exv10w26







Exhibit 10.26




CONCENTRIC ENERGY CORP.

SECURITIES PURCHASE AGREEMENT




     This Securities Purchase Agreement (this “Agreement”) is dated as of December 31, 2008
between Concentric Energy Corp., a Nevada corporation (the “Company”), and each purchaser
identified on the signature pages hereto (each, including its successors and assigns, a
“Purchaser” and collectively the “Purchasers”).



     WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506
promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, desires to purchase from the Company, securities of the
Company as more fully described in this Agreement.



     NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
the Company and each Purchaser agree as follows:



ARTICLE I.

DEFINITIONS




     1.1 Definitions. In addition to the terms defined elsewhere in this Agreement: (a)
capitalized terms that are not otherwise defined herein have the meanings given to such terms in
the Debentures (as defined herein), and (b) the following terms have the meanings set forth in this
Section 1.1:




     “Action” shall have the meaning ascribed to such term in Section 3.1(j).




     “Actual Aggregate Sales Price” shall have the meaning ascribed to such term in
Section 2.2(b)(ii).




     “Additional Debenture Amount” shall have the meaning ascribed to such term in
Section 2.2(b)(ii).




     “Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a Person, as
such terms are used in and construed under Rule 405 under the Securities Act. With respect
to a Purchaser, any investment fund or managed account that is managed on a discretionary
basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of
such Purchaser.




     “Aggregate VWAP Price” shall have the meaning ascribed to such term in Section
2.2(b)(ii).




     “Board of Directors” means the board of directors of the Company.




     “Business Day” means any day except any Saturday, any Sunday, any day which is
a federal legal holiday in the United States or any day on which banking institutions in



 









 







the State of New York are authorized or required by law or other governmental action to
close.




     “Closing” means the closing of the purchase and sale of the Securities pursuant
to Section 2.1.




     “Closing Date” means the Business Day when all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all conditions
precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Securities have been satisfied or waived.




     “Commission” means the Securities and Exchange Commission.




     “Common Stock” means the common stock of the Company, par value $.001 per
share, and any other class of securities into which such securities may hereafter be
reclassified or changed into.




     “Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock.




     “Conversion Price” shall have the meaning ascribed to such term in the
Debentures.




     “Debentures” means the 15% Convertible Debentures to be issued by the Company
to the Purchasers hereunder, in the form of Exhibit A attached hereto.




     “Disclosure Schedules” shall have the meaning ascribed to such term in Section
3.1.




     “Escrow Agent” means Bank of North Georgia with a location at 1200 Johnson
Ferry Road, Marietta, Georgia 30068, Facsimile (770) 509-5923, Telephone (770) 977- 8585.




     “Escrow Agreement” means the escrow agreement entered into prior to the date
hereof, by and among the Company, Westminster and the Escrow Agent pursuant to which the
Purchasers, shall deposit Subscription Amounts with the Escrow Agent to be applied to the
transactions contemplated hereunder.




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




     “GAAP” shall have the meaning ascribed to such term in Section 3.1(h).




     “Indebtedness” shall have the meaning ascribed to such term in Section 3.1(u).



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     “Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.1(o).




     “July Warrants” means those certain three warrants issued by the Company on
July 31, 2008 to purchase (i) 61,997shares of Common Stock at an exercise price of $3.00 per
share, (ii) 681,965 shares of Common Stock at an exercise price of $4.50 per share and (iii)
340,983 shares of Common Stock at an exercise price of $6.00 per share.




     “Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.




     “Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b).




     “Material Permits” shall have the meaning ascribed to such term in Section
3.1(l).




     “Maximum Rate” shall have the meaning ascribed to such term in Section 5.16.




     “Minimum Subscription Amount” shall have the meaning ascribed to such term in
Section 2.1(b).




     “Person” means an individual or corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint stock
company, government (or an agency or subdivision thereof) or other entity of any kind.




     “Principal Amount” shall mean, as to each Purchaser, the amounts set forth
below such Purchaser’s signature block on the signature pages hereto and next to the heading
“Principal Amount”, in United States Dollars, which shall equal such Purchaser’s
Subscription Amount.




     “Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding, such as a
deposition), whether commenced or threatened.




     “Purchaser Party” shall have the meaning ascribed to such term in Section 4.10.




     “Required Approvals” shall have the meaning ascribed to such term in Section
3.1(e).




     “Required Minimum” means, as of any date, the maximum aggregate number of
shares of Common Stock then issued or potentially issuable in the future pursuant to the
Transaction Documents, including any Underlying Shares issuable upon exercise or conversion
in full of all Warrants and Debentures (including Underlying Shares issuable as payment of
interest), ignoring any conversion or exercise limits set forth therein, and assuming that
the Conversion Price is at all times on and after the date of determination 75% of the then
Conversion Price on the Trading Day immediately prior to the date of determination.



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     “Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same effect as such
Rule.




     “Securities” means the Debentures, the Warrants, the Warrant Shares and the
Underlying Shares.




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




     “Subscription Amount” means, as to each Purchaser, the aggregate amount to be
paid for Debentures and Warrants purchased hereunder as specified below such Purchaser’s
name on the signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds.




     “Subsidiary” means any subsidiary of the Company as set forth on Schedule
3.1(a) and shall, where applicable, include any direct or indirect subsidiary of the
Company formed or acquired after the date hereof.




     “Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the American Stock Exchange,
the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange or the OTC Bulletin Board.




     “Transaction Documents” means this Agreement, the Debentures, the Warrants, all
exhibits and schedules thereto and hereto and any other documents or agreements executed in
connection with the transactions contemplated hereunder.




     “Transfer Agent” means Computershare, the current transfer agent of the
Company, with a mailing address of 350 Indiana Street, Suite 800, Golden, CO 80401, and a
facsimile number of (303) 262-0603, and any successor transfer agent of the Company.




     “Underlying Shares” means the shares of Common Stock issued and issuable upon




     “Warrants” means, collectively, the Common Stock purchase warrants delivered to
the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Warrants shall
be exercisable immediately and have a term of exercise equal to 4 years, in the form of
Exhibit C attached hereto.




     “Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.




     “Westminster” means Westminster Securities Corp., the placement agent for the
transactions contemplated hereby.



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ARTICLE II.

