Document:

fs12012a1ex4iii_magnegas.htm

Exhibit 4.3

 

NEITHER THE SECURITIES REPRESENTED HEREBY NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATES.  THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  UNLESS SOLD PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

MAGNEGAS CORPORATION

 

ENGAGEMENT WARRANT

 

Original Issue Date:

August 4, 2011

 

MAGNEGAS CORPORATION a Delaware corporation (the “Company”), hereby certifies that, for value received, Northland Securities Inc. or its registered assigns (the “Holder”), is entitled to purchase from the Company up to a total of 150,000 shares of Common Stock (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”), at any time and from time to time from and after the Original Issue Date and through and including August 4, 2021 (the “Expiration Date”), and subject to the following terms and conditions:

 

1.           Definitions. As used in this Warrant, the following terms shall have the respective definitions set forth in this Section 1.  Capitalized terms that are used and not defined in this Warrant that are defined in the Purchase Agreement (as defined below) shall have the respective definitions set forth in the Purchase Agreement.

 

“Closing Price” means, for any date of determination, the price determined by the first of the following clauses that applies: (i) if the Common Stock is then listed or quoted on a Trading Market, the closing bid price per share of the Common Stock for such date (or the nearest preceding date) on such market; (ii) if prices for the Common Stock are then quoted on the OTC Bulletin Board, the closing bid price per share of the Common Stock for such date (or the nearest preceding date) so quoted; (iii) if prices for the Common Stock are then reported in the “Pink Sheets” published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (iv) in all other cases, the fair market value of a share of Common Stock as determined by an independent qualified appraiser selected in good faith and paid for by the Company.

 

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

 

“Exercise Price” means $0.25, subject to adjustment in accordance with Section 9.

 

  

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“Fundamental Transaction” means any of the following: (i) the Company effects any merger or consolidation of the Company with or into another person, (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property.

 

“Original Issue Date” means the Original Issue Date first set forth on the first page of this Warrant or its predecessor instrument.

 

“Purchase Agreement” means the Common Stock and Warrant Purchase Agreement, dated October 28, 2011, to which the Company and the original Holder are parties.

 

“Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in clauses (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.

 

“Trading Market” means whichever of the New York Stock Exchange, NYSE AMEX, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or the OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.

 

2.           Registration of Warrant.  The Company shall register this Warrant upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

3.           Registration of Transfers.  The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Company at its address specified herein. Upon any such registration or transfer, a new Warrant to purchase Common Stock, in substantially the form of this Warrant (any such new Warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

 

	
4. 

	
Exercise and Duration of Warrants.

 

(a)            This Warrant shall be exercisable by the registered Holder in whole at any time and in part from time to time from the Original Issue Date through and including the Expiration Date. At 5:00 p.m., Eastern time on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value.  The Company may not call or redeem any portion of this Warrant without the prior written consent of the affected Holder.

 

 (b)            Notwithstanding anything to the contrary contained herein, the number of Warrant Shares that may be acquired by the Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its affiliates (as defined under Rule 144, “Affiliates”) and any other persons whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act, does not exceed 4.999% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise).  For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  This provision shall not restrict the number of shares of Common Stock which a Holder may receive or beneficially own in order to determine the amount of securities or other consideration that such Holder may receive in the event of a Fundamental Transaction as contemplated in Section 9 of this Warrant.  By written notice to the Company, the Holder may waive the provisions of this Section 4(b) but any such waiver will not be effective until the 61st day after delivery of such notice, nor will any such waiver effect any other Holder.

 

  

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Notwithstanding anything to the contrary contained herein, the number of Warrant Shares that may be acquired by the Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its Affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act, does not exceed 9.999% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise).  For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  This provision shall not restrict the number of shares of Common Stock which a Holder may receive or beneficially own in order to determine the amount of securities or other consideration that such Holder may receive in the event of a Fundamental Transaction as contemplated in Section 9 of this Warrant.  This restriction may not be waived.

 

	
5. 

	
Delivery of Warrant Shares.

 

 (a)            To effect exercises hereunder, the Holder shall not be required to physically surrender this Warrant unless the aggregate Warrant Shares represented by this Warrant are being exercised. Upon delivery of the Exercise Notice (in the form attached hereto) to the Company (with the attached Warrant Shares Exercise Log) at its address for notice set forth herein and upon payment of the Exercise Price multiplied by the number of Warrant Shares that the Holder intends to purchase hereunder and the Company shall promptly (but in no event later than three Trading Days after the Date of Exercise (as defined herein)) issue and deliver to the Holder, a certificate for the Warrant Shares issuable upon such exercise, which, unless otherwise required by the Purchase Agreement, shall be free of restrictive legends. The Company shall, upon request of the Holder and subsequent to the date on which a registration statement covering the resale of the Warrant Shares has been declared effective by the Securities and Exchange Commission, use its reasonable best efforts to deliver Warrant Shares hereunder electronically through the Depository Trust Corporation or another established clearing corporation performing similar functions, if available, provided, that, the Company may, but will not be required to change its transfer agent if its current transfer agent cannot deliver Warrant Shares electronically through the Depository Trust Corporation. A “Date of Exercise” means the date on which the Holder shall have delivered to the Company: (i) the Exercise Notice (with the Warrant Exercise Log attached to it), appropriately completed and duly signed and (ii) if such Holder is not utilizing the cashless exercise provisions set forth in this Warrant, payment of the Exercise Price for the number of Warrant Shares so indicated by the Holder to be purchased.

