Blueprint








  EXHIBIT
10.1











 



AMENDED INVESTMENT AGREEMENT


 


This AMENDED INVESTMENT AGREEMENT (the
“Agreement”), dated as of October 20, 2016 (the
“Execution
Date”), is entered into
by and between Lode-Star Mining Inc., a Nevada corporation (the
“Company”) and 
Crane Creek, Inc., a
Texas corporation (the “Investor”).


 



RECITALS:


 


WHEREAS, the parties desire that, upon the terms
and subject to the conditions contained herein, the Investor shall
invest up to Two Million Dollars ($2,000,000) to purchase the
Company’s common stock par value $0.001 per share (the
“Common Stock”);


 


WHEREAS, such investments will be made and the
Common Stock issued in reliance upon the exemption from securities
registration afforded by Section 4(a)(2) of the Securities Act of
1933, as amended (the “1933 Act”), Rule 506(b) of Regulation D promulgated
by the SEC under the 1933 Act, and upon such other exemption from
the registration requirements of the 1933 Act as may be available
with respect to any or all of the investments in Common Stock to be
made hereunder;


 


WHEREAS, contemporaneously with the execution and
delivery of this Agreement, the parties hereto are executing and
delivering a Registration Rights Agreement substantially in the
form attached hereto as Exhibit A
(the “Registration Rights
Agreement”) pursuant to
which the Company has agreed to provide certain registration rights
under the 1933 Act, and the rules and regulations promulgated
thereunder, and applicable state securities
laws.


 


NOW
THEREFORE, in consideration of the foregoing recitals, which shall
be considered an integral part of this Agreement, the covenants and
agreements set forth hereafter, and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Investor hereby agree as
follows:

 






SECTION I.



DEFINITIONS


 


For
all purposes of and under this Agreement, the following terms shall
have the respective meanings below, and such meanings shall be
equally applicable to the singular and plural forms of such defined
terms.


 


“1933 Act” shall have the meaning set forth in the
recitals.


 


“1934 Act” shall mean the Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules and
regulations of the SEC thereunder, all as the same will then be in
effect.


 


“Affiliate” shall have the meaning set forth in
Section
5.7.


 


“Agreement” shall have the meaning set forth in the
preamble.


 


“By-laws” shall have the meaning set forth in
Section
4.3.


 


“Certificate of
Incorporation” shall have
the meaning set forth in Section
4.3.


 


“Closing” shall have the meaning set forth in
Section
2.4.


 


“Closing Date” shall have the meaning set forth in
Section
2.4.


 


“Common Stock” shall have the meaning set forth in the
recitals.


 


“Control” or “Controls” shall have the meaning set forth in
Section
5.7.


 



 

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“Effective
Date” shall mean the date
the SEC declares effective under the 1933 Act the Registration
Statement covering the Securities.


 


“Environmental
Laws” shall have the
meaning set forth in Section
4.13.


 


“Execution
Date” shall have the
meaning set forth in the preamble.


 


“Indemnified
Liabilities” shall have
the meaning set forth in Section
10.


 


“Indemnitees” shall have the meaning set forth in
Section
10.


 


“Indemnitor” shall have the meaning set forth in
Section
10.


 


“Ineffective
Period” shall mean any
period of time that the Registration Statement or any supplemental
registration statement becomes ineffective or unavailable for use
for the sale or resale, as applicable, of any or all of the
Registrable Securities (as defined in the Registration Rights
Agreement) for any reason (or in the event the prospectus under
either of the above is not current and deliverable) during any time
period required under the Registration Rights
Agreement.


 


“Investor” shall have the meaning set forth in the
preamble.


 


“Material Adverse
Effect” shall have the
meaning set forth in Section
4.1.


 


“Maximum Common Stock
Issuance” shall have the
meaning set forth in Section
2.5.


 


“Open Market Adjustment
Amount” shall have the
meaning set forth in Section
2.4.


 


“Open Market Share
Purchase” shall have the
meaning set forth in Section
2.4.


 


“Open Period” shall mean the period beginning on and
including the Trading Day immediately following the Effective Date
and ending on the earlier to occur of (i) the date which is
thirty-six (36) months from the Effective Date; or (ii) termination
of the Agreement in accordance with Section
8.


 


“Pricing
Period” shall mean, with
respect to a particular Put Notice, the twenty (20) Trading Days
immediately prior to the applicable Put Notice
Date.


 


“Principal
Market” shall mean the
New York Stock Exchange, the NYSE Amex, the Nasdaq Capital Market,
the Nasdaq Global Market, the Nasdaq Global Select Market, the OTC
Markets or the OTC Bulletin Board, whichever is the principal
market on which the Common Stock is listed.


 


“Prospectus” shall mean the prospectus, preliminary
prospectus and supplemental prospectus used in connection with the
Registration Statement.


 


“Purchase
Amount” shall mean the
total amount being paid by the Investor on a particular Closing
Date to purchase the Securities.


 


“Purchase
Price” shall mean a
twenty percent (20%) percent discount to the lowest trading price
of the Common Stock during the Pricing Period applicable to the Put
Notice.


 


“Put” shall have the meaning set forth in
Section
2.2.


 


“Put Amount” shall have the meaning set forth in
Section
2.2.


 



 

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“Put Notice” shall mean a written notice sent to the
Investor by the Company stating the Put Amount in U.S. dollars that
the Company intends to sell to the Investor pursuant to the terms
of the Agreement and stating the current number of Shares issued
and outstanding on such date.


 


“Put Notice
Date” shall mean the
Trading Day on which the Investor receives a Put Notice, determined
as follows: a Put Notice shall be deemed delivered on (a) the
Trading Day it is received by facsimile or otherwise by the
Investor if such notice is received prior to 9:30 am Eastern Time,
or (b) the immediately succeeding Trading Day if it is received by
facsimile or otherwise after 9:30 am Eastern Time on a Trading Day.
No Put Notice may be deemed delivered on a day that is not a
Trading Day.


 


“Put
Restriction” shall mean
the days between the beginning of the Pricing Period and Closing
Date for a particular Put Notice. During this time, the Company
shall not be entitled to deliver another Put
Notice.


 


“Put Shares
Due” shall have the
meaning set forth in Section
2.4.


 


“Registered Offering Transaction
Documents” shall mean
this Agreement and the Registration Rights Agreement between the
Company and the Investor as of the date
herewith.


 


“Registration Rights
Agreement” shall have the
meaning set forth in the recitals.


 


“Registration
Statement” means the
registration statement of the Company filed under the 1933 Act
covering the resale of the Securities issuable hereunder by the
Investor, in the manner described in such Registration
Statement.


 


“Related
Party” shall have the
meaning set forth in Section
5.7.


 


“Resolution” shall have the meaning set forth in
Section
7.5.


 


“SEC” shall mean the U.S. Securities and
Exchange Commission.


 


“SEC
Documents” shall have the
meaning set forth in Section
4.6.


 


“Securities” shall mean the shares of Common Stock
issued pursuant to the terms of the Agreement.


 


“Shares” shall mean the shares of the
Company’s Common Stock.


 


“Subsidiaries” shall have the meaning set forth in
Section
4.1.


 


“Trading Day” shall mean any day on which the Principal
Market for the Common Stock is open for trading, from the hours of
9:30 am until 4:00 pm.


 


“Waiting
Period” shall have the
meaning set forth in Section
2.2.


 



SECTION II



PURCHASE AND SALE OF COMMON STOCK


 


2.1 PURCHASE AND SALE OF
COMMON STOCK. Subject to the
terms and conditions set forth herein, the Company, while under no
obligation to issue and sell to the investor, may at the time and
date of the Company's choosing issue and sell to the Investor, and
the Investor shall purchase from the Company, up to that number of
Shares having a Purchase Price of Two Million Dollars
($2,000,000).


 


2.2 DELIVERY OF PUT
NOTICES. Subject to the terms
and conditions of the Registered Offering Transaction Documents,
and from time to time during the Open Period, the Company may, in
its sole discretion, deliver a Put Notice to the Investor which
states the dollar amount (designated in U.S. Dollars), which the
Company intends to sell to the Investor on a Closing Date (the
“Put”). The Put Notice shall be in the form
attached hereto as Exhibit C
and incorporated herein by reference.
The maximum am ount that the Company shall be entitled to Put to
the Investor for any applicable Put Notice (the
“Put
Amount”) shall be equal
to Two Hundred percent (200%) of dollar trading volume (U.S. market
only) of the Common Stock for the Twenty (20) Trading Days
immediately prior to the applicable Put Notice Date so long as such
amount does not exceed 4.99% of the outstanding shares of the
Company. During the Open Period, the Company shall not be entitled
to submit a Put Notice until after the previous Closing has been
completed.