PURCHASE AND SALE




     2.1 Purchase and Sale of Securities.




     (a) The Securities will be offered for sale until December 12, 2008, unless the Company
determines to extend the Offering in its sole discretion to January 31, 2009 (the
“Termination Date”).




     (b) The closing of the Offering shall occur at any time after the receipt of
subscriptions in the aggregate amount of at least $270,000 (the “Minimum Subscription
Amount”) prior to the Termination Date (the “Closing” and such date, the
“Closing Date”). Any subscription documents or funds received after the Closing, or
in the event the Minimum Subscription Amount is not received prior to the Termination Date,
will be returned, without interest or deduction. Notwithstanding the foregoing, the Company
in its sole discretion shall have the right to elect to not sell to any Purchaser any or all
of the Debentures and Warrants requested to be purchased by such Purchaser, provided that
the Company must return or cause the Escrow Agent to return to such Purchaser any applicable
amount of such Purchaser’s Subscription Amount relating to the Debentures and Warrants the
Company has elected not to sell to such Purchaser.




     (c) On the Closing Date, upon the terms and subject to the conditions set forth herein,
the Company shall sell, and the applicable Purchasers, severally and not jointly, agree to
purchase the Debentures and Warrants. Upon satisfaction of the conditions set forth in
Sections 2.2 and 2.3, the Closing shall occur at such location as Westminster and the
Company shall mutually agree.



     2.2 Deliveries




     (a) The Company shall have delivered or caused to be delivered to each Purchaser to be
included in the Closing the following:




     (i) this Agreement duly executed by the Company;




     (ii) a Debenture with a Principal Amount equal to such Purchaser’s Subscription
Amount, registered in the name of such Purchaser;




     (iii) a Warrant registered in the name of such Purchaser to purchase up to a
number of shares of Common Stock equal to 200% of the Subscription Amount of such
Purchaser’s Debenture issuable hereunder divided by $0.90, with an exercise price
equal to $1.00, subject to adjustment therein;




     (b) On the Closing Date, each Purchaser shall deliver or cause to be delivered to the
Company the following:



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     (i) this Agreement duly executed by such Purchaser;




     (ii) such Purchaser’s Subscription Amount by wire transfer to the Escrow Agent
or, with respect to Ralph Kettell, by due transfer of marketable securities,
accompanied by duly executed medallion guaranteed stock powers (which securities
shall be valued at their aggregate VWAP (as defined in the Debentures), or at up to
a 12% discount to their aggregate VWAP, at the sole discretion of the Company, on
the date preceding the Closing Date (such ultimate valuation being referred to as
the “Aggregate VWAP Price”)), as provided in Section 5(c) of the Debentures;
provided, however, that should the aggregate realized price from the
sale of Mr. Kettell’s securities net of any execution costs or trading commissions
(the “Actual Aggregate Sales Price”), which sales will occur over a period
of not more than 120 days from the Closing Date, (A) exceed the Aggregate VWAP
Price, Mr. Kettell shall be issued (I) an additional Debenture in the principal
amount equal to the difference between the Actual Aggregate Sales Price and the
Aggregate VWAP Price (the “Additional Debenture Amount”) and (II) a Warrant
to purchase up to a number of shares of Common Stock equal to 200% of the Additional
Debenture Amount divided by $0.90, with an exercise price equal to $1.00, subject to
adjustment therein, or (B) be less than the Aggregate VWAP Price, Mr. Kettell shall
be issued (I) in exchange for his original Debenture a new Debenture in the
principal amount equal to the Actual Aggregate Sales Price and (II) in exchange for
his original Warrant a new Warrant to purchase up to a number of shares of Common
Stock equal to 200% of the Actual Aggregate Sales Price divided by $0.90, with an
exercise price equal to $1.00, subject to adjustment therein.




     (iii) such number of July Warrants for surrender and cancellation equal to such
Purchaser’s Subscription Amount divided by $0.90; and




     (iv) in the event that a Purchaser does not have sufficient, or any, July
Warrants to satisfy its delivery obligations under Section 2.2(b)(iii), such
Purchase shall pay additional cash consideration to the Company equal to the value
of such number of July Warrants as would be necessary to satisfy such Purchaser’s
delivery obligation under Section 2.2(b)(iii) using the Black and Scholes Option
Pricing Model, assuming (A) an exercise price equal to $6.00, (B) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the
remaining term of the July Warrants as of the Closing Date and (C) an expected
volatility equal to 105%.



     2.3 Closing Conditions. The Closing is subject to the satisfaction or waiver by the
party to be benefited thereby of the following conditions:




     (a) The obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:




     (i) the accuracy in all material respects on the Closing Date of the



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representations and warranties of the Purchasers contained herein;




     (ii) all obligations, covenants and agreements of each Purchaser required to be
performed at or prior to the Closing Date shall have been performed; and




     (iii) the delivery by each Purchaser of the items set forth in Section 2.2(b)
of this Agreement.




     (b) The respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met:




     (i) the accuracy in all material respects when made and on the Closing Date of
the representations and warranties of the Company contained herein;




     (ii) all obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been performed;




     (iii) the delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;




     (iv) there shall have been no Material Adverse Effect with respect to the
Company since the date hereof;




     (v) the Company shall have filed a registration statement on Form S-1 with the
Commission pursuant to that certain Registration Rights Agreement, dated as of July
31, 2008, between the Company the investors party thereto, which Registration Rights
Agreement shall have included in the resale registration the Common Shares
underlying the July 31, 2008 Warrants exchanged for the Securities;




     (vi) the Company shall have received subscriptions for at least $270,000 prior
to the Closing; and




     (vii) from the date hereof to the Closing Date, a banking moratorium shall not
have been declared either by the United States or New York State authorities nor
shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the
reasonable judgment of each Purchaser, makes it impracticable or inadvisable to
purchase the Securities at the Closing.



ARTICLE III.

REPRESENTATIONS AND WARRANTIES




     3.1 Representations and Warranties of the Company.
Except as set forth under the corresponding section of the disclosure schedules delivered to the
Purchasers concurrently



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herewith (the “Disclosure Schedules”) which Disclosure Schedules
shall be deemed a part hereof, the Company hereby makes the representations and warranties set
forth below to each Purchaser:




     (a) Subsidiaries. All of the direct and indirect subsidiaries of the Company
are set forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of
the capital stock or other equity interests of each Subsidiary free and clear of any Liens,
and all of the issued and outstanding shares of capital stock of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.




