Document:

exhibit_10-2.htm

EXHIBIT 10.2

 

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement ("Agreement"), dated January 23, 2014, is made by and between ANDALAY SOLAR, INC. a Delaware corporation ("Company"), and SOUTHRIDGE PARTNERS II LP, a Delaware limited partnership (the "Investor").

RECITALS

WHEREAS, upon the terms and subject to the conditions of the Equity Purchase Agreement dated January 23, 2014 ("Purchase Agreement"), between the Investor and the Company, the Company has agreed to issue and sell to the Investor shares (the "Put Shares") of its common stock, $0.001 par value per share (the "Common Stock") from time to time for an aggregate investment price of up to Five Million Dollars ($5,000,000) (the "Registered Securities"); and

WHEREAS, to induce the Investor to execute and deliver the Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "Securities Act"), and applicable state securities laws with respect to the Registered Securities;

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows:

1.           Definitions.

(a)           As used in this Agreement, the following terms shall have the following meaning:

(i)           "Subscription Date" means the date of this Agreement.

(ii)          "Investor" has the meaning set forth in the preamble to this Agreement.

(iii)         "Register," "registered" and "registration" refer to a registration effected by preparing and filing a Registration Statement or Statements in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any successor rule providing for offering securities on a delayed or continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such Registration Statement by the United States Securities and Exchange Commission (the "SEC").

(iv)          "Registered Securities" will have the same meaning as set forth in the Purchase Agreement.

(v)           "Registration Statement" means the Company’s registration statement on Form S-1, or any similar registration statement of the Company filed with SEC under the Securities Act with respect to the Registered Securities.

(vi)          "EDGAR" means the SEC's Electronic Data Gathering, Analysis and Retrieval System.

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

(b)           Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement.

2.           [RESERVED]

 

  

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3.           Obligation of the Company.  In connection with the registration of the Registered Securities, the Company shall do each of the following:

(a)           Prepare promptly and file with the SEC within  one hundred twenty (120)  days after the date hereof, a Registration Statement with respect to not less than the maximum allowable under Rule 415 of Registered Securities, and thereafter use all commercially reasonable efforts to cause such Registration Statement relating to the Registered Securities to become effective within five (5) business days after notice from the Securities and Exchange Commission that such Registration Statement may be declared effective, and keep the Registration Statement effective at all times prior to the termination of the Purchase Agreement until the earliest of (i) the date that is three months after the completion of the last Closing Date under the Purchase Agreement, (ii) the date when the Investor may sell all Registered Securities under Rule 144 without volume limitations, or (iii) the date the Investor no longer owns any of the Registered Securities (collectively, the "Registration Period"), which Registration Statement (including any amendments or supplements, thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

(b)           Prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to keep the Registration Statement effective at all times during the Registration Period, and to comply with the provisions of the Securities Act with respect to the disposition of all Registered Securities of the Company covered by the Registration Statement until the expiration of the Registration Period.

(c)           With respect to the Registered Securities, permit counsel designated by Investor to review the Registration Statement and all amendments and supplements thereto a reasonable period of time (but not less than two (2) business days) prior to their filing with the SEC, and not file any document in a form to which such counsel reasonably objects.

(d)            As promptly as practicable after becoming aware of the following facts, the Company shall notify Investor and Investor’s legal counsel identified to the Company and (if requested by any such person) confirm such notice in writing no later than one (1) business day thereafter (i): (A) when a prospectus or any prospectus supplement or post-effective amendment to the Registration Statement is filed; (B) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registered Securities or the initiation of any proceedings for that purpose; and (iii) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registered Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose.

(e)           Unless available to the Investor without charge through EDGAR, the SEC's website or the Company's website, furnish to Investor,  promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one (1) copy of the Registration Statement, each preliminary prospectus and the prospectus, and each amendment or supplement thereto;

(f)           Use all commercially reasonable  efforts to (i) register and/or qualify the Registered Securities covered by the Registration Statement under such other securities or blue sky laws of such jurisdictions as the Investor may reasonably request and in which significant volumes of shares of Common Stock are traded, (ii) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof at all times during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualification in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registered Securities for sale in such jurisdictions: provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (A) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(f), (B) subject itself to general taxation in any such jurisdiction, (C) file a general consent to service of process in any such jurisdiction, (D) provide any undertakings that cause more than nominal expense or burden to the Company or (E) make any change in its charter or by-laws or any then existing contracts, which in each case the Board of Directors of the Company determines to be contrary to the best interests of the Company and its stockholders;

