Document:

exv10w60

Exhibit 10.60

MEMBERSHIP INTEREST PURCHASE AGREEMENT

     This Membership Interest Purchase
Agreement (the “Contract”), made as of this 29th
day of December, 2011 (“Contract Date”) by and between:
WESTERN DIAMOND LLC, a
Nevada limited liability company, and WESTERN LAND COMPANY, LLC, a Kentucky limited
liability company, (hereinafter “Sellers”) agree to sell,
and ARMSTRONG RESOURCE PARTNERS,
L.P., a Delaware limited partnership (“Buyer”), agrees to buy all of Seller’s right, title
and membership interest in Armstrong Conveyance I, LLC (“AC”), a Delaware limited liability
company, representing 100% of the membership interests of AC (the “Membership
Interests”), upon the terms and conditions set forth herein.

     1. Conveyance of Partial Undivided Interest in Property. Upon payment of $20,000,000
by Buyer to Sellers (the “Purchase Price”), Sellers hereby jointly agree to indirectly
convey to Buyer an undivided interest in the Property (as such term is hereafter defined)
as described below. Sellers shall convey to AC a partial undivided interest in that certain
real property and coal reserves described in the Exhibit A
attached hereto and made a part
hereof (the “Property”), subject to the exclusions and
exceptions set forth thereon, equal
to a fraction, the numerator of which shall be equal to Twenty Million Dollars
($20,000,000), and the denominator of which is a dollar amount the Parties agree represents
the aggregate fair market value of the Property (the “Purchased Interest”).

     2. Title.
Sellers shall convey to AC title to the Property by Corporation Special
Warranty Deed; subject, however, to those (if any) rights-of-way, easements, leases, deed
and plat restrictions, partitions, severances, encumbrances, licenses, reservations and
exceptions which are of record on this Contract Date, and to all rights of persons in
possession and to physical conditions, encroachments and possessory rights which would be
evident from an inspection of the Property. Sellers shall have no obligation to furnish
Buyer any evidence of its title to the Property. Buyer agrees that they will have their
attorney conduct whatever examination of title to the Property or purchase title insurance
as Buyer deems necessary. The cost of such title insurance or attorney’s opinion shall be
at Buyer’s expense.

     3. Closing. This Contract shall be fulfilled, the sale closed and possession of the
property given, on or before ninety (90) days after Buyer and/or its parent companies or
affiliates has delivered the Purchase Price to Sellers (the “Closing” or “Closing Date”),
or at such date as the Parties shall mutually agree. The Closing shall not occur unless and
until the representations and warranties of the Parties are hue and correct in all material
respects as of the Closing Date.

     The Closing shall be implemented as follows: (a) the Sellers will convey the Purchased
Interest to AC and (b) the Sellers will assign the Membership Interest directly to Elk
Creek Operating LP (it being acknowledged and agreed that such direct assignment to Elk
Creek Operating, LP is merely for convenience and shall be treated as (i) an
assignment of the Membership Interest by the Armstrong Entities to Elk Creek, (ii) a deemed
contribution of the Membership Interest by Elk Creek, 99.99% to Elk Creek Operating, LP,
and 0.01% to Elk Creek Operating GP, LLC and (iii) a deemed contribution of 0.01% of the
Membership Interest by Elk Creek Operating GP, LLC to Elk Creek Operating, LP). The
assignment and deemed

 

 

contribution described in subsection (b) above shall be deemed to occur immediately following
the effectiveness of the conveyances described in subsection (a) above.

     Upon closing this Contract each party shall have been deemed to have waived any and
all defects of performance hereunder by the other patty, other than the payment of good
funds, but including defects of title.

     4. Representations of the Sellers. Each of the Sellers represents and warrants to
Buyer as to itself, as of the date hereof and the Closing Date, as follows:

	 	(a)	 	The entity is an entity duly organized or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization.
	 
	 	(b)	 	The entity has all power and authority to enter into the Agreement and any ancillary
documents contemplated herein, and the Agreement and the transactions contemplated herein have
been approved by all requisite action by its directors, members or managers, as applicable.
	 
	 	(c)	 	The Agreement constitutes a legal, valid and binding obligation of the entity, enforceable
against the entity in accordance with its terms.
	 
	 	(d)	 	Neither the execution, the delivery or performance of the Agreement conflicts with any
applicable law, any organizational document, or any agreement, judgment, license, order or
permit applicable to or binding upon the entity or any of its properties, except for any
consents required to be obtained by the Sellers.
	 
	 	(e)	 	No consent, approval, order, or authorization of, or declaration, filing, or registration
with, any governmental entity is required to be obtained or made by the entity in connection
with the execution, delivery, or performance by the entity of the Agreement and, the
consummation by it of the transactions contemplated hereby.
	 
	 	(f)	 	The Membership Interest constitutes 100% of the authorized and outstanding membership
interests of AC. There are no outstanding options, warrants, rights, agreements, contracts,
calls, commitments, written demands of any character or requirements of any applicable laws
which might obligate AC to issue any membership interests of AC. There are no pre-emptive
rights (statutory or otherwise) with respect to any of the outstanding membership interests of
AC. There are no contracts or agreements with respect to the voting or transfer of the
Membership Interest. AC is not obligated to redeem or otherwise acquire any of its
outstanding Membership Interest. All dividends and other distributions declared prior to
the date hereof with respect to the issued and outstanding membership interests of AC
have been paid or distributed.

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	 	(g)	 	Each of the Sellers has good and valid title to the Membership Interest owned by it,
free and clear of all liens, claims or encumbrances. At the Closing, each of Sellers will
transfer to Buyer good and valid title to the Membership Interest free and clear of all liens,
claims or encumbrances.
	 
	 	5.	 	Representations of Buyer. Buyer hereby represents to the Sellers as follows:
	 
	 	(a)	 	Buyer is a limited partnership duly formed, validly existing and in good standing under the
laws of the State of Delaware.
	 
	 	(b)	 	Buyer has all power and authority to enter into the Agreement and any ancillary documents
contemplated herein, and the Agreement and the transactions contemplated herein have been
approved by all requisite action by its general partner.
	 
	 	(c)	 	The Agreement constitutes a legal, valid and binding obligation of Buyer, enforceable
against the entity in accordance with its terms.
	 
	 	(d)	 	Neither the execution, the delivery or performance of the Agreement conflicts with any
applicable law, any organizational document, or any agreement, judgment, license, order or
permit applicable to or binding upon Buyer or any of its properties.
	 
	 	(e)	 	No consent, approval, order, or authorization of, or declaration, filing, or registration
with, any governmental entity is required to be obtained or made by Buyer in connection with
the execution, delivery, or performance by Buyer of the Agreement and, the consummation by it
of the transactions contemplated hereby.

     6. Closing Costs. Sellers and Buyer shall pay prorata the real estate taxes on the
Property due and payable for the tax year in which the Closing occurs. Buyer shall pay all
subsequent installments of real estate taxes, any special assessments, title examination expenses
of Buyer’s counsel, any surveying expenses and deed recording fees.

     7. Risk of Loss or Damage. Sellers will, at Sellers’ expense, maintain such policies
of insurance on the Property and improvements thereon as are currently in force until the Closing
Date. The risk of loss or damage to the Property or to any or all improvements thereon between
the Contract Date and Closing Date shall be on Sellers. The occurrence of any loss or damage,
whether substantial or insubstantial, shall not avoid, terminate, or impair this Contract, nor
entitle
Buyer to any reduction in the Price.