     (b) Organization and Qualification. The Company and each of the Subsidiaries
is an entity duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization (as applicable),
with the requisite power and authority to own and use its properties and assets and to carry
on its business as currently conducted. Neither the Company nor any Subsidiary is in
violation or default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the Company and
the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not have or
reasonably be expected to result in (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results
of operations, assets, business, prospects or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its obligations under
any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”)
and no Proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or qualification.




     (c) Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Company and no further action is
required by the Company, the Board of Directors or the Company’s stockholders in connection
therewith other than in connection with the Required Approvals. Each Transaction Document
has been (or upon delivery will have been) duly executed by the Company and, when delivered
in accordance with the terms hereof and thereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its terms,
except (i) as limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization,
moratorium and other laws of general application affecting enforcement of creditors’



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rights generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.




     (d) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the other transactions
contemplated hereby and thereby do not and will not: (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the properties or assets of the
Company or any Subsidiary, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary
debt or otherwise) or other understanding to which the Company or any Subsidiary is a party
or by which any property or asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is subject (including federal
and state securities laws and regulations), or by which any property or asset of the Company
or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii),
such as could not have or reasonably be expected to result in a Material Adverse Effect.




     (e) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other governmental authority
or other Person in connection with the execution, delivery and performance by the Company of
the Transaction Documents, other than the filing of Form D with the Commission and such
filings as are required to be made under applicable state securities laws (collectively, the
“Required Approvals”).




     (f) Issuance of the Securities. The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction Documents, will be duly
and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the Transaction Documents. The
Underlying Shares, when issued in accordance with the terms of the Transaction Documents,
will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by
the Company other than restrictions on transfer provided for in the Transaction Documents.
The Company has reserved from its duly authorized capital stock a number of shares of Common
Stock for issuance of the Underlying Shares at least equal to the Required Minimum on the
date hereof.




     (g) Capitalization. The capitalization of the Company is as set forth on
Schedule 3.1(g), which Schedule 3.1(g) shall also include the number of
shares of
Common Stock owned beneficially, and of record, by Affiliates of the Company as of the



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date hereof. No Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions contemplated by the
Transaction Documents. Except as provided in Schedule 3.1(g) and as a result of the
purchase and sale of the Securities, there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock
Equivalents. Except as provided in Schedule 3.1(g), the issuance and sale of the
Securities will not obligate the Company to issue shares of Common Stock or other securities
to any Person (other than the Purchasers) and will not result in a right of any holder of
Company securities to adjust the exercise, conversion, exchange or reset price under any of
such securities. All of the outstanding shares of capital stock of the Company are validly
issued, fully paid and nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was issued in violation of any
preemptive rights or similar rights to subscribe for or purchase securities. No further
approval or authorization of any stockholder, the Board of Directors or others is required
for the issuance and sale of the Securities. Except as Specified in Schedule 3.1(g)
there are no stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to the knowledge
of the Company, between or among any of the Company’s stockholders.




     (h) Financial Statements. The audited financial statements of the Company for
the fiscal year ended December 31, 2007 are attached hereto on Schedule 3.1(h)(A)
and unaudited quarterly financial statements for the quarter and nine months ended
September 30, 2008 are attached hereto on Schedule 3.1(h)(B). Such financial
statements have been prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes required by GAAP,
and fairly present in all material respects the financial position of the Company and its
consolidated subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited statements, to
normal, immaterial, year-end audit adjustments.




     (i) Material Changes; Undisclosed Events, Liabilities or Developments. Since
the date of the latest audited financial statements attached hereto as Schedule
3.1(h), except as specifically disclosed on Schedule 3.1(i): (i) there has been
no event, occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice and (B) liabilities not required
to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in
filings
made with the Commission, (iii) the Company has not altered its method of accounting,



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(iv) the Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to Board approval.




     (j) Litigation. There is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company, threatened against
or affecting the Company, any Subsidiary or any of their respective properties before or by
any court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) could, if there were an unfavorable
decision, have or reasonably be expected to result in a Material Adverse Effect. Neither
the Company nor any Subsidiary, nor any director or officer thereof, is or has been the
subject of any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or officer of the
Company.




     (k) Compliance. Neither the Company nor any Subsidiary (i) is in default under
or in violation of (and no event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is in default under
or that it is in violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in violation of
any order of any court, arbitrator or governmental body, or (iii) is or has been in
violation of any statute, rule or regulation of any governmental authority, including
without limitation all foreign, federal, state and local laws applicable to its business and
all such laws that affect the environment, except in each case as could not have or
reasonably be expected to result in a Material Adverse Effect.




     (l) Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct their respective businesses, except
where the failure to possess such permits could not reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or modification
of any Material Permit.




     (m) Insurance. The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as are
prudent and customary in the businesses in which the Company and the Subsidiaries are
engaged, including, but not limited to, directors and officers insurance coverage at least
equal to the aggregate Subscription Amount. Neither the Company nor any
Subsidiary has any reason to believe that it will not be able to renew its existing insurance



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coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a significant increase
in cost.




     (n) Transactions with Affiliates and Employees. Except as disclosed on
Schedule 3.1(n), none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is presently a party to any
transaction with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or personal property
to or from, or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any entity in which any officer, director, or
any such employee has a substantial interest or is an officer, director, trustee or partner,
in each case in excess of $120,000 other than for (i) payment of salary or consulting fees
for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including stock option agreements under any stock option plan
of the Company.




     (o) Internal Accounting Controls. The Company and the 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 GAAP 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.




     (p) Certain Fees. All brokerage or finder’s fees or commissions that are or
will be payable by the Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents are as set forth on Schedule 3.1(p)
attached hereto. The Purchasers shall have no obligation with respect to any fees or with
respect to any claims made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated by the
Transaction Documents.




     (q) Private Placement. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, no registration under the
Securities Act is required for the offer and sale of the Securities by the Company to the
Purchasers as contemplated hereby.




     (r) Registration Rights. Except as disclosed on Schedule 3.1(r), no
Person has any right to cause the Company to effect the registration under the Securities
Act of any securities of the Company.



12









 






     (s) Disclosure. All written disclosure furnished by or on behalf of the
Company to the Purchasers regarding the Company, its business and the transactions
contemplated hereby, including the Disclosure Schedules to this Agreement, is true and
correct and does not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The press releases disseminated
by the Company during the twelve months preceding the date of this Agreement taken as a
whole do not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made and when made, not misleading. The
Company acknowledges and agrees that no Purchaser makes or has made any representations or
warranties with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2 hereof.




     (t) No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Securities to be integrated with prior
offerings by the Company for purposes of the Securities Act which would require the
registration of any such securities under the Securities Act. 




     (u) Solvency. Based on the consolidated financial condition of the Company as
of the Closing Date after giving effect to the receipt by the Company of the proceeds from
the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets
exceeds the amount that will be required to be paid on or in respect of the Company’s
existing debts and other liabilities (including known contingent liabilities) as they
mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on
its business as now conducted and as proposed to be conducted including its capital needs
taking into account the near term 6 month projected capital requirements and capital
availability thereof, however, the mining industry is particularly capital intensive and the
Company will need to raise significant additional capital over the next 5 years to meet its
pre-production capital requirements, and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be sufficient to
pay all amounts on or in respect of its liabilities when such amounts are required to be
paid. The Company has no knowledge of any facts or circumstances which lead it to believe
that it will file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from the Closing Date. Schedule 3.1(u)
sets forth as of the date hereof all outstanding secured and unsecured indebtedness of the
Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For
the purposes of this Agreement, “Indebtedness” means (a) any liabilities for
borrowed money or amounts owed in excess of $150,000 (other than trade accounts payable
incurred in the ordinary course of business), (b) all guaranties, endorsements and other
contingent obligations in respect of indebtedness of others, whether or not the same are or
should be reflected in the Company’s balance sheet



13









 







(or the notes thereto), except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of business; and (c)
the present value of any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default
with respect to any Indebtedness.




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




     (w) No General Solicitation. Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the Securities by any form of general
solicitation or general advertising. The Company has offered the Securities for sale only
to the Purchasers and certain other “accredited investors” within the meaning of Rule 501
under the Securities Act.



     3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself
and for no other Purchaser hereby, represents and warrants as of the date hereof and as of the
Closing Date to the Company as follows:




     (a) Organization; Authority. Such Purchaser is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its organization
with full right, corporate or partnership power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents and otherwise to carry
out its obligations hereunder and thereunder. The execution and delivery of the Transaction
Documents and performance by such Purchaser of the transactions contemplated by the
Transaction Documents have been duly authorized by all necessary corporate or similar action
on the part of such Purchaser. Each Transaction Document to which it is a party has been
duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the
terms hereof, will constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights generally, (ii)
as limited by laws relating to the availability of specific performance, injunctive relief
or other equitable remedies and (iii) insofar as indemnification and contribution provisions
may be limited by applicable law.




     (b) Own Account. Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or any
applicable state securities law and is acquiring the Securities as principal for its own
account and not with a view to or for distributing or reselling such Securities or any part
thereof in violation of the Securities Act or any applicable state securities law, has no
present intention of distributing any of such Securities in violation of the Securities Act



14









 







or any applicable state securities law and has no direct or indirect arrangement or
understandings with any other persons to distribute or regarding the distribution of such
Securities (this representation and warranty not limiting such Purchaser’s right to sell the
Securities pursuant to the Registration Statement or otherwise in compliance with applicable
federal and state securities laws) in violation of the Securities Act or any applicable
state securities law. Such Purchaser is acquiring the Securities hereunder in the ordinary
course of its business.




     (c) Purchaser Status. At the time such Purchaser was offered the Securities,
it was, and at the date hereof it is, and on each date on which it exercises any Warrants or
converts any Debentures it will be either: (i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is
not required to be registered as a broker-dealer under Section 15 of the Exchange Act.




     (d) Experience of Such Purchaser. Such Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the prospective
investment in the Securities, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the Securities and, at
the present time, is able to afford a complete loss of such investment.




     (e) General Solicitation. Such Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media or broadcast over television or radio
or presented at any seminar or any other general solicitation or general advertisement.




     (f) No Outside Reliance. No oral or written representations or warranties have
been made, or information furnished, to such Purchaser by the Company or any of the
Company’s officers, employees, agents, sub-agents, affiliates, advisors or subsidiaries in
connection with the Offering, other than any representations of the Company contained
herein, and in subscribing for the Securities, such Purchaser is not relying upon any
representations other than those contained herein.




     (g) Non-Reliance on Draft S-1. In executing this Agreement, such Purchaser is
not acting in reliance on any information contained in that certain draft Registration
Statement on Form S-1, which was provided to certain Purchasers, that seeks to register the
resale of all shares of Common Stock that were issued by the Company pursuant to that
certain Securities Purchase Agreement, dated as of July 31, 2008, between the Company and
the purchasers thereunder, together with the shares of Common Stock underlying the July
Warrants.




15











 





ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES




     4.1 Transfer Restrictions.




     (a) The Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than pursuant to an
effective registration statement or Rule 144, to the Company or to an Affiliate of a
Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may
require the transferor thereof to provide to the Company an opinion of counsel selected by
the transferor and reasonably acceptable to the Company, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such transfer
does not require registration of such transferred Securities under the Securities Act. As a
condition of transfer, any such transferee shall agree in writing to be bound by the terms
of this Agreement and shall have the rights of a Purchaser under this Agreement.




     (b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1,
of a legend on any of the Securities in the following form:




     [NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE]
[CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY [AND
THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.




     The Company acknowledges and agrees that a Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security
interest in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by
the provisions of this Agreement and, if required under the terms of such arrangement, such
Purchaser may transfer pledged or secured Securities to the pledgees or secured parties.
Such a pledge or transfer would not be subject to approval of the Company and no legal
opinion of legal counsel of the pledgee, secured party or pledgor



16









 







shall be required in connection therewith. Further, no notice shall be required of
such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of Securities may reasonably
request in connection with a pledge or transfer of the Securities.




     (c) Certificates evidencing the Underlying Shares shall not contain any legend
(including the legend set forth in Section 4.1(b) hereof): (i) following any sale of such
Underlying Shares pursuant to a registration statement covering the resale of such
Underlying Shares that is effective under the Securities Act, (ii) following any sale of
such Underlying Shares pursuant to Rule 144 or (iii) if such legend is not required under
applicable requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission).




