PLACEMENT AGENCY AGREEMENT

 

October 27, 2011

 

Gottbetter Capital Markets, LLC PRIVILEGED & CONFIDENTIAL Mr. Julio A. Marquez,
President   488 Madison Avenue   12th Floor   New York, New York 10022  

 

Re:    DYNASTAR HOLDINGS, INC.

 

Dear Mr. Marquez:

 

This Placement Agency Agreement (“Agreement”) sets forth the terms upon which
Gottbetter Capital Markets, LLC, a registered broker-dealer and member of the
Financial Industry Regulatory Authority (“FINRA”), (the “Placement Agent”),
shall be engaged by Dynastar Holdings, Inc., a Nevada Corporation (hereinafter
referred to as “Dynastar” or the “Company”), to act as a non-exclusive Placement
Agent in connection with the private placement of units (“Units”) of securities
(the “Offering”). Dynastar will acquire by reverse triangular merger the
business of Dynastar Ventures, Inc. (“DVI”), a Delaware corporation, and
continue DVI’s existing operations as the Company (the “Merger”).

 

The Offering will be made by the Placement Agent and its selected dealers and
consists of Units of the Company. Each Unit consists of (i) one share of the
Company’s Common Stock (“Common Stock”) and (ii) one Warrant to purchase one
half (1/2) share of Common Stock at an exercise price of $0.80 per whole share
for five (5) years (“Investor Warrants”). The Offering will consist of Two
Million Dollars ($2,000,000 USD) through the sale of Ten Million (10,000,000)
Units (the “Maximum Amount”). In the event the Offering is oversubscribed, the
Company, with the consent of DVI, may sell up to an additional Five Hundred
Thousand Dollars ($500,000 USD) through the sale of Two Million Five Hundred
Thousand (2,500,000) Units (the “Over-Allotment Option”).

 

The Offering Price for the Units will be Twenty Cents ($0.20) per Unit (the
“Offering Price”). The minimum subscription amount is Twenty Five Thousand
United States Dollars ($25,000 USD); provided, however, that subscriptions in
lesser amounts may be accepted upon the written consent of the Company and the
Placement Agent. Placement of the Units by the Placement Agent will be made on a
best efforts basis only.

 

The Units will be offered until the earlier of the time that all Units offered
in the Offering are sold or until January 31, 2012 (“Initial Offering Period”),
which date may be extended by written agreement among the Company, DVI and the
Placement Agent (this additional period and the Initial Offering Period shall be
referred to as the “Offering Period”). The date on which the Offering is
terminated shall be referred to as the “Termination Date.”

  

 

 

    

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The Placement Agent shall accept subscriptions only from (i) persons or entities
who qualify as “accredited investors,” as such term is defined in Rule 501 of
Regulation D (“Regulation D”) as promulgated by the United States Securities and
Exchange Commission (the “SEC”) under Section 4(2) of the Securities Act of
1933, as amended (the “Act”) or (ii) persons or entities who were offered and
purchased the Units outside the United States in an Offshore Transaction (as
such term is defined in Regulation S) and who are not U.S. Persons (as such term
is defined in Regulation S) and are not acting for the account or benefit of a
person in the United States or a U.S. Person.

 

With respect to the Offering, the Company shall provide the Placement Agent, on
terms set forth herein, the right to offer and sell all of the Units being
offered during the Offering Period. It is understood that no sale shall be
regarded as effective unless and until accepted by the Company and DVI. The
Company and DVI may, in their sole discretion, accept or reject, in whole or in
part, any prospective investment in the Units or allot to any prospective
subscriber less than the number of Units that such subscriber desires to
purchase. Purchases of Units may be made by the Placement Agent and its
officers, directors, employees and affiliates and by the officers, directors,
employees and affiliates of the Company and DVI for the Offering.

 

The Offering will be made by the Company pursuant to the Confidential Private
Placement Memorandum (including the documents and information attached thereto
as exhibits), the Subscription Agreement and any documents, agreements,
supplements and additions thereto (“Subscription Documents”), which at all times
will be in form and substance reasonably acceptable to the Company, DVI and the
Placement Agent and their respective counsel and contain such legends and other
information as the Company, DVI and the Placement Agent and their respective
counsel, may, from time to time, deem necessary and desirable to be set forth
therein.

 

1.        Appointment of Placement Agent. On the basis of the written and
documented representations and warranties of the Company provided herein, and
subject to the terms and conditions set forth herein, the Placement Agent is
appointed as a non-exclusive Placement Agent of the Company during the Offering
Period to assist the Company in finding qualified subscribers for the Offering.
The Placement Agent may sell Units through other broker-dealers who are FINRA
members and may reallow all or a portion of the Brokers’ Fees (as defined in
Section 3(a) below) it receives to such other broker-dealers or pay a finders or
consultant fee as allowed. On the basis of such representations and warranties
and subject to such terms and conditions, the Placement Agent hereby accepts
such appointment and agrees to perform its services hereunder diligently and in
good faith and in a professional and businesslike manner and to use its best
efforts to assist the Company in (A) finding subscribers of Units who either (i)
qualify as “accredited investors,” as such term is defined in Rule 501 of
Regulation D, or (ii) were offered and purchased the Units outside the United
States in an Offshore Transaction (as such term is defined in Regulation S) and
who are not U.S. Persons (as such term is defined in Regulation S) and are not
acting for the account or benefit of a person in the United States or a U.S.
Person and (B) completing the Offering. The Placement Agent has no obligation to
purchase any of the Units. Unless sooner terminated in accordance with this
Agreement, the engagement of the Placement Agent hereunder shall continue until
the later of the Termination Date or the Final Closing (as defined below).

  

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2.        Representations, Warranties and Covenants.

 

A.       Representations, Warranties and Covenants of the Company. The
representations and warranties of the Company contained in this Section 2A are
true and correct as of the date of execution of this Agreement by the Company
and the Company covenants as follows, as applicable.

 

(a)    The Subscription Documents have been and/or will be prepared by the
Company, in conformity with all applicable laws, and is in compliance with
Regulation D, Regulation S and/or Section 4(2) of the Act and the requirements
of all other rules and regulations (the “Regulations”) of the SEC relating to
offerings of the type contemplated by the Offering, and the applicable
securities laws and the rules and regulations of those jurisdictions wherein the
Placement Agent notifies the Company that the Units are to be offered and sold
excluding any foreign jurisdictions. The Units will be offered and sold pursuant
to the registration exemption provided by Regulation D, Regulation S and/or
Section 4(2) of the Act as a transaction not involving a public offering and the
requirements of any other applicable state securities laws and the respective
rules and regulations thereunder in those United States jurisdictions in which
the Placement Agent notifies the Company that the Units are being offered for
sale. None of the Company, its affiliates, or any person acting on its or their
behalf (other than the Placement Agent, its affiliates or any person acting on
its behalf, in respect of which no representation is made) has taken nor will it
take any action that conflicts with the conditions and requirements of, or that
would make unavailable with respect to the Offering, the exemption(s) from
registration available pursuant to Rule 506 of Regulation D, Rule 903 of
Regulation S and/or Section 4(2) of the Act, or knows of any reason why any such
exemption would be otherwise unavailable to it (including, without limitation,
any Directed Selling Efforts (as such term is defined in Regulation S)). None of
the Company, its predecessors or affiliates has been subject to any order,
judgment or decree of any court of competent jurisdiction temporarily,
preliminarily or permanently enjoining such person for failing to comply with
Section 503 of Regulation D. The Company has not, for a period of six months
prior to the commencement of the offering of Units, sold, offered for sale or
solicited any offer to buy any of its securities in a manner that would be
integrated with the offer and sale of the Units pursuant to this Agreement,
would cause the exemption from registration set forth in Rule 506 of Regulation
D to become unavailable with respect to the offer and sale of the Units pursuant
to this Agreement in the United States or to, by or for the benefit or account
of, U.S. Persons, or would cause the exclusion from registration provided by
Rule 903 of Regulation S to become unavailable for offers and sales of the Units
pursuant to this Agreement outside the United States to non-U.S. Persons.

