PREMIER POWER RENEWABLE ENERGY, INC. [______] Shares of Common Stock, par value $0.0001 per share PLACEMENT AGENT AGREEMENT
[______]
Shares of Common Stock, par value $0.0001 per share
July
[__], 2010
Xxxxxxxx
Curhan Ford & Co.
000 Xxxx
00xx
Xxxxxx
00xx
Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Dear Sir
or Madam:
Premier
Power Renewable Energy, Inc., a Delaware corporation (the “Company”), proposes
to issue and sell up to [_____] shares (the “Offered Securities”)
of common stock, par value $0.0001 per share (the “Common Stock”) to one
or more investors (collectively, the “Investors”). The
Offered Securities are described more fully in the Registration Statement (as
hereinafter defined).
The
Company hereby confirms its agreement with Xxxxxxxx Curhan Ford & Co. (the
“Placement
Agent”) as set forth below.
1. Agreement to Act as
Placement Agent. On the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions of this Agreement, the Placement Agent agrees to act as the Company’s
placement agent in connection with the issuance and sale, on a best efforts
basis, by the Company of the Offered Securities to the Investors. The
Placement Agent shall use commercially reasonable efforts to assist the Company
in obtaining performance by each Investor whose offer to purchase Offered
Securities has been solicited by the Placement Agent and accepted by the
Company, but the Placement Agent shall not have any liability to the Company in
the event any such purchase is not consummated for any reason. The
Company shall pay to the Placement Agent a cash fee (the “Placement Fee”) equal
to 6.5% of the gross proceeds received by the Company from the sale of the
Offered Securities as set forth on the cover page of the Prospectus (as
hereinafter defined). The Placement Agent may, in its discretion, retain other
brokers or dealers who are members of the Financial Industry Regulatory
Authority, Inc. (“FINRA”) to act as
selected dealers or subagents on such Placement Agent’s behalf in connection
with the offering of the Offered Securities, payment to whom shall be solely the
responsibility of the Placement Agent retaining such selected dealer or
subagent.
2. Delivery and
Payment. The closing (the “Closing”) of the sale
of the Offered Securities shall take place at the office of Xxxxxx Xxxxx
Xxxxxxxx & Xxxxxxx LLP at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000 at 10:00 a.m., New York City time, on July [__], 2010, or at such other
time on such other date as may be agreed upon by the Company and the Placement
Agent (the “Closing
Date”). All actions taken at the Closing shall be deemed to
have occurred simultaneously. On or before the Closing Date, each
Investor shall pay by wire transfer of immediately available funds to an account
specified by the Company an amount equal to the product of (x) the number of
Offered Securities such Investor has agreed to purchase and (y) the purchase
price per share as set forth on the cover page of the Prospectus (as defined
below) (the “Purchase Amount”). On the Closing Date, the Company
shall (i) deliver or cause to be delivered the Offered Securities to the
Investors, with the delivery of the Offered Securities to be made, if possible,
through the facilities of [The Depository Trust
Company's DWAC system],
and (ii) pay to the Placement Agent the Placement Fee and the expense
reimbursement to which the Placement Agent is entitled pursuant to Section 6
hereof.
3. Representations and
Warranties of the Company. The Company represents and warrants and
covenants to the Placement Agent that:
(a) A
registration statement on Form S-1 (File No. [______]) (the “Initial Registration
Statement”) in respect of the Offered Securities, including a base
prospectus relating to the Offered Securities (the “Base Prospectus”) has
been filed in conformity with the requirements of the Securities Act of 1933, as
amended (the “Act”), and the rules
and regulations (the “Rules and
Regulations”) of the Securities and Exchange Commission (the “Commission”); the
Initial Registration Statement and any post-effective amendment thereto, each in
the form heretofore delivered to the Placement Agent, and excluding exhibits
thereto, have been declared effective by the Commission in such form; other than
registration, if any, increasing the size of the offering (a “Rule 462(b) Registration
Statement”), filed pursuant to Rule 462(b) under the Act, which became
effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission; the
Company has complied to the Commission’s satisfaction with all requests of the
Commission for additional or supplemental information; and no stop order
suspending the effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration Statement, if
any, has been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule 424(a) of
the rules and regulations of the Commission under the Act, is hereinafter called
a “Preliminary
Prospectus;” the various parts of the Initial Registration Statement and
the Rule 462(b) Registration Statement, if any, including all exhibits thereto
and including the information contained in the form of final prospectus filed
with the Commission pursuant to Rule 424(b) under the Act in accordance with
Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to be part
of the Initial Registration Statement at the time it was declared effective,
each as amended at the time such part of the Initial Registration Statement
became effective or such part of the Rule 462(b) Registration Statement, if any,
became or hereafter becomes effective, are hereinafter collectively called the
“Registration
Statement”; and such final prospectus, in the form first filed pursuant
to Rule 424(b) under the Act, is hereinafter called the “Prospectus”); all
references in this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, a Preliminary Prospectus, the Prospectus or any
amendments or supplements to any of the foregoing, shall include any copy
thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System (“XXXXX”). As
used in this Agreement:
(i) “Applicable Time”
means 11:59 P.M. (New York City time) on the date of this
Agreement;
(ii) “Base Prospectus”
means the form of prospectus included in the Registration Statement as of the
most recent Effective Date;
(iii) “Effective Date” means
any date as of which any part of the Registration Statement became, or is deemed
to have become, effective under the Act in accordance with the Rules and
Regulations;
(iv) “Issuer Free Writing
Prospectus” means any “free writing
prospectus” (as defined in Rule 405 of the Rules and Regulations)
prepared by or on behalf of the Company or used or referred to by the Company in
connection with the offering of the Offered Securities;
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(v) “Preliminary
Prospectus” means any preliminary prospectus relating to the Offered
Securities included in the Registration Statement or filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations, including any preliminary
prospectus supplement thereto relating to the Offered Securities;
(vi) “Pricing Disclosure
Materials” means, as of the Applicable Time, the Base Prospectus, any
Preliminary Prospectus, and the information, if any, set forth on Schedule 1
hereto;
(vii) “Prospectus” means the
final prospectus relating to the Offered Securities including the Base
Prospectus and any prospectus supplement thereto relating to the Offered
Securities, as filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations; and
(viii) “Registration
Statement” means, collectively, the various parts of such registration
statement, each as amended as of the Effective Date for such part, including the
Prospectus and all exhibits to such registration statement.
