Exhibit 10.2
 
MAGNEGAS CORPORATION
Placement Agency Agreement
Preferred Stock and Warrants

This Placement Agency Agreement (the “Agreement”) is entered into by and between
MagneGas Corporation, a Delaware corporation (the “Company”), and Northland
Securities, Inc. (the “Agent”) effective as of January 21, 2014.  The Agreement
supplements that certain letter agreement between the Company and Northland
Securities, Inc. dated April 26, 2013 (the “Letter Agreement”) by providing
additional information with respect to the Private Placement (as defined below).
 
1.      Engagement And Services.
 
1.1           Engagement.  The Company hereby engages the Agent exclusively to
act as placement agent to the Company concerning a potential private placement
(the “Private Placement”) of up to $2,141,132.80 (the “Shares”) of the Company’s
preferred stock, par value $.001 per share (the “Preferred Stock”) and warrants
(the “Warrants”), which are exercisable for shares of the Company’s common stock
(the “Common Stock”), par value $.001 per share (the “Warrant Shares” and
together with the Shares and the Warrants, the “Securities”). The final terms of
the Private Placement, however, will be negotiated between the Company and the
investors who purchase the Securities in the Private Placement.  The Agent
hereby accepts such engagement on a “reasonable efforts” basis upon the terms
and conditions set forth in this Agreement.  This Agreement shall not give rise
to any commitment by the Agent to purchase or sell any of the Securities, and
the Agent shall have no authority to bind the Company.  The Company agrees that
it will only sell Securities in the Private Placement to sophisticated
institutional or accredited investors.  The Company and the Agent agree and
acknowledge that the Agent is not acting as an underwriter with respect to the
Private Placement and the Company shall determine the purchasers in the Private
Placement in its sole discretion.
 
1.2           Services.  In undertaking this assignment, the Agent will, among
other things, provide the services to the Company outlined in the Letter
Agreement, including identifying potential investors (the “Potential
Investors”).  The Agent is permitted to engage selected dealers and co-agents in
performing the services hereunder.
 
2.      Fees And Expenses.
 
2.1           Agent Fees.  The Company hereby agrees to pay the Agent, as
compensation for its services hereunder, the fees and expenses set forth in the
Letter Agreement.  For the avoidance of doubt, as set forth in the second
paragraph of Section C(1) of the Letter Agreement, for the consideration of $50
at the Closing Date, the Company will sell to the Agent, a warrant to purchase
shares of the Common Stock equal to 5.0% (or 2.5% if the Company raises funds
through investors) of the Shares sold in the Private Placement (the “Agent
Warrants”).  The Agent Warrants will be in the form attached hereto as
Attachment B.
 
3.      Representations And Warranties Of The Company.  The Company represents
and warrants to the Agent as follows:
 
3.1           Authorization. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement has been taken.  The Company has the
requisite corporate power to enter into this Agreement and carry out and perform
its obligations under the terms of this Agreement.  At the closing of the
Private Placement (the “Closing”), the Company will have the requisite corporate
power to issue and sell the Shares, the Warrants, the Agent Warrants, and the
Common Stock issuable upon the exercise of the Warrants and the exercise of the
Agent Warrants (the “Agent Warrant Shares”).  This Agreement has been duly
authorized, executed and delivered by the Company and, upon due execution and
delivery by the Agent, this Agreement will be a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
or by equitable principles or to the extent the indemnification and contribution
provisions of the Letter Agreement may be limited by applicable federal or state
securities laws.
 
 
 
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3.2           No Conflict with Other Instruments.  The execution, delivery and
performance of this Agreement, the issuance and sale of the Securities to be
sold by the Company in the Private Placement, the issuance of the Agent
Warrants, the issuance of the Warrant Shares and the Agent Warrant Shares, and
the consummation of the actions contemplated by this Agreement (which for all
purposes herein shall include the Private Placement, the sale of the Agent
Warrants and the issuance of the Agent Warrant Shares) will not (a) result in
any violation of, be in conflict with, or constitute a default under, with or
without the passage of time or the giving of notice:  (i) any provision of the
Company’s or its subsidiaries certificate of incorporation or bylaws (or similar
governing documents) as in effect on the date hereof or the date of the Closing
(the “Closing Date”); (ii) any provision of any judgment, arbitration ruling,
decree or order to which either of the Company or its subsidiaries are a party
or by which any of them is bound; (iii) any bond, debenture, note or other
evidence of indebtedness, or any lease, contract, mortgage, indenture, deed of
trust, loan agreement, joint venture or other agreement, instrument or
commitment to which the Company or its subsidiaries are a party or by which any
of them or their respective properties are bound; or (iv) any statute, rule, law
or governmental regulation applicable to the Company or its subsidiaries; or (b)
result in the creation or imposition of any lien, encumbrance, claim, security
interest or restriction whatsoever upon any of the properties or assets of the
Company or its subsidiaries or any acceleration of indebtedness pursuant to any
obligation, agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or any indenture, mortgage, deed of trust or any
other agreement or instrument to which the Company or its subsidiaries are a
party or by which either of them is bound or to which any of the property or
assets of the Company or its subsidiaries are subject.  No consent, approval,
authorization or other order of, or registration, qualification or filing with,
any regulatory body, administrative agency, or other governmental body is
required for the execution and delivery of this Agreement by the Company and the
valid issuance or sale of the Securities, the Agent Warrants and the Agent
Warrant Shares by the Company pursuant to this Agreement, other than such as
have been made or obtained and that remain in full force and effect, and except
for the filing of a Form D or any filings required to be made under state
securities laws, which shall be timely filed by the Company.
 
3.3           Certificate of Incorporation; Bylaws. The form of certificate of
incorporation and bylaws of the Company attached as an exhibit to the Company’s
filings with the Securities and Exchange Commission (the “SEC”), are true,
correct and complete copies of the certificate of incorporation and bylaws of
the Company, as in effect on the date hereof.
 
3.4           Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted.  Each of the Company and its
subsidiaries has full power and authority to own, operate and occupy its
properties and to conduct its business as presently conducted, as presently
proposed to be conducted, and is duly qualified to transact business and is in
good standing in each jurisdiction in which the failure so to qualify would have
a material adverse effect on the Company’s and its subsidiaries’ business,
financial condition, properties, operations, prospects or assets or its ability
to perform its obligations under this Agreement (a “Material Adverse Effect”).
 
 
 
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3.5           SEC Filings. The consolidated financial statements contained in
each report, registration statement and definitive proxy statement filed by the
Company with the SEC (all documents filed with the SEC, the “Company SEC
Documents”) and the Private Placement Documents:  (i) complied as to form in all
material respects with the published rules and regulations of the SEC applicable
thereto; (ii) the information contained therein as of the respective dates
thereof was accurate and complete and did not contain an 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 light of the circumstances under
which they were made not misleading; (iii) were prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods covered, except as may be indicated in the notes to such
financial statements and (in the case of unaudited statements) as permitted by
Form 10-Q of the SEC, and except that unaudited financial statements may not
contain footnotes and are subject to year-end audit adjustments; and (iv) fairly
present the consolidated financial position of the Company and its subsidiaries
as of the respective dates thereof and the consolidated results of operations,
cash flows and the changes in stockholders’ equity of the Company and its
subsidiaries for the periods covered thereby.  Except as set forth in the
financial statements included in the Company SEC Documents, neither the Company
nor its subsidiaries has any liabilities, contingent or otherwise, other than
liabilities incurred in the ordinary course of business subsequent to September
30, 2013, and liabilities of the type not required under generally accepted
accounting principles to be reflected in such financial statements.  Such
liabilities incurred subsequent to September 30, 2013, are not, in the
aggregate, material to the financial condition or operating results of the
Company and its subsidiaries, taken as a whole.
 
3.6           Capitalization. The authorized capital stock of the Company
consists of (i) 90,000,000 shares of Common Stock, of which (A) 23,109,109
shares were issued and outstanding as of the date of this Agreement, and (B)
7,009,121 shares were reserved for issuance upon the exercise or conversion, as
the case may be, of outstanding options, warrants or other convertible
securities as of the date of this Agreement; and (ii) 10,000,000 shares of
preferred stock, 1,000,000 of which were issued and outstanding as of the date
of this Agreement, and none are outstanding or reserved for issuance upon the
exercise or conversion, as the case may be, of outstanding options, warrants or
other convertible securities.  All issued and outstanding shares of Preferred
Stock have been duly authorized and validly issued, are fully paid and
nonassessable, were not issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities, and, except as disclosed in the
Company SEC Documents, have been issued and sold in compliance with the
registration requirements of federal and state securities laws or the applicable
statutes of limitation have expired.  Except as set forth in the Letter
Agreement, in the subscription agreements executed in connection with the
Private Placement (collectively, the “Purchase Agreement”) or in the Company SEC
Documents, there are no (i) outstanding rights (including, without limitation,
preemptive rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any unissued shares of capital stock or other equity
interest in the Company, or any contract, commitment, agreement, understanding
or arrangement of any kind to which the Company or its subsidiaries is a party
and relating to the issuance or sale of any capital stock or convertible or
exchangeable security of the Company or its subsidiaries; or (ii) obligations of
the Company to purchase redeem or otherwise acquire any of its outstanding
capital stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof.  There are no anti-dilution or price adjustment
provisions, co-sale rights, registration rights, rights of first refusal or
other similar rights contained in the terms governing any outstanding security
of the Company that will be triggered by the issuance of the Securities, the
Agent Warrants or the Agent Warrant Shares.
 
3.7           Subsidiaries.  Except as set forth in the Company SEC Documents,
the Company does not presently own or control, directly or indirectly, and has
no stock or other interest as owner or principal in, any other corporation or
partnership, joint venture, association or other business venture or entity
(each a “subsidiary”).  The Company’s subsidiaries are duly incorporated or
organized, validly existing and in good standing under the laws of their
jurisdiction of incorporation or organization and have all requisite power and
authority to carry on their business as now conducted.  Such subsidiaries are
duly qualified to transact business and is in good standing in each jurisdiction
in which the failure to so qualify would have a material adverse effect on their
respective business or properties.  All of the outstanding capital stock or
other voting securities of such subsidiaries are owned by the Company, directly
or indirectly, free and clear of any liens, claims, or encumbrances.
 
 
 
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3.8           Valid Issuance of Securities.  The Securities, the Agent Warrants
and the Agent Warrant Shares are duly authorized and, when issued, sold,
delivered and paid for in accordance with the terms of the Purchase Agreement,
the Securities or the Agent Warrants, as the case may be, the shares of common
stock issuable pursuant to the Warrants and the Agent Warrants will be duly and
validly authorized and issued, fully paid and nonassessable, free from all
taxes, liens, claims, encumbrances and charges with respect to the issue
thereof; provided, however, that the Securities, the Agent Warrants and the
Agent Warrant Shares may be subject to restrictions on transfer under state
and/or federal securities laws or as otherwise set forth herein.  The issuance,
sale and delivery of the Securities, the Agent Warrants and the Agent Warrant
Shares in accordance with the terms hereof or of the Purchase Agreement or the
Agent Warrants (as the case may be) will not be subject to preemptive rights of
stockholders of the Company.  The Warrant Shares and the Agent Warrant Shares
have been duly reserved for issuance upon exercise of the Warrants and Agent
Warrants.
 
3.9           Private Placement. Assuming the accuracy of the representations of
the Purchasers in the Purchase Agreement, on the Closing Date and solely as this
Section 3.9 relates to the issue and sale of the Warrant Shares on the date(s)
of exercise of the Warrants and the issue and sale of the Agent Warrant Shares
on the date(s) of exercise of the Agent Warrants, the offer, issue and sale of
the Securities, the issuance of the Agent Warrant Shares upon exercise of the
Agent Warrant (assuming no change in applicable law prior to the date the Shares
and Agent Warrant Shares are issued), are and will be exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933
(the “Securities Act”) and have been or will be registered or qualified (or are
or will be exempt from registration and qualification) under the registration,
permit or qualification requirements of all applicable state securities
laws.  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 require registration under the Securities Act of the issuance of the
Securities to the purchasers in the Private Placement or the Agent
Warrants.  The Shares, and upon the exercise of the Warrants  pursuant to their
terms, the Warrant Shares and Agent Warrant Shares will be quoted on the Nasdaq
Stock Market (the “Principal Market”).  Other than the Company SEC Documents,
the Company has not distributed and will not distribute prior to the Closing any
offering material in connection with the offering and sale of the Securities,
unless such offering materials are provided to the Agent prior to or
simultaneously with such delivery to the offerees of the Securities.  The
Company agrees that no Private Placement Documents (as hereinafter defined) or
materials presented or distributed to the Potential Investors, including the
Company SEC Documents, shall contain an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
 
3.10           Litigation. Except as set forth in the Company SEC Documents,
there is no action, suit, proceeding nor investigation pending or, to the
Company’s knowledge, currently threatened against the Company or its
subsidiaries that (a) if adversely determined would reasonably be expected to
have a Material Adverse Effect on the Company or its subsidiaries or (b) would
be required to be disclosed in the Company’s Annual Report on Form 10-K under
the requirements of Item 103 of Regulation S-K.  The foregoing includes, without
limitation, any action, suit, proceeding or investigation, pending or
threatened, that questions the validity of this Agreement or the right of the
Company to enter into such Agreement and perform its obligations
hereunder.  Neither the Company nor its subsidiaries are subject to any
injunction, judgment, decree or order of any court, regulatory body, arbitral
panel, administrative agency or other government body.
 
3.11           Governmental Consents.  No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, local or provincial governmental authority on
the part of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement, except for notices required or
permitted to be filed with certain state and federal securities commissions,
which notices will be filed on a timely basis.
 
 
 
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3.12           No Brokers.  Except for any fees payable to the Agent, no broker,
finder or investment banker is entitled to any brokerage, finder’s or other fee
or commission in connection with the transactions contemplated by this Agreement
based on arrangements made by the Company.
 
3.13           Compliance. Neither the Company nor its subsidiaries are in
violation of its certificate of incorporation or bylaws (or similar governing
documents).  Neither the Company nor its subsidiaries have been advised or have
reason to believe, that it is not conducting its business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local, state
and federal environmental laws and regulations; except where failure to be so in
compliance would not have a Material Adverse Effect.  Each of the Company and
its subsidiaries has all necessary franchises, licenses, certificates and other
authorizations from any foreign, federal, state or local government or
governmental agency, department or body that are currently necessary for the
operation of the business of the Company and its subsidiaries as currently
conducted, except where the failure to currently possess such franchises,
licenses, certificates and other authorizations would not reasonably be expected
to have a Material Adverse Effect.
 
3.14           No Material Adverse Changes. Except as disclosed in the Company
SEC Documents, since September 30, 2013, there has not been any change that has
had a Material Adverse Effect.   Since September 30, 2013, the Company has not
declared or paid any dividend or distribution on its capital stock.
 
3.15           Contracts. Except for matters which are not reasonably likely to
have a Material Adverse Effect and those contracts that are substantially or
fully performed or expired by their terms, the contracts listed as exhibits to
or described in the Company SEC Documents that are material to the Company or
its subsidiaries and all amendments thereto, are in full force and effect on the
date hereof, and neither the Company nor, to the Company’s knowledge, any other
party to such contracts is in breach of or default under any of such
contracts.  Neither the Company nor its subsidiaries has any contracts or
agreements that would constitute a material contract as such term is defined in
Item 601(b)(10) of Regulation S-K, except for such contracts or agreements that
are filed as exhibits to or described in the Company SEC Documents.
 
3.16           Intellectual Property.
 
(a)           The Company has ownership or license or legal right to use all
patents, copyrights, trade secrets, know-how, trademarks, trade names, customer
lists, designs, manufacturing or other processes, computer software, systems,
data compilation, research results or other proprietary rights used in the
business of the Company or its subsidiaries (collectively “Intellectual
Property”).  All of such patents, registered trademarks and registered
copyrights have been duly registered in, filed in or issued by the United States
Patent and Trademark Office, the United States Register of Copyrights or the
corresponding offices of other jurisdictions and have been maintained and
renewed in accordance with all applicable provisions of law and administrative
regulations in the United States and all such jurisdictions.
 
(b)           The Company believes it has taken all reasonable steps required in
accordance with sound business practice and business judgment to establish and
preserve its and its subsidiaries’ ownership of all material Intellectual
Property with respect to their products and technology.  To the knowledge of the
Company, there is no infringement of the Intellectual Property by any third
party.
 
(c)           To the knowledge of the Company, the present business, activities
and products of the Company and its subsidiaries do not infringe any
intellectual property of any other person.  No proceeding charging the Company
or its subsidiaries with infringement of any adversely held Intellectual
Property has been filed and the Company is unaware of any facts which are
reasonably likely to form a basis for any such proceeding.
 
 
 
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(d)           No proceedings have been instituted or pending or, to the
knowledge of the Company, threatened, which challenge the rights of the Company
or its subsidiaries to the use of the Intellectual Property.  The Intellectual
Property owned by the Company and its subsidiaries, and to the knowledge of the
Company, the Intellectual Property licensed to the Company and its subsidiaries,
has not been adjudged invalid or unenforceable, in whole or in part.  There is
no pending or, to the knowledge of the Company, threatened proceeding by others
challenging the validity or scope of any such Intellectual Property, and the
Company is unaware of any facts which are reasonably likely to form a basis for
any such claim.  Each of the Company and its subsidiaries has the right to use,
free and clear of material claims or rights of other persons, all of its
customer lists, designs, computer software, systems, data compilations, and
other information that are required for its products or its business as
presently conducted.  Neither the Company nor its subsidiaries is making
unauthorized use of any confidential information or trade secrets of any person.
 
(e)           The activities of any of the employees on behalf of the Company or
of its subsidiaries do not violate any agreements or arrangements between such
employees and third parties are related to confidential information or trade
secrets of third parties or that restrict any such employee’s engagement in
business activity of any nature.  Each former and current employee or consultant
of the Company or its subsidiaries is a party to a written contract with the
Company or its subsidiaries that assigns to the Company or its subsidiaries all
rights to all inventions, improvements, discoveries and information relating to
the Company or its subsidiaries, except for any failure to so do as would not
reasonably be expected to result in a Material Adverse Effect.
 
(f)           All licenses or other agreements under which (i) the Company or
its subsidiaries employs rights in Intellectual Property, or (ii) the Company or
its subsidiaries has granted rights to others in Intellectual Property owned or
licensed by the Company or its subsidiaries are in full force and effect, and
there is no default (and there exists no condition which, with the passage of
time or otherwise, would constitute a default by the Company or such subsidiary)
by the Company or its subsidiaries with respect thereto.
 
3.17           Securities Market Compliance. The Company has taken no action
designed to, or likely to have the effect of, terminating the quotation of the
Common Stock (including the Shares, Warrant Shares and the Agent Warrant Shares)
on the Principal Market.  The Company is and on the Closing Date will be in
compliance with all of the then-applicable requirements for continued quotation
of the Common Stock on the Principal Market.
 
3.18           Accountants. DKM Certified Public Accountants, who expressed its
opinion with respect to the consolidated financial statements contained in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2012, have
advised the Company that they are, and to the knowledge of the Company they are,
independent accountants as required by the Securities Act and the rules and
regulations promulgated thereunder.
 
3.19           Taxes.  The Company and its subsidiaries have filed all necessary
federal, state, local and foreign income and franchise tax returns and have paid
or accrued all taxes shown as due thereon, and the Company and its subsidiaries
have no knowledge of a tax deficiency which has been or might be asserted or
threatened against it by any taxing jurisdiction, other than any deficiency
which the Company or its subsidiaries are contesting in good faith and with
respect to which adequate reserves for payment have been established.
 
3.20           Insurance.  The Company and its subsidiaries maintain and will
continue to maintain insurance of the types and in the amounts that the Company
reasonably believes are adequate for its and its subsidiaries’ business,
including, but not limited to, insurance covering all real and personal property
owned or leased by the Company or its subsidiaries against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against
by similarly situated companies, all of which insurance is in full force and
effect.
 
 
 
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3.21           Transfer Taxes.  On the Closing Date, all stock transfer or other
taxes (other than income taxes) that are required to be paid in connection with
the sale and transfer of the Securities and the Agent Warrants will be, or will
have been, fully paid or provided for by the Company and the Company will have
complied with all laws imposing such taxes.
 
3.22           Investment Company.  The Company (including its subsidiaries) is
not an “investment company” or an “affiliated person” of, or “promoter” or
“principal underwriter” for an investment company, within the meaning of the
Investment Company Act of 1940 and will not be deemed an “investment company” as
a result of the transactions contemplated by the Purchase Agreement.
 
3.23           Related Party Transactions.  To the knowledge of the Company, no
transaction has occurred between or among the Company or any of its affiliates
(including, without limitation, its subsidiaries), officers or directors or any
affiliate or affiliates of any such affiliate officer or director that with the
passage of time will be required to be disclosed pursuant to Section 13, 14 or
15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) (assuming the
Company’s Preferred Stock and Common Stock was registered under the Exchange
Act) other than those transactions that have already been so disclosed.
 
3.24           Books and Records. The books, records and accounts of the Company
and its subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the operations of, the
Company and its subsidiaries.
 
3.25           Disclosure Controls and Internal Controls.
 
(a)           The Company and its subsidiaries have established and maintain
disclosure controls and procedures (as such term is defined in Rule 13a-15 under
the Exchange Act), which (i) are designed to ensure that material information
relating to the Company or its subsidiaries is made known to the Company’s
principal executive officer and its principal financial officer by others within
those entities particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared; and (ii) provide for the
periodic evaluation of the effectiveness of such disclosure controls and
procedures as of the end of the period covered by the Company’s most recent
annual or quarterly report filed with the SEC.
 
(b)           Except as described in the Company SEC Documents, the Company and
its subsidiaries maintain a system of 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 generally accepted accounting principles and to maintain asset
and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any difference.  The
Company and its subsidiaries maintain disclosure controls and procedures (as
such term is defined in Rule 13a-15 under the Exchange Act) that are effective
in ensuring that information required to be disclosed by the Company in the
reports that it files with or submits to the SEC is recorded, processed,
summarized and reported, within the time periods specified in the rules and
forms of the SEC, including, without limitation, controls and procedures
designed in to ensure that information required to be disclosed by the Company
in the reports that it files or submits under the Exchange Act is accumulated
and communicated to the Company’s management, including its principal executive
officer or officers and its principal financial officer or officers, as
appropriate, to allow timely decisions regarding required disclosure.  Except as
described in the Company SEC Documents, the Company is not aware of (i) any
significant deficiency in the design or operation of internal controls which
could adversely affect the Company’s or its subsidiaries’ ability to record,
process, summarize and report financial data or any material weaknesses in
internal controls; or (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company’s or
its subsidiaries’ internal controls.
 
 
 
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(c)           Since the date of the most recent evaluation of such disclosure
controls and procedures, there have been no changes that have materially
affected, or are reasonably likely to materially affect, the Company’s or its
subsidiaries’ internal control over financial reporting, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
 
(d)           Except as described in the Company SEC Documents, there are no
material off-balance sheet arrangements (as defined in Item 303 of Regulation
S-K), or any other relationships with unconsolidated entities (in which the
Company or its control persons have an equity interest) that may have a material
current or future effect on the Company’s or its subsidiaries’ financial
condition, revenues or expenses, changes in financial condition, results of
operations, liquidity, capital expenditures or capital resources.
 
(e)           To the knowledge of the Company, except as described in the
Company SEC Documents, the board of directors has not been informed, nor is any
director of the Company aware, of (1) any significant deficiencies in the design
or operation of the internal controls of the Company or its subsidiaries which
could adversely affect the Company’s or its subsidiaries’ ability to record,
process, summarize and report financial data or any material weakness in the
Company’s or its subsidiaries’ internal controls; or (2) any fraud, whether or
not material, that involves management or other employees of the Company or its
subsidiaries who have a significant role in the Company’s or its subsidiaries’
internal controls.
 
3.26           No General Solicitation.  Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged or will
engage in any form of general solicitation or general advertising (within the
meaning of Regulation D promulgated under the Securities Act) in connection with
the offer or sale of the Securities or the Agent Warrants.
 
3.27           Anti-Bribery.  Each of the Company, its subsidiaries, its
affiliates and any of their respective officers, directors, supervisors,
managers, agents, or employees, has not violated, its participation in the
offering will not violate, and the Company has instituted and maintains policies
and procedures designed to ensure continued compliance with, each of the
following laws:  (a) anti-bribery laws, including but not limited to, any
applicable law, rule, or regulation of any locality, including but not limited
to any law, rule, or regulation promulgated to implement the OECD Convention on
Combating Bribery of Foreign Public Officials in International Business
Transactions, signed December 17, 1997, including the U.S. Foreign Corrupt
Practices Act of 1977, as amended, or any other law, rule or regulation of
similar purposes and scope, (b) anti-money laundering laws, including but not
limited to, applicable federal, state, international, foreign or other laws,
regulations or government guidance regarding anti-money laundering, including,
without limitation, Title 18 US. Code section 1956 and 1957, the Patriot Act,
the Bank Secrecy Act, and international anti-money laundering principles or
procedures by an intergovernmental group or organization, such as the Financial
Action Task Force on Money Laundering, of which the United States is a member
and with which designation the United States representative to the group or
organization continues to concur, all as amended, and any Executive order,
directive, or regulation pursuant to the authority of any of the  foregoing, or
any orders or licenses issued thereunder or (c) laws and regulations imposing
U.S. economic sanctions measures, including, but not limited to, the
International Emergency Economic Powers Act, the Trading with the Enemy Act, the
United Nations Participation Act and the Syria Accountability and Lebanese
Sovereignty Act, all as amended, and any Executive Order, directive, or
regulation pursuant to the authority of any of the foregoing, including the
regulations of the United States Treasury Department set forth under 31 CFR,
Subtitle B, Chapter V, as amended, or any orders or licenses issued thereunder. 
Neither the Company nor any director, officer, agent, employee or other person
acting on behalf of the Company has, in the course of its actions for, or on
behalf of, the Company (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; or
(iii) made any unlawful bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or
employee.
 
 
 
Placement Agency Agreement (PIPE) 
Page 8

 
 
 
 
3.28           Sarbanes-Oxley Act.  The Company is in compliance in all material
respects with any and all applicable requirements of the Sarbanes-Oxley Act of
2002 that are effective as of the date hereof, and any and all applicable rules
and regulations promulgated by the SEC thereunder that are effective as of the
date hereof.
 
3.29           Employee Relations.  Neither the Company nor its subsidiaries is
a party to any collective bargaining agreement or employs any member of a
union.  The Company believes that its relations with its employees are good.  No
executive officer of the Company (as defined in Rule 501(f) of Regulation D
under the Securities Act) has notified the Company that such officer intends to
leave the Company or otherwise terminate such officer’s employment with the
Company.  No executive officer of the Company, to the knowledge of the Company,
is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each such executive
officer does not subject the Company to any liability with respect to any of the
foregoing matters.
 
The Company and its subsidiaries are in compliance with all federal, state,
local and foreign laws and regulations respecting labor, employment and
employment practices and benefits, terms and conditions of employment and wages
and hours, except where failure to be in compliance would not, either
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
 
3.30           Environmental Laws.  Each of the Company and its subsidiaries (i)
is in compliance with any and all Environmental Laws (as hereinafter defined),
(ii) has received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business and (iii) is in compliance
with all terms and conditions of any such permit, license or approval where, in
each of the foregoing clauses (i), (ii) and (iii), the failure to so comply
could be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect.  The term “Environmental Laws” means all federal,
state, local or foreign laws relating to pollution or protection of human health
or the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
 
3.31           No Manipulation; Disclosure of Information.  None of the Company,
its subsidiaries or any executive officer of the Company (as defined in Rule
501(f) of Regulation D under the Securities Act) has taken and will not take any
action designed to or that might reasonably be expected to cause or result in an
unlawful manipulation of the price of the Common Stock or Preferred Stock to
facilitate the sale or resale of the Securities, the Agent Warrants or the Agent
Warrant Shares.  The Company confirms that, to its knowledge, with the exception
of the proposed sale of Securities contemplated in the Purchase Agreement (as to
which the Company makes no representation), neither it nor any other person
acting on its behalf has provided any of the Potential Investors or their agent
or counsel with any information that constitutes or might constitute material,
non-public information.  The Company understands and confirms that the Potential
Investors shall be relying on the foregoing representations in effecting
transactions in securities of the Company.  All disclosures provided to the
Potential Investors regarding the Company, its business and the transactions
contemplated by the Purchase Agreement, including the exhibits to the Purchase
Agreement and the Company SEC Documents, furnished by the Company are true and
correct and do 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.  No
forward-looking statement (within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act) made by the Company or any of its
officers or directors contained in any Company SEC Document or made available to
the public generally since January 1, 2012, has been made or reaffirmed without
a reasonable basis or has been disclosed other than in good faith.  Statistical,
industry-related and market-related data included in the Company SEC Documents
are based on or derived from sources that the Company reasonably and in good
faith believes are reliable and accurate in all material respects.
 
 
 
Placement Agency Agreement (PIPE) 
Page 9

 
 
 
 
3.32           Application of Takeover Protections; Rights Agreement.  The
Company and its 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 the laws of the jurisdiction of its formation which is or could
become applicable to any Potential Investor as a result of the transactions
contemplated by the Purchase Agreement, including, without limitation, the
Company’s issuance of the Securities and any Potential Investor’s ownership of
the Securities.  The Company has not adopted a stockholder rights plan or
similar arrangement relating to accumulations of beneficial ownership of Common
Stock or Preferred Stock or a change in control of the Company.
 
3.33           Bad Actor Disqualification.
 
(a)           With respect to Securities to be offered and sold hereunder in
reliance on Rule 506 under the Securities Act (“Regulation D Securities”), none
of the Company, any of its predecessors, any affiliated issuer, any director,
executive officer, other officer of the Company participating in the Private
Placement, any beneficial owner of 20% or more of the Company's outstanding
voting equity securities (calculated on the basis of voting power), nor any
promoter (as that term is defined in Rule 405 under the Securities Act)
connected with the Company in any capacity at the time of such sale (each, an
“Issuer Covered Person” and, together, “Issuer Covered Persons”) is subject to
any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i)–(viii)
under the Securities Act (a “Disqualification Event”), except for a
Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has
exercised reasonable care to determine whether any Issuer Covered Person is
subject to a Disqualification Event. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e), and has furnished
to the Agent and the Potential Investors a copy of any disclosures provided
thereunder.
 
(b)           The Company is not aware of any person (other than any Issuer
Covered Person or Dealer Covered Person that has been or will be paid (directly
or indirectly) remuneration for solicitation of purchasers in connection with
the sale of any Regulation D Securities.  For the purposes of this subsection,
“Dealer Covered Person” shall mean Northland Securities, Inc. or any of its
directors, executive officers, general partners, managing members or other
officers participating in the Private Placement.
 
(c)           The Company will notify the Agent in writing, prior to the Closing
Date of (i) any Disqualification Event relating to any Issuer Covered Person and
(ii) any event that would, with the passage of time, become a Disqualification
Event relating to any Issuer Covered Person.
 
4.      Further Agreements Of The Company.  The Company covenants and agrees as
follows:
 
4.1           On the Closing Date, the Company will permit the Agent to rely on
any representations and warranties made by the Company to the investors and will
cause its counsel to permit the Agent to rely upon any opinion furnished to the
investors in the Private Placement.
 
4.2           The Company will comply with all of its obligations and covenants
set forth in its agreements with the Potential Investors.  The Company will
promptly deliver to the Agent and their counsel copies of any and all filings
with the SEC and each amendment or supplement thereto, as well as all
prospectuses and free writing prospectuses, prior to the closing of the Private
Placement and six months thereafter (if they are not filed on EDGAR).  The Agent
is authorized on behalf of the Company to use and distribute copies of any
documents provided to the Agent or Potential Investors in connection with the
Private Placement, including Company SEC Documents and the offering memorandum
(as supplemented) (the “Private Placement Documents”) in connection with the
sale of the Securities as, and to the extent, permitted by federal and
applicable state securities laws.  The Private Placement documents do not
contain any material, non-public information regarding the Company.
 
 
 
Placement Agency Agreement (PIPE) 
Page 10

 
 
 
 
4.3           Neither the Company nor any of its affiliates has distributed, and
none of them will distribute, any prospectus or other offering material in
connection with the Private Placement and the sale of the Securities other than
any materials permitted by the Securities Act to be distributed by the Company.
 
4.4           The Company will apply the net proceeds from the sale of the
Securities substantially in the manner set forth in the Private Placement
Documents or for working capital of the Company.
 
4.5           On the Closing Date, the Company will provide the Agent with a
legal opinion of the Company’s counsel in substantially the form attached as
Attachment C.
 
4.6           The Company will make available to the Agent on a confidential
basis all information concerning the business, assets, operations and financial
condition of the Company, which the Agent reasonably requests in connection with
the performance of its obligations hereunder and the due diligence investigation
deemed appropriate by the Agent.  The Company shall make members of management
and other employees available to the Agent and Potential Investors for purposes
of satisfying such parties’ due diligence requirements and consummating the
Private Placement, and shall commit such time and other resources as are
necessary or appropriate to secure reasonable and timely success of a
transaction.  The Company shall inform the Agent of any material events or
developments concerning prospective material events that may come to the
attention of the Company at any point prior to the Closing Date.  The Agent will
be relying, without independent verification, on the accuracy and completeness
of all financial and other information that is and will be furnished to it by
the Company
 
4.7           On the Closing Date, the Company shall deliver to the Agent a
certificate duly executed by an officer of the Company, stating on behalf of the
Company that the representations and warranties contained in Section 3 are true
and correct in all material respects as of the Closing Date as if they had been
made on and as of said date and that the Company has performed and complied with
all obligations and conditions herein required to be performed or complied with
by it on or prior to the Closing and that the appropriate Private Placement
Documents, as of the Closing Date, contain all material statements that are
required to be made therein, do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.  On the Closing Date,
the Company will also deliver to the Agent any additional documents or
instruments reasonably requested by such Agent.
 
4.8           If in connection with the Private Placement, the Agent determines
that they or the Company would be required to make a filing with the Financial
Industry Regulatory Authority, Inc. (“FINRA”) to enable the Agent to act as
agent in the Private Placement, the Company will do the following:
 
(a)           The Company will cooperate with the Agent with respect to all
FINRA filings that the Company or the Agent may be required to make and provide
all information and documentation necessary to make the filings in a timely
manner.
 
(b)           The Company will pay all expenses related to all FINRA filings
that the Company or Agent may be required to make, including, but not limited
to, all printing costs related to all documents required or that the Agent may
reasonably deem necessary, to comply with FINRA rules; any FINRA filing fees;
postage and express charges; and all other expenses incurred in making the FINRA
filings.
 
 
 
Placement Agency Agreement (PIPE) 
Page 11

 
 
 
 
4.9           The Company agrees and understands that this Agreement and the
Letter Agreement in no way constitute a guarantee that the Private Placement
will be successful.  Management acknowledges that the Company is ultimately
responsible for the successful completion of a transaction.
 
4.10           The Company hereby agrees to register or permit the continuance
of sales and/or dealings in the shares underlying the Agent Warrants on the same
terms as those set forth in the Purchase Agreement applicable to the Warrants.
 
5.      Disclosure.  The Company agrees that, except as required by applicable
law or the rules and regulations of the SEC or as permitted herein, any advice
to be provided by an Agent under this Agreement shall not be disclosed publicly
or made available to third parties without the prior approval of such Agent,
which approval shall not be unreasonably withheld.  The Agent agrees that,
except as required by applicable law or the rules and regulations of the SEC or
as permitted herein, that they shall not disclose any material, non-public
information provided to it by the Company to third parties without the prior
written consent of the Company.
 
6.      Indemnification And Contribution.  The indemnification and contribution
provision of the Letter Agreement shall apply to the Private Placement, except
that (i) all references to the “Agreement” therein will be deemed to include
this Agreement, (ii) all references to “Northland” shall refer to the Agent and
its co-agent and selected dealers and (iii) the Company’s indemnification and
contribution obligations thereunder will include any and all losses, claims,
damages, liabilities and expenses, joint or several, to which any Indemnified
Person (as defined in the Letter Agreement) may become subject arising out or
relating to (x) any inaccuracy in the representations and warranties of the
Company herein or any failure of the Company to perform its obligations
hereunder or (y) the transactions contemplated by this Agreement or the Purchase
Agreement.  The Company hereby authorizes the Agent to agree to indemnify any
selected dealers or co-agent on the same terms and conditions as the Company has
agreed to indemnify the Agent.  Therefore, as a matter of clarification, the
Company agrees to indemnify and hold harmless the Agent, its agent, co-agent
selected dealers, officers, directors, managers, members, representatives,
guarantors, sureties and each person who controls the Agent within the meaning
of either Section 15 of the Act or Section 20 of the Securities Exchange Act of
1934 from and against any and all losses, claims, damages, liabilities or
expenses, joint or several, (including reasonable legal or other expenses
incurred by each such person in connection with defending or investigating any
such claims or liabilities, whether or not resulting in any liability to such
person) which they or any of them may incur under the Act, or any state
securities law and the rules and regulations thereunder or the rules and
regulations under any state securities laws or any other statute or at common
law or otherwise and to reimburse persons indemnified as above for any legal or
other expense (including the cost of any investigation and preparation) incurred
by any of them in connection with any litigation, whether or not resulting in
any liability.
 