 

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(b)  As to the Company, the Subscription Documents will not and do not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, the foregoing does not apply to any statements or omissions made solely
in reliance on and in conformity with written information furnished to the
Company by the Placement Agent specifically for use in the preparation thereof.
To the knowledge of the Company, none of the statements, documents, certificates
or other items made, prepared or supplied by the Company with respect to the
transactions contemplated hereby contains an untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained
therein not misleading in light of the circumstances in which they were made.
There is no fact which the Company has not disclosed in the Subscription
Documents or which is not disclosed in the filings (the “SEC Filings”) that the
Company makes with the SEC and of which the Company is aware that materially
adversely affects or that could reasonably be expected to have a material
adverse effect on the (i) assets, liabilities, results of operations, condition
(financial or otherwise), business or business prospects of the Company or (ii)
ability of the Company to perform its obligations under this Agreement (“Company
Material Adverse Effect”). Notwithstanding anything to the contrary herein, the
Company makes no representation or warranty with respect to any estimates,
projections and other forecasts and plans (including the reasonableness of the
assumptions underlying such estimates, projections and other forecasts and
plans) that may have been delivered to the Placement Agent or its
representatives, except that such estimates, projections and other forecasts and
plans have been prepared in good faith on the basis of assumptions stated
therein, which assumptions were believed to be reasonable at the time of such
preparation.

 

(c)  The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and is qualified and in good
standing as a foreign corporation in each jurisdiction in which the nature of
the business conducted by the Company or the property owned or leased by the
Company requires such qualification. The Company has all requisite corporate
power and authority to conduct its business as presently conducted and as
proposed to be conducted (as described in the Subscription Documents and/or the
SEC Filings), has all the necessary and requisite documents and approvals from
all state authorities, has all requisite corporate power and authority to enter
into and perform its obligations under this Agreement, the Subscription
Agreement substantially in the form made part of the Subscription Documents (the
“Subscription Agreement”), the Registration Rights Agreement substantially in
the form made part of the Subscription Documents (the “Registration Rights
Agreement”), and the other agreements contemplated hereby (this Agreement, the
Subscription Agreement, the Registration Rights Agreement, the Investor Warrants
and the other agreements contemplated hereby that the Company is required to
execute and deliver are collectively referred to herein as the “Company
Transaction Documents”) and subject to necessary Board and stockholder
approvals, to issue, sell and deliver the Units, the shares of Common Stock
underlying the Units, and the shares of Common Stock issuable upon exercise of
the Investor Warrants (the “Warrant Shares”) and to make the representations in
this Agreement accurate and not misleading. Prior to the First Closing, as
defined herein, each of the Company Transaction Documents will have been duly
authorized. This Agreement has been duly authorized, executed and delivered and
constitutes, and each of the other Company Transaction Documents, upon due
execution and delivery, will constitute, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms (i) except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect related to laws affecting creditors’ rights generally, including the
effect of statutory and other laws regarding fraudulent conveyances and
preferential transfers, and except that no representation is made herein
regarding the enforceability of the Company’s obligations to provide
indemnification and contribution remedies under the securities laws and (ii)
subject to the limitations imposed by general equitable principles (regardless
of whether such enforceability is considered in a proceeding at law or in
equity).

  

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(d)  None of the execution and delivery of or performance by the Company under
this Agreement or any of the other Company Transaction Documents or the
consummation of the transactions herein or therein contemplated conflicts with
or violates, or will result in the creation or imposition of, any lien, charge
or other encumbrance upon any of the assets of the Company under any agreement
or other instrument to which the Company is a party or by which the Company or
its assets may be bound, or any term of the certificate of incorporation or
by-laws of the Company, or any license, permit, judgment, decree, order,
statute, rule or regulation applicable to the Company or any of its assets,
except in the case of a conflict, violation, lien, charge or other encumbrance
(except with respect to the Company’s certificate of incorporation or by-laws)
which would not, or could not reasonably be expected to, have a Company Material
Adverse Effect.

 

(e)  The Company’s financial statements, together with the related notes, if
any, included in the Company’s SEC Filings, present fairly, in all material
respects, the financial position of the Company as of the dates specified and
the results of operations for the periods covered thereby. Such financial
statements and related notes were prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated, except that the unaudited financial statements
omit full notes, and except for normal year end adjustments. During the period
of engagement of the Company’s independent certified public accountants, there
have been no disagreements between the accounting firm and the Company on any
matters of accounting principles or practices, financial statement disclosure or
auditing scope or procedures. The Company has made and kept books and records
and accounts which are in reasonable detail and which fairly and accurately
reflect the activities of the Company, subject only to year-end adjustments.
Except as set forth in such financial statements or otherwise disclosed in the
Subscription Documents, the Company’s senior management has no known material
liabilities of any kind, whether accrued, absolute or contingent, or otherwise,
and subsequent to the date of the Subscription Documents and prior to the date
of the First Closing it shall not enter into any material transactions or
commitments without promptly thereafter notifying the Placement Agent in writing
of any such material transaction or commitment. The other financial and
statistical information with respect to the Company and any pro forma
information and related notes included in the SEC Filings present fairly the
information shown therein on a basis consistent with the financial statements of
the Company included in the SEC Filings. The Company does not know of any facts,
circumstances or conditions which could materially adversely affect its
operations, earnings or prospects that have not been fully disclosed in the
financial statements appearing in the SEC Filings.

 

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(f)  As of the date of the First Closing, the Company will have the authorized
and outstanding capital stock as set forth in the Subscription Documents. All
outstanding shares of capital stock of the Company are duly authorized, validly
issued and outstanding, fully paid and nonassessable (with no personal liability
attaching to the holders thereof or to the Company). Except as described in the
Subscription Documents, as of the date of the First Closing: (i) there will be
no outstanding options, stock subscription agreements, warrants or other rights
permitting or requiring the Company or others to purchase or acquire any shares
of capital stock or other equity securities of the Company or to pay any
dividend or make any other distribution in respect thereof; (ii) there will be
no securities issued or outstanding which are convertible into or exchangeable
for any of the foregoing and there are no contracts, commitments or
understandings, whether or not in writing, to issue or grant any such option,
warrant, right or convertible or exchangeable security; (iii) no shares of stock
or other securities of the Company are reserved for issuance for any purpose;
(iv) there will be no voting trusts or other contracts, commitments,
understandings, arrangements or restrictions of any kind with respect to the
ownership, voting or transfer of shares of stock or other securities of the
Company, including, without limitation, any preemptive rights, rights of first
refusal, proxies or similar rights, and (v) no person prior to the execution of
this Agreement by the Company holds a right to require the Company to register
any securities of the Company under the Act or to participate in any such
registration. As of the date of the First Closing, the issued and outstanding
shares of capital stock of the Company will conform in all material respects to
all statements in relation thereto contained in the Company’s SEC Filings and
such SEC Filings describe all material terms and conditions thereof. All
issuances by the Company of its securities have been issued pursuant to either a
current effective registration statement under the Act or an exemption from
registration requirements under the Act, and were issued in accordance with any
applicable federal and state securities laws.