(g)           As promptly as practicable after becoming aware of such event, notify the Investor of the happening of any event of which the Company has knowledge, as a result of which the prospectus included in the Registration Statement, as then in effect, includes any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading ("Registration Default"), and promptly prepare a supplement or amendment to the Registration Statement or other appropriate filing with the SEC to correct such untrue statement or omission, and take any other commercially reasonable steps to cure the Registration Default, and, unless available to the Investor without charge through EDGAR, the SEC's website or the Company's website, deliver a number of copies of such supplement or amendment to the Investor as the Investor may reasonably request.

(h)           [INTENTIONALLY OMITTED];

(i)           Use its commercially reasonable efforts, if eligible, either to (i) cause all the Registered Securities covered by the Registration Statement to be listed on a national securities exchange and on each additional national securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registered Securities is then permitted under the rules of such exchange, or (ii) secure designation of all the Registered Securities covered by the Registration Statement as a National Association of Securities Dealers Automated Quotations System ("Nasdaq”) security within the meaning of Rule 11Aa2-1 of the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the quotation of the Registered Securities on the Nasdaq Capital Market; or if, despite the Company’s commercially reasonable efforts to satisfy the preceding clause (i) or (ii), the Company is unsuccessful in doing so, to use its commercially reasonable efforts to secure authorization of the Financial Industry Regulatory Authority (“FINRA”) and quotation for such Registered Securities on the over-the-counter bulletin board and, without limiting the generality of the foregoing;

 

  

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(j)           Provide a transfer agent for the Registered Securities not later than the Subscription Date under the Purchase Agreement;

(k)           Cooperate with the Investor to facilitate the timely preparation and delivery of certificates for the Registered Securities to be offered pursuant to the Registration Statement and enable such certificates for the Registered Securities to be in such denominations or amounts as the case may be, as the Investor may reasonably request and registration in such names as the Investor may request; and, within five (5) business days after a Registration Statement which includes Registered Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel selected by the Company to deliver, to the transfer agent for the Registered Securities (with copies to the Investor) an appropriate instruction and opinion of such counsel, if so required by the Company’s transfer agent; and

(l)           Take all other commercially reasonable actions necessary to expedite and facilitate distribution to the Investor of the Registered Securities pursuant to the Registration Statement.

4.           Obligations of the Investor.  In connection with the registration of the Registered Securities, the Investor shall have the following obligations;

(a)           It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registered Securities of the Investor that the Investor shall timely furnish to the Company such information regarding itself, the Registered Securities held by it, and the intended method of disposition of the Registered Securities held by it, as shall be reasonably required to effect the registration of such Registered Securities and shall timely execute such documents in connection with such registration as the Company may reasonably request.

 

(b)           The Investor by such Investor’s acceptance of the Registered Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement hereunder; and

(c)           The Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(d)(ii) or (iii) or 3(g) above, the Investor will immediately discontinue disposition of Registered Securities pursuant to the Registration Statement covering such Registered Securities until the Investor receives the copies of the supplemented or amended prospectus contemplated by Section 3(d)(ii) or (iii) or 3(g) and, if so directed by the Company, the Investor shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in the Investor’s possession, of the prospectus covering such Registered Securities current at the time of receipt of such notice.

5.           Expenses of Registration.  All reasonable expenses incurred in connection with registrations, filings or qualifications pursuant to Section 3, including, without limitation, all registration, listing, and qualifications fees, printers and accounting fees, the fees and disbursements of counsel for the Company shall be borne by the Company.

6.           Indemnification.  After Registered Securities are included in a Registration Statement under this Agreement:

(a)           To the extent permitted by law, the Company will indemnify and hold harmless, the Investor, the directors, if any, of such Investor, the officers, if any, of such Investor, each person, if any, who controls the Investor within the meaning of the Securities Act or the Exchange Act (each, an "Indemnified Person"), against any losses, claims, damages, liabilities or expenses (joint or several) incurred (collectively, "Claims") to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in the light of the circumstances under which the statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation under the Securities Act, the Exchange Act or any state securities law (the matters in the foregoing clauses (i) through (iii) being collectively referred to as  "Violations").  Subject to Section 6(b) hereof, the Company shall reimburse the Investor, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim.   Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a) shall not (i) apply to any Claims arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(b) hereof; (ii) with respect to any preliminary prospectus, inure to the benefit of any such person from whom the person asserting any such Claim purchased the Registered Securities that are the subject thereof (or to the benefit of any person controlling such person) if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected in the prospectus, as then amended or supplemented, if such prospectus was timely made available by the Company pursuant to Section 3(b) hereof; (iii) be available to the extent such Claim is based on a failure of the Investor to deliver or cause to be delivered the prospectus made available by the Company; or (iv) apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the  Company, which consent shall not be unreasonably withheld.  The Investor will indemnify the Company, its officers, directors and agents (including legal counsel) against any claims arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company, by or on behalf of the Investor, expressly for use in connection with the preparation of the Registration Statement, subject to such limitations and conditions set forth in the previous sentence.

 

  

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(b)           Promptly after receipt by an Indemnified Person under this Section 6 of notice of the commencement of any action (including any governmental action), such Indemnified Person shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person, as the case may be; provided, however, that an Indemnified Person shall have the right to retain its own counsel with the reasonable fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person and any other party represented by such counsel in such proceeding.  In such event, the Company shall pay for only one separate legal counsel for the Investor selected by the Investor.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.  The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable.

7.           Contribution.  To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that (a) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6; (b) no seller of Registered Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registered Securities who was not guilty of such fraudulent misrepresentation; and (c) contribution by any seller of Registered Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registered Securities.

8.           Reports under Exchange Act.  With a view to making available to the Investor the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees to use its commercially reasonable efforts to:

(a)           make and keep public information available, as those terms are understood and defined in Rule 144;

(b)           file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act for so long as the Company remains subject to such requirements, and the filing of such reports is required for sales under Rule 144;

(c)           furnish to the Investor so long as the Investor owns Registered Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) unless available to the Investor without charge through EDGAR, the SEC's website or the Company's website, a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration; and

(d)           at the request of any Investor of Registered Securities, give its Transfer Agent instructions (supported by an opinion of Company counsel, if required or requested by the Transfer Agent) to the effect that, upon the Transfer Agent’s receipt from such Investor of:

(i) a certificate (a “Rule 144 Certificate”) certifying (A) that such Investor has held the shares of Registered Securities which the Investor proposes to sell (the “Securities Being Sold”) for a period of not less than (6) months and (B) as to such other matters as may be appropriate in accordance with Rule 144 under the Securities Act, and

(ii) an opinion of counsel acceptable to the Company (for which purposes it is agreed that the initial Investor’s counsel shall be deemed acceptable if such opinion is not given by Company counsel) that, based on the Rule 144 Certificate, Securities Being Sold  may be sold pursuant to the provisions of Rule 144, even in the absence of an effective Registration Statement,

the Transfer Agent is to effect the transfer of the Securities Being Sold and issue to the buyer(s) or transferee(s) thereof one or more stock certificates representing the transferred Securities Being Sold without any restrictive legend and without recording any restrictions on the transferability of such shares on the Transfer Agent’s  books and records (except to the extent any such legend or restriction results from facts other than the identity of the Investor, as the seller or transferor thereof, or the status, including any relevant legends or restrictions, of the shares of the Securities Being Sold while held by the Investor).   If the Transfer Agent requires any additional documentation at the time of the transfer, the Company shall deliver or cause to be delivered all such reasonable additional documentation as may be necessary to effectuate the issuance of an unlegended certificate.

9.           Miscellaneous.

(a)           Registered Owners.  A person or entity is deemed to be a holder of Registered Securities whenever such person or entity owns of record such Registered Securities.  If the Company receives conflicting instructions, notices or elections from two or more persons or entities with respect to the same Registered Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registered Securities.

(b)           Rights Cumulative; Waivers.  The rights of each of the parties under this Agreement are cumulative.  The rights of each of the parties hereunder shall not be capable of being waived or varied other than by an express waiver or variation in writing.  Any failure to exercise or any delay in exercising any of such rights shall not operate as a waiver or variation of that or any other such right.  Any defective or partial exercise of any of such rights shall not preclude any other or further exercise of that or any other such right.  No act or course of conduct or negotiation on the part of any party shall in any way preclude such party from exercising any such right or constitute a suspension or any variation of any such right.

