EXHIBIT 10.1

 

AT THE MARKET OFFERING AGREEMENT

 

May 13, 2016

 

T.R. Winston & Company

2049 Century Park East, Suite 320

Los Angeles, CA 90067

 

 

Ladies and Gentlemen:

       

Synthesis Energy Systems, Inc., a corporation organized under the laws of
Delaware (the “Company”), confirms its agreement (this “Agreement”) with T.R.
Winston & Company (the “Manager”) as follows:

 

1.               Definitions. The terms that follow, when used in this Agreement
and any Terms Agreement, shall have the meanings indicated.

 

“Accountants”   has the meaning ascribed to such term in Section 4(o).

 

“Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

 

“Action” has the meaning ascribed to such term in Section 3(q).

 

“Affiliate” has the meaning ascribed to such term in Section 3(p).

 

“Applicable Time” means, with respect to any Shares, the time of sale of such
Shares pursuant to this Agreement or any relevant Terms Agreement.

 

“Base Prospectus” means the base prospectus contained in the Registration
Statement at the Execution Time.

 

“Board” has the meaning ascribed to such term in Section 2(b)(iii).

 

“Broker Fee” has the meaning ascribed to such term in Section 2(b)(v).

 

“Business Day” means any day other than a Saturday, a Sunday or a legal holiday
or a day on which banking institutions or trust companies are authorized or
obligated by law to close in New York City.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” has the meaning ascribed to such term in Section 2.

 

 

 

“Common Stock Equivalents” has the meaning ascribed to such term in Section
3(g).

 

“Company Counsel” has the meaning ascribed to such term in Section 4(m).

 

“DTC” has the meaning ascribed to such term in Section 2(b)(vii).

 

“Effective Date” means each date and time that the Registration Statement and
any post-effective amendment or amendments thereto became or becomes effective.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.

 

“Execution Time” means the date and time that this Agreement is executed and
delivered by the parties hereto.

 

“Filing Date” has the meaning ascribed to such term in Section 4(x).

 

“FINRA” has the meaning ascribed to such term in Section 3(e).

 

“Free Writing Prospectus” means a free writing prospectus, as defined in
Rule 405.

 

“GAAP” has the meaning ascribed to such term in Section 3(n).

 

“Incorporated Documents” means the documents or portions thereof filed with the
Commission on or before the Effective Date that are incorporated by reference in
the Registration Statement or the Prospectus and any documents or portions
thereof filed with the Commission after the Effective Date that are deemed to be
incorporated by reference in the Registration Statement or the Prospectus.

 

“Intellectual Property Rights” has the meaning ascribed to such term in Section
3(v).

 

“Issuer Free Writing Prospectus” means an issuer free writing prospectus, as
defined in Rule 433.

 

“Losses” has the meaning ascribed to such term in Section 7(d).

 

“Material Adverse Effect” has the meaning ascribed to such term in Section 3(b).

 

“Material Permits” has the meaning ascribed to such term in Section 3(t).

 

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“Maximum Amount” has the meaning ascribed to such term in Section 2.

 

“Net Proceeds” has the meaning ascribed to such term in Section 2(b)(v).

 

“Permitted Free Writing Prospectus” has the meaning ascribed to such term in
Section 4(g).

 

“Placement” has the meaning ascribed to such term in Section 2(c).

 

“Proceeding” has the meaning ascribed to such term in Section 3(b).

 

“Prospectus” means the Base Prospectus, as supplemented by the most recently
filed Prospectus Supplement (if any).

 

“Prospectus Supplement” means each prospectus supplement relating to the Shares
prepared and filed pursuant to Rule 424(b) from time to time.

 

“Registration Statement” means the shelf registration statement (File
Number 333-210786) on Form S-3, including exhibits and financial statements and
any prospectus supplement relating to the Shares that is filed with the
Commission pursuant to Rule 424(b) and deemed part of such registration
statement pursuant to Rule 430B, as amended on each Effective Date and, in the
event any post-effective amendment thereto becomes effective, shall also mean
such registration statement as so amended.

 

“Representation Date” has the meaning ascribed to such term in Section 4(l).

 

“Required Approvals” has the meaning ascribed to such term in Section 3(e).

 

“Rule 158”, “Rule 164”, “Rule 172”, “Rule 173”, “Rule 405”, “Rule 415”,
“Rule 424”, “Rule 430B” and “Rule 433” refer to such rules under the Act.

 

“Sales Notice” has the meaning ascribed to such term in Section 2(b)(i).

 

“SEC Reports” has the meaning ascribed to such term in Section 3(m).

 

“Settlement Date” has the meaning ascribed to such term in Section 2(b)(vii).

 

“Shares” has the meaning ascribed to such term in Section 2.

 

“Subsidiary” has the meaning ascribed to such term in Section 3(a).

 

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“Terms Agreement” has the meaning ascribed to such term in Section 2(a).

 

“Time of Delivery” has the meaning ascribed to such term in Section 2(c).

 

“Trading Market” means Nasdaq Capital Market.

 

2.              Sale and Delivery of Shares. The Company proposes to issue and
sell through or to the Manager, as sales agent and/or principal, up to
$20,000,000 of shares (the “Shares”) of the Company’s common stock, $0.01 par
value per share (“Common Stock”), from time to time during the term of this
Agreement and on the terms set forth herein; provided, however, that in no event
shall the Company issue or sell through the Manager such number of Shares that
(a) exceeds the number or dollar amount of shares of Common Stock registered on
the Registration Statement, pursuant to which the offering is being made, (b)
exceeds the number of authorized but unissued shares of Common Stock or (c)
would cause the Company or the offering of the Shares to not satisfy the
eligibility and transaction requirements for use of Form S-3 (including, if
applicable, General Instruction I.B.6 of Registration Statement on Form S-3 (the
lesser of (a), (b) and (c), the “Maximum Amount”)). Notwithstanding anything to
the contrary contained herein, the parties hereto agree that compliance with the
limitations set forth in this Section 2 on the number and aggregate sales price
of Shares issued and sold under this Agreement shall be the sole responsibility
of the Company and that Manager shall have no obligation in connection with such
compliance.

 

(a)                Appointment of Manager as Selling Agent; Terms Agreement. For
purposes of selling the Shares through the Manager, the Company hereby appoints
the Manager as exclusive agent of the Company for the purpose of selling the
Shares of the Company pursuant to this Agreement and the Manager agrees to use
its reasonable best efforts to sell the Shares on the terms and subject to the
conditions stated herein. The Company agrees that, whenever it determines to
sell the Shares directly to the Manager as principal, it will enter into a
separate agreement (each, a “Terms Agreement”) in substantially the form of
Annex I hereto, relating to such sale in accordance with Section 2 of this
Agreement.

 

(b)               Agent Sales. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
will issue and agrees to sell Shares from time to time through the Manager,
acting as sales agent, and the Manager agrees to use its reasonable best efforts
to sell the Shares, as sales agent for the Company, on the following terms:

 

(i)                 The Shares are to be sold on a daily basis or otherwise as
shall be agreed to by the Company and the Manager on any day that (A) is a
trading day for the Trading Market, (B) the Company has instructed the Manager
by telephone (confirmed promptly by electronic mail) to make such sales (“Sales
Notice”) and (C) the Company has satisfied its obligations under Section 6 of
this Agreement, provided that the deliveries required under Section 6 shall only
be required to be made on the Execution Time and on a Representation Date on
which a material amendment to the Registration Statement or Prospectus is made
or the Company files its Annual Report on Form 10-K or a material amendment
thereto under the Exchange Act. The Company will designate the maximum amount of
the Shares to be sold by the Manager daily (subject to the limitations set forth
in Section 2(d)) and the minimum price per Share at which such Shares may be
sold. Subject to the terms and conditions hereof, the Manager shall use its
reasonable best efforts to sell on a particular day all of the Shares designated
for the sale by the Company on such day. The gross sales price of the Shares
sold under this Section 2(b) shall be the market price for shares of the
Company’s Common Stock sold by the Manager under this Section 2(b) on the
Trading Market at the time of sale of such Shares.