     (d) Each Purchaser, severally and not jointly with the other Purchasers, agrees that
such Purchaser will sell any Securities pursuant to either the registration requirements of
the Securities Act, including any applicable prospectus delivery requirements, or an
exemption therefrom, and that if Securities are sold pursuant to a registration statement,
they will be sold in compliance with the plan of distribution set forth therein.



     4.2 Acknowledgment of Dilution. The Company acknowledges that the issuance of the
Securities may result in dilution of the outstanding shares of Common Stock, which dilution may be
substantial under certain market conditions. The Company further acknowledges that its obligations
under the Transaction Documents, including without limitation its obligation to issue the
Underlying Shares pursuant to the Transaction Documents, are unconditional and absolute and not
subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any
such dilution or any claim the Company may have against any Purchaser and regardless of the
dilutive effect that such issuance may have on the ownership of the other stockholders of the
Company.



     4.3 Furnishing of Information; Public Information. If after the date hereof the
Company becomes subject to the rules and regulations of the Exchange Act and as long as any
Purchaser owns Securities, the Company covenants to timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. As long as any Purchaser owns
Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will
prepare and furnish to the Purchasers and make available in accordance with Rule 144(c) such
information as is required for the Purchasers to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any holder of Securities may reasonably
request, to the extent required from time to time to enable such Person to sell such Securities
without registration under the Securities Act within the requirements of the exemption provided by
Rule 144.



     4.4 Integration. The Company shall not sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act)
that would be integrated with the offer or sale of the Securities to the Purchasers in a manner
that



17









 







would require the registration under the Securities Act of the sale of the Securities to the
Purchasers.



     4.5 Conversion and Exercise Procedures. The form of Notice of Exercise included in
the Warrants and the form of Notice of Conversion included in the Debentures set forth the totality
of the procedures required of the Purchasers in order to exercise the Warrants or convert the
Debentures. No additional legal opinion or other information or instructions shall be required of
the Purchasers to exercise their Warrants or convert their Debentures. The Company shall honor
exercises of the Warrants and conversions of the Debentures and shall deliver Underlying Shares in
accordance with the terms, conditions and time periods set forth in the Transaction Documents.



     4.6 Securities Laws Disclosure; Publicity. Neither the Company nor Westminster shall
issue any press releases with respect to the transactions contemplated hereby without the express
written consent of the other, and no Purchaser shall issue any such press release nor otherwise
make any such public statement without the prior written consent of the Company, with respect to
any press release of any Purchaser, except if such disclosure is required by law, in which case the
disclosing party shall promptly provide the other party with prior notice of such public statement
or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name
of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of such Purchaser, except
(a) as required by federal securities law in connection with (i) any registration statement
contemplated by Section 4.14 hereof and (ii) the filing of final Transaction Documents (including
signature pages thereto) with the Commission and (b) to the extent such disclosure is required by
law or Trading Market regulations, in which case the Company shall provide the Purchasers with
prior notice of such disclosure permitted under this clause (b).



     4.7 Shareholder Rights Plan. No claim will be made or enforced by the Company or,
with the consent of the Company, or any other Person, that any Purchaser is an “Acquiring Person”
under any control share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter
adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such
plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any
other agreement between the Company and the Purchasers.



     4.8 Non-Public Information. Except with respect to the material terms and conditions
of the transactions contemplated by the Transaction Documents, the Company covenants and agrees
that neither it nor any other Person acting on its behalf will provide any Purchaser or its agents
or counsel with any information that the Company believes constitutes material non-public
information, unless prior thereto such Purchaser shall have executed a written agreement regarding
the confidentiality and use of such information. The Company understands and confirms that each
Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the
Company.



18









 





     4.9 Use of Proceeds. For 6 months from the Closing Date, subject to the prior
approval of an investment committee, which committee shall be comprised of Richard Price and one
non-executive director, the Company shall use the net proceeds from the sale of the Securities
hereunder for (a) engineering, advisory or consulting services to define the resource and
metallurgy, and to advance the preliminary feasibility study, (b) advisory services to address the
financial objectives/requirements of the Company, including without out limitation, legal and
accounting fees, and (c) working capital and general corporate purposes.



     4.10 Indemnification of Purchasers. Subject to the provisions of this Section 4.10,
the Company will indemnify and hold each Purchaser and its directors, officers, shareholders,
members, partners, employees and agents (and any other Persons with a functionally equivalent role
of a Person holding such titles notwithstanding a lack of such title or any other title), each
Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members,
partners or employees (and any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding a lack of such title or any other title) of such controlling
person (each, a “Purchaser Party”) harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any
such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against a Purchaser in any capacity,
or any of them or their respective Affiliates, by any stockholder of the Company who is not an
Affiliate of such Purchaser, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of such Purchaser’s
representations, warranties or covenants under the Transaction Documents or any agreements or
understandings such Purchaser may have with any such stockholder or any violations by the Purchaser
of state or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross
negligence, willful misconduct or malfeasance). If any action shall be brought against any
Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right
to assume the defense thereof with counsel of its own choosing reasonably acceptable to the
Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such counsel shall be
at the expense of such Purchaser Party except to the extent that (i) the employment thereof has
been specifically authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii) in such action
there is, in the reasonable opinion of such separate counsel, a material conflict on any material
issue between the position of the Company and the position of such Purchaser Party, in which case
the Company shall be responsible for the reasonable fees and expenses of no more than one such
separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (i)
for any settlement by a Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that a
loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the
representations, warranties, covenants



19









 







or agreements made by such Purchaser Party in this Agreement or in the other Transaction
Documents.



     4.11 Reservation and Listing of Securities.




     (a) The Company shall maintain a reserve from its duly authorized shares of Common
Stock for issuance pursuant to the Transaction Documents in such amount as may be required
to fulfill its obligations in full under the Transaction Documents.




     (b) If, on any date, the number of authorized but unissued (and otherwise unreserved)
shares of Common Stock is less than the Required Minimum on such date, then the Board of
Directors shall use commercially reasonable efforts to amend the Company’s certificate or
articles of incorporation to increase the number of authorized but unissued shares of Common
Stock to at least the Required Minimum at such time, as soon as possible and in any event
not later than the 75th day after such date.