 

(b)            If by the third Trading Day after a Date of Exercise the Company fails to deliver the required number of Warrant Shares in the manner required pursuant to Section 5(a), then the Holder will have the right to rescind such exercise.

 

  

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(c)            If by the third Trading Day after a Date of Exercise the Company fails to deliver the required number of Warrant Shares in the manner required pursuant to Section 5(a), and if after such third Trading Day and prior to the receipt of such Warrant Shares, the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue by (B) the closing bid price of the Common Stock at the time of the obligation giving rise to such purchase obligation and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In.

 

(d)           The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Warrant Shares upon exercise of the Warrant as required pursuant to the terms hereof.

 

6.           Charges, Taxes and Expenses.  Issuance and delivery of Warrant Shares upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

 

7.           Replacement of Warrant.  If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity (which shall not include a surety bond), if requested. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe. If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company’s obligation to issue the New Warrant.

 

8.           Reservation of Warrant Shares.  The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of Persons other than the Holder (taking into account the adjustments and restrictions of Section 9). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.

 

  

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9.           Certain Adjustments.  The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9.

 

(a)           Stock Dividends and Splits.  If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be adjusted to equal the product obtained by multiplying the then-current Exercise Price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination.

 

(b)           Fundamental Transactions.  If, at any time while this Warrant is outstanding there is a Fundamental Transaction, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant (the “Alternate Consideration”). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. At the Holder’s option and request, any successor to the Company or surviving entity in such Fundamental Transaction shall, either (1) issue to the Holder a new warrant substantially in the form of this Warrant and consistent with the foregoing provisions and evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof, or (2) purchase the Warrant from the Holder for a purchase price, payable in cash within five Trading Days after such request (or, if later, on the effective date of the Fundamental Transaction), equal to the Black Scholes value of the remaining unexercised portion of this Warrant on the date of such request. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (b) and insuring that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

 

 (c)           Number of Warrant Shares.  Simultaneously with any adjustment to the Exercise Price pursuant to this Section 9, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.

 

(d)           Calculations. All calculations under this Section 9 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

 

  

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(e)           Notice of Adjustments.  Upon the occurrence of each adjustment pursuant to this Section 9, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based. Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company’s Transfer Agent.

 

	
10.

	
Payment of Exercise Price. The Holder may pay the Exercise Price in one of the following manners:

 

(a)           Cash Exercise.  The Holder may deliver immediately available funds; or

 

(b)           Cashless Exercise.  If an Exercise Notice is delivered at a time when a registration statement permitting the Holder to resell the Warrant Shares is not then effective or the prospectus forming a part thereof is not then available to the Holder for the resale of the Warrant Shares, then the Holder may notify the Company in an Exercise Notice of its election to utilize cashless exercise, in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows:

 

X = Y [(A-B)/A]  

 

where:  

 

X = the number of Warrant Shares to be issued to the Holder.  

 

Y = the number of Warrant Shares with respect to which this Warrant is being exercised.  

 

A = the average of the Closing Prices for the five Trading Days immediately prior to (but not including) the Exercise Date.  

 

B = the Exercise Price.  

 

For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued.

 

11.              No Fractional Shares. No fractional shares of Warrant Shares will be issued in connection with any exercise of this Warrant. In lieu of any fractional shares which would, otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the Closing Price of one Warrant Share on the date of exercise.

 

12.              Notices.  Any and all notices or other communications or deliveries hereunder (including, without limitation, any Exercise Notice) shall be in writing and shall be deemed given and effective if provided pursuant to the Purchase Agreement. In case any time:  (1) the Company shall declare any cash dividend on its capital stock; (2) the Company shall pay any dividend payable in stock upon its capital stock or make any distribution to the holders of its capital stock; (3) the Company shall offer for subscription pro rata to the holders of its capital stock any additional shares of stock of any class or other rights; (4) there shall be any capital reorganization, or reclassification of the capital stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation; or (5) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of said cases, the Company shall give prompt written notice to the Holder. Such notice shall also specify the date as of which the holders of capital stock of record shall participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their capital stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, or conversion or redemption, as the case may be.  Such written notice shall be given at least 20 days prior to the action in question and not less than 20 days prior to the record date or the date on which the Company’s transfer books are closed in respect thereto.

 

  

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13.          Registration Rights.  The Holder shall be entitled to the registration rights set forth in Section 6 of the Purchase Agreement.