 

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(ii)               The Company acknowledges and agrees that (A) there can be no
assurance that the Manager will be successful in selling the Shares, (B) the
Manager will incur no liability or obligation to the Company or any other person
or entity if it does not sell the Shares for any reason other than a failure by
the Manager to use its reasonable best efforts consistent with its normal
trading and sales practices and applicable law and regulations to sell such
Shares as required under this Agreement, and (C) the Manager shall be under no
obligation to purchase Shares on a principal basis pursuant to this Agreement,
except as otherwise specifically agreed by the Manager and the Company pursuant
to a Terms Agreement.

 

(iii)             The Company shall not authorize the issuance and sale of, and
the Manager shall not be obligated to use its reasonable best efforts to sell,
any Share at a price lower than the minimum price therefor designated from time
to time by the Company’s Board of Directors (the “Board”), or a duly authorized
committee thereof, or such duly authorized officers of the Company, and notified
to the Manager in writing. The Company or the Manager may, upon notice to the
other party hereto by telephone (confirmed promptly by electronic mail), suspend
the offering of the Shares for any reason and at any time; provided, however,
that such suspension or termination shall not affect or impair the parties’
respective obligations with respect to the Shares sold hereunder prior to the
giving of such notice.

 

(iv)             The Manager may sell Shares by any method permitted by law
deemed to be an “at the market offering” as defined in Rule 415 under the Act,
including without limitation sales made directly on the Trading Market, on any
other existing trading market for the Common Stock or to or through a market
maker. The Manager may also sell Shares in privately negotiated transactions,
provided that the Manager receives the Company’s prior written approval for any
sales in privately negotiated transactions and if so provided in the “Plan of
Distribution” section of the Prospectus Supplement.

 

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(v)               The compensation to the Manager for sales of the Shares under
this Section 2(b) shall be a placement fee of 4.0% of the gross sales price of
the Shares sold pursuant to this Section 2(b) (“Broker Fee”). The foregoing rate
of compensation shall not apply when the Manager acts as principal, in which
case the Company may sell Shares to the Manager as principal at a price agreed
upon at the relevant Applicable Time pursuant to a Terms Agreement. The
remaining proceeds, after deduction of the Broker Fee and deduction for any
transaction fees imposed by any governmental or self-regulatory organization in
respect of such sales, shall constitute the net proceeds to the Company for such
Shares (the “Net Proceeds”).

 

(vi)             The Manager shall provide written confirmation (which may be by
facsimile or electronic mail) to the Company following the close of trading on
the Trading Market each day in which the Shares are sold under this Section 2(b)
setting forth the number of the Shares sold on such day, the aggregate gross
sales proceeds and the Net Proceeds to the Company, and the compensation payable
by the Company to the Manager with respect to such sales.

 

(vii)           Upon delivery of a Sales Notice, the Company shall issue and
deliver the maximum number of Shares to be sold pursuant to the Sales Notice to
the Manager’s account at The Depository Trust Company (“DTC”) via the DWAC
system, which Shares shall be deposited by the Manager in the Company’s account
with the Manager. The Manager shall have no obligation to attempt to sell the
Shares until the Company has delivered the Shares to the Manager. Settlement for
sales of the Shares pursuant to this Section 2(b) will occur at 10:00 a.m. (New
York City time), or at such time as the Company and the Manager may mutually
agree, on the third Business Day following delivery of the Shares issued
pursuant to the Sale Notice (each such day, a “Settlement Date”). On each
Settlement Date, the Manager shall deliver the Net Proceeds from the sale of the
Shares to the Company. If on any Settlement Date not all Shares were sold as
issued pursuant to the Sales Notice, then, at the election of and upon notice
from the Company, the Shares shall be applied to a future Settlement Date or
returned to the Company.

 

(viii)         At each Applicable Time, Settlement Date, Representation Date and
Filing Date, the Company shall be deemed to have affirmed each representation
and warranty contained in this Agreement as if such representation and warranty
were made as of such date, modified as necessary to relate to the Registration
Statement and the Prospectus as amended as of such date. Any obligation of the
Manager to use its reasonable best efforts to sell the Shares on behalf of the
Company shall be subject to the continuing accuracy of the representations and
warranties of the Company herein, to the performance by the Company of its
obligations hereunder and to the continuing satisfaction of the additional
conditions specified in Section 6 of this Agreement.

 

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(c)                Terms Sales. If the Company wishes to sell the Shares
pursuant to this Agreement but other than as set forth in Section 2(b) of this
Agreement (each, a “Placement”), it will notify the Manager of the proposed
terms of such Placement. If the Manager, acting as principal, wishes to accept
such proposed terms (which it may decline to do for any reason in its sole
discretion) or, following discussions with the Company wishes to accept amended
terms, the Manager and the Company will enter into a Terms Agreement setting
forth the terms of such Placement. The terms set forth in a Terms Agreement will
not be binding on the Company or the Manager unless and until the Company and
the Manager have each executed such Terms Agreement accepting all of the terms
of such Terms Agreement. In the event of a conflict between the terms of this
Agreement and the terms of a Terms Agreement, the terms of such Terms Agreement
will control. A Terms Agreement may also specify certain provisions relating to
the reoffering of such Shares by the Manager. The commitment of the Manager to
purchase the Shares pursuant to any Terms Agreement shall be deemed to have been
made on the basis of the representations and warranties of the Company herein
contained and shall be subject to the terms and conditions herein set forth.
Each Terms Agreement shall specify the number of the Shares to be purchased by
the Manager pursuant thereto, the price to be paid to the Company for such
Shares, any provisions relating to rights of, and default by, underwriters
acting together with the Manager in the reoffering of the Shares, and the time
and date (each such time and date being referred to herein as a “Time of
Delivery”) and place of delivery of and payment for such Shares. Such Terms
Agreement shall also specify any requirements for opinions of counsel,
accountants’ letters and officers’ certificates pursuant to Section 6 of this
Agreement and any other information or documents required by the Manager.

 

(d)               Maximum Number of Shares. Under no circumstances shall the
Company cause or request the offer or sale of any Shares if, after giving effect
to the sale of such Shares, the aggregate amount of Shares sold pursuant to this
Agreement would exceed the lesser of (A) together with all sales of Shares under
this Agreement, the Maximum Amount, (B) the amount available for offer and sale
under the currently effective Registration Statement and (C) the amount
authorized from time to time to be issued and sold under this Agreement by the
Company’s board of directors, a duly authorized committee thereof or a duly
authorized executive committee, and notified to the Agent in writing. Under no
circumstances shall the Company cause or request the offer or sale of any Shares
pursuant to this Agreement at a price lower than the minimum price authorized
from time to time by the Company’s board of directors, a duly authorized
committee thereof or a duly authorized executive committee, and notified to the
Agent in writing. Further, under no circumstances shall the Company cause or
permit the aggregate offering amount of Shares sold pursuant to this Agreement
to exceed the Maximum Amount.

 

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(e)                Regulation M Notice. Unless the exceptive provisions set
forth in Rule 101(c)(1) of Regulation M under the Exchange Act are satisfied
with respect to the Shares, the Company shall give the Manager at least one
Business Day’s prior notice of its intent to sell any Shares in order to allow
the Manager time to comply with Regulation M.

 

3.             Representations and Warranties. The Company represents and
warrants to, and agrees with, the Manager at the Execution Time and on each such
time that the following representations and warranties are repeated or deemed to
be made pursuant to this Agreement, as set forth below or in the Registration
Statement, the Prospectus or the Incorporated Documents.

 

(a)                Subsidiaries. The Subsidiaries are all of the direct and
indirect subsidiaries of the Company (other than Synthesis Energy Systems (Zao
Zhuang) New Gas Company Ltd., a Chinese company and SES Asia Technologies, Ltd.,
a Hong Kong company). The Company owns, directly or indirectly, all of the
capital stock or other equity interests of each Subsidiary free and clear of any
“Liens” (which for purposes of this Agreement means a lien, charge, security
interest, encumbrance, right of first refusal, preemptive right or other
restriction), and all 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.