 

(g) Immediately prior to the First Closing, the shares of Common Stock
underlying the Units and the Investor Warrants will have been duly authorized
and, when issued and delivered against payment therefor as provided in the
Company Transaction Documents, will be validly issued, fully paid and
nonassessable. No holder of any of the shares of Common Stock underlying the
Units and the Investor Warrants will be subject to personal liability solely by
reason of being such a holder, and except as described in the Subscription
Documents, none of the shares of Common Stock underlying the Units and the
Investor Warrants will be subject to preemptive or similar rights of any
stockholder or security holder of the Company or an adjustment under the
antidilution or exercise rights of any holders of any outstanding shares of
capital stock, options, warrants or other rights to acquire any securities of
the Company. Immediately prior to the First Closing, a sufficient number of
authorized but unissued shares of Common Stock will have been reserved for
issuance upon the exercise of the Investor Warrants.

 

(h)  Except as described in the Subscription Documents, the Company has no
subsidiaries and does not own any equity interest and has not made any loans or
advances to or guarantees of indebtedness to any person, corporation,
partnership or other entity. The conduct of business by the Company as presently
and proposed to be conducted is not subject to continuing oversight,
supervision, regulation or examination by any governmental official or body of
the United States, or any other jurisdiction wherein the Company conducts or
proposes to conduct such business, except as described in the Company’s SEC
Filings and except as such regulation is applicable to US public companies and
commercial enterprises generally. The Company has obtained all material
licenses, permits and other governmental authorizations necessary to conduct its
business as presently conducted. The Company has not received any notice of any
violation of, or noncompliance with, any federal, state, local or foreign laws,
ordinances, regulations and orders (including, without limitation, those
relating to environmental protection, occupational safety and health, securities
laws, equal employment opportunity, consumer protection, credit reporting,
“truth-in-lending”, and warranties and trade practices) applicable to its
business, the violation of, or noncompliance with, would have a Company Material
Adverse Effect, and the Company knows of no facts or set of circumstances which
could give rise to such a notice.

  

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(i)   Except as described in the Subscription Documents and/or the Company’s SEC
Filings, no default by the Company or, to the knowledge of the Company, any
other party, exists in the due performance under any material agreement to which
the Company is a party or to which any of its assets is subject (collectively,
the “Company Agreements”). The Company Agreements, if any, disclosed in the
Subscription Documents and/or the Company’s SEC Filings are the only material
agreements to which the Company is bound or by which its assets are subject, are
accurately described in the Subscription Documents and/or the Company’s SEC
Filings and are in full force and effect in accordance with their respective
terms, subject to any applicable bankruptcy, insolvency or other laws affecting
the rights of creditors generally and to general equitable principles and the
availability of specific performance.

 

(j)   Subsequent to the respective dates as of which information is given in the
Subscription Documents, the Company has operated its business in the ordinary
course and, except as may otherwise be set forth in the Subscription Documents,
there has been no: (i) Company Material Adverse Effect; (ii) transaction
otherwise than in the ordinary course of business consistent with past practice;
(iii) issuance of any securities (debt or equity) or any rights to acquire any
such securities other than pursuant to equity incentive plans approved by its
Board of Directors; (iv) damage, loss or destruction, whether or not covered by
insurance, with respect to any asset or property of the Company; or (v)
agreement to permit any of the foregoing.

 

(k)   Except as set forth in the Subscription Documents and/or the Company’s SEC
Filings, there are no actions, suits, claims, hearings or proceedings pending
before any court or governmental authority or, to the knowledge of the Company,
threatened, against the Company, or involving its assets or any of its officers
or directors (in their capacity as such) which, if determined adversely to the
Company or such officer or director, could reasonably be expected to have a
Company Material Adverse Effect or adversely affect the transactions
contemplated by this Agreement (as hereinafter defined) or the enforceability
thereof.

 

(l)   The Company is not: (i) in violation of its Articles of Incorporation or
By-laws; (ii) in default of any contract, indenture, mortgage, deed of trust,
note, loan agreement, security agreement, lease, alliance agreement, joint
venture agreement or other agreement, license, permit, consent, approval or
instrument to which the Company is a party or by which it is or may be bound or
to which any of its assets may be subject, the default of which could reasonably
be expected to have a Company Material Adverse Effect; (iii) in violation of any
statute, rule or regulation applicable to the Company, the violation of which
would have a Company Material Adverse Effect; or (iv) in violation of any
judgment, decree or order of any court or governmental body having jurisdiction
over the Company and specifically naming the Company, which violation or
violations individually, or in the aggregate, could reasonably be expected to
have a Company Material Adverse Effect.

 

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(m)   Except as disclosed in the Subscription Documents and/or the Company’s SEC
Filings, as of the date of this Agreement, no current or former stockholder,
director, officer or employee of the Company, nor, to the knowledge of the
Company, any affiliate of any such person is presently, directly or indirectly
through his/her affiliation with any other person or entity, a party to any loan
from the Company or any other transaction (other than as an employee) with the
Company providing for the furnishing of services by, or rental of any personal
property from, or otherwise requiring cash payments to any such person.

 

(n)   The Company is not obligated to pay, and has not obligated the Placement
Agent to pay, a finder’s or origination fee in connection with the Offering
(other than to the Placement Agent), and hereby agrees to indemnify the
Placement Agent from any such claim made by any other person as more fully set
forth in Section 8 hereof. The Company has not offered for sale or solicited
offers to purchase the Units except for negotiations with the designated
Placement Agent(s). Except as set forth in the Subscription Documents, no other
person has any right to participate in any offer, sale or distribution of the
Company’s securities to which the Placement Agent’s rights, described herein,
shall apply.

 

(o)   Until the earlier of (i) the Termination Date or (ii) the Final Closing
(as hereinafter defined), the Company will not issue any press release, grant
any interview, or otherwise communicate with the media in any manner whatsoever
with respect to the Offering without the Placement Agent’s prior written
consent, which consent will not unreasonably be withheld or delayed.

 

(p)   No representation or warranty contained in Section 2A of this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements herein not misleading in the context of
such representations and warranties. The Placement Agent shall be entitled to
rely on such representations and warranties.

 

(q)   No consent, authorization or filing of or with any court or governmental
authority is required in connection with the issuance or the consummation of the
transactions contemplated herein or in the other Company Transaction Documents,
except for required filings with the SEC and the applicable state securities
commissions relating specifically to the Offering (all of which filings will be
duly made by, or on behalf of, the Company), other than those which are required
to be made after the First Closing (all of which will be duly made on a timely
basis).

 

(r)   The Company acknowledges and agrees that certain affiliates of the
Placement Agent will own shares of the Company prior to and immediately after
the Merger.

 

(s)   Neither the sale of the Units by the Company nor its use of the proceeds
thereof will violate the Trading with the Enemy Act, as amended, nor any of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto. Without limiting the foregoing, the Company is not (a) a
person whose property or interests in property are blocked pursuant to Section 1
of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)) or (b) a person who engages in any dealings or
transactions, or be otherwise associated, with any such person. The Company and
its subsidiaries, if any, are in compliance, in all material respects, with the
USA Patriot Act of 2001 (signed into law October 26, 2001).