 

14.          Miscellaneous.

 

(a)           This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the Company and the Holder and their successors and assigns.

 

(b)           All questions concerning the construction, validity, enforcement and interpretation of this Warrant 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.

 

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

 

(d)           In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

 

(e)           Prior to exercise of this Warrant, the Holder hereof shall not, by reason of by being a Holder, be entitled to any rights of a stockholder with respect to the Warrant Shares.

 

[Remainder of page intentionally left blank, signature page follows]

 

  

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In witness whereof, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.

 

	 	
MAGNEGAS CORPORATION

	 	 	 
	 	
By: 

	/s/ Dr. Ruggero Santilli
	 	Name: 	Dr. Ruggero Santilli
	 	Its:	CEO

 

  

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EXERCISE NOTICE

The undersigned Holder hereby irrevocably elects to purchase                      shares of Common Stock pursuant to the attached Warrant.  Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant.

 

(1) The undersigned Holder hereby exercises its right to purchase                      Warrant Shares pursuant to the Warrant.

 

(2) The Holder intends that payment of the Exercise Price shall be made as (check one):

 

                     “Cash Exercise” under Section 10

 

                              “Cashless Exercise” under Section 10

 

(3) If the holder has elected a Cash Exercise, the holder shall pay the sum of $____________ to the Company in accordance with the terms of the Warrant.

 

(4) Pursuant to this Exercise Notice, the Company shall deliver to the holder                      Warrant Shares in accordance with the terms of the Warrant.

 

Dated ______________ __, _____                                                                                     Name of Holder:

(Print)

____________________________________

By:_________________________________

Its:_________________________________

(Signature must conform in all respects to

name of holder as specified on the face of

the Warrant)

 

  

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Warrant Shares Exercise Log

	
Date

	
Number of Warrant

Shares Available

to be Exercised

	
Number of Warrant

Shares Exercised

	
Number of Warrant

Shares Remaining

to be Exercised

	  	  	  	  

 

  

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FORM OF ASSIGNMENT

 

[To be completed and signed only upon transfer of Warrant]

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                              the right represented by the attached Warrant to purchase                  shares of Common Stock to which such Warrant relates and appoints                              attorney to transfer said right on the books of the Company with full power of substitution in the premises.

Dated: __________ __, _______

 

________________________________________

(Signature must conform in all respects to name of

holder as specified on the face of the Warrant)

 

Address of Transferee

__________________________________________

__________________________________________

__________________________________________

 

  

Attest:

__________________________________

 

  

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MAGNEGAS CORPORATION

AMENDMENT TO ENGAGEMENT WARRANT

This Amendment No. 1 to Engagement Warrant, dated as of December 23, 2011 (this “Amendment”), will amend that certain warrant, originally issued on August 4, 2011 (the “Engagement Warrant”), by MagneGas Corporation, a Delaware corporation (the “Company”), to Northland Securities, Inc. or its registered assigns (the “Holder”), to purchase 150,000 shares of the Company’s Common Stock (the “Warrant Shares”), par value $0.001 per share, at the per share exercise price of $0.25.

WHEREAS, the Company and the Holder desire to amend the Expiration Date (defined below) of the Engagement Warrant.

NOW, THEREFORE, the parties hereby agree as follows:

1.   Defined Terms.  Capitalized terms used but not defined herein will have the meanings given to them in the Engagement Warrant.

 

2.   Expiration of Engagement Warrant.  The Holder is entitled to purchase from the Company the Warrant Shares at any time and from time to time from and after the Original Issue Date and through and including August 4, 2016 (the “Expiration Date”).

 

3.   All Other Terms Unchanged.  Except as expressly provided in this Amendment, all of the provisions, terms and conditions of the Engagement Warrant remain in full force and effect.

 

4.   Conflicting Provisions.  Should any of the provisions of this Amendment conflict with any of the provisions of the Engagement Warrant, then the provisions of this Amendment shall apply.

 

5.   Counterparts.  This Amendment may be executed in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

 

  

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This Amendment will be effective as of December 23, 2011.

COMPANY:

MAGNEGAS CORPORATION

 

By:          /s/ Ruggero Santilli_________

Ruggero Santilli

Chief Executive Officer

HOLDER:

NORTHLAND SECURITIES, INC.

By:          /s/ Shawn D. Messner                   

Name:    Shawn D. Messner

Title:      VP

 

13Exhibit 10.64

Exhibit 10.64

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this “Agreement”) is entered into as of January 11, 2012, by and between PositiveID Corporation, a Delaware corporation (the “Seller”), and VeriTeQ Acquisition Corporation, a Florida corporation (the “Buyer”). 

A.

The Seller owns 5.0 million shares of the currently issued and outstanding shares of common stock of PositiveID Animal Health Corporation, a Florida corporation (the “Company”), which constitutes all of the Company’s issued and outstanding common stock as of January 11, 2012. The Company has 6.85 million options outstanding as of January 11, 2012.

B.

