Document:

exhibit_10-1.htm

 

Exhibit 10.1

 

Employment Agreement

 

This Employment Agreement is entered into between:

 

 

Westinghouse Solar, Inc.

 

1475 Bascom Ave., Suite 101

 

Campbell, CA  95008

 

(“the Company”)

 

and

 

 

Margaret Randazzo

 

1230 McKendrie St.

 

San Jose, CA 95126 (the “EXECUTIVE")

 

 

1  Date of employment

1.1  Effective May 7, 2012 (“Effective Date”), EXECUTIVE is employed as Interim Chief Executive Officer in the Company (“ICEO”).  This employment agreement (“Agreement”) replaces all previous agreements concerning the EXECUTIVE’s employment with the Company or with any of its affiliates and/or predecessors, in any capacity, except, for the avoidance of doubt, all Company proprietary rights agreements signed by EXECUTIVE shall remain in full force and effect.

 

2  The initial duties of the EXECUTIVE

2.1  For so long as EXECUTIVE holds the position of ICEO, EXECUTIVE is, in cooperation with the other members of the Executive Management, responsible for the daily management of the Company subject to instructions and guidelines of the Board of Directors (“Board’) of the Company.

 

2.2  The Board of Directors (“Board’) of the Company determines the directions applicable to the activities of the Company at any time.  It is the responsibility of the EXECUTIVE towards the Board that the activities of the Company are carried out in accordance with such directions, the Agreement and Plan of Merger (“Merger Agreement”) between the Company, CBD Energy Limited (“CBD”) and CBD-WS Merger Sub, Inc., the Company’s Certificate of Incorporation and Bylaws, and current legislation and law.

 

2.3  All questions of extraordinary character or major importance to the Company shall be submitted by the EXECUTIVE to the Board and the CBD Liaison (as defined in the Merger Agreement).

 

2.4  The EXECUTIVE is entitled to sign on behalf of the Company in matters concerning the day-to-day operations of the Company, subject to the restrictions in this Employment Agreement and otherwise in accordance with the Company’s Certificate of Incorporation and Bylaws, the Merger Agreement, and authorities delegated by the Board.

 

2.5  EXECUTIVE  shall hold the position of ICEO and perform the duties of such office from the Effective Date until the consummation of the Merger Agreement, or such later date as is determined by mutual agreement of EXECUTIVE and the senior executive officer (“Managing Director”) of CBD. However, if the Merger is not consummated and closed pursuant to the terms of the Merger Agreement by a date no later than December 31, 2012, the Board of Directors of the Company shall have the discretion to determine the terms and conditions of EXECUTIVE’s employment.

 

  

  

  

 

3  Follow-on duties of EXECUTIVE

3.1  Provided the Merger is consummated, as such term is defined in the Merger Agreement, and all of the transactions contemplated by the Merger Agreement are closed, then upon appointment by the Managing Director of CBD of a replacement Chief Executive Officer for the Company, EXECUTIVE shall be appointed to a senior executive position in the Company or within CBD or another of its subsidiaries as shall be assigned by the Managing Director of CBD and reasonably acceptable to EXECUTIVE (the “Successor Position”).  For the avoidance of doubt, all provisions of this Agreement that refer to actions or events in the Successor Position are contingent upon the consummation and closing of the Merger pursuant to the terms of the Merger Agreement. If EXECUTIVE is employed in a Successor Position with CBD or any subsidiary or affiliate of CBD other than the Company, such employer is referred to herein as the Successor Employer.  The Company and the Successor Employer are each sometimes referred to an “Employer” and collectively as “Employers”.   In the event of employment of EXECUTIVE in a Successor Position, this Employment Agreement shall continue to apply in connection with EXECUTIVE’s employment therein.

 

3.2  The duties of EXECUTIVE in the Successor Position shall be specified at and reasonably agreeable to EXECUTIVE at the time of the appointment.

 

3.3  Thereafter, at the discretion of the Managing Director of CBD, EXECUTIVE may be assigned to further Successor Positions, and this Agreement shall continue to apply in connection with EXECUTIVE’s employment therein.

 

4  Additional duties during the employment

 

4.1  The EXECUTIVE is obliged to use the EXECUTIVE’s full working capacity and best efforts in the service of Employer. In performing her duties under this Agreement, EXECUTIVE must comply with all applicable laws and Company policies, avoid conflicts of interest and in making decisions on behalf of the Company, must do that which is in the best interests of the Company. The ICEO position is exempt from state and federal wage and hour laws applicable to non-exempt employees.  There is no limit to the number of working hours, and the EXECUTIVE is not entitled to overtime pay, standby allowance, or paid time off in lieu of overtime.

 

4.2  The EXECUTIVE must not, without the prior written consent of the Board or, following appointment to a Successor Position, the Managing Director of CBD, engage in any other employment or engagement, whether remunerated or not, that is inconsistent with EXECUTIVE’S duties and obligations under this Agreeement..

 

4.3  During the employment, the EXECUTIVE must not have any interests in any other business activity, directly or indirectly, that are inconsistent with EXECUTIVE’S duties and obligations under this Agreeement, without the prior written consent of the Board or, following appointment to a Successor Position, the Managing Director of CBD.   However, the EXECUTIVE is entitled to make, and need not disclose to Employer, normal capital investments in assets, which are usually the subject of such investment, and which do not include personal working efforts of any kind and/or decisive influence.

 

4.4  EXECUTIVE may have opportunities from time to time to fulfill directorships and honorary offices and may do so subject to the consent of Employer, which consent shall not be unreasonably withheld.

 

4.5  For purposes of Section 4.2 and 4.3 herof, determination of whether EXECUTIVE’s employment, engagement or interests in a business activity are inconsistent with EXECUTIVE’s duties and obligations under this Agreement shall be at the sole discretion of the Board or, following appointment to a Successor Position, the Managing Director of CBD.

 

5  Place of work

5.1  The EXECUTIVE’s normal place of work will be the address of the Company, which address may change from time to time but shall be reasonably proximate to the Northern California Bay Area (“Home Region”).  However, the EXECUTIVE may be required to work from time to time at the premises of customers, business partners, CBD and its subsidiaries etc. The employment also involves travelling in the United States and abroad.

 

  

  

  

 

6  Remuneration

6.1  The EXECUTIVE’s annual gross salary is $225,000 (“Base Salary”).  While EXECUTIVE is serving as ICEO, she shall be paid incrementally in arrears in accordance with the Company’s standard payroll practices for exempt executive employees.  Following consummation of the Merger (as defined below), EXECUTIVE’s annual gross salary shall be adjusted to a level consistent with similar positions of responsibility and authority as determined from time to time by the Compensation Committee of CBD and confirmed in writing as a modification to this  Employment Agreement, signed by EXECUTIVE and by an authorized agent of CBD, provided however, that such annual gross salary shall not be less than the Base Salary during the term of this Agreement.  In the event of EXECUTIVE’s appointment to a Successor Position, EXECUTIVE shall be paid in a manner consistent with the standard payroll practices for exempt executive employees of the Successor Employer, provided that payment shall be no less than 1/12 of the annual salary, paid monthly in arrears and paid no later than the last business day of each month by live check or, if the EXECUTIVE so directs, by direct deposit to an account designated by the EXECUTIVE.

 

6.2  In addition to the compensation referenced in paragraph 6.1, the EXECUTIVE shall be eligible for bonus compensation to be set at the sole discretion of the Company’s compensation committee for the period when EXECUTIVE is serving as ICEO.  Thereafter, if EXECUTIVE is serving in a Successor Position, such bonus compensation shall be set at the sole discretion of the Managing Director of CBD.  In each instance, the target bonus amounts and performance criteria shall be set and communicated in writing to EXECUTIVE within 30 days following the appointment of EXECUTIVE and thereafter at the beginning of the fiscal year.  The Board has determined that in lieu of other annual bonus amounts established for EXECUTIVE, a target bonus amount for the services of EXECUTIVE in the position of ICEO through the end of such term, or the year ending December 31, 2012 if later, is up to $100,000, of which 50% shall be payable in stock of the Company or Successor Employer issued at the VWAP (Volume Weighted Average Price) for the 10 trading days preceding the consummation of the transaction and 50% of which shall be payable in cash in the last payroll distribution of December 2012.  The actual amount of the 2012 ICEO bonus compensation shall be based on meeting the specific objectives set forth on Schedule A; such objectives shall be mutually agreed upon by the parties and Schedule A completed within 30 days of the execution of this Agreement.

 

6.3  Annual bonus targets for Successor Positions shall be not less than 45% of the EXECUTIVE’S Base Salary.

 

7  Entertainment and travel expenses

7.1  The EXECUTIVE’s costs in connection with travel and entertainment in the interest of Employer will be refunded by the Employer subject to receipts in accordance with the guidelines and policies in force from time to time in the Company or Successor Employer.

 

8  Vacations and Public Holidays

8.1  The EXECUTIVE shall receive paid vacation and paid holidays, to accrue and be taken in accordance with the standard policies and practices of the Company or the Successor Employer.  The EXECUTIVE is entitled to four (4) weeks’ (twenty (20) business days’) vacation with pay per calendar year.  The EXECUTIVE is entitled to payout of any unused accrued paid vacation balance at the time of termination of employment under this Employment Agreement.

 

8.2  While serving as ICEO, EXECUTIVE shall coordinate the scheduling of paid vacation with the Board and the CBD Liaison.  In any Successor Position, vacation scheduling should be coordinated with the Managing Director of CBD or his delegatee.

 

8.3  The EXECUTIVE is entitled paid Company holidays in accordance with the policies of the Company or Successor Employer, as applicable.  The EXECUTIVE will not be entitled to additional compensation for holidays upon termination of employment.

 

9  Health Insurance; Life Insurance; Other Benefits

9.1  While serving as ICEO, the EXECUTIVE shall be entitled to participate in Company-sponsored health insurance plan(s) in accordance with the Company’s standard policies and procedures, which are subject to change in the Company’s sole discretion.

 

9.2  While serving as ICEO, EXECUTIVE shall be entitled to participate in Company-sponsored life insurance plan(s) in accordance with the Company’s standard policies and procedures, which are subject to change in the Company’s sole discretion.  The EXECUTIVE agrees fully to cooperate with the Company in connection with any application for life insurance that the Company may wish to pursue in order to obtain life insurance relating to the EXECUTIVE, including, but not limited to, submission to a medical examination as reasonably may be required by the prospective insurer(s).