Any
reference herein to the terms “amend”, “amendment” or “supplement” with
respect to the Registration Statement, the Base Prospectus, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
document filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after
the effective date of the Registration Statement or the date of such Base
Prospectus, such Preliminary Prospectus or the Prospectus, as the case may
be.
(b) Each
Preliminary Prospectus and the Prospectus when filed, if filed by electronic
transmission, pursuant to XXXXX (except as may be permitted by Regulation S-T
under the Act), was identical to the copy thereof delivered to the Placement
Agent for use in connection with the offer and sale of the Offered Securities;
the Registration Statement conforms, and the Prospectus and any further
amendments or supplements to the Registration Statement or the Prospectus will
conform, in all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder; on the effective date the
Registration Statement did not or will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading; and, when
filed, the Prospectus (together with any supplement thereto) will not include
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(c) The
Registration Statement has heretofore become effective under the Act or, with
respect to any registration statement to be filed to register the offer and sale
of Offered Securities pursuant to Rule 462(b) under the Act, will be filed with
the Commission and become effective under the Act no later than 10:00 p.m., New
York City time, on the date of determination of the public offering price for
the Offered Securities; no stop order of the Commission preventing or suspending
the use of any Prospectus, or the effectiveness of the Registration Statement,
has been issued, and no proceedings for such purpose have been instituted or, to
the Company’s knowledge, are contemplated by the Commission.
(d) The
Company was not at the time of the initial filing of the Registration Statement,
has not been since the date of such filing, and will not be on the Closing Date,
an “ineligible
issuer” (as defined in Rule 405 under the Act). The Company has been
since the time of initial filing of the Registration Statement and continues to
be eligible to use Form S-1 for the offering of the Offered
Securities.
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(e) The
Registration Statement, at the time it became effective, as of the date hereof,
and at the Closing Date, conformed and will conform in all material respects to
the requirements of the Act and the Rules and Regulations. The Base Prospectus
and any Preliminary Prospectus conformed, and the Prospectus will conform in all
material respects, when filed with the Commission pursuant to Rule 424(b) and on
the Closing Date, to the requirements of the Act and the Rules and
Regulations.
(f) The
Registration Statement did not, as of the Effective Date, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
(g) The
Prospectus will not, as of its date and on the Closing Date, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however, that the
Company makes no representation or warranty with respect to any statement
contained in the Prospectus in reliance upon and in conformity with information
concerning the Placement Agent and furnished in writing by the Placement Agent
to the Company expressly for use in the Prospectus, as set forth in Section
8(b).
(h) The
Pricing Disclosure Materials did not, as of the Applicable Time, contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however, that the
Company makes no representation or warranty with respect to any statement
contained in the Pricing Disclosure Materials in reliance upon and in conformity
with information concerning the Placement Agent and furnished in writing by the
Placement Agent to the Company expressly for use in the Pricing Disclosure
Materials, as set forth in Section 8(b).
(i) The
Company acknowledges that, as a “xxxxx stock” issuer, the Company is an
“ineligible issuer” as such term is defined in Rule 405 of the Act and is not
permitted to avail itself of an Issuer Free Writing Prospectus. The
Company has not made any offer relating to the Offered Securities that would
constitute an Issuer Free Writing Prospectus.
(j) The
Company is, and at the Closing Date will be, duly organized, validly existing
and in good standing under the laws of the State of Delaware. The Company has,
and at the Closing Date will have, full power and authority to conduct all the
activities conducted by it, to own or lease all the assets owned or leased by it
and to conduct its business as described in the Registration Statement and the
Prospectus. The Company is, and at the Closing Date will be, duly licensed or
qualified to do business and in good standing as a foreign organization in all
jurisdictions in which the nature of the activities conducted by it or the
character of the assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so qualified or in good
standing or have such power or authority would not, individually or in the
aggregate, have a material adverse effect or would not reasonably be expected to
have a material adverse effect on or affecting the business, prospects,
properties, management, consolidated financial position, stockholders’ equity or
results of operations of the Company and its Subsidiaries (as defined below),
taken as a whole (a “Material Adverse
Effect”). Complete and correct copies of the articles or certificate of
incorporation and of the bylaws of the Company and all amendments thereto have
been delivered to the Placement Agent, and no changes therein will be made
subsequent to the date hereof and prior to the Closing Date.
(k) The
Company’s subsidiaries (the “Subsidiaries”) are
listed on Schedule 2 to
this Agreement. The Subsidiaries have been duly organized and are validly
existing as a corporation or limited liability company in good standing under
the laws of their respective jurisdictions of formation. The Subsidiaries are
duly qualified and in good standing as foreign corporations or limited liability
companies in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of their
respective businesses makes such qualification necessary, except for those
failures to be so qualified or in good standing which will not have a Material
Adverse Effect. All of the equity materials of the Subsidiaries have been duly
authorized and validly issued, are fully paid and non-assessable and, except as
disclosed in the Pricing Disclosure Materials and the Prospectus, are owned
directly or indirectly by the Company, free and clear of any lien, encumbrance,
claim, security interest, restriction on transfer, shareholders’ agreement,
voting trust or other defect of title whatsoever.