 



 

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2.3 CONDITIONS TO
INVESTOR’S OBLIGATION TO PURCHASE SHARES. Notwithstanding anything to the contrary in this
Agreement, the Company shall not be entitled to deliver a Put
Notice and the Investor shall not be obligated to purchase any
Shares at a Closing unless each of the following conditions are
satisfied:


 




i.

a Registration
Statement shall have been declared effective and shall remain
effective and available for the resale of all the Registrable
Securities (as defined in the Registration Rights Agreement) at all
times until the Closing with respect to the subject Put
Notice;






 




ii.

at all times during
the period beginning on the related Put Notice Date and ending on
and including the related Closing Date, the Common Stock shall have
been listed or quoted for trading on the Principal Market and shall
not have been suspended from trading thereon for a period of two
(2) consecutive Trading Days during the Open Period and the Company
shall not have been notified of any pending or threatened
proceeding or other action to suspend the trading of the Common
Stock;






 




iii.

the Company has
complied with its obligations and is otherwise not in breach of or
in default under, this Agreement, the Registration Rights Agreement
or any other agreement executed in connection herewith which has
not been cured prior to delivery of the Investor’s Put Notice
Date;






 




iv.

no injunction shall
have been issued and remain in force, or action commenced by a
governmental authority which has not been stayed or abandoned,
prohibiting the purchase or the issuance of the Securities;
and






 




v.

the issuance of the
Securities will not violate any shareholder approval requirements
of the Principal Market.






 


If
any of the events described in clauses (i) through (v) above occurs
during a Pricing Period, then the Investor shall have no obligation
to purchase the Put Amount of Common Stock set forth in the
applicable Put Notice.


 


2.4 MECHANICS OF PURCHASE
OF SHARES BY INVESTOR. Subject
to the satisfaction of the conditions set forth in Sections 2.5 and
2.6 of this Agreement, the closing of the purchase by the Investor
of Shares (a “Closing”) shall occur on the date which is no later
than five (5) Trading Days following the applicable Put Notice Date
(each a “Closing Date”). Upon each such Closing Date, the Company
shall deliver to the Investor pursuant to this Agreement,
certificates representing the Shares to be issued to the Investor
on such date and registered in the name of the Investor (the
“Certificate”). Within one business day after receipt of
the Certificate, the Investor shall deliver to the Company the
Purchase Price to be paid for such Shares, determined as set forth
in Section
2.2. In lieu of delivering
physical certificates representing the Securities and provided that
the Company’s transfer agent then is participating in The
Depository Trust Company (“DTC”) Fast Automated Securities Transfer
(“FAST”) program and that the Securities are
eligible for inclusion in the FAST program, upon request of the
Investor, the Company shall use all commercially reasonable efforts
to cause its transfer agent to electronically transmit the
Securities by crediting the account of the Investor’s prime
broker (as specified by the Investor within a time reasonably in
advance of the Investor’s notice) with DTC through its
Deposit Withdrawal Agent Commission (“DWAC”) system.


 


2.5 OVERALL LIMIT ON
COMMON STOCK ISSUABLE.
Notwithstanding anything contained herein to the contrary, if
during the Open Period the Company becomes listed on an exchange
that limits the number of shares of Common Stock that may be issued
without shareholder approval, then the number of Shares issuable by
the Company and purchasable by the Investor, shall not exceed that
number of the shares of Common Stock that may be issuable without
shareholder approval (the “Maximum Common Stock
Issuance”). If such
issuance of shares of Common Stock could cause a delisting on the
Principal Market, then the Maximum Common Stock Issuance shall
first be approved by the Company’s shareholders in accordance
with applicable law and the By-laws and the Certificate of
Incorporation of the Company, if such issuance of shares of Common
Stock could cause a delisting on the Principal Market. The parties
understand and agree that the Company’s failure to seek or
obtain such shareholder approval shall in no way adversely affect
the validity and due authorization of the issuance and sale of
Securities or the Investor’s obligation in accordance with
the terms and conditions hereof to purchase a number of Shares in
the aggregate up to the Maximum Common Stock Issuance limitation,
and that such approval pertains only to the applicability of the
Maximum Common Stock Issuance limitation provided in this
Section
2.5.


 



 

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2.6 LIMITATION ON AMOUNT
OF OWNERSHIP. Notwithstanding
anything to the contrary in this Agreement, in no event shall the
Investor be entitled to purchase that number of Shares, which when
added to the sum of the number of shares of Common Stock
beneficially owned (as such term is defined under Section 13(d) and
Rule 13d-3 of the 1934 Act), by the Investor, would exceed 4.99% of
the number of shares of Common Stock outstanding on the Closing
Date, as determined in accordance with Rule 13d-1(j) of the 1934
Act.


 



SECTION III



INVESTOR’S REPRESENTATIONS, WARRANTIES AND
COVENANTS


 


The
Investor represents and warrants to the Company, and covenants,
that:


 


3.1 SOPHISTICATED
INVESTOR. The Investor has, by
reason of its business and financial experience, such knowledge,
sophistication and experience in financial and business matters and
in making investment decisions of this type that it is capable of
(i) evaluating the merits and risks of an investment in the
Securities and making an informed investment decision; (ii)
protecting its own interest; and (iii) bearing the economic risk of
such investment for an indefinite period of
time.


 


3.2 AUTHORIZATION;
ENFORCEMENT. This Agreement has
been duly and validly authorized, executed and delivered on behalf
of the Investor and is a valid and binding agreement of the
Investor enforceable against the Investor in accordance with its
terms, subject as to enforceability to general principles of equity
and to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’
rights and remedies.


 


3.3 SECTION 9 OF THE 1934
ACT. During the term of this
Agreement, the Investor will comply with the provisions of Section
9 of the 1934 Act, and the rules promulgated thereunder, with
respect to transactions involving the Common Stock. The Investor
agrees not to sell the Company’s stock short, either directly
or indirectly through its affiliates, principals or advisors, the
Company’s common stock during the term of this
Agreement.


 


3.4 ACCREDITED
INVESTOR. Investor is an
“Accredited Investor” as that term is defined in Rule
501(a) of Regulation D of the 1933 Act.


 


3.5 NO
CONFLICTS. The execution,
delivery and performance of the Registered Offering Transaction
Documents by the Investor and the consummation by the Investor of
the transactions contemplated hereby and thereby will not result in
a violation of Partnership Agreement or other organizational
documents of the Investor.


 


3.6 OPPORTUNITY TO
DISCUSS. The Investor has
received all materials relating to the Company’s business,
finance and operations which it has requested. The Investor has had
an opportunity to discuss the business, management and financial
affairs of the Company with the Company’s
management.


 


3.7 INVESTMENT
PURPOSES. The Investor is
purchasing the Securities for its own account for investment
purposes and not with a view towards distribution and agrees to
resell or otherwise dispose of the Securities solely in accordance
with the registration provisions of the 1933 Act (or pursuant to an
exemption from such registration provisions).


 


3.8 NO REGISTRATION AS A
DEALER. The Investor is not and
will not be required to be registered as a “dealer”
under the 1934 Act, either as a result of its execution and
performance of its obligations under this Agreement or
otherwise.


 



 

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3.9 GOOD
STANDING. The Investor is a
corporation, duly organized, validly existing and in good standing
in the State of Texas.


 


3.10 TAX
LIABILITIES. The Investor
understands that it is liable for its own tax
liabilities.


 


3.11 REGULATION
M. The Investor will comply
with Regulation M under the 1934 Act, if
applicable.


 


3.12 NO SHORT
SALES. No short sales shall be
permitted by the Investor or its affiliates during the period
commencing on the Execution Date and continuing through the
termination of this Agreement.


 



SECTION IV



REPRESENTATIONS AND WARRANTIES OF THE COMPANY


 


Except
as set forth in the Schedules attached hereto, or as disclosed on
the Company’s SEC Documents, the Company represents and
warrants to the Investor that:


 


4.1 ORGANIZATION AND
QUALIFICATION. The Company is a
corporation duly organized and validly existing in good standing
under the laws of the State of Nevada, and has the requisite
corporate power and authorization to own its properties and to
carry on its business as now being conducted. Both the Company and
the companies it owns or controls (“Subsidiaries”) are duly qualified to do business and are
in good standing in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a Material
Adverse Effect. As used in this Agreement,
“Material Adverse
Effect” means a change,
event, circumstance, effect or state of facts that has had or is
reasonably likely to have, a material adverse effect on the
business, properties, assets, operations, results of operations,
financial condition or prospects of the Company and its
Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements and instruments to be
entered into in connection herewith, or on the authority or ability
of the Company to perform its obligations under the Registered
Offering Transaction Documents.


 


4.2 AUTHORIZATION;
ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.


 




i.

The Company has the
requisite corporate power and authority to enter into and perform
this Investment Agreement and the Registration Rights Agreement
(collectively, the “Registered Offering Transaction
Documents”), and to issue the Securities in accordance
with the terms hereof and thereof.






 




ii.

The execution and
delivery of the Registered Offering Transaction Documents by the
Company and the consummation by it of the transactions contemplated
hereby and thereby, including without limitation the issuance of
the Securities pursuant to this Agreement, have been duly and
validly authorized by the Company’s Board of Directors and no
further consent or authorization is required by the Company, its
Board of Directors, or its shareholders.