 

9.3  While serving as ICEO, the EXECUTIVE shall be entitled to receive other Company-sponsored benefits as other full-time Company employees may receive, as may be announced by the Company from time to time, in its sole discretion, and on terms that are subject to change in the Company’s sole discretion.

 

9.4  While serving in a Successor Position, EXECUTIVE will be entitled to the benefits set forth in Sections 9.1, 9.2 and 9.3 hereof in accordance with the standard practices and policies of the Successor Employer; provided however, that such benefits are no less than provided by the Company while EXECUTIVE served as ICEO.

 

9.5  The Company acknowledges that EXECUTIVE has been and shall continue as a participant in the Westinghouse Solar, Inc. 2006 Stock Incentive Plan and prior awards under the Westinghouse Solar, Inc. 2006 Stock Incentive Plan shall not be affected by this Agreement.  On the Effective Date of the Merger, EXECUTIVE shall receive a restricted stock grant of CBD Stock having a market value on the date of consummation of the Merger of $150,000, which grant shall vest 1/3 at the end of calendar years 2012, 2013 and 2014 if Executive remains employed by CBD or an affiliate of CBD.   This stock award shall be subject to the terms and conditions of any stock equity compensation plan adopted by CBD or subject to the terms and conditions placed on the stock award by CBD’s board of directors or granting body.

 

9.6  EXECUTIVE shall be eligible to receive stock, option and other incentive awards for CBD executive management as may be granted by the CBD Compensation Committee, at its discretion, from time to time.  These awards, if granted, shall be subject to the terms and conditions set by the CBD Compensation Committee and the applicable incentive plans.

 

9.7  EXECUTIVE shall be entitled to participate in any Company sponsored 401(k) Plan, subject to the terms and conditions of the applicable Plan.

 

  

  

  

 

10  Illness/Disability

10.1  Subject to applicable law, Employer may terminate this Employment Agreement due to undue hardship to the Employer, subject to one month’s written notice effective from the end of a month, if, due to illness or disability, the EXECUTIVE has been unable to perform the obligations as ICEO during a consecutive period of two months or in total three months within a period of 12 months.  In such event, the EXECUTIVE shall receive, as severance compensation, the salary provided for in this Agreement through a date that is 24 months after the Effective Date of this Agreement, provided that on or before the 30th day following the termination of employment, the EXECUTIVE has signed a Severance Agreement and Release substantially in the form attached hereto as Schedule D, or in a form as otherwise reasonably may be presented by the Company or Successor Employer and it has become effective.

 

10.2  While serving as ICEO, the EXECUTIVE will receive paid sick leave in accordance with the Company’s standard practices and procedures.  Thereafter, while serving in a Successor Position, EXECUTIVE will receive paid sick leave in accordance with the standard practices and policies of the Successor Employer, provided that such benefits shall be no less than those of the Company while EXECUTIVE was serving as ICEO.  Paid sick leave does not accrue as a vested right, and any accrued but unused balance will not be paid out upon termination of the employment.

 

11  Confidentiality, duty of loyalty, protection of trade secrets and other information, and return of materials

11.1  The EXECUTIVE has a duty of confidentiality with respect to everything that the EXECUTIVE may learn in connection with the performance of the EXECUTIVE’s duties, including, but not limited to, the confidential and proprietary trade secret information, financial information, business information, customer lists, customer information, inventions, and intellectual property of Employer. The duty of confidentiality shall apply and continue to apply after termination of the employment.

 

11.2  During the period of employment – including during any notice period – the EXECUTIVE is obliged to observe a duty of loyalty towards the Company and any Successor Employer.

 

11.3  Failure to observe the EXECUTIVE’s duty of confidentiality and loyalty may have consequences for the EXECUTIVE’s employment, including discipline up to and including termination without notice, for cause.

 

11.4  Upon the actual termination of the employment – irrespective of cause – the EXECUTIVE must return to Employer all materials and assets in the EXECUTIVE’s possession which relate to the employer’s activities. No lien may be exercised on any materials belonging to any Employer.

 

11.5  The EXECUTIVE may not, during the period of employment, access, use, exploit, and/or disclose the Employer’s confidential and proprietary trade secret information, financial information, business information, employee lists, customer lists, customer information, inventions, and/or intellectual property, for any reason other than in furtherance of the Employer’s interests. The EXECUTIVE may not, after the period of employment, access, use, exploit, and/or disclose the Employer’s confidential and proprietary trade secret information, financial information, business information, employee lists, customer lists, customer information, inventions, and/or intellectual property, for any reason. The purpose of this provision is to protect, to the maximum extent provided by law, the Employer’s rights and interests in its proprietary and confidential trade secret information. Any breach of the provisions of this clause 11.5 is cause for the Employer’s termination of this Employment Agreement without notice, and also may be subject to injunction as may be available subject to clause 19. In the event of a breach of this Section 11.5, Employer may from apply other statutory or common law relief, including injunction as may be available subject to clause 19.

 

12  Non-competition clause

12.1  During the employment, the EXECUTIVE is not entitled to commence any activities or, directly or indirectly, be engaged in any activities (as owner, director, employee, agent, consultant or the like) which, directly or indirectly, compete with the activities of the Employer or any group-affiliated companies.

 

12.2  No separate compensation is paid for undertaking this non-competition clause.

 

12.3  The non-competition clause will apply globally.

 

12.4  Any breach of the non-competition clause is cause for the Employer’s termination of this Employment Agreement without notice, and also may be subject to injunction as may be available subject to clause 19. Payment by the EXECUTIVE of damages will not cause the non-competition clause to terminate and will not exclude the Employer from applying other statutory or common law relief, including injunction as may be available subject to clause 19.

 

13  Non-solicitation (non-poaching) clause

13.1  During the employment and for a period of 12 months after termination of the employment calculated from the last day the EXECUTIVE receives salary, the EXECUTIVE is not entitled, directly or indirectly, to

	
Solicit any Colleague to breach any terms of any employment agreement the Colleague may have with the Employer

	
Solicit any Colleague to become employed with or affiliated to a company, in which the EXECUTIVE, directly or indirectly, through employment, ownership, directorship or in any other way can exercise any influence on that company’s employment of employees, including as adviser, or

	
in any other way solicit a Colleague to resign from the employment in the Employer.

13.2  A “Colleague” is understood to be an employee or manager employed by the Employer or any affiliate thereof.

 

13.3  Any breach of the non-solicitation (non-poaching) clause may be subject to injunction as may be available subject to clause 19. Payment by the EXECUTIVE of damages will not cause the non-solicitation (non-poaching) clause to terminate and will not exclude the Company from applying other statutory and/or common law relief, including injunction as may be available subject to clause 19.

 

  

  

  

 

14  Intellectual property rights

14.1  Without paying separate remuneration, the Employer has the exclusive right to ownership and/or exploitation of any and all intellectual property rights in inventions, productions, production methods, know how, designs, patterns, patents, trademarks or other marks, proprietary rights and other intellectual property rights or assets which the EXECUTIVE may, during his/her employment, develop or contribute to the development of, and the title and any other ownership and/or exploitation right belongs to the Employer without separate remuneration.

 

14.2  The EXECUTIVE should immediately inform the Employer if the rights referred to in clause 14.1 are or may be expected to be developed completely or partially by the EXECUTIVE.

 

14.3  The EXECUTIVE is obliged to sign declarations and permits and carry out all other actions required for the purpose of transfer, assignment, registration or procurement of any such intellectual property rights in the name of the Employer.

 

14.4  In connection with his/her employment with the Employer, the EXECUTIVE agrees to execute a PROPRIETARY INFORMATION, WORKS-FOR-HIRE, AND OTHER INVENTIONS AGREEMENT (“Inventions Agreement”), a form of which is attached hereto as Schedule C.  The Inventions Agreement shall, to the fullest extent possible, be read in harmony with this Employment Agreement and any Inventions Agreement previously signed by EXECUTIVE in connection with her employment with the Company or any of its predecessors, and if there is any conflict between or among the Agreements referenced in this clause 14.4, the last signed Inventions Agreement will control as to the terms and conditions contained therein

 

15  Information security

15.1  The EXECUTIVE is obliged in every respect to observe the general and specific directions on information security, including directions concerning use of e-mail and the internet which at any time may appear from the Employer’s directions on information security, employee handbook or personal instructions. Failure to observe these directions may have consequences for the EXECUTIVE’s employment, including, but not limited to, discipline up to and including termination of this Employment Agreement without notice, for cause.

 

15.2  EXECUTIVE hereby acknowledges that she has no right or expectation of privacy in her use of any and all Employer software, hardware, communications systems (including, but not limited to, telephone, email, or internet) or any other Employer property, and that the EXECUTIVE’s use of any such software, hardware, communications systems, or any other Employer property may be subject to unannounced and undisclosed monitoring, review, and/or supervision, at any time.

 

16  Termination

16.1  The EXECUTIVE’s employment is at will and may be terminated by either the EXECUTIVE or the Employer, without notice or cause.  In the event of termination by the Employer without cause (as “cause” is set forth in this Employment Agreement), or in the event that the Successor Position is not reasonably acceptable to EXECUTIVE following a 14-day period commencing the day after EXECUTIVE notifies the Employer, in writing, that the Successor Position is not reasonably acceptable, to allow (a) good faith efforts by EXECUTIVE and Employer to negotiate the terms and conditions of any Successor Position, which negotiated terms and conditions EXECUTIVE shall not unreasonably refuse, and/or (b) Employer’s opportunity, at Employer’s option, to modify the existing Employment to meet EXECUTIVE’s reasonable requirements, then the EXECUTIVE shall receive, all wages and accrued but unpaid vacation and bonus compensation (set forth in 6.2 and 9.5) through the date of termination (Final Wages”) on the termination date, provided that to the extent any bonus compensation that is earned as of the date of termination is payable at a later date consistent with Employer’s customary compensation policies and practices, then such bonus compensation will be paid at the later date as provided by such customary compensation policies and practices.  In addition, as severance compensation, EXECUTIVE shall receive a continuance of the Base Salary (not bonus compensation) provided for in this Agreement, payable according to the Employer’s  regular payroll schedule, policies, and practices, through a date that is 24 months after the Effective Date of this Agreement, provided that on or before the 30th day following the date of EXECUTIVE’S termination of employment, the EXECUTIVE has signed a Severance Agreement and Release substantially in the form attached hereto as Schedule D, or in a form as otherwise reasonably may be presented by the Employer, and it has become effective.  If a Successor Position is that of CEO, COO, CFO or similar senior executive position for the Company or another division of CBD and EXECUTIVE can perform such role without the necessity of relocating from the Home Region, it shall be deemed reasonably acceptable for purposes of this Section 16.1.