  

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2B.      Representations, Warranties and Covenants of Placement Agent. The
Placement Agent hereby represents and warrants to the Company that the following
representations and warranties are true and correct as of the date of this
Agreement:

 

(a)  The Placement Agent is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of New York and has
all requisite corporate power and authority to enter into this Agreement and to
carry out and perform its obligations under the terms of this Agreement.

 

(b)  This Agreement has been duly authorized, executed and delivered by the
Placement Agent, and upon due execution and delivery by the Company, this
Agreement will be a valid and binding agreement of the Placement Agent
enforceable against it in accordance with its terms, except as may be limited by
principles of public policy and, as to enforceability, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws relating to
or affecting creditor’s rights from time to time in effect and subject to
general equity principles.

 

(c)  The Placement Agent is a member of FINRA and is registered as a
broker-dealer under the Exchange Act (as defined below), and under the
securities acts of each state into which it is making offers or sales of the
Units. None of the Placement Agent or its affiliates, or any person acting on
behalf of the foregoing (other than the Company, its or their affiliates or any
person acting on its or their behalf, in respect of which no representation is
made) has taken nor will it take any action that conflicts with the conditions
and requirements of, or that would make unavailable with respect to the
Offering, the exemption(s) from registration available pursuant to Rule 506 of
Regulation D, Rule 903 of Regulation S or Section 4(2) of the Act, or knows of
any reason why any such exemption would be otherwise unavailable to it.

 

(d)  None of the Placement Agent or its affiliates, or any person acting on
behalf of the foregoing, has engaged or will engage in any Directed Selling
Efforts (as such term is defined in Regulation S).

 

(e)  Any offer or solicitation of an offer to buy Units made by the Placement
Agent or its affiliates, or any person acting on behalf of the foregoing, in
reliance on Rule 903 of Regulation S and in reliance upon similar exemptions
from registration available under applicable state securities laws, was made
outside of the United States exclusively to persons or entities that were, and
are at the time of the delivery of the Units, not a U.S. Person (as such term is
defined in Regulation S) and were, and are at the time of the delivery of the
Units, not acting for the account or benefit of a person in the United States or
a U.S. Person.

 

(f)   Adam S. Gottbetter is the owner of Gottbetter Capital Group, Inc.,
Gottbetter & Partners, LLP and Gottbetter Capital Markets, LLC.  Gottbetter
Capital Group owns shares of the public company which is the acquirer in the
proposed transaction.  Gottbetter & Partners, LLP is counsel to the company and
has represented the company in the proposed transaction for which it will
receive legal fees in accordance with an executed retainer agreement.
 Gottbetter Capital Markets, LLC is a placement agent for the private placement
offering in the proposed transaction for which it may receive placement agent
fees in accordance with an executed placement agent agreement.

  

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3.        Placement Agent Compensation.

 

(a)   In connection with the Offering and as a condition to Closing, the Company
will pay a cash fee (the “Agent Cash Fee”) to the Placement Agent at each
Closing equal to Ten Percent (10%) of the gross sales price of the securities
purchased by those Investor(s) introduced to the Company by the Placement Agent
(“Markets Clients”). Additionally, the Company will deliver to the Placement
Agent warrants exercisable for a period of five (5) years from the Closing Date,
to purchase a number of shares of Common Stock equaling Five Percent (5%) of the
number of Units sold to the Markets Clients with an exercise price per share of
$0.20 (“Broker Warrants”) (“Agent Cash Fee” and “Broker Warrants” are sometimes
referred to collectively as “Brokers’ Fees”).

 

(b)   The Company shall also pay to the Placement Agent the Brokers’ Fees
calculated according to the percentages set forth in Sections 3(a) of this
Agreement, if any person or entity contacted by the Placement Agent in
connection with the Offering invests in the Company (the “Post-Closing
Investors”) at any time prior to the date that is twenty four (24) months after
the Termination Date or the Final Closing, whichever is applicable, regardless
of whether such Post-Closing Investor purchased Units in the Offering.

 

(c)   To the extent there is more than one Closing, payment of the proportional
amount of the Brokers’ Fees will be made out of the proceeds of subscriptions
for the Units sold at each Closing.

 

4.        Subscription and Closing Procedures.

 

(a)   The Company shall cause to be delivered to the Placement Agent copies of
the Subscription Documents and has consented, and hereby consents, to the use of
such copies for the purposes permitted by the Act and applicable securities laws
and in accordance with the terms and conditions of this Agreement, and hereby
authorizes the Placement Agent and its agents and employees to use the
Subscription Documents in connection with the sale of the Units until the
earlier of (i) the Termination Date or (ii) the Final Closing, and no person or
entity is or will be authorized to give any information or make any
representations other than those contained in the Subscription Documents or to
use any offering materials other than those contained in the Subscription
Documents in connection with the sale of the Units, unless the Company first
provides the Placement Agent with notification of such information,
representations or offering materials.

 

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(b)   The Company shall make available to the Placement Agent and its
representatives such information, including, but not limited to, financial
information, and other information regarding the Company (the “Information”), as
may be reasonably requested in making a reasonable investigation of the Company
and its affairs. The Company shall provide access to the officers, directors,
employees, independent accountants, legal counsel and other advisors and
consultants of the Company as shall be reasonably requested by the Placement
Agent. The Company recognizes and agrees the Placement Agent (i) will use and
rely primarily on the Information and generally available information from
recognized public sources in performing the services contemplated by this
Agreement without independently verifying the Information or such other
information, (ii) does not assume responsibility for the accuracy of the
Information or such other information, and (iii) will not make an appraisal of
any assets or liabilities owned or controlled by the Company or its market
competitors.

 

(c)   Each prospective purchaser will be required to complete and execute the
Subscription Agreement, Anti-Money Laundering Form, Accredited Investor
Certification and other related documents, which will be forwarded or delivered
to the Placement Agent at the Placement Agent’s offices at the address set forth
in Section 12 hereof.

 

(d)   Simultaneously with the delivery to the Placement Agent of the
Subscription Documents, the subscriber’s check or other good funds will be
forwarded directly by the subscriber to the escrow agent (the “Escrow Agent”)
and deposited into a non interest bearing escrow account established for such
purpose. All such funds for subscriptions will be held in the Escrow Account
pursuant to the terms of an escrow agreement among the Company, the Placement
Agent and the Escrow Agent. The Company will pay all fees related to the
establishment and maintenance of the Escrow Account. Subject to the receipt of
subscriptions for the amount for Closing, the Company will either accept or
reject, for any or no reason, the Subscription Documents in a timely fashion and
at each Closing will countersign the Subscription Documents and provide
duplicate copies of such documents to the Placement Agent for distribution to
the subscribers. The Company will give notice to the Placement Agent of its
acceptance of each subscription. The Company, or the Placement Agent on the
Company’s behalf, will promptly return to subscribers incomplete, improperly
completed, improperly executed and rejected subscriptions and give written
notice thereof to the Placement Agent upon such return.