The Buyer is willing to purchase from the Seller, and the Seller is willing to sell to the Buyer, 5.0 million shares of the Company's common stock (the “Acquisition Shares”).

For valuable consideration received, the parties agree as follows:

1.

Purchase and Sale of the Acquisition Shares.  

1.1

Purchase and Sale of the Acquisition Shares.  Subject to the terms and conditions of this Agreement, at the Closing (as defined herein), the Buyer agrees to purchase from the Seller, and the Seller agrees to sell and convey to the Buyer, the Acquisition Shares, free and clear of all liens, claims, security interests, pledges and encumbrances of every kind.  

1.2

Closing; Deliveries.

(a)

The purchase and sale of the Acquisition Shares (the “Closing”) shall take place at the offices of the Seller in Delray Beach, Florida, as soon as practicable, but no later than January 11, 2012, or at such other time and place as the Buyer and the Seller mutually agree upon, orally or in writing.  

(b)

As consideration for the Acquisition Shares, at Closing, the Buyer shall deliver to the Seller a promissory note in the principal amount of Two Hundred Thousand Dollars ($200,000), executed by the Buyer, which note shall be the form attached as Exhibit A hereto (the "Note") and shall be secured by a first priority lien on the assets of the Company, as evidenced by a Security Agreement between Buyer and the Seller in the form attached as Exhibit B hereto ("Security Agreement").

(c)

The Buyer will issue 4.0 million new shares of the Buyer’s common stock to the Seller. Following the issuance, the total number of shares issued and outstanding of the Buyer will be 33.15 million.

(d)

At Closing, the Buyer shall assume all the obligations of the Company under the PositiveID Animal Health Corporation 2010 Flexible Stock Plan (the “Company Stock Plan”), each outstanding option to purchase shares of the Company common stock under such plan (a “Company Stock Option”) which are set forth in Exhibit C hereto and the agreements evidencing the grants thereof.  As soon as practicable after Closing, the Buyer shall deliver to the holders of Company Stock Options appropriate notice setting forth such holders’ right pursuant to the  Company Stock Plan, and the agreements evidencing the grants of such Company Stock Options shall continue in effect on the same terms and conditions.  

(e)

The Buyer shall deliver to the Seller such other documents and instruments, in form and substance reasonably satisfactory to the Seller and its counsel, as shall be necessary or desirable in order to consummate the transactions contemplated hereby, each dated the date hereof.

(f)

At the Closing, the Seller shall deliver to the Buyer: (i) certificates representing the Acquisition Shares, together with stock powers, duly endorsed in blank in proper form for transfer; and (ii) such other documents and instruments, in form and substance reasonably satisfactory to the Buyer and its counsel, as shall be necessary or desirable in order to consummate the transactions contemplated hereby, each dated the date hereof.

1.3

Certain Agreements.

(a)

Embedded Bio Sensor Patent License.  The Seller hereby grants to the Buyer and the Buyer hereby accepts a non-exclusive, perpetual, non-transferable, license to utilize Seller’s United States Patent No. 7,125,382 “Embedded bio-sensor system” for the purpose of designing and constructing, using, selling and offering to sell products or services related to the VeriChip Business (as defined in Section 6.1 below) for human applications only but excluding the Restricted Applications. “Restricted Applications” means any product or application involving blood glucose detection or diabetes management, including, the GlucoChip, a glucose-sensing microchip, based on the Seller’s proprietary intellectual property, which is being developed by the Seller in conjunction with Receptors LLC.  The Buyer shall pay the Seller a ten percent (10%) royalty on gross revenues attributable to the VeriChip Products. Any royalty payments due under this Section 1.3(a) shall be paid via check or wire transfer within 30 days following the end of each month.  

(b)

Medical Components Agreement.  The Buyer shall pay the Seller twenty percent (20%) of gross revenues of the Buyer from Medical Components, Inc. (“Medcomp”) under that certain Development and Supply Agreement with Medcomp dated April 2, 2009.  Any royalty payments due under this Section 1.3(b) shall be paid via check or wire transfer within 30 days following the end of each month.  The Seller's right to any royalty payments under this Section 1.3(b) shall terminate three (3) years following written approval by the United States Food and Drug Administration of the Medcomp product that incorporates the VeriChip Product. 

2.

Representations and Warranties of the Seller.  The Seller represents and warrants to the Buyer that the following representations are true and complete as of the Closing, except as otherwise indicated:

2.1

Authorization.  The Seller has full power and authority to enter into this Agreement.  The Agreement, when executed and delivered by the Seller, will constitute valid and legally binding obligations of the Seller, enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of a specific performance, injunctive relief, or other equitable remedies.  

2.2

Title.  The Acquisition Shares are free and clear of all pledges, security interests, liens, charges, encumbrances, agreements, claims and options of whatever nature.  Upon consummation of the transaction contemplated hereby, the Buyer will acquire good and valid title to the Acquisition Shares free and clear of all pledges, security interests, liens, charges, encumbrances, agreements, claims and options of whatever nature.  To the Seller's knowledge, the Acquisition Shares were issued to the Seller in compliance with all applicable federal and state securities laws and regulations.  