     8. Condition
of Property.

	 	(a)	 	The Property is sold “as is.” Sellers make no warranty that the above- referenced land is
either safe or suitable for the purposes for which it is intended to be used,

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	 	 	 	or for any other purpose or use. The land may be unsuitable for reasons including
but not limited to rough, unnatural and unstable surfaces, inadequate subjacent or
lateral support, circumstances relating to the environmental quality of the land, or
other conditions arising out of the prior use of the land.
	 
	 	(b)	 	Sellers agree to permit Buyer, its employees, servants, representatives or contractors to
enter upon the Property at a reasonable time and in a reasonable manner for the purpose of
performing such tests, borings, surveys, studies, sampling, inspections as the Buyer deems
necessary; provided, however, such acts do not unreasonably interfere with the Sellers’ current
use of the land or ongoing operations on the property.
	 
	 	(c)	 	Buyer agrees to defend, indemnify and hold Sellers harmless from and against all claims,
liabilities, law suits, losses, damages, and expenses, including attorney’s fees, arising
either directly or indirectly, out of actions, or omissions, taken by Buyer, their employees,
servants, representatives or contractors, pursuant to this agreement. The provisions of this
paragraph shall survive the expiration, termination or cancellation of the agreement and shall
apply to any action taken by any government agency after the Closing Date.

     9. Ancillary Provisions of this Contract. This Contract and the attached Exhibit A
constitute the entire agreement between the Parties, supersede all representations,
notices, advertisements, bids, agreements, memoranda and correspondence between, by or for
the Parties relating to the Property, and shall be construed in accordance with the laws of
the Commonwealth of Kentucky. No amendment or modification of this Contract shall be
binding unless made in writing. Waiver by either party or performance by the other party of
any of the provisions of this Contract shall not be construed as a waiver of any further
right to insist upon full performance of the terms of this Contract. No adjustment in the
Purchase Price shall later be made for any variances in acreage from
that set forth in the
deeds described on Exhibit A; and the Purchase Price shall be construed as a lump sum
amount paid for the Property as described in Exhibit A. Each patty shall be entitled to
insist strictly upon the timeliness of performance by the other Patty
of the other Party’s
obligations.

     Each
Party hereby indemnifies and holds harmless the other Party from all claims
for commissions, fees, expenses and liability of any broker, agent or finder, or person
claiming to such, by or through such indemnifying Party.

     Neither Patty shall record this Contract. Neither Party shall assign this Contract, or
any of rights hereunder, without the prior written consent of the other Patty, except to
their affiliates, subsidiaries or parent companies. Any such assignment or attempted or
purported assignment shall be void as to the other Party and, moreover, shall constitute a
material breach of this Contract.

     If Sellers breach this Contract, Buyer’s remedy shall be limited to enforcing
specifically this Contract. If Buyer breaches this Contract, Sellers may recover Seller’s
damages.

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     If the parties do not execute this Contract contemporaneously, then the party first
executing and delivering this Contract to the other shall be deemed to have made an offer
to enter into this Contract which shall be irrevocable for a period of ninety (90) days
following the date of such execution. This offer may be accepted by the other party by
executing this Contract and delivering an executed copy to the first patty.

     IN WITNESS WHEREOF, the Parties have executed this Contract as of the date first above
written, by their own hand and deed, and/or by their duly authorized representatives, each
of which represents, by signing this Contract, personally represents and guarantees his
authority to sign for the party indicated.

	 	 	 	 	 

	Western Diamond LLC

	 	Armstrong
Resource Partners, L.P.	 	 
	 
	 	 	 	 
	 

	 	By: Elk Creek GP, LLC, its general partner	 	 
	 
	 	 	 	 
	
	 	 	 	 
	 
 By:
Martin D. Wilson, Manager
	 	 	 	 
	 

	 		 	 
	 

	 	 
 By: Martin
D. Wilson, President
	 	 
	 
	 	 	 	 
	Western
Land Company, LLC
	 	 	 	 
	 
	 	 	 	 
	
	 	 	 	 
	 
 By:
Martin D. Wilson, Manager
	 	 	 	 

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EXHIBIT A

     The Property shall mean all of the coal reserves and real property described in, and
conveyed, demised or otherwise granted in or under the following deeds and instruments, to
Western Land Company, LLC and/or Western Diamond LLC, subject to all rights-of-way,
easements, leases, deed and plat restrictions, partitions, severances, encumbrances,
licenses, reservations, conveyances and exceptions of record, and to all rights of persons
in possession, and to physical conditions, encroachments and possessory rights which would
be evident from an inspection of the property at such time, and further excluding any
portion of the mineral reserves, mining rights, surface property or other real property
associated with Armstrong’s Parkway Mine.:

     (i) The Corporation Special Warranty Deed from Central States Coal Reserves of
Kentucky, LLC and Beaver Dam Coal Company to Western Diamond LLC, dated September 19, 2006,
of record in Deed Book 363, page 369, in the Office of the Ohio County Clerk;

     (ii) The Partial Assignment of Coal Mining Lease from Central States Coal
Reserves of Kentucky, LLC to Western Diamond LLC dated September 19,2006, of record in Deed
Book 363, page 428, in the Office of the Ohio County Clerk;

     (iii) The Corporation Special Warranty Deed from Central States Coal Reserves of
Kentucky, LLC and Beaver Dam Coal Company to Western Diamond LLC, dated September 19, 2006,
of record in Deed Book 363, page 414, in the Office of the Ohio County Clerk;

     (iv) The Corporation Special Warranty Deed from Beaver Dam Coal Company to Western
Diamond LLC, dated September 19,2006, of record in Deed Book 363, page 393, in the Office
of the Ohio County Clerk;

     (v) The Corporation Special Warranty Deed from Beaver Dam Coal Company to Western
Diamond LLC, dated September 19,2006, of record in Deed Book 363, page 403, in the Office
of the Ohio County Clerk;

     (vi) The Corporation Special Warranty Deed from Central States Coal Reserves of
Kentucky, LLC to Western Diamond LLC, dated May 31, 2007, of record in Deed Book 528,
page 284, in the Office of the Muhlenberg County Clerk, and the Deed of Confirmation
between Central States Coal Reserves of Kentucky, LLC, Western Diamond LLC and Armstrong
Coal Reserves, Inc., dated September 30, 2007, of record in Deed Book 531, page 205, in the
Office of the Muhlenberg County Clerk;

     (vii) The Corporation Special Warranty Deed from Central States Coal Reserves of
Kentucky, LLC and Beaver Dam Coal Company to Western Diamond LLC, dated May 31, 2007, of
record in Deed Book 368, page 17, in the Office of the Ohio County Clerk, and the Deed of
Correction between Central States Coal Reserves of Kentucky, LLC, Beaver Dam Coal Company,
LLC and Western Diamond LLC, of record in Deed Book 369, page 759, in the Office of the
Ohio County Clerk;

 

 

     (viii) The
Partial Assignment and Assumption of Mineral Leasehold Estate from Central
States Coal Reserves of Kentucky, LLC to Western Diamond LLC, dated May 31, 2007, of record
in Deed Book 528, page 320, in the Office of the Muhlenberg County Clerk;

     (ix) The
Partial Assignment and Assumption of Mineral Leasehold Estate from Central
States Coal Reserves of Kentucky, LLC to Western Diamond LLC, dated May 31, 2007, of record
in Deed Book 528, page 330, in the Office of the Muhlenberg County Clerk.

     (x) The Corporation Special Warranty Deed from Central States Coal Reserves of
Kentucky, LLC to Western Land Company, LLC, dated December 12,2006, of record in Deed Book
524, page 505, in the Office of the Muhlenberg County Clerk;

     (xi) The Corporation Special Warranty Deed from Central States Coal Reserves of
Kentucky, LLC and Beaver Dam Coal Company to Western Land Company, LLC, dated December 12,
2006, of record in Deed Book 365, page 36, in the Office of the Ohio County Clerk;

     (xii) The
Partial Assignment and Assumption of Mineral Leasehold Estate from Central
States Coal Reserves of Kentucky, LLC to Western Land Company, LLC, dated November 20,
2006, of record in Deed Book 524, page 523, in the Office of the Muhlenberg County Clerk,
as amended and restated in Deed Book 527, page 186, in the Office of the Muhlenberg County
Clerk;

     (xiii) The
Partial Assignment and Assumption of Surface and Mineral Leasehold Estate
from Central States Coal Reserves of Kentucky, LLC to Western Land Company, LLC, dated
November 20,2006, of record in Deed Book 365, page 57, in the Office of the Muhlenberg
County Clerk;

     (xiv) The Corporation Special Warranty Deed from Central States Coal Reserves of
Kentucky, LLC, Beaver Dam Coal Company, Ohio County Coal Company, LLC and Grand Eagle
Mining, Inc. to Western Land Company, LLC, dated March 30, 2007, of record in Deed Book
367, page 1, in the Office of the Ohio County Clerk;

     (xv) The Corporation Special Warranty Deed from Central States Coal Reserves of
Kentucky, LLC to Western Land Company, LLC, dated March 30, 2007, of record in Deed Book
527, page 118, in the Office of the Muhlenberg County Clerk, as corrected by Deed of
Correction dated September 30, 2007, of record in Deed Book 531, page 213, in the Office of
the Muhlenberg County Clerk; and

     (xvi) The Partial Assignment and Assumption of Surface and Mineral Leasehold Estate
from Central States Coal Reserves of Kentucky, LLC to Western Land Company, LLC, dated
March 30, 2007, of record in Deed Book 527, page 161, in the Office of the Muhlenberg
County Clerk.ex1017.htm

EXHIBIT 10.17

 

 SECOND AMENDED AND RESTATED

PLACEMENT AGENCY AGREEMENT

 

February 10 , 2012                                                            

 

Tripoint Global Equities, LLC

17 State Street

Suite 2000

New York, New York 10004

Ladies and Gentlemen:

 Introduction.  Whereas an original Placement Agency Agreement was entered into on February 2, 2012, as amended and restated on February 8, 2012, subject to the terms and conditions therein (collectively, the “Original Agreement”), Trellis Earth Products, Inc., a Nevada corporation (the “Company”), hereby agrees to use its best efforts to sell up to an aggregate of $8,000,000.00 (the “Maximum”) of registered securities (the “Securities”) of the Company, including, but not limited to, Common Stock (the "Common Stock ”), and common share purchase warrants (the “ Warrants ” and, together with the Common Stock, and the shares of common stock underlying the Warrants, the “ Securities ”) directly to various investors (each, an “ Investor ” and, collectively, the “ Investors ”) through Tripoint Global Equities, LLC, as placement agent (“ Tripoint ” or the “ Placement Agent ”).   The Placement Agent may retain other brokers or dealers to act as sub-agents or selected-dealers on its behalf in connection with the Offering (as defined below).  The Company and the Placement Agent have since determined to clarify certain terms of the Original Agreement and therefore are amending and restating the Original Agreement in its entirety. 

 

The Company hereby restates and confirms its agreement with the Placement Agent as follows:

 

Section 1.            Agreement to Act as Placement Agent.

 

(a)           On the basis of the representations, warranties and agreements of the Company herein contained, and subject to all the terms and conditions of this Agreement, the Placement Agent shall be the exclusive Placement Agent in connection with the offering and sale by the Company of the Securities pursuant to the Company's Registration Statement (as defined below), with the terms of such offering (the “ Offering ”) to be subject to market conditions and negotiations between the Company, the Placement Agent and the prospective Investors.  The Placement Agent will act on a reasonable best efforts basis and the Company agrees and acknowledges that there is no guarantee of the successful placement of the Securities, or any portion thereof, in the prospective Offering.  Under no circumstances will the Placement Agent or any of its “Affiliates” (as defined below) be obligated to underwrite or purchase any of the Securities for its own account or otherwise provide any financing.  The Placement Agent shall act solely as the Company’s agent and not as principal.  The Placement Agent shall have no authority to bind the Company with respect to any prospective offer to purchase Securities and the Company shall have the sole right to accept offers to purchase Securities and may reject any such offer, in whole or in part.  Subject to the terms and conditions hereof, payment of the purchase price for, and delivery of, the Securities shall be made at one or more closings (each a “ Closing ” and the date on which each Closing occurs, a “ Closing Date ”).  As compensation for services rendered, on each Closing Date, the Company shall pay to the Placement Agent the fees and expenses set forth below:

 

  

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 (i)           A cash fee equal to 8% of the gross proceeds received by the Company from the sale of the Securities at the Closing. 

 (ii)            Warrants for the purchase of an amount equal to 7% of the securities issued in the Offering (the “Placement Agent Warrants”).  The Placement Agent Warrants will have a strike price equal to 140% of the Offering price, have a term of three years and be exercisable for cash, unless the cashless exercise right as set forth herein is available.  As per FINRA Rule 5110(g)(1), for a period of six months after the issuance date of the Placement Agent Warrants, neither the Placement Agent Warrants nor any warrant shares issued upon exercise of the Placement Agent Warrants shall be (A) sold, transferred, assigned, pledged, or hypothecated, or (B) the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately following the date of effectiveness or commencement of sales of the offering pursuant to which the compensation warrants are being issued, except the transfer of any security as permitted by FINRA rules.  Additionally, the Placement Agent shall be able to exercise the Placement Agent Warrants via a cashless exercise if, at any time during the term of the Placement Agent Warrants, they are not registered in an effective registration statement or they are included in a registration statement that ceases to be effective for any duration of time during the Placement Agent Warrants’ term.  

 

 (iii)          Subject to compliance with FINRA Rule 5110(f)(2)(D), the Company also agrees to reimburse Tripoint’s expenses equal to 1.5% of the aggregate gross proceeds raised in the Offering (exclusive of the fees of Placement Agent’s counsel, as set forth in Section 6(x)) (provided, however, that such expense cap in no way limits or impairs the indemnification and contribution provisions of this Agreement).  Such reimbursement shall be payable immediately upon (but only in the event of) a Closing of the Offering.

 

(b)           The term of the Placement Agent's exclusive engagement will be until the earlier of (i) 12 months from the date hereof or (ii) completion of the Offering (the “ Exclusive Term ”);   provided ,  however , that a party hereto may terminate the engagement with respect to itself at any time upon 10 days written notice to the other parties.   Notwithstanding anything to the contrary contained herein, the provisions concerning confidentiality, indemnification and contribution contained herein and the Company’s obligations contained in the indemnification provisions will survive any expiration or termination of this Agreement, and the Company’s obligation to pay fees actually earned and payable and to reimburse expenses actually incurred and reimbursable pursuant to Section 1 hereof and which are permitted to be reimbursed under FINRA Rule 5110(f)(2)(D), will survive any expiration or termination of this Agreement.  Nothing in this Agreement shall be construed to limit the ability of the Placement Agent or its Affiliates to pursue, investigate, analyze, invest in, or engage in investment banking, financial advisory or any other business relationship with Persons (as defined below) other than the Company. As used herein (i) “Persons” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind and (ii) “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”).

 

(c)           If during the Exclusive Term, or within twelve months after the date of termination or expiration of this Agreement, securities are sold by the Company to investors identified to the Company or contacted by Tripoint on behalf of the Company, then the Company shall pay to Tripoint, at the time of each such sale, the fees set forth in this Section 1 with respect to any such sale.  Upon termination of this Agreement and at the request of the Company, Tripoint will provide the Company with a list of investors identified and/or contacted by Tripoint in its capacity as placement agent hereunder.

 

  

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Section 2.            Representations, Warranties and Covenants of the Company.  The Company hereby represents, warrants and covenants to the Placement Agent as of the date hereof, and as of each Closing Date, as follows:

 

(a)           Securities Law Filings.  The Company has filed with the Securities and Exchange Commission (the “ Commission ”) a registration statement on Form S-1 (Registration File No. 333-176970) under the Securities Act and the rules and regulations (the “ Rules and Regulations ”) of the Commission promulgated thereunder.  At the time of such filing, the Company met the requirements of Form S-1 under the Securities Act.  The Company will file with the Commission pursuant to Rules 430A and/or 424(b) under the Securities Act, a final prospectus included in such registration statement relating to the offering of the Securities and the plan of distribution thereof and has advised the Placement Agent of all further information (financial and other) with respect to the Company required to be set forth therein. Such registration statement, including the exhibits thereto, as amended at the date of this Agreement, is hereinafter called the “ Registration Statement ”; such prospectus in the form in which it appears in the Registration Statement is hereinafter called the “ Base Prospectus ”; and the amended or supplemented form of prospectus, in the form in which it will be filed with the Commission pursuant to Rules 430A and/or 424(b) (including the Base Prospectus as so amended or supplemented) is hereinafter called the “ Prospectus Supplement .”  All references in this Agreement to financial statements and schedules and other information that is “contained,” “included,” “described,” “referenced,” “set forth” or “stated” in the Registration Statement, the Base Prospectus or the Prospectus Supplement (and all other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information that is or is deemed to be incorporated by reference in the Registration Statement, the Base Prospectus or the Prospectus Supplement, as the case may be.  Following FINRA approval of the compensation arrangements set forth in Section 1, the Company has no reason to believe that the Registration Statement will not be declared effective by the Commission. 

 

(b)           Assurances.  The Registration Statement (and any further documents to be filed with the Commission) contains all exhibits and schedules as required by the Securities Act.  Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in all material respects with the Securities Act and the applicable Rules and Regulations and did not and, as amended or supplemented, if applicable, will 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 not misleading.  The Base Prospectus, and the Prospectus Supplement, each as of its respective date, comply in all material respects with the Securities Act and the applicable Rules and Regulations.  Each of the Base Prospectus and the Prospectus Supplement, as amended or supplemented, did not and will not contain as of the date thereof any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  No post-effective amendment to the Registration Statement reflecting any facts or events arising after the date thereof which represent, individually or in the aggregate, a fundamental change in the information set forth therein is required to be filed with the Commission.  There are no documents required to be filed with the Commission in connection with the transaction contemplated hereby that (x) have not been filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time period.  There are no contracts or other documents required to be described in the Base Prospectus, or Prospectus Supplement, or to be filed as exhibits or schedules to the Registration Statement, that have not been described or filed as required.   The Company will not, without the prior consent of the Placement Agent, prepare, use or refer to, any free writing prospectus.

 

(c)           Offering Materials.  The Company has delivered, or will as promptly as practicable deliver, to the Placement Agent complete conformed copies of the Registration Statement and of each consent and certificate of experts, as applicable, filed as a part thereof, and conformed copies of the Registration Statement (without exhibits), the Base Prospectus, and the Prospectus Supplement, as amended or supplemented, in such quantities and at such places as the Placement Agent reasonably requests.  Neither the Company nor any of its directors and officers has distributed and none of them will distribute, prior to the Closing Date, any offering material in connection with the offering and sale of the Shares other than the Base Prospectus, the Prospectus Supplement, the Registration Statement, and any other materials permitted by the Securities Act.

 

  

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(d)           Subsidiaries.  All of the direct and indirect subsidiaries of the Company (the “ Subsidiaries ”) are set forth in the exhibits to the Registration Statement.  Except as described in the Base Prospectus and Prospectus Supplement, the Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any liens, charges, security interests, encumbrances, rights of first refusal, preemptive rights or other restrictions (collectively, “ Liens ”), and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

 

(e)           Organization and Qualification.  The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing (where applicable) under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of this Agreement or any other agreement entered into between the Company and the Investors, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under this Agreement or the transactions contemplated under the Prospectus Supplement (any of (i), (ii) or (iii), a “ Material Adverse Effect ”) and no action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened (“ Proceeding ”) has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

(f)           Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and the Prospectus Supplement and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of each of this Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby and under the Prospectus Supplement have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Company’s Board of Directors (the “ Board of Directors ”) or the Company’s shareholders in connection therewith other than in connection with the Required Approvals (as defined below).  This Agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

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

 

(h)           Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of this Agreement and the transactions contemplated pursuant to the Prospectus Supplement, other than: (i) the filing with the Commission of the Prospectus Supplement,  and (ii) such filings as are required to be made under applicable state securities laws (collectively, the “ Required Approvals ”).

 

(i)            Issuance of the Securities; Registration.  The Securities are duly authorized and, when issued and paid for in accordance with the Prospectus Supplement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.  The shares underlying the Warrants (the “ Warrant Shares ”), when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.  The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to the Prospectus Supplement. 

 

  

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(j)           Capitalization.  The capitalization of the Company is as set forth in the Prospectus Supplement.  The Company has not issued any capital stock since the date of filing of its latest periodic report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or, in the event that the Company is not required to file periodic reports pursuant to Section 13(a) or 15(d) of the Exchange Act, the Company has not issued any capital stock since the date of filing of the Prospectus Supplement, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time any Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock (“ Common Stock Equivalents ”) outstanding as of the date of the filing of the Prospectus Supplement.  No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by this Agreement and the transactions contemplated pursuant to the Prospectus Supplement.  Except as a result of the purchase and sale of the Securities and except for stock options issued pursuant to the Company's stock option plans, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents.  Except as disclosed in the Registration Statement, the issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Investors) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  No further approval or authorization of any shareholder, the Board of Directors or others is required for the issuance and sale of the Securities.  There are no shareholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s shareholders.

 

(k)           SEC Reports; Financial Statements.  The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “ SEC Reports ”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“ GAAP ”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

(l)            Material Changes; Undisclosed Events, Liabilities or Developments.  Since the date of the latest audited financial statements included within the Registration Statement, except as specifically disclosed in the Registration Statement, the Prospectus Supplement or a subsequent SEC Report filed prior to the date hereof, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans.  The Company does not have pending before the Commission any request for confidential treatment of information.  Except for the issuance of the Securities contemplated by the Prospectus Supplement or disclosed in the Prospectus Supplement, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective business, prospects, properties, operations, assets or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.

 

  

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

 

(n)           Labor Relations.  No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect.  None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good.  No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.  The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 

(o)           Compliance.  Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not reasonably be expected to result in a Material Adverse Effect.

 

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

 

(q)           Title to Assets.  The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens disclosed in the Prospectus Supplement, Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

 

(r)           Patents and Trademarks.  The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “ Intellectual Property Rights ”).  None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement.  Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the Registration Statement, a notice (written or otherwise) of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as would not have a Material Adverse Effect.  To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.  The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

  

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(s)           Insurance.  The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage.  Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

 

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

 

(u)           Sarbanes-Oxley; Internal Accounting Controls.  The Company is in compliance in all material respects with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of each Closing Date.  The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.  The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “ Evaluation Date ”).  If it is currently required to file periodic reports under Section 13(a) or 15(d) of the Exchange Act, the Company has presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

(v)           Certain Fees.  Except as set forth in the Prospectus Supplement, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement and the transactions contemplated pursuant to the Prospectus Supplement.  The Investors shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement and the transactions contemplated pursuant to the Prospectus Supplement.

 

(w)           Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.

 

(x)           Registration Rights.  No Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.

 

(y)           Reserved.

 

(z)           Application of Takeover Protections.  The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Investors as a result of the Investors and the Company fulfilling their obligations or exercising their rights under this Agreement and the transactions contemplated pursuant to the Prospectus Supplement, including without limitation as a result of the Company’s issuance of the Securities and the Investors’ ownership of the Securities.

 

  

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(aa)         Disclosure.  Except with respect to the material terms and conditions of the transactions contemplated by this Agreement and the transactions contemplated pursuant to the Prospectus Supplement, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Investors or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed in the Prospectus Supplement.   The Company understands and confirms that the Investors will rely on the foregoing representation in effecting transactions in securities of the Company.  All of the disclosure furnished by or on behalf of the Company to the Investors regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.  The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading.

(bb)         No Integrated Offering.  Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions of any trading market on which any of the securities of the Company are listed or designated.

 

(cc)         Solvency.  Based on the consolidated financial condition of the Company as of each Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid.  The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).  The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from each Closing Date.  The Base Prospectus sets forth as of September 30, 2011 all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments.  For the purposes of this Agreement, “ Indebtedness ” means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP.  Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

 

(dd)         Tax Status.  Except for matters that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary (i) has made or filed all United States federal and state income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply.  There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.

 

(ee)         Foreign Corrupt Practices.  Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

(ff)           Accountants.  The Company’s accounting firm is set forth in the Base Prospectus.  To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the year ending December 31, 2011.

 

(gg)         Regulation M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement agent in connection with the placement of the Securities.

 

(hh)         Office of Foreign Assets Control.  Neither the Company nor, to the Company's knowledge, any director, officer, agent, employee or affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“ OFAC ”).

 

  

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(ii)           U.S. Real Property Holding Corporation.  The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Investor’s request.

 

(jj)           Bank Holding Company Act.  Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended (the “ BHCA ”) and to regulation by the Board of Governors of the Federal Reserve System (the “ Federal Reserve ”).  Neither the Company nor any of its Subsidiaries owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.  Neither the Company nor any of its Subsidiaries exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

 

(kk)         Money Laundering.  The operations of the Company are and have been conducted at all times in compliance in all material respects with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “ Money Laundering Laws ”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

 

(ll)           Certificates.  Any certificate signed by an officer of the Company and delivered to the Placement Agent or to counsel for the Placement Agent shall be deemed to be a representation and warranty by the Company to the Placement Agent as to the matters set forth therein.

 

 (mm)       Reliance.  The Company acknowledges that the Placement Agent will rely upon the accuracy and truthfulness of the foregoing representations and warranties and hereby consents to such reliance.

 

(nn)         Forward-Looking Statements.   No forward-looking statements (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in either the Registration Statement, the Base Prospectus or the Prospectus Supplement has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

 

(oo)         Statistical or Market-Related Data.  Any statistical, industry-related and market-related data included or incorporated by reference in the Registration Statement, the Base Prospectus or the Prospectus Supplement, are based on or derived from sources that the Company reasonably and in good faith believes to be reliable and accurate, and such data agree with the sources from which they are derived.

 

(pp)         FINRA Affiliations.  Except as set forth on Schedule 2(pp), there are no affiliations with any FINRA member firm among the Company’s officers, directors or, to the knowledge of the Company, except as set forth on  Schedule 2(pp), any five percent (5%) or greater shareholder of the Company.

 

(qq)         No Incorporation by Reference.  No documents are incorporated by reference in the Base Prospectus or the Prospectus Supplement pursuant to Item 12 of Form S-1 which were filed under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”).

 

Section 3.            Delivery and Payment.  Each Closing shall occur at the offices of the Placement Agent (or at such other place as shall be agreed upon by the Placement Agent and the Company).  Subject to the terms and conditions hereof, at each Closing payment of the purchase price for the Securities sold on such Closing Date shall be made by Federal Funds wire transfer, against delivery of such Securities, and such Securities shall be registered in such name or names and shall be in such denominations, as the Placement Agent may request at least one business day before the time of purchase (as defined below).

 

Deliveries of the documents with respect to the purchase of the Securities, if any, shall be made at the offices of Placement Agent.   All actions taken at a Closing shall be deemed to have occurred simultaneously.

 

  

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Section 4.            Covenants and Agreements of the Company.  The Company further covenants and agrees with the Placement Agent as follows:

 

(a)           Registration Statement Matters.  The Company will advise the Placement Agent promptly after it receives notice thereof of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to any Prospectus Supplement or any amended Prospectus Supplement has been filed and will furnish the Placement Agent with copies thereof.  The Company will file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 14 or 15(d) of the Exchange Act subsequent to the date of any Prospectus Supplement and for so long as the delivery of a prospectus is required in connection with the Offering.  The Company will advise the Placement Agent, promptly after it receives notice thereof (i) of any request by the Commission to amend the Registration Statement or to amend or supplement any Prospectus Supplement or for additional information, and (ii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or any order preventing or suspending the use of the Base Prospectus or any Prospectus Supplement or any amendment or supplement thereto or any post-effective amendment to the Registration Statement, of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, of the institution or threatened institution of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or a Prospectus Supplement or for additional information. The Company shall use its best efforts to prevent the issuance of any such stop order or prevention or suspension of such use.  If the Commission shall enter any such stop order or order or notice of prevention or suspension at any time, the Company will use its best efforts to obtain the lifting of such order at the earliest possible moment, or will file a new registration statement and use its best efforts to have such new registration statement declared effective as soon as practicable.  Additionally, the Company agrees that it shall comply with the provisions of Rules 424(b), 430A, 430B and 430C, as applicable, under the Securities Act, including with respect to the timely filing of documents thereunder, and will use its reasonable efforts to confirm that any filings made by the Company under such Rule 424(b) are received in a timely manner by the Commission.

(b)           Blue Sky Compliance.  The Company will cooperate with the Placement Agent and the Investors in endeavoring to qualify the Securities for sale under the securities laws of such jurisdictions (United States and foreign) as the Placement Agent and the Investors may reasonably request and will make such applications, file such documents, and furnish such information as may be reasonably required for that purpose, provided the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction where it is not now so qualified or required to file such a consent, and provided further that the Company shall not be required to produce any new disclosure document other than a Prospectus Supplement.  The Company will, from time to time, prepare and file such statements, reports and other documents as are or may be required to continue such qualifications in effect for so long a period as the Placement Agent may reasonably request for distribution of the Securities.  The Company will advise the Placement Agent promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Securities for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company shall use its best efforts to obtain the withdrawal thereof at the earliest possible moment.

 

(c)           Amendments and Supplements to a Prospectus Supplement and Other Matters.  The Company will comply with the Securities Act and the Exchange Act, and the rules and regulations of the Commission thereunder, so as to permit the completion of the distribution of the Securities as contemplated in this Agreement and any Prospectus Supplement.  If during the period in which a prospectus is required by law to be delivered in connection with the distribution of Securities contemplated by any Prospectus Supplement (the “ Prospectus Delivery Period ”), any event shall occur as a result of which, in the judgment of the Company or in the opinion of the Placement Agent or counsel for the Placement Agent, it becomes necessary to amend or supplement any Prospectus Supplement in order to make the statements therein, in the light of the circumstances under which they were made, as the case may be, not misleading, or if it is necessary at any time to amend or supplement any Prospectus Supplement to comply with any law, the Company will promptly prepare and file with the Commission, and furnish at its own expense to the Placement Agent and to dealers, an appropriate amendment to the Registration Statement or supplement to the Registration Statement or any Prospectus Supplement that is necessary in order to make the statements in any Prospectus Supplement as so amended or supplemented, in the light of the circumstances under which they were made, as the case may be, not misleading, or so that the Registration Statement or any Prospectus Supplement, as so amended or supplemented, will comply with law.  Before amending the Registration Statement or supplementing any Prospectus Supplement in connection with the Offering, the Company will furnish the Placement Agent with a copy of such proposed amendment or supplement and will not file any such amendment or supplement to which the Placement Agent reasonably objects.

 (d)           Copies of any Amendments and Supplements to a Prospectus Supplement.  The Company will furnish the Placement Agent, without charge, during the period beginning on the date hereof and ending on the later of the last Closing Date of the Offering, as many copies of any Prospectus Supplement and any amendments and supplements thereto as the Placement Agent may reasonably request.

 

(e)           Reserved.

 

(f)           Transfer Agent.  The Company will maintain, at its expense, a registrar and transfer agent for the Common Stock.

 

  

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(g)           Earnings Statement.  As soon as practicable and in accordance with applicable requirements under the Securities Act, but in any event not later than 18 months after the last Closing Date, the Company will make generally available to its security holders and to the Placement Agent an earnings statement, covering a period of at least 12 consecutive months beginning after the last Closing Date, that satisfies the provisions of Section 11(a) and Rule 158 under the Securities Act.

 

(h)           Periodic Reporting Obligations.  During the Prospectus Delivery Period, the Company will duly file, on a timely basis, with the Commission all reports and documents required to be filed under the Exchange Act within the time periods and in the manner required by the Exchange Act.

 

(i)           Additional Documents.  The Company will enter into any subscription, purchase or other customary agreements as the Placement Agent or the Investors deem necessary or appropriate to consummate the Offering, all of which will be in form and substance reasonably acceptable to the Company, the Placement Agent and the Investors.  The Company agrees that the Placement Agent may rely upon, and each is a third party beneficiary of, the representations and warranties, and applicable covenants, set forth in any such purchase, subscription or other agreement with Investors in the Offering.

 

(j)            No Manipulation of Price.  The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company.

 

(k)           Acknowledgment.  The Company acknowledges that any advice given by the Placement Agent to the Company is solely for the benefit and use of the Board of Directors of the Company and may not be used, reproduced, disseminated, quoted or referred to, without the Placement Agent's prior written consent.

 

Section 5.           Conditions of the Obligations of the Placement Agent.  The obligations of the Placement Agent hereunder shall be subject to the accuracy of the representations and warranties on the part of the Company set forth in Section 2 hereof, in each case, unless otherwise noted below, as of the date hereof and as of each Closing Date as though then made, to the timely performance by each of the Company of its covenants and other obligations hereunder on and as of such dates, and to each of the following additional conditions:

 

(a)           Accountants’ Comfort Letter.  Notwithstanding anything contained herein to the contrary, as of the first Closing, the Placement Agent shall have received, and the Company shall have caused to be delivered to the Placement Agent, a letter from GBH CPAs, PC (the independent registered public accounting firm of the Company), addressed to the Placement Agent, dated as of such first Closing, in form and substance satisfactory to the Placement Agent.  The letter shall not disclose any change in the condition (financial or other), earnings, operations, business or prospects of the Company from that set forth in the Base Prospectus or the applicable Prospectus Supplement, which, in the Placement Agent's sole judgment, is material and adverse and that makes it, in the Placement Agent's sole judgment, impracticable or inadvisable to proceed with the Offering of the Securities as contemplated by such Prospectus Supplement.

 

(b)           Compliance with Registration Requirements; No Stop Order; No Objection from the FINRA.  Each Prospectus Supplement (in accordance with Rule 424(b)) , if any, shall have been duly filed with the Commission, as appropriate; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; no order preventing or suspending the use of any Prospectus Supplement shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; no order having the effect of ceasing or suspending the distribution of the Securities or any other securities of the Company shall have been issued by any securities commission, securities regulatory authority or stock exchange and no proceedings for that purpose shall have been instituted or shall be pending or, to the knowledge of the Company, contemplated by any securities commission, securities regulatory authority or stock exchange; all requests for additional information on the part of the Commission shall have been complied with; and the FINRA shall have raised no objection to the fairness and reasonableness of the placement terms and arrangements.

 

(c)           Corporate Proceedings.  All corporate proceedings and other legal matters in connection with this Agreement, the Registration Statement and each Prospectus Supplement, and the registration, sale and delivery of the Securities, shall have been completed or resolved in a manner reasonably satisfactory to the Placement Agent's counsel, and such counsel shall have been furnished with such papers and information as it may reasonably have requested to enable such counsel to pass upon the matters referred to in this Section 5.

 

(d)           No Material Adverse Change.  Subsequent to the execution and delivery of this Agreement and prior to each Closing Date, in the Placement Agent's sole judgment after consultation with the Company, there shall not have occurred any Material Adverse Effect.

(e)           Opinion of Counsel for the Company.  The Placement Agent shall have received on each Closing Date the favorable opinion of legal counsel to the Company, dated as of such Closing Date, including, without limitation, a negative assurance letter, addressed to the Placement Agent in form and substance satisfactory to the Placement Agent.