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(l) The
issued and outstanding shares of capital stock of the Company have been validly
issued, are fully paid and nonassessable and, other than as set forth in the
Registration Statement and the Prospectus are not subject to any preemptive
rights, rights of first refusal or similar rights. The Company has an
authorized, issued and outstanding capitalization as set forth in the Prospectus
as of the dates referred to therein. The descriptions of the securities of the
Company in the Registration Statement and the Prospectus are, and at the Closing
Date will be, complete and accurate in all respects. Except as set forth in the
Registration Statement and the Prospectus and options granted under the
Company’s option plans or other option arrangements approved by the Company’s
Board of Directors, the Company does not have outstanding any options to
purchase, or any rights or warrants to subscribe for, or any securities or
obligations convertible into, or exchangeable for, or any contracts or
commitments to issue or sell, any shares of capital stock or other securities
other than the Offered Securities.
(m) The
Company has full legal right, power and authority to enter into this Agreement
and the purchase agreement executed between each Investor and the Company,
substantially in the form attached hereto as Exhibit A (the “Subscription
Agreement” and, together with this Agreement, the “Transaction
Documents”) and perform the transactions contemplated hereby and thereby.
The Transaction Documents have been authorized and validly executed and
delivered by the Company and are legal, valid and binding agreements of the
Company enforceable against the Company in accordance with their respective
terms, subject to the effect of applicable bankruptcy, insolvency or similar
laws affecting creditors’ rights generally and equitable principles of general
applicability.
(n) The
issuance and sale of the Offered Securities have been duly authorized by the
Company, and the Offered Securities, when issued and paid for in accordance with
the Transaction Documents, will be duly and validly issued, fully paid and
nonassessable and will not be subject to preemptive or similar
rights. The holders of the Offered Securities will not be subject to
personal liability by reason of being such holders. The Offered Securities, when
issued, will conform in all material respects to the description thereof set
forth in or incorporated into the Prospectus.
(o) The
consolidated financial statements and the related notes included in the
Registration Statement and the Prospectus present fairly, in all material
respects, the financial condition of the Company and its consolidated
Subsidiaries as of the dates thereof and the results of operations and cash
flows at the dates and for the periods covered thereby in conformity with
generally accepted accounting principles (“GAAP”). No other
financial statements, financial schedules or pro forma financial information of
the Company, the Subsidiaries or any other entity are required by the Act or the
Rules and Regulations to be included in the Registration Statement or the
Prospectus. All disclosures contained in the Registration Statement, the Pricing
Disclosure Materials and the Prospectus regarding “non-GAAP financial
measures” (as such term is defined by the Rules and Regulations) comply
with Regulation G of the Exchange Act and Item 10 of Regulation S-K under the
Act, to the extent applicable. The Company and the Subsidiaries do not have any
material liabilities or obligations, direct or contingent (including any
off-balance sheet obligations or any “variable interest
entities” within the meaning of Financial Accounting Standards Board
Interpretation No. 46), not disclosed in the Registration Statement, the Pricing
Disclosure Materials and the Prospectus.
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(p) Xxxxxx
Xxxx & X’Xxxxxxx LLP (the “Accountants”), who
has reported on the audited consolidated financial statements and schedules of
the Company and its consolidated Subsidiaries, are registered independent public
accountants with respect to the Company and its consolidated Subsidiaries as
required by the Act and the Rules and Regulations and by the rules of the Public
Company Accounting Oversight Board. The consolidated financial statements of the
Company and the related notes and schedules included in the Registration
Statement and the Prospectus have been prepared in conformity with the
requirements of the Act and the Rules and Regulations and present fairly the
information shown therein. Ria & Partners S.p.A., who has
reported on the audited financial statements of Premier Power Italy S.p.A., are
registered independent public accountants with respect to Premier Power Italy
S.p.A. as required by the Act and the Rules and Regulations and by the rules of
the Public Company Accounting Oversight Board.
(q) There
is and has been no failure on the part of the Company, or to its knowledge after
due inquiry, any of the Company’s directors or officers, in their capacities as
such, to comply with any applicable provisions of the Sarbanes Oxley Act of 2002
and the rules and regulations promulgated therewith (the “Sarbanes Oxley Act”).
Each of the principal executive officer and the principal financial officer of
the Company (or each former principal executive officer of the Company and each
former principal financial officer of the Company, as applicable) has made all
certifications required by Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act with
respect to all periodic reports required to be filed by it with the Commission.
For purposes of the preceding sentence, “principal executive
officer” and “principal financial
officer” shall have the meanings given to such terms in the
Xxxxxxxx-Xxxxx Act.
(r) Except
as disclosed in the Registration Statement and Prospectus, the Company and its
Subsidiaries maintain systems 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 and 15d-15) for the Company
and its Subsidiaries. The Company presented in its Form 10-Q for the quarter
ended March 31, 2010 (such date, the “Evaluation Date”) 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 significant changes in the
Company’s internal controls (as such term is defined in Item 307(b) of
Regulation S-K under the Exchange Act) or, to the Company’s knowledge, in other
factors that could significantly affect the Company’s internal
controls.
(s) Except
as set forth in or otherwise contemplated by the Registration Statement and the
Prospectus, since the date of the most recent consolidated financial statements
of the Company included in the Registration Statement and prior to Closing, (i)
there has not been and will not have been any change in the capital stock of the
Company (except for changes in the number of outstanding shares of Common Stock
of the Company due to the issuance of shares pursuant to any equity compensation
plans described in the Registration Statement), or long-term debt of the Company
or the Subsidiaries or any dividend or distribution of any kind declared, set
aside for payment, paid or made by the Company on any class of capital stock, or
any material adverse change, or any development that would reasonably be
expected to result in a material adverse change in, or affecting, the business,
prospects, properties, management, consolidated financial position,
stockholders’ equity, or results of operations of the Company and its
Subsidiaries taken as a whole (a “Material Adverse
Change”) and (ii) neither the Company nor the Subsidiaries have sustained
any material loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
disturbance or dispute or any action, order or decree of any court or arbitrator
or governmental or regulatory authority, except in each case as otherwise
disclosed in the Registration Statement and the Prospectus.
