of laws
principles thereof. Each of the Placement Agent and the Company: (i) agrees that
any legal suit, action or proceeding arising out of or relating to this
engagement letter and/or the transactions contemplated hereby shall be
instituted exclusively in New York Supreme Court, County of New York, or in the
United States District Court for the Southern District of New York, (ii) waives
any objection which it may have or hereafter to the venue of any such suit,
action or proceeding, and (iii) irrevocably consents to the jurisdiction of the
New York Supreme Court, County of New York, and the United States District Court
for the Southern District of New York in any such suit, action or proceeding.
Each of the Placement Agent and the Company further agrees to accept and
acknowledge service of any and all process which may be served in any such suit,
action or proceeding in the New York Supreme Court, County of New York, or in
the United States District Court for the Southern District of New York and
agrees that service of process upon the Company mailed by certified mail to the
Company’s address shall be deemed in every respect effective service of process
upon the Company, in any such suit, action or proceeding, and service of process
upon the Placement Agent mailed by certified mail to the Placement Agent’s
address shall be deemed in every respect effective service process upon the
Placement Agent, in any such suit, action or proceeding. Notwithstanding any
provision of this engagement letter to the contrary, the Company agrees that
neither the Placement Agent nor its affiliates, and the respective officers,
directors, employees, agents and representatives of the Placement Agent, its
affiliates and each other person, if any, controlling the Placement Agent or any
of its affiliates, shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to the Company for or in connection with the
engagement and transaction described herein except for any such liability for
losses, claims, damages or liabilities incurred by us that are finally
judicially determined to have resulted from the bad faith, willful misconduct or
gross negligence of such individuals or entities. If either party shall commence
an action or proceeding to enforce any provision of this Agreement, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its reasonable attorney’s fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.

 

Section 13.              General Provisions.

 

(a)       This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. Section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.

 

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(b)       The Company acknowledges that in connection with the offering of the
Shares: (i) the Placement Agent has acted at arms length, are not agents of, and
owe no fiduciary duties to the Company or any other person, (ii) the Placement
Agent owes the Company only those duties and obligations set forth in this
Agreement and (iii) the Placement Agent may have interests that differ from
those of the Company. The Company waives to the full extent permitted by
applicable law any claims it may have against the Placement Agent arising from
an alleged breach of fiduciary duty in connection with the offering of the
Shares.

 

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If the foregoing is in accordance with your understanding of our agreement,
please sign below whereupon this instrument, along with all counterparts hereof,
shall become a binding agreement in accordance with its terms.

 

Very truly yours,             QUEST RESOURCE HOLDING CORPORATION                
    By:                      Name:       Title:       

 

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The foregoing Placement Agency Agreement is hereby confirmed and accepted as of
the date first above written.

 

Roth Capital Partners, LLC                     By:         Name:       Title: