Exhibit 10.1

 

Execution Version

 

 

GREENHUNTER RESOURCES, INC.

 

 

PLACEMENT AGENCY AGREEMENT

 

January 22, 2015

MLV & Co. LLC

1251 Avenue of the Americas

41st Floor

New York, New York 10020

 

Ladies and Gentlemen:

 

GreenHunter Resources, Inc. (the “Company”) proposes, subject to the terms and
conditions stated herein, to issue and sell to certain investors (collectively,
the “Investors”) up to an aggregate of 3,333,334 shares (the “Shares”) of common
stock, par value $0.001 per share (the “Common Stock”), and warrants to purchase
up to 1,166,667 shares of Common Stock (each, a “Warrant,” and collectively, the
“Warrants”). The shares of Common Stock issuable upon exercise of the Warrants
are referred to as the “Warrant Shares” and the Shares, the Warrants and the
Warrant Shares are referred to as the “Securities.” MLV & Co. LLC (“MLV”) is
acting as the Company’s exclusive placement agent (in such capacity, the
“Placement Agent”) in connection with the Offering (as defined below).

 

The Company hereby confirms its agreement with the Placement Agent pursuant to
the terms and provisions of this Placement Agency Agreement (this “Agreement”)
as follows:

 

Section 1.     Agreement to Act as Placement Agent.

 

(a)     On the basis of the representations, warranties and agreements of the
Company herein contained and subject to all of the terms and conditions of this
Agreement, the Company engages the Placement Agent in connection with the
issuance and sale of the Securities and the Placement Agent hereby agrees, as an
agent of the Company, to use its commercially reasonable efforts to solicit
offers to purchase the Securities upon the terms and conditions set forth in the
Prospectus (as defined below). Prior to the earlier of (i) the date on which
this Agreement is terminated and (ii) the closing date for the transactions
contemplated by the Transaction Documents (as defined below) (the “Closing
Date”), the Company shall not, without the prior consent of the Placement Agent,
solicit or accept offers to purchase Common Stock (other than pursuant to the
exercise of options or warrants to purchase shares of Common Stock that are
outstanding as of the date hereof) otherwise than through the Placement Agent in
accordance herewith. In connection with its commercially reasonable efforts to
solicit offers to purchase the Securities, the Placement Agent shall only
communicate information regarding the Company to potential purchasers of the
Securities that is consistent with the information contained in the Registration
Statement, any Issuer Free Writing Prospectus issued at or prior to the date of
this Agreement and in the Prospectus (each as defined below).

 

(b)     As compensation for the services rendered hereunder, on the Closing Date
(as defined below), the Company shall pay to the Placement Agent, by wire
transfer of immediately available U.S. funds payable to the order of the
Placement Agent, to an account or accounts designated by the Placement Agent, an
amount equal to 6% of the aggregate gross proceeds received by the Company from
the sale of the Securities (the “Fee”). The Placement Agent may, in its
discretion, retain other brokers or dealers to act as sub-agents on the
Placement Agent’s behalf in connection with the offering of the Securities,
provided that the Company shall not be obligated to pay any additional amounts
to the Placement Agent or any such sub-agent with respect thereto.

 

 
 

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(c)     This Agreement shall not give rise to a commitment by the Placement
Agent or any of its Affiliates to underwrite or purchase any of the Securities
or otherwise provide any financing, and the Placement Agent shall not have the
authority to bind the Company in respect of the sale of any Securities. The
Company shall have the sole right to accept offers to purchase the Securities
and may reject any such offer in whole or in part. The Placement Agent shall
have the right, in its discretion reasonably exercised after consultation with
the Company, to reject any offer to purchase Securities received by it, in whole
or in part, and any such rejection shall not be deemed a breach of its agreement
contained herein. The sale of the Securities shall be made pursuant to a
subscription agreement in substantially the form attached hereto as Exhibit A
(the “Purchase Agreement” and, together with this Agreement and any other
documents or agreements executed in connection with the transactions
contemplated hereunder, the “Transaction Documents”). As used in this paragraph
and elsewhere in this Agreement, “Affiliate” means any Person (as defined below)
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 promulgated under the Securities Act of 1933, as
amended (the “Securities Act”).

 

Section 2.     Sale of Securities by MLV

 

(a)     Subject to the provisions of this Agreement, MLV will use its
commercially reasonable efforts consistent with its normal trading and sales
practices and applicable state and federal laws, rules and regulations and the
rules of the NYSE MKT (the “Exchange”), to sell the Securities up to the amount
specified. MLV will provide written confirmation to the Company no later than
the opening of the Trading Day (as defined below) immediately following the
Trading Day on which it has made sales of the Securities hereunder setting forth
the number of Securities sold on such day, the compensation payable by the
Company to MLV pursuant hereto with respect to such sales, and the Net Proceeds
(as defined below) payable to the Company, with an itemization of the deductions
made by MLV from the gross proceeds that it receives from such sales. MLV may
sell the Securities by any method permitted by law. “Trading Day” means any day
on which Common Stock is purchased and sold on the Exchange.

 

(b)     During the term of this Agreement, neither MLV nor any of its affiliates
or subsidiaries shall engage in (i) any short sale of any security of the
Company or (ii) any sale of any security of the Company that MLV does not own or
any sale which is consummated by the delivery of a security of the Company
borrowed by, or for the account of, MLV. Neither MLV nor any of its affiliates
or subsidiaries, shall engage in any proprietary trading or trading for MLV’s
(or its affiliates’ or subsidiaries’) own account.

 

Section 3.     Sale and Delivery to MLV; Settlement

 

(a)     On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, MLV will use its
commercially reasonable efforts consistent with its normal trading and sales
practices to sell the Securities up to the amount specified. The Company
acknowledges and agrees that (i) there can be no assurance that MLV will be
successful in selling the Securities, (ii) MLV will incur no liability or
obligation to the Company or any other person or entity if it does not sell the
Securities for any reason other than a failure by MLV to use its commercially
reasonable efforts consistent with its normal trading and sales practices and
applicable law and regulations to sell such Securities as required under this
Agreement and (iii) MLV shall be under no obligation to purchase Securities on a
principal basis pursuant to this Agreement, except as otherwise agreed by MLV
and the Company.

 

(b)     Unless otherwise specified in the applicable Purchase Agreement,
settlement for sales of the Securities will occur on the third (3rd) Trading Day
(or such earlier day as is industry practice for regular-way trading) following
the date on which such sales are made (each, a “Settlement Date”). The amount of
proceeds to be delivered to the Company on a Settlement Date against receipt of
the Securities sold (the “Net Proceeds”) will be equal to the aggregate sales
price received by MLV, after deduction for (i) MLV’s commission, discount or
other compensation for such sales payable by the Company pursuant to Section 1
hereof, and (ii) any transaction fees imposed by any governmental or
self-regulatory organization in respect of such sales.

 

 
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(c)     On or before each Settlement Date, the Company will, or will cause its
transfer agent to, electronically transfer the Securities being sold by
crediting MLV’s or its designee’s account (provided MLV shall have given the
Company written notice of such designee prior to the Settlement Date) at The
Depository Trust Company through its Deposit and Withdrawal at Custodian System
or by such other means of delivery as may be mutually agreed upon by the parties
hereto which in all cases shall be freely tradable, transferable, registered
shares in good deliverable form. On each Settlement Date, MLV will deliver the
related Net Proceeds in same day funds to an account designated by the Company
on, or prior to, the Settlement Date. The Company agrees that if the Company, or
its transfer agent (if applicable), defaults in its obligation to deliver the
Securities on a Settlement Date, the Company agrees that in addition to and in
no way limiting the rights and obligations set forth in Section 9(a) hereto, it
will (i) hold MLV harmless against any loss, claim, damage, or expense
(including reasonable legal fees and expenses), as incurred, arising out of or
in connection with such default by the Company or its transfer agent (if
applicable) and (ii) pay to MLV any commission, discount, or other compensation
to which it would otherwise have been entitled absent such default.

 

(d)     Under no circumstances shall the Company cause or request the offer or
sale of any Securities if, after giving effect to the sale of such Securities,
the aggregate gross sales proceeds of Securities sold pursuant to this Agreement
would exceed the lesser of (A) together with all sales of Securities under this
Agreement, the Maximum Amount (as defined below), and (B) 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 MLV in writing. Under no circumstances
shall the Company cause or request the offer or sale of any Securities 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 MLV in writing.
Further, under no circumstances shall the Company cause or permit the aggregate
offering amount of Securities sold pursuant to this Agreement to exceed the
Maximum Amount. The “Maximum Amount” means the lesser of the number of
Securities that (a) would cause the Company to not satisfy the eligibility
requirements for use of Form S-3 (including Instruction I.B.6. thereof), (b)
exceeds the number of shares of Common Stock and Warrants registered on the
effective Registration Statement (as defined below) pursuant to which the
offering is being made, or (c) including the Warrant Shares, exceeds the number
of authorized but unissued shares of the Company’s Common Stock.

 

Section 4.     Representations and Warranties of the Company.

 

The Company hereby represents, warrants and covenants to the Placement Agent as
of the date hereof, and as of the Closing Date (as defined below) of the
Offering, as follows:

 

(a)     The Company has prepared and filed with the Securities and Exchange
Commission (the “Commission”) a registration statement on Form S-3 (File No.
333-198051) under the Securities Act and the rules and regulations (the
“Securities Act Regulations”) of the Commission thereunder, and such amendments
to such registration statement as may have been required to the date of this
Agreement. Such registration statement, at any given time, including amendments
thereto to such time, the exhibits and any schedules thereto at such time, the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act at such time and the documents and information
otherwise deemed to be a part thereof or included therein by Rule 430B (the
“Rule 430B Information”) under the Securities Act or otherwise pursuant to the
Rules and Regulations at such time, is herein called the “Registration
Statement.” The Registration Statement at the time it originally became
effective is herein called the “Original Registration Statement.” Any
registration statement filed by the Company pursuant to Rule 462(b) under the
Securities Act is called the “Rule 462(b) Registration Statement” and, from and
after the date and time of filing of the Rule 462(b) Registration Statement, the
term “Registration Statement” shall include the Rule 462(b) Registration
Statement. The base prospectus that covers (i) the offering, issuance and sale
by the Company of up to $150,000,000 of Common Stock, preferred stock, warrants,
debt securities and guarantees of debt securities, as well as (ii) sales by
selling stockholders of up to 517,869 shares of Common Stock, in the form in
which it appeared in the Original Registration Statement, is herein called the
“Base Prospectus.” Each preliminary prospectus supplement to the Base Prospectus
(including the Base Prospectus as so supplemented), if any, that describes the
Securities and the offering thereof, that omitted the Rule 430B Information and
that was used prior to the filing of the final prospectus supplement referred to
in the following sentence is herein called a “Preliminary Prospectus.” Promptly
after execution and delivery of this Agreement, the Company will prepare and
file with the Commission a final prospectus supplement to the Base Prospectus
relating to the Securities and the offering thereof in accordance with the
provisions of Rule 430B and Rule 424(b) of the Securities Act Regulations. Such
final supplemental form of prospectus (including the Base Prospectus as so
supplemented), in the form filed with the Commission pursuant to Rule 424(b) is
herein called the “Prospectus.” Any reference herein to the Registration
Statement, the Base Prospectus, any Preliminary Prospectus or the Prospectus or
any amendment or supplement thereto shall be deemed to refer to and include the
documents incorporated by reference therein, and any reference herein to the
terms “amend,” “amendment” or “supplement” with respect to the Registration
Statement, the Base Prospectus, any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the filing after the execution hereof of
any document with the Commission deemed to be incorporated by reference therein
(the “Incorporated Documents”).