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(t) Since
the date as of which information is given in the Registration Statement and the
Prospectus, neither the Company nor the Subsidiaries have entered or will, at
any time when a Prospectus relating to the Offered Securities is required to be
delivered under the Act, enter into any transaction or agreement, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries, individually or taken as a whole or incurred or will incur any
liability or obligation, direct or contingent, not in the ordinary course of
business, that is material to the Company and the Subsidiaries, individually or
taken as a whole.
(u) Neither
the Company nor any Subsidiary owns any real property. The Company or
a Subsidiary has a valid leasehold interest in all real property used or held
for use by any of them, free and clear of all liens, encumbrances, claims and
defects and imperfections of title except those that (i) do not materially
interfere with the use made and proposed to be made of such property by the
Company and the Subsidiaries or (ii) would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. Each of the Company and
the Subsidiaries have good and valid title to all personal property described in
the Registration Statement or the Prospectus as being owned by them that are
material to the business of the Company and the Subsidiaries taken as a whole,
in each case free and clear of all liens, encumbrances and claims except for
liens, encumbrances and claims that (i) do not materially interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries or (ii) would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. Any real property described in the
Registration Statement or the Prospectus as being leased by the Company or the
Subsidiaries that is material to the business of the Company and the
Subsidiaries taken as a whole is held by them under valid, existing and
enforceable leases, in each case free and clear of all liens, encumbrances and
claims except for liens, encumbrances and claims that (A) do not materially
interfere with the use made or proposed to be made of such property by the
Company and the Subsidiaries or (B) would not be reasonably expected,
individually or in the aggregate, to have a Material Adverse
Effect.
(v) The
Company is not, nor upon completion of the transactions contemplated herein will
it be, an “investment company” or an “affiliated person” of, or “promoter” or
“principal underwriter” for, an “investment company,” as such terms are defined
in the Investment Company Act of 1940, as amended (the “Investment Company
Act”).
(w) Except
as disclosed in the Registration Statement and the Prospectus, there are no
legal, governmental or regulatory actions, suits or proceedings pending, nor, to
the Company’s knowledge, any legal, governmental or regulatory investigations,
to which the Company or the Subsidiaries is a party or to which any property of
the Company or the Subsidiaries is the subject that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect or
materially and adversely affect the ability of the Company to perform its
obligations under the Transaction Documents; to the Company’s knowledge, no such
actions, suits or proceedings are threatened or contemplated by any governmental
or regulatory authority or threatened by others; and there are no current or
pending legal, governmental or regulatory investigations, actions, suits or
proceedings that are required under the Act to be described in the Prospectus
that are not so described.
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(x) Each
of the Company and the Subsidiaries have, and at the Closing Date will have, (i)
all governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to carry on its respective business as presently
conducted except where the failure to have such governmental licenses, permits,
consents, orders, approvals and other authorizations would not have a Material
Adverse Effect, (ii) complied with all laws, regulations and orders applicable
to either it or its business, except where the failure to so comply would not
have a Material Adverse Effect, and (iii) performed all its obligations required
to be performed, and is not, and at the Closing Date will not be, in default,
under any indenture, mortgage, deed of trust, voting trust agreement, loan
agreement, bond, debenture, note agreement, lease, contract or other agreement
or instrument (collectively, a “contract or other
agreement”) to which it is a party or by which its property is bound or
subject, except where such failure to perform or default would not have a
Material Adverse Effect, individually or in the aggregate, and, to the Company’s
knowledge, no other party under any material contract or other agreement to
which it is a party is in default in any respect thereunder, except where such
default would not have a Material Adverse Effect, individually or in the
aggregate. The Company and the Subsidiaries are not in violation of any
provision of their respective organizational or governing
documents.
(y) The
Company has all corporate power and authority to enter into the Transaction
Documents, and to carry out the provisions and conditions hereof and thereof,
and all consents, authorizations, approvals and orders required in connection
herewith and therewith have been obtained, except such as may be required under
state securities or Blue Sky Laws or the by-laws and rules of FINRA or the OTC
Bulletin Board or a national securities exchange in connection with the
distribution of the Offered Securities by the Placement Agent.
(z) Neither
the execution of the Transaction Documents, nor the issuance, offering or sale
of the Offered Securities, nor the consummation of any of the transactions
contemplated herein or in the other Transaction Documents, nor the compliance by
the Company with the terms and provisions hereof or thereof will conflict with,
or will result in a breach of, any of the terms and provisions of, or has
constituted or will constitute a default under, or has resulted in or will
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or the Subsidiaries pursuant to the terms of
any contract or other agreement to which the Company or the Subsidiaries may be
bound or to which any of the property or assets of the Company or the
Subsidiaries are subject, except such conflicts, breaches or defaults as may
have been waived; nor will such action result in any violation of (i) the
provisions of the organizational or governing documents of the Company or the
Subsidiaries, or (ii) any statute or any order, rule or regulation applicable to
the Company or the Subsidiaries or (iii) any court or of any federal, state or
other regulatory authority or other government body having jurisdiction over the
Company or the Subsidiaries, except, in the case of clauses (ii) and (iii) only,
for such violations that could not reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate.
(aa) There
is no document or contract of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement which is not described or filed as required. All such
contracts to which the Company is a party have been authorized, executed and
delivered by the Company, constitute valid and binding agreements of the
Company, and are enforceable against the Company in accordance with the terms
thereof, subject to the effect of applicable bankruptcy, insolvency or similar
laws affecting creditors’ rights generally and equitable principles of general
applicability.
(bb) No
statement, representation or warranty made by the Company in this Agreement or
made in any certificate or document required by the Transaction Documents to be
delivered to the Placement Agent or the Investors was or will be, when made,
inaccurate, untrue or incorrect in any material respect.
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(cc) The
Company and its directors, officers or controlling persons have not taken,
directly or indirectly, any action intended, or which might reasonably be
expected, to cause or result, under the Act or otherwise, in, or which has
constituted, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Common Stock.
(dd) No
holder of securities of the Company has rights to the registration of any
securities of the Company as a result of the filing of the Registration
Statement or the transactions contemplated by this Agreement, except for such
rights as have been waived or satisfied.
