Sigma Labs, Inc.
and its Wholly Owned Subsidiary B6 Sigma, Inc.

 
February 9, 2011

 
Hudson Valley Capital Management Corp
2039 Albany Post Road
Croton on Hudson, NY 10520
Attention: Mark Gillis, Chief Executive Officer

 
Dear Mark,

 
This letter agreement (the “Agreement”) shall confirm the engagement of Hudson
Valley Capital Management Corp (the “Placement Agent”) by Sigma Labs, Inc., a
Nevada corporation (the “Company”), as the Company's non-exclusive placement
agent during the term of Placement Agent's engagement hereunder, in connection
with the private placement of up to 75,000,000 shares of the Company's common
stock, $0,001 par value per share (collectively, the “Shares,” and such private
placement, the “Offering”). Placement Agent understands that the Company
currently contemplates the Offering to be made pursuant to one or more
exemptions from registration under the Securities Act of 1933, as amended (the
“Securities Act”), and any applicable securities laws of any state or other
jurisdiction. The Offering and the Placement Agent's engagement will be subject
to the following terms and conditions:

 

 
1.
Retention.

 
(a)           Subject to the terms and conditions of this Agreement, the Company
hereby appoints Placement Agent to act as its placement agent during the
Authorization Period (as hereinafter defined). Placement Agent hereby accepts
such appointment and agrees, subject to the terms and conditions of this
Agreement, to seek to complete the placement of up to $1,500,000 or any portion
thereof of the Shares on a “best efforts” basis during the Authorization Period.
The Shares will be sold at a price of $0.02 per Share. All Shares sold will be
done so pursuant to the Private Placement Memorandum, dated January 19, 2011
(the “Private Placement Memorandum”), which provides for no minimum sale of
Shares and up to a maximum of 75,000,000 Shares.
 
(b)           The Company and the Placement Agent understand and agree that, in
soliciting offers to purchase Shares from the Company pursuant to this Agreement
and in assuming its other obligations hereunder, Placement Agent is acting as
agent for the Company and not as principal, and that Placement Agent's
responsibility in respect of its engagement hereunder is limited to a “best
efforts” basis in placing the Shares, with no understanding, expressed or
implied, on Placement Agent's part of a commitment to underwrite, purchase or
place any of the Shares or any other securities of the Company.

3900 Paseo del Sol, Santa Fe New Mexico 87507

 
 

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(c)          Placement Agent agrees that it may not bind or obligate the Company
to sell the Shares or otherwise enter into any agreement on behalf of the
Company. The Company is not obligated or required to accept any offer to
purchase Shares by any prospective investor identified by Placement Agent, and
the Company may refuse in its sole discretion to sell any Shares to such
prospective investor without any liability to Placement Agent. If the Company
should fail to deliver Shares to a purchaser whose offer the Company has
accepted by execution of a subscription agreement in respect thereof, the
Company shall pay to Placement Agent any fee to which Placement Agent would be
entitled hereunder in connection with such sale as if such sale had been
consummated.
 
(d)          During the Authorization Period, the Company shall be authorized to
utilize the services of other placement agents.
 
(e)          It is understood that Placement Agent is being engaged hereunder
solely to provide the services described in this Agreement to the Company as an
independent contractor and that Placement Agent is not acting as an agent or
fiduciary of, and shall have no duties or liabilities to, the shareholders of
the Company or any third party in connection with its engagement hereunder.
 
2.           Authorization Period. Placement Agent's engagement hereunder shall
become effective on the date hereof and shall continue until the earlier of (i)
the final closing date of the Offering, and (ii) the date either party to this
Agreement terminates the engagement according to the terms of the next sentence
(such date, the “Termination Date”; the period from the date hereof through the
Termination Date being hereinafter referred to as the “Authorization Period”).
This Agreement may be terminated at any time by either party upon 30 days
written notice to the other party, effective upon receipt of written notice to
that effect by the other party.
 
3.           Offering Documents. In addition to the Private Placement
Memorandum, the Company will prepare and provide to the Placement Agent such
amendments or supplements thereto as the Company and its legal representatives
may deem reasonably, to effectuate the offer and sale of the Shares (the Private
Placement Memorandum and any such amendments or supplements, are collectively
referred to herein as the “Offering Materials”). The Company shall cooperate
with Placement Agent and shall provide to Placement Agent such information, as
Placement Agent reasonably believes necessary in connection with its assistance
in the preparation of, or for inclusion in, the Offering Materials, and provide
such other information, as Placement Agent reasonably believes appropriate to
its engagement hereunder. The Company authorizes the Placement Agent to transmit
the Offering Materials to potential purchasers of the Shares, and shall furnish
to Placement Agent copies of the Offering Materials in such quantities as
Placement Agent may from time to time request. The Company shall prepare forms
of purchase agreements or subscription agreements containing terms and
conditions customary for private placement offerings, to be entered into by the
Company and each purchaser of Shares, which forms shall be provided to the
Placement Agent's offerees only upon the review and approval of both the Company
and Placement Agent.

3900 Paseo del Sol, Santa Fe New Mexico 87507
 
 
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4.
Compensation.

 
(a)                    Fees. As compensation for Placement Agent's services
hereunder, the Company shall pay Placement Agent a fee of ten percent (10%) of
the Aggregate Consideration (as defined below) received or receivable by the
Company at each closing of the Offering. For purposes of calculating Placement
Agent's fees, “Aggregate Consideration” shall consist of the payments made to,
and actually received by the Company from the sale of Shares to investors placed
by the Placement Agent in connection with the Offering (the “Agent's
Investors”). The Placement Agent acknowledges that investor funds may be placed
in escrow pending the satisfaction of all closing conditions and the acceptance
of the subscription documents by the Company, and that such escrowed funds shall
not be deemed to constitute Aggregate Consideration until (and if) such funds
are released to the Company.
 
(b)                    Warrants. On each closing date of the sale of Shares, the
Placement Agent shall be entitled to receive warrants (the “Placement Agent
Warrants”) to purchase shares of common stock of the Company in an amount equal
to fifteen percent (15%) of the number of Shares sold by the Company to the
Agent's Investors at such closing. The Placement Agent Warrants shall be issued
at the closing of the Offering, in substantially the form attached hereto as
Exhibit A, and shall expire five (5) years after issuance. The Placement Agent
Warrants shall be exercisable at a per share price of $0,025.

 
5.           Representations, Warranties and Covenants of the Company.    The
Company represents and warrants to, and covenants with, Placement Agent as
follows:
 
(a)                    During the Authorization Period, the Company shall not
use, disseminate, publish, distribute or refer to any materials in connection
with any offering of the Shares, including without limitation, any Offering
Materials, unless such materials are also provided to the Placement Agent.
 
(b)                    The Company has not taken, and will not take, any action,
directly or indirectly, so as to cause any of the transactions contemplated by
this Agreement to fail to be entitled to exemption from registration under all
applicable securities laws. The Company shall ensure that neither it, nor any of
its affiliates, nor any person (other than the Placement Agent who agrees to
comply with this requirement) acting on behalf of the Company or any such
affiliates, has engaged or will engage in any general advertising or general
solicitation (as those terms are used in Regulation D under the Securities Act
of 1933) with respect to the Shares.
 
(c)                    The Company shall, from time to time, take such action as
Placement Agent may reasonably request to qualify the Shares for offering and
sale as a private placement under the securities laws of such states or other
jurisdictions as Placement Agent may reasonably request and to comply with such
laws so as to permit such offers and sales.
 
3900 Paseo del Sol, Santa Fe New Mexico 87507

 
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(d)                    The Company shall make available to Placement Agent, at
the Company's expense, all financial statements, projections, appraisals,
surveys and other information prepared by the Company in connection with the
Offering for use in the offering. The Company shall, upon reasonable request,
cause its directors, officers, personnel, counsel, accountants, and other
representatives to meet with Placement Agent or its representatives to discuss
all information relevant for disclosure in any Offering Materials. The Company
shall cooperate in any reasonable investigation requested by Placement Agent or
its representatives or counsel (including the production of information at the
Company's offices or copies of such information at the offices of Placement
Agent) for the purpose of examining the accuracy and completeness of the
statements contained in the Offering Materials.
 
(e)                    To the best of the Company's knowledge, the Offering
Materials as of the date thereof and as of the closing date of each sale of
Shares, are and will be true, complete and correct in all material respects and
do not, and will 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 contained therein, in light of the circumstances under which they
were made, not misleading. The Company shall advise Placement Agent immediately
of the occurrence of any event or other change which results in the Offering
Materials containing an untrue statement of a material fact or omitting to state
a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading, and shall furnish to Placement Agent copies of
amended or supplemented Offering Materials that correct such statement or
omission in such quantities as Placement Agent may from time to time request
upon being so advised.

 
(f)                    With respect to any financial or other projections
included or to be included in the Offering Materials, if any, the Company
represents and warrants that they have been, or will be, prepared in good faith
on the basis of reasonable assumptions. The Company recognizes and confirms that
Placement Agent: (i) will be using and relying primarily on the information in
the Offering Materials and information available from generally recognized
public sources in performing the services contemplated hereunder, without having
independently verified the accuracy or completeness thereof, (ii) does not
assume responsibility for the accuracy or completeness of the Offering Materials
or such other information, and (iii) will not make any appraisal of any assets
owned or used by the Company.

 
(g)                    (i) The Company has full corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder, and
all consents, authorizations, approvals and orders required in connection with
the execution, delivery and performance hereof have been obtained; (ii) this
Agreement is a valid and binding obligation of the Company, enforceable in
accordance with its terms, except to the extent that the enforceability hereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors generally and general principles of equity; and (iii)
the execution, delivery and performance of this Agreement will not conflict
with, result in a breach of any of the terms or provisions of, or constitute a
violation or a default under, the Company's charter, by-laws or comparable
documents or under any material agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound.

3900 Paseo del Sol, Santa Fe New Mexico 87507
 
 
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6.            Representations and Covenants of Placement Agent: Placement Agent
represents and warrants to, and covenants with, the Company as follows:
 
(a)                    None of Placement Agent, its affiliates or any persons
acting on the behalf of Placement Agent or any such affiliates has engaged in or
will engage in any general solicitation or general advertising (as those terms
are used in Regulation D under the Securities Act) with respect to the Shares.
 
(b)                    Placement Agent will use its best efforts to conduct the
offering and sale of the Shares (i) in a manner consistent with the Private
Placement Memorandum and (ii) so that the Shares are sold in a transaction or
series of transactions exempt from registration under the Securities Act.
 
(c)                    The Offering Materials will be sent only to persons that
Placement Agent reasonably believes are “accredited investors” (as defined under
Rule 501(a) of the Securities Act).
 
(d)                    Placement Agent will not make any representation or
warranty as to the Shares or the Company except those expressly stated in the
Offering Materials.
 
(e)                    Placement Agent is a broker-dealer registered as such
under applicable provisions of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), including, without limitation, Section 15 of the Exchange
Act.

 
7.             Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and shall be mailed or delivered (a) if to the
Company, at its principal office at 3900 Paseo del Sol, Santa Fe, New Mexico
87507, Attention: Mark Cola, President, and (b) if to Placement Agent, at the
address set forth on the first page of this Agreement, Attention: Mark Gillis,
Chief Executive Officer.
 
8.             Non-Disclosure of Confidential Information. The Placement Agent
acknowledges that it is the policy of the Company to maintain as confidential
all valuable information heretofore or hereafter acquired, developed or used by
the Company in relation to its business, operations, employees and customers
which may give the Company a competitive advantage in its industry, including
the information set forth in the Private Placement Memorandum of the Company
(all such information is hereinafter referred to as “Confidential Information”).
The parties recognize that, by reason of its access to the Private Placement
Memorandum and other information about the Company, the Placement Agent may
acquire Confidential Information. The Placement Agent recognizes that all such
Confidential Information is the property of the Company. In consideration of the
Company entering into this Agreement, the Placement Agent agrees that it shall
never, directly or indirectly, intentionally or unintentionally, publicly
disseminate or otherwise disclose any Confidential Information obtained during
its engagement by the Company without the prior written consent of the Company,
unless and until such information is otherwise known to the public generally or
is not otherwise secret and confidential (through no fault of the Placement
Agent), it being understood that the obligation created by this subparagraph
shall survive the termination of this Agreement.
 