 

 
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For purposes of this Agreement, all references to the Registration Statement,
the Rule 462(b) Registration Statement, the Base Prospectus, any Preliminary
Prospectus, the Prospectus or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”). All
references in this Agreement to financial statements and schedules and other
information which is “described,” “contained,” “included” or “stated” in the
Registration Statement, the Base Prospectus, any Preliminary Prospectus or the
Prospectus (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
is incorporated by reference in or otherwise deemed by the Securities Act
Regulations to be a part of or included in the Registration Statement, the Base
Prospectus, any Preliminary Prospectus or the Prospectus, as the case may be;
and all references in this Agreement to amendments or supplements to the
Registration Statement, the Base Prospectus, any Preliminary Prospectus or the
Prospectus shall be deemed to mean and include the subsequent filing of any
document under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and which is deemed to be incorporated therein by reference therein or
otherwise deemed by the Securities Act Regulations to be a part thereof.

 

The Company and, assuming no act or omission on the part of MLV that would make
such statement untrue, the transactions contemplated by this Agreement meet the
requirements for and comply with the conditions for the use of Form S-3 under
the Securities Act. The Registration Statement has been filed with the
Commission and has been declared effective under the Securities Act. The
Prospectus will name MLV as the agent in the section entitled “Plan of
Distribution.” The Company has not received, and has no notice of, any order of
the Commission preventing or suspending the use of the Registration Statement,
or threatening or instituting proceedings for that purpose. The Registration
Statement and the offer and sale of the Securities as contemplated hereby meet
the requirements of Rule 415 under the Securities Act and comply in all material
respects with said Rule. Any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement have been so
described or filed. Copies of the Registration Statement, the Prospectus, and
any such amendments or supplements and all documents incorporated by reference
therein that were filed with the Commission on or prior to the date of this
Agreement have been delivered, or are available through EDGAR, to MLV and its
counsel. The Company has not distributed and, prior to the later to occur of
each Settlement Date and completion of the distribution of the Securities, will
not distribute any offering material in connection with the offering or sale of
the Securities other than the Registration Statement and the Prospectus and any
Issuer Free Writing Prospectus (as defined below) to which MLV has consented.
The Common Stock is currently quoted on the Exchange under the trading symbol
“GRH.” Except as disclosed in the Registration Statement, including the
Incorporated Documents, the Company has not, in the 12 months preceding the date
hereof, received notice from the Exchange to the effect that the Company is not
in compliance with the listing or maintenance requirements. Except as disclosed
in the Registration Statement, including the Incorporated Documents, or the
Prospectus, the Company has no reason to believe that it will not in the
foreseeable future continue to be in compliance with all such listing and
maintenance requirements.

 

 
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(c)     The Registration Statement, when it became effective, and the
Prospectus, and any amendment or supplement thereto, on the date of such
Prospectus or amendment or supplement, conformed and will conform in all
material respects with the requirements of the Securities Act. As of the Closing
Date (as defined below), the Registration Statement and the Prospectus, as of
such date, will conform in all material respects with the requirements of the
Securities Act. The Registration Statement, when it became or becomes effective,
did not, and will not, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus and any amendment and
supplement thereto, on the date thereof and at the Closing Date, did not or will
not include an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The documents incorporated by
reference in the Prospectus did not, and any further documents filed and
incorporated by reference therein will not, when filed with the Commission,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated in such document or necessary to make the statements in
such document, in light of the circumstances under which they were made, not
misleading. The foregoing shall not apply to statements in, or omissions from,
any such document made in reliance upon, and in conformity with, information
furnished to the Company by MLV specifically for use in the preparation thereof.

 

(d)     The Registration Statement, the Prospectus, any Issuer Free Writing
Prospectus or any amendment or supplement thereto, and the documents
incorporated by reference in the Registration Statement, the Prospectus or any
amendment or supplement thereto, when such documents were or are filed with the
Commission under the Securities Act or the Exchange Act or became or become
effective under the Securities Act, as the case may be, conformed or will
conform in all material respects with the requirements of the Securities Act and
the Exchange Act, as applicable.

 

(e)     The consolidated financial statements of the Company included or
incorporated by reference in the Registration Statement, the Prospectus and the
Issuer Free Writing Prospectuses, if any, together with the related notes and
schedules, present fairly, in all material respects, the consolidated financial
position of the Company and the Subsidiaries as of the dates indicated and the
consolidated results of operations, cash flows and changes in stockholders’
equity of the Company for the periods specified and have been prepared in
compliance with the requirements of the Securities Act and Exchange Act, as
applicable, and in conformity with GAAP (as defined below) applied on a
consistent basis (except for such adjustments to accounting standards and
practices as are noted therein) during the periods involved; the other financial
and statistical data with respect to the Company and the Subsidiaries contained
or incorporated by reference in the Registration Statement, the Prospectus and
the Issuer Free Writing Prospectuses, if any, are accurately and fairly
presented and prepared on a basis consistent with the financial statements and
books and records of the Company; there are no financial statements (historical
or pro forma) that are required to be included or incorporated by reference in
the Registration Statement, or the Prospectus that are not included or
incorporated by reference as required; the Company and the Subsidiaries (as
defined below) do not have any material liabilities or obligations, direct or
contingent (including any off-balance sheet obligations), not described in the
Registration Statement (excluding the exhibits thereto and Incorporated
Documents), and the Prospectus which are required to be described in the
Registration Statement or the Prospectus (including Exhibits thereto and
Incorporated Documents); and all disclosures contained or incorporated by
reference in the Registration Statement, the Prospectus and the Issuer Free
Writing Prospectuses, if any, regarding “non-GAAP financial measures” (as such
term is defined by the rules and regulations of the Commission) comply with
Regulation G of the Exchange Act and Item 10 of Regulation S-K under the
Securities Act, to the extent applicable;

 

 
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(f)     The Prospectus delivered to MLV for use in connection with the sale of
the Securities pursuant to this Agreement will be identical to the versions of
the Prospectus created to be transmitted to the Commission for filing via EDGAR,
except to the extent permitted by Regulation S-T.

 

(g)     The Company and each of its Subsidiaries (as defined below) are, and
will be, duly organized, validly existing as a corporation and in good standing
under the laws of their respective jurisdictions of organization. The Company
and each of its Subsidiaries are, and will be, duly licensed or qualified as a
foreign corporation for transaction of business and in good standing under the
laws of each other jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires such license or
qualification, and have all corporate power and authority necessary to own or
hold their respective properties and to conduct their respective businesses as
described in the Registration Statement and the Prospectus, except where the
failure to be so qualified or in good standing or have such power or authority
would not, individually or in the aggregate, have a material adverse effect or
would reasonably be expected to have a material adverse effect on the assets,
business, operations, earnings, properties, condition (financial or otherwise),
prospects, stockholders’ equity or results of operations of the Company and the
Subsidiaries (as defined below) taken as a whole, or prevent or materially
interfere with consummation of the transactions contemplated hereby (a “Material
Adverse Effect”).

 

(h)     Except for GreenHunter Renewable Power, LLC; GreenHunter Wind Energy,
LLC; GreenHunter Mesquite Lake, LLC; GreenHunter Water, LLC; Hunter Disposal,
LLC; Ritchie Hunter Water Disposal, LLC; Hunter Hauling, LLC; White Top Oilfield
Construction, LLC; Blackwater Services, LLC; Virco Realty, LLC; Little Muskingum
Drilling LLC; Blue Water Energy Solutions, LLC; GreenHunter Wheeling Barge, LLC;
GreenHunter Environmental Solutions, LLC; GreenHunter Pipeline, LLC; and
GreenHunter Hydrocarbons, LLC, or as otherwise described in the Company’s most
recent Annual Report on Form 10-K (collectively, the “Subsidiaries”), the
Company has no other significant subsidiaries (as such term is defined in Rule
1-02 of Regulation S-X promulgated by the Commission). Except as set forth in
the Registration Statement and in the Prospectus, the Company owns, directly or
indirectly, all of the equity interests of the Subsidiaries free and clear of
any lien, charge, security interest, encumbrance, right of first refusal or
other restriction, and all the equity interests of the Subsidiaries are validly
issued and are fully paid, nonassessable and free of preemptive and similar
rights.

 

(i)     Neither the Company nor any of its Subsidiaries is (i) in violation of
its charter or by-laws or similar organizational documents; (ii) in default, and
no event has occurred that, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any term,
covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound or to which any of the property or assets of the Company or any of its
Subsidiaries are subject; or (iii) in violation of any law or statute or any
judgment, order, rule or regulation of any court or arbitrator or governmental
or regulatory authority, except, in the case of each of clauses (ii) and (iii)
above, for any such violation or default that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Except as
described in the Prospectus or the Incorporated Documents, to the Company’s
knowledge, no other party under any material contract or other agreement to
which it or any of its Subsidiaries is a party is in default in any respect
thereunder where such default would reasonably be expected to have a Material
Adverse Effect.