 

(b)               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 (as applicable), 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
or 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, could not reasonably be expected to result in (i)
a material adverse effect on the legality, validity or enforceability of this
Agreement, (ii) a material adverse change in the results of operations, assets,
business, prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, from that set forth in the Registration
Statement, the Base Prospectus, any Prospectus Supplement, the Prospectus or the
Incorporated Documents, 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 (any of (i), (ii) or (iii), a “Material Adverse Effect”)
and no “Proceeding” (which for purposes of this Agreement means any action,
claim, suit, investigation or proceeding (including, without limitation, an
investigation or partial proceeding, such as a deposition), whether commenced or
threatened) has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.

 

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(c)             Authorization and Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder. The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company, the Board or its stockholders in connection
herewith other than in connection with the Required Approvals. This Agreement
has been duly executed and delivered by the Company and constitutes 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.

 

(d)               No Conflicts. The execution, delivery and performance of this
Agreement by the Company, the issuance and sale of the Shares and the
consummation by the Company of the other transactions contemplated herein 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, or (ii) 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
agreement or instrument 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) 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) and (iii), such
as could not reasonably be expected to result in a Material Adverse Effect.

 

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(e)                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” (defined as 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, including the
Trading Market) in connection with the execution, delivery and performance by
the Company of this Agreement, other than (i) the filings required by this
Agreement, (ii) the filing with the Commission of the Prospectus Supplement,
(iii) the filing of application(s) to and approval by the Trading Market for the
listing of the Shares for trading thereon in the time and manner required
thereby, and (iv) such filings as are required to be made under applicable state
securities laws and the rules and regulations of the Financial Industry
Regulatory Authority, Inc. (“FINRA”) (collectively, the “Required Approvals”).

 

(f)                Issuance of Shares. The Shares are duly authorized and, when
issued and paid for in accordance with this Agreement, 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 this Agreement.
The issuance by the Company of the Shares has been registered under the Act and
all of the Shares are freely transferable and tradable by the purchasers thereof
without restriction (other than any restrictions arising solely from an act or
omission of such a purchaser). The Shares are being issued pursuant to the
Registration Statement and the issuance of the Shares has been registered by the
Company under the Act. The “Plan of Distribution” section within the
Registration Statement permits the issuance and sale of the Shares as
contemplated by this Agreement. Upon receipt of the Shares, the purchasers of
such Shares will have good and marketable title to such Shares and the Shares
will be freely tradable on the Trading Market.

 

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(g)               Capitalization. The capitalization of the Company is as set
forth in the SEC Reports. The Company has not issued any capital stock since its
most recently filed SEC Report, other than pursuant to the exercise of employee
stock options under the Company’s stock option plans, the issuance of grants of
Common Stock Equivalents pursuant to the Company’s incentive plans and pursuant
to the conversion and/or exercise of Common Stock Equivalents outstanding as of
the date of the most recently filed SEC Report. No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by this Agreement. Except as a
result of the purchase and sale of the Shares or as set forth in the SEC
Reports, there are no outstanding options, warrants, scrip rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional shares of
Common Stock or Common Stock Equivalents. The issuance and sale of the Shares
will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the purchasers of the Shares) and will not
result in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any of such securities. All of the
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities. Other than specified in Section 3.1(f), no further
approval or authorization of any stockholder, the Board of Directors or others
is required for the issuance and sale of the Shares. Other than as described in
the SEC Reports, there are no stockholders agreements, voting agreements or
other similar agreements with respect to the Company’s capital stock to which
the Company is a party or, to the knowledge of the Company, between or among any
of the Company’s stockholders.

 

(h)               Registration Statement. The Company meets the requirements for
use of Form S-3 under the Act and has prepared and filed with the Commission the
Registration Statement, including a related Base Prospectus, for registration
under the Act of the offering and sale of the Shares. Such Registration
Statement is effective and available for the offer and sale of the Shares as of
the date hereof. As filed, the Base Prospectus contains all information required
by the Act and the rules thereunder, and, except to the extent the Manager shall
agree in writing to a modification, shall be in all substantive respects in the
form furnished to the Manager prior to the Execution Time or prior to any such
time this representation is repeated or deemed to be made. The Registration
Statement, at the Execution Time, each such time this representation is repeated
or deemed to be made, and at all times during which a prospectus is required by
the Act to be delivered (whether physically or through compliance with Rule 172,
173 or any similar rule) in connection with any offer or sale of the Shares,
meets the requirements set forth in Rule 415(a)(1)(x). The initial Effective
Date of the Registration Statement was not earlier than the date that is three
years before the Execution Time.

 

(i)                 [Reserved].

 

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(j)                 Ineligible Issuer. (i) At the earliest time after the filing
of the Registration Statement that the Company or another offering participant
made a bona fide offer (within the meaning of Rule 164(h)(2)) of the Shares and
(ii) as of the Execution Time and on each such time this representation is
repeated or deemed to be made (with such date being used as the determination
date for purposes of this clause (ii)), the Company was not and is not an
Ineligible Issuer (as defined in Rule 405), without taking account of any
determination by the Commission pursuant to Rule 405 that it is not necessary
that the Company be considered an Ineligible Issuer.

 

(k)               Free Writing Prospectus. The Company is eligible to use Issuer
Free Writing Prospectuses. Each Issuer Free Writing Prospectus does not include
any information the substance of which conflicts with the information contained
in the Registration Statement, including any Incorporated Documents and any
prospectus supplement deemed to be a part thereof that has not been superseded
or modified; and each Issuer Free Writing Prospectus does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The foregoing sentence does not apply to
statements in or omissions from any Issuer Free Writing Prospectus based upon
and in conformity with written information furnished to the Company by the
Manager specifically for use therein. Any Issuer Free Writing Prospectus that
the Company is required to file pursuant to Rule 433(d) has been, or will be,
filed with the Commission in accordance with the requirements of the Act and the
rules thereunder. Each Issuer Free Writing Prospectus that the Company has
filed, or is required to file, pursuant to Rule 433(d) or that was prepared by
or behalf of or used by the Company complies or will comply in all material
respects with the requirements of the Act and the rules thereunder. The Company
will not, without the prior consent of the Manager, prepare, use or refer to,
any Issuer Free Writing Prospectuses.

 

(l)                 Proceedings Related to Registration Statement. The
Registration Statement is not the subject of a pending proceeding or examination
under Section 8(d) or 8(e) of the Act, and the Company is not the subject of a
pending proceeding under Section 8A of the Act in connection with the offering
of the Shares. The Company has not received any notice that the Commission has
issued or intends to issue a stop-order with respect to the Registration
Statement or that the Commission otherwise has suspended or withdrawn the
effectiveness of the Registration Statement, either temporarily or permanently,
or intends or has threatened in writing to do so.

 

(m)             SEC Reports. The Company has complied in all material respects
with requirements to file all reports, schedules, forms, statements and other
documents required to be filed by it under the 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 to file such material) (the foregoing materials, including the exhibits
thereto and documents incorporated by reference therein, 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.

 

12

 

(n)               Financial Statements. The consolidated financial statements
incorporated by reference in the Registration Statement, the Prospectus or the
Incorporated Documents and any amendments thereof or supplements thereto 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 or as amended or corrected in a subsequent 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.

 

(o)               Accountants. The Company’s accountants are BDO USA, LLP. To
the knowledge of the Company, such accountants, which the Company expects will
express their opinion with respect to the financial statements to be included in
the Company’s next Annual Report on Form 10-K, are a registered public
accounting firm as required by the Act.

 

(p)               Material Adverse Events. Since the date of the latest
financial statements included within the SEC Reports, except as specifically
disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there
has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect, (ii) the Company
has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or required to be
disclosed in filings made with the Commission, (iii) the Company has not altered
its method of accounting, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or “Affiliate” (defined as 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
144 under the Act), except pursuant to existing Company incentive plans or
pursuant to previously issued Common Stock Equivalents. The Company does not
have pending before the Commission any request for confidential treatment of
information. Except for the issuance of the Shares as contemplated by this
Agreement, no event, liability or development has occurred or exists with
respect to the Company or its Subsidiaries or their respective business,
properties, operations or financial condition, that would be required to be
disclosed by the Company under applicable securities laws at the time this
representation is deemed made that has not been publicly disclosed at least 1
Trading Day prior to the date that this representation is deemed made.