 

(e)   If subscriptions for an amount acceptable to the Company for a Closing
have been accepted prior to the Termination Date, the funds therefor have been
collected by the Escrow Agent and all of the conditions set forth elsewhere in
this Agreement are fulfilled, a closing shall be held promptly with respect to
Units sold (the “First Closing”). Thereafter, the remaining Units will continue
to be offered and sold until the Termination Date. Additional closings
(“Closings”) may from time to time be conducted at times mutually agreed to
between the Placement Agent and the Company with respect to additional Units
sold, with the final closing (“Final Closing”) to occur within 10 days after the
earlier of the Termination Date and the date on which an agreed upon amount has
been subscribed for. Delivery of payment for the accepted subscriptions for
Units from the funds held in the Escrow Account will be made at each Closing at
the Placement Agent’s offices against delivery of the Units by the Company at
the address set forth in Section 12 hereof (or at such other place as may be
mutually agreed upon between the Company and the Placement Agent), net of
amounts due to the Placement Agent and its Blue Sky counsel as of such Closing.
Executed certificates for the shares of Common Stock and Investor Warrants
constituting the Units and the Broker Warrants will be in such authorized
denominations and registered in such names as the Placement Agent may request on
or before the date of each Closing (“Closing Date”). The certificates will be
forwarded to the subscriber directly by the transfer agent or the Company’s
designated agent at each Closing. The Company will issue the certificates for
the Common Stock, Investor Warrants and Broker Warrants within twenty (20) days
of each Closing.

  

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(f)  If Subscription Documents for the amount for Closing have not been received
and accepted by the Company on or before the Termination Date for any reason,
the Offering will be terminated, no Units will be sold, and the Escrow Agent
will, at the request of the Placement Agent, cause all monies received from
subscribers for the Units to be promptly returned to such subscribers without
interest, penalty, expense or deduction.

  

5.       Further Covenants.

  

The Company hereby covenants and agrees that:

 

(a)  Except upon prior written notice to the Placement Agent, the Company shall
not, at any time prior to the Final Closing, knowingly take any action which
would cause any of the representations and warranties made by it in this
Agreement not to be complete and correct in all material respects on and as of
each Closing Date with the same force and effect as if such representations and
warranties had been made on and as of each such date (except to the extent any
representation or warranty relates to an earlier date).

 

(b)   If, at any time prior to the Final Closing, any event shall occur that
causes a Company Material Adverse Effect which as a result it becomes necessary
to amend or supplement the Subscription Documents so that the representations
and warranties herein remain true and correct in all material respects, or in
case it shall be necessary to amend or supplement the Subscription Documents to
comply with Regulation D or any other applicable securities laws or regulations,
the Company will promptly notify the Placement Agent and shall, at its sole
cost, prepare and furnish to the Placement Agent copies of appropriate
amendments and/or supplements in such quantities as the Placement Agent may
reasonably request. The Company will not at any time before the Final Closing
prepare or use any amendment or supplement to the Subscription Documents of
which the Placement Agent will not previously have been advised and furnished
with a copy, or which is not in compliance in all material respects with the Act
and other applicable securities laws. As soon as the Company is advised thereof,
the Company will advise the Placement Agent and its counsel, and confirm the
advice in writing, of any order preventing or suspending the use of the
Subscription Documents, or the suspension of any exemption for such
qualification or registration thereof for offering in any jurisdiction, or of
the institution or threatened institution of any proceedings for any of such
purposes, and the Company will use their best efforts to prevent the issuance of
any such order and, if issued, to obtain as soon as reasonably possible the
lifting thereof.

 

(c)   The Company shall comply with the Act, the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and the rules and regulations thereunder,
all applicable state securities laws and the rules and regulations thereunder in
the states in which Placement Agent’s Blue Sky counsel has advised the Placement
Agent and/or the Company that the Units are qualified or registered for sale or
exempt from such qualification or registration, so as to permit the continuance
of the sales of the Units, and will file or cause to be filed with the SEC, and
shall promptly thereafter forward or cause to be forwarded to the Placement
Agent, any and all reports on Form D as are required. The Company will pay the
attorney’s fee and out of pocket expenses related to the filings for
registrations of sale or exemption from such qualifications with any state
securities commissions and any other regulatory agencies. Such fees will be paid
at the time of invoicing, or at the time of Closing, if known, and if not yet
invoiced, funds will remain in escrow to cover the estimated invoice.

  

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(d)   The Company shall use best efforts to qualify the Units for sale under the
securities laws of such jurisdictions in the United States as may be mutually
agreed to by the Company and the Placement Agent, and the Company will make or
cause to be made such applications and furnish information as may be required
for such purposes, provided that the Company will not be required to qualify as
a foreign corporation in any jurisdiction or execute a general consent to
service of process. The Company will, from time to time, prepare and file such
statements and reports as are or may be required to continue such qualifications
in effect for so long a period as the Placement Agent may reasonably request
with respect to the Offering.

 

(e)  The Company shall place a legend on the certificates representing the
Shares and the Investor Warrants that the securities evidenced thereby have not
been registered under the Act or applicable state securities laws, setting forth
or referring to the applicable restrictions on transferability and sale of such
securities under the Act and applicable state laws.

 

(f)   The Company shall apply the net proceeds from the sale of the Units for
the purposes substantially as described under the “Use of Proceeds” section of
the Subscription Documents. Except as set forth in the Subscription Documents,
the Company shall not use any of the net proceeds of the Offering to repay
indebtedness to officers (other than accrued salaries incurred in the ordinary
course of business), directors or stockholders of the Company without the prior
written consent of the Placement Agent.

 

(g)   During the Offering Period, the Company shall afford each prospective
purchaser of Units the opportunity to ask questions of and receive answers from
an officer of the Company concerning the terms and conditions of the Offering
and the opportunity to obtain such other additional information necessary to
verify the accuracy of the Subscription Documents to the extent the Company
possesses such information or can acquire it without unreasonable expense.

 

(h)  Except with the prior written consent of the Placement Agent, the Company
shall not, at any time prior to the earlier of the Final Closing or the
Termination Date, except as contemplated by the Subscription Documents (i)
engage in or commit to engage in any transaction outside the ordinary course of
business as described in the Subscription Documents, (ii) issue, agree to issue
or set aside for issuance any securities (debt or equity) or any rights to
acquire any such securities, (iii) incur, outside the ordinary course of
business, any material indebtedness, (iv) dispose of any material assets, (v)
make any material acquisition or (vi) change its business or operations.

 

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(i)   The Company shall pay all reasonable expenses incurred in connection with
the preparation and printing of all necessary offering documents and instruments
related to the Offering and the issuance of the Shares and the Investor Warrants
and will also pay for the Company’s expenses for accounting fees, legal fees,
printing costs, and other costs involved with the Offering. The Company will
provide at its own expense such quantities of the Subscription Documents and
other documents and instruments relating to the Offering as the Placement Agent
may reasonably request. The Company will pay at its own expense in connection
with the creation, authorization, issuance, transfer and delivery of the Units,
including, without limitation, fees and expenses of any transfer agent or
registrar; the fees and expenses of the Escrow Agent; all fees and expenses of
legal, accounting and other advisers to the Company and DVI; the registration or
qualification of the Units for offer and sale under the securities or Blue Sky
laws of such jurisdictions, payable within five (5) days of being invoiced; and
at the First Closing, or, if there is no Closing, within ten (10) days after
written request therefore following the Termination Date, legal fees of $25,000
and expenses of the Placement Agent’s counsel, and provided that such limitation
shall in no way affect the obligations of the Company with respect to
indemnification and contribution as set forth in Sections 8 and 9 herein.

 

(j)   Effective with the First Closing, Placement Agent shall have a right of
first negotiation (“Right of Negotiation”) to act as lead placement agent on any
subsequent private placement of the Company’s securities for a period of two (2)
years from such effectiveness.