 

  

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(f)           Officers’ Certificate.  The Placement Agent shall have received on each Closing Date a certificate of the Company, dated as of such Closing Date, signed by the Chief Executive Officer and Chief Financial Officer of the Company, to the effect that, and the Placement Agent shall be satisfied that, the signers of such certificate have reviewed the Registration Statement, the Base Prospectus, any Prospectus Supplement, and this Agreement and to the further effect that:

 

(i)           The representations and warranties of the Company in this Agreement are true and correct, as if made on and as of such Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to such Closing Date;

 

(ii)          No stop order suspending the effectiveness of the Registration Statement or the use of the Base Prospectus or any Prospectus Supplement has been issued and no proceedings for that purpose have been instituted or are pending or, to the Company’s knowledge, threatened under the Securities Act; no order having the effect of ceasing or suspending the distribution of the Securities or any other securities of the Company has been issued by any securities commission, securities regulatory authority or stock exchange in the United States and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, contemplated by any securities commission, securities regulatory authority or stock exchange in the United States;

 

(iii)         When the Registration Statement became effective, at the time of sale, and at all times subsequent thereto up to the delivery of such certificate, the Registration Statement, when it became effective, contained all material information required to be included therein by the Securities Act and the applicable rules and regulations of the Commission thereunder, as the case may be, and in all material respects conformed to the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder, as the case may be, and the Registration Statement, did not and does not include 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 (provided, however, that the preceding representations and warranties contained in this paragraph (iii) shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by the Placement Agent expressly for use therein) and, since the effective date of the Registration Statement, there has occurred no event required by the Securities Act and the rules and regulations of the Commission thereunder to be set forth in the Registration Statement which has not been so set forth; and

 

(iv)         Subsequent to the respective dates as of which information is given in the Registration Statement and any Prospectus Supplement, there has not been:  (a) any Material Adverse Effect; (b) any transaction that is material to the Company and the Subsidiaries taken as a whole, except transactions entered into in the ordinary course of business; (c) any obligation, direct or contingent, that is material to the Company and the Subsidiaries taken as a whole, incurred by the Company or any Subsidiary, except obligations incurred in the ordinary course of business; (d) any material change in the capital stock (except changes thereto resulting from the exercise of outstanding stock options or warrants) or outstanding indebtedness of the Company or any Subsidiary; (e) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company; or (f) any loss or damage (whether or not insured) to the property of the Company or any Subsidiary which has been sustained or will have been sustained which has a Material Adverse Effect.

(g)           Bring-down Comfort Letter.  On each Closing Date following the first Closing, the Placement Agent shall have received from GBH CPAs, PC, or such other independent registered public accounting firm of the Company, a letter dated as of such Closing Date, in form and substance satisfactory to the Placement Agent, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (a) of this Section 5, except that the specified date referred to therein for the carrying out of procedures shall be no more than three business days prior to such Closing Date.

 

(h)           Reserved.

 

(i)           Additional Documents.  On or before each Closing Date, the Placement Agent and counsel for the Placement Agent shall have received such information and documents as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the Securities as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained.

 

If any condition specified in this Section 5 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Placement Agent by notice to the Company at any time on or prior to a Closing Date, which termination shall be without liability on the part of any party to any other party, except that Section 6 (Payment of Expenses), Section 7 (Indemnification and Contribution) and Section 8 (Representations and Indemnities to Survive Delivery) shall at all times be effective and shall survive such termination.

 

Section 6.           Payment of Expenses.  The Company agrees to pay all costs, fees and expenses incurred by the Company in connection with the performance of its obligations hereunder and in connection with the transactions contemplated hereby, including, without limitation:  (i) all expenses incident to the issuance, delivery and qualification of the Securities (including all printing and engraving costs); (ii) all fees and expenses of the registrar and transfer agent of the Common Stock; (iii) all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the Securities; (iv) all fees and expenses of the Company’s counsel, independent public or certified public accountants and other advisors; (v) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and distribution of the Registration Statement (including financial statements, exhibits, schedules, consents and certificates of experts), the Base Prospectus and each Prospectus Supplement, and all amendments and supplements thereto, and this Agreement; (vi) all filing fees, reasonable attorneys’ fees and expenses incurred by the Company or the Placement Agent in connection with qualifying or registering (or obtaining exemptions from the qualification or registration of) all or any part of the Securities for offer and sale under the state securities or blue sky laws or the securities laws of any other country, and, if requested by the Placement Agent, preparing and printing a “ Blue Sky Survey ,” an “ International Blue Sky Survey ” or other memorandum, and any supplements thereto, advising the Placement Agent of such qualifications, registrations and exemptions; (vii) if applicable, the filing fees incident to the review and approval by the FINRA of the Placement Agent's participation in the offering and distribution of the Securities;  (viii) all costs and expenses incident to the travel and accommodation of the Company’s and the Placement Agent's employees on the “ roadshow ,” if any;  provided,  however , that the Placement Agent shall only be reimbursed for any such costs and expenses of the Company’s and Placement Agent’s employees on the “roadshow” that do not exceed the 1.5% expense allowance available to the Placement Agent pursuant to Section 1(a)(iv)of this Agreement; (ix) fees and expenses of Placement Agent’s counsel, which fees shall not exceed $75,000.00 and; provided, that any costs and expenses (exclusive of any blue sky or other filing fees) do not exceed the 1.5% expense allowance available to the Placement Agent pursuant to Section 1(a)(iv)of this Agreement and (x) all other fees, costs and expenses referred to in Part II of the Registration Statement. 

 

  

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Section 7.            Indemnification and Contribution.  The Company agrees to indemnify the Placement Agent in accordance with the provisions of  Schedule A  hereto, which is incorporated by reference herein and made a part hereof.

 

Section 8.           Representations and Indemnities to Survive Delivery.  The respective indemnities, agreements, representations, warranties and other statements of the Company or any person controlling the Company, of its officers, and of the Placement Agent set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Placement Agent, the Company, or any of its or their partners, officers or directors or any controlling person, as the case may be, and will survive delivery of and payment for the Securities sold hereunder and any termination of this Agreement.  A successor to a Placement Agent, or to the Company, its directors or officers or any person controlling the Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Agreement.

 

Section 9.            Notices.  All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied and confirmed to the parties hereto as follows:

 

If to the Placement Agent to the address set forth above, attn: Mark Elenowitz, CEO, Facsimile: 212-202-6380.

With a copy to:

Hunter Taubman Weiss, LLP

17 State Street, 20th Floor

New York, New York 10004

Facsimile: (212) 202-6380

Attention:  Louis Taubman, Esq.

If to the Company:

Trellis Earth Products, Inc.

9125 S.W. Ridder Road, Suite D

Wilsonville, OR 97070

Facsimile: 503-582-1313

Attention:  William Collins, CEO

With a copy to:

	
Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, NY 10006

 Facsimile: 212-930-9725

Attention:  Gregory Sichenzia, Esq.

Marcelle Balcombe, Esq.

Any party hereto may change the address for receipt of communications by giving written notice to the others.

 

  

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Section 10.         Successors.  This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the employees, officers and directors and controlling persons referred to in Section 7 hereof, and to their respective successors, and personal representative, and no other person will have any right or obligation hereunder.