 

13

 

(q)               Litigation. There is no action, suit, inquiry, notice of
violation, Proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i) adversely affects or challenges
the legality, validity or enforceability of this Agreement or the Shares or (ii)
could, if there were an unfavorable decision, reasonably be expected to result
in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor, to
the knowledge of the Company, any director or officer thereof, is or has been
the subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty. There
has not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company or any
current or former director or officer of the Company. The Commission has not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Act. None of the Company’s or its Subsidiaries’ employees is a member
of a union that relates to such employee’s relationship with the Company, and
neither the Company nor any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and its Subsidiaries believe that their
relationships with their employees are good. To the knowledge of the Company, no
executive officer is, or is now expected to be, in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary
information agreement or 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 or any of its Subsidiaries to any
liability with respect to any of the foregoing matters. The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local and foreign
laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

 

(r)                 Labor Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company which could reasonably be expected to result in a Material Adverse
Effect.

 

14

 

(s)                No Existing Defaults. 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 order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule 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 as could not reasonably be expected to result in a Material Adverse
Effect.

 

(t)                 Regulatory Permits. To the Company’s knowledge, and except
as otherwise noted in the SEC Reports, the Company and the Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the Registration Statement, the Base
Prospectus, any Prospectus Supplement or the Prospectus, except where the
failure to possess such permits could not reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit.

 

(u)               Title to Assets. The Company and the Subsidiaries have title
in fee simple to all real property owned by them that is material to the
business of the Company and the Subsidiaries and title in all personal property
owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as
do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and the Subsidiaries, (ii) Liens for the payment of federal, state or
other taxes, the payment of which is neither delinquent nor subject to
penalties, and (iii) Liens described in the SEC Reports. Any real property and
facilities held under lease by the Company and the Subsidiaries are held by them
under leases of which the Company and the Subsidiaries are in compliance, except
where such non-compliance would not reasonably be expected to have a Material
Adverse Effect.

 

15

 

(v)               Intellectual Property. The Company and the Subsidiaries have,
or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other similar intellectual property rights necessary or material
for use in connection with their respective businesses as described in the
Registration Statement, the Base Prospectus, any Prospectus Supplement or the
Prospectus and which the failure to so have could reasonably be expected to have
a Material Adverse Effect (collectively, the “Intellectual Property Rights”).
Neither the Company nor any Subsidiary has received, since the date of the
latest audited financial statements included within the SEC Reports, a written
notice of a claim or otherwise has any knowledge that the Intellectual Property
Rights violate or infringe upon the rights of any Person, except as would not
have a Material Adverse Effect. To the knowledge of the Company, all such
Intellectual Property Rights are enforceable (other than patent and trademark
applications) and there is no existing infringement by another Person of any of
the Intellectual Property Rights, except as could not have or reasonably be
expected to not have a Material Adverse Effect. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their Intellectual Property Rights, except where failure to
do so could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

 

(w)             Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary for companies of similar size
as the Company in the businesses in which the Company and the Subsidiaries are
engaged, including, but not limited to, directors and officers insurance
coverage. To the knowledge of the Company, such insurance contracts and policies
are accurate and complete. Neither the Company nor any Subsidiary has any reason
to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business without a significant
increase in cost.

 

(x)               Affiliate Transactions. Except as set forth in the
Registration Statement, the Base Prospectus, any Prospectus Supplement or the
Prospectus, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company 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, 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 or
partner, in each case in excess of $120,000, other than (i) for payment of
salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) for other employee benefits,
including stock option agreements under any stock option plan of the Company.

 

16

 

(y)               Sarbanes Oxley Compliance. Except as disclosed in the
Registration Statement, the Base Prospectus, any Prospectus Supplement or the
Prospectus, the Company is in material compliance with all provisions of the
Sarbanes-Oxley Act of 2002 which are applicable to it as of the Effective Date.

 

(z)                Finder’s Fees. Other than payments to be made to the Manager,
no brokerage or finder’s fees or commissions are or will be payable by the
Company to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Manager 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.

 

(aa)            No Other Sales Agency Agreement. The Company has not entered
into any other sales agency agreements or other similar arrangements with any
agent or any other representative in respect of at the market offerings of the
Shares.

 

(bb)           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 Manager in connection with the placement of the Shares.

 

(cc)            Listing and Maintenance Requirements. The issuance and sale of
the Shares as contemplated in this Agreement does not contravene the rules and
regulations of the Trading Market. 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. Other than as described in the SEC Reports, 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.

 

(dd)          Application of Takeover Protections. Except as set forth in the
Registration Statement, the Base Prospectus, any Prospectus Supplement or the
Prospectus, the Company and its Board 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 purchasers of the
Shares.

 

17

 

(ee)            Investment Company. The Company is not, and is not an Affiliate
of, and immediately after receipt of payment for the Shares, will not be or be
an Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. The Company currently intends to conduct its
business in a manner so that it will not become subject to the Investment
Company Act of 1940, as amended.

 

(ff)             Solvency. Based on the financial condition of the Company as of
the Effective Date, (i) the Company’s fair saleable value of its assets exceeds
the amount that will be required to be paid on or in respect of the Company’s
existing debts and other liabilities (including known contingent liabilities) as
they mature and (ii) 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 debt when such amounts are required
to be paid. Within one year of the Effective Date, the Company does not 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 SEC Reports set forth as of the dates thereof 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 (a) any liabilities for borrowed money or amounts owed in
excess of $50,000 (other than accrued liabilities and trade accounts payable
incurred in the ordinary course of business), (b) 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 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 (c) 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 with respect to any Indebtedness.

 

(gg)           Tax Status. Except for matters that would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary have filed all necessary federal, state
and foreign income and franchise tax returns and have paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.

 

(hh)           Reserved.

 

18

 

(ii)               Foreign Corrupt Practices. Neither the Company, nor to the
knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.

 

4.                  Agreements. The Company agrees with the Manager that:

 

(a)                Right to Review Amendments and Supplements to Registration
Statement and Prospectus. During any period when the delivery of a prospectus
relating to the Shares is required (including in circumstances where such
requirement may be satisfied pursuant to Rule 172, Rule 173 or any similar rule)
to be delivered under the Act in connection with the offering or the sale of
Shares, the Company will not file any amendment to the Registration Statement or
supplement (including any Prospectus Supplement) to the Base Prospectus unless
the Company has furnished to the Manager a copy for its review prior to filing
and will not file any such proposed amendment or supplement to which the Manager
reasonably objects. The Company has completed the Prospectus, in a form approved
by the Manager, and filed such Prospectus, as amended at the Execution Time,
with the Commission pursuant to the applicable paragraph of Rule 424(b) by the
Execution Time and will cause any supplement to the Prospectus to be completed,
in a form approved by the Manager, and will file such supplement with the
Commission pursuant to the applicable paragraph of Rule 424(b) within the time
period prescribed thereby and will provide evidence reasonably satisfactory to
the Manager of such timely filing. The Company will promptly advise the Manager
(i) when the Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b), (ii) when, during any
period when the delivery of a prospectus (whether physically or through
compliance with Rule 172, Rule 173 or any similar rule) is required under the
Act in connection with the offering or sale of the Shares, any amendment to the
Registration Statement shall have been filed or become effective (other than any
annual report of the Company filed pursuant to Section 13(a) or 15(d) of the
Exchange Act), (iii) of any request by the Commission or its staff for any
amendment of the Registration Statement, or any Rule 462(b) Registration
Statement, or for any supplement to the Prospectus or for any additional
information, (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or of any notice objecting to
its use or the institution or threatening of any proceeding for that purpose and
(v) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any jurisdiction or
the institution or threatening of any proceeding for such purpose. The Company
will use its reasonable best efforts to prevent the issuance of any such stop
order or the occurrence of any such suspension or objection to the use of the
Registration Statement and, upon such issuance, occurrence or notice of
objection, to obtain as soon as possible the withdrawal of such stop order or
relief from such occurrence or objection, including, if necessary, by filing an
amendment to the Registration Statement or a new registration statement and
using its best efforts to have such amendment or new registration statement
declared effective as soon as practicable.