(c)           Benefit; Successors Bound.  This Agreement and the terms, covenants, conditions, provisions, obligations, undertakings, rights, and benefits hereof, shall be binding upon, and shall inure to the benefit of, the undersigned parties and their successors.

 

  

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(d)           Entire Agreement.  This Agreement contains the entire agreement between the parties with respect to the subject matter hereof.  There are no promises, agreements, conditions, undertakings, understandings, warranties, covenants or representations, oral or written, express or implied, between them with respect to this Agreement or the matters described in this Agreement, except as set forth in this Agreement and in the other documentation relating to the transactions contemplated by this Agreement.  Any such negotiations, promises, or understandings shall not be used to interpret or constitute this Agreement.

(e)           Amendment.  Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investor.  Any amendment or waiver affected in accordance with this Section 9 shall be binding upon the Company.

(f)           Severability.  Each part of this Agreement is intended to be severable.  In the event that any provision of this Agreement is found by any court or other authority of competent jurisdiction to be illegal or unenforceable, such provision shall be severed or modified to the extent necessary to render it enforceable and as so severed or modified, this Agreement shall continue in full force and effect.

(g)           Notices.  Notices required or permitted to be given hereunder shall be in writing and shall be deemed to be sufficiently given when personally delivered (by hand, by courier, by telephone line facsimile transmission, receipt confirmed, email or other means) or sent by certified mail, return receipt requested, properly addressed and with proper postage pre-paid (i) if to the Company, at its executive office and (ii) if to the Investor, at the address set forth under its name in the Purchase Agreement, with a copy to its designated attorney, or at such other address as each such party furnishes by notice given in accordance with this Section 9(g), and shall be effective, when personally delivered, upon receipt and, when so sent by certified mail, five (5) business days after deposit with the United States Postal Service.

(h)           Governing Law.   This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York without regard to the principles of conflicts of law. Each of the Company and Investor hereby submit to the exclusive jurisdiction of the United States Federal and state courts located in New York with respect to any dispute arising under this Agreement, the agreements entered into in connection herewith or the transactions contemplated hereby or thereby.

(i)           Consents.  The person signing this Agreement on behalf of each party hereby represents and warrants that he has the necessary power, consent and authority to execute and deliver this Agreement on behalf of that party.

(j)           Further Assurances.  In addition to the instruments and documents to be made, executed and delivered pursuant to this Agreement, the parties hereto agree to make, execute and deliver or cause to be made, executed and delivered, to the requesting party such other instruments and to take such other actions as the requesting party may reasonably require to carry out the terms of this Agreement and the transactions contemplated hereby.

(k)           Section Headings.  The Section headings in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

(l)           Construction.  Unless the context otherwise requires, when used herein, the singular shall be deemed to include the plural, the plural shall be deemed to include each of the singular, and pronouns of one or no gender shall be deemed to include the equivalent pronoun of the other or no gender.

(m)           Execution in Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement.  This Agreement, once executed by a party, may be delivered to the other party hereto by email of a .pdf or telephone line facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.  A facsimile transmission or email of a .pdf of this signed Agreement shall be legal and binding on all parties hereto.

[SIGNATURES ON FOLLOWING PAGE]

  

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[SIGNATURE PAGE]

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

COMPANY:

                                                      ANDALAY SOLAR, INC.

 

                   By:  /s/ Margaret R. Randazzo

                   Name:  Margaret R. Randazzo

                   Title:  CEO

                INVESTOR:

                SOUTHRIDGE PARTNERS II LP

 

 

                   By:  /s/ Stephen Hicks

                   Name:  Stephen Hicks

                   Title:  Manager

 

  

6exhibit_10-37.htm

EXHIBIT 10.37

 

CONSULTING AGREEMENT

 

This Consulting Agreement ("Agreement") is made on this 20th day of February, 2013 (“Effective Date”) between SC Advisors Inc. (the “Project Manager”), a Delaware corporation, with principal offices at 90 Grove Street, Ridgefield CT 06877, and Westinghouse Solar, Inc. (the “Company”), a Delaware Corporation, with principal offices at 1475 S. Bascom Ave, Ste. 101, Campbell CA 95008.

 

WHEREAS,

 

Project Manager’s principals have experience in corporate structure and valuation,  mergers and acquisitions, strategic alliances, financing and other matters relating to the general business and operating affairs of private and public companies;

 

The Company desires to retain Project Manager to provide a variety of financial, business consulting and advisory services, and Project Manager is willing to provide such services pursuant to the terms of this agreement.