(ee) The
Common Stock is currently quoted on the OTC Bulletin Board. Except as disclosed
in the Registration Statement and Prospectus, the Company has not, in the 12
months preceding the date hereof, received notice from the OTC Bulletin Board to
the effect that the Company is not in compliance with its listing or maintenance
requirements. 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.
(ff) The
Company is not involved in any material labor dispute nor is any such dispute
known by the Company to be threatened.
(gg) The
business and operations of the Company and the Subsidiaries have been and are
being conducted in compliance with all applicable laws, ordinances, rules,
regulations, licenses, permits, approvals, plans, authorizations or requirements
relating to occupational safety and health, or pollution, or protection of
health or the environment (including, without limitation, those relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic substances, materials or wastes into ambient
air, surface water, groundwater or land, or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of chemical substances, pollutants, contaminants or hazardous or toxic
substances, materials or wastes, whether solid, gaseous or liquid in nature) of
any governmental department, commission, board, bureau, agency or
instrumentality of the United States, any state or political subdivision
thereof, or any foreign jurisdiction, and all applicable judicial or
administrative agency or regulatory decrees, awards, judgments and orders
relating thereto, except where the failure to be in such compliance will not,
individually or in the aggregate, have a Material Adverse Effect; and neither
the Company nor the Subsidiaries have received any notice from any governmental
instrumentality or any third party alleging any material violation thereof or
liability thereunder (including, without limitation, liability for costs of
investigating or remediating sites containing hazardous substances and/or
damages to natural resources).
(hh) To
the Company’s knowledge, each of the Company and the Subsidiaries own, is
licensed or otherwise possesses all rights to use, all patents, patent rights,
inventions, know-how (including trade secrets and other unpatented or
unpatentable or confidential information, systems, or procedures), trademarks,
service marks, trade names, copyrights and other intellectual property rights
(collectively, the “Know-How”) necessary
for the conduct of its business as described in the Registration Statement and
the Prospectus. No claims have been asserted against the Company or
the Subsidiaries by any person with respect to the use of any such Know-How or
challenging or questioning the validity or effectiveness of any such
Know-How.
(ii) Except
as disclosed in the Registration Statement and the Prospectus, (i) to the
Company’s knowledge, each of the Company and the Subsidiaries own or has
obtained valid and enforceable licenses or options for the inventions, patent
applications, patents, trademarks (both registered and unregistered), trade
names, copyrights and trade secrets necessary for the conduct of its respective
business as currently conducted (collectively, the “Intellectual
Property”); and (ii) (a) to the Company’s knowledge, there are no third
parties who have any ownership rights to any Intellectual Property that is owned
by, or has been licensed to, the Company or the Subsidiaries for the products
described in the Registration Statement that would preclude the Company or the
Subsidiaries from conducting its business as currently conducted and have a
Material Adverse Effect, except for the ownership rights of the owners of the
Intellectual Property licensed or optioned by the Company or the Subsidiaries;
(b) to the Company’s knowledge, there are currently no sales of any products
that would constitute an infringement by third parties of any Intellectual
Property owned, licensed or optioned by the Company or the Subsidiaries, which
infringement would have a Material Adverse Effect; (c) there is no pending or,
to the Company’s knowledge, threatened action, suit, proceeding or claim by
others challenging the rights of the Company or the Subsidiaries in or to any
Intellectual Property owned, licensed or optioned by the Company or the
Subsidiaries that would reasonably be expected to have a Material Adverse
Effect; (d) there is no pending or, to the Company’s knowledge, threatened
action, suit, proceeding or claim by others challenging the validity or scope of
any Intellectual Property owned, licensed or optioned by the Company or the
Subsidiaries, other than non-material actions, suits, proceedings and claims, or
other than normal patent application examination procedures; and (e) there is no
pending or, to the Company’s knowledge, threatened action, suit, proceeding or
claim by others that the Company or the Subsidiaries infringes or otherwise
violates any patent, trademark, copyright, trade secret or other proprietary
right of others, other than non-material actions, suits, proceedings and
claims.
-9-
(jj) Each
of the Company and the Subsidiaries have filed all necessary federal, state and
foreign income and franchise tax returns and have paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of any tax deficiency
which has been or might be asserted or threatened against it or the Subsidiaries
which could have a Material Adverse Effect.
(kk) On
the Closing Date, all stock transfer or other taxes (other than income taxes)
which are required to be paid in connection with the sale and transfer of the
Offered Securities to be sold hereunder will be, or will have been, fully paid
or provided for by the Company and all laws imposing such taxes will be or will
have been fully complied with.
(ll) Each
of the Company and the Subsidiaries maintain insurance of the types and in the
amounts that the Company reasonably believes is adequate for their respective
businesses, including, but not limited to, insurance covering all real and
personal property owned or leased by the Company or the Subsidiaries against
theft, damage, destruction, acts of vandalism, all of which insurance is in full
force and effect. The Company has no reason to believe that it or any
of its Subsidiaries will not be able (i) to renew its existing insurance
coverage as and when such policies expire or (ii) to obtain comparable coverage
from similar institutions as may be necessary or appropriate to conduct its
business as now conducted and at a cost that would not reasonably be expected to
result in a Material Adverse Effect.
(mm) Neither
the Company nor the Subsidiaries, nor, to the knowledge of the Company, any
director, officer, agent or employee of the Company or any Subsidiary has
directly or indirectly, (i) made any unlawful contribution to any candidate for
public office, or failed to disclose fully any contribution in violation of law,
(ii) made any payment to any federal or state governmental officer or official,
or other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof, (iii) violated or is in violation of any provisions of the
U.S. Foreign Corrupt Practices Act of 1977 or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
(nn) The
Company has not distributed and, prior to the later to occur of the Closing Date
and completion of the distribution of the Offered Securities, will not
distribute any offering material in connection with the offering and sale of the
Offered Securities other than the Pricing Disclosure Materials and the
Prospectus. The Company will promptly notify the Placement Agent of
any such distributions and the names of the persons receiving such
distributions.