 

6.      Conditions of Placement Agent’s Obligations.

 

The obligations of the Placement Agent hereunder to affect a Closing are subject
to the fulfillment, at or before each Closing, of the following additional
conditions:

 

(a)  Each of the representations and warranties made by the Company qualified as
to materiality shall be true and correct at all times prior to and on each
Closing Date, except to the extent any such representation or warranty expressly
speaks as of an earlier date, in which case such representation or warranty
shall be true and correct as of such earlier date, and the representations and
warranties made by the Company not qualified as to materiality shall be true and
correct in all material respects at all times prior to and on each Closing Date,
except to the extent any such representation or warranty expressly speaks as of
an earlier date, in which case such representation or warranty shall be true and
correct in all material respects as of such earlier date.

 

(b)   The Company shall have performed and complied in all material respects
with all agreements, covenants and conditions required to be performed, and
complied with by it at or before the Closing.

 

(c)   The Subscription Documents do not, and as of the date of any amendment or
supplement thereto will not, include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

 

(d)  No order suspending the use of the Subscription Documents or enjoining the
Offering or sale of the Units shall have been issued, and no proceedings for
that purpose or a similar purpose shall have been initiated or pending, or, to
the best of the Company’s knowledge, be contemplated or threatened.

  

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(e)  The Placement Agent shall have received a certificate of the Chief
Executive Officer of the Company, dated as of each Closing Date, certifying, as
to the fulfillment of the conditions set forth in subparagraphs (a), (b), (c)
and (d) above.

 

(f)  The Company shall have delivered to the Placement Agent: (i) a good
standing certificate dated as of a date within 10 days prior to the first
Closing Date from the secretary of state of its jurisdiction of incorporation;
and (ii) resolutions of the Company’s Board of Directors approving this
Agreement and the transactions and agreements contemplated by this Agreement,
any other agreements and the Subscription Documents, certified by the Chief
Executive Officer of the Company.

 

(g)  At each Closing, the Company shall pay and/or issue to the Placement Agent
the Brokers’ Fees earned in such Closing.

 

(h)  All proceedings taken at or prior to the Closing in connection with the
authorization, issuance and sale of the Units will be reasonably satisfactory in
form and substance to the Placement Agent and its counsel, and such counsel
shall have been furnished with all such documents, certificates and opinions as
it may reasonably request upon reasonable prior notice in connection with the
transactions contemplated hereby.

 

7.            Conditions of the Company’s Obligations.

 

The obligations of the Company hereunder are subject to the satisfaction of each
of the following conditions:

a.    The satisfaction or waiver of all conditions to closing as set forth
herein.

b.    As of each Closing, each of the representations and warranties made by
Placement Agent herein being true and correct as of the Closing Date for such
Closing.

 

7A.    Mutual Condition. The obligations of the Placement Agent and the Company
hereunder are subject to the execution by each investor of a Subscription
Agreement in form and substance acceptable to the Placement Agent and the
Company and deposit by such investor with the escrow agent all funds required to
be so deposited by such investor.

   

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8.       Indemnification.

 

(a)  The Company will: (i) indemnify and hold harmless the Placement Agent, its
agents and their respective officers, directors, employees, selected dealers and
each person, if any, who controls the Placement Agent within the meaning of the
Act and such agents (each an “Indemnitee” or a “Placement Agent Party”) against,
and pay or reimburse each Indemnitee for, any and all losses, claims, damages,
liabilities or expenses whatsoever (or actions or proceedings or investigations
in respect thereof), severally (which will, for all purposes of this Agreement,
include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys’ fees, including appeals), to which
any Indemnitee may become subject (a) under the Act or otherwise, in connection
with the offer and sale of the Units and (b) as a result of the breach of any
representation, warranty or covenant made by the Company herein, regardless of
whether such losses, claims, damages, liabilities or expenses shall result from
any claim by any Indemnitee or by any third party; and (ii) reimburse each
Indemnitee for any legal or other expenses reasonably incurred in connection
with investigating or defending against any such loss, claim, action, proceeding
or investigation; provided, however, the Company will not be liable in any such
case to the extent that any such claim, damage or liability is finally
judicially determined to have resulted from (A) an untrue statement or alleged
untrue statement of a material fact made in the Subscription Documents, or an
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, made
solely in reliance upon and in conformity with written information furnished to
the Company by the Placement Agent specifically for use in the Subscription
Documents or (B) any violations by the Placement Agent of the Act or state
securities laws which does not result from a violation thereof by the Company or
any of their respective affiliates or (C) due to the intentional or negligent
misrepresentation and/or malfeasance of the Placement Agent. In addition to the
foregoing agreement to indemnify and reimburse, the Company will indemnify and
hold harmless each Indemnitee against any and all losses, claims, damages,
liabilities or expenses whatsoever (or actions or proceedings or investigations
in respect thereof), joint or several (which shall, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys’ fees, including appeals) to which
any Indemnitee may become subject insofar as such costs, expenses, losses,
claims, damages or liabilities arise out of or are based upon the claim of any
person or entity that he or it is entitled to broker’s or finder’s fees from any
Indemnitee in connection with the Offering, other than fees due to the Placement
Agent. The foregoing indemnity agreements will be in addition to any liability
the Company may otherwise have.

 

(b)   The Placement Agent will indemnify and hold harmless the Company, their
respective officers, directors, and each person, if any, who controls such
entity within the meaning of the Act against, and pay or reimburse any such
person for, any and all losses, claims, damages, liabilities or expenses
whatsoever (or actions, proceedings or investigations in respect thereof) to
which the Company or any such person may become subject under the Act or
otherwise, whether such losses, claims, damages, liabilities or expenses shall
result from any claim of the Company or any such person who controls the Company
within the meaning of the Act or by any third party, but only to the extent that
such losses, claims, damages or liabilities are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Subscription
Documents made in reliance upon and in conformity with information contained in
the Subscription Documents relating to the Placement Agent, or an omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in either case, if
made or omitted in reliance upon and in conformity with written information
furnished to the Company by the Placement Agent, specifically for use in the
preparation thereof or due to the intentional or negligent misrepresentation
and/or malfeasance of the Placement Agent. The Placement Agent will reimburse
the Company or any such person for any legal or other expenses reasonably
incurred in connection with investigating or defending against any such loss,
claim, damage, liability or action, proceeding or investigation to which such
indemnity obligation applies. The foregoing indemnity agreements are in addition
to any liability which the Placement Agent may otherwise have.

  

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(c)   Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, claim, proceeding or investigation
(the “Action”), such indemnified party, if a claim in respect thereof is to be
made against the indemnifying party under this Section 8, will notify the
indemnifying party of the commencement thereof, but the omission to so notify
the indemnifying party will not relieve it from any liability that it may have
to any indemnified party under this Section 8 unless the indemnifying party has
been substantially prejudiced by such omission. The indemnifying party will be
entitled to participate in and, to the extent that it may wish, jointly with any
other indemnifying party, to assume the defense thereof subject to the
provisions herein stated, with counsel reasonably satisfactory to such
indemnified party. The indemnified party will have the right to employ separate
counsel in any such Action and to participate in the defense thereof, but the
fees and expenses of such counsel will not be at the expense of the indemnifying
party if the indemnifying party has assumed the defense of the Action with
counsel reasonably satisfactory to the indemnified party, provided, however,
that if the indemnified party shall be requested by the indemnifying party to
participate in the defense thereof or shall have concluded in good faith and
specifically notified the indemnifying party either that there may be specific
defenses available to it that are different from or additional to those
available to the indemnifying party or that such Action involves or could have a
material adverse effect upon it with respect to matters beyond the scope of the
indemnity agreements contained in this Agreement, then the counsel representing
it, to the extent made necessary by such defenses, shall have the right to
direct such defenses of such Action on its behalf and in such case the
reasonable fees and expenses of such counsel in connection with any such
participation or defenses shall be paid by the indemnifying party. No settlement
of any Action against an indemnified party will be made without the consent of
the indemnifying party and the indemnified party, which consent shall not be
unreasonably withheld or delayed in light of all factors of importance to such
party, and no indemnifying party shall be liable to indemnify any person for any
settlement of any such claim effected without such indemnifying party’s consent.