 




iii.

The Registered
Offering Transaction Documents have been duly and validly executed
and delivered by the Company.






 




iv.

The Registered
Offering Transaction Documents constitute the valid and binding
obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of
creditors’ rights and remedies.






 


4.3 CAPITALIZATION.
As of the date hereof, the authorized capital stock of the Company
consists of, 480,000,000 shares of the Common Stock, par value
$0.001 per share, of which 49,127,825 shares were issued and
outstanding as of May 11, 2016 and 20,000,000 shares of preferred
stock none are issued and outstanding. All of such outstanding
shares have been legally authorized, validly issued and are fully
paid and nonassessable.


 



 

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Except
as disclosed in the Company’s publicly available filings with
the SEC or as otherwise set forth on Schedule 4.3:


 




i.

no shares of the
Company’s capital stock are subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or
permitted by the Company;






 




ii.

there are no
outstanding debt securities;






 




iii.

there are no
outstanding shares of capital stock, options, warrants, scrip,
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into,
any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or
may become bound to issue additional shares of capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into,
any shares of capital stock of the Company or any of its
Subsidiaries;






 




iv.

there are no
agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their
securities under the 1933 Act (except the Registration Rights
Agreement);






 




v.

there are no
outstanding securities of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to
redeem a security of the Company or any of its
Subsidiaries;






 




vi.

there are no
securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Securities
as described in this Agreement;






 




vii.

the Company does
not have any stock appreciation rights or “phantom
stock” plans or agreements or any similar plan or agreement;
and






 




viii.

there is no dispute
as to the classification of any shares of the Company’s
capital stock.






 


The Company has furnished to the Investor, or the
Investor has had access through EDGAR to, true and correct copies
of the Company’s Certificate of Incorporation, as in effect
on the date hereof (the “Certificate of
Incorporation”), and the
Company’s By-laws, as in effect on the date hereof (the
“By-laws”), and the terms of all securities
convertible into or exercisable for Common Stock and the material
rights of the holders thereof in respect
thereto.


 


4.4 ISSUANCE OF
SHARES. As of the Effective
Date, the Company will have reserved the amount of Shares included
in the Registration Statement for issuance pursuant to the
Registered Offering Transaction Documents, which will have been
duly authorized and reserved (subject to adjustment pursuant to the
Company’s covenant set forth in Section 5.5
below) pursuant to this Agreement.
Upon issuance in accordance with this Agreement, the Securities
will be validly issued, fully paid for and non-assessable and free
from all taxes, liens and charges with respect to the issuance
thereof. In the event the Company cannot reserve a sufficient
number of Shares for issuance pursuant to this Agreement, the
Company will use its best efforts to authorize and reserve for
issuance the number of Shares required for the Company to perform
its obligations hereunder as soon as reasonably
practicable.


 



 

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4.5 NO
CONFLICTS. The execution,
delivery and performance of the Registered Offering Transaction
Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby will not (i) result in
a violation of the Certificate of Incorporation, any Certificate of
Designations, Preferences and Rights of any outstanding series of
preferred stock of the Company or the By-laws; or (ii) conflict
with, or constitute a material default (or an event which with
notice or lapse of time or both would become a material default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, contract,
indenture mortgage, indebtedness or instrument to which the Company
or any of its Subsidiaries is a party, or to the Company’s
knowledge result in a violation of any law, rule, regulation,
order, judgment or decree (including United States federal and
state securities laws and regulations and the rules and regulations
of the Principal Market or principal securities exchange or trading
market on which the Common Stock is traded or listed) applicable to
the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or
affected. Neither the Company nor its Subsidiaries is in violation
of any term of, or in default under, the Certificate of
Incorporation, any Certificate of Designations, Preferences and
Rights of any outstanding series of preferred stock of the Company
or the By-laws or their organizational charter or by-laws,
respectively, or any contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its Subsidiaries,
except for possible conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations that would not
individually or in the aggregate have or constitute a Material
Adverse Effect. The business of the Company and its Subsidiaries is
not being conducted, and shall not be conducted, in violation of
any law, statute, ordinance, rule, order or regulation of any
governmental authority or agency, regulatory or self-regulatory
agency, or court, except for possible violations the sanctions for
which either individually or in the aggregate would not have a
Material Adverse Effect. Except as specifically contemplated by
this Agreement and as required under the 1933 Act or any securities
laws of any states, to the Company’s knowledge, the Company
is not required to obtain any consent, authorization, permit or
order of, or make any filing or registration (except the filing of
a registration statement as outlined in the Registration Rights
Agreement between the parties) with, any court, governmental
authority or agency, regulatory or self-regulatory agency or other
third party in order for it to execute, deliver or perform any of
its obligations under, or contemplated by, the Registered Offering
Transaction Documents in accordance with the terms hereof or
thereof. All consents, authorizations, permits, orders, filings and
registrations which the Company is required to obtain pursuant to
the preceding sentence have been obtained or effected on or prior
to the date hereof and are in full force and effect as of the date
hereof. The Company and its Subsidiaries are unaware of any facts
or circumstances which might give rise to any of the foregoing. The
Company is not, and will not be, in violation of the listing
requirements of the Principal Market as in effect on the date
hereof and on each of the Closing Dates and is not aware of any
facts which would reasonably lead to delisting of the Common Stock
by the Principal Market in the foreseeable
future.


 


4.6 SEC DOCUMENTS;
FINANCIAL STATEMENTS. As of the
date hereof, the Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the
SEC pursuant to the reporting requirements of the 1934 Act (all of
the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto and
documents incorporated by reference therein, and amendments
thereto, being hereinafter referred to as the
“SEC
Documents”). The Company
has delivered to the Investor or its representatives, or they have
had access through EDGAR to, true and complete copies of the SEC
Documents. As of their respective filing dates, the SEC Documents
complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC or the time they were
amended, if amended, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of
their respective dates, the financial statements of the Company
included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with
generally accepted accounting principles, by a firm that is a
member of the Public Companies Accounting Oversight Board
(“PCAOB”) consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations
and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No
other written information provided by or on behalf of the Company
to the Investor which is not included in the SEC Documents,
including, without limitation, information referred to in
Section
4.3 of this Agreement, contains
any untrue statement of a material fact or omits to state any
material fact necessary to make the statements therein, in the
light of the circumstance under which they are or were made, not
misleading. Neither the Company nor any of its Subsidiaries or any
of their officers, directors, employees or agents have provided the
Investor with any material, nonpublic information which was not
publicly disclosed prior to the date hereof and any material,
nonpublic information provided to the Investor by the Company or
its Subsidiaries or any of their officers, directors, employees or
agents prior to any Closing Date shall be publicly disclosed by the
Company prior to such Closing Date.


 



 

8







 






 


4.7 ABSENCE OF CERTAIN
CHANGES. Except as otherwise
set forth in the SEC Documents, the Company does not intend to
change the business operations of the Company in any material way.
The Company has not taken any steps, and does not currently expect
to take any steps, to seek protection pursuant to any bankruptcy
law nor does the Company or its Subsidiaries have any knowledge or
reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings.


 


4.8 ABSENCE OF LITIGATION
AND/OR REGULATORY PROCEEDINGS.
Except as set forth in the SEC Documents, there is no action, suit,
proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body
pending or, to the knowledge of the executive officers of Company
or any of its Subsidiaries, threatened against or affecting the
Company, the Common Stock or any of the Company’s
Subsidiaries or any of the Company’s or the Company’s
Subsidiaries’ officers or directors in their capacities as
such, in which an adverse decision could have a Material Adverse
Effect.


 


4.9 ACKNOWLEDGMENT
REGARDING INVESTOR’S PURCHASE OF SHARES. The Company acknowledges and agrees that the
Investor is acting solely in the capacity of an arm’s length
purchaser with respect to the Registered Offering Transaction
Documents and the transactions contemplated hereby and thereby. The
Company further acknowledges that the Investor is not acting as a
financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Registered Offering Transaction
Documents and the transactions contemplated hereby and thereby and
any advice given by the Investor or any of its respective
representatives or agents in connection with the Registered
Offering Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to the Investor’s
purchase of the Securities, and is not being relied on by the
Company. The Company further represents to the Investor that the
Company’s decision to enter into the Registered Offering
Transaction Documents has been based solely on the independent
evaluation by the Company and its
representatives.


 


4.10 NO UNDISCLOSED EVENTS,
LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES. Except as set forth in the SEC Documents or
required with respect to the Registered Offering Transaction
Documents, as of the date hereof, no event, liability, development
or circumstance has occurred or exists, or to the Company’s
knowledge is contemplated to occur, with respect to the Company or
its Subsidiaries or their respective business, properties, assets,
prospects, operations or financial condition, that would be
required to be disclosed by the Company under applicable securities
laws on a registration statement filed with the SEC relating to an
issuance and sale by the Company of its Common Stock and which has
not been publicly announced.