 

In consideration of the terms of this Agreement the Company and Project Manager agree as follows:

 

ARTICLE 1

 

ENGAGEMENT

 

	
1.1.  

	
The Company hereby engages and retains Project Manager, on a non-exclusive basis, under the terms of this agreement to render certain business, financial consulting and advisory services to the Company.

 

Project Manager is hereby engaged and retained by the Company to assist in the performance of, as and when requested by the Company, among other things;

 

	
1.  

	
Financial management services- cash flow projection, financial statement preparation, balance sheet optimization and debt restructuring.

 

	
2.  

	
Third party service provider support-coordinating functions with auditors and legal counsel.  Interfacing with Investor/Public Relations to increase Company awareness in the financial marketplace. Keeping shareholders abreast of current developments at the Company.

 

The services to be rendered by Project Manager to the Company shall under no circumstances include any activities which could be deemed by the Securities and Exchange Commission to constitute investment banking or any other activities requiring Project Manager to be registered as a broker-dealer under the Securities Act of 1934.

 

	  	
 1.3. Project Manager hereby acknowledges and agrees that this engagement is on a non-exclusive basis and, therefore, the Company will, during the Term of this Agreement, be free to engage or retain any other entity to render the same or similar services to it.  The Company hereby acknowledges that this engagement does not prohibit Project Manager from rendering similar services to others.  The Company hereby acknowledges that Project Manager has and may hereafter perform services for vendors, strategic partners, or other third parties doing business or otherwise having a relationship with the Company.  Project Manager agrees to disclose to the Company any current service engagement, relationships or other situations that may create a conflict of interest with this engagement.  The Company consents to and waives any conflict of interest with respect to the specific matters disclosed to the Company in advance of this Agreement.

 

	  	
1.4. The Company will provide Project Manager with all financial and business information and documentation concerning the Company which is reasonably requested by Project Manager hereunder to the extent such information and documentation is available without the Company incurring any unreasonable effort or expense.  In addition, the Company will make its executive officers and members of its Board of Directors available to Project Manager, upon reasonable advance notice and request of Project Manager, for the purpose of providing information to Project Manager in connection with its contemplated services hereunder.

 

	  	
1.5. Project Manager will only be required to devote such of its time and efforts as it may determine is necessary for the performance of its services hereunder. Project Manager will perform its services hereunder in the highest professional manner and will provide such of its staff and personnel as it may deem necessary for the performance of its services hereunder.

 

	  	
1.6. The Company acknowledges that Project Manager does not guarantee that its Services will have an impact upon the Company’s business or that subsequent financial improvement or advantage will result from the Consulting Services. Company understands and acknowledges that the success or failure of Project Manager’s efforts will be predicated on Company’s assets and operating results.

 

  

  

  

 

ARTICLE 2

 

COMPENSATION

 

	  	
2.1. In consideration of Project Manager's services under this Agreement, Project Manager shall be entitled to the following compensation:

 

A monthly fee of Thirty Thousand Dollars ($30,000) (the "Consulting Fee"), payable solely in the form of shares of Series D 8% Convertible Preferred Stock of the Company (“Preferred Stock”), valued at the stated value of such Preferred Stock of $1,000 per share, which stock is convertible into shares of Company common stock at the Project Manager’s option. Such fee is payable monthly on the first day of each calendar month, in advance, commencing as of March 1, 2013.  Project Manager acknowledges that the shares of Preferred Stock issued to Project Manager, and the shares of common stock issuable upon conversion thereof, are “restricted securities” which are subject to limitations on resale for purposes of U.S. securities law.  Project Manager makes the representations, warranties and acknowledgements set forth on Appendix I attached to this Agreement..

 

ARTICLE 3

 

 

MISCELLANEOUS

 

	  	
3.1. Independent Contractor Relationship.  Nothing herein or attached shall be construed to create the relationship of employer and employee between the Company and Project Manager. Project Manager acknowledges that as an independent contractor it, (1) is not entitled to unemployment insurance benefits; (2) is not entitled to workers compensation benefits; and (3) is obligated to file federal and state income tax reports on any monies, stock or other consideration paid pursuant this arrangement.

 

	  	
3.2. Authority.  Under this Agreement, Project Manager will have no authority whatsoever to assume or create any obligation, liability, or to undertake any responsibility whatsoever, express or implied, on behalf of or in the name of the Company or any affiliate of the Company, other than those expressly approved in advance by an executive officer of the Company in connection with the  performance of services under this Agreement.