 

19

 

(b)               Subsequent Events. If, at any time on or after an Applicable
Time but prior to the related Settlement Date, any event occurs as a result of
which the Registration Statement or Prospectus would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein in the light of the circumstances under which they
were made or the circumstances then prevailing not misleading, the Company will
(i) notify promptly the Manager so that any use of the Registration Statement or
Prospectus may cease until such are amended or supplemented; (ii) amend or
supplement the Registration Statement or Prospectus to correct such statement or
omission; and (iii) supply any amendment or supplement to the Manager in such
quantities as the Manager may reasonably request.

 

(c)                Notification of Subsequent Filings. During any period when
the delivery of a prospectus relating to the Shares is required (including in
circumstances where such requirement may be satisfied pursuant to Rule 172, Rule
173 or any similar rule) to be delivered under the Act, any event occurs as a
result of which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein in the light of the circumstances under which they
were made at such time not misleading, or if it shall be necessary to amend the
Registration Statement, file a new registration statement or supplement the
Prospectus to comply with the Act or the Exchange Act or the respective rules
thereunder, including in connection with use or delivery of the Prospectus, the
Company promptly will (i) notify the Manager of any such event, (ii) subject to
Section 4(a), prepare and file with the Commission an amendment or supplement or
new registration statement which will correct such statement or omission or
effect such compliance, (iii) use its best efforts to have any amendment to the
Registration Statement or new registration statement declared effective as soon
as practicable in order to avoid any disruption in use of the Prospectus and
(iv) supply any supplemented Prospectus to the Manager in such quantities as the
Manager may reasonably request.

 

(d)               Earnings Statements. As soon as practicable, the Company will
make generally available to its security holders and to the Manager an earnings
statement or statements of the Company and its Subsidiaries which will satisfy
the provisions of Section 11(a) of the Act and Rule 158.

 

20

 

(e)                Delivery of Registration Statement. Upon the request of the
Manager, the Company will furnish to the Manager and counsel for the Manager,
without charge, signed copies of the Registration Statement (including exhibits
thereto) and, so long as delivery of a prospectus by the Manager or dealer may
be required by the Act (including in circumstances where such requirement may be
satisfied pursuant to Rule 172, Rule 173 or any similar rule), as many copies of
the Prospectus and each Issuer Free Writing Prospectus and any supplement
thereto as the Manager may reasonably request. The Company will pay the expenses
of printing or other production of all documents relating to the offering.

 

(f)                Qualification of Shares. The Company will arrange, if
necessary, for the qualification of the Shares for sale under the laws of such
jurisdictions as the Manager may reasonably designate and will maintain such
qualifications in effect so long as required for the distribution of the Shares;
provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take any
action that would subject it to service of process in suits, other than those
arising out of the offering or sale of the Shares, in any jurisdiction where it
is not now so subject.

 

(g)               Free Writing Prospectus. The Company agrees that, unless it
has or shall have obtained the prior written consent of the Manager (such
consent not to be unreasonably withheld or delayed), and the Manager agrees with
the Company that, unless it has or shall have obtained, as the case may be, the
prior written consent of the Company, it has not made and will not make any
offer relating to the Shares that would constitute an Issuer Free Writing
Prospectus or that would otherwise constitute a “free writing prospectus” (as
defined in Rule 405) required to be filed by the Company with the Commission or
retained by the Company under Rule 433. Any such free writing prospectus
consented to by the Manager or the Company is hereinafter referred to as a
“Permitted Free Writing Prospectus.” The Company agrees that (i) it has treated
and will treat, as the case may be, each Permitted Free Writing Prospectus as an
Issuer Free Writing Prospectus and (ii) it has complied and will comply, as the
case may be, with the requirements of Rules 164 and 433 applicable to any
Permitted Free Writing Prospectus, including in respect of timely filing with
the Commission, legending and record keeping.

 

(h)               Subsequent Equity Issuances. Neither the Company nor any
Subsidiary will offer, sell, issue, contract to sell, contract to issue or
otherwise dispose of, directly or indirectly, any other shares of Common Stock
or any Common Stock Equivalents (other than the Shares) during the term of this
Agreement without giving the Manager at least two Business Days prior written
notice specifying the nature of the proposed transaction and the date of such
proposed transaction. Upon receipt of such notice, the Manager shall as soon as
practicable suspend acting under this Agreement for such period of time
requested by the Company or as deemed appropriate by the Manager in light of the
proposed transaction. Notwithstanding anything herein to the contrary, the
Company may issue and sell Common Stock or Common Stock Equivalents pursuant to
any employee stock incentive plan, stock ownership plan or dividend reinvestment
plan of the Company in effect at the Execution Time and the Company may issue
Common Stock issuable upon the conversion or exercise of Common Stock
Equivalents outstanding at the Execution Time.

 

21

 

(i)                 Reserved.

 

(j)                 Market Manipulation. Until the termination of this
Agreement, the Company will not take, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected to
cause or result in, under the Exchange Act or otherwise, stabilization or
manipulation in violation of the Act, Exchange Act or the rules and regulations
thereunder of the price of any security of the Company to facilitate the sale or
resale of the Shares or otherwise violate any provision of Regulation M under
the Exchange Act.

 

(k)               Notification of Incorrect Certificate. The Company will, at
any time during the term of this Agreement, as supplemented from time to time,
advise the Manager immediately after it shall have received notice or obtained
knowledge thereof, of any information or fact that would alter or affect any
opinion, certificate, letter and other document provided to the Manager pursuant
to Section 6 herein.

 

(l)                 Certification of Accuracy of Disclosure. Upon commencement
of the offering of the Shares under this Agreement (and upon the recommencement
of the offering of the Shares under this Agreement following the termination of
a suspension of sales hereunder lasting more than 30 trading days), and each
time that (i) the Registration Statement or Prospectus shall be amended or
supplemented, other than by means of Incorporated Documents, (ii) the Company
files its Annual Report on Form 10-K under the Exchange Act, (iii) the Company
files its quarterly reports on Form 10-Q under the Exchange Act, (iv) the
Company files a Current Report on Form 8-K containing amended financial
information (other than information that is furnished and not filed), if the
Manager reasonably determines that the information in such Form 8-K is material,
or (v) the Shares are delivered to the Manager as principal at the Time of
Delivery pursuant to a Terms Agreement (such commencement or recommencement date
and each such date referred to in (i), (ii), (iii), (iv) and (v) above, a
“Representation Date”), unless waived by the Manager, the Company shall furnish
or cause to be furnished to the Manager forthwith a certificate dated and
delivered on the Representation Date, in form reasonably satisfactory to the
Manager to the effect that the statements contained in the certificate referred
to in Section 6 of this Agreement which were last furnished to the Manager are
true and correct at the Representation Date, as though made at and as of such
date (except that such statements shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to such date) or, in
lieu of such certificate, a certificate of the same tenor as the certificate
referred to in said Section 6, modified as necessary to relate to the
Registration Statement and the Prospectus as amended and supplemented to the
date of delivery of such certificate.

 

22

 

(m)             Bring Down Opinions; Negative Assurance. At each Representation
Date, unless waived by the Manager, the Company shall furnish or cause to be
furnished forthwith to the Manager and to counsel to the Manager a written
opinion of counsel to the Company (“Company Counsel”) addressed to the Manager
and dated and delivered on such Representation Date, in form and substance
reasonably satisfactory to the Manager, including a negative assurance
representation.

 

(n)               Auditor Bring Down “Comfort” Letter. At each Representation
Date, unless waived by the Manager, the Company shall cause (1) the Company’s
auditors (the “Accountants”), or other independent accountants satisfactory to
the Manager forthwith to furnish the Manager a letter, and (2) the Chief
Financial Officer of the Company forthwith to furnish the Manager a certificate,
in each case dated on such Representation Date, in form satisfactory to the
Manager, of the same tenor as the letters and certificate referred to in Section
6 of this Agreement but modified to relate to the Registration Statement and the
Prospectus, as amended and supplemented to the date of such letters and
certificate; provided, however, that the Company will not be required to cause
the Accountants to furnish such letters to the Manager in connection with the
filing of a Current Report on Form 8-K unless (i) such Current Report on Form
8-K is filed at any time during which a prospectus relating to the Shares is
required to be delivered under the Act and (ii) the Manager has reasonably
requested such letter based upon the event or events reported in such Current
Report on Form 8-K.