3900 Paseo del Sol, Santa Fe New Mexico 87507

 
 
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9.             Registration Rights. If, subsequent to the date hereof, the
Company proposes to file a registration statement under the Securities Act, as
amended (“Securities Act”) with respect to an offering of Company's equity
securities, or securities or other obligations exercisable or exchangeable for,
or convertible into, such equity securities (“Securities”), by the Company for
its own account or for shareholders of the Company for their account, then the
Company shall (x) give written notice of such proposed filing to the Placement
Agent as soon as practicable, which notice shall describe, among other things,
the amount of Securities to be included in such offering and the intended
method(s) of distribution, and (y) offer to the Placement Agent in such notice
the opportunity to register the sale of such number of shares of Warrant Stock
as the Placement Agent may request in writing within ten (10) days following
receipt of such notice, subject to customary underwriter cutbacks in connection
with such offering. For purposes hereof, “Warrant Stock” means the shares of
common stock issuable upon exercise of the Placement Agent Warrants.

 
10.           Miscellaneous.
 
(a)           This Agreement sets forth the entire agreement between the
parties, supersedes and merges all prior written or oral agreements with respect
to the subject matter hereof, may only be amended, modified or waived in writing
and signed by each party to be bound thereby, and shall be governed by the laws
of the State of California applicable to agreements made and to be performed
entirely within such State. Each party hereto hereby irrevocably submits for
purposes of any action arising from this Agreement brought by the other party
hereto to the jurisdiction of the courts of California and the U.S. District
Court for the County of Los Angeles, California.
 
(b)           The Company (for itself, anyone claiming through it or in its
name, and on behalf of its equity holders) and Placement Agent each hereby
irrevocably waive any right they may have to a trial by jury in respect of any
claim based upon or arising out of this Agreement or the transactions
contemplated hereby.
 
(c)           This Agreement may not be assigned by either party without the
prior written consent of the other party.
 
(d)           If any provision of this Agreement is determined to be invalid or
unenforceable in any respect, such determination will not affect such provision
in any other respect or any other provision of this Agreement, which will remain
in full force and effect.

3900 Paseo del Sol, Santa Fe New Mexico 87507
 
 
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[Signature page follows]

3900 Paseo del Sol, Santa Fe New Mexico 87507
 
 
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Please confirm that the foregoing correctly sets forth our agreement by signing
and returning to the Company the enclosed duplicate copy of this Agreement.

 
Very truly yours,
     
SIGMA LABS, INC.
     
By:
/s/ Mark J. Cola
 
Name: Mark J. Cola
 
Title: President

 
Accepted and agreed to as of
the date first written above
 
HUDSON VALLEY CAPITAL MANAGEMENT CORP

By:
   
Name: Mark Gillis.
 
Title: Chief Executive Officer
 

3900 Paseo del Sol, Santa Fe New Mexico 87507
 
 
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Please confirm that the foregoing correctly sets forth our agreement by signing
and returning to the Company the enclosed duplicate copy of this Agreement.

 
Very truly yours,
     
SIGMA LABS, INC.
     
By:
   
Name: Mark Cola
 
Title: President

Accepted and agreed to as of
the date first written above
 
HUDSON VALLEY CAPITAL MANAGEMENT CORP

By:
/s/ Mark Gillis  
Name: Mark Gillis.
 
Title: Chief Executive Officer
 

 
 
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Exhibit A
 
Form of Placement Agent Warrant
 
[See attached]
 
3900 Paseo del Sol, Santa Fe New Mexico 87507

 
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