 


4.11 EMPLOYEE
RELATIONS. Neither the Company
nor any of its Subsidiaries is involved in any union labor dispute
nor, to the knowledge of the Company or any of its Subsidiaries, is
any such dispute threatened. Neither the Company nor any of its
Subsidiaries is a party to a collective bargaining agreement, and
the Company and its Subsidiaries believe that relations with their
employees are good. No executive officer (as defined in Rule 501(f)
of the 1933 Act) has notified the Company that such officer intends
to leave the Company’s employ or otherwise terminate such
officer’s employment with the Company.


 


4.12 INTELLECTUAL PROPERTY
RIGHTS. The Company and its
Subsidiaries own or possess adequate rights or licenses to use all
trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now
conducted. Except as set forth in the SEC Documents, none of the
Company’s trademarks, trade names, service marks, service
mark registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, government
authorizations, trade secrets or other intellectual property rights
necessary to conduct its business as now or as proposed to be
conducted have expired or terminated, or are expected to expire or
terminate within two (2) years from the date of this Agreement. The
Company and its Subsidiaries do not have any knowledge of any
infringement by the Company or its Subsidiaries of trademark, trade
name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service mark registrations,
trade secret or other similar rights of others, or of any such
development of similar or identical trade secrets or technical
information by others and, except as set forth in the SEC
Documents, there is no claim, action or proceeding being made or
brought against, or to the Company’s knowledge, being
threatened against, the Company or its Subsidiaries regarding
trademark, trade name, patents, patent rights, invention,
copyright, license, service names, service marks, service mark
registrations, trade secret or other infringement; and the Company
and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing. The Company and its
Subsidiaries have taken commercially reasonable security measures
to protect the secrecy, confidentiality and value of all of their
intellectual properties.


 



 

9







 






 


4.13 ENVIRONMENTAL
LAWS. The Company and its
Subsidiaries (i) are, to the knowledge of the management and
directors of the Company and its Subsidiaries, in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes,
pollutants or contaminants (“Environmental
Laws”); (ii) have, to the
knowledge of the management and directors of the Company, received
all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective
businesses; and (iii) are in compliance, to the knowledge of the
management and directors of the Company, with all terms and
conditions of any such permit, license or approval where, in each
of the three (3) foregoing cases, the failure to so comply would
have, individually or in the aggregate, a Material Adverse
Effect.


 


4.14 TITLE.
The Company and its Subsidiaries have good and marketable title to
all personal property owned by them which is material to the
business of the Company and its Subsidiaries, in each case free and
clear of all liens, encumbrances and defects except such as are
described in the SEC Documents or such as do not materially affect
the value of such property and do not interfere with the use made
and proposed to be made of such property by the Company or any of
its Subsidiaries. Any real property and facilities held under lease
by the Company or any of its Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company
and its Subsidiaries.


 


4.15 INSURANCE.
Each of the Company’s Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks
and in such amounts as management of the Company reasonably
believes to be prudent and customary in the businesses in which the
Company and its Subsidiaries are engaged. Neither the Company nor
any of its Subsidiaries has been refused any insurance coverage
sought or applied for and neither the Company nor its Subsidiaries
has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material
Adverse Effect.


 


4.16 REGULATORY
PERMITS. The Company and its
Subsidiaries have in full force and effect all certificates,
approvals, authorizations and permits from the appropriate federal,
state, local or foreign regulatory authorities and comparable
foreign regulatory agencies, necessary to own, lease or operate
their respective properties and assets and conduct their respective
businesses, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or
modification of any such certificate, approval, authorization or
permit, except for such certificates, approvals, authorizations or
permits which if not obtained, or such revocations or modifications
which, would not have a Material Adverse
Effect.


 


4.17 INTERNAL ACCOUNTING
CONTROLS. Except as otherwise
set forth in the SEC Documents, the Company and each of its
Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles by a firm
with membership to the PCAOB 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’s management has
determined that the Company’s internal accounting controls
were not effective as of the date of this Agreement as further
described in the SEC Documents.


 


4.18 NO MATERIALLY ADVERSE
CONTRACTS, ETC. Neither the
Company nor any of its Subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree,
order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is a party to any contract or agreement which in the
judgment of the Company’s officers has or is expected to have
a Material Adverse Effect.


 



 

10







 






 


4.19 TAX
STATUS. The Company and each of
its Subsidiaries has made or filed all United States federal and
state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries
has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes
and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has
set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know
of no basis for any such claim.


 


4.20 CERTAIN
TRANSACTIONS. Except as set
forth in the SEC Documents filed at least ten (10) days prior to
the date hereof and except for arm’s length transactions
pursuant to which the Company makes payments in the ordinary course
of business upon terms no less favorable than the Company could
obtain from disinterested third parties and other than the grant of
stock options disclosed in the SEC Documents, none of the officers,
directors, or employees of the Company is presently a party to any
transaction with the Company or any of its Subsidiaries (other than
for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of
the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner, such that
disclosure would be required in the SEC
Documents.


 


4.21 DILUTIVE
EFFECT. The Company understands
and acknowledges that the number of shares of Common Stock issuable
upon purchases pursuant to this Agreement will increase in certain
circumstances including, but not necessarily limited to, the
circumstance wherein the trading price of the Common Stock declines
during the period between the Effective Date and the end of the
Open Period. The Company’s executive officers and directors
have studied and fully understand the nature of the transactions
contemplated by this Agreement and recognize that they have a
potential dilutive effect on the shareholders of the Company. The
Board of Directors of the Company has concluded, in its good faith
business judgment, and with full understanding of the implications,
that such issuance is in the best interests of the Company. The
Company specifically acknowledges that, subject to such limitations
as are expressly set forth in the Registered Offering Transaction
Documents, its obligation to issue shares of Common Stock upon
purchases pursuant to this Agreement is absolute and unconditional
regardless of the dilutive effect that such issuance may have on
the ownership interests of other shareholders of the
Company.


 


4.22 LOCK-UP.
The Company shall cause its officers, insiders, directors, and
affiliates or other related parties under control of the Company,
to refrain from selling Common Stock during each Pricing
Period.


 


4.23 NO GENERAL
SOLICITATION. Neither the
Company, nor any of its affiliates, nor any person acting on its
behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with
the offer or sale of the Common Stock to be offered as set forth in
this Agreement.


 


4.24 NO BROKERS, FINDERS OR
FINANCIAL ADVISORY FEES OR COMMISSIONS. No brokers, finders or financial advisory fees
or commissions will be payable by the Company, its agents or
Subsidiaries, with respect to the transactions contemplated by this
Agreement.


 



SECTION V



COVENANTS OF THE COMPANY


 


5.1 BEST
EFFORTS. The Company shall use
all commercially reasonable efforts to timely satisfy each of the
conditions set forth in Section 7
of this Agreement.


 


5.2 REPORTING
STATUS. Until one of the
following occurs, the Company shall file all reports required to be
filed with the SEC pursuant to the 1934 Act, and the Company shall
not terminate its status, or take an action or fail to take any
action, which would terminate its status as a reporting company
under the 1934 Act: (i) this Agreement terminates pursuant
to Section 8
and the Investor has the right to sell
all of the Securities without restrictions pursuant to Rule 144
promulgated under the 1933 Act, or such other exemption, or (ii)
the date on which the Investor has sold all the Securities and this
Agreement has been terminated pursuant to Section
8.


 



 

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5.3 USE OF
PROCEEDS. The Company will use
the proceeds from the sale of the Shares (excluding amounts paid by
the Company for fees as set forth in the Registered Offering
Transaction Documents) for general corporate and working capital
purposes and acquisitions or assets, businesses or operations or
for other purposes that the Board of Directors, in its good faith
deem to be in the best interest of the Company.


 


5.4 FINANCIAL
INFORMATION. During the Open
Period, the Company agrees to make available to the Investor via
EDGAR or other electronic means the following documents and
information on the forms set forth: (i) within five (5) Trading
Days after the filing thereof with the SEC, a copy of its Annual
Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any
Current Reports on Form 8-K and any Registration Statements or
amendments filed pursuant to the 1933 Act; (ii) copies of any
notices and other information made available or given to the
shareholders of the Company generally, contemporaneously with the
making available or giving thereof to the shareholders; and (iii)
within two (2) calendar days of filing or delivery thereof, copies
of all documents filed with, and all correspondence sent to, the
Principal Market, any securities exchange or market, or the
Financial Industry Regulatory Association, unless such information
is material nonpublic information.


 


5.5 RESERVATION OF
SHARES. The Company shall take
all action necessary to at all times have authorized, and reserved
the amount of Shares included in the Registration Statement for
issuance pursuant to the Registered Offering Transaction Documents.
In the event that the Company determines that it does not have a
sufficient number of authorized shares of Common Stock to reserve
and keep available for issuance as described in this
Section
5.5, the Company shall use all
commercially reasonable efforts to increase the number of
authorized shares of Common Stock by seeking shareholder approval
for the authorization of such additional
shares.