 

(o)               Due Diligence Session. Upon commencement of the offering of
the Shares under this Agreement (and upon the recommencement of the offering of
the Shares under this Agreement following the termination of a suspension of
sales hereunder lasting more than 30 trading days), and at each Representation
Date, the Company will conduct a due diligence session, in form and substance,
reasonably satisfactory to the Manager, which shall include representatives of
management and Accountants. The Company shall cooperate timely with any
reasonable due diligence request from or review conducted by the Manager or its
agents from time to time in connection with the transactions contemplated by
this Agreement, including, without limitation, providing information and
available documents and access to appropriate corporate officers and the
Company’s agents during regular business hours and at the Company’s principal
offices, and timely furnishing or causing to be furnished such certificates,
letters and opinions from the Company, its officers and its agents, as the
Manager may reasonably request. The Company shall reimburse the Manager for
Manager’s counsel’s time in each such due diligence update session, up to a
maximum of $5,000 per update, plus any incidental expense incurred by the
Manager in connection therewith.

 

23

 

(p)               Acknowledgment of Trading. The Company acknowledges that the
Manager may trade in the Common Stock for the Manager’s own account and for the
account of its clients at the same time as sales of the Shares occur pursuant to
this Agreement or pursuant to a Terms Agreement.

 

(q)               Disclosure of Shares Sold. The Company will disclose in its
Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, as applicable,
the number of Shares sold through the Manager under this Agreement, the Net
Proceeds to the Company and the compensation paid by the Company with respect to
sales of Shares pursuant to this Agreement during the relevant quarter; and, if
required by any subsequent change in Commission policy or request, more
frequently by means of a Current Report on Form 8-K or a further Prospectus
Supplement.

 

(r)                 Rescission Right. If to the knowledge of the Company, the
conditions set forth in Section 6 shall not have been satisfied as of the
applicable Settlement Date, the Company will offer to any person who has agreed
to purchase Shares from the Company as the result of an offer to purchase
solicited by the Manager the right to refuse to purchase and pay for such
Shares.

 

(s)                Bring Down of Representations and Warranties. Each acceptance
by the Company of an offer to purchase the Shares hereunder, and each execution
and delivery by the Company of a Terms Agreement, shall be deemed to be an
affirmation to the Manager that the representations and warranties of the
Company contained in or made pursuant to this Agreement are true and correct as
of the date of such acceptance or of such Terms Agreement as though made at and
as of such date, and an undertaking that such representations and warranties
will be true and correct as of the Settlement Date for the Shares relating to
such acceptance or as of the Time of Delivery relating to such sale, as the case
may be, as though made at and as of such date (except that such representations
and warranties shall be deemed to relate to the Registration Statement and the
Prospectus as amended and supplemented relating to such Shares).

 

(t)                 Reservation of Shares. The Company shall ensure that there
are at all times sufficient shares of Common Stock to provide for the issuance,
free of any preemptive rights, out of its authorized but unissued shares of
Common Stock or shares of Common Stock held in treasury, of the maximum
aggregate number of Shares authorized for issuance by the Board pursuant to the
terms of this Agreement. The Company will use commercially reasonable efforts to
cause the Shares to be listed for trading on the Trading Market and to maintain
such listing.

 

(u)               Obligation Under Exchange Act. During any period when the
delivery of a prospectus relating to the Shares is required (including in
circumstances where such requirement may be satisfied pursuant to Rule 172, 173
or any similar rule) to be delivered under the Act, the Company will file all
documents required to be filed with the Commission pursuant to the Exchange Act
within the time periods required by the Exchange Act and the regulations
thereunder.

 

24

 

(v)               DTC Facility. The Company shall cooperate with the Manager and
use its reasonable efforts to permit the Shares to be eligible for clearance and
settlement through the facilities of DTC.

 

(w)             Use of Proceeds. The Company will apply the Net Proceeds from
the sale of the Shares in the manner set forth in the Prospectus.

 

(x)               Filing of Prospectus Supplement. On or prior to the earlier of
(i) the date on which the Company shall file a Quarterly Report on Form 10-Q or
an Annual Report on Form 10-K in respect of any fiscal quarter in which sales of
Shares were made by the Manager pursuant to Section 2(b) of this Agreement and
(ii) the date on which the Company shall be obligated to file such document
referred to in clause (i) in respect of such quarter (each such date, and any
date on which an amendment to any such document is filed, a “Filing Date”), the
Company will file a prospectus supplement with the Commission under the
applicable paragraph of Rule 424(b), which prospectus supplement will set forth,
with regard to such quarter, the number of the Shares sold through the Manager
as agent pursuant to Section 2(b) of this Agreement, the Net Proceeds to the
Company and the compensation paid by the Company with respect to such sales of
the Shares pursuant to Section 2(b) of this Agreement and deliver such number of
copies of each such prospectus supplement to the Trading Market as are required
by such exchange. The Company may satisfy such disclosure requirement by
including such information in a Quarterly Report on Form 10-Q or an Annual
Report on Form 10-K. In the event any sales are made pursuant to this Agreement
which are NOT made in “at the market” offerings as defined in Rule 415,
including, without limitation, any Placement pursuant to a Terms Agreement, the
Company shall file a Prospectus Supplement describing the terms of such
transaction, the amount of Shares sold, the price thereof, the Manager’s
compensation, and such other information as may be required pursuant to Rule 424
and Rule 430B, as applicable, within the time required by Rule 424. [NTD – this
language is based on recent SEC guidance that we recently received]

 

(y)               Additional Registration Statement. To the extent that the
Registration Statement is not available for the sales of the Shares as
contemplated by this Agreement, the Company shall file a new registration
statement with respect to any additional shares of Common Stock necessary to
complete such sales of the Shares and use commercially reasonable efforts to
cause such registration statement to become effective as promptly as
practicable. After the effectiveness of any such registration statement, all
references to “Registration Statement” included in this Agreement shall be
deemed to include such new registration statement, including all documents
incorporated by reference therein pursuant to Item 12 of Form S-3, and all
references to “Base Prospectus” included in this Agreement shall be deemed to
include the final form of prospectus, including all documents incorporated
therein by reference, included in any such registration statement at the time
such registration statement became effective.

 

25

 

5.                  Payment of Expenses. The Company agrees to pay the costs and
expenses incident to the performance of its obligations under this Agreement,
whether or not the transactions contemplated hereby are consummated, including
without limitation: (i) the preparation, printing or reproduction and filing
with the Commission of the Registration Statement (including financial
statements and exhibits thereto), the Prospectus and each Issuer Free Writing
Prospectus, and each amendment or supplement to any of them; (ii) the printing
(or reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the Registration
Statement, the Prospectus, and each Issuer Free Writing Prospectus, and all
amendments or supplements to any of them, as may, in each case, be reasonably
requested for use in connection with the offering and sale of the Shares;
(iii) the preparation, printing, authentication, issuance and delivery of
certificates for the Shares, including any stamp or transfer taxes in connection
with the original issuance and sale of the Shares; (iv) the printing (or
reproduction) and delivery of this Agreement, any blue sky memorandum and all
other agreements or documents printed (or reproduced) and delivered in
connection with the offering of the Shares; (v) the registration of the Shares
under the Exchange Act, if applicable, and the listing of the Shares on the
Trading Market; (vi) any registration or qualification of the Shares for offer
and sale under the securities or blue sky laws of the several states (including
filing fees and the reasonable fees and expenses of counsel for the Manager
relating to such registration and qualification); (vii) the transportation and
other expenses incurred by or on behalf of Company representatives in connection
with presentations to prospective purchasers of the Shares; (viii) the fees and
expenses of the Company’s accountants and the fees and expenses of counsel
(including local and special counsel) for the Company; (ix) the filing fee under
FINRA Rule 5110; (x) the reasonable fees and expenses of the Manager’s counsel,
not to exceed $35,000 (excluding any periodic due diligence fees provided for
under Section 4(o), $10,000 of which has been paid prior to the date hereof and
the balance of which shall be paid upon the Execution Time; and (xi) all other
costs and expenses incident to the performance by the Company of its obligations
hereunder.