     (c) The Company shall, if applicable: (i) in the time and manner required by the
principal Trading Market, prepare and file with such Trading Market an additional shares
listing application covering a number of shares of Common Stock at least equal to the
Required Minimum on the date of such application, (ii) take all steps necessary to cause
such shares of Common Stock to be approved for listing on such Trading Market as soon as
possible thereafter, (iii) provide to the Purchasers evidence of such listing, and (iv)
maintain the listing of such Common Stock on any date at least equal to the Required Minimum
on such date on such Trading Market or another Trading Market.



     4.12 Equal Treatment of Purchasers. No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration is also offered to all of the parties to the Transaction
Documents. Further, the Company shall not make any payment of principal or interest on the
Debentures in amounts which are disproportionate to the respective principal amounts outstanding on
the Debentures at any applicable time. For clarification purposes, this provision constitutes a
separate right granted to each Purchaser by the Company and negotiated separately by each
Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any
way be construed as the Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.



     4.13 Form D. The Company agrees to timely file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof, promptly upon request of
any Purchaser.



     4.14 Piggy Back Registration Rights.




     (a) For so long as any Purchaser holds Securities, the Company shall notify the
Purchasers in writing at least thirty (30) days prior the filing of any registration
statement under Securities Act, in connection with a public offering of shares of the Common
Stock, including, but not limited to, registration statements relating to



20









 







secondary offerings of securities of the Company but excluding any registration
statements (i) on Form S-4 or S-8 (or any successor or substantially similar form), or of
any employee stock option, stock purchase or compensation plan or of securities issued or
issuable pursuant to any such plan, or a dividend reinvestment plan, (ii) otherwise relating
to any employee, benefit plan or corporate reorganization or other transactions covered by
Rule 145 promulgated under the Securities Act, or (iii) on any registration form that does
not permit secondary sales or does not include substantially the same information as would
be required to be included in a registration statement covering the resale of the Underlying
Shares and will afford each Purchaser an opportunity to include in such registration
statement all or part of the Underlying Shares held by or underlying and Debentures or
Warrants held by such Purchaser (the “Purchaser Shares”). In the event a Purchaser
desires to include in any such registration statement all or any part of its Purchaser
Shares, such Purchaser shall within twenty-five (25) days after the above-described notice
from the Company, so notify the Company in writing, including the number of such Purchaser
Shares that such Purchaser wishes to include in such registration statement. If a Purchaser
decides not to include all of its Purchaser Shares in any registration statement thereafter
filed by the Company, such Purchaser shall nevertheless continue to have the right to
include any Purchaser Shares in any subsequent registration statement or registration
statements as may be filed by the Company with respect to the offering of the securities,
all upon the terms and conditions set forth herein.



     (b) Notwithstanding the foregoing, if the managing underwriter or underwriters of any
such proposed public offering advise the Company that the total amount or kind of securities
that the Purchasers, the Company and any other persons intended to be included in such
proposed public offering is sufficiently large to adversely affect the success of such
proposed public offering, then the offering may be limited at the recommendation of the
underwriter to only the Primary Securities and if not so limited then the amount or kind of
securities to be offered for the various parties wishing to have shares Common Stock
registered shall be included in the following order:




     (i) if the Company proposes to register treasury shares or authorized but
unissued shares of its common stock (collectively, “Primary Securities”):




(A) first, the Primary Securities;




(B) second, the Purchaser Shares requested to be included in such
registration statement, together with shares of its Common Stock that
do not constitute Purchaser Shares or Primary Securities (“Other
Securities”) held by parties exercising similar piggy-back
registration rights (or if necessary, such Purchaser Shares and Other
Securities pro rata among the holders thereof based upon the number
of such Purchaser Shares and Other Securities requested to be
registered by each such holder).




     (ii) if the Company proposes to register Other Securities:



21









 






(A) first, the Other Securities requested to be included in such
registration by holders exercising demand registration rights;




(B) second, the Purchaser Shares requested to be included in such
registration, together with Other Securities held by parties
exercising similar piggy-back registration rights (or if necessary,
such Purchaser Shares and Other Securities pro rata among the holders
thereof based upon the number of such Purchaser Shares and Other
Securities requested to be registered by each such holder).




     Anything to the contrary in this Agreement notwithstanding, the Company may withdraw or
postpone a registration statement referred to herein (a “Registration Statement”) at
any time before it becomes effective or withdraw, postpone or terminate the offering after
it becomes effective without obligation to the Subscriber.




     (c) In connection with its obligation under this Section 4.14, the Company will (i)
furnish to each Purchaser without charge, at least one copy of any effective registration
statement and any post-effective amendments thereto, including financial statements and
schedules, and, if such Purchaser so requests in writing, all documents incorporated therein
by reference and all exhibits (including those incorporated by reference) in the form filed
with the Commission; and (ii) deliver to each Purchaser and the underwriters, if any,
without charge, as many copies of the then effective prospectus included in the registration
statement, as the same may be amended or supplemented (including such prospectus subject to
completion) (the “Prospectus”), and any amendments or supplements thereto as such
persons may reasonably request.




     (d) As a condition to the inclusion of its Purchaser Shares, each Purchaser shall
furnish to the Company such information regarding such Purchaser and the distribution
proposed by such Purchaser as the Company may request in writing or as shall be required in
connection with any registration, qualification or compliance referred to in this Agreement.




     (e) Each Purchaser agrees by acquisition of the Securities that, upon receipt of any
notice from the Company of the happening of any event that, in the good faith judgment of
the Company’s Board of Directors, requires the suspension of the Subscriber’s rights under
this Section 4.14, such Purchaser will forthwith discontinue disposition of any Purchaser
Shares pursuant to the then current Prospectus until such Purchaser is advised in writing by
the Company that the use of the Prospectus may be resumed. If so directed by the Company, on
the happening of such event, each Purchaser will deliver to the Company (at the Company’s
expense) all copies, other than permanent file copies then in such Purchaser’s possession,
of the Prospectus covering the Purchaser Shares at the time of receipt of such notice.