 

	  	
3.3. Confidential Information and Other Restrictions.  Both during and after the term of this Agreement, Project Manager agrees not to communicate, disclose, or utilize to the Project Managers own benefit or the benefit of any other entity or persons, any techniques, plans, designs, programs, forecasts, business, financial, or customer information or other information not in the public domain pertaining to the business or affairs of the Company or of any of its affiliates.  Information shall not be considered to be in the public domain if revealed or disclosed in contravention of this Agreement or the agreements made between the Company and other parties.  Upon termination of this Agreement, the Project Manager agrees to immediately surrender to the Company all original documentation, software, or computer systems programs, and all copies of any other documents and material received by Project Manager while engaged to provide services under this Agreement.  Project Manager shall not retain or deliver to any other entity or person any of the foregoing or a summary or memorandum thereof.

 

	  	
3.4. Contracts or Other Agreements with Former Employer or Business.  The Project Manager hereby represents and warrants that Project Manager is not subject to any engagement, consulting, employment agreement or similar document, except as previously disclosed and delivered to the Company, with a former employer or any business with which the Project Manager has been associated, which prohibits the Project Manager during a period of time which extends through the date of this letter from any of the following: (i) competing with or in any way participating in any business ; (ii) soliciting personnel ; or (iii) soliciting customers on behalf of another business.

 

	  	
3.5. Termination.  This Agreement may be terminated by either party; (i) upon giving thirty (30) days written notice to the other party; provided however that if the Company terminates this Agreement by written notice during the 4 month period following the Effective Date (the “Term”), the Company shall remain obligated to pay the Management Fee through the end of the Term, or (ii) for Cause, as defined, at any time.  For purposes of  this Agreement, “Cause” means the occurrence of any of the following events: (i) willful and continued failure (other than such failure resulting from personnel’s  incapacity during physical or mental illness) by the Project Manager to substantially perform duties with the Company; (ii) conduct by the Project Manager or its personnel that amounts to willful misconduct, gross negligence or a violation of law; (iii) any act by Project Manager or its personnel of fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Company; (iv) commission by Project Manager of a felony or any crime involving dishonesty; or (v) a material breach of the Agreement by the either the Company or the Project Manager.

 

The Company agrees to pay all costs of collection, including, reasonable attorney's fee, in the case that any payments due under this Agreement are not paid in a timely manner, or in case it becomes necessary to protect the interests hereof, whether suit be brought or not.

 

	  	
3.6. Indemnification.  In no event shall the Project Manager and its personnel be liable for consequential, special, indirect, incidental, punitive, or exemplary loss, damage, cost or expense (including, without limitation, lost profits and opportunity costs) unless due to gross negligence on the part of the Project Manager or its personnel.  The Company agrees to indemnify and hold harmless the Project Manager and its personnel and any affiliate of the Project Manager from and against any and all actions, losses, damages, claims, liabilities, costs and expenses (including without limitation, reasonable legal fees and expenses) in any way arising out of or relating to this Agreement, unless such is due to gross negligence on the part of the Project Manager or its personnel.  The provision of this paragraph shall apply regardless of the form of action, loss, damage, claim, liability, cost, or expense, whether in contract, statute, tort (including without limitation, negligence), or otherwise.  The provisions of this paragraph shall survive the completion or termination of this Agreement.  The Company further agrees to cover any reasonable legal or other professional services costs on behalf of Project Manager should the need for such arise out of any claims made against Project Manager and its personnel relating to the services provided under this Agreement.

 

	  	
3.7. This Agreement constitutes the sole and entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, representations, warranties, statements, promises, arrangements and understandings, whether oral or written, express or implied, between the parties hereto with respect to the subject matter hereof and may not be amended or modified except by an instrument in writing signed by the party to be bound thereby.

 

	  	
3.8. All notices, consents, requests, demands and other communications required or permitted to be given under this Agreement (collectively, the "Notices") shall be in writing and delivered personally, receipt acknowledged, or mailed by registered or certified mail, postage prepaid, return receipt requested, addressed to the parties hereto identified above (or to such other addresses as either of the parties hereto shall specify by notice given in accordance with this provision), or sent by email to the email addresses provided below the signature lines to this Agreement.  All such Notices shall be deemed given when personally delivered as aforesaid, or, if mailed as aforesaid, on the third business day after the mailing thereof or on the day actually received, if earlier, or if sent by email, upon confirmation of receipt, except for a notice of a change of address which shall be effective only upon receipt.