 

16.2  In the event of termination of the EXECUTIVE’s employment for cause (as “cause” is set forth in this Agreement) or in the event of the EXECUTIVE’s voluntary resignation from employment from the Employer, no severance compensation shall be payable to the EXECUTIVE.

 

16.3  In the event of Serious Misconduct by the EXECUTIVE as defined in Schedule B and determined by the Employer in its sole discretion to have occurred, the EXECUTIVE may be summarily terminated, for cause, and without warning or advance notice.

 

16.4  If the Employer or the EXECUTIVE commits a material breach of the obligations of this Employment Agreement, the other party is entitled to terminate the Agreement without notice.  If the Employer terminates the EXECUTIVE’s employment under this Agreement pursuant to this paragraph 16.4, such termination shall constitute termination for cause.

 

  

  

  

 

17  Miscellaneous

17.1  The EXECUTIVE shall inform the Employer of the EXECUTIVE’s current private address.

 

17.2  Rules, Policies and Procedures:  Subject to giving the EXECUTIVE prior notice, the Employer shall be entitled to introduce, vary or cancel company rules, policies and procedures at its discretion. All such rules, policies and procedures shall bind the EXECUTIVE who shall fully observe and comply with the same at all times during the employment.

 

17.3  Legal Advice: The EXECUTIVE acknowledges that she was given a reasonable opportunity to seek independent legal advice before entering into this Agreement.

 

17.4  Notices: Any notice to be given under this Agreement to the EXECUTIVE may be served by being handed to her personally or by being sent by courier to her at her usual or last known address; and any notice to be given to the Employer may be served by being left at or by being sent by courier to its office address noted herein.

 

17.5  Entire Agreement: This Employment Agreement constitutes the entire agreement and understanding between the Parties and supersedes any prior arrangements, understandings or agreements (whether oral or written) between them relating to the subject-matter of this Employment Agreement.

 

17.6  No Waiver: No failure or delay by either party in exercising any right or remedy provided by law under or pursuant to this Employment Agreement shall impair such right or remedy or operate or be construed as a waiver or variation of it or preclude its exercise at any subsequent time and no single or partial exercise of any such right or remedy shall preclude any other or further exercise of it or the exercise of any other right or remedy.

 

17.7  Modification: No modification of this Employment Agreement shall be valid unless it is in writing and signed by or on behalf of each of the Parties or as otherwise provided in this Employment Agreement.  ”Modification” shall include any amendment, variation, supplement, deletion, termination or replacement however effected.

 

17.8  Counterparts:  This Employment Agreement may be executed in any number of counterparts (including facsimile copies) all of which, when taken together, shall constitute one and the same instrument. A party may enter into this Employment Agreement by executing any counterpart.

 

17.9  Survival: If one or more of the provisions of this Employment Agreement is deemed to be invalid or unenforceable, the remaining provisions of this Employment Agreement will not be affected and will continue in full force and effect.

 

17.10  Collective Agreements: There are no collective agreements that directly affect the terms and conditions of the employment of the EXECUTIVE under this Employment Agreement.

 

18  Choice of law and venue

This Employment Agreement is governed by, and to be interpreted under, the laws of the State of California, and that, subject to any procedural rules as may apply pursuant to clause 19 hereof, any dispute arising in relation to the Employment Agreement should be settled at the venue (city, county, state and country) of the Company.

 

  

  

  

 

19  Mandatory Arbitration

19.1  The Parties agree that they shall submit any and all employment-related disputes between them, including, but not limited to, disputes relating to the interpretation of this Agreement, to binding arbitration, on the following terms:

 

	
  

	
(a)

	
Arbitration.  In consideration of the EXECUTIVE’s employment with the Employer, the Employer’s mutual promise hereby to arbitrate all employment-related disputes, and the EXECUTIVE’s receipt of the compensation and other benefits paid to the EXECUTIVE by the Employer, at present and in the future, the EXECUTIVE agrees that any and all controversies, claims, or disputes with anyone (including the Employer and any employee, officer, director, shareholder or benefit plan of the Employer in their capacity as such or otherwise) arising out of, relating to, or resulting from employment with the Employer or the termination of employment with the Employer, including any breach of this agreement, shall be subject to binding arbitration under the arbitration rules set forth in the California Code Of Civil Procedure section 1280 through 1294.2, including sections 1281.8 and 1283.05 (the “Rules”) and pursuant to California law.  Disputes which the Parties mutually agree to arbitrate, and thereby agree to waive any right to a trial by jury, include any statutory claims under state or federal law, including, but not limited to, claims under Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act of 1990, the Age Discrimination In Employment Act of 1967, the Older Workers Benefit Protection Act, the California Fair Employment And Housing Act, the California Labor Code, claims of harassment, discrimination or wrongful termination, any statutory claims, and any claims under the Proprietary Information, Works-for-Hire, and Other Inventions Agreement in the form attached hereto as Schedule C., which the EXECUTIVE herein agrees to execute as a condition of his/her employment. The EXECUTIVE further understands that this agreement to arbitrate also applies to any disputes that the Employer may have with the EXECUTIVE, including under any of the foregoing authorities and agreement.

 

	
  

	
(b)

	
Procedure.  The Parties agree that any arbitration will be administered by the American Arbitration Association (“AAA”) and that the neutral arbitrator will be selected in a manner consistent with its national rules for the resolution of employment disputes.  A true and correct copy of the AAA’s Employment Arbitration Rules is attached hereto as Schedule E.  A current version of the Rules may be accessed at http://www.adr.org/sp.asp?id=32904.  The Parties agree that the arbitrator shall have the power to issue any ruling that a court could issue, including, without limitation, deciding any motions brought by any party to the arbitration (including motions for summary judgment and/or adjudication and motions to dismiss and demurrers) prior to any arbitration hearing.  The Parties also agree that the arbitrator shall have the power to award any remedies, including attorneys’ fees and costs, that a court could award, as are available under applicable law.  The Parties agree that the Employer will pay for any administrative or hearing fees charged by the arbitrator or AAA, except that the EXECUTIVE shall pay the first $200.00 (two hundred United States Dollars) of any filing fees associated with any arbitration that the EXECUTIVE initiates.  The Parties agree that the arbitrator shall administer and conduct any arbitration in a manner consistent with the Rules and that to the extent that the AAA’s national rules for the resolution of employment disputes conflict with the Rules, the Rules shall take precedence.  The Parties agree that the decision of the arbitrator shall be in writing.

 

	
  

	
(c)

	
Remedy.  Except as provided by the Rules and this Agreement, arbitration shall be the sole, exclusive and final remedy for any dispute between the Parties. Accordingly, except as provided for by the Rules and this Agreement, neither of the Parties will be permitted to pursue court action regarding claims that are subject to arbitration.  Notwithstanding, the arbitrator will not have the authority to disregard or refuse to enforce any lawful company policy, and the arbitrator shall not order or require the company to adopt a policy not otherwise required by law that the company has not adopted.

 

	
  

	
(d)

	
Administrative Relief. The EXECUTIVE understands that this agreement does not prohibit him/her from pursuing an administrative claim with a local, state or federal administrative body such as the Department of Fair Employment and Housing, the Equal Employment Opportunity Commission or the Workers’ Compensation Board.  This agreement does, however, preclude the EXECUTIVE from pursuing court action regarding any such claim (except as may be provided by the Rules).

 

	
  

	
(e)

	
Voluntary Nature of Agreement.  The EXECUTIVE acknowledges and agrees that she is executing this agreement voluntarily and without any duress or undue influence by the Company or anyone else.  The EXECUTIVE further acknowledges and agrees that she has carefully read this Agreement and that she has asked any questions needed for her to understand the terms, consequences and binding effect of this agreement and fully understand it, including that the EXECUTIVE is waiving her right to a jury trial.  Finally, the EXECUTIVE agrees that she has been provided an opportunity to seek the advice of an attorney of her choice before signing this Agreement, and that the EXECUTIVE has had the opportunity to ask questions regarding and negotiate the contents of this Mandatory Arbitration provision, including negotiating, on an arms-length basis, the issue of inclusion of this Mandatory Arbitration provision in this Employment Agreement.

  

  

  

 

 

This Employment Agreement is signed in three identical copies, of which each party receives one.

 

 

On behalf of the Company:

 

 

	
  

	
Date:  May 7, 2012

 

	
/s/ Ed Roffman

	  
	
 

Ed Roffman

	  
	
Title: Authorized Singatory

 

	  

	
  

	
Executive:

 

	
  

	
Date:  May 7, 2012

 

	
/s/ Margaret Randazzo

	  
	
 

Margaret Randazzo

	  
	  	  

 

  

  

  

 

 

Conditional and Limited Acknowledgement and Agreement

 

Conditioned upon (a) the full execution of this Agreement by Company and EXECUTIVE, and (b) the consummation of the Merger (as such term is defined in the Merger Agreement referenced in this Employment Agreement) and closing of all transactions contemplated in the Merger Agreement, CBD Energy Limited (“CBD”) acknowledges and agrees to the provisions set forth in Clauses 9.5 and 9.6, above.  If the Merger is not consummated and closed (pursuant to the terms of the Merger Agreement) and/or the Merger Agreement is terminated for any reason, this Conditional and Limited Acknowledgement and Agreement shall be invalid, void, and of no force or effect.

 

CBD’s execution hereof does not constitute an offer or guarantee of employment, nor an agreement to employ, EXECUTIVE, nor does it extend to EXECUTIVE any rights or benefits as against CBD other than those that are set forth in Clauses 9.5 and 9.6, above.

 

On behalf of CBD:

 

	
  

	
Date: May ___ ,2012

 

 

	
_______________________________

Name:

Title:

 

  

  

  

 

 

SCHEDULE A – 2012 ICEO PERFORMANCE OBJECTIVES

 

 

[To be completed]

 

  

  

  

 

 

SCHEDULE B – SERIOUS MISCONDUCT

 

 

The EXECUTIVE recognizes the special nature of the services to be provided.  Due to the growing nature of the business, and the need for harmony, co-operation, and co-ordination in the Company, the EXECUTIVE accepts that certain types of misconduct may be treated more seriously than in other types of contracts.  At all times during the course of the Employment Agreement, EXECUTIVE acknowledges that s/he is representing the Company.  Without limitation, and subject to applicable law, the following may be considered Serious Misconduct, and may result in the employment being terminated without warning or advance notice:

 

(a)           publicly criticizing or bringing into disrepute the Company or any of its affiliates;

 

(b)           aggressive, bullying, or harassing behaviour;

 

(c)           criminal behaviour;

 

(d)           civil disorder;

 

(e)           theft, or unauthorized possession or removal of the Company’s property;

 

(f)           accepting or failing to report any bribes or attempts to bribe;

 

	
(g)

	
violation of the Company’s policies applicable to employees and those provisions of the Code of Conduct and Ethics adopted by Company that are specifically applicable to the Company’s officers and directors ;

 

(h)           breach of this Agreement;

 

(i)           wilfully failing to obey a reasonable direction of the Company without providing to the Company reasonable grounds for failure to obey; or

 

 (j)           knowing use of drugs or alcohol in a manner prohibited by the Company.

 

The determination of whether Serious Misconduct has occurred shall be made by the Company in its sole discretion and shall be binding on the EXECUTIVE.

 

 

 

END OF SCHEDULE B

 

  

  

  

 

SCHEDULE C – FORM OF PROPRIETARY INFORMATION,

 

WORKS-FOR-HIRE, AND OTHER INVENTIONS AGREEMENT

 

 

PROPRIETARY INFORMATION, WORKS-FOR-HIRE,

 

AND OTHER INVENTIONS AGREEMENT

 

In consideration and as a condition of my employment, continued employment, or consulting relationship by Westinghouse Solar, Inc., its subsidiaries, successors or assigns (the “Company”), and the compensation paid therefor, I hereby agree as follows:

 

1.            

 

1.            Nondisclosure.

 

1.1       Recognition of Company's Rights; Nondisclosure.  At all times during my engagement and thereafter, I will hold in strictest confidence and will not disclose, use, lecture upon or publish any of the Company's Proprietary Information (defined below), except as such disclosure, use or publication may be required in connection with my work for the Company, or unless an officer of the Company expressly authorizes such in writing.  I will obtain Company's written approval before publishing or submitting for publication any material (written, oral, or otherwise) that relates to my work at Company and/or incorporates any Proprietary Information.  I hereby assign to the Company any rights I may have or acquire in such Proprietary Information and recognize that all Proprietary Information shall be the sole property of the Company and its assigns.

 

1.2            Proprietary Information.  The term "Proprietary Information" shall mean any and all confidential and/or proprietary works of authorship, knowledge, data, designs or information of the Company.  By way of illustration but not limitation, "Proprietary Information" includes (a) patents, trademarks, trade secrets, inventions, copyrights, mask works, processes, formulas, source and object codes, data, programs, other works of authorship, know-how, improvements, discoveries, developments, designs, artwork, techniques, and any other intellectual property that is protectable under United States or foreign laws (hereinafter collectively referred to as "Inventions"); (b) research, development, new products, marketing and selling, business plans, budgets and unpublished financial statements, licenses, prices and costs, suppliers and customers; and (c) information regarding the skills and compensation of employees and others working with the Company.  Notwithstanding the foregoing, it is understood that, at all such times, I am free to use information which is generally known in the trade or industry, which is not gained as result of a breach of this Agreement, and my own, skill, knowledge, know-how and experience to whatever extent and in whichever way I wish.

 

1.3            Third Party Information.  I understand, in addition, that the Company has received and in the future will receive from third parties confidential or proprietary information ("Third Party Information"), including, but not limited to, works of authorship, subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes.  During the term of my engagement and thereafter, I will hold Third Party Information in the strictest confidence and will not disclose to anyone (other than Company personnel who need to know such information in connection with their work for the Company) or use, except in connection with my work for the Company, Third Party Information unless expressly authorized by an officer of the Company in writing.

 

1.4            No Improper Use of Information of Prior Employers and Others.  During my engagement by the Company I will not improperly use or disclose any confidential or proprietary information or trade secrets, if any, of any former employer or any other person to whom I have an obligation of confidentiality, and I will not bring onto the premises of the Company any unpublished documents or any property belonging to any former employer or any other person to whom I have an obligation of confidentiality unless consented to in writing by that former employer or person.  I will use in the performance of my duties only information which is generally known and used by persons with training and experience comparable to my own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company.

 

  

  

  

 

2.       Assignment of Works for Hire and Other Inventions.

 

2.1            Proprietary Rights.  The term "Proprietary Rights" shall mean all copyright, trade secret, patent, mask work and other intellectual property rights throughout the world.

 

2.2            Prior Inventions.  Inventions, if any, patented or unpatented, which I made prior to the commencement of my engagement with the Company are excluded from the scope of this Agreement.  To preclude any possible uncertainty, I have set forth on Exhibit B (Previous Inventions) attached hereto a complete list of all Inventions that I have, alone or jointly with others, conceived, developed or reduced to practice or caused to be conceived, developed or reduced to practice prior to the commencement of my engagement with the Company, that I consider to be my property or the property of third parties and that I wish to have excluded from the scope of this Agreement (collectively referred to as "Prior Inventions").  If disclosure of any such Prior Invention would cause me to violate any prior confidentiality agreement, I understand that I am not to list such Prior Inventions in Exhibit B but am only to disclose a cursory name for each such invention, a listing of the party(ies) to whom it belongs and the fact that full disclosure as to such inventions has not been made for that reason. A space is provided on Exhibit B for such purpose.  If no such disclosure is attached, I represent that there are no Prior Inventions.  If, in the course of my engagement with the Company, I incorporate a Prior Invention into a Company product, process or machine, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with rights to sublicense through multiple tiers of sublicensees) to make, have made, modify, use and sell such Prior Invention.  Notwithstanding the foregoing, I agree that I will not incorporate, or permit to be incorporated, Prior Inventions in any Company Inventions without the Company's prior written consent.

 

2.3            Assignment of Inventions.  Subject to Sections 2.4, and 2.6, I hereby assign and agree to assign in the future (when any such Inventions or Proprietary Rights are first reduced to practice or first fixed in a tangible medium, as applicable) to the Company all my right, title and interest in and to any and all Inventions (and all Proprietary Rights with respect thereto) whether or not patentable or registrable under copyright or similar statutes, made or conceived or reduced to practice or learned by me, either alone or jointly with others, during the period of my engagement with the Company.  Inventions assigned to the Company, or to a third party as directed by the Company pursuant to this Section 2, are hereinafter referred to as "Company Inventions."

 

2.4            Nonassignable Inventions.  This Agreement does not apply to an Invention which qualifies fully as a nonassignable Invention under Section 2870 of the California Labor Code (hereinafter “Section 2870”).  I have reviewed the notification on Exhibit A (Limited Exclusion Notification) and agree that my signature acknowledges receipt of the notification.

 

2.5            Obligation to Keep Company Informed.  During the period of my engagement and for six (6) months after termination of my engagement with the Company, I will promptly disclose to the Company fully and in writing all Inventions authored, conceived or reduced to practice by me, either alone or jointly with others.  In addition, I will promptly disclose to the Company all patent applications filed by me or on my behalf within a year after termination of engagement.  At the time of each such disclosure, I will advise the Company in writing of any Inventions that I believe fully qualify for protection under Section 2870; and I will at that time provide to the Company in writing all evidence necessary to substantiate that belief.  The Company will keep in confidence and will not use for any purpose or disclose to third parties without my consent any confidential information disclosed in writing to the Company pursuant to this Agreement relating to Inventions that qualify fully for protection under the provisions of Section 2870.  I will preserve the confidentiality of any Invention that does not fully qualify for protection under Section 2870.

 

2.6            Government or Third Party.  I also agree to assign all my right, title and interest in and to any particular Company Invention to a third party, including without limitation the United States, as directed by the Company.

 

2.7            Works for Hire.  I acknowledge that all original works of authorship which are made by me (solely or jointly with others) within the scope of my engagement and which are protectable by copyright are "works made for hire," pursuant to United States Copyright Act (17 U.S.C., Section 101).

 

2.8            Enforcement of Proprietary Rights.  I will assist the Company in every proper way to obtain, and from time to time enforce, United States and foreign Proprietary Rights relating to Company Inventions in any and all countries.  To that end I will execute, verify and deliver such documents and perform such other acts (including appearances as a witness) as the Company may reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and enforcing such Proprietary Rights and the assignment thereof.  In addition, I will execute, verify and deliver assignments of such Proprietary Rights to the Company or its designee.  My obligation to assist the Company with respect to Proprietary Rights relating to such Company Inventions in any and all countries shall continue beyond the termination of my engagement, but the Company shall compensate me at a reasonable rate after my termination for the time actually spent by me at the Company's request on such assistance.

 

In the event the Company is unable for any reason, after reasonable effort, to secure my signature on any document needed in connection with the actions specified in the preceding paragraph, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, which appointment is coupled with an interest, to act for and in my behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of the preceding paragraph with the same legal force and effect as if executed by me.  I hereby waive and quitclaim to the Company any and all claims, of any nature whatsoever, which I now or may hereafter have for infringement of any Proprietary Rights assigned hereunder to the Company.

 

  

  

  

 

3.       Records.  I agree to keep and maintain adequate and current records (in the form of notes, sketches, drawings and in any other form that may be required by the Company) of all Proprietary Information developed by me and all Inventions made by me during the period of my engagement at the Company, which records shall be available to and remain the sole property of the Company at all times.

 

4.       Additional Activities.  I agree that for the period of my engagement by the Company and for one (l) year after the date of termination of my engagement by the Company I will not solicit any employee of the Company or any of its affiliates or, to the extent it is protected by trade secret or other applicable law, the business of any client or customer of the Company (other than on behalf of the Company).

 

5.       No Conflicting Obligation.  I represent that my performance of all the terms of this Agreement and as an independent contractor of the Company does not and will not breach any agreement to keep in confidence information acquired by me in confidence or in trust prior to my engagement by the Company.  I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict herewith.

 

6.       Return of Company Documents.  When I leave the engagement with the Company, I will deliver to the Company any and all drawings, notes, memoranda, specifications, devices, formulas, and documents, together with all copies thereof, and any other material containing or disclosing any Company Inventions, Third Party Information or Proprietary Information of the Company.  I further agree that any property situated on the Company's premises and owned by the Company, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by Company personnel at any time with or without notice.  Prior to leaving, I will cooperate with the Company in completing and signing the Company's termination statement.

 

7.       Legal and Equitable Remedies.  Subject to Section 10.7 hereof, because my services are personal and unique and because I may have access to and become acquainted with the Proprietary Information of the Company, the Company shall have the right to enforce this Agreement and any of its provisions by injunction, specific performance or other provisional relief pursuant to California Code of Civil Procedure Section 1281.8, without prejudice to any other rights and remedies that the Company may have for a breach of this Agreement.

 

8.       Notices.  Any notices required or permitted hereunder shall be given to the appropriate party at the address specified below or at such other address as the party shall specify in writing.  Such notice shall be deemed given upon personal delivery to the appropriate address or if sent by certified or registered mail, three (3) days after the date of mailing.

 

9.       Notification of New Employer.  In the event that I leave the engagement of the Company, I hereby consent to the notification of any new contractor or employer by the Company of my rights and obligations under this Agreement.

 

10.       General Provisions.

 

10.1            Governing Law.  This Agreement will be governed by and construed according to the laws of the State of California, as such laws are applied to agreements entered into and to be performed entirely within California between California residents.

 

10.2            Severability.  In case any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.  If moreover, any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing it, so as to be enforceable to the extent compatible with the applicable law as it shall then appear.

 

10.3            Successors and Assigns.  This Agreement will be binding upon my heirs, executors, administrators and other legal representatives and will be for the benefit of the Company, its successors, and its assigns.

 

10.4            Survival.  The provisions of this Agreement shall survive the termination of my engagement and the assignment of this Agreement by the Company to any successor in interest or other assignee.

 

10.5            Engagement.  I agree and understand that nothing in this Agreement shall confer any right with respect to continuation of engagement by the Company, nor shall it interfere in any way the Company’s right to terminate my engagement.

 

10.6            Waiver.  No waiver by the Company of any breach of this Agreement shall be a waiver of any preceding or succeeding breach.  No waiver by the Company of any right under this Agreement shall be construed as a waiver of any other right.  The Company shall not be required to give notice to enforce strict adherence to all terms of this Agreement.

 

10.7.           Mandatory Arbitration.  The Company and I agree that all disputes between us, including all agreements made herein and in the Employment Agreement relating to my employment with the Company (to which a form of this Agreement is attached as Schedule C), shall be submitted to mandatory arbitration before the American Arbitration Association, as set forth in the Section 19 of the Employment Agreement (a form of which is attached hereto as Exhibit C).  I understand that by submitting all disputes to mandatory arbitration, the Company and I mutually are waiving our right to a jury trial or any other relief from court except for provisional relief as provided by California Code of Civil Procedure Section 1281.8.

 

  

  

  

 

10.8           Entire Agreement.  The obligations pursuant to Sections 1 and 2 of this Agreement shall apply to any time during which I was previously engaged, or am in the future engaged, by the Company as an employee or independent contractor if no other agreement governs nondisclosure and assignment of inventions during such period.  This Agreement is the final, complete and exclusive agreement of the parties with respect to the subject matter hereof and supersedes and merges all prior discussions between us.  No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing and signed by the party to be charged.  Any subsequent change or changes in my duties or compensation will not affect the validity or scope of this Agreement.

 

This Agreement shall be effective as of the first day of my engagement with the Company.

 

I have read this Agreement carefully and understand its terms.  I have completely filled out Exhibit B to this Agreement.

 

Dated:  May 7, 2012

 

/s/ Margaret Randazzo

 

MARGARET RANDAZZO

 

 

 

ACCEPTED AND AGREED TO:

 

Westinghouse Solar,  Inc.

 

By:  /s/ Ed Roffman

 

Name: Ed Roffman

 

Title:  Chair, Special Committee of Westinghouse Solar Board of Directors

 

Dated:   May 7, 2012

  

  

  

Exhibit A

 

LIMITED EXCLUSION NOTIFICATION

 

This is to notify you in accordance with Section 2872 of the California Labor Code that the foregoing Agreement between you and the Company does not require you to assign or offer to assign to the Company any invention that you developed entirely on your own time without using the Company's equipment, supplies, facilities or trade secret information except for those inventions that either:

 

1. Relate at the time of conception or reduction to practice of the invention to the Company's business, or actual or demonstrably anticipated research or development of the Company;

 

2. Result from any work performed by you for the Company.

 

To the extent a provision in the foregoing Agreement purports to require you to assign an invention otherwise excluded from the preceding paragraph, the provision is against the public policy of this state and is unenforceable.

 

This limited exclusion does not apply to any patent or invention covered by a contract between the Company and the United States or any of its agencies requiring full title to such patent or invention to be in the United States.

 

I acknowledge receipt of a copy of this notification.

 

By:  /s/ Margaret Randazzo

 

(Signature)

 

Margaret Randazzo

 

 (Printed Name)

 

Date: May 7, 2012

 

 

Witnessed by:

 

/s/ Jessica Wyckoff

 

Jessica Wychoff

 

(Printed Name of Representative)

 

 

  

  

  

Exhibit B

 

TO:  Westinghouse Solar, Inc.

 

FROM:  Margaret Randazzo

 

DATE:  May 7, 2012

 

SUBJECT:  Previous Inventions

 

1.           Except as listed in Section 2 below, the following is a complete list of all inventions or improvements relevant to the subject matter of my engagement by Westinghouse Solar, Inc. (the "Company") that have been made or conceived or first reduced to practice by me alone or jointly with others prior to my engagement by the Company:

 

x  No inventions or improvements.

  

 ̈           See below:

 

 ̈           Additional sheets attached.

 

2.           Due to a prior confidentiality agreement, I cannot complete the disclosure under Section 1 above with respect to inventions or improvements generally listed below, the proprietary rights and duty of confidentiality with respect to which I owe to the following party(ies):

 

Invention or Improvement                                                                           Party(ies)                      Relationship

 

1. 

 

2. 

 

3. 

 

 ̈           Additional sheets attached.

 

 

  

  

  

 

 

 

Exhibit C

 

 

FORM OF EMPLOYMENT AGREEMENT

 

 

 

 

END OF SCHEDULE C

 

 

 

 

 

  

  

  

 

 

 

SCHEDULE D – FORM OF SEVERANCE AGREEMENT AND RELEASE

 

___________, 2012

 

BY [METHOD OF DELIVERY]

 

 

To Employee Age 40 or Over

 

[address]

 

 

Re:           Separation Agreement

 

Dear _______________________:

 

This letter sets forth the terms of the separation agreement (the “Agreement”) that _______________________ (the “Company”) is offering to you in connection with your employment transition.

 

1.            Separation Date.  Your last day of employment and your employment termination date is ____________________ (the “Separation Date”).  On the Separation Date, the Company will provide you with your final pay, which includes payment of base salary and any accrued and unused vacation time as of the Separation Date.  You are entitled to these payments by law.  

 

2.            Severance Compensation.

 

                      (a)  Payment of Severance Compensation.  Although the Company is not otherwise obligated to do so, if you timely sign, date, and return this fully signed Agreement to the Company no later than _________________ and allow it to become effective, and you comply with your obligations hereunder, the Company will pay you severance compensation in the form of a continuance of the base salary (not bonus compensation) provided for in the Employment Agreement entered into between you and the Company effective ____________, 2012, payable according to the Company’s regular payroll schedule, policies, and practices, through a date that is 24 months after the effective date of the Employment Agreement, subject to applicable deductions and withholdings (the “Severance Compensation”).  Payment of the Severance Compensation will be made in accordance with the Company’s regular payroll schedule, commencing ____ business days following the Effective Date of this Agreement (as defined in Section 13(d)).  The first installment of the Severance Compensation will include retroactive payment of any compensation that would have accrued after the termination date and would have been payable to you on the Company’s regular payroll schedule but for the termination of the employment.

 

                      (b)  Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).  The payment of the Severance Compensation is intended to be interpreted and applied so that the payment either (i) shall be exempt from the requirements of Section 409A of the Code, as amended, and the regulations promulgated thereunder or (ii) shall comply with the requirements of such provision (including the exceptions for short-term deferrals, separation pay arrangements, reimbursements, and in-kind distributions.)  In addition, each payment shall be considered a separate payment for purposes of Section 409A

 

                      (b)  Short-term Deferral under Code Section 409A.  If the Severance Compensation payment does not qualify as a short-term deferral under Section 409A and Treasury Regulation ("Treas. Reg.") §1.409A-1(b)(4) or any similar or successor provisions, and you are a specified employee (as defined in Section 409A and Treas. Reg. 1.409A-1(c)(i) or any similar or successor provisions) as of the Separation Date, distributions to you may not be made before the date that is six (6) months and one (1) day after the Separation Date or, if earlier, the date of the your death (the "Six-Month Delay Rule"). Payments to which you would otherwise be entitled during the first six months following the Separation Date (the "Six-Month Delay") will be accumulated and paid on the first day of the seventh month following the Separation Date.

 

                      (c)  Lump Sum Payments during Six Month Delay under Code Section 409A.  Notwithstanding the Six-Month Delay Rule set forth above, to the maximum extent permitted under Code Section 409A and Treas. Reg. §1.409A-1(b)(9)(iii) or any similar or successor provisions, during the Six-Month Delay, the Company will pay to you in a lump sum an amount equal to the lesser of (i) the total termination benefits provided in Sections 2(a) above, or (ii) the lesser of (A) the maximum amount that may be taken into account under a qualified plan pursuant to Code Section 401(a)(17) for the year in which the Separation Date occurs, and (B) the sum of the your annual base salary based upon the annual rate of pay for services provided to the Company for the taxable year preceding the taxable year of the Separation Date; provided that amounts paid under this sentence will count toward, and will not be in addition to, the total payment of termination benefits required to be made to you by the Company under this Section 2.

 

  

  

  

 

3.            Health Insurance.  To the extent provided by the federal COBRA law or, if applicable, state insurance laws (collectively, “COBRA”), and by the Company’s current group health insurance policies, you will be eligible to continue your group health insurance benefits at your own expense after the Separation Date.  You will be provided with a separate notice describing your rights and obligations under COBRA laws on or after the Separation Date.

 

4.            Stock Options.  The Company and Employee have entered into _____<#> Stock Option Agreements, each granting Employee the option to purchase shares of the Company's common stock subject to the terms and conditions of the __________________________ [Stock Option / Stock Issuance Plan and the Stock Option Agreements (collectively the "Stock Agreements")].  The exercise of Employee's vested options and shares shall continue to be governed by the terms and conditions of the Company's Stock Agreements.

 

5.            Expense Reimbursements.  You agree that, within thirty (30) days of the Separation Date, you will submit your final documented expense reimbursement statement reflecting all business expenses you incurred through the Separation Date, if any, for which you seek reimbursement.  The Company will reimburse you for any final documented expenses pursuant to its regular business practice and reimbursement policy.

 

6.           No Other Compensation or Benefits.  You acknowledge that, except as expressly provided in this Agreement, you have not earned and will not receive from the Company any additional compensation, severance, or benefits on or after the Separation Date.  By way of example, except as otherwise referenced in this Agreement, you acknowledge and agree that you have not earned and are not owed any bonus, incentive compensation, commissions or equity.

 

7.           Return of Company Property.  You agree to return to the Company, no later than three (3) business days after the Separation Date, all Company documents (and all copies thereof) and other property of the Company in your possession or control, whether tangible or intangible, including, but not limited to, Company files, notes, correspondence, memoranda, notebooks, drawings, records, reports, lists, compilations of data, proposals, agreements, drafts, minutes, studies, plans, forecasts, purchase orders, financial and operational information, product and training information, research and development information, sales and marketing information, personnel and compensation information, vendor information, promotional literature and instructions, product specifications and manufacturing information, computer-recorded information, electronic information (including e-mail and correspondence), other tangible property and equipment (including, but not limited to, computer equipment, PDAs, facsimile machines, and cellular telephones), credit cards, entry cards, identification badges and keys; and any materials of any kind that contain or embody any proprietary or confidential information of the Company (and all reproductions thereof in whole or in part), as well as intangible property such as passwords, access codes, identification keys and/or any other information relating to the business of the Company in your possession, custody, knowledge and/or control.  You agree that you will make a diligent search to locate any such documents, property and information within the timeframe referenced above.  In addition, if you have used any personally owned computer, server, or e-mail system to receive, store, review, prepare or transmit any Company confidential or proprietary data, materials or information, then you agree to provide the Company, within five (5) business days after the Separation Date, with a computer-useable copy of all such information and then permanently delete and expunge such Company confidential or proprietary information from those systems without retaining any reproductions (in whole or in part); and you agree to provide the Company access to your system as requested to verify that the necessary copying and/or deletion is done.  Your timely compliance with this Section 7 is a precondition to your receipt of the Severance Compensation.

 

8.            Confidentiality.  The provisions of this Agreement will be held in strictest confidence by you and will not be publicized or disclosed in any manner whatsoever; provided, however, that:  (a) you may disclose this Agreement in confidence to your immediate family; (b) you may disclose this Agreement in confidence to your attorneys, accountants, auditors, tax preparers, and financial advisors; and (c) you may disclose this Agreement insofar as such disclosure may be necessary to enforce its terms or as otherwise required by law.  In particular, and without limitation, you agree not to disclose the existence or terms of this Agreement to any current or former Company employee, contractor or consultant.

 

9.            Nondisparagement.  You agree not to disparage the Company, its products or services, business, technologies, market position, performance and other similar information concerning the Company, or the Company’s officers, directors, employees, shareholders and agents, in any manner likely to be harmful to them or their business, business reputations or personal reputations; provided that you may respond accurately and fully to any request for information to the extent required by legal process.

 

10.           Nonsolicitation of Employees.  You agree that, for one (1) year after the Separation Date, you will not solicit, urge, encourage, or attempt to solicit, urge or encourage, any employees or independent contractors of the Company to terminate or otherwise alter his or her employment or contractor relationship with the Company in order to obtain a new employment or contractor relationship with another entity or person.

 

11.            No Voluntary Adverse Action; and Cooperation.  To the extent allowed by law, you agree that you will not voluntarily (except in response to legal compulsion) assist any person in bringing or pursuing any proposed or pending litigation, arbitration, administrative claim or other formal proceeding against the Company, its parent or subsidiary entities, affiliates, officers, directors, employees or agents.  In addition, you agree to cooperate fully with the Company in connection with its actual or contemplated defense, prosecution, or investigation of any claims or demands by or against third parties, or other matters arising from events, acts, or failures to act that occurred during the period of your employment by the Company.  Such cooperation includes, without limitation, making yourself available to the Company upon reasonable notice, without subpoena, to provide complete, truthful and accurate information in witness interviews, depositions, and trial testimony.  The Company will reimburse you for reasonable out-of-pocket expenses you incur in connection with any such cooperation (excluding forgone wages, salary, or other compensation) and will make reasonable efforts to accommodate your scheduling needs.  In addition, you agree to execute all documents (if any) necessary to carry out the terms of this Agreement.

  

  

  

  

 

12.    No Admissions.  Nothing contained in this Agreement shall be construed as an admission by you or the Company of any liability, obligation, wrongdoing or violation of law.    

 

13.   Release of Claims.

 

       (a)           General Release.  In exchange for the consideration provided to you under this Agreement to which you would not otherwise be entitled, including but not limited to the Severance Compensation, you hereby generally and completely release the Company and its current and former directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, parent and subsidiary entities, insurers, affiliates, and assigns (collectively, the “Released Parties”) of and from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to or on the date you sign this Agreement (collectively, the “Released Claims”).

 

       (b)           Scope of Release.  The Released Claims include, but are not limited to:  (i) all claims arising out of or in any way related to your employment with the Company, or the termination of that employment; (ii) except as expressly provided for and/or referenced in this Agreement, all claims related to your compensation or benefits from the Company, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the Company; (iii) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing (including but not limited to any claims based on or arising from the Employment Agreement); (iv) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (v) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (as amended) (the “ADEA”), the Civil Rights Act of 1991, the California Labor Code (as amended), and the California Fair Employment and Housing Act (as amended).

 

       (c)           Excluded Claims. Notwithstanding the foregoing, the following are not included in the Released Claims (the “Excluded Claims”): (i) any rights or claims for indemnification you may have pursuant to any written indemnification agreement with the Company to which you are a party, the charter, bylaws, or operating agreements of the Company, or under applicable law; (ii) any rights that are not waivable as a matter of law; and (iii) any claims for breach of this Agreement.  In addition, nothing in this Agreement prevents you from filing, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission, the Department of Labor, the California Department of Fair Employment and Housing, or any other government agency, except that you acknowledge and agree that you are hereby waiving your right to any monetary benefits in connection with any such claim, charge or proceeding.  You hereby represent and warrant that, other than the Excluded Claims, you are not aware of any claims you have or might have against any of the Released Parties that are not included in the Released Claims.

 

       (d)           ADEA Waiver.  You acknowledge that you are knowingly and voluntarily waiving and releasing any rights you may have under the ADEA, and that the consideration given for the waiver and release in this Section 13 is in addition to anything of value to which you are already entitled.  You further acknowledge that you have been advised, as required by the ADEA, that:  (i) your waiver and release do not apply to any rights or claims that may arise after the date that you sign this Agreement; (ii) you should consult with an attorney prior to signing this Agreement (although you may choose voluntarily not to do so); (iii) you have twenty-one (21) days in which to consider this Agreement (although you may choose voluntarily to sign it earlier); (iv) you have seven (7) days following the date you sign this Agreement to revoke the Agreement (by providing written notice of your revocation to the Company); and (v) this Agreement will not be effective until the date upon which the revocation period has expired, which will be the eighth day after the date that this Agreement is signed by you provided that you do not revoke it (the “Effective Date”).

 

       (e)           Section 1542 Waiver.  In giving the releases set forth in this Agreement, which include claims which may be unknown to you at present, you acknowledge that you have read and understand Section 1542 of the California Civil Code which reads as follows:  “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”  You hereby expressly waive and relinquish all rights and benefits under that section and any law or legal principle of similar effect in any jurisdiction with respect to the releases granted herein, including but not limited to the release of unknown and unsuspected claims granted in this Agreement.

 

       (f)           Timing of Delivery of Release.  Subject to and without waiver of the execution and delivery timing requirements of paragraph 13(d), above, in order for the Release referred to herein to be effective under any circumstances, this Agreement must be executed by you and  delivered to the Company no later than the fiftieth (50th) day following the date your employment is terminated, and must not be revoked during the seven (7) days following such delivery (“Effective Release”).  If the Effective Release does not occur by the fifty-seventh (57th) day following the date your employment is terminated, your right to the Severance Compensation is forfeited.

 

   14   Representations.  You hereby represent that you have been paid all compensation owed and for all hours worked, have received all the leave and leave benefits and protections for which you are eligible pursuant to any applicable law or Company policy, and have not suffered any on-the-job injury for which you have not already filed a workers’ compensation claim.

       

    15.           Job Verification.  Any and all requests by third parties for job verifications or references regarding your employment at the Company should be directed exclusively to the Company’s Human Resources personnel.  In response to any such requests, the Company’s response will be limited to confirming the starting and ending dates that you worked for the Company, and the last job title held by you.  No other information or reference will be provided.

 

    16.           Dispute Resolution.  To aid in the rapid and economical resolution of any disputes that may arise under this Agreement, you and the Company agree that any and all claims, disputes or controversies of any nature whatsoever arising from or regarding the interpretation, performance, negotiation, execution, enforcement or breach of this Agreement, your employment, or the termination of your employment, shall be resolved by confidential, final and binding arbitration conducted before a single arbitrator with JAMS, Inc. (“JAMS”) in San Francisco, California, in accordance with JAMS’ then-applicable arbitration rules.  The parties acknowledge that by agreeing to this arbitration procedure, they waive the right to resolve any such dispute through a trial by jury, judge or administrative proceeding.  You will have the right to be represented by legal counsel at any arbitration proceeding.  The arbitrator shall:  (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be available under applicable law in a court proceeding; and (b) issue a written statement signed by the arbitrator regarding the disposition of each claim and the relief, if any, awarded as to each claim, the reasons for the award, and the arbitrator’s essential findings and conclusions on which the award is based.  The Company shall bear JAMS’ arbitration fees and administrative costs.  Consistent with the provisions of California Code of Civil Procedure Section 1281.8, nothing in this Agreement shall prevent either you or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.  Any awards or orders in such arbitrations may be entered and enforced as judgments in the federal and state courts of any competent jurisdiction.  This Section 15 shall supersede and replace any Agreement to Arbitrate Employment Disputes previously entered into between you and the Company.

 

    17.           Miscellaneous.  This Agreement constitutes the complete, final and exclusive embodiment of the entire agreement between you and the Company with regard to its subject matter.  It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations.  This Agreement may not be modified or amended except in a written agreement signed by both you and a duly authorized officer of the Company.  This Agreement will bind the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Company, and their heirs, successors and assigns.  If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement and the provision in question shall be deemed modified so as to be rendered enforceable in a manner consistent with the intent of the parties, insofar as possible under applicable law.  Any ambiguity in this Agreement shall not be construed against either party as the drafter.  Any waiver of a breach of this Agreement, or rights hereunder, shall be in writing and shall not be deemed to be a waiver of any successive breach or rights hereunder.  This Agreement shall be deemed to have been entered into, and shall be construed and enforced, in accordance with the laws of the State of California without regard to conflicts of law principles.  This Agreement may be executed in counterparts, each of which shall be deemed to be part of one original, and facsimile signatures shall be equivalent to original signatures.  You have the option to review this Agreement with legal counsel of your choice, at your expense.

 

 

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

 

  

  

  

 

 

 

If this Agreement is acceptable to you, no later than twenty-one (21) days after your receipt of this Agreement, please sign below and return the signed Agreement to the Company.  If you do not sign and return this Agreement to the Company within the aforementioned timeframe, the Company’s offer to enter into this Agreement will expire.

 

Sincerely,

 

[COMPANY]

 

By:                                                                

 

      Name

 

      Title

 

 

Understood and Agreed:

 

 

[NAME]

 

 

Date: ______________________

 

 

 

 

END OF SCHEDULE D

 

  

  

  

 

 

 

SCHEDULE E – EMPLOYMENT ARBITRATION RULES

 

OF THE AMERICAN ARBITRATION ASSOCIATIONexhibit_10-1.htm

EXHIBIT 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of August 14, 2012, between Westinghouse Solar, Inc., a Delaware corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively the “Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

 

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

 

ARTICLE I.

 

DEFINITIONS

 

1.1 Definitions.  In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings set forth in this Section 1.1:

 

“Acquiring Person” shall have the meaning ascribed to such term in Section 4.5.

 

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

 

“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.

 

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

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

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

 

“Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Shares, in each case, have been satisfied or waived, and in any event, on or before the 3rd Trading Day following the date hereof.

 

“Closing Statement” means the Closing Statement in the form on Annex A attached hereto.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

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

 

“Company Counsel” means DLA Piper LLP (US), with offices located at 2000 University Avenue, East Palo Alto, CA 94303.

 

“Disclosure Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.

 

“G&M” means Grushko & Mittman, P.C., with offices located at 515 Rockaway Avenue Valley Stream, NY 11581.

 

“Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(r).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Money Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(hh).

 

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

 

 “Per Share Purchase Price” equals $0.25, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

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

 

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

 

“Prospectus” means the final prospectus filed with the Registration Statement.

 

“Prospectus Supplement” means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with the Commission and delivered by the Company to each Purchaser at the Closing.

 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.8.

 

“Registration Statement” means the effective registration statement with Commission file No. 333-180239 which registers the sale to the Purchasers of the  Shares.

 

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

 

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

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

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

 

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

 

 “Shares” means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement.

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock). 

 

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

 

 “Subsidiary” means any subsidiary of the Company as set forth on Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE Alternext, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).

 

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

 

“Transfer Agent” means American Stock Transfer & Trust Company, LLC, the current transfer agent of the Company, with a mailing address of 1218 Third Avenue Suite 1700, Seattle, Washington 98101, and a facsimile number of (206) 682-0812, and any successor transfer agent of the Company.

 

  

1

  

 

ARTICLE II.

 

PURCHASE AND SALE

 

2.1 Closing.  On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, an aggregate of up to $500,000 of Shares. Each Purchaser shall deliver to the Company, via wire transfer or a certified check of immediately available funds equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser and the Company shall deliver to each Purchaser its respective Shares as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing.  Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of G&M or such other location as the parties shall mutually agree.

 

2.2 Deliveries.

 

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

 

(i) a copy of this Agreement duly executed by the Company;

 

(ii) a copy of a legal opinion of Company Counsel, substantially in the form of Exhibit A attached hereto;

 

(iii) a copy of the irrevocable instructions to the Company’s transfer agent instructing the transfer agent to deliver via the Depository Trust Company’s Deposit/Withdrawal at Custodian system (“DWAC”) Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, registered in the name of such Purchaser, for an aggregate of 2,000,000 shares of Common Stock; and

 

(iv) the Prospectus and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act).

 

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

 

(i) a duly executed copy of its signature page to this Agreement duly executed by such Purchaser; and

 

(ii) such Purchaser’s Subscription Amount by wire transfer to the account as specified in writing by the Company.

 

2.3 Closing Conditions.

 

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

 

(i) the accuracy in all material respects on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein);

 

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

 

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

 

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

 

(i) the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein);

 

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

 

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

 

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

 

(v) from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of each Purchaser, makes it impracticable or inadvisable to purchase the Shares at the Closing.

 

  

2

  

 

ARTICLE III.

 

REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Company.  Except as set forth in the Registration Statement (including any SEC Reports incorporated by reference therein), or in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or warranty otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each Purchaser:

 

(a) Subsidiaries.  All of the direct and indirect subsidiaries of the Company are set forth on Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.  The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

 

(b)     Organization and Qualification.  The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, 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 nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

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

 

(d) No Conflicts.  The execution, delivery and performance by the Company of the Transaction Documents, the issuance and sale of the Shares and the consummation by it 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 have or reasonably be expected to result in a Material Adverse Effect.

 

(e) Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Prospectus Supplement, (iii) application(s) to each applicable Trading Market for the issuance and sale of the Shares for trading thereon in the time and manner required thereby and (iv) such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

 

(f) Issuance of the Shares; Registration.  The Shares are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.  The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement. The Company has prepared and filed the Registration Statement in conformity with the requirements of the Securities Act, which Registration Statement became effective on March 27, 2012 (the “Effective Date”), including the Prospectus, and such amendments and supplements thereto as may have been required to the date of this Agreement.  The Registration Statement is effective under the Securities Act and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus has been issued by the Commission and no proceedings for that purpose have been instituted or, to the knowledge of the Company, are threatened by the Commission.  The Company, if required by the rules and regulations of the Commission, proposes to file the Prospectus, with the Commission pursuant to Rule 424(b).  At the time the Registration Statement and any amendments thereto became effective, at the date of this Agreement and at the Closing Date, the Registration Statement and any amendments thereto conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments or supplements thereto, at the time the Prospectus or any amendment or supplement thereto was issued and at the Closing Date, conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain an 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.

 

(g) Capitalization.  The capitalization of the Company is as set forth in the Registration Statement or Prospectus Supplement.  The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, 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 Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act.  No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.  Except as a result of the purchase and sale of the Shares, and except as disclosed or described in the Registration Statement (including in the SEC Reports incorporated therein) and for stock options and other equity grants to employees made under the Company’s existing stock 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 for outstanding warrants disclosed or described in the Registration Statement (including in any SEC Reports incorporated therein), the issuance and sale of the Shares will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Shares.  There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

 

  

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(h) 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 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, together with the Prospectus and the Prospectus Supplement, 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 Company has never been an issuer subject to Rule 144(i) under the Securities Act. 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 indicated therein, subject, in the case of unaudited statements, to normal, immaterial year-end audit adjustments.

 

(i) Material Changes; Undisclosed Events, Liabilities or Developments.  Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in 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 stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to 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 Shares contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability or development that could reasonably be expected to result in a Material Adverse Effect has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, operations 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 one Trading Day prior to the date that this representation is made.

 

(j) Litigation.  There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Shares or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any Subsidiary, to the knowledge of the Company, 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.

 

(k) 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, to the knowledge of the Company, 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 of the Company or any Subsidiary, 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 in all material respects 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.

 

(l) 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 applicable to its business and all such laws that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(m) 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.

 

(n) 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 reflected in the Company’s Financial Statements, such Liens that do not materially effect 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 its Subsidiaries, and Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made in accordance with GAAP, and 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.

 

(o) Patents and Trademarks.  To its knowledge, 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”).  To the knowledge of the Company, neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person.  To the knowledge of the Company, all Intellectual Property Rights that it owns or has rights to 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 their intellectual property that consist of trade secrets, 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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(p) Insurance.  The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription Amount.  Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance 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.

 

(q) Transactions With Affiliates and Employees.  Except as set forth in the SEC Reports, none of the officers or directors of the Company or any Subsidiary 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.

 

(r) Sarbanes-Oxley; Internal Accounting Controls.  The Company is in all material respects in compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the 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”).  The Company 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 adversely affected, or is reasonably likely to materially adversely affect, the Company’s internal control over financial reporting.

 

(s) Certain Fees.  Except as set forth on Schedule 3.1(s) hereto, 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 the Transaction Documents.  The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

 

(t) Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Shares, 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.

 

(u) Registration Rights.  Except as set forth on Schedule 3.1(u) hereto, other than rights which have expired or as to which the Company has previously filed effective registration statements, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.

 

(v) Listing and Maintenance Requirements.  The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.  Except as disclosed in the SEC Reports, the Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. Except as set forth on Schedule 3.1(v) hereto, the Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

 

(w) 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 Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Shares and the Purchasers’ ownership of the Shares.

 

(x) Disclosure.  Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers 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 Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company.  All of the disclosure furnished, taken as a whole, by or on behalf of the Company to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct in all material respects 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 Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 

(y) No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Shares 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.

 

(z) Solvency.   The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date.  The SEC Reports sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments.  For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess of $250,000 (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 $250,000 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.

 

  

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

 

(bb) 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.

 

(cc) Accountants.  The Company’s accounting firm is set forth in the SEC Reports.  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.

 

(dd)  Acknowledgment Regarding Purchasers’ Purchase of Shares.  The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby.  The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Shares.  The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

(ee) Acknowledgement Regarding Purchaser’s Trading Activity.  Anything in this Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(e) and 4.14 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers have been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Shares for any specified term; (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly-traded securities; (iii) any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the Common Stock, and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction.  The Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period that the Shares are outstanding, and (z) such hedging activities (if any) could reduce the value of the existing stockholders' equity interests in the Company at and after the time that the hedging activities are being conducted.  The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.

 

(ff) 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 Shares, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Shares, 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 Shares.

 

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

 

(hh) Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance 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 or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.

 

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

 

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

 

(b) Understandings or Arrangements.  Such Purchaser is acquiring the Shares as principal for its own account and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Shares (this representation and warranty not limiting such Purchaser’s right to sell the Shares pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws).  Such Purchaser is acquiring the Shares hereunder in the ordinary course of its business.

 

  

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

 

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

 

(e) Certain Transactions and Confidentiality.  Other than consummating the transactions contemplated hereunder, such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Shares covered by this Agreement.  Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.

 

(f) Need for additional financing.  Such Purchaser understands that it is likely that the Company will need to obtain additional financing following consummation of this Agreement in order to fully execute its current business plan and objectives.  Such financing could be in the form of a sale or sales of equity or debt or equipment lease financing or a combination of the foregoing. Such financing could lead to material dilution to the Company’s then existing equity holders and could provide for terms that restrict the operations of the Company.  There can be no assurance that any additional financing following the consummation of this Agreement will be available to the Company on commercially reasonable terms or at all.  In the event the Company is unable to obtain additional financing, it may not be able to fully execute its business plan and objectives and could be forced to curtail some or all of its operations.

 

(g) Such Purchaser understand and recognize that the purchase of the Shares is highly speculative and involves a high degree of risk and that only investors who can afford the loss of their entire investment should consider investing in the Company.  Such Purchaser has reviewed the risk factors in the SEC Reports.

 

(h) The address of such Purchaser furnished by him/her on the signature pages hereto is the undersigned’s principal residence if he/she is an individual or its principal business address if it is a corporation or other entity.

 

(i) If such Purchaser is not a United States person, it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to purchase the Shares or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Shares.  Such Purchaser’s payment for, and its continued beneficial ownership of the Shares, will not violate any applicable securities or other laws of the Purchaser’s jurisdiction.

 

The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.

 

 

  

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ARTICLE IV.

 

OTHER AGREEMENTS OF THE PARTIES

 

4.1 [RESERVED].

 

4.2 Furnishing of Information.  Until the time that no Purchaser owns Shares, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.

 

4.3 Integration.  The Company shall not sell, offer for sale or solicit offers to buy any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Shares for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

 

4.4 Securities Laws Disclosure; Publicity.  The Company shall, by 9:00 a.m. (New York City time) on the Trading Day immediately following the date hereof, issue a press release or file a Current Report on Form 8-K, disclosing the material terms of the transactions contemplated hereby, and within one Trading Day thereafter, file a Current Report on Form 8-K, including the Transaction Documents as exhibits thereto.  From and after the issuance of such Form 8-K, the Company shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents.  The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.  Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (a) as required by federal securities law in connection with the filing of final Transaction Documents (including signature pages thereto) with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).

 

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

 

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

 

4.7 Use of Proceeds.  Except as set forth on Schedule 4.7 attached hereto or in the Registration Statement, the Company shall use the net proceeds from the sale of the Shares hereunder for working capital purposes and shall not use such proceeds for: (a) the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices), (b) the redemption of any Common Stock or Common Stock Equivalents, (c) the settlement of any outstanding litigation, or (d) in violation of Money Laundering Laws or OFAC regulations.

 

4.8 Indemnification of Purchasers.   Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against a Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser may have with any such stockholder or any violations by such Purchaser of state or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance).  If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.  The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents.

 

  

8

  

 

4.9 [RESERVED].

 

4.10 Listing of Common Stock. The Company hereby agrees to use all commercially reasonable efforts to maintain the listing or quotation of the Common Stock on the Trading Market on which it is currently listed, and concurrently with the Closing, the Company shall apply to list or quote all of the Shares on such Trading Market and promptly secure the listing of all of the Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such application all of the Shares, and will take such other action as is necessary to cause all of the Shares to be listed or quoted on such other Trading Market as promptly as possible.  The Company will then take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.

 

4.11 [RESERVED].

 

4.12 [RESERVED].

 

4.13 Equal Treatment of Purchasers.  No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents.  For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Shares or otherwise.

 

4.14 Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the Form 8-K as described in Section 4.4.  Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the Form 8-K as described in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Transaction Documents and the Disclosure Schedules.  Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the Form 8-K as described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the Form 8-K as described in Section 4.4 and (iii) no Purchaser shall have any duty of confidentiality to the Company or its Subsidiaries after the issuance of the Form 8-K as described in Section 4.4.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Shares covered by this Agreement.

 

4.15 [RESERVED].

 

4.16 Capital Changes.  Prior to October 1, 2012, the Company may file a proxy statement with the Commission to obtain shareholder approval of a reverse stock split of the Common Stock which will provide that such reverse stock split shall not exceed a 1 for 8 ratio.  From October 1, 2012 until the 120 calendar day from such date, the Company shall undertake no other reverse or forward stock split or reclassification of the Common Stock without the prior written consent of the Purchasers holding a majority in interest of the Shares.

 

4.17 Management Lock-Up. Except as set forth on Schedule 4.17, the Company hereby agrees that, from the date hereof until the 60th day following the Closing Date (such period, the “Restriction Period”), no member of the Board of Directors and no officer of the Company (such group, the “Management”) will offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by such Management or any Affiliate of such Management or any person in privity with such Management or any Affiliate of such Management), directly or indirectly, including the filing (or participation in the filing) of a registration statement with the Commission in respect of, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any shares of Common Stock or Common Stock Equivalents beneficially owned, held or hereafter acquired by such Management; provided, however, that such Management is permitted to sell or dispose shares of Common Stock to the extent needed to satisfy or to generate proceeds to cover tax withholdings obligations regarding their receipt of vesting of Common Stock.  Beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act.  In order to enforce this covenant, promptly upon the written request of a Purchaser, the Company shall impose irrevocable stop-transfer instructions preventing the Transfer Agent from effecting any actions in violation of this Section 4.17.  The Company hereby acknowledges that the enforcement of this Section 4.17 is a material inducement to each Purchaser to complete the transactions contemplated by this Agreement and that each Purchaser and the Company shall be entitled to specific performance of the obligations pursuant to this Section 4.17.

 

4.18 [RESERVED].

 

  

9

  

 

ARTICLE V.

 

MISCELLANEOUS

 

5.1 Termination.  This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before August 31, 2012; provided, however, that no such termination will affect the right of any party to sue for any breach by the other party (or parties).

 

5.2 Fees and Expenses.  At the Closing, the Company has agreed to reimburse Alpha Capital (“Alpha”) the non-accountable sum of $10,000 for its legal fees and expenses, none of which has been paid prior to the Closing.  The Company shall deliver to each Purchaser, prior to the Closing, a completed and executed copy of the Closing Statement, attached hereto as Annex A.  Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Shares to the Purchasers.

 

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

 

5.4 Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

5.5 Amendments; Waivers.  No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchasers holding at least 67% in interest of the Shares then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

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

 

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

 

5.8 No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8.

 

5.9 Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.  If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.8, the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

 

  

10

  

 

5.10 Survival.  The representations and warranties contained herein shall survive the Closing and the delivery of the Shares.

 

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

 

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

 

5.13 Rescission and Withdrawal Right.  Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

 

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

 

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

 

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

 

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

 

5.18 [RESERVED]

 

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

 

5.20 Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

5.21 WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

 

(Signature Pages Follow)

 

  

11

  

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

 

	
WESTINGHOUSE SOLAR, INC.

 

 

	
Address for Notice:

1475 S. Bascom Ave., Suite 101

Campbell, CA 95008

	
By:__________________________________________

     Name:

     Title:

 

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

	
Fax: 408-371-5105

	  	  

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

  

12

  

[PURCHASER SIGNATURE PAGES TO WEST SECURITIES PURCHASE AGREEMENT]

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

 

Name of Purchaser: ________________________________________________________

Signature of Authorized Signatory of Purchaser: _________________________________

Name of Authorized Signatory: _______________________________________________

Title of Authorized Signatory: ________________________________________________

Email Address of Authorized Signatory:_________________________________________

Facsimile Number of Authorized Signatory: __________________________________________

Address for Notice of Purchaser:

Address for Delivery of Shares for Purchaser (if not same as address for notice):

Subscription Amount: $_________________

Shares of Common Stock: _________________

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

  

13

  

Annex A

CLOSING STATEMENT

Pursuant to the attached Securities Purchase Agreement, dated as of the date hereto, the purchasers shall purchase up to $500,000 of Common Stock from Westinghouse Solar, Inc., a Delaware corporation (the “Company”).  All funds will be wired into an account maintained by the Company.  All funds will be disbursed in accordance with this Closing Statement.

	
Disbursement Date:

	
August ___, 2012

	
I.   PURCHASE PRICE

 

	  
	  	
Gross Proceeds to be Received

	
$500,000

	  	  
	
II.      DISBURSEMENTS

 

	  
	  	
 

	
$

	  	
 

	
$

	  	  	
$

	  	  	
$

	  	  	
$

	  	  
	
Total Amount Disbursed:

	
$

	  	  
	  	  
	  	  
	
WIRE INSTRUCTIONS:

 

 

	  
	
To: _____________________________________

 

 

 

 

 

	  
	
To: _____________________________________

 

 

 

 

 

	  

  

14

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