-10-
(oo) Each
material employee benefit plan, within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is
maintained, administered or contributed to by the Company or any of its
affiliates for employees or former employees of the Company and the Subsidiaries
have been maintained in material compliance with its terms and the requirements
of any applicable statutes, orders, rules and regulations, including but not
limited to ERISA and the Internal Revenue Code of 1986, as amended (the “Code”); no prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of the
Code, has occurred which would result in a material liability to the Company or
any Subsidiary with respect to any such plan excluding transactions effected
pursuant to a statutory or administrative exemption; and for each such plan that
is subject to the funding rules of Section 412 of the Code or Section 302 of
ERISA, no “accumulated funding deficiency” as defined in Section 412 of the Code
has been incurred, whether or not waived, and the fair market value of the
assets of each such plan (excluding for these purposes accrued but unpaid
contributions) exceeds the present value of all benefits accrued under such plan
determined using reasonable actuarial assumptions.
(pp) No
relationship, direct or indirect, exists between or among the Company or the
Subsidiaries, on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or the Subsidiaries, on the other, which
is required by the Act to be disclosed in the Registration Statement and the
Prospectus and is not so disclosed.
(qq) The
Company has not sold or issued any securities that would be integrated with the
offering of the Offered Securities contemplated by this Agreement pursuant to
the Act, the Rules and Regulations or the interpretations thereof by the
Commission.
(rr) Neither
the Company nor the Subsidiaries are a party to any contract, agreement or
understanding with any person (other than this Agreement) that would give rise
to a valid claim against the Company or the Subsidiaries or the Placement Agent
for a brokerage commission, finder’s fee or like payment in connection with the
offering and sale of the Offered Securities.
(ss) No
forward-looking statement (within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act) (a “Forward Looking
Statement”) contained in the Registration Statement and the Prospectus
has been made or reaffirmed without a reasonable basis or has been disclosed
other than in good faith.
(tt) The
operations of the Company and the Subsidiaries are and have been conducted at
all times in material compliance with applicable financial record keeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions to which
the Company or the Subsidiaries are subject, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (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 the Subsidiaries with respect to the Money Laundering Laws is pending or, to
the best knowledge of the Company, threatened.
(uu) Neither
the Company, nor the Subsidiaries, nor, to the knowledge of the Company, any
director, officer, agent, employee or other person acting on behalf of the
Company or the Subsidiaries have, in the course of its actions for, or on behalf
of, the Company (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
-11-
(vv) Based
on the financial condition of the Company as of the Closing Date after giving
effect to the transactions contemplated by the Transaction Documents, (i) the
Company’s fair saleable value of its assets exceeds the amount that will be
required to be paid on or in respect of the Company’s existing debts and other
liabilities (including known contingent liabilities) as they mature; (ii) the
Company’s assets do not constitute unreasonably small capital to carry on its
business through December 31, 2010 as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its
debt).
4. Agreements of the
Company. The Company covenants and agrees with the Placement Agent as
follows:
(a) The
Registration Statement has become effective, and if Rule 430A is used or the
filing of the Prospectus is otherwise required under Rule 424(b), the Company
will file the Prospectus (properly completed if Rule 430A has been used),
subject to the prior approval of the Placement Agent (which approval shall not
be unreasonably withheld or delayed), pursuant to Rule 424(b) within the
prescribed time period and will provide a copy of such filing to the Placement
Agent promptly following such filing.
(b) The
Company will not, during such period as the Prospectus would be required by law
to be delivered in connection with sales of the Offered Securities by an
underwriter, a dealer or a placement agent in connection with the offering
contemplated by this Agreement, file any amendment or supplement to the
Registration Statement or the Prospectus unless a copy thereof shall first have
been submitted to the Placement Agent within a reasonable period of time prior
to the filing thereof and the Placement Agent shall not have reasonably objected
thereto in good faith.
(c) The
Company will notify the Placement Agent promptly, and will, if requested,
confirm such notification in writing, (1) when any post-effective amendment to
the Registration Statement becomes effective, but only during the period
mentioned in Section 4(b); (2) of any request by the Commission for any
amendments to the Registration Statement or any amendment or supplements to the
Prospectus or for additional information, but only during the period mentioned
in Section 4(b); (3) of the issuance by the Commission of any stop order
preventing or suspending the effectiveness of the Registration Statement or the
use of any Preliminary Prospectus, the Base Prospectus, or the Prospectus, or
the initiation of any proceedings for that purpose or the threat thereof, but
only during the period mentioned in Section 4(b); (4) of becoming aware of the
occurrence of any event during the period mentioned in Section 4(b) that in the
judgment of the Company makes any statement made in the Registration Statement
or the Prospectus untrue in any material respect or that requires the making of
any changes in the Registration Statement or the Prospectus in order to make the
statements therein, in light of the circumstances in which they are made, not
misleading; and (5) of receipt by the Company of any notification with respect
to any suspension of the qualification of the Offered Securities for offer and
sale in any jurisdiction. If at any time the Commission shall issue any order
suspending the effectiveness of the Registration Statement in connection with
the offering contemplated hereby, the Company will make every reasonable effort
to obtain the withdrawal of any such order at the earliest possible moment. If
the Company has omitted any information from the Registration Statement,
pursuant to Rule 430A, it will use its best efforts to comply with the
provisions of and make all requisite filings with the Commission pursuant to
said Rule 430A and to notify the Placement Agent promptly of all such
filings.
-12-
(d) If,
at any time when a Prospectus relating to the Offered Securities is required to
be delivered under the Act, the Company becomes aware of the occurrence of any
event as a result of which the Prospectus, as then amended or supplemented,
would, in the reasonable judgment of counsel to the Company or counsel to the
Placement Agent, include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or the
Registration Statement, as then amended or supplemented, would, in the
reasonable judgment of counsel to the Company or counsel to the Placement Agent,
include any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading, or if for any other
reason it is necessary, in the reasonable judgment of counsel to the Company or
counsel to the Placement Agent, at any time to amend or supplement the
Prospectus or the Registration Statement to comply with the Act or the Rules and
Regulations, the Company will promptly notify the Placement Agent and, subject
to Section 4(b) hereof, will promptly prepare and file with the Commission, at
the Company’s expense, an amendment to the Registration Statement or an
amendment or supplement to the Prospectus that corrects such statement or
omission or effects such compliance and will deliver to the Placement Agent,
without charge, such number of copies thereof as the Placement Agent may
reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the Placement Agent.