 

 
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(j)     Subsequent to the respective dates as of which information is given in
the Registration Statement, the Prospectus and the Issuer Free Writing
Prospectuses, if any (including any document deemed incorporated by reference
therein), there has not been (i) any Material Adverse Effect, or any development
involving a prospective Material Adverse Effect, in or affecting the business,
properties, management, financial, condition (financial or otherwise), results
of operations, or prospects of the Company and the Subsidiaries taken as a
whole, (ii) any transaction which is material to the Company and the
Subsidiaries taken as a whole, (iii) any obligation or liability, direct or
contingent (including any off-balance sheet obligations), incurred by the
Company or any Subsidiary, which is material to the Company and the Subsidiaries
taken as a whole, (iv) any material change in the capital stock (other than as a
result of the sale of the Securities or other than as described in a proxy
statement filed on Schedule 14A or a Registration Statement on Form S-4 and
otherwise publicly announced) or outstanding long-term indebtedness of the
Company or any of its Subsidiaries or (v) any dividend or distribution of any
kind declared, paid or made on the capital stock of the Company or any
Subsidiary, other than in each case above in the ordinary course of business or
as otherwise disclosed in the Registration Statement or Prospectus (including
any document deemed incorporated by reference therein);

 

(k)     The issued and outstanding shares of capital stock of the Company have
been validly issued, are fully paid and non-assessable and, other than as
disclosed in the Registration Statement or the Prospectus, are not subject to
any preemptive rights, rights of first refusal or similar rights. The Company
has an authorized, issued and outstanding capitalization as set forth in the
Registration Statement and the Prospectus as of the dates referred to therein
(other than the grant of additional options under the Company’s existing stock
option plans, or changes in the number of outstanding common shares of the
Company due to the issuance of shares upon the exercise or conversion of
securities exercisable for, or convertible into, common shares outstanding on
the date hereof or as a result of the issuance of the Securities) and such
authorized capital stock conforms to the description thereof set forth in the
Registration Statement and the Prospectus. The description of the Common Stock
in the Registration Statement and the Prospectus is complete and accurate in all
material respects. Except as disclosed in or contemplated by the Registration
Statement or the Prospectus, as of the date referred to therein, the Company did
not have outstanding any options to purchase, or any rights or warrants to
subscribe for, or any securities or obligations convertible into, or
exchangeable for, or any contracts or commitments to issue or sell, any shares
of capital stock or other securities.

 

(l)     The Company has full legal right, power and authority to enter into this
Agreement and perform the transactions contemplated hereby. This Agreement has
been duly authorized, executed and delivered by the Company and is a legal,
valid and binding agreement of the Company enforceable in accordance with its
terms, except to the extent that (i) enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable principles and (ii) the
indemnification and contribution provisions of Section 9 hereof may be limited
by federal or state securities laws and public policy considerations in respect
thereof.

 

(m)     The Securities, when issued and delivered pursuant to the terms approved
by the board of directors of the Company or a duly authorized committee thereof,
or a duly authorized executive committee, against payment therefor as provided
herein, will be duly and validly authorized and issued and fully paid and
nonassessable, free and clear of any pledge, lien, encumbrance, security
interest or other claim (other than any pledge, lien, encumbrance, security
interest or other claim arising from an act or omission of MLV or a purchaser),
including any statutory or contractual preemptive rights, resale rights, rights
of first refusal or other similar rights, and will be registered pursuant to
Section 12 of the Exchange Act. The Securities, when issued, will conform in all
material respects to the description thereof set forth in or incorporated into
the Prospectus.

 

(n)     No consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or any governmental or
regulatory authority is required for the execution, delivery and performance by
the Company of this Agreement, and the issuance and sale by the Company of the
Securities as contemplated hereby, except for such consents, approvals,
authorizations, orders and registrations or qualifications as may be required
under applicable state securities laws or by the by-laws and rules of the
Financial Industry Regulatory Authority (“FINRA”) or the Exchange in connection
with the sale of the Securities by MLV.

 

 
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(o)     Except as set forth in the Registration Statement and the Prospectus,
(i) no person, as such term is defined in Rule 1-02 of Regulation S-X
promulgated under the Securities Act (each, a “Person”), has the right,
contractual or otherwise, to cause the Company to issue or sell to such Person
any Common Stock or shares of any other capital stock or other securities of the
Company (other than upon the exercise of options or warrants to purchase common
shares or upon the exercise of options that may be granted from time to time
under the Company’s stock option plans), (ii) no Person has any preemptive
rights, rights of first refusal, or any other rights (whether pursuant to a
“poison pill” provision or otherwise) to purchase any Common Stock or shares of
any other capital stock or other securities of the Company from the Company
which have not been duly waived with respect to the offering contemplated
hereby, (iii)  no Person has the right to act as an underwriter or as a
financial advisor to the Company in connection with the offer and sale of the
Common Stock, and (iv) no Person has the right, contractual or otherwise, to
require the Company to register under the Securities Act any Common Stock or
shares of any other capital stock or other securities of the Company, or to
include any such shares or other securities in the Registration Statement or the
offering contemplated thereby, whether as a result of the filing or
effectiveness of the Registration Statement or the sale of the Securities as
contemplated thereby or otherwise.

 

(p)     Hein & Associates LLP (the “Accountant”), whose report on the
consolidated financial statements of the Company is filed with the Commission as
part of the Company’s most recent Annual Report on Form 10-K filed with the
Commission and incorporated into the Registration Statement, are and, during the
periods covered by their report, were independent public accountants within the
meaning of the Securities Act and the Public Company Accounting Oversight Board
(United States). To the Company’s knowledge, after due inquiry, the Accountant
is not in violation of the auditor independence requirements of the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) with respect to the
Company.

 

(q)     All agreements between the Company and third parties expressly
referenced in the Prospectus, other than such agreements that have expired by
their terms or whose termination is disclosed in documents filed by the Company
on EDGAR, are legal, valid and binding obligations of the Company enforceable in
accordance with their respective terms, except to the extent that
(i) enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally and by general
equitable principles and (ii) the indemnification provisions of certain
agreements may be limited be federal or state securities laws or public policy
considerations in respect thereof, except for any unenforceability that,
individually or in the aggregate, would not unreasonably be expected to have a
Material Adverse Effect.

 

(r)     Except as set forth in the Registration Statement or the Prospectus,
there are no legal, governmental or regulatory actions, suits or proceedings
pending, nor, to the Company’s knowledge, any legal, governmental or regulatory
investigations, to which the Company or a Subsidiary is a party or to which any
property of the Company or any of its Subsidiaries is the subject that,
individually or in the aggregate, if determined adversely to the Company or any
of its Subsidiaries, would reasonably be expected to have a Material Adverse
Effect or materially and adversely affect the ability of the Company to perform
its obligations under this Agreement; to the Company’s knowledge, no such
actions, suits or proceedings are threatened or contemplated by any governmental
or regulatory authority or threatened by others that, individually or in the
aggregate, if determined adversely to the Company or any of its Subsidiaries,
would reasonably be expected to have a Material Adverse Effect; or and (i) there
are no current or pending legal, governmental or regulatory investigations,
actions, suits or proceedings that are required under the Securities Act to be
described in the Prospectus that are not described in the Prospectus including
any Incorporated Document; and (ii) there are no contracts or other documents
that are required under the Securities Act to be filed as exhibits to the
Registration Statement that are not so filed.

 

 
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(s)     Except as set forth in the Registration Statement or the Prospectus, the
Company and each of its Subsidiaries possess or have obtained, all licenses,
certificates, consents, orders, approvals, permits and other authorizations
issued by, and have made all declarations and filings with, the appropriate
federal, state, local or foreign governmental or regulatory authorities that are
necessary for the ownership or lease of their respective properties or the
conduct of their respective businesses as described in the Registration
Statement and the Prospectus (the “Permits”), except where the failure to
possess, obtain or make the same would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as disclosed in
the Registration Statement or the Prospectus, neither the Company nor any of its
Subsidiaries have received written notice of any proceeding relating to
revocation or modification of any such Permit or has any reason to believe that
such Permit will not be renewed in the ordinary course, except where the failure
to obtain any such renewal would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(t)     As of the close of trading on the Exchange on the Trading Day
immediately prior to the date of this Agreement, the aggregate market value of
the outstanding voting and non-voting common equity (as defined in Securities
Act Rule 405) of the Company held by persons other than affiliates of the
Company (pursuant to Securities Act Rule 144, those that directly, or indirectly
through one or more intermediaries, control, or are controlled by, or are under
common control with, the Company)  (the “Non-Affiliate Shares”), was
approximately $10.35 million (calculated by multiplying (x) the price at which
the common equity of the Company was last sold on the Exchange on the Trading
Day immediately prior to the date of this Agreement times (y) the number of
Non-Affiliate Shares).

 

(u)     Neither the Company nor any of the Subsidiaries has defaulted on any
installment on indebtedness for borrowed money or on any rental on one or more
long-term leases, which defaults, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. The Company has not
filed a report pursuant to Section 13(a) or 15(d) of the Exchange Act since the
filing of its last Annual Report on Form 10-K, indicating that it (i) has failed
to pay any dividend or sinking fund installment on preferred stock or (ii) has
defaulted on any installment on indebtedness for borrowed money or on any rental
on one or more long-term leases, which defaults, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(v)     Neither the Company, nor any of the Subsidiaries, nor any of their
respective directors, officers or controlling persons has taken, directly or
indirectly, any action designed, or that has constituted or might reasonably be
expected to cause or result in, under the Exchange Act or otherwise, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.

 

(w)     Neither the Company nor any of the Subsidiaries or any related entities
(i) is required to register as a “broker” or “dealer” in accordance with the
provisions of the Exchange Act or (ii) directly or indirectly through one or
more intermediaries, controls or is a “person associated with a member” or
“associated person of a member” (within the meaning set forth in the FINRA
Manual).

 

(x)     The Company has not relied upon MLV or legal counsel for MLV for any
legal, tax or accounting advice in connection with the offering and sale of the
Securities.

 

(y)     The Company and each of its Subsidiaries have filed all federal, state,
local and foreign tax returns which have been required to be filed and paid all
taxes shown thereon through the date hereof, to the extent that such taxes have
become due and are not being contested in good faith, except where the failure
to do so would not reasonably be expected to have a Material Adverse Effect.
Except as otherwise disclosed in or contemplated by the Registration Statement
or the Prospectus, no tax deficiency has been determined adversely to the
Company or any of its Subsidiaries which has had, or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
The Company has no knowledge of any federal, state or other governmental tax
deficiency, penalty or assessment which has been or might be asserted or
threatened against it which could have a Material Adverse Effect.