2.3

No Conflict.  Neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated hereby (i) will violate or conflict with any provision of the Certificate of Incorporation or Bylaws of the Seller, (ii) is prohibited by or requires the Seller to obtain or make any consent, approval, registration or filing under any law, regulation, judgment, order, decree or other restriction of any government, governmental agency, court, body, department, authority, or other person or entity; or (iii) will result in the creation or imposition of any lien, claim, charge, restriction or encumbrance of any kind or give to any person (other than the Buyer) any interest or right in or with respect to the Acquisition Shares.  The Seller is not a party to any contract or subject to any legal restriction that would prevent or restrict complete fulfillment by the Seller of all of the terms and conditions of this Agreement or compliance with any of its obligations hereunder.

3.

Representations and Warranties of the Buyer.  The Buyer represents and warrants to the Seller that the following representations are true and complete as of the Closing:

3.1

Organization and Good Standing.  The Buyer is a corporation duly incorporated and organized, validly existing and its status is active under the laws of the State of Florida.  

3.2

Authorization.  The Buyer has full power and authority to enter into this Agreement, the Note, the Security Agreement, and the other documents contemplated hereby, including, but not limited to, the Note, the Security Agreement, the License Agreement, and the Shared Services Agreement (collectively, the “Transaction Documents”).  The Transaction Documents, when executed and delivered by the Buyer, will constitute a valid and legally binding obligation of the Buyer, enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of a specific performance, injunctive relief, or other equitable remedies.  

3.3

Purchase Entirely for Own Account.  The Buyer is acquiring its interest in the Acquisition Shares for its own account, and not as a nominee for any person other than the Buyer and its affiliates.  The Buyer is not acquiring the Acquisition Shares with a view to or for sale or transfer in connection with any distribution of the Acquisition Shares except pursuant to transactions registered under the Securities Act of 1933, as amended (the “Securities Act”) or exempt from such registration; provided, however, that the disposition of its property shall at all times be within its control.  The Buyer, 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 Acquisition Shares, and has so evaluated the merits and risks of such investment.  The Buyer is able to bear the economic risk of an investment in the Acquisition Shares and, at the present time, is able to afford a complete loss of such investment  

3.4

Disclosure of Information.  The Buyer has had an opportunity to discuss the Company's business, management, financial affairs and the terms and conditions of the offering of the Acquisition Shares with the Company's management and has had an opportunity to review the Company's books and records.  

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3.5

Restricted Securities.  The Buyer understands that the Acquisition Shares are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Buyer must hold the Acquisition Shares indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available.  The Buyer acknowledges that the Seller has no obligation to register or qualify the Acquisition Shares for resale.  

3.6

Accredited Investor.  The Buyer is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act

4.

Conditions of the Buyer’s Obligations at the Closing.  The obligations of the Buyer to the Seller under this Agreement at the Closing are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived:

4.1

Representations and Warranties.  The representations and warranties of the Seller contained in Section 2 shall be true and correct in all material respects on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing.

4.2

Performance.  The Seller shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing.

4.3

Compliance Certificate.  The Seller shall deliver to the Buyer at the Closing a certificate certifying that the conditions specified in Sections 4.1 and 4.2 have been fulfilled.

4.4

Qualifications.  All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Acquisition Shares pursuant to this Agreement shall be obtained and effective as of the Closing.

4.5

Proceedings and Documents.  All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the Buyer, and the Buyer (or its counsel) shall have received all such counterpart original and certified or other copies of such documents as reasonably requested. 

4.6

License Agreement.  The Seller shall deliver to the Buyer the License Agreement, executed by the Seller (the “License Agreement”).

5.

Conditions of the Seller’s Obligations at the Closing.  The obligations of the Seller to the Buyer under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived:

5.1

Representations and Warranties.  The representations and warranties of the Buyer contained in Section 3 shall be true and correct in all material respects on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing.

5.2

Performance.  The Buyer shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it or him on or before the Closing.

5.3

Compliance Certificate.  The Buyer shall deliver to the Seller at the Closing a certificate certifying that the conditions specified in Sections 5.1 and 5.2 have been fulfilled.

5.4

Qualifications.  All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Acquisition Shares pursuant to this Agreement shall be obtained and effective as of the Closing.

5.5

Consents.  The third party consents set forth on Schedule 5.5 shall have been obtained. 

5.6

Seller Board/Independent Committee Approval.  A certificate of a secretary of the Seller certifying to the resolutions of the board of directors of the Seller and an independent committee of the board of directors of the Seller approving this Agreement and the transactions contemplated hereby.

5.7

Shared Services Agreement.  The Seller and the Buyer shall have entered into a Shared Services Agreement substantially in the form of Exhibit D attached hereto (the “Shared Services Agreement”). 

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5.8

Note and Security Agreement.  The Buyer shall deliver to the Seller the Note and Security Agreement, executed by Buyer.