(e) The
Company will furnish to the Placement Agent and its counsel, without charge (i)
two conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto, including financial statements and
schedules, and all exhibits thereto, (ii) so long as a prospectus relating to
the Offered Securities is required to be delivered under the Act, as many copies
of the Prospectus or any amendment or supplement thereto as the Placement Agent
may reasonably request.
(f) The
Company will comply with all the undertakings contained in the Registration
Statement.
(g) Prior
to the sale of the Offered Securities to the Investors, the Company will
cooperate with the Placement Agent and its counsel in connection with the
registration or qualification of the Offered Securities for offer and sale under
the state securities or Blue Sky laws of such jurisdictions as the Placement
Agent may reasonably request; provided, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to general service of
process in any jurisdiction where it is not now so subject.
(h) The
Company will not make any offer relating to the Offered Securities that would
constitute an Issuer Free Writing Prospectus.
(i)
[intentionally omitted]
(j)
The Company will apply the net proceeds from the
offering and sale of the Offered Securities in the manner set forth in the
Prospectus under the caption “Use of
Proceeds.”
-13-
(k) The
Company will use its best efforts to ensure that the Offered Securities are
quoted on the OTC Bulletin Board or traded on a national securities exchange at
the time of the Closing.
(l)
The Company will not at any time, directly or indirectly, take any action
intended, or which might reasonably be expected, to cause or result in, or which
will constitute, stabilization of the price of the Offered Securities to
facilitate the sale or resale of any of the Offered Securities.
(m) The
Company will cause each of its executive officers and directors, and certain of
its shareholders, whose names are set forth in Exhibit B hereto, to
furnish to the Placement Agent, on or before the Closing Date, a letter dated
the date hereof, substantially in the form of Exhibit C hereto (the
“Lock-Up
Agreement”). The Company will use its commercially reasonable
efforts to enforce the terms of each Lock-Up Agreement and issue stop transfer
instructions to the transfer agent for the shares with respect to any
transaction or contemplated transaction that would constitute a breach or
default under the applicable Lock-Up Agreement.
(n) For
a period ending on the earlier of (i) 90 days after the date hereof or (ii) the
termination of this Agreement by the Placement Agent prior to the Closing (other
than as a result of any breach of this Section 4(n)) (the “Lock-Up Period”), the
Company will not directly or indirectly, (1) offer to sell, hypothecate, pledge,
announce the intention to sell, sell, contract to sell, sell any option or
contract to purchase (to the extent such option or contract to purchase is
exercisable within one year from the Closing Date), purchase any option or
contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, 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 any securities convertible into or exercisable or exchangeable
for shares of Common Stock; (2) file or cause to become effective a registration
statement under the Act relating to the offer and sale of any shares of Common
Stock or securities convertible into or exercisable or exchangeable for shares
of Common Stock or (3) enter into any swap or other agreement that transfers, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clauses (1), (2) or (3) above
is to be settled by delivery of shares of Common Stock or such other securities,
in cash or otherwise, without the prior written consent of the Placement Agent
(which consent may be withheld in its sole discretion), other than (i) the
Offered Securities to be sold hereunder, (ii) the issuance of employee stock
options or shares of restricted stock pursuant to equity compensation plans
described in the Registration Statement (excluding the exhibits thereto), the
Pricing Disclosure Materials and the Prospectus, (iii) issuances of shares of
Common Stock upon the exercise of options or warrants disclosed as outstanding
in the Registration Statement (excluding the exhibits thereto), the Pricing
Disclosure Materials and the Prospectus or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of the date of this
Agreement; (iv) except as disclosed in the Registration Statement, the Pricing
Disclosure Materials and the Prospectus, the issuance by the Company of any
shares of Common Stock or securities convertible or exchangeable into shares of
Common Stock as consideration for mergers, acquisitions, other business
combinations, or strategic alliances, occurring after the date of this
Agreement; provided that each recipient of shares pursuant to this clause (iv)
agrees that all such shares remain subject to restrictions substantially similar
to those contained in this subsection 4(n); or (v) the purchase or sale of the
Company’s securities pursuant to a plan, contract or instruction that satisfies
all of the requirements of Rule 10b5-1(c)(1)(i)(B) that was in effect prior to
the date hereof. Notwithstanding the foregoing, for the purpose of
allowing the Placement Agent to comply with FINRA Rule 2711(f)(4), if (1) during
the last 17 days of the Lock-Up Period, the Company releases earnings results or
publicly announces other material news or a material event relating to the
Company occurs or (2) prior to the expiration of the Lock-Up Period, the Company
announces that it will release earnings results during the 16 day period
beginning on the last day of the Lock-Up Period, then in each case the Lock-Up
Period will be extended until the expiration of the 18 day period beginning on
the date of release of the earnings results or the public announcement regarding
the material news or the occurrence of the material event, as applicable, unless
the Placement Agent waives such extension in writing. The Placement
Agent agrees to waive such extension if the provisions of FINRA Rule 2711(f)(4)
are not applicable to the Offering. The Company agrees not to accelerate the
vesting of any option or warrant or the lapse of any repurchase right prior to
the expiration of the Lock-Up Period, except in accordance with the terms of any
existing employment agreement.
-14-
5. Agreement of the Placement
Agent. The Placement Agent agrees that it will not include any issuer
information (as defined in Rule 433 under the Act) in any “free writing
prospectus” (as defined in Rule 405) used or referred to by the Placement
Agent.