 

 
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(z)     Except as set forth in the Registration Statement or the Prospectus, the
Company and its Subsidiaries have good and valid title in fee simple to all
items of real property and good and valid title to all personal property
described in the Registration Statement or Prospectus as being owned by them
that are material to the businesses of the Company or such Subsidiary, in each
case free and clear of all liens, encumbrances and claims, except those that
(i) do not materially interfere with the use made and proposed to be made of
such property by the Company and any of its Subsidiaries or (ii) would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. Any real property described in the Registration Statement or
Prospectus as being leased by the Company and any of its Subsidiaries is held by
them under valid, existing and enforceable leases, except those that (A) do not
materially interfere with the use made or proposed to be made of such property
by the Company or any of its Subsidiaries or (B) would not be reasonably
expected, individually or in the aggregate, to have a Material Adverse Effect.

 

(aa)     Except as set forth in the Registration Statement or the Prospectus,
the Company and its Subsidiaries own or possess adequate enforceable rights to
use all patents, patent applications, trademarks (both registered and
unregistered), service marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses and know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) (collectively, the “Intellectual Property”), necessary
for the conduct of their respective businesses as conducted as of the date
hereof, except to the extent that the failure to own or possess adequate rights
to use such Intellectual Property would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; except as disclosed in
writing to MLV, the Company and any of its Subsidiaries have not received any
written notice of any claim of infringement or conflict which asserted
Intellectual Property rights of others, which infringement or conflict, if the
subject of an unfavorable decision, would result in a Material Adverse Effect;
there are no pending, or to the Company’s knowledge, threatened judicial
proceedings or interference proceedings challenging the Company’s or its
Subsidiaries’ rights in or to or the validity of the scope of any of the
Company’s or its Subsidiaries’ patents, patent applications or proprietary
information; no other entity or individual has any right or claim in any of the
Company’s or its Subsidiaries’ patents, patent applications or any patent to be
issued therefrom by virtue of any contract, license or other agreement entered
into between such entity or individual and the Company or a Subsidiary or by any
non-contractual obligation, other than by written licenses granted by the
Company or a Subsidiary; the Company and its Subsidiaries have not received any
written notice of any claim challenging the rights of the Company or a
Subsidiary in or to any Intellectual Property owned, licensed or optioned by the
Company or such Subsidiary which claim, if the subject of an unfavorable
decision would result in a Material Adverse Effect.

 

(bb)     Except as set forth in the Registration Statement or the Prospectus,
the Company and its Subsidiaries (i) are in compliance with any and all
applicable federal, state, local and foreign laws, rules, regulations, decisions
and orders relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (collectively, “Environmental Laws”); (ii) have received and are in
compliance with all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses as
described in the Registration Statement and the Prospectus; and (iii) have not
received notice of any actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, except, in the case of any of clauses (i),
(ii) or (iii) above, for any such failure to comply or failure to receive
required permits, licenses, other approvals or liability as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

 
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(cc)     The Company and each of its Subsidiaries maintain systems of internal
accounting controls designed to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company is not aware of any material weaknesses
in its internal control over financial reporting (other than as set forth in the
Prospectus). Since the date of the latest audited financial statements of the
Company included in the Prospectus, there has been no change in the Company’s
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting (other than as set forth in the Prospectus). The Company has
established disclosure controls and procedures (as defined in Exchange Act Rules
13a-15 and 15d-15) for the Company and designed such disclosure controls and
procedures to ensure that material information relating to the Company and each
of its Subsidiaries is made known to the certifying officers by others within
those entities, particularly during the period in which the Company’s Annual
Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, is
being prepared. The Company’s certifying officers have evaluated the
effectiveness of the Company’s controls and procedures as of a date within 90
days prior to the filing date of the Form 10-K for the fiscal year most recently
ended (such date, the “Evaluation Date”). The Company presented in its Form 10-K
for the fiscal year most recently ended the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no significant changes in the Company’s internal controls (as such
term is defined in Item 307(b) of Regulation S-K under the Securities Act) or,
to the Company’s knowledge, in other factors that could significantly affect the
Company’s internal controls. To the knowledge of the Company, the Company’s
“internal controls over financial reporting” and “disclosure controls and
procedures” are effective.

 

(dd)     There is and has been no failure on the part of the Company or, to the
knowledge of the Company, any of the Company’s directors or officers, in their
capacities as such, to comply with any applicable provisions of the
Sarbanes-Oxley Act and the rules and regulations promulgated thereunder. Each of
the principal executive officer and the principal financial officer of the
Company (or each former principal executive officer of the Company and each
former principal financial officer of the Company as applicable) has made all
certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act with
respect to all reports, schedules, forms, statements and other documents
required to be filed by it or furnished by it to the Commission. For purposes of
the preceding sentence, “principal executive officer” and “principal financial
officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act.

 

(ee)     Neither the Company nor any of the Subsidiaries has incurred any
liability for any finder’s fees, brokerage commissions or similar payments in
connection with the transactions herein contemplated, except as may otherwise
exist with respect to MLV pursuant to this Agreement.

 

(ff)     No labor disturbance by or dispute with employees of the Company or any
of its Subsidiaries exists or, to the knowledge of the Company, is threatened
which would reasonably be expected to result in a Material Adverse Effect.

 

(gg)     Neither the Company nor any of the Subsidiaries is or, after giving
effect to the offering and sale of the Securities, will be an “investment
company” or an entity “controlled” by an “investment company,” as such terms are
defined in the Investment Company Act of 1940, as amended (the “Investment
Company Act”).

 

 
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(hh)     The operations of the Company and its Subsidiaries are and have been
conducted at all times in compliance with applicable financial record keeping
and reporting requirements of the Currency and Foreign Transactions Reporting
Act of 1970, as amended, the money laundering statutes of all jurisdictions to
which the Company or its Subsidiaries are subject, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “Money
Laundering Laws”), except as would not reasonably be expected to result in a
Material Adverse Effect; and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the
Company or any of its Subsidiaries with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company, threatened.

 

(ii)     There are no transactions, arrangements and other relationships between
and/or among the Company, and/or, to the knowledge of the Company, any of its
affiliates and any unconsolidated entity, including, but not limited to, any
structural finance, special purpose or limited purpose entity (each, an “Off
Balance Sheet Transaction”) that could reasonably be expected to affect
materially the Company’s liquidity or the availability of or requirements for
its capital resources, including those Off Balance Sheet Transactions described
in the Commission’s Statement about Management’s Discussion and Analysis of
Financial Conditions and Results of Operations (Release Nos. 33-8056; 34-45321;
FR-61), required to be described in the Prospectus which have not been described
as required.

 

(jj)     To the knowledge of the Company, each material employee benefit plan,
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”), that is maintained, administered or
contributed to by the Company or any of its affiliates for employees or former
employees of the Company and any of its Subsidiaries has been maintained in
material compliance with its terms and the requirements of any applicable
statutes, orders, rules and regulations, including but not limited to ERISA and
the Internal Revenue Code of 1986, as amended (the “Code”); no prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of the
Code, has occurred which would result in a material liability to the Company
with respect to any such plan excluding transactions effected pursuant to a
statutory or administrative exemption; and for each such plan that is subject to
the funding rules of Section 412 of the Code or Section 302 of ERISA, no
“accumulated funding deficiency” as defined in Section 412 of the Code has been
incurred, whether or not waived, and the fair market value of the assets of each
such plan (excluding for these purposes accrued but unpaid contributions)
exceeds the present value of all benefits accrued under such plan determined
using reasonable actuarial assumptions.

 

(kk)     No forward-looking statement (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) (a “Forward Looking
Statement”) contained in the Registration Statement and the Prospectus has been
made or reaffirmed without a reasonable basis or has been disclosed other than
in good faith. The Forward Looking Statements incorporated by reference in the
Registration Statement and the Prospectus from the Company’s Annual Report on
Form 10-K for the fiscal year most recently ended (i) except for any Forward
Looking Statement included in any financial statements and notes thereto, are
within the coverage of the safe harbor for forward looking statements set forth
in Section 27A of the Securities Act, Rule 175(b) under the Securities Act or
Rule 3b-6 under the Exchange Act, as applicable, (ii) were made by the Company
with a reasonable basis and in good faith and reflect the Company’s good faith
commercially reasonable best estimate of the matters described therein, and
(iii) have been prepared in accordance with Item 10 of Regulation S-K under the
Securities Act.

 

(ll)     Neither the issuance, sale and delivery of the Securities nor the
application of the proceeds thereof by the Company as described in the
Registration Statement and the Prospectus will violate Regulation T, U or X of
the Board of Governors of the Federal Reserve System or any other regulation of
such Board of Governors.

 

(mm)     The Company and each of its Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as the Company and each of its
Subsidiaries reasonably believe are adequate for the conduct of their properties
and as is customary for companies of similar size engaged in similar businesses
in similar industries.

 

 
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(nn)     (i) Neither the Company nor, to the Company’s knowledge, the
Subsidiaries, nor to the Company’s knowledge, any of their respective executive
officers has, in the past five years, made any unlawful contributions to any
candidate for any political office (or failed fully to disclose any contribution
in violation of law) or made any contribution or other payment to any official
of, or candidate for, any federal, state, municipal, or foreign office or other
person charged with similar public or quasi-public duty in violation of any law
or of the character required to be disclosed in the Prospectus; (ii) no
relationship, direct or indirect, exists between or among the Company or, to the
Company’s knowledge, any Subsidiary or any affiliate of any of them, on the one
hand, and the directors, officers and stockholders of the Company or, to the
Company’s knowledge, any Subsidiary, on the other hand, that is required by the
Securities Act to be described in the Registration Statement and the Prospectus
that is not so described; (iii) no relationship, direct or indirect, exists
between or among the Company or any Subsidiary or any affiliate of them, on the
one hand, and the directors, officers, stockholders or directors of the Company
or, to the Company’s knowledge, any Subsidiary, on the other hand, that is
required by the rules of FINRA to be described in the Registration Statement and
the Prospectus that is not so described; (iv) except as described in the
Prospectus, there are no material outstanding loans or advances or material
guarantees of indebtedness by the Company or, to the Company’s knowledge, any
Subsidiary to or for the benefit of any of their respective officers or
directors or any of the members of the families of any of them; and (v) the
Company has not offered, or caused any placement agent to offer, Common Stock to
any person with the intent to influence unlawfully (A) a customer or supplier of
the Company or any Subsidiary to alter the customer’s or supplier’s level or
type of business with the Company or any Subsidiary or (B) a trade journalist or
publication to write or publish favorable information about the Company or any
Subsidiary or any of their respective products or services, and, (vi) neither
the Company nor any Subsidiary nor, to the Company’s knowledge, any employee or
agent of the Company or any Subsidiary has made any payment of funds of the
Company or any Subsidiary or received or retained any funds in violation of any
law, rule or regulation (including, without limitation, the Foreign Corrupt
Practices Act of 1977), which payment, receipt or retention of funds is of a
character required to be disclosed in the Registration Statement or the
Prospectus.