5.9 

License Agreement.  The Buyer shall deliver to the Seller the License Agreement substantially in the form of Exhibit E attached hereto, executed by the Buyer.

5.10

Issuance of the Buyer’s Shares.  The Buyer shall have issued 4.0 million new shares of the Buyer’s common stock to the Seller.

6.

Non-Competition.  

6.1

Non-Competition. During the period beginning on the Closing and ending four (4) years later, (i) the Buyer and its successors and assigns shall not engage (whether as an owner, operator, manager, employee, officer, director, consultant, advisor, representative or otherwise), directly or indirectly, anywhere in the world, in any business competitive with the Seller’s current businesses or with the businesses then currently conducted by the Seller, including, but not limited to, products or services relating to blood glucose measurement and diabetes management, and (ii) the Seller and its respective successors and assigns shall not engage (whether as an owner, operator, manager, employee, officer, director, consultant, advisor, representative or otherwise), directly or indirectly, anywhere in the world, in any business competitive with the Company’s VeriChip Business (as defined below) or Health Link Business (as defined below). The Buyer and the Seller each expressly acknowledge and agree that each and every restriction imposed by this Section 6.1 is reasonable with respect to subject matter and time period.  

For purposes herein, the “VeriChip Business” shall mean the development manufacture, distribution and sale of implantable radio-frequency identification technologies (“VeriChip Product”), including all of VeriChip Product’s identification derivatives, readers, transponders, implanters, and packaging devices, and related services. For the avoidance of doubt, for purposes herein, the VeriChip Business does not include the GlucoChip, a glucose-sensing microchip, based on Seller’s proprietary intellectual property, which is being developed by Seller in conjunction with Receptors LLC or any product developed by Seller related to GlucoChip, glucose detection and/or diabetes management.  For purposes herein, the “Health Link Business” shall mean Seller’s patient-controlled, online repository to store personal health information and to connect the patient to a multitude of customized materials such as personalized health education and online connectivity to caregivers.  

Notwithstanding the foregoing, the provisions of this Section 6.1 shall not prohibit the ownership by the Seller of an aggregate interest of ten percent (10%) of the Company.

6.2

Injunctive Relief; Enforcement. Each of the Buyer and the Seller, acknowledges and agrees that in the event of a breach of any of the provisions of this Section 6, monetary damages shall not constitute a sufficient remedy.  Consequently, in the event of any such breach, the non-breaching party and/or its respective successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof, in each case without the requirement of posting a bond or providing actual damages.  If the final judgment of a court of competent jurisdiction declares that any term or provision of this Section 6 is invalid or unenforceable, each of Buyer and the Seller agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as  so modified after the expiration of the time within which the judgment may be appealed.

7.

Indemnification. 

7.1

Indemnification by the Buyer. The Buyer agrees to hold harmless, defend, and indemnify the Seller and its officers, directors, subsidiaries, affiliates, employees, agents, attorneys, representatives, successors and assigns (collectively the “Seller Indemnified Parties”) from and against, and pay to the applicable Seller Indemnified Parties the amount of any and all losses, liabilities, claims, obligations, deficiencies, demands, judgments, damages (including incidental and consequential damages), interest, fines, penalties, claims, suits, actions, causes of action, assessments, awards, costs and expenses (including the costs of investigation and defense and attorneys’ and other professionals’ fees), whether or not involving a third party claim arising out of or relating to (individually, a “Loss” and collectively, the  “Losses”):

(a)

the failure of any of the representations or warranties made by the Buyer in this Agreement to be true and correct in all respects at and as of the Closing Date;

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(b)

the breach of any covenant or other agreement on the part of the Buyer under this Agreement;

(c)

any claims or demands against any Seller Indemnified Party arising out of or resulting to the Assumed Liabilities (as defined below); 

(d)

any claims or demands against any Seller Indemnified Party arising out of or resulting to Buyer’s ownership, lease, use or operation of the Company after the Closing;

(e)

any claims or demands arising out of or relating to that certain Amended and Restated Supply, License and Development Agreement between the Seller and Digital Angel Corporation dated December 27, 2005, as amended;

(f)

any claims or demands arising out of or relating to that certain Asset Purchase Agreement among the Seller, Digital Angel Corporation, and Destron Fearing Corporation dated November 12, 2008; and 

(g)

any claims or demands arising out of or relating to that certain Letter Agreement between the Seller and Digital Angel Corporation dated May 15, 2008. 

For purposes herein, “Assumed Liabilities” shall mean:

(i)

Any and all liabilities, whether primary or secondary, known or unknown, accrued or contingent, of any kind or nature, arising out of or relating to the operation of the VeriChip Business prior to and after January 11, 2012; and

(ii)

Any and all liabilities, whether primary or secondary, known or unknown, accrued or contingent, of any kind or nature, arising out of or relating to the operation of the Health Link Business prior to and after January 11, 2012.