 


5.6 LISTING.
The Company shall promptly secure and maintain the listing of all
of the Registrable Securities (as defined in the Registration
Rights Agreement) on the Principal Market and each other national
securities exchange and automated quotation system, if any, upon
which shares of Common Stock are then listed (subject to official
notice of issuance) and shall maintain, such listing of all
Registrable Securities from time to time issuable under the terms
of the Registered Offering Transaction Documents. Neither the
Company nor any of its Subsidiaries shall take any action which
would be reasonably expected to result in the delisting or
suspension of the Common Stock on the Principal Market (excluding
suspensions of not more than one (1) Trading Day resulting from
business announcements by the Company). The Company shall promptly
provide to the Investor copies of any notices it receives from the
Principal Market regarding the continued eligibility of the Common
Stock for listing on such automated quotation system or securities
exchange. The Company shall pay all fees and expenses in connection
with satisfying its obligations under this Section
5.6.


 


5.7 TRANSACTIONS WITH
AFFILIATES. The Company shall
not, and shall cause each of its Subsidiaries not to, enter into,
amend, modify or supplement, or permit any Subsidiary to enter
into, amend, modify or supplement, any agreement, transaction,
commitment or arrangement with any of its or any Subsidiary’s
officers, directors, persons who were officers or directors at any
time during the previous two (2) years, shareholders who
beneficially own 5% or more of the Common Stock, or Affiliates or
with any individual related by blood, marriage or adoption to any
such individual or with any entity in which any such entity or
individual owns a 5% or more beneficial interest (each a
“Related
Party”), except for (i)
customary employment arrangements and benefit programs on
reasonable terms, (ii) any agreement, transaction, commitment or
arrangement on an arms-length basis on terms no less favorable than
terms which would have been obtainable from a disinterested third
party other than such Related Party, or (iii) any agreement,
transaction, commitment or arrangement which is approved by a
majority of the disinterested directors of the Company. For
purposes hereof, any director who is also an officer of the Company
or any Subsidiary of the Company shall not be a disinterested
director with respect to any such agreement, transaction,
commitment or arrangement. “Affiliate” for purposes hereof means, with respect to
any person or entity, another person or entity that, directly or
indirectly, (i) has a 5% or more equity interest in that person or
entity, (ii) has 5% or more common ownership with that person or
entity, (iii) controls that person or entity, or (iv) is under
common control with that person or entity.
“Control” or “Controls” for purposes hereof means that a person or
entity has the power, directly or indirectly, to conduct or govern
the policies of another person or entity.


 



 

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5.8 FILING OF FORM
8-K. On or before the date
which is four (4) Trading Days after the Execution Date, the
Company shall file a Current Report on Form 8-K with the SEC
describing the terms of the transaction contemplated by the
Registered Offering Transaction Documents in the form required by
the 1934 Act, if such filing is required.


 


5.9 CORPORATE
EXISTENCE. The Company shall
use all commercially reasonable efforts to preserve and continue
the corporate existence of the Company.


 


5.10 NOTICE OF CERTAIN
EVENTS AFFECTING REGISTRATION; SUSPENSION OF RIGHT TO MAKE A
PUT. The Company shall promptly
notify the Investor upon the occurrence of any of the following
events in respect of a Registration Statement or related prospectus
in respect of an offering of the Securities: (i) receipt of any
request for additional information by the SEC or any other federal
or state governmental authority during the period of effectiveness
of the Registration Statement for amendments or supplements to the
Registration Statement or related prospectus; (ii) the issuance by
the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of any Registration
Statement or the initiation of any proceedings for that purpose;
(iii) receipt 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 notice
of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in such Registration Statement or
related prospectus or any 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, related prospectus or documents so that, in the case of
a Registration Statement, it will not contain any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and that in the case of the related prospectus, it will
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and (v) the
Company’s reasonable determination that a post-effective
amendment or supplement to the Registration Statement would be
appropriate, and the Company shall promptly make available to
Investor any such supplement or amendment to the related
prospectus. The Company shall not deliver to Investor any Put
Notice during the continuation of any of the foregoing events in
this Section
5.10.


 


5.11 TRANSFER
AGENT. Upon effectiveness of
the Registration Statement, and for so long as the Registration
Statement is effective, following delivery of a Put Notice, the
Company shall deliver instructions to its transfer agent to issue
Shares to the Investor that are covered for resale by the
Registration Statement, and the Company shall ensure that upon
delivery to the transfer agent of evidence of the sale of any such
Shares in accordance with the Plan of Distribution section of the
then current prospectus relating to such Registration Statement,
such Shares shall be issued to the purchaser thereof free of
restrictive legends in accordance with Section 3.11 of the
Registration Rights Agreement.


 


5.12 ACKNOWLEDGEMENT OF
TERMS. The Company hereby
represents and warrants to the Investor that: (i) it is voluntarily
entering into this Agreement of its own freewill, (ii) it is not
entering this Agreement under economic duress, (iii) the terms of
this Agreement are reasonable and fair to the Company, and (iv) the
Company has had independent legal counsel of its own choosing
review this Agreement, advise the Company with respect to this
Agreement, and represent the Company in connection with this
Agreement.


 



SECTION VI



CONDITIONS OF THE COMPANY’S OBLIGATION TO SELL


 


The
obligation hereunder of the Company to issue and sell the
Securities to the Investor is further subject to the satisfaction,
at or before each Closing Date, of each of the following conditions
set forth below. These conditions are for the Company’s sole
benefit and may be waived by the Company at any time in its sole
discretion.


 


6.1
The Investor shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the
Company.


 


6.2 The Investor shall have delivered to the
Company the Purchase Price for the Securities being purchased by
the Investor between the end of the Pricing Period and the Closing
Date via a Put Settlement Sheet (hereto attached as
Exhibit
D). After receipt of
confirmation of delivery of such Securities to the Investor, the
Investor, by wire transfer of immediately available funds pursuant
to the wire instructions provided by the Company will disburse the
funds constituting the Purchase Amount. The Investor shall have no
obligation to disburse the Purchase Amount until the Company
delivers the Securities pursuant to a Put
Notice.


 



 

13







 






 


6.3
No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement.


 



SECTION VII



FURTHER CONDITIONS OF THE INVESTOR’S OBLIGATION TO
PURCHASE


 


The
obligation of the Investor hereunder to purchase Securities is
subject to the satisfaction, on or before each Closing Date, of
each of the following conditions set forth below.


 


7.1
The Company shall have executed the Registered Offering Transaction
Documents and delivered the same to the Investor.


 


7.2
The Common Stock shall be authorized for quotation on the Principal
Market and trading in the Common Stock shall not have been
suspended by the Principal Market or the SEC, at any time beginning
on the date hereof and through and including the respective Closing
Date (excluding suspensions of not more than one (1) Trading Day
resulting from business announcements by the Company, provided that
such suspensions occur prior to the Company’s delivery of the
Put Notice related to such Closing).


 


7.3 The representations and warranties of the
Company shall be true and correct as of the date when made and as
of the applicable Closing Date as though made at that time and the
Company shall have performed, satisfied and complied with the
covenants, agreements and conditions required by the Registered
Offering Transaction Documents to be performed, satisfied or
complied with by the Company on or before such Closing Date. The
Investor may request an update as of such Closing Date regarding
the representation contained in Section
4.3.


 


7.4
The Company shall have executed and delivered to the Investor the
certificates representing, or have executed electronic book-entry
transfer of, the Securities (in such denominations as the Investor
shall request) being purchased by the Investor at such
Closing.


 


7.5 The Board of Directors of the Company shall
have adopted resolutions consistent with Section 4.2(ii)
(the “Resolutions”) and such Resolutions shall not have been
amended or rescinded prior to such Closing
Date.


 


7.6
No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement.


 


7.7
The Registration Statement shall be effective on each Closing Date
and no stop order suspending the effectiveness of the Registration
statement shall be in effect or to the Company’s knowledge
shall be pending or threatened. Furthermore, on each Closing Date
(i) neither the Company nor the Investor shall have received notice
that the SEC has issued or intends to issue a stop order with
respect to such Registration Statement or that the SEC otherwise
has suspended or withdrawn the effectiveness of such Registration
Statement, either temporarily or permanently, or intends or has
threatened to do so (unless the SEC’s concerns have been
addressed), and (ii) no other suspension of the use or withdrawal
of the effectiveness of such Registration Statement or related
prospectus shall exist.


 


7.8
At the time of each Closing, the Registration Statement (including
information or documents incorporated by reference therein) and any
amendments or supplements thereto shall not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading or which would require public disclosure or
an update supplement to the prospectus.


 



 

14







 






 


7.9 If applicable, the shareholders of the Company
shall have approved the issuance of any Shares in excess of the
Maximum Common Stock Issuance in accordance with
Section
2.5 or the Company shall have
obtained appropriate approval pursuant to the requirements of
Nevada law and the Company’s Certificate of Incorporation and
By-laws.