  

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9.       Contribution.

 

To provide for just and equitable contribution, if: (i) an indemnified party
makes a claim for indemnification pursuant to Section 8 hereof and it is finally
determined, by a judgment, order or decree not subject to further appeal that
such claims for indemnification may not be enforced, even though this Agreement
expressly provides for indemnification in such case; or (ii) any indemnified or
indemnifying party seeks contribution under the Act, the Exchange Act, or
otherwise, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party 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 the Placement Agent on the other in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Placement Agent on the other shall be deemed to be in
the same proportion as the total net proceeds from the Offering (before
deducting expenses) received by the Company bear to the total Brokers’ Fees
received by the Placement Agent. The relative fault, in the case of an untrue
statement, alleged untrue statement, omission or alleged omission will be
determined by, among other things, whether such statement, alleged statement,
omission or alleged omission relates to information supplied by the Company or
by the Placement Agent, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement, alleged
statement, omission or alleged omission. The Company and the Placement Agent
agree that it would be unjust and inequitable if the respective obligations of
the Company and the Placement Agent for contribution were determined by pro rata
allocation of the aggregate losses, liabilities, claims, damages and expenses or
by any other method or allocation that does not reflect the equitable
considerations referred to in this Section 9. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 10(f) of the Act) will be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 9, each person, if any, who
controls the Placement Agent within the meaning of the Act will have the same
rights to contribution as the Placement Agent, and each person, if any, who
controls the Company within the meaning of the Act will have the same rights to
contribution as the Company, subject in each case to the provisions of this
Section 9. Anything in this Section 9 to the contrary notwithstanding, no party
will be liable for contribution with respect to the settlement of any claim or
action effected without its written consent. This Section 9 is intended to
supersede, to the extent permitted by law, any right to contribution under the
Act, the Exchange Act or otherwise available.

  

10.       Termination.

 

(a)   The Offering may be terminated by the Placement Agent at any time prior to
the expiration of the Offering Period in the event that: (i) any of the
representations, warranties or covenants of the Company contained herein or in
the Subscription Documents shall prove to have been false or misleading in any
material respect when actually made; (ii) the Company shall have failed to
perform any of its material obligations hereunder or under any other the Company
Transaction Document or any other transaction document; (iii) there shall occur
any event, within the control of the Company that could materially adversely
affect the transactions contemplated hereunder or the ability of the Company to
perform hereunder; or (iv) the Placement Agent determines that it is reasonably
likely that any of the conditions to Closing set forth herein will not, or
cannot, be satisfied.

 

(b)  This Offering may be terminated by the Company at any time prior to the
expiration of the Offering Period (i) in the event that the Placement Agent
shall have failed to perform any of its material obligations hereunder, or (ii)
on account of the Placement Agent’s fraud, illegal or willful misconduct or
gross negligence or (iii) a material breach of this Agreement by the Placement
Agent. In the event of any such termination by the Company, the Placement Agent
shall not be entitled to any amounts whatsoever except (i) as may be due under
any indemnity or contribution obligation provided herein or any other Company
Transaction Document, at law or otherwise and (ii) it shall retain any Brokers’
Fees received for Closings that occurred prior to the Termination Date.

 

(c)  This Offering may be terminated upon mutual agreement of the Company and
the Placement Agent at any time prior to the expiration of the Offering Period.

  

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(d)  Before any termination by the Placement Agent under Section 10(a) or by the
Company under Section 10(b) shall become effective, the terminating party shall
give ten (10) days prior written notice to the other party of its intention to
terminate the Offering (the “Termination Notice”). The Termination Notice shall
specify the grounds for the proposed termination. If the specified grounds for
termination, or their resulting adverse effect on the transactions contemplated
hereby, are curable, then the other party shall have five (5) days from the
Termination Notice within which to remove such grounds or to eliminate all of
their material adverse effects on the transactions contemplated hereby;
otherwise, the Offering shall terminate.

(e)  Upon any termination pursuant to this Section 10, the Placement Agent and
the Company will instruct the Escrow Agent to cause all monies received with
respect to the subscriptions for Units not accepted by the Company to be
promptly returned to such subscribers without interest, penalty or deduction.

 

11.    Survival.

 

(a)  The obligations of the parties to pay any costs and expenses hereunder and
to provide indemnification and contribution as provided herein shall survive any
termination hereunder. In addition, the provisions of Sections 3, and 10 through
17 shall survive the sale of the Units or any termination of the Offering
hereunder.

 

(b)    The respective indemnities, covenants, representations, warranties and
other statements of the Company and the Placement Agent set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of, and regardless of any access to
information by the Company or the Placement Agent, or any of their officers or
directors or any controlling person thereof, and will survive the sale of the
Units or any termination of the Offering hereunder.

 

12.     Notices.

 

All communications hereunder will be in writing and, except as otherwise
expressly provided herein or after notice by one party to the other of a change
of address, will be mailed, delivered or telefaxed and confirmed to: (A) if sent
to the Placement Agent, to Gottbetter Capital Markets, LLC 488 Madison Avenue,
12th Floor, New York, New York 10022, Attention: Mr. Julio A. Marquez,
President, telefax number (212) 400-6999, with a copy to: Law Offices of Barbara
J. Glenns, Esq. 30 Waterside Plaza, Suite 25G, New York, New York 10010, Attn:
Barbara J. Glenns, Esq., telefax number (212) 689-6578; and (B) if sent to the
Company, to Dynastar Holdings, Inc., 517 NW 8 Terrace, Cape Coral, FL 33993
Attn: Kenneth Spiegeland, President, with a copy to: Gottbetter & Partners, LLP
488 Madison Avenue, 12th Floor, New York, NY 10022, telefax: 212-400-6901 Attn:
Paul C. Levites, Esq.

 

13.      Governing Law, Jurisdiction.

 

This Agreement shall be deemed to have been made and delivered in New York City
and shall be governed as to validity, interpretation, construction, effect and
in all other respects by the internal laws of the State of New York without
regard to principles of conflicts of law thereof.