 

(oo)     The Company was not and is not an ineligible issuer as defined in Rule
405 under the Securities Act at the times specified in Rules 164 and 433 under
the Securities Act in connection with the offering of the Securities.

 

(pp)     Each Issuer Free Writing Prospectus, as of its issue date and as the
Closing Date (as defined below), did not, does not and will not include any
information that conflicted, conflicts or will conflict with the information
contained in the Registration Statement or the Prospectus, including any
incorporated document deemed to be a part thereof that has not been superseded
or modified. 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 MLV specifically for use
therein.

 

(qq)     Neither the execution of this Agreement, nor the issuance, offering or
sale of the Securities, nor the consummation of any of the transactions
contemplated herein and therein, nor the compliance by the Company with the
terms and provisions hereof and thereof will conflict with, or will result in a
breach of, any of the terms and provisions of, or has constituted or will
constitute a default under, or has resulted in or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company pursuant to the terms of any contract or other agreement to which the
Company may be bound or to which any of the property or assets of the Company is
subject, except (i) such conflicts, breaches or defaults as may have been waived
and (ii) such conflicts, breaches and defaults that would not reasonably be
expected to have a Material Adverse Effect; nor will such action result (x) in
any violation of the provisions of the organizational or governing documents of
the Company, or (y) in any material violation of the provisions of any statute
or any order, rule or regulation applicable to the Company or of any court or of
any federal, state or other regulatory authority or other government body having
jurisdiction over the Company, except where such violation would not reasonably
be expected to have a Material Adverse Effect.

 

 
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(rr)      (i) The Company represents that, neither the Company nor any of its
Subsidiaries (collectively, the “Entity”) or any director, officer, employee,
agent, affiliate or representative of the Entity, is a government, individual,
or entity (in this paragraph (tt), “Person”) that is, or is owned or controlled
by a Person that is:

 

(A)  the subject of any sanctions administered or enforced by the U.S.
Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the United
Nations Security Council (“UNSC”), the European Union (“EU”), Her Majesty’s
Treasury (“HMT”), or other relevant sanctions authority (collectively,
“Sanctions”), nor

 

(B)  located, organized or resident in a country or territory that is the
subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran,
North Korea, Sudan and Syria).

 

(ii)  The Entity represents and covenants that it will not, directly or
indirectly, use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture partner or other
Person:

 

(A)  to fund or facilitate any activities or business of or with any Person or
in any country or territory that, at the time of such funding or facilitation,
is the subject of Sanctions; or

 

(B)  in any other manner that will result in a violation of Sanctions by any
Person (including any Person participating in the offering, whether as
underwriter, advisor, investor or otherwise).

 

(iii)  The Entity represents and covenants that, except as detailed in the
Prospectus, for the past 5 years, it has not knowingly engaged in, is not now
knowingly engaged in, and will not engage in, any dealings or transactions with
any Person, or in any country or territory, that at the time of the dealing or
transaction is or was the subject of Sanctions.

 

(ss)     On the Closing Date, all stock transfer or other taxes (other than
income taxes) which are required to be paid in connection with the sale and
transfer of the Securities to be sold hereunder will be, or will have been,
fully paid or provided for by the Company and all laws imposing such taxes will
be or will have been fully complied with.

 

(tt)     Subject to the listing requirements of the NYSE MKT, as well as other
requirements of applicable law, the Company will use commercially reasonable
efforts to apply for listing of the Warrants on the NYSE MKT.

 

Any certificate signed by an officer of the Company and delivered to MLV or to
counsel for MLV pursuant to or in connection with this Agreement shall be deemed
to be a representation and warranty by the Company, as applicable, to MLV as to
the matters set forth therein.

 

 
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Section 5.     Agreements of the Company.

 

The Company covenants and agrees with the Placement Agent as follows:

 

(a)     After the date of this Agreement and during any period in which a
Prospectus relating to the Securities is required to be delivered by MLV under
the Securities Act (including in circumstances where such requirement may be
satisfied pursuant to Rule 172 under the Securities Act), (i) the Company will
notify MLV promptly of the time when any subsequent amendment to the
Registration Statement, other than documents incorporated by reference, has been
filed with the Commission and/or has become effective or any subsequent
supplement to the Prospectus has been filed and of any request by the Commission
for any amendment or supplement to the Registration Statement or Prospectus or
for additional information, (ii) the Company will prepare and file with the
Commission, promptly upon MLV’s request, any amendments or supplements to the
Registration Statement or Prospectus that, in MLV’s reasonable opinion, may be
necessary or advisable in connection with the distribution of the Securities by
MLV (provided, however, that the failure of MLV to make such request shall not
relieve the Company of any obligation or liability hereunder, or affect MLV’s
right to rely on the representations and warranties made by the Company in this
Agreement and provided, further, that the only remedy MLV shall have with
respect to the failure to make such filing shall be to cease making sales under
this Agreement until such amendment or supplement is filed); (iii) the Company
will not file any amendment or supplement to the Registration Statement or
Prospectus relating to the Securities or a security convertible into the Shares
or Warrants unless a copy thereof has been submitted to MLV within a reasonable
period of time before the filing and MLV has not objected thereto (provided,
however, that the failure of MLV to make such objection shall not relieve the
Company of any obligation or liability hereunder, or affect MLV’s right to rely
on the representations and warranties made by the Company in this Agreement and
provided, further, that the only remedy MLV shall have with respect to the
failure to by the Company to obtain such consent shall be to cease making sales
under this Agreement) and the Company will furnish to MLV at the time of filing
thereof a copy of any document that upon filing is deemed to be incorporated by
reference into the Registration Statement or Prospectus, except for those
documents available via EDGAR; and (iv) the Company will cause each amendment or
supplement to the Prospectus to be filed with the Commission as required
pursuant to the applicable paragraph of Rule 424(b) of the Securities Act or, in
the case of any document to be incorporated therein by reference, to be filed
with the Commission as required pursuant to the Exchange Act, within the time
period prescribed (the determination to file or not file any amendment or
supplement with the Commission under this Section 5(a), based on the Company’s
reasonable opinion or reasonable objections, shall be made exclusively by the
Company).

 

(b)     The Company will advise MLV, promptly after it receives notice or
obtains knowledge thereof, of the issuance or threatened issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement, of the suspension of the qualification of the Securities for offering
or sale in any jurisdiction, or of the initiation or threatening of any
proceeding for any such purpose; and it will promptly use its commercially
reasonable efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such a stop order should be issued. The Company will advise MLV
promptly after it receives any request by the Commission for any amendments to
the Registration Statement or any amendment or supplements to the Prospectus or
any Issuer Free Writing Prospectus or for additional information related to the
offering of the Securities or for additional information related to the
Registration Statement, the Prospectus or any Issuer Free Writing Prospectus.

 

 
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(c)     During any period in which a Prospectus relating to the Securities is
required to be delivered by MLV under the Securities Act with respect to the
offer and sale of the Securities, (including in circumstances where such
requirement may be satisfied pursuant to Rule 172 under the Securities Act), the
Company will comply with all requirements imposed upon it by the Securities Act,
as from time to time in force, and to file on or before their respective due
dates all reports and any definitive proxy or information statements required to
be filed by the Company with the Commission pursuant to Sections 13(a), 13(c),
14, 15(d) or any other provision of or under the Exchange Act. If the Company
has omitted any information from the Registration Statement pursuant to Rule
430A under the Securities Act, it will use its best efforts to comply with the
provisions of and make all requisite filings with the Commission pursuant to
said Rule 430A and to notify MLV promptly of all such filings. If during such
period any event occurs as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances then existing, not misleading, or if during such period it is
necessary to amend or supplement the Registration Statement or Prospectus to
comply with the Securities Act, the Company will promptly notify MLV to suspend
the offering of Securities during such period and the Company will promptly
amend or supplement the Registration Statement or Prospectus (at the expense of
the Company) so as to correct such statement or omission or effect such
compliance.

 

(d)     During any period in which the Prospectus relating to the Securities is
required to be delivered by MLV under the Securities Act with respect to the
offer and sale of the Securities, the Company will use its reasonable best
efforts to cause the Shares to be listed on the Exchange and to qualify the
Securities for sale under the securities laws of such jurisdictions as MLV
reasonably designates and to continue such qualifications in effect so long as
required for the distribution of the Securities; provided, however, that the
Company shall not be required in connection therewith to qualify as a foreign
corporation or dealer in securities or file a general consent to service of
process in any jurisdiction.

 

(e)     The Company will furnish to MLV and its counsel (at the expense of the
Company) copies of the Registration Statement, the Prospectus (including all
documents incorporated by reference therein) and all amendments and supplements
to the Registration Statement or Prospectus that are filed with the Commission
during any period in which a Prospectus relating to the Securities is required
to be delivered under the Securities Act (including all documents filed with the
Commission during such period that are deemed to be incorporated by reference
therein), in each case as soon as reasonably practicable and in such quantities
as MLV may from time to time reasonably request and, at MLV’s request, will also
furnish copies of the Prospectus to each exchange or market on which sales of
the Securities may be made; provided, however, that the Company shall not be
required to furnish any document (other than the Prospectus) to MLV to the
extent such document is available on EDGAR.

 

(f)     The Company will make generally available to its security holders as
soon as practicable, but in any event not later than 15 months after the end of
the Company’s current fiscal quarter, an earnings statement covering a 12-month
period that satisfies the provisions of Section 11(a) and Rule 158 of the
Securities Act.

 

(g)     The Company will use the Net Proceeds as described in the Prospectus in
the section entitled “Use of Proceeds.”

 

(h)     The Company will, at any time prior to the Closing Date, advise MLV
promptly after it shall have received notice or obtained knowledge thereof, of
any information or fact that would alter or affect in any material respect any
opinion, certificate, letter or other document required to be provided to MLV
pursuant to this Agreement.

 

(i)     The Company will cooperate with any reasonable due diligence review
conducted by MLV or its representatives in connection with the transactions
contemplated hereby, including, without limitation, providing information and
making available documents and senior corporate officers, during regular
business hours and at the Company’s principal offices, as MLV may reasonably
request.

 

(j)     The Company agrees that on such dates as the Securities Act shall
require, the Company will (i) file a prospectus supplement with the Commission
under the applicable paragraph of Rule 424(b) under the Securities Act (each and
every filing under Rule 424(b), a “Filing Date”), which prospectus supplement
will set forth, within the relevant period, the amount of Securities sold
through MLV, the Net Proceeds to the Company and the compensation payable by the
Company to MLV with respect to such Securities, and (ii) deliver such number of
copies of each such prospectus supplement to each exchange or market on which
such sales were effected as may be required by the rules or regulations of such
exchange or market.