 

6.                  Conditions to the Obligations of the Manager. The
obligations of the Manager under this Agreement and any Terms Agreement shall be
subject to (i) the accuracy of the representations and warranties on the part of
the Company contained herein as of the Execution Time, each Representation Date,
and as of each Applicable Time, Settlement Date and Time of Delivery, (ii) to
the performance by the Company of its obligations hereunder and (iii) the
following additional conditions:

 

(a)                Filing of Prospectus Supplement. The Prospectus, and any
supplement thereto, required by Rule 424 to be filed with the Commission have
been filed in the manner and within the time period required by Rule 424(b) with
respect to any sale of Shares; each Prospectus Supplement shall have been filed
in the manner required by Rule 424(b) within the time period required hereunder
and under the Act; any other material required to be filed by the Company
pursuant to Rule 433(d) under the Act, shall have been filed with the Commission
within the applicable time periods prescribed for such filings by Rule 433; and
no stop order suspending the effectiveness of the Registration Statement or any
notice objecting to its use shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.

 

26

 

(b)               Delivery of Opinion. The Company shall have caused the Company
Counsel to furnish to the Manager, to the extent requested by the Manager and
upon reasonable advance notice in connection with any offering of the Shares,
its opinion and negative assurance statement, dated as of such date and
addressed to the Manager in form and substance acceptable to the Manager.

 

(c)                Delivery of Officer’s Certificate. The Company shall have
furnished or caused to be furnished to the Manager, to the extent requested by
the Manager and upon reasonable advance notice in connection with any offering
of the Shares, a certificate of the Company signed by the Chief Executive
Officer or the President and the principal financial or accounting officer of
the Company, dated as of such date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the Prospectus,
any Prospectus Supplement and any documents incorporated by reference therein
and any supplements or amendments thereto and this Agreement and that:

 

(i)                 the representations and warranties of the Company in this
Agreement are true and correct on and as of such date with the same effect as if
made on such 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 date;

 

(ii)               no stop order suspending the effectiveness of the
Registration Statement or any notice objecting to its use has been issued and no
proceedings for that purpose have been instituted or, to the Company’s
knowledge, threatened; and

 

(iii)             since the date of the most recent financial statements
included in the Registration Statement, the Prospectus and the Incorporated
Documents, there has been no Material Adverse Effect on the condition (financial
or otherwise), earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated in the
Registration Statement and the Prospectus.

 

(d)               Delivery of Accountants’ “Comfort” Letter. The Company shall
have requested and caused the Accountants to have furnished to the Manager, to
the extent requested by the Manager and upon reasonable advance notice in
connection with any offering of the Shares, letters (which may refer to letters
previously delivered to the Manager), dated as of such date, in form and
substance satisfactory to the Manager, confirming that they are independent
accountants within the meaning of the Act and the Exchange Act and the
respective applicable rules and regulations adopted by the Commission thereunder
and that they have performed a review of any unaudited interim financial
information of the Company and included or incorporated by reference in the
Registration Statement and the Prospectus and provide customary “comfort” as to
such review in form and substance satisfactory to the Manager.

 

27

 

(e)                No Material Adverse Event. Since the respective dates as of
which information is disclosed in the Registration Statement, the Prospectus and
the Incorporated Documents, except as otherwise stated therein, there shall not
have been (i) any change or decrease in previously reported results specified in
the letter or letters referred to in paragraph (d) of this Section 6 or (ii) any
change, or any development involving a prospective change, in or affecting the
condition (financial or otherwise), earnings, business or properties of the
Company and its subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Registration Statement, the Prospectus and the Incorporated
Documents (exclusive of any amendment or supplement thereto) the effect of
which, in any case referred to in clause (i) or (ii) above, is, in the
reasonable judgment of the Manager, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of the
Shares as contemplated by the Registration Statement (exclusive of any amendment
thereof), the Incorporated Documents and the Prospectus (exclusive of any
amendment or supplement thereto).

 

(f)                Payment of All Fees. The Company shall have paid the required
Commission filing fees relating to the Shares within the time period required by
Rule 456(b)(1)(i) of the Act without regard to the proviso therein and otherwise
in accordance with Rules 456(b) and 457(r) of the Act and, if applicable, shall
have updated the “Calculation of Registration Fee” table in accordance with
Rule 456(b)(1)(ii) either in a post-effective amendment to the Registration
Statement or on the cover page of a prospectus filed pursuant to Rule 424(b).

 

(g)               No FINRA Objections. FINRA shall not have raised any objection
with respect to the fairness and reasonableness of the terms and arrangements
under this Agreement.

 

(h)               Shares Listed on Trading Market. The Shares shall have been
listed and admitted and authorized for trading on the Trading Market, and
satisfactory evidence of such actions shall have been provided to the Manager.

 

(i)                 Other Assurances. Prior to each Settlement Date and Time of
Delivery, as applicable, the Company shall have furnished to the Manager such
further information, certificates and documents as the Manager may reasonably
request.

 

28

 

If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as provided in this Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Manager and counsel for the
Manager, this Agreement and all obligations of the Manager hereunder may be
canceled at, or at any time prior to, any Settlement Date or Time of Delivery,
as applicable, by the Manager. Notice of such cancellation shall be given to the
Company in writing or by telephone or facsimile confirmed in writing.

 

The documents required to be delivered by this Section 6 shall be delivered at
the office of Ellenoff Grossman & Schole LLP, counsel for the Manager, at 1345
Avenue of the Americas, New York, New York 10105, on each such date as provided
in this Agreement.

 

7.                  Indemnification and Contribution.

 

(a)                Indemnification by Company. The Company agrees to indemnify
and hold harmless the Manager, the directors, officers, employees and agents of
the Manager and each person who controls the Manager within the meaning of
either the Act or the Exchange Act against any and all losses, claims, damages
or liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or state statutory law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement for the registration of the Shares as
originally filed or in any amendment thereof, or in the Prospectus, any Issuer
Free Writing Prospectus, or in any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse each such indemnified
party for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by the Manager specifically for inclusion
therein. This indemnity agreement will be in addition to any liability that the
Company may otherwise have.

 

(b)              Indemnification by the Manager. The Manager agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers who
signs the Registration Statement, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Company to the Manager, but only with reference
to written information relating to the Manager furnished to the Company by the
Manager specifically for inclusion in the documents referred to in the foregoing
indemnity; provided, however, that in no case shall the Manager be responsible
for any amount in excess of the Broker Fee applicable to the Shares and paid
hereunder. This indemnity agreement will be in addition to any liability which
the Manager may otherwise have.

 

29

 

(c)                Indemnification Procedures. Promptly after receipt by an
indemnified party under this Section 7 of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 7, notify the indemnifying
party in writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph (a)
or (b) above unless and to the extent it did not otherwise learn of such action
and such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party’s choice at the indemnifying party’s expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying party’s
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. An indemnifying party
will not, without the prior written consent of the indemnified parties, settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.

 

30

 

(d)               Contribution. In the event that the indemnity provided in
paragraph (a), (b) or (c) of this Section 7 is unavailable to or insufficient to
hold harmless an indemnified party for any reason, the Company and the Manager
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending the same) (collectively “Losses”) to which the
Company and the Manager may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and by the
Manager on the other from the offering of the Shares; provided, however, that in
no case shall the Manager be responsible for any amount in excess of the Broker
Fee applicable to the Shares and paid hereunder. If the allocation provided by
the immediately preceding sentence is unavailable for any reason, the Company
and the Manager severally shall contribute in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
Company on the one hand and of the Manager on the other in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total Net Proceeds from the offering (before deducting
expenses) received by it, and benefits received by the Manager shall be deemed
to be equal to the Broker Fee applicable to the Shares and paid hereunder as
determined by this Agreement. Relative fault shall be determined by reference
to, among other things, whether any untrue or any alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information provided by the Company on the one hand or the Manager on
the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Manager agree that it would not be just and
equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (d), no
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of this
Section 7, each person who controls the Manager within the meaning of either the
Act or the Exchange Act and each director, officer, employee and agent of the
Manager shall have the same rights to contribution as the Manager, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).