7.      Survival.  The respective covenants, agreements, representations and
warranties of the Company and the Agent hereunder, as set forth in, or made
pursuant to this Agreement, shall remain in full force and effect regardless of
any investigation made by or on behalf of any such party or any of its directors
or officers or any controlling person, and shall survive delivery of and payment
for the Securities.  The indemnification and contribution agreements and this
section regarding survival contained in this Agreement shall also survive any
termination or expiration of this Agreement.
 
8.      Complete Agreement.  This Agreement, together with the Letter Agreement,
incorporates the entire understanding of the parties with respect to the subject
matter of this Agreement.
 
 
 
Placement Agency Agreement (PIPE) 
Page 12

 
 
 
 
9.      Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the state of New York applicable to contracts
executed and to be wholly performed therein without giving effect to its
conflicts of laws principles or rules.  This agreement contains a predispute
arbitration clause.  By signing an arbitration agreement the parties agree as
follows:
 
 
·
All parties to this Agreement are giving up the right to sue each other in
court, including the right to a trial by jury, except as provided by the rules
of the arbitration forum in which a claim is filed.

 
 
·
Arbitration awards are generally final and binding; a party’s ability to have a
court reverse or modify an arbitration award is very limited.

 
 
·
The ability of the parties to obtain documents, witness statements and other
discovery is generally more limited in arbitration than in court proceedings.

 
 
·
The arbitrators do not have to explain the reason(s) for their award.

 
 
·
The panel of arbitrators will typically include a minority of arbitrators who
were or are affiliated with the securities industry.

 
 
·
The rules of some arbitration forums may impose time limits for bringing a claim
in arbitration.  In some cases, a claim that is ineligible for arbitration may
be brought in court.

 
 
·
The rules of the arbitration forum in which the claim is filed, and any
amendments thereto, shall be incorporated into this Agreement.

 
Any dispute or controversy arising out of this agreement or regarding the
interpretation, application, or breach of this Agreement shall be determined by
arbitration conducted in accordance with the rules of FINRA as then in effect. 
Any arbitration award shall be final and binding upon the Company and the Agent,
and judgment on the award may be entered in any court having jurisdiction.  No
person shall bring a putative or certified class action to arbitration, nor seek
to enforce any pre-dispute arbitration agreement against any person who has
initiated in court a putative class action; or who is a member of a putative
class who has not opted out of the class with respect to any claims encompassed
by the putative class action until: (i) the class certification is denied; or
(ii) the class is decertified; or (iii) the customer is excluded from the class
by the court.  Such forbearance to enforce an agreement to arbitrate shall not
constitute a waiver of any rights under this Agreement except to the extent
stated herein.  Each party will bear its own costs and attorneys’ fees, and will
share equally in the fees and expenses of the arbitrator and the arbitration. 
The proceedings will be conducted in English and venued in Minneapolis,
Minnesota.  Notwithstanding the foregoing, it is expressly agreed that either
party may seek injunctive relief, at any time, in an appropriate court of law or
equity to enforce its rights hereunder.  This Section 9 supersedes Section H of
the Letter Agreement in its entirety.
 
10.      Miscellaneous.  This Agreement shall inure to the benefit of and be
binding upon the successors of the Agent and of the Company.  Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person or corporation, other than the parties hereto and their successors, and
the controlling persons and directors and officers and other persons referred to
in the indemnification and contribution provision of the Letter Agreement, any
legal or equitable right, remedy or claim under or in respect to this Agreement
or any provision hereof.  The term “successors” shall not include any purchaser
of the Securities, the Agent Warrants or the Agent Warrant Shares merely by
reason of such purchase.  No subrogee of a benefited party shall be entitled to
any benefits hereunder.  Each party hereto disclaims any an intention to impose
any fiduciary obligation on any other party by virtue of the arrangements
contemplated by this Agreement.

 
[Remainder of page left blank intentionally – signature page follows]
 
 
 
Placement Agency Agreement (PIPE) 
Page 13

 
 
 
 
In witness whereof, the parties have executed this Agreement as of the date
first written above.  This Agreement contains a predispute arbitration provision
in paragraph 9 beginning on page 12 hereof.
 

 
MagneGas Corporation
     
By:                                                                        
Name:                                                                   
Its:                                                                        
     
Address:

Attn: Luisa Ingargiola
MagneGas Corporation
150 Rainville Road
Tarpon Springs, FL 34689

with a copy to:

Attn: Gregg Jaclin
Szaferman Lakind Blumstein & Blader, PC
101 Grovers Mill Road
Second Floor
Lawrenceville, NJ 08648

 
Northland Securities, Inc.

By:                                                                        
Name:                                                                   
Its:                                                                        

Address:
 
Northland Capital Markets
45 South 7th Street, Suite 2000
Minneapolis, MN 55402
Attention: Shawn D. Messner
 
with a copy to:
 
Faegre Baker Daniels LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, Minnesota  55042
Attention:  Jonathan R. Zimmerman
 
 
 
Placement Agency Agreement (PIPE) 
Signature Page

 
 
 
 
Attachment A

FORM OF WARRANT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Placement Agency Agreement (PIPE) 
Page A-1

 
 
 
 
Attachment B

FORM OF AGENT WARRANT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Placement Agency Agreement (PIPE) 
Page B-1

 
 
 
 
Attachment C

FORM OF LEGAL OPINION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Placement Agency Agreement (PIPE) 
Page C-1