 

 
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(k)     At the Closing Date, there shall be furnished to MLV a certificate,
dated the date of its delivery, executed by each of the President and the Chief
Financial Officer of the Company, in form and substance satisfactory to MLV, in
the form attached hereto as Exhibit 5(k).

 

(l)     On the Closing Date, the Company shall cause to be furnished to MLV
written opinions of Norton Rose Fulbright US LLP (“Company Counsel”), or other
counsel satisfactory to MLV, in form and substance satisfactory to MLV and its
counsel, modified, as necessary, to relate to the Registration Statement and the
Prospectus as then amended or supplemented, and with customary assumptions and
exceptions.

 

(m)     On the Closing Date, the Company shall cause the Accountant to furnish
MLV a letter (the “Comfort Letter”), dated the date the Comfort Letter is
delivered, which shall meet the requirements set forth in this Section 5(m). The
Comfort Letter shall be in a form and substance satisfactory to MLV, (i)
confirming that the Accountant is an independent public accounting firm within
the meaning of the Securities Act and the PCAOB, and (ii) stating, as of such
date, the conclusions and findings of such firm with respect to the financial
information and other matters ordinarily covered by accountants’ “comfort
letters” to underwriters in connection with registered public offerings.

 

(n)     The Company will not, directly or indirectly, (i) take any action
designed to cause or result in, or that constitutes or might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of Common Stock or
(ii) sell, bid for, or purchase Common Stock in violation of Regulation M, or
pay anyone any compensation for soliciting purchases of the Securities other
than MLV.

 

(o)     The Company will conduct its affairs in such a manner so as to
reasonably ensure that neither it nor any of its Subsidiaries will be or become,
at any time prior to the termination of this Agreement, an “investment company,”
as such term is defined in the Investment Company Act.

 

(p)     Other than an Issuer Free Writing Prospectus approved in advance by the
Company and MLV in its capacity as the Placement Agent, neither MLV nor the
Company (including its agents and representatives, other than MLV in its
capacity as such) will make, use, prepare, authorize, approve or refer to any
written communication (as defined in Rule 405 under the Securities Act),
required to be filed with the Commission, that constitutes an offer to sell or
solicitation of an offer to buy Securities hereunder.

 

(q)     The Company and the Subsidiaries will maintain and keep accurate books
and records reflecting their assets and maintain internal accounting controls in
a manner designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and
including those policies and procedures that (i) pertain to the maintenance of
records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the Company, (ii) provide reasonable assurance
that transactions are recorded as necessary to permit the preparation of the
Company’s consolidated financial statements in accordance with generally
accepted accounting principals, (iii) that receipts and expenditures of the
Company are being made only in accordance with management’s and the Company’s
directors’ authorization, and (iv) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the Company’s assets that could have a material effect on its financial
statements. The Company and the Subsidiaries will maintain such controls and
other procedures, including, without limitation, those required by Sections 302
and 906 of the Sarbanes-Oxley Act, and the applicable regulations thereunder
that are designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the Commission’s rules and forms, including, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the Company’s management, including its
principal executive officer and principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding
required disclosure and to ensure that material information relating to the
Company or the Subsidiaries is made known to them by others within those
entities, particularly during the period in which such periodic reports are
being prepared.

 

 
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Section 6.     Representations and Covenants of the Placement Agent.

 

(a)     MLV represents and warrants that it is duly registered as a
broker-dealer under FINRA, the Exchange Act and the applicable statutes and
regulations of each state in which the Securities will be offered and sold,
except such states in which MLV is exempt from registration or such registration
is not otherwise required. MLV shall continue, for the term of this Agreement,
to be duly registered as a broker-dealer under FINRA, the Exchange Act and the
applicable statutes and regulations of each state in which the Securities will
be offered and sold, except such states in which MLV is exempt from registration
or such registration is not otherwise required, during the term of this
Agreement.

 

Section 7.     Payment of Expenses.

 

(a)     The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including (i) the preparation, filing,
including any fees required by the Commission, and printing of the Registration
Statement (including financial statements and exhibits) as originally filed and
of each amendment and supplement thereto and each Free Writing Prospectus, in
such number as MLV shall deem necessary, (ii) the printing and delivery to MLV
of this Agreement and such other documents as may be required in connection with
the offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates, if any, for the
Securities to MLV, including any stock or other transfer taxes and any capital
duties, stamp duties or other duties or taxes payable upon the sale, issuance or
delivery of the Securities to MLV, (iv) the fees and disbursements of the
counsel, accountants and other advisors to the Company, (v)  the fees and
expenses of the transfer agent and registrar for the Securities, (vii) the
filing fees incident to any review by FINRA of the terms of the sale of the
Securities, (viii) the fees and expenses incurred in connection with the listing
of the Shares on the Exchange and (ix) all costs and expenses of MLV incident to
the performance of its obligations under this Agreement, which in no case shall
exceed $15,000.

 

Section 8.     Conditions of the Issuance and Sale of the Securities and the
Obligations of the Placement Agent.

 

The issuance and sale of the Securities pursuant to the Purchase Agreement and
the obligations of the Placement Agent hereunder are subject to the following
conditions:

 

(a)     The Registration Statement shall have become effective and shall be
available for the (i) resale of all Securities issued to MLV and not yet sold by
MLV and (ii) sale of all Securities to be issued hereto.

 

(b)     None of the following events shall have occurred and be continuing:
(i) receipt by the Company of any request for additional information from the
Commission or any other federal or state governmental authority during the
period of effectiveness of the Registration Statement, the response to which
would require any post-effective amendments or supplements to the Registration
Statement or the Prospectus; (ii) the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose; (iii) receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; or (iv) the occurrence of any event that makes
any material statement made in the Registration Statement or the Prospectus or
any material document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, the Prospectus or documents so that, in
the case of the Registration Statement, it will not contain any materially
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and, that in the case of the Prospectus, it will not contain any materially
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 the light
of the circumstances under which they were made, not misleading.

 

 
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(c)     MLV shall not have advised the Company that the Registration Statement
or Prospectus, or any amendment or supplement thereto, contains an untrue
statement of fact that in MLV’s reasonable opinion is material, or omits to
state a fact that in MLV’s opinion is material and is required to be stated
therein or is necessary to make the statements therein not misleading.

 

(d)     Except as contemplated in the Prospectus, or disclosed in the Company’s
reports filed with the Commission, there shall not have been any material
adverse change, on a consolidated basis, in the authorized capital stock of the
Company or any Material Adverse Effect, or any development that could reasonably
be expected to cause a Material Adverse Effect, or a downgrading in or
withdrawal of the rating assigned to any of the Company’s securities (other than
asset backed securities) by any rating organization or a public announcement by
any rating organization that it has under surveillance or review its rating of
any of the Company’s securities (other than asset backed securities), the effect
of which, in the case of any such action by a rating organization described
above, in the reasonable judgment of MLV (without relieving the Company of any
obligation or liability it may otherwise have), is so material as to make it
impracticable or inadvisable to proceed with the offering of the Securities on
the terms and in the manner contemplated in the Prospectus.

 

(e)     MLV shall have received the opinions of Company Counsel required to be
delivered pursuant Section 5(l) on or before the date on which such delivery of
such opinions are required pursuant to Section 5(l).

 

(f)     MLV shall have received the Comfort Letter required to be delivered
pursuant Section 5(m) on or before the date on which such delivery of such
letter is required pursuant to Section 5(m).

 

(g)     MLV shall have received the certificate required to be delivered
pursuant to Section 5(k) on or before the date on which delivery of such
certificate is required pursuant to Section 5(k).

 

(h)     Trading in the Shares shall not have been suspended on the Exchange and
the Shares shall not have been delisted from the Exchange.

 

(i)     On the date on which the Company is required to deliver a certificate
pursuant to Section 5(k), the Company shall have furnished to MLV such
appropriate further information, certificates and documents as MLV may
reasonably request. All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof. The Company will furnish MLV
with such conformed copies of such opinions, certificates, letters and other
documents as MLV shall reasonably request.

 

(j)     All filings with the Commission required by Rule 424 under the
Securities Act to have been filed shall have been made within the applicable
time period prescribed for such filing by Rule 424.

 

(k)     The Shares shall either have been approved for listing on the Exchange,
subject only to notice of issuance, or the Company shall have filed an
application for listing of the Shares on the Exchange at, or prior to, the date
of this Agreement.

 

 
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(l)     There shall not have occurred any event that would permit MLV to
terminate this Agreement pursuant to Section 11(a).

 

Section 9.     Indemnification.

 

(a)     The Company agrees to indemnify and hold harmless MLV, its partners,
members, directors, officers, employees and agents and each person, if any, who
controls MLV within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act as follows:

 

(i)     against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, joint or several, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading, or arising out of any untrue
statement or alleged untrue statement of a material fact included in any related
Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;

 

(ii)     against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, joint or several, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 9(d) below) any such
settlement is effected with the written consent of the Company, which consent
shall not unreasonably be delayed or withheld; and

 

(iii)     against any and all expense whatsoever, as incurred (including the
fees and disbursements of counsel), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense is not
paid under (i) or (ii) above,

 

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made solely in
reliance upon and in conformity with written information furnished to the
Company by MLV expressly for use in the Registration Statement (or any amendment
thereto), or in any related Issuer Free Writing Prospectus or the Prospectus (or
any amendment or supplement thereto).

 

(b)     MLV agrees to indemnify and hold harmless the Company and its directors
and each officer of the Company who signed the Registration Statement, and each
person, if any, who (i) controls the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act or (ii) is controlled by or
is under common control with the Company against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 9(c),
as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendments thereto) or the Prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with information relating to MLV and
furnished to the Company in writing by MLV expressly for use therein.