 


7.10 The conditions to such Closing set forth
in Section 2.3
shall have been satisfied on or before
such Closing Date.


 


7.11
The Company shall have certified to the Investor the number of
Shares of Common Stock outstanding when a Put Notice is given to
the Investor. The Company’s delivery of a Put Notice to the
Investor constitutes the Company’s certification of the
existence of the necessary number of shares of Common Stock
reserved for issuance.

 






SECTION VIII



TERMINATION


 


This
Agreement shall terminate upon any of the following
events:


 




i.

when the Investor
has purchased Two Million Dollars ($2,000,000) in the Common Stock
of the Company pursuant to this Agreement; or






 




ii.

on the date which
is thirty-six (36) months after the Effective Date; or






 




iii.

at such time that
the Registration Statement is no longer in effect






 


Any
and all shares, or penalties, if any, due under this Agreement
shall be immediately payable and due upon termination of this
Agreement.


 



SECTION IX



SUSPENSION


 


This
Agreement shall be suspended upon any of the following events, and
shall remain suspended until such event is rectified:


 




i.

The trading of the
Common Stock is suspended by the SEC, the Principal Market or FINRA
for a period of two (2) consecutive Trading Days during the Open
Period; or,






 




ii.

The Common Stock
ceases to be registered under the 1934 Act or listed or traded on
the Principal Market or the Registration Statement is no longer
effective (except as permitted hereunder).






 


Immediately
upon the occurrence of one of the above-described events, the
Company shall send written notice of such event to the
Investor.


 



SECTION X



INDEMNIFICATION


 


In consideration of the parties mutual obligations
set forth in the Transaction Documents, each of the parties (in
such capacity, an “Indemnitor”) shall defend, protect, indemnify and hold
harmless the other and all of the other party’s shareholders,
officers, directors, employees, counsel, and direct or indirect
investors and any of the foregoing person’s agents or other
representatives (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement)
(collectively, the “Indemnitees”) from and against any and all actions,
causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and reasonable expenses in connection
therewith (irrespective of whether any such Indemnitee is a party
to the action for which indemnification hereunder is sought), and
including reasonable attorneys’ fees and disbursements (the
“Indemnified
Liabilities”), incurred
by any Indemnitee as a result of, or arising out of, or relating to
(I) any misrepresentation or breach of any representation or
warranty made by the Indemnitor or any other certificate,
instrument or document contemplated hereby or thereby; (II) any
breach of any covenant, agreement or obligation of the Indemnitor
contained in the Registered Offering Transaction Documents or any
other certificate, instrument or document contemplated hereby or
thereby; or (III) any cause of action, suit or claim brought or
made against such Indemnitee by a third party and arising out of or
resulting from the execution, delivery, performance or enforcement
of the Registered Offering Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby,
except insofar as any such misrepresentation, breach or any untrue
statement, alleged untrue statement, omission or alleged omission
is made in reliance upon and in conformity with information
furnished to Indemnitor which is specifically intended for use in
the preparation of any such Registration Statement, preliminary
prospectus, prospectus or amendments to the prospectus. To the
extent that the foregoing undertaking by the Indemnitor may be
unenforceable for any reason, the Indemnitor shall make the maximum
contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
The indemnity provisions contained herein shall be in addition to
any cause of action or similar rights Indemnitor may have, and any
liabilities the Indemnitor or the Indemnitees may be subject
to.


 



 

15







 






 



SECTION XI



GOVERNING LAW; DISPUTES SUBMITTED TO ARBITRATION.


 


11.1 LAW GOVERNING THIS
AGREEMENT. This Agreement shall
be governed by and construed in accordance with the laws of the
State of Nevada without regard to principles of conflicts of laws.
Any action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only
in the Texas state courts or federal courts sitting in Houston,
Texas. The parties to this Agreement hereby irrevocably waive any
objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non
conveniens. The parties executing this
Agreement and other agreements referred to herein or delivered in
connection herewith on behalf of the Company agree to submit to the
in personam jurisdiction of such courts and hereby irrevocably
waive trial by jury. The
prevailing party shall be entitled to recover from the other party
its reasonable attorney’s fees and costs. In the event that
any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be
deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of
any other provision of any agreement. Each party hereby irrevocably
waives personal service of process and consents to process being
served in any suit, action or proceeding in connection with this
Agreement or any other Transaction Documents by mailing a copy
thereof via registered or certified mail or overnight delivery
(with evidence of delivery) 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 other manner permitted by
law.


 


11.2 LEGAL FEES; AND
MISCELLANEOUS FEES. Except as
otherwise set forth in the Registered Offering Transaction
Documents (including but not limited to Section 5 of the
Registration Rights Agreement), each party shall pay the fees and
expenses of its advisers, counsel, the accountants and other
experts, if any, and all other expenses incurred by such party
incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. Any attorneys’ fees and
expenses incurred by either the Company or the Investor in
connection with the preparation, negotiation, execution and
delivery of any amendments to this Agreement or relating to the
enforcement of the rights of any party, after the occurrence of any
breach of the terms of this Agreement by another party or any
default by another party in respect of the transactions
contemplated hereunder, shall be paid on demand by the party which
breached the Agreement and/or defaulted, as the case may be. The
Company shall pay all stamp and other taxes and duties levied in
connection with the issuance of any Securities.


 


11.3 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by
the different signatories hereto on separate counterparts, each of
which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile transmission, PDF,
electronic signature or other similar electronic means with the
same force and effect as if such signature page were an original
thereof.


 


11.4 HEADINGS;
SINGULAR/PLURAL. The headings
of this Agreement are for convenience of reference and shall not
form part of, or affect the interpretation of, this Agreement.
Whenever required by the context of this Agreement, the singular
shall include the plural and masculine shall include the
feminine.


 



 

16







 






 


11.5 SEVERABILITY.
If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in
any other jurisdiction.


 


11.6 ENTIRE AGREEMENT;
AMENDMENTS. This Agreement is
the FINAL AGREEMENT between the Company and the Investor with
respect to the terms and conditions set forth herein, and, the
terms of this Agreement may not be contradicted by evidence of
prior, contemporaneous, or subsequent oral agreements of the
Parties. No provision of this Agreement may be amended other than
by an instrument in writing signed by the Company and the Investor.
The execution and delivery of the Registered Offering Transaction
Documents shall not alter the force and effect of any other
agreements between the Parties, and the obligations under those
agreements.


 


11.7 NOTICES.
Any notices or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will
be deemed to have been delivered (I) upon receipt, when delivered
personally; (II) upon receipt, when sent by electronic mail
(provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or
(III) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for
such communications shall be:


 


	

If
to the Company:

	


Lode-Star Mining Inc.



13529 Skinner Road, Suite N



Cypress, TX 77429-1775



Attn: Mark Walmesley



Email: markw@lode-starmining.com



Telephone: (281) 734-3690


	

     

	


 


	

With a copy to (that does not constitute
notice):

	


Sonfield & Sonfield



2500 Wilcrest Drive, 3rd
Floor



Houston, Texas 77042-2754



Attn: Robert L. Sonfield, Jr.



Email: Robert@sonfield.com



Telephone: (713) 877-8333



Facsimile: (713) 877-1547


	

     

	


 


	

If
to the Investor:

	


Crane Creek, Inc.



One Sugar Creek Center Blvd., Suite 1080



Sugar Land, Texas 77478



Attn: Jenni Rebecca Stephenson, President



Email: jenni.rebecca@gmail.com



Telephone: (281) 610-1948



Facsimile: (713) 650-0146







 


Each
party shall provide five (5) days prior written notice to the other
party of any change in address or facsimile number.


 


11.8 NO
ASSIGNMENT. This Agreement may
not be assigned. The Investor is unconditionally obligated to
deliver the funds to the Company pursuant to the terms of this
Agreement.


 


11.9 NO THIRD PARTY
BENEFICIARIES. This Agreement
is intended for the benefit of the parties hereto and is not for
the benefit of, nor may any provision hereof be enforced by, any
other person, except that the Company acknowledges that the rights
of the Investor may be enforced by its general
partner.


 


11.10 SURVIVAL.
The representations and warranties of the Company and the Investor
contained in Sections 3 and 4, the agreements and covenants set
forth in Sections 5 and 6, and the indemnification provisions set
forth in Section
10, shall survive each of the
Closings and the termination of this Agreement.


 



 

17







 






 


11.11 PUBLICITY.
The Company and the Investor shall consult with each other in
issuing any press releases or otherwise making public statements
with respect to the transactions contemplated hereby and no party
shall issue any such press release or otherwise make any such
public statement without the prior consent of the other party,
which consent shall not be unreasonably withheld or delayed, except
that no prior consent shall be required if such disclosure is
required by law, in which such case the disclosing party shall
provide the other party with prior notice of such public statement.
Notwithstanding the foregoing, the Company shall not publicly
disclose the name of the Investor without the prior consent of the
Investor, except to the extent required by law. The Investor
acknowledges that this Agreement and all or part of the Registered
Offering Transaction Documents may be deemed to be “material
contracts” as that term is defined by Item 601(b)(10) of
Regulation S-K, and that the Company may therefore be required to
file such documents as exhibits to reports or registration
statements filed under the 1933 Act or the 1934 Act. The Investor
further agrees that the status of such documents and materials as
material contracts shall be determined solely by the Company, in
consultation with its counsel.