7.2

Indemnification by the Seller. The Seller agrees to hold harmless, defend, and indemnify the Buyer and its officers, directors, subsidiaries, affiliates, employees, agents, attorneys, representatives, successors and assigns (collectively the “Buyer Indemnified Parties”) from and against, and pay to the applicable Buyer Indemnified Parties the amount of any and all Losses arising out of or relating to:

(a)

the failure of any of the representations or warranties made by the Seller in this Agreement to be true and correct in all respects at and as of the Closing Date; and

(b)

the breach of any covenant or other agreement on the part of the Seller under this Agreement.

7.3

Procedures of Indemnification. The procedures for indemnification shall be as follows:

(a)

A claim for indemnification for any matter not involving a third party claim may be asserted by notice to the party from whom indemnification is sought; provided, however, that failure to so notify the indemnifying shall not preclude the indemnified party from any indemnification which it may claim in accordance with this Section 7.

(b)

In the event that any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), hearing, inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before, or otherwise involving, any court or other governmental entity or any arbitrator or arbitration shall be instituted or that any claim or demand shall be asserted by any third party in respect of which indemnification may be sought under Section 7.3 hereof (a “Third Party Claim”), the indemnified party shall promptly cause written notice of the assertion of any Third Party Claim of which it has knowledge which is covered by this indemnity to be forwarded to the indemnifying party.  The failure of the indemnified party to give reasonably prompt notice of any Third Party Claim shall not release, waive or otherwise affect the indemnifying party’s obligations with respect thereto except to the extent that the indemnifying party can demonstrate actual loss and prejudice as a result of such failure.  Subject to the provisions of this Section 7.3, the indemnifying party shall have the right, at its sole expense, to be represented by counsel of its choice, which must be reasonably satisfactory to the indemnified party, and to defend against, negotiate, settle or otherwise deal with any Third Party Claim which relates to any Losses indemnified against hereunder; provided that the indemnifying party shall have acknowledged in writing to the indemnified party its unqualified obligation to indemnify the indemnified party as provided hereunder.  If the indemnifying party elects to defend against, negotiate, settle or otherwise deal with any Third Party Claim which relates to any Losses indemnified by it hereunder, it shall within five (5) days of the indemnified party’s written notice of the assertion of such Third Party Claim (or sooner, if the nature of the Third Party Claim so requires) notify the indemnified party of its intent to do so; provided, that the indemnifying party must conduct the defense of the 

-5-

Third Party Claim actively and diligently thereafter in order to preserve its rights in this regard.  If the indemnifying party elects not to defend against, negotiate, settle or otherwise deal with any Third Party Claim which relates to any Losses indemnified against hereunder, fails to notify the indemnified party of its election as herein provided or contests its obligation to indemnify the indemnified party for such Losses under this Agreement, the indemnified party may defend against, negotiate, settle or otherwise deal with such Third Party Claim.  If the indemnified party defends any Third Party Claim, then the indemnifying party shall reimburse the indemnified party for the expenses of defending such Third Party Claim upon submission of periodic bills.  If the indemnifying party shall assume the defense of any Third Party Claim, the indemnified party may participate, at its own expense, in the defense of such Third Party Claim; provided, however, that such indemnified party shall be entitled to participate in any such defense with separate counsel at the expense of the indemnifying party if (i) so requested by the indemnifying party to participate or (ii) in the reasonable opinion of counsel to the indemnified party, a conflict or potential conflict exists between the indemnified party and the indemnifying party that would make such separate representation advisable; and provided, further, that the indemnifying party shall not be required to pay for more than one such counsel for all indemnified parties in connection with any Third Party Claim.  The parties hereto agree to provide reasonable access to the other to such documents and information as may be reasonably requested in connection with the defense, negotiation or settlement of any such Third Party Claim.  Notwithstanding anything in this Section 7.3 to the contrary, neither the indemnifying party nor the indemnified party shall, without the written consent of the other party, settle or compromise any Third Party Claim or permit a default or consent to entry of any judgment unless the claimant or claimants and such party provide to such other party an unqualified release from all liability in respect of the Third Party Claim.  

(c)

After any final decision, judgment or award shall have been rendered by a governmental entity of competent jurisdiction and the expiration of the time in which to appeal therefrom, or a settlement shall have been consummated, or the indemnified party and the indemnifying party shall have reached an agreement, in each case with respect to an  indemnifiable claim hereunder, the indemnified party shall forward to the indemnifying party notice of any sums due and owing by the indemnifying party pursuant to this Agreement with respect to such matter and the indemnifying party shall pay all of such remaining sums so due and owing to the indemnified party. 

8.

Survival of Representations, Warranties, Etc. All representations, warranties, covenants, and indemnification obligations of the parties shall survive the execution and delivery hereof and the Closing hereunder.

9.

 Miscellaneous.

9.1

Transfer; Successors and Assigns.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by any of the parties hereto without the prior written consent of the other party.