     (f) Each Purchaser hereby covenants with the Company (i) not to make any sale of
Purchaser Shares without effectively causing the prospectus delivery requirements



22









 







under the Securities Act to be satisfied, and (ii) if such Purchaser Shares are to be
sold by any method or in any transaction other than on a national securities exchange, the
Nasdaq Global Select Market, the Nasdaq Global Market, Nasdaq Capital Market or in the
over-the-counter market, in privately negotiated transactions, or in a combination of such
methods, to notify the Company at least 5 business days prior to the date on which such
Purchaser first offers to sell any such Purchaser Shares.




     (g) Each Purchaser acknowledges and agrees that the Purchaser Shares sold pursuant to a
registration statement described in this Section 4.14 are not transferable on the books of
the Company unless the stock certificate submitted to the transfer agent evidencing the
Purchaser Shares is accompanied by a certificate reasonably satisfactory to the Company to
the effect that (x) the Purchaser Shares have been sold in accordance with such registration
statement and (y) the requirement of delivering a current Prospectus has been satisfied.




     (h) No Purchaser shall take any action with respect to any distribution deemed to be
made pursuant to such registration statement that would constitute a violation of Regulation
M under the Exchange Act, or any other applicable rule, regulation or law.




     (i) Upon the expiration of the effectiveness of any registration statement described in
this Section 4.14, the Purchasers shall discontinue sales of the Purchaser Shares pursuant
to such registration statement upon receipt of notice from the Company of the Company’s
intention to remove from registration the Purchaser Shares covered by such registration
statement that remain unsold, and the Subscriber shall notify the Company of the number of
registered Purchaser Shares that remain unsold immediately upon receipt of such notice from
the Company.




     (j) In the case of the registration of any underwritten primary offering initiated by
the Company (other than any registration by the Company on Form S-4 or Form S-8 (or any
successor or substantially similar form), or of (i) an employee stock option, stock purchase
or compensation plan or of securities issued or issuable pursuant to any such plan, or (ii)
a dividend reinvestment plan) or any underwritten secondary offering initiated at the
request of a holder of securities of the Company pursuant to registration rights granted by
the Company, the Purchasers agree not to effect any public sale or distribution of
securities of the Company, except as part of such underwritten registration, during the
period beginning fifteen (15) days prior to the closing date of such underwritten offering
and during the period ending ninety (90) days after such closing date (or such longer period
as may be reasonably requested by the Company or by the managing underwriter or
underwriters).




     (k) Anything to the contrary contained in this Agreement notwithstanding, when, in the
opinion of counsel for the Company, registration of the Purchaser Shares is not required by
the Securities Act, in connection with a proposed sale of such Purchaser Shares, the
Subscriber shall have no rights pursuant to this Section 4.14. In furtherance and not in
limitation of the foregoing, no Purchaser shall have any rights pursuant to this



23









 







Section 4.14 at such time as all of such Purchaser’s Purchaser Shares may be sold
without limitation pursuant to Rule 144.



ARTICLE V.

MISCELLANEOUS




     5.1 Termination. This Agreement may be terminated by any Purchaser, as to such
Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between
the Company and the other Purchasers, by written notice to the other parties, if the Closing has
not been consummated on or before the Termination Date; provided, however, that no
such termination will affect the right of any party to sue for any breach by the other party (or
parties).



     5.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to
the contrary, each party shall pay the fees and expenses of its advisers, counsel, 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. The Company shall pay all
transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery
of any Securities to the Purchasers.



     5.3 Entire Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents, exhibits and
schedules.



     5.4 Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of (a) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30
p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto on a day that is not a Trading Day or later than
5:30 p.m. (New York City time) on any Trading Day, (c) the second Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual
receipt by the party to whom such notice is required to be given. The address for such notices and
communications shall be as set forth on the signature pages attached hereto.



     5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed, in the case of an amendment, by the
Company and the Purchasers of at least 66 2/3% in interest of the Securities still held by
Purchasers or, in the case of a waiver, by the party against whom enforcement of any such waived
provision is sought. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver
of any subsequent default or a waiver of any other provision, condition or



24









 







requirement hereof, nor shall any delay or omission of any party to exercise any right
hereunder in any manner impair the exercise of any such right.



     5.6 Headings. The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.



     5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written consent of each
Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this
Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that
such transferee agrees in writing to be bound, with respect to the transferred Securities, by the
provisions of the Transaction Documents that apply to the “Purchasers.”



     5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the benefit of,
nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in
Section 4.10.



     5.9 Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of the Transaction Documents shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by this Agreement and any
other Transaction Documents (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of
Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to the enforcement of
any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any
such court, that such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy thereof 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. If either party shall commence an action or proceeding to enforce any provisions of the
Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed
by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such action or proceeding.



25









 





     5.10 Survival. The representations and warranties shall survive the Closing and the
delivery of the Securities for the applicable statue of limitations.



     5.11 Execution. This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature
page were an original thereof.



     5.12 Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the intention of the parties
that they would have executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or unenforceable.



     5.13 Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued
in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in
lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant
for a new certificate or instrument under such circumstances shall also pay any reasonable
third-party costs (including customary indemnity) associated with the issuance of such replacement
Securities.



     5.14 Remedies. In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the Purchasers and the Company will be
entitled to specific performance under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agrees to waive and not to assert in
any action for specific performance of any such obligation the defense that a remedy at law would
be adequate.



     5.15 Payment Set Aside. To the extent that the Company makes a payment or payments to
any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights
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



26









 







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.



     5.16 Usury. To the extent it may lawfully do so, the Company hereby agrees not to
insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be
compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time
hereafter in force, in connection with any claim, action or proceeding that may be brought by any
Purchaser in order to enforce any right or remedy under any Transaction Document. Notwithstanding
any provision to the contrary contained in any Transaction Document, it is expressly agreed and
provided that the total liability of the Company under the Transaction Documents for payments in
the nature of interest shall not exceed the maximum lawful rate authorized under applicable law
(the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of
interest or default interest, or both of them, when aggregated with any other sums in the nature of
interest that the Company may be obligated to pay under the Transaction Documents exceed such
Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and
applicable to the Transaction Documents is increased or decreased by statute or any official
governmental action subsequent to the date hereof, the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective
date forward, unless such application is precluded by applicable law. If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to any Purchaser with
respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by
such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the
Company, the manner of handling such excess to be at such Purchaser’s election.