 

 
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(c)     Any party that proposes to assert the right to be indemnified under this
Section 9 will, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section 9, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve the indemnifying party from (i) any liability that it might have to any
indemnified party otherwise than under this Section 9 and (ii) any liability
that it may have to any indemnified party under the foregoing provision of this
Section 9 unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the indemnifying party. If any
such action is brought against any indemnified party and it notifies the
indemnifying party of its commencement, the indemnifying party will be entitled
to participate in and, to the extent that it elects by delivering written notice
to the indemnified party promptly after receiving notice of the commencement of
the action from the indemnified party, jointly with any other indemnifying party
similarly notified, to assume the defense of the action, with counsel reasonably
satisfactory to the indemnified party, and after notice from the indemnifying
party to the indemnified party of its election to assume the defense, the
indemnifying party will not be liable to the indemnified party for any legal or
other expenses except as provided below and except for the reasonable costs of
investigation subsequently incurred by the indemnified party in connection with
the defense. The indemnified party will have the right to employ its own counsel
in any such action, but the fees, expenses and other charges of such counsel
will be at the expense of such indemnified party unless (1) the employment of
counsel by the indemnified party has been authorized in writing by the
indemnifying party, (2) the indemnified party has reasonably concluded (based on
advice of counsel) that there may be legal defenses available to it or other
indemnified parties that are different from or in addition to those available to
the indemnifying party, (3) a conflict or potential conflict exists (based on
advice of counsel to the indemnified party) between the indemnified party and
the indemnifying party (in which case the indemnifying party will not have the
right to direct the defense of such action on behalf of the indemnified party)
or (4) the indemnifying party has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm admitted to practice in such
jurisdiction at any one time for all such indemnified party or parties. All such
fees, disbursements and other charges will be reimbursed by the indemnifying
party promptly after the indemnifying party receives a written invoice relating
to fees, disbursements and other charges in reasonable detail. An indemnifying
party will not, in any event, be liable for any settlement of any action or
claim effected without its written consent. No indemnifying party shall, without
the prior written consent of each indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action
or proceeding relating to the matters contemplated by this Section 9 (whether or
not any indemnified party is a party thereto), unless such settlement,
compromise or consent (1) includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding or claim and (2) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.

 

(d)     If an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for reasonable fees and expenses of counsel for
which it is entitled to be reimbursed under this Section 9, such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 9(a)(ii) effected without its written consent if
(1) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (2) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (3) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.

 

 
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(e)     In order to provide for just and equitable contribution in circumstances
in which the indemnification provided for in the foregoing paragraphs of this
Section 9 is applicable in accordance with its terms but for any reason is held
to be unavailable from the Company or MLV, the Company and MLV will contribute
to the total losses, claims, liabilities, expenses and damages (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted, but after deducting any contribution received by the Company
from persons other than MLV, such as persons who control the Company within the
meaning of the Securities Act, officers of the Company who signed the
Registration Statement and directors of the Company, who also may be liable for
contribution) to which the Company and MLV may be subject in such proportion as
shall be appropriate to reflect the relative benefits received by the Company on
the one hand and MLV on the other hand. The relative benefits received by the
Company on the one hand and MLV on the other hand shall be deemed to be in the
same proportion as the total net proceeds from the sale of the Securities
(before deducting expenses) received by the Company bear to the total
compensation received by MLV (before deducting expenses) from the sale of
Securities on behalf of the Company. If, but only if, the allocation provided by
the foregoing sentence is not permitted by applicable law, the allocation of
contribution shall be made in such proportion as is appropriate to reflect not
only the relative benefits referred to in the foregoing sentence but also the
relative fault of the Company, on the one hand, and MLV, on the other hand, with
respect to the statements or omission that resulted in such loss, claim,
liability, expense or damage, or action in respect thereof, as well as any other
relevant equitable considerations with respect to such offering. Such relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
or MLV, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and MLV agree that it would not be just and equitable if
contributions pursuant to this Section 9(e) were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, liability, expense, or
damage, or action in respect thereof, referred to above in this Section 9(e)
shall be deemed to include, for the purpose of this Section 9(e), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim to the extent consistent
with Section 9(c) hereof. Notwithstanding the foregoing provisions of this
Section 9(e), MLV shall not be required to contribute any amount in excess of
the commissions received by it under this Agreement and no person found guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 9(e),
any person who controls a party to this Agreement within the meaning of the
Securities Act, and any officers, directors, partners, employees or agents of
MLV, will have the same rights to contribution as that party, and each officer
and director of the Company who signed the Registration Statement will have the
same rights to contribution as the Company, subject in each case to the
provisions hereof. Any party entitled to contribution, promptly after receipt of
notice of commencement of any action against such party in respect of which a
claim for contribution may be made under this Section 9(e), will notify any such
party or parties from whom contribution may be sought, but the omission to so
notify will not relieve that party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section 9(e)
except to the extent that the failure to so notify such other party materially
prejudiced the substantive rights or defenses of the party from whom
contribution is sought. Except for a settlement entered into pursuant to the
last sentence of Section 9(c) hereof, no party will be liable for contribution
with respect to any action or claim settled without its written consent if such
consent is required pursuant to Section 9(c) hereof

 

Section 10.     Representations and Agreements to Survive Delivery.

 

(a)     The indemnity and contribution agreements contained in Section 9 of this
Agreement and all representations and warranties of the Company herein or in
certificates delivered pursuant hereto shall survive, as of their respective
dates, regardless of (i) any investigation made by or on behalf of MLV, any
controlling persons, or the Company (or any of their respective officers,
directors or controlling persons), (ii) delivery and acceptance of the
Securities and payment therefor or (iii) any termination of this Agreement

 

 
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Section 11.     Termination.

 

(a)     MLV may terminate this Agreement, by notice to the Company, as
hereinafter specified at any time (1) if there has been, since the time of
execution of this Agreement or since the date as of which information is given
in the Prospectus, MLV may terminate this Agreement, by notice to the Company,
as hereinafter specified at any time (1) if there has been, since the time of
execution of this Agreement or since the date as of which information is given
in the Prospectus, any Material Adverse Effect, or any development that has
occurred that is reasonably likely to have a Material Adverse Effect has
occurred or, in the sole judgment of MLV, is material and adverse and makes it
impractical or inadvisable to market the Securities or to enforce contracts for
the sale of the Securities, (2) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of MLV,
impracticable or inadvisable to market the Securities or to enforce contracts
for the sale of the Securities, (3) if trading in the Common Stock has been
suspended or limited by the Commission or the Exchange, or if trading generally
on the Exchange has been suspended or limited, or minimum prices for trading
have been fixed on the Exchange, (4) if any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter market
shall have occurred and be continuing, (5) if a major disruption of securities
settlements or clearance services in the United States shall have occurred and
be continuing, or (6) if a banking moratorium has been declared by either U.S.
Federal or New York authorities. Any such termination shall be without liability
of any party to any other party except that the provisions of Section 7 (Payment
of Expenses), Section 9 (Indemnification and Contribution), Section 10
(Representations and Agreements to Survive Delivery), Section 16 (Governing Law
and Time; Waiver of Jury Trial) and Section 17 (Consent to Jurisdiction) hereof
shall remain in full force and effect notwithstanding such termination. If MLV
elects to terminate this Agreement as provided in this Section 11(a), MLV shall
provide the required notice as specified in Section 12 (Notices).

 

(b)     The Company shall have the right, by giving ten (10) days notice as
hereinafter specified to terminate this Agreement in its sole discretion at any
time after the date of this Agreement. Any such termination shall be without
liability of any party to any other party except that the provisions of Section
7, Section 9, Section 10, Section 16 and Section 17 hereof shall remain in full
force and effect notwithstanding such termination.

 

(c)     MLV shall have the right, by giving ten (10) days notice as hereinafter
specified to terminate this Agreement in its sole discretion at any time after
the date of this Agreement. Any such termination shall be without liability of
any party to any other party except that the provisions of Section 7, Section 9,
Section 10, Section 16 and Section 17 hereof shall remain in full force and
effect notwithstanding such termination.

 

(d)     Unless earlier terminated pursuant to this Section 10, this Agreement
shall automatically terminate upon the issuance and sale of all of the
Securities through MLV on the terms and subject to the conditions set forth
herein except that the provisions of Section 7, Section 9, Section 10, Section
16 and Section 17 hereof shall remain in full force and effect notwithstanding
such termination.

 

(e)     This Agreement shall remain in full force and effect unless terminated
pursuant to Sections 11(a), (b), (c), or (d) above or otherwise by mutual
agreement of the parties; provided, however, that any such termination by mutual
agreement shall in all cases be deemed to provide that Section 7, Section 9,
Section 10, Section 16 and Section 17 shall remain in full force and effect.
Upon termination of this Agreement, the Company shall not have any liability to
MLV for any discount, commission or other compensation with respect to any
Securities not otherwise sold by MLV under this Agreement.

 

 
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(f)     Any termination of this Agreement shall be effective on the date
specified in such notice of termination; provided, however, that such
termination shall not be effective until the close of business on the date of
receipt of such notice by MLV or the Company, as the case may be. If such
termination shall occur prior to the Settlement Date for any sale of Securities,
such Securities shall settle in accordance with the provisions of this
Agreement.

 

Section 12.     Notices.

 

(a)     All notices or other communications required or permitted to be given by
any party to any other party pursuant to the terms of this Agreement shall be in
writing, unless otherwise specified, and if sent to MLV, shall be delivered to:

 

MLV & Co. LLC
1251 Avenue of the Americas, 41st Floor
New York, NY 10020
Attention: General Counsel
Facsimile: (212) 542-5870

 

with a copy to:

 

K&L Gates LLP

1 Park Plaza

Twelfth Floor

Irvine, CA 92614

Attention: Michael Hedge

Facsimile No.: (949) 623-4454

 

and if to the Company, shall be delivered to:

 

GreenHunter Resources, Inc.

1048 Texan Trail

Grapevine, TX 76051

Attention: Morgan F. Johnston, General Counsel

Facsimile No.: (972) 410-1066

 

with a copy to:

 

Norton Rose Fulbright US LLP

2200 Ross Avenue, Suite 2800

Dallas, Texas 75201

Attention: Dave Morrison

Facsimile No.: (214) 855-8200

 

Each party to this Agreement may change such address for notices by sending to
the parties to this Agreement written notice of a new address for such purpose.
Each such notice or other communication shall be deemed given (i) when delivered
personally or by verifiable facsimile transmission (with an original to follow)
on or before 4:30 p.m., New York City time, on a Business Day (as defined below)
or, if such day is not a Business Day, on the next succeeding Business Day,
(ii) on the next Business Day after timely delivery to a nationally-recognized
overnight courier and (iii) on the Business Day actually received if deposited
in the U.S. mail (certified or registered mail, return receipt requested,
postage prepaid). For purposes of this Agreement, “Business Day” shall mean any
day on which the Exchange and commercial banks in the City of New York are open
for business.