9.2

Governing Law; Jurisdiction and Venue.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida applicable to contracts executed in and to be performed in that state.  The parties acknowledge that all of the negotiations, anticipated performance and execution of this Agreement occurred or shall occur in the State of Florida, and that, therefore, without limiting the jurisdiction or venue of any other federal or state courts, each of the parties irrevocably and unconditionally (a) agrees that any suit, action or legal proceeding arising out of or relating to this Agreement may be brought in the state or federal courts of record of the State of Florida in Palm Beach County; (b) consents to the jurisdiction of each such court in any suit, action or proceeding; (c) waives any objection which it may have to the laying of venue of any such suit, action or proceeding in any of such courts; and (d) agrees that service of any court paper may be effected on such party by mail, as provided in this Agreement, or in such other manner as may be provided under applicable laws or court rules in said state.

9.3

Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. Delivery of an executed counterpart of this Agreement via facsimile or portable document format shall be effective as delivery of a manually executed counterpart of this Agreement. 

9.4

Titles and Subtitles.  The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

9.5

Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by facsimile (upon customary confirmation of receipt), or 48 hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, or as subsequently modified by written notice.  

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9.6

Finder’s Fee.  Each party represents that it neither is nor will be obligated for any finder’s fee or commission in connection with this transaction.  

9.7

Fees and Expenses.  Each party shall pay all of its own fees and expenses of experts, consultants and the like and other expenses incurred in connection with performing due diligence with respect to this Agreement, the documents referred to herein and the transactions contemplated hereby.

9.8

Attorney’s Fees.  If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

9.9

Amendments and Waivers.  Any term of this Agreement may be amended or waived only with the written consent of the Seller and the Buyer.  Any amendment or waiver effected in accordance with this Section 9.9 shall be binding upon the Buyer and the Seller and each transferee of the Acquisition Shares, and each future holder of all such securities.  

9.10

Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.  In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of the Agreement shall be interpreted as if such provision were so excluded and (c) the balance of the Agreement shall be enforceable in accordance with its terms.

9.11

Delays or Omissions.  No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing.  All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

9.12

Entire Agreement.  This Agreement and the Transaction Documents referred to herein constitute the entire agreement between the parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements relating to the subject matter hereof existing between the parties hereto are expressly canceled.

9.13

Confidentiality.  The Buyer and the Seller each agree that, except with the prior written permission of the other party, it shall at all times hold in confidence and trust and not use or disclose the terms of this Agreement.  Notwithstanding the foregoing, the Buyer or the Seller each may disclose the terms of this Agreement: (a) as required by any court or other governmental body, provided that the Buyer or the Seller provides the other party with prompt notice of such court order or requirement to enable the other party to seek a protective order or otherwise to prevent or restrict such disclosure; (b) to legal counsel or the financial advisor of the Buyer or the Seller; (c) in connection with the enforcement of this Agreement or rights under this Agreement; or (d) to comply with applicable law.  Notwithstanding anything herein to the contrary, the Seller has the right, as required by law and the rules and regulations of the Securities and Exchange Commission, to publicly disclose this Agreement and the transactions contemplated hereby without the prior written approval of the Buyer.  The provisions of this Section 9.13 shall survive the termination of this Agreement.

9.14

Consents.  Notwithstanding anything herein to the contrary, if any consent or other right set forth on Schedule 5.5 is not capable of being assigned or transferred to the Buyer prior to the Closing as a result of an inability to obtain the required approval of any third person, this Agreement will not constitute an assignment, transfer or sublease thereof. With respect to each such consent or other right that cannot be so assigned at Closing, the Seller shall (i) from and after the Closing, promptly assign each such consent or other right to the Buyer if and when such consent or other right may be assigned, (ii) from and after Closing until the assignment of such consent or other right pursuant to clause (i), and provide the Buyer with all of the rights and benefits of such consent or other right accruing after Closing to the extent that the Seller may provide the Buyer with such rights and benefits without violating applicable law or the applicable contract.

[Signature pages follow.]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

					
	 
	BUYER:

	 
	 

	 
	VERITEQ ACQUISITION CORPORATION

	 
	 
	 
	 
	 

	 
	By:

	/s/ Scott R. Silverman
	 
	 

	 
	Print Name:

	Scott R. Silverman

	 
	 

	 
	Title:

	Chief Executive Officer

	 
	 

	 
	 
	 
	 
	 

	 
	Address:

	1690 S. Congress Avenue, Suite 200

	 
	 
	Delray Beach, Florida 33445

	 
	Facsimile:

	561-805-8001

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	SELLER:

	 
	 

	 
	POSITIVEID CORPORATION

	 
	 
	 
	 
	 

	 
	By:

	/s/ William J. Caragol
	 
	 

	 
	Print Name:

	William J. Caragol

	 
	 

	 
	Title:

	Chief Executive Officer

	 
	 

	 
	 
	 
	 
	 

	 
	Address:

	1690 S. Congress Avenue, Suite 200

	 
	 
	Delray Beach, Florida 33445

	 
	Facsimile:

	561-805-8001

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