 

31

 

8.                  Termination.

 

(a)                The Company shall have the right, by giving written notice as
hereinafter specified, to terminate the provisions of this Agreement relating to
the solicitation of offers to purchase the Shares in its sole discretion at any
time upon five (5) Business Days’ prior written notice. Any such termination
shall be without liability of any party to any other party except that (i) with
respect to any pending sale, through the Manager for the Company, the
obligations of the Company, including in respect of compensation of the Manager,
shall remain in full force and effect notwithstanding the termination and
(ii) the provisions of Sections 5, 6, 7, 8, 9, 10, 12 and 14 of this Agreement
shall remain in full force and effect notwithstanding such termination.

 

(b)               The Manager shall have the right, by giving written notice as
hereinafter specified, to terminate the provisions of this Agreement relating to
the solicitation of offers to purchase the Shares in its sole discretion at any
time. Any such termination shall be without liability of any party to any other
party except that the provisions of Sections 5, 6, 7, 8, 9, 10, 12 and 14 of
this Agreement shall remain in full force and effect notwithstanding such
termination.

 

(c)                This Agreement shall remain in full force and effect until
the earlier of April 8, 2018 and such date that this Agreement is terminated
pursuant to Sections 8(a) or (b) above or otherwise by mutual agreement of the
parties; provided that any such termination by mutual agreement shall in all
cases be deemed to provide that Sections 5, 6, 7, 8, 9, 10, 12 and 14 shall
remain in full force and effect.

 

(d)               Any termination of this Agreement shall be effective on the
date specified in such notice of termination; provided that such termination
shall not be effective until the close of business on the date of receipt of
such notice by the Manager or the Company, as the case may be. If such
termination shall occur prior to the Settlement Date or Time of Delivery for any
sale of the Shares, such sale shall settle in accordance with the provisions of
Section 2(b) of this Agreement.

 

(e)                In the case of any purchase of Shares by the Manager pursuant
to a Terms Agreement, the obligations of the Manager pursuant to such Terms
Agreement shall be subject to termination, in the absolute discretion of the
Manager, by prompt oral notice given to the Company prior to the Time of
Delivery relating to such Shares, if any, and confirmed promptly by facsimile or
electronic mail, if since the time of execution of the Terms Agreement and prior
to such delivery and payment, (i) trading in the Company’s Common Stock shall
have been suspended by the Commission or the Trading Market or trading in
securities generally on the Trading Market shall have been suspended or limited
or minimum prices shall have been established on such exchange, (ii) a banking
moratorium shall have been declared either by Federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Manager, impractical or inadvisable to
proceed with the offering or delivery of the Shares as contemplated by the
Prospectus (exclusive of any amendment or supplement thereto).

 

32

 

9.                  Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Manager set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by the Manager or the Company or any of the officers, directors, employees,
agents or controlling persons referred to in Section 7, and will survive
delivery of and payment for the Shares.

 

10.              Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Manager, will be mailed,
delivered or facsimiled to the address set forth on the signature page hereto.

 

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

 

12.              No Fiduciary Duty. The Company hereby acknowledges that (a) the
purchase and sale of the Shares pursuant to this Agreement is an arm’s-length
commercial transaction between the Company, on the one hand, and the Manager and
any affiliate through which it may be acting, on the other, (b) the Manager is
acting solely as sales agent and/or principal in connection with the purchase
and sale of the Company’s securities and not as a fiduciary of the Company and
(c) the Company’s engagement of the Manager in connection with the offering and
the process leading up to the offering is as independent contractors and not in
any other capacity. Furthermore, the Company agrees that it is solely
responsible for making its own judgments in connection with the offering
(irrespective of whether the Manager has advised or is currently advising the
Company on related or other matters). The Company agrees that it will not claim
that the Manager has rendered advisory services of any nature or respect, or owe
an agency, fiduciary or similar duty to the Company, in connection with such
transaction or the process leading thereto.

 

13.              Integration. This Agreement and any Terms Agreement supersede
all prior agreements and understandings (whether written or oral) between the
Company and the Manager with respect to the subject matter hereof.

 

14.              Applicable Law. This Agreement and any Terms Agreement will be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.

 

33

 

15.              Waiver of Jury Trial. The Company hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement, any
Terms Agreement or the transactions contemplated hereby or thereby.

 

16.              Counterparts. This Agreement and any Terms Agreement may be
signed in one or more counterparts, each of which shall constitute an original
and all of which together shall constitute one and the same agreement, which may
be delivered by facsimile or in .pdf file via e-mail.

 

17.              Headings. The section headings used in this Agreement and any
Terms Agreement are for convenience only and shall not affect the construction
hereof.

         

 

 

 

 

 

 

[Remainder of Page Intentionally Left Blank]

 

 

 

34

 

 

If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the Company
and the Manager.

 

 

Very truly yours,

 

SYNTHESIS ENERGY SYSTEMS, INC.

 

By:___/s/ DeLome Fair________

Name: DeLome Fair

Title: President and Chief Executive Officer

 

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

 

T.R. WINSTON & COMPANY

 

 

By:      /s/ G. Tyler Runnels            
Name: G. Tyler Runnels
Title: Chairman & CEO

 

Address for Notice:

 

 

 

35

 

Form of Terms Agreement

ANNEX I

SYNTHESIS ENERGY SYSTEMS, INC. TERMS AGREEMENT

 

Dear Sirs:

 

Synthesis Energy Systems, Inc. (the “Company”) proposes, subject to the terms
and conditions stated herein and in the At The Market Offering Agreement, dated
May 13, 2016 (the “At The Market Offering Agreement”), between the Company and
T.R. Winston & Company (“Manager”), to issue and sell to Manager the securities
specified in the Schedule I hereto (the “Purchased Shares”). Capitalized terms
used but not defined herein shall have the meaning given such term in the At The
Market Offering Agreement.

 

Each of the provisions of the At The Market Offering Agreement not specifically
related to the solicitation by Manager, as agent of the Company, of offers to
purchase securities is incorporated herein by reference in its entirety, and
shall be deemed to be part of this Terms Agreement to the same extent as if such
provisions had been set forth in full herein. Each of the representations and
warranties set forth therein shall be deemed to have been made at and as of the
date of this Terms Agreement and the Time of Delivery (as defined in the At The
Market Offering Agreement), except that each representation and warranty in
Section 3 of the At The Market Offering Agreement which makes reference to the
Prospectus (as therein defined) shall be deemed to be a representation and
warranty as of the date of the At The Market Offering Agreement in relation to
the Prospectus, and also a representation and warranty as of the date of this
Terms Agreement and the Time of Delivery in relation to the Prospectus as
amended and supplemented to relate to the Purchased Shares.

 

An amendment to the Registration Statement (as defined in the At The Market
Offering Agreement), or a supplement to the Prospectus, as the case may be,
relating to the Purchased Shares, in the form heretofore delivered to the
Manager is now proposed to be filed with the Securities and Exchange Commission.

 

Subject to the terms and conditions set forth herein and in the At The Market
Offering Agreement which are incorporated herein by reference, the Company
agrees to issue and sell to Manager and the Manager agrees to purchase from the
Company the number of shares of the Purchased Shares at the time and place and
at the purchase price set forth in the Schedule I hereto.

 

 

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If the foregoing is in accordance with your understanding, please sign and
return to us a counterpart hereof, whereupon this Terms Agreement, including
those provisions of the At The Market Offering Agreement incorporated herein by
reference, shall constitute a binding agreement between the Manager and the
Company.

 

 

SYNTHESIS ENERGY SYSTEMS, INC.

 

By:__________________________________________

Name:

Title:  

 

ACCEPTED as of the date first written above.

 

T.R. WINSTON & COMPANY
 

By:__________________________________________

Name:

Title:

 

 

 

 

 

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