 


11.12 FURTHER
ASSURANCES. Each party shall do
and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.


 


11.13 PLACEMENT
AGENT. If so required, the
Company agrees to pay a registered broker dealer, to act as
placement agent, a percentage of the Put Amount on each Put toward
the fee as outlined in that certain placement agent agreement
entered into between the Company and the placement agent. The
Investor shall have no obligation with respect to any fees or with
respect to any claims made by or on behalf of other persons or
entities for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by the
Registered Offering Transaction Documents. The Company shall
indemnify and hold harmless the Investor, their employees,
officers, directors, agents, and partners, and their respective
affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and attorney’s fees) and
expenses incurred in respect of any such claimed or existing fees,
as such fees and expenses are incurred.


 


11.14 NO STRICT
CONSTRUCTION. The language used
in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict
construction will be applied against any party, as the parties
mutually agree that each has had a full and fair opportunity to
review this Agreement and seek the advice of counsel on
it.


 


11.15 REMEDIES.
The Investor shall have all rights and remedies set forth in this
Agreement and the Registration Rights Agreement and all rights and
remedies which such holders have been granted at any time under any
other agreement or contract and all of the rights which the
Investor has by law. Any person having any rights under any
provision of this Agreement shall be entitled to enforce such
rights specifically (without posting a bond or other security), to
recover damages by reason of any default or breach of any provision
of this Agreement, including the recovery of reasonable attorneys
fees and costs, and to exercise all other rights granted by
law.


 


11.16 PAYMENT SET
ASIDE. To the extent that the
Company makes a payment or payments to the Investor hereunder or
under the Registration Rights Agreement or the Investor enforces or
exercises its rights hereunder or thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.


 


11.17 PRICING OF COMMON
STOCK. For purposes of this
Agreement, the bid price of the Common Stock shall be as reported
on Bloomberg, L.P.


 


 



 

18







 






 



SECTION XII



NON-DISCLOSURE OF NON-PUBLIC INFORMATION


 


The
Company shall not disclose non-public information to the Investor,
its advisors, or its representatives.


 


Nothing in the Registered Offering Transaction
Documents shall require or be deemed to require the Company to
disclose non-public information to the Investor or its advisors or
representatives, and the Company represents that it does not
disseminate non-public information to any investors who purchase
stock in the Company in a public offering, to money managers or to
securities analysts, provided, however, that notwithstanding
anything herein to the contrary, the Company will, as hereinabove
provided, immediately notify the advisors and representatives of
the Investor and, if any, underwriters, of any event or the
existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware,
constituting non-public information (whether or not requested of
the Company specifically or generally during the course of due
diligence by such persons or entities), which, if not disclosed in
the prospectus included in the Registration Statement would cause
such prospectus to include a material misstatement or to omit a
material fact required to be stated therein in order to make the
statements, therein, in light of the circumstances in which they
were made, not misleading. Nothing contained in this
Section
12 shall be construed to mean
that such persons or entities other than the Investor (without the
written consent of the Investor prior to disclosure of such
information) may not obtain non-public information in the course of
conducting due diligence in accordance with the terms of this
Agreement and nothing herein shall prevent any such persons or
entities from notifying the Company of their opinion that based on
such due diligence by such persons or entities, that the
Registration Statement contains an untrue statement of material
fact or omits a material fact required to be stated in the
Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they were
made, not misleading.

 






SECTION XIII



ACKNOWLEDGEMENTS OF THE PARTIES


 


Notwithstanding
anything in this Agreement to the contrary, the parties hereto
hereby acknowledge and agree to the following: (i) the Investor
makes no representations or covenants that it will not engage in
trading in the securities of the Company, other than the Investor
will not short the Common Stock at any time during the Open Period;
(ii) the Company shall comply with its obligations under Section
5.8 in a timely manner; (iii) the Company has not and shall not
provide material non-public information to the Investor unless
prior thereto the Investor shall have executed a written agreement
regarding the confidentiality and use of such information; and (iv)
the Company understands and confirms that the Investor will be
relying on the acknowledgements set forth in clauses (i) through
(iii) above if the Investor effects any transactions in the
securities of the Company.


 



[Signature page follows]


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 

19








 






 


Your
signature on this Signature Page evidences your agreement to be
bound by the terms and conditions of the Investment Agreement as of
the date first written above. The undersigned signatory hereby
certifies that he has read and understands the Investment
Agreement, and the representations made by the undersigned in this
Investment Agreement are true and accurate, and agrees to be bound
by its terms.


 


	


Crane Creek, Inc.



By: _/s/ Jenni Rebecca
Stephenson____


Jenni
Rebecca Stephenson


President 

	


Lode-Star Mining Inc.



By: _/s/ Mark
Walmesley_____________


Mark
Walmesley


President
and CEO







 


 



[SIGNATURE PAGE OF INVESTMENT AGREEMENT]


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 

20








 










 



LIST OF EXHIBITS


 



 



EXHIBIT A

Registration
Rights Agreement






 



EXHIBIT B

Notice
of Effectiveness






 



EXHIBIT C

Put
Notice






 



EXHIBIT D

Put
Settlement Sheet






 



EXHIBIT E


Plan
of Distribution





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 




 

21








 










 



EXHIBIT B



 



FORM OF NOTICE OF EFFECTIVENESS


OF
REGISTRATION STATEMENT



 

Date:
__________



 



[TRANSFER AGENT]



 


Re: Lode-Star Mining
Inc.


 



 



Ladies and Gentlemen:



 


We
are counsel to Lode-Star Mining Inc., a Nevada corporation (the
“Company”), and have represented the Company in
connection with that certain Investment Agreement (the
“Investment Agreement”) entered into by and among the
Company and Crane Creek, Inc. (the “Investor”) pursuant
to which the Company has agreed to issue to the Investor shares of
the Company’s common stock with $0.001 par value (the
“Common Stock”) on the terms and conditions set forth
in the Investment Agreement. Pursuant to the Investment Agreement,
the Company also has entered into a Registration Rights Agreement
with the Investor (the “Registration Rights Agreement”)
pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration
Rights Agreement), including the shares of Common Stock issued or
issuable under the Investment Agreement under the Securities Act of
1933, as amended (the “1933 Act”). In connection with
the Company’s obligations under the Registration Rights
Agreement, on ____________ ___, 2016, the Company filed a
Registration Statement on Form S- 1 (File No. 333-________) (the
“Registration Statement”) with the Securities and
Exchange Commission (the “SEC”) relating to the
Registrable Securities which names the Investor as a selling
shareholder thereunder.



 


In connection with the foregoing, we advise you
that the Registration Statement has become effective under the 1933
Act at [ enter the time of
effectiveness ] on [
enter the
date of effectiveness ] and to
the best of our knowledge, no stop order suspending its
effectiveness has been issued and no proceedings for that purpose
are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to
the Registration Statement.


 


	
 

	Very
truly yours,
	
 

	
 


	
 

	[Company
Counsel]






 





 

 

 

 

 



B-1








 










 



EXHIBIT C


 



PUT NOTICE


 



[____________], 201__


 



Crane Creek, Inc.



[______________ ]



[______________ ]



[______________ ]



Attn: [______________ ]


 



RE:             

Investment
Agreement made and entered into effective as of _________, 2016
(the “Agreement”), by and between Lode-Star Mining
Inc., a Nevada corporation (the “Company”), and Crane
Creek, Inc., a corporation organized under the laws of Texas
(“Investor”).  All capitalized terms below
shall have the meaning given to them in the Agreement.






 



This is to inform you that as of today, the Company, hereby elects
to exercise a Put and to require Investor to purchase the Shares
described below as of the Closing Date, in accordance with the
terms of the Agreement. Accordingly, at the applicable Closing
Date, the Company will issue and sell shares to Investor, as
Subscriber, according to the following terms:



 




●

Put Amount:
______________________






 




●

Put Notice Date:
___________________






 




●

Share Price:
_______________________






 




●

Shares to be
sold:___________________






 




●

Remaining Commitment under the
Agreement:                                                                                               






 



Lode-Star Mining Inc.


 


 



By: _______________________ 


Its:
_________________________ 


 



Subscriber hereby acknowledges receipt of this Notice and chooses
the Closing Date set forth below, in accordance with the terms of
the Agreement.


 



Closing Date: _____________


 



Crane Creek, Inc.


 



By: _______________________ 


Its:
_________________________ 


 



C-1








 










 



EXHIBIT D



 



PUT SETTLEMENT SHEET



 



Date: ________________



 



Dear Mr. ________,



 


Pursuant
to the Put given by Lode-Star Mining Inc. to Crane Creek, Inc.
(“Crane”) on _________________ 2016, we are now
submitting the amount of common shares for you to issue to
Crane.