 

 
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An electronic communication (“Electronic Notice”) shall be deemed written notice
for purposes of this Section 12 if sent to the electronic mail address specified
by the receiving party under separate cover. Electronic Notice shall be deemed
received at the time the party sending Electronic Notice receives confirmation
of receipt by the receiving party. Any party receiving Electronic Notice may
request and shall be entitled to receive the notice on paper, in a nonelectronic
form (“Nonelectronic Notice”) which shall be sent to the requesting party within
ten (10) days of receipt of the written request for Nonelectronic Notice.

 

Section 13.     Successors and Assigns.

 

(a)     This Agreement shall inure to the benefit of and be binding upon the
Company and MLV and their respective successors and the affiliates, controlling
persons, officers and directors referred to in Section 8 hereof. References to
any of the parties contained in this Agreement shall be deemed to include the
successors and permitted assigns of such party. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and permitted assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. Neither party may assign its
rights or obligations under this Agreement without the prior written consent of
the other party.

 

Section 14.     Adjustments for Stock Splits.

 

(a)     The parties acknowledge and agree that all share-related numbers
contained in this Agreement shall be adjusted to take into account any share
consolidation, stock split, stock dividend, corporate domestication or similar
event effected with respect to the Securities.

 

Section 15.     Entire Agreement; Amendment; Severability.

 

(a)     This Agreement (including all schedules and exhibits attached hereto)
constitutes the entire agreement and supersedes all other prior and
contemporaneous agreements and undertakings, both written and oral, among the
parties hereto with regard to the subject matter hereof. Neither this Agreement
nor any term hereof may be amended except pursuant to a written instrument
executed by the Company and MLV. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable as written by a court of competent
jurisdiction, then such provision shall be given full force and effect to the
fullest possible extent that it is valid, legal and enforceable, and the
remainder of the terms and provisions herein shall be construed as if such
invalid, illegal or unenforceable term or provision was not contained herein,
but only to the extent that giving effect to such provision and the remainder of
the terms and provisions hereof shall be in accordance with the intent of the
parties as reflected in this Agreement.

 

Section 16.     GOVERNING LAW AND TIME; WAIVER OF JURY TRIAL.

 

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. 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 OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

 
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Section 17.     CONSENT TO JURISDICTION.

 

EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE
STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN,
FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH ANY
TRANSACTION CONTEMPLATED HEREBY, AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT
TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT,
ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL
SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION
OR PROCEEDING BY MAILING A COPY THEREOF (CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT
UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND
SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL
BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED
BY LAW.

 

Section 18.     Use of Information.

 

(a)     MLV may not use any information gained in connection with this Agreement
and the transactions contemplated by this Agreement, including due diligence, to
advise any party with respect to transactions not expressly approved by the
Company.

 

Section 19.     Counterparts.

 

(a)     This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Delivery of an executed Agreement by one party to
the other may be made by facsimile transmission.

 

Section 20.     Effect of Headings.

 

(a)     The section and Exhibit headings herein are for convenience only and
shall not affect the construction hereof.

 

Section 21.     Permitted Free Writing Prospectuses.

 

(a)     The Company represents, warrants and agrees that, unless it obtains the
prior consent of MLV, and MLV represents, warrants and agrees that, unless it
obtains the prior consent of the Company, it has not made and will not make any
offer relating to the Securities 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 with the Commission. Any such free
writing prospectus consented to by MLV or by the Company, as the case may be, is
hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company
represents and warrants that it has treated and agrees that it will treat each
Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as
defined in Rule 433, and has complied and will comply with the requirements of
Rule 433 applicable to any Permitted Free Writing Prospectus, including timely
filing with the Commission where required, legending and record keeping.

 

 
- 26 -

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Section 22.     Absence of Fiduciary Relationship.

 

The Company acknowledges and agrees that:

 

(a)     MLV is acting solely as agent in connection with the public offering of
the Securities and in connection with each transaction contemplated by this
Agreement and the process leading to such transactions, and no fiduciary or
advisory relationship between the Company or any of its respective affiliates,
stockholders (or other equity holders), creditors or employees or any other
party, on the one hand, and MLV, on the other hand, has been or will be created
in respect of any of the transactions contemplated by this Agreement,
irrespective of whether or not MLV has advised or is advising the Company on
other matters, and MLV has no obligation to the Company with respect to the
transactions contemplated by this Agreement except the obligations expressly set
forth in this Agreement;

 

(b)     it is capable of evaluating and understanding, and understands and
accepts, the terms, risks and conditions of the transactions contemplated by
this Agreement;

 

(c)     MLV has not provided any legal, accounting, regulatory or tax advice
with respect to the transactions contemplated by this Agreement and it has
consulted its own legal, accounting, regulatory and tax advisors to the extent
it has deemed appropriate;

 

(d)     it is aware that MLV and its affiliates are engaged in a broad range of
transactions which may involve interests that differ from those of the Company
and MLV has no obligation to disclose such interests and transactions to the
Company by virtue of any fiduciary, advisory or agency relationship or
otherwise; and

 

(e)     it waives, to the fullest extent permitted by law, any claims it may
have against MLV for breach of fiduciary duty or alleged breach of fiduciary
duty in connection with the sale of Securities under this Agreement and agrees
that MLV shall not have any liability (whether direct or indirect, in contract,
tort or otherwise) to it in respect of such a fiduciary duty claim or to any
person asserting a fiduciary duty claim on its behalf or in right of it or the
Company, employees or creditors of Company, other than in respect of MLV’s
obligations under this Agreement and to keep information provided by the Company
to MLV and MLV's counsel confidential to the extent not otherwise
publicly-available.

 

Section 23.     Definitions.

 

As used in this Agreement, the following terms have the respective meanings set
forth below:

 

“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as
defined in Rule 433, relating to the Securities that (1) is required to be filed
with the Commission by the Company, (2) is a “road show” that is a “written
communication” within the meaning of Rule 433(d)(8)(i) whether or not required
to be filed with the Commission, or (3) is exempt from filing pursuant to
Rule 433(d)(5)(i) because it contains a description of the Securities or of the
offering that does not reflect the final terms, in each case in the form filed
or required to be filed with the Commission or, if not required to be filed, in
the form retained in the Company’s records pursuant to Rule 433(g) under the
Securities Act Regulations.

 

“Rule 163,” “Rule 164,” “Rule 172,” “Rule 405,” “Rule 415,” “Rule 424,”
“Rule 424(b),” “Rule 430B,” and “Rule 433” refer to such rules under the
Securities Act Regulations.

 

All references in this Agreement to financial statements and schedules and other
information that is “contained,” “included” or “stated” in the Registration
Statement or the Prospectus (and all other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other
information that is incorporated by reference in the Registration Statement or
the Prospectus, as the case may be.

 

 
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All references in this Agreement to the Registration Statement, the Prospectus
or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to EDGAR; all references in
this Agreement to any Issuer Free Writing Prospectus (other than any Issuer Free
Writing Prospectuses that, pursuant to Rule 433, are not required to be filed
with the Commission) shall be deemed to include the copy thereof filed with the
Commission pursuant to EDGAR; and all references in this Agreement to
“supplements” to the Prospectus shall include, without limitation, any
supplements, “wrappers” or similar materials prepared in connection with any
offering, sale or private placement of any Securities by MLV outside of the
United States.

 

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

 
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Please confirm that the foregoing correctly sets forth the agreement between the
Company and the Placement Agent.

 

 

Very truly yours,

 

GREENHUNTER RESOURCES, INC.

 

By: /s/ Morgan
Johnston                                                              

Name: Morgan Johnston

Title: Sr. Vice President, General Counsel and Secretary

Confirmed as of the date first

above mentioned:

 

MLV & CO. LLC

 

 

By:   /s/ Dean M.
Colucci                                                        

Name: Dean M. Colucci

Title: President

 

 

 

[Signature Page to Placement Agency Agreement] 

--------------------------------------------------------------------------------

 

 

Schedule I

 

Issuer free Writing Prospectuses

 

None.

 

 

Schedule I 

--------------------------------------------------------------------------------

 

  

EXHIBIT A

 

FORM OF PURCHASE AGREEMENT

 

 

Exhibit A 

--------------------------------------------------------------------------------

 

 

EXHIBIT 5(k)

 

Form of Closing Date Certificate

 

This Officer’s Certificate (this “Certificate”) is executed and delivered in
connection with Section 5(k) of the Placement Agency Agreement (the
“Agreement”), dated January [●], 2015, and entered into between GreenHunter
Resources, Inc. (the “Company”) and MLV & Co. LLC. All capitalized terms used
but not defined herein shall have the meanings given to such terms in the
Agreement.

 

The undersigned, a duly appointed and authorized officer of the Company, having
made reasonable inquiries to establish the accuracy of the statements below and
having been authorized by the Company to execute this certificate on behalf of
the Company, hereby certifies as follows:

 

1.     As of the date of this Certificate, (i) the Registration Statement does
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading and (ii) neither the Registration Statement nor the
Prospectus contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (iii) no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein not untrue or misleading for (i) and (ii) to be true.

 

2.     Each of the representations and warranties of the Company contained in
the Agreement were, when originally made, and are, as of the date of this
Certificate, true and correct in all material respects.

 

3.     Except as waived by MLV in writing, each of the covenants required to be
performed by the Company in the Agreement on or prior to the date of the
Agreement, the Closing Date, and each such other date prior to the date hereof
as set forth in the Agreement, has been duly, timely and fully performed in all
material respects and each condition required to be complied with by the Company
on or prior to the date of the Agreement, the Closing Date, and each such other
date prior to the date hereof as set forth in the Agreement has been duly,
timely and fully complied with in all material respects.

 

4.     Subsequent to the date of the most recent financial statements in the
Prospectus, and except as described in the Prospectus, including Incorporated
Documents, there has been no material adverse change.

 

5.     No stop order suspending the effectiveness of the Registration Statement
or of any part thereof has been issued, and no proceedings for that purpose have
been instituted or are pending or threatened by any securities or other
governmental authority (including, without limitation, the Commission).

 

 

Exhibit 5(k) 

--------------------------------------------------------------------------------

 

 

 

6.     No order suspending the effectiveness of the Registration Statement or
the qualification or registration of the Securities under the securities or Blue
Sky laws of any jurisdiction are in effect and no proceeding for such purpose is
pending before, or threatened, to the Company’s knowledge or in writing by, any
securities or other governmental authority (including, without limitation, the
Commission).

 

 

 

[Signature on next page]

 

 
 

--------------------------------------------------------------------------------

 

 

The undersigned has executed this Officer’s Certificate as of the date first
written above.

 

GREENHUNTER RESOURCES, INC. 

 

By:

 

         

 

Name:

 

         

 

Title:

 

 

 

 

 

[Signature Page to Officer’s Certificate]