     5.17 Independent Nature of Purchasers’ Obligations and Rights. The obligations of
each Purchaser under any Transaction Document are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the performance or
non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing
contained herein or in any other Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently
protect and enforce its rights, including without limitation the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser
has been represented by its own separate legal counsel in their review and negotiation of the
Transaction Documents. The Company has elected to provide all Purchasers with the same terms and
Transaction Documents for the convenience of the Company and not because it was required or
requested to do so by the Purchasers.



     5.18 Liquidated Damages. The Company’s obligations to pay any partial liquidated
damages or other amounts owing under the Transaction Documents is a continuing obligation of the
Company and shall not terminate until all unpaid partial liquidated damages and other



27









 







amounts have been paid notwithstanding the fact that the instrument or security pursuant to
which such partial liquidated damages or other amounts are due and payable shall have been
canceled.



     5.19 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not be a Business Day,
then such action may be taken or such right may be exercised on the next succeeding Business Day.



     5.20 Construction. The parties agree that each of them and/or their respective counsel
has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal
rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments
hereto.



     5.21 Waiver of Jury Trial. In any action, suit or proceeding in any jurisdiction
brought by any party against any other party, the parties each knowingly and intentionally, to the
greatest extent permitted by applicable law, hereby absolutely, unconditionally, irrevocably and
expressly waives forever trial by jury.



(Signature Pages Follow)




28









 








     IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated above.



	 	 	 	 	 	 	 
	CONCENTRIC ENERGY CORP.	 	 	 	Address for Notice:
	 
	 	 	 	 	 	 
	By:

	 	 	 	 	 	Fax:
	 

	 	 

Name:
	 	 	 	 
	 

	 	Title:	 	 	 	 






With a copy to (which shall not constitute notice):




Haynes and Boone, LLP

1221 Avenue of the Americas

26th Floor

New York, New York 10020

Attn: Harvey J. Kesner, Esq.

Fax: 212-918-8989




[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]





29












 





PURCHASER SIGNATURE PAGES TO

CONCENTRIC ENERGY CORP.

SECURITIES PURCHASE AGREEMENT




     IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first indicated above.



Subscription Amount:                     




Principal Amount (Equal to the Subscription Amount):                     




Warrant Shares:                     




	 	 	 	 	 	 	 
	 

Name of Investor (Print)

	 	 
	 	 

Name of Joint Investor (if any) (Print)
	 	 
	 
	 	 	 	 	 	 
	 

                 
     Signature of Investor

	 	 
	 	 

Signature of Joint Investor (if any)
	 	 
	 
	 	 	 	 	 	 
	 

Capacity of Signatory (for entities)

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

Social Security or Taxpayer Identification Number

	 	 	 	 	 	 






Investor Contact Information:




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Street Address

	 	 	 	Telephone
	 	Fax	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	City

	 	State            
               Zip Code
	 	             
          Email	 	 	 	 






Instructions for Delivery of Cash Proceeds and Securities:




	 	 	 
	o Deposit to my Westminster brokerage account

	 	o Deliver to the address above:
	 
	 	 
	o Deliver to the alternate address below:
	 	 






	 	 	 
	 

Street/Postal Address

	 	 






	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	City

	 	State/Province
	 	Zip/Post Code
	 	Country






Broker:




													
	 

	 	o Westminster Rep:
	 	 	 	 	 	o Other Rep:	 	 	 	 
	 

	 	 	 	 

	 	 
	 	 	 	 

	 	 






30









 





[SIGNATURE PAGES CONTINUE]

ANNEX I — ACCREDITED INVESTOR QUESTIONNAIRE



The undersigned hereby refers to the Subscription Agreement executed and delivered to Concentric
Energy Corp. (the “Company”) by the undersigned as of the date herewith. The undersigned hereby
represents and warrants to the Company that such individual or entity meets at least one of the
tests below for an “accredited investor” (as defined in Regulation D of the Securities Act of 1933,
as amended).



The undersigned qualifies as an Accredited Investor pursuant to the following (check one):





	o	 	The undersigned is an individual who is a director or executive officer of Concentric Energy
Corp. An “executive officer” is the president, a vice president in charge of a principal
business unit, division or function (such as sales, administration or finance), any other
officer who performs a policy making function or any other person who performs similar policy
making functions for the Company.
	 
	o	 	The undersigned is an individual that (1) had individual income of more than $200,000 in each
of the two most recent fiscal years and reasonably expects to have individual income in excess
of $200,000 in the current year, or (2) had joint income together with the undersigned’s spouse
in excess of $300,000 in each of the two most recent fiscal years and reasonably expects to
have joint income in excess of $300,000 in the current year. “Income” means adjusted gross
income, as reported for federal income tax purposes, increased by the following amounts: (i)
any tax exempt interest income under Section 103 of the Internal Revenue Code (the “Code”)
received, (ii) any losses claimed as a limited partner in a limited partnership as reported on
Schedule E of Form 1040, (iii) any deduction claimed for depletion under Section 611 of the
Code or (iv) any amount by which income has been reduced in arriving at adjusted gross income
pursuant to the provisions of Section 1202 of the Code. In determining personal income,
however, unrealized capital gains should not be included.
	 
	o	 	The undersigned is an individual with individual net worth, or combined net worth together
with the undersigned’s spouse, in excess of $1,000,000. “Net worth” means the excess of total
assets at fair market value, including home, home furnishings and automobiles, over total
liabilities.
	 
	o	 	The undersigned is a Trust with total assets in excess of $5,000,000, was not formed for the
specific purpose of acquiring securities of Concentric Energy Corp., and the purchase of the
securities is directed by a person with such knowledge and experience in financial and business
matters that he is capable of evaluating the risks and merits of the prospective investment in
such securities.
	 
	o	 	The undersigned is a corporation, partnership, limited liability company or limited liability
partnership that has total assets in excess of $5,000,000 and was not formed for the specific
purpose of acquiring securities of Concentric Energy Corp.
	 
	o	 	The undersigned is an entity in which all of its equity owners are Accredited Investors.





	 	 	 	 	 
	 

Name of Investor (Print)

	 	 

Name of Joint Investor (if any) (Print)
	 	 
	 
	 	 	 	 
	 

Signature of Investor

	 	 

Signature of Joint Investor (if any)
	 	 
	 
	 	 	 	 
	 

Capacity of Signatory (for entities)

	 	 

Date
	 	 







31