 

 

  

  

  

 

	  	
 3.9. Neither party hereto may assign this Agreement or its or their respective rights, benefits or obligations hereunder without the written consent of the other party hereto

 

	  	
3.10. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assignees.

 

	  	
 3.11. No waiver of any provision of this Agreement or of any breach hereof shall be effective unless in writing and signed by the party to be bound thereby.  The waiver by either party hereto of a breach of any provision of this Agreement, or of any representation, warranty, obligation or covenant in this Agreement by the other party hereto, shall not be construed as a waiver of any subsequent breach or of any other provision, representation, warranty, obligation or covenant of such other party, unless the instrument of waiver expressly so provides.

 

	  	
3.12. This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut with respect to contracts made and to be fully performed therein, without regard to the conflicts of laws principles thereof.

 

	  	
3.13. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision(s) shall be excluded from this Agreement and the balance of this Agreement shall remain in full force and effect.

 

	  	
3.14. This Agreement may be executed in one or more counterparts, each of which, when executed and delivered, shall be deemed an original, but all of which when taken together, shall constitute one and the same instrument.

 

	  	
IN WITNESS WHEREOF, the parties have executed this Agreement of the day and year first above written.

 

SC ADVISORS INC.

 

 

 

By:________________________________

 

Stephen M. Hicks

President <shicks@southridge.com>

 

 

 

 

WESTINGHOUSE SOLAR, INC.

 

 

 

 

By:________________________________

 

 

Margaret Randazzo, Chief Executive Officer and Chief Financial Officer <mrandazzo@westinghousesolar.com>

 

 

  

  

  

 

 

APPENDIX I

 

 

Representations and Warranties of Project Manager Regarding Securities Law Matters.  Project Manager hereby represents and warrants to the Company as follows:

 

 

(a)  Restricted Securities.  Project Manager understands that the Preferred Stock and the common stock issuable upon conversion (together, the “Securities”) are “restricted securities” which have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) or any applicable state securities law. Project Manager acknowledges that the Securities cannot be freely sold, on the public market or otherwise, and must be held indefinitely unless subsequently registered under the Securities Act, or the Securities are sold pursuant to Rule 144 or another exemption from registration.  Project Manager is aware of the provisions of Rule 144 promulgated under the Securities Act which permit limited resale of stock purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, the availability of certain current public information about the Company, the resale occurring not less than six months after a party has purchased and paid for the stock to be resold, and the sale being through a “broker’s transaction” or a transaction directly with a “market maker”.  Project Manager further acknowledges and understands that the Company may not be satisfying the current public information requirement of Rule 144 at the time Project Manager wishes to sell the Securities and, if so, Project Manager would be precluded from selling the Securities under Rule 144 even if the six month minimum holding period has been satisfied. Project Manager understands that it may never be able to liquidate its investment in the Company.

 

(b)  No Understandings or Arrangements.  Project Manager is acquiring the Securities as principal for its own account and not with a view to or for distribution or resale.  Project Manager has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law, and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the sale or distribution of such Securities.  Project Manager is acquiring the Securities hereunder in the ordinary course of its business.

 

(c)  Accredited Status.  Project Manager is an “accredited investor” as defined in Rule 501(a) under the Securities Act.  Project Manager is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

 

(d)  Experience; Information; Risks.  Project Manager 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.  Project Manager 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. Project Manager has had an opportunity to discuss the Company’s business, management and financial affairs with the Company’s management and the opportunity to inspect Company facilities and such books and records and material contracts as Project Manager deemed necessary to its determination to purchase the Securities.  Project Manager has reviewed the reports filed by the Company with the SEC, including the risk factors included in such reports. Project Manager understands and recognizes that the purchase of the Securities is highly speculative and involves a high degree of risk and that only investors who can afford the loss of their entire investment should consider investing in the Company.

 

(e)  General Solicitation.  Project Manager 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.

 

Transfer Restrictions. Project Manager acknowledges the following:

 

(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, 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.

 

(b)  The Project Manager agrees to the imprinting, so long as is required, of a legend on any certificates representing the Securities in the following form:

 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAS 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.

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