  

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THE PARTIES HERETO AGREE TO SUBMIT ALL CONTROVERSIES TO the exclusive
jurisdiction of finra ARBITRATION IN ACCORDANCE WITH THE PROVISIONS SET FORTH
BELOW AND UNDERSTAND THAT (A) ARBITRATION IS FINAL AND BINDING ON THE PARTIES,
(B) THE PARTIES ARE WAIVING THEIR RIGHTS TO SEEK REMEDIES IN COURT, INCLUDING
THE RIGHT TO A JURY TRIAL, (C) PRE-ARBITRATION DISCOVERY IS GENERALLY MORE
LIMITED AND DIFFERENT FROM COURT PROCEEDINGS, (D) THE ARBITRATOR’S AWARD IS NOT
REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING AND ANY PARTY’S RIGHT TO
APPEAL OR TO SEEK MODIFICATION OF RULES BY ARBITRATORS IS STRICTLY LIMITED, (E)
THE PANEL OF THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. (“FINRA”)
ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO WERE OR ARE
AFFILIATED WITH THE SECURITIES INDUSTRY, AND (F) ALL CONTROVERSIES WHICH MAY
ARISE BETWEEN THE PARTIES CONCERNING THIS AGREEMENT SHALL BE DETERMINED BY
ARBITRATION PURSUANT TO THE RULES THEN PERTAINING TO FINRA. ALL QUESTIONS
CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEw york. JUDGMENT ON ANY AWARD OF ANY SUCH ARBITRATION MAY
BE ENTERED IN THE SUPREME COURT OF THE STATE OF NEW YORK OR IN ANY OTHER COURT
HAVING JURISDICTION OVER THE PERSON OR PERSONS AGAINST WHOM SUCH AWARD IS
RENDERED. THE PARTIES AGREE THAT THE DETERMINATION OF THE ARBITRATORS SHALL BE
BINDING AND CONCLUSIVE UPON THEM. THE PREVAILING PARTY, AS DETERMINED BY SUCH
ARBITRATORS, IN A LEGAL PROCEEDING SHALL BE ENTITLED TO COLLECT ANY COSTS,
DISBURSEMENTS AND REASONABLE ATTORNEY’S FEES FROM THE OTHER PARTY. PRIOR TO
FILING AN ARBITRATION, THE PARTIES HEREBY AGREE THAT THEY WILL ATTEMPT TO
RESOLVE THEIR DIFFERENCES FIRST BY SUBMITTING THE MATTER FOR RESOLUTION TO A
MEDIATOR, ACCEPTABLE TO ALL PARTIES, AND WHOSE EXPENSES WILL BE BORNE EQUALLY BY
ALL PARTIES. THE MEDIATION WILL BE HELD IN THE COUNTY OF NEW YORK, STATE OF NEW
YORK, ON AN EXPEDITED BASIS. IF THE PARTIES CANNOT SUCCESSFULLY RESOLVE THEIR
DIFFERENCES THROUGH MEDIATION, THE MATTER WILL BE RESOLVED BY ARBITRATION. THE
ARBITRATION SHALL TAKE PLACE IN THE COUNTY OF NEW YORK, THE STATE OF NEW YORK,
ON AN EXPEDITED BASIS.

  

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14.      Miscellaneous.

 

A.       No provision of this Agreement may be changed or terminated except by a
writing signed by the party or parties to be charged therewith. Unless expressly
so provided, no party to this Agreement will be liable for the performance of
any other party’s obligations hereunder. Either party hereto may waive
compliance by the other with any of the terms, provisions and conditions set
forth herein; provided, however, that any such waiver shall be in writing
specifically setting forth those provisions waived thereby. No such waiver shall
be deemed to constitute or imply waiver of any other term, provision or
condition of this Agreement. Neither party may assign its rights or obligations
under this Agreement to any other person or entity without the prior written
consent of the other party.

 

B.     Each party shall, without payment of any additional consideration by any
other party, at any time on or after the date of any Closings take such further
action and execute such other and further documents and instruments as the other
party may request in order to provide the other party with the benefits of this
Agreement.

 

C.      The Parties to this Agreement each hereby confirm that they will
cooperate with each other to the extent that it may become necessary to enter
into any revisions or amendments to this Agreement, in the future to conform to
any federal or state regulations.

 

15.     Entire Agreement; Severability.

 

This Agreement together with any other agreement referred to herein supersedes
all prior understandings and written or oral agreements between the parties with
respect to the Offering and the subject matter hereof. If any portion of this
Agreement shall be held invalid or unenforceable, then so far as is reasonable
and possible (i) the remainder of this Agreement shall be considered valid and
enforceable and (ii) effect shall be given to the intent manifested by the
portion held invalid or unenforceable.

 

16.     Counterparts.

 

This Agreement may be executed in multiple counterparts, each of which may be
executed by less than all of the parties and shall be deemed to be an original
instrument which shall be enforceable against the parties actually executing
such counterparts and all of which together shall constitute one and the same
instrument. The exchange of copies of this Agreement and of signature pages by
facsimile transmission or in pdf format shall constitute effective execution and
delivery of this Agreement as to the parties and may be used in lieu of the
original Agreement for all purposes. Signatures of the parties transmitted by
facsimile or in pdf format shall be deemed to be their original signatures for
all purposes.

 

17.     Confidentiality.

 

(a)      The Placement Agent will maintain the confidentiality of the
Information and, unless and until such information shall have been made publicly
available by the Company or by others without breach of a confidentiality
agreement, shall disclose the Information only as authorized by the Company or
as required by law or by order of a governmental authority or court of competent
jurisdiction. In the event the Placement Agent is legally required to make
disclosure of any of the Information, the Placement Agent will give notice to
the Company or the Company prior to such disclosure, to the extent the Placement
Agent can practically do so.

  

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(b)    The foregoing paragraph shall not apply to information that:

 

(i)      at the time of disclosure by the Company, is or thereafter becomes,
generally available to the public or within the industries in which the Company
or the Placement Agent or its affiliates conduct business, other than as a
direct result of a breach by the Placement Agent of its obligations under this
Agreement;

 

(ii)      prior to or at the time of disclosure by the Company, was already in
the possession of, or conceived by, the Placement Agent or any of its
affiliates, or could have been developed by them from information then in their
possession, by the application of other information or techniques in their
possession, generally available to the public, or available to the Placement
Agent or its affiliates other than from the Company; at the time of disclosure
by the Company thereafter, is obtained by the Placement Agent or any of its
affiliates from a third party who the Placement Agent reasonably believes to be
in possession of the information not in violation of any contractual, legal or
fiduciary obligation to the Company with respect to that information; or is
independently developed by the Placement Agent or its affiliates.

 

(c)     Nothing in this Agreement shall be construed to limit the ability of the
Placement Agent or its affiliates to pursue, investigate, analyze, invest in, or
engage in investment banking, financial advisory or any other business
relationship with entities other than the Company, notwithstanding that such
entities may be engaged in a business which is similar to or competitive with
the business of the Company, and notwithstanding that such entities may have
actual or potential operations, products, services, plans, ideas, customers or
supplies similar or identical to the Company’s, or may have been identified by
the Company as potential merger or acquisition targets or potential candidates
for some other business combination, cooperation or relationship. The Company
expressly acknowledges and agrees that they do not claim any proprietary
interest in the identity of any other entity in its industry or otherwise, and
that the identity of any such entity is not confidential information.

 

SIGNATURE PAGE TO FOLLOW

 

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PRIVILEGED & CONFIDENTIAL

 

If the foregoing is in accordance with your understanding of the agreement
between Dynastar and the Placement Agent, kindly sign and return this Agreement,
whereupon it will become a binding agreement as provided herein, between
Dynastar and the Placement Agent in accordance with its terms.

 

  DYNASTAR HOLDINGS, INC.         By: /s/ Kenneth Speigeland     Mr. Kenneth
Spiegeland     President     517 NW 8 Terrace     Cape Coral, FL  33993    
Tel:  239-628-4591

  

Accepted and agreed to this

       th day of November 2011:

  

GOTTBETTER CAPITAL MARKETS, LLC         By: /s/ Julio A. Marquez     Julio A.
Marquez     President