 


Please
have a certificate bearing no restrictive legend totaling
__________ shares issued to Crane Creek, Inc. immediately and send
via DWAC to the following account:



 



[INSERT]



 


If
not DWAC eligible, please send FedEx Priority Overnight
to:



 



[INSERT ADDRESS]



 


When
the shares are received by us, we will have the funds wired to the
Company.



 



Regards,



 



Crane Creek, Inc.



 



By:_______________ 



Name:______________ 



Title:________________



 


 


 


 


 


 



D-1








 










 



EXHIBIT E



PLAN OF DISTRIBUTION


 


We
are registering shares of Common Stock that have been or may be
issued by us from time to time to Crane Creek, Inc. under the
Investment Agreement to permit the resale of these shares of Common
Stock after the issuance thereof by the Selling Stockholder from
time to time after the date of this Prospectus. We will not receive
any of the proceeds from the sale by the Selling Stockholder of the
shares of Common Stock. We will bear all fees and expenses incident
to our obligation to register the shares of Common
Stock.



 


The
Selling Stockholder may decide not to sell any shares of Common
Stock. The Selling Stockholder may sell all or a portion of the
shares of Common Stock beneficially owned by it and offered hereby
from time to time directly or through one or more underwriters,
broker-dealers or agents, who may receive compensation in the form
of discounts, concessions or commissions from the Selling
Stockholder and/or the purchasers of the shares of Common Stock for
whom they may act as agent. In effecting sales, broker-dealers that
are engaged by the Selling Stockholder may arrange for other
broker-dealers to participate. Crane Creek, Inc. is an
“underwriter” within the meaning of the Securities Act.
Any brokers, dealers or agents who participate in the distribution
of the shares of Common Stock by the Selling Stockholder may also
be deemed to be “underwriters,” and any profits on the
sale of the shares of Common Stock by them and any discounts,
commissions or concessions received by any such brokers, dealers or
agents may be deemed to be underwriting discounts and commissions
under the Securities Act. Crane Creek, Inc. has advised us that it
will use an unaffiliated broker-dealer to effectuate all resales of
our Common Stock. To our knowledge, Crane Creek, Inc. has not
entered into any agreement, arrangement or understanding with any
particular broker-dealer or market maker with respect to the shares
of Common Stock offered hereby, nor do we know the identity of the
broker-dealers or market makers that may participate in the resale
of the shares. Because Crane Creek, Inc. is, and any other selling
stockholder, broker, dealer or agent may be deemed to be, an
“underwriter” within the meaning of the Securities Act,
Crane Creek, Inc. will (and any other selling stockholder, broker,
dealer or agent may) be subject to the prospectus delivery
requirements of the Securities Act and may be subject to certain
statutory liabilities of the Securities Act (including, without
limitation, Sections 11, 12 and 17 thereof) and Rule 10b-5 under
the Exchange Act.



 


The
Selling Stockholder will act independently of us in making
decisions with respect to the timing, manner and size of each sale.
The shares of Common Stock may be sold in one or more transactions
at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at
negotiated prices. These sales may be effected in transactions,
which may involve crosses or block transactions, pursuant to one or
more of the following methods:



 




●

on
any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of
sale;








●

in
the over-the-counter market in accordance with the rules of
NASDAQ;








●

in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;








●

through
the writing or settlement of options, whether such options are
listed on an options exchange or otherwise;








●

ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;








●

block
trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as
principal to facilitate the transaction;








●

purchases
by a broker-dealer as principal and resale by the broker-dealer for
its account;








●

an
exchange distribution in accordance with the rules of the
applicable exchange;








●

privately
negotiated transactions;








●

broker-dealers
may agree with the Selling Stockholder to sell a specified number
of such shares at a stipulated price per share;








●

a
combination of any such methods of sale; and








●

any
other method permitted pursuant to applicable law.






 



 

E-1







 






 


The
Selling Stockholder may also sell shares of Common Stock covered by
this Prospectus pursuant to Rule 144 promulgated under the
Securities Act, if available, rather than under this Prospectus. In
addition, the Selling Stockholder may transfer the shares of Common
Stock by other means not described in this Prospectus.


 


Any
broker-dealer participating in such transactions as agent may
receive commissions from the Selling Stockholder (and, if they act
as agent for the purchaser of such shares, from such purchaser).
Crane Creek, Inc. has informed us that each such broker-dealer will
receive commissions from Crane Creek, Inc. which will not exceed
customary brokerage commissions. Broker-dealers may agree with the
Selling Stockholder to sell a specified number of shares at a
stipulated price per share, and, to the extent such a broker-dealer
is unable to do so acting as agent for the Selling Stockholder, to
purchase as principal any unsold shares at the price required to
fulfill the broker-dealer commitment to the Selling Stockholder.
Broker-dealers who acquire shares as principal may thereafter
resell such shares from time to time in one or more transactions
(which may involve crosses and block transactions and which may
involve sales to and through other broker-dealers, including
transactions of the nature described above and pursuant to the one
or more of the methods described above) at fixed prices, at
prevailing market prices at the time of the sale, at varying prices
determined at the time of sale, or at negotiated prices, and in
connection with such resales may pay to or receive from the
purchasers of such shares commissions computed as described above.
To the extent required under the Securities Act, an amendment to
this Prospectus or a supplemental prospectus will be filed,
disclosing:


 



●       

the
name of any such broker-dealers;







●       

the
number of shares involved;







●       

the
price at which such shares are to be sold;







●       

the
commission paid or discounts or concessions allowed to such
broker-dealers, where applicable;







●       

that
such broker-dealers did not conduct any investigation to verify the
information set out or incorporated by reference in this
prospectus, as supplemented; and







●       

other
facts material to the transaction.






Crane
Creek, Inc. has informed us that it does not have any written or
oral agreement or understanding, directly or indirectly, with any
person to distribute the Common Stock. Pursuant to a requirement of
FINRA, the maximum commission or discount and other compensation to
be received by any FINRA member or independent broker-dealer shall
not be greater than eight percent (8%) of the gross proceeds
received by us for the sale of any securities being registered
pursuant to Rule 415 under the Securities Act.


 


Under
the securities laws of some states, the shares of Common Stock may
be sold in such states only through registered or licensed brokers
or dealers. In addition, in some states the shares of Common Stock
may not be sold unless such shares have been registered or
qualified for sale in such state or an exemption from registration
or qualification is available and is complied with.


 


There
can be no assurance that the Selling Stockholder will sell any or
all of the shares of Common Stock registered pursuant to the
Registration Statement, of which this Prospectus forms a
part.


 


Underwriters
and purchasers that are deemed underwriters under the Securities
Act may engage in transactions that stabilize, maintain or
otherwise affect the price of the Common Stock, including the entry
of stabilizing bids or syndicate covering transactions or the
imposition of penalty bids. The Selling Stockholder and any other
person participating in the sale or distribution of the shares of
Common Stock will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder (including,
without limitation, Regulation M of the Exchange Act), which may
restrict certain activities of, and limit the timing of purchases
and sales of any of the shares of Common Stock by, the Selling
Stockholder and any other participating person. To the extent
applicable, Regulation M may also restrict the ability of any
person engaged in the distribution of the shares of Common Stock to
engage in market-making and certain other activities with respect
to the shares of Common Stock. In addition, the anti-manipulation
rules under the Exchange Act may apply to sales of the shares of
Common Stock in the market. All of the foregoing may affect the
marketability of the shares of Common Stock and the ability of any
person or entity to engage in market-making activities with respect
to the shares of Common Stock.


 



 

E-2







 






 


We
have agreed to pay all expenses of the registration of the shares
of Common Stock pursuant to the Registration Rights Agreement,
estimated to be $27,500.00 in total, including, without limitation,
SEC filing fees and expenses of compliance with state securities or
“Blue Sky” laws; provided , however , Crane Creek, Inc.
will pay all selling commissions, concessions and discounts, and
other amounts payable to underwriters, dealers or agents, if any,
as well as transfer taxes and certain other expenses associated
with the sale of the shares of Common Stock. We have agreed to
indemnify Crane Creek, Inc. and certain other persons against
certain liabilities in connection with the offering of shares of
Common Stock offered hereby, including liabilities arising under
the Securities Act or, if such indemnity is unavailable, to
contribute amounts required to be paid in respect of such
liabilities. Crane Creek, Inc. has agreed to indemnify us against
liabilities under the Securities Act that may arise from any
written information furnished to us by Crane Creek, Inc.
specifically for use in this Prospectus or, if such indemnity is
unavailable, to contribute amounts required to be paid in respect
of such liabilities.


 


At
any time a particular offer of the shares of Common Stock is made
by the Selling Stockholder, a revised prospectus or prospectus
supplement, if required, will be distributed. Such prospectus
supplement or post-effective amendment will be filed with the SEC
to reflect the disclosure of any required additional information
with respect to the distribution of the shares of Common Stock. We
may suspend the sale of shares by the Selling Stockholder pursuant
to this Prospectus for certain periods of time for certain reasons,
including if the Prospectus is required to be supplemented or
amended to include additional material information.


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 



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