 

Section 11.         Partial Unenforceability.  The invalidity or unenforceability of any section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other section, paragraph or provision hereof.  If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

 

Section 12.         Governing Law Provisions.  This Agreement shall be deemed to have been made and delivered in New York City and both this Agreement and the transactions contemplated hereby shall be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of New York, without regard to the conflict of laws principles thereof.  Each of the Placement Agent and the Company: (i) agrees that any legal suit, action or proceeding arising out of or relating to this Agreement and/or the transactions contemplated hereby shall be instituted exclusively in New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, (ii) waives any objection which it may now or hereafter have to the venue of any such suit, action or proceeding, and (iii) irrevocably consents to the jurisdiction of the New York Supreme Court, County of New York, and the United States District Court for the Southern District of New York in any such suit, action or proceeding.  Each of the Placement Agent and the Company further agrees to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York and agrees that service of process upon the Company mailed by certified mail to the Company’s address shall be deemed in every respect effective service of process upon the Company, in any such suit, action or proceeding, and service of process upon the Placement Agent mailed by certified mail to the Placement Agent’s address shall be deemed in every respect effective service process upon the Placement Agent, in any such suit, action or proceeding.  Notwithstanding any provision of this Agreement to the contrary, the Company agrees that neither the Placement Agent nor its affiliates, and the respective officers, directors, employees, agents and representatives of the Placement Agent, its affiliates and each other person, if any, controlling the Placement Agent or any of its affiliates, shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with the transactions described herein except for any such liability for losses, claims, damages or liabilities incurred by such persons that are finally judicially determined to have resulted from the bad faith or gross negligence of such individuals or entities.  If either party shall commence an action or proceeding to enforce any provision of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorney’s fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

 

Section 13.         General Provisions.

 

(a)           This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof.  This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit.  Section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.

(b)           The Company acknowledges that in connection with the offering of the Securities: (i) the Placement Agent has acted at arms length, are not agents of, and owe no fiduciary duties to the Company or any other person, (ii) the Placement Agent owes the Company only those duties and obligations set forth in this Agreement and (iii) the Placement Agent may have interests that differ from those of the Company.  The Company waives to the full extent permitted by applicable law any claims it may have against the Placement Agent arising from an alleged breach of fiduciary duty in connection with the offering of the Securities

 

[The remainder of this page has been intentionally left blank.]

 

 

 

  

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If the foregoing is in accordance with your understanding of our agreement, please sign below whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.

 

	 	Very truly yours,	 
	 	 	  	 
	 	TRELLIS EARTH PRODUCTS, INC.,	 
	 	A Nevada corporation	 
	 	 	  	 
	 	
By: 

	 /s/ William Collins	 
	 	 	Name: William Collins	 
	 	 	 
Title: CEO

	 

 

The foregoing Placement Agency Agreement is hereby confirmed and accepted as of the date first above written.

 

	 	TRIPOINT GLOBAL EQUITIES, LLC	 
	 	 	  	 
	 	
By: 

	/s/ Mark Elenowitz	 
	 	 	 
Name: Mark Elenowitz

	 
	 	 	 
Title: CEO

	 

 

 

 

 

 

 

 

  

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SCHEDULE A – INDEMNIFICATION

The Company hereby agrees to indemnify and hold Tripoint, its officers, directors, principals, employees, affiliates, and shareholders, and their successors and assigns, harmless from and against any and all loss, claim, damage, liability, deficiencies, actions, suits, proceedings, costs and legal expenses or expense whatsoever (including, but not limited to, reasonable legal fees and other expenses and reasonable disbursements incurred in connection with investigating, preparing to defend or defending any action, suit or proceeding, including any inquiry or investigation, commenced or threatened, or any claim whatsoever, or in appearing or preparing for appearance as witness in any proceeding, including any pretrial proceeding such as a deposition) (collectively, "Losses") arising out of, based upon, or in any way related or attributed to, (i) any breach of a representation, warranty or covenant by the Company contained in this Agreement or (ii) any activities or services performed hereunder by Tripoint, unless it is finally judicially determined in a court of competent jurisdiction that such Losses were the primary and direct result of the intentional misconduct or gross negligence of Tripoint in performing the services hereunder.

If Tripoint receives written notice of the commencement of any legal action, suit or proceeding with respect to which the Company is or may be obligated to provide indemnification pursuant to this  Schedule A , Tripoint shall, within thirty (30) days of the receipt of such written notice, give the Company written notice thereof (a "Claim Notice").  Failure to give such Claim Notice within such thirty (30) day period shall not constitute a waiver by Tripoint of its right to indemnity hereunder with respect to such action, suit or proceeding. Upon receipt by the Company of a Claim Notice from Tripoint with respect to any claim for indemnification which is based upon a claim made by a third party ("Third Party Claim"), the Company may assume the defense of the Third Party Claim with counsel of its own choosing, as described below.  Tripoint shall cooperate in the defense of the Third Party Claim and shall furnish such records, information and testimony and attend all such conferences, discovery proceedings, hearings, trial and appeals as may be reasonably required in connection therewith.  Tripoint shall have the right to employ its own counsel in any such action, which shall be at the Company's expense if (i) the Company and Tripoint shall have mutually agreed in writing to the retention of such counsel, (ii) the Company shall have failed in a timely manner to assume the defense and employ counsel or experts reasonably satisfactory to Tripoint in such litigation or proceeding or (iii) the named parties to any such litigation or proceeding (including any impleaded parties) include the Company and Tripoint and representation of the Company and Tripoint by the same counsel or experts would, in the reasonable opinion of Tripoint, be inappropriate due to actual or potential differing interests between the Company and Tripoint.  The Company shall not satisfy or settle any Third Party Claim for which indemnification has been sought and is available hereunder, without the prior written consent of Tripoint, which consent shall not be delayed and which shall not be required if Tripoint is granted a general release in connection therewith.   The indemnification provisions hereunder shall survive the termination or expiration of this Agreement.

The Company further agrees, upon demand by Tripoint, to promptly reimburse Tripoint for, or pay, any fees, expenses or disbursements as to which Tripoint has been indemnified herein with such reimbursement to be made currently as any such fees, expenses or disbursements are incurred by Tripoint. Notwithstanding the provisions of the aforementioned indemnification, any such reimbursement or payment by the Company of fees, expenses, or disbursements incurred by Tripoint shall be repaid by Tripoint in the event of any proceeding in which a final judgment (after all appeals or the expiration of time to appeal) is entered in a court of competent jurisdiction against Tripoint based solely upon its gross negligence or intentional misconduct in the performance of its duties hereunder, and provided further, that the Company shall not be required to make reimbursement or payment for any settlement effected without the Company’s prior written consent (which consent shall not be unreasonably withheld or delayed).

  

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If for any reason the foregoing indemnification is unavailable or is insufficient to hold Tripoint harmless, the Company agrees to contribute the amount paid or payable by Tripoint in such proportion as to reflect not only the relative benefits received by the Company, on the one hand, and Tripoint, on the other hand, but also the relative fault of the Company and Tripoint as well as any relevant equitable considerations.  In no event shall Tripoint contribute in excess of the fees actually received by it pursuant to the terms of this Agreement.

 

For purposes of this Agreement, each officer, director, shareholder, and employee or affiliate of Tripoint and each person, if any, who controls Tripoint (or any affiliate) within the meaning of either Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended, shall have the same rights as Tripoint with respect to matters of indemnification by the Company hereunder.

 

Notwithstanding any provision of this Agreement to the contrary, the Company agrees that neither the Placement Agent nor its Affiliates, and the respective officers, directors, employees, agents and representatives of the Placement Agent, its Affiliates and each other person, if any, controlling the Placement Agent or any of its affiliates, shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with the engagement and transaction described herein except for any such liability for losses, claims, damages or liabilities incurred by us that are finally judicially determined to have resulted from the bad faith or gross negligence of such individuals or entities.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17

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