6. Expenses. Whether or
not the transactions contemplated by this Agreement are consummated or this
Agreement is terminated, the Company will pay all costs and expenses incident to
the performance of the obligations of the Company under this Agreement,
including but not limited to costs and expenses of or relating to (1) the
preparation, printing and filing of the Registration Statement (including each
pre- and post-effective amendment thereto) and exhibits thereto, any Preliminary
Prospectus, the Prospectus and any amendments or supplements thereto, including
all fees, disbursements and other charges of counsel and accountants to the
Company, (2) the preparation and delivery of certificates representing the
Offered Securities, (3) furnishing (including costs of shipping and mailing)
such copies of the Registration Statement (including all pre- and post-effective
amendments thereto), the Prospectus, any Preliminary Prospectus and all
amendments and supplements thereto, as may be requested for use in connection
with the direct placement of the Offered Securities, (4) the applicable listing
or quotation of the Common Stock on an exchange or the over-the-counter market,
(5) any filings required to be made by the Placement Agent with the FINRA, and
the reasonable fees, disbursements and other charges of counsel for the
Placement Agent in connection therewith (subject to the limitations set forth
below), (6) the registration or qualification of the Offered Securities for
offer and sale under the securities or Blue Sky laws of such jurisdictions
designated pursuant to Section 4(g), including the reasonable fees,
disbursements and other charges of counsel to the Placement Agent in connection
therewith (subject to the limitations set forth below) and the preparation and
printing of preliminary, supplemental and final Blue Sky memoranda, (7) fees,
disbursements and other charges of counsel to the Company, and (8) fees and
disbursements of the Accountants incurred in delivering the letter(s) described
in 7(f) of this Agreement. Whether or not the issuance and sale of
the Offered Securities occurs, the Company shall reimburse the Placement Agent
in an amount not to exceed in the aggregate $110,000 for all reasonable
travel, legal and other actual out-of-pocket expenses of the Placement Agent;
provided, however, that the Placement Agent shall seek approval of the Company
(which shall not be unreasonably withheld or delayed) for any individual expense
greater than $2,500. In no event shall the total amount of
compensation, which shall include the Placement Fee plus costs and expenses paid
pursuant to this Section 6, paid to the Placement Agent and other securities
brokers and dealers upon completion of the offering of the Offered Securities
contemplated hereby exceed 8% of the gross proceeds from the sale of the Offered
Securities to the public as contemplated hereby.
7. Conditions of the
Obligations of the Placement Agent. The obligations of the Placement
Agent hereunder are subject to the following conditions:
(a) (i)
No stop order suspending the effectiveness of the Registration Statement shall
have been issued, and no proceedings for that purpose shall be pending or
threatened by any securities or other governmental authority (including, without
limitation, the Commission), (ii) no order suspending the effectiveness of the
Registration Statement or the qualification or registration of the Offered
Securities under the securities or Blue Sky laws of any jurisdiction shall be in
effect and no proceeding for such purpose shall be pending before, or threatened
or contemplated by, any securities or other governmental authority (including,
without limitation, the Commission), (iii) any request for additional
information on the part of the staff of any securities or other governmental
authority (including, without limitation, the Commission) shall have been
complied with to the satisfaction of the staff of the Commission or such
authorities and (iv) after the date hereof no amendment or supplement to the
Registration Statement or the Prospectus shall have been filed unless a copy
thereof was first submitted to the Placement Agent and the Placement Agent did
not object thereto in good faith, and the Placement Agent shall have received
certificates of the Company, dated the Closing Date and signed by the President
and Chief Executive Officer or the Chairman of the Board of Directors of the
Company, and the Chief Financial Officer of the Company, to the effect of
clauses (i), (ii) and (iii).
-15-
(b) Since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, (i) there shall not have been a Material Adverse
Change, whether or not arising from transactions in the ordinary course of
business, in each case other than as set forth in or contemplated by the
Registration Statement and the Prospectus and (ii) the Company shall not have
sustained any material loss or interference with its business or properties from
fire, explosion, flood or other casualty, whether or not covered by insurance,
or from any labor dispute or any court or legislative or other governmental
action, order or decree, which is not set forth in the Registration Statement
and the Prospectus, if in the reasonable judgment of the Placement Agent any
such development makes it impracticable or inadvisable to consummate the sale
and delivery of the Offered Securities to Investors as contemplated
hereby.
(c) Since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there shall have been no litigation or other
proceeding instituted against the Company or any of its officers or directors in
their capacities as such, before or by any Federal, state or local court,
commission, regulatory body, administrative agency or other governmental body,
domestic or foreign, which litigation or proceeding, in the reasonable judgment
of the Placement Agent, could have a Material Adverse Effect.
(d) Each
of the representations and warranties of the Company contained herein shall be
true and correct in all material respects at the Closing Date, as if made on
such date, and all covenants and agreements herein contained to be performed on
the part of the Company and all conditions herein contained to be fulfilled or
complied with by the Company at or prior to the Closing Date shall have been
duly performed, fulfilled or complied with in all material
respects.
(e) The
Placement Agent shall have received an opinion, dated the Closing Date, of
Xxxxxxxxxx & Xxxxx LLP, counsel to the Company, in form and substance
reasonably satisfactory to the Placement Agent.
(f)
On the date hereof, the Accountants shall have furnished
to the Placement Agent a letter, dated the date of its delivery (the “Comfort Letter”),
addressed to the Placement Agent and in form and substance satisfactory to the
Placement Agent, confirming that (i) they are independent public accountants
with respect to the Company within the meaning of the Act and the Rules and
Regulations; (ii) in their opinion, the financial statements and any
supplementary financial information included in the Registration Statement and
examined by them comply as to form in all material respects with the applicable
accounting requirements of the Act and the Rules and Regulations; (iii) on the
basis of procedures, not constituting an examination in accordance with
generally accepted auditing standards, set forth in detail in the Comfort
Letter, a reading of the latest available interim financial statements of the
Company, inspections of the minute books of the Company since the latest audited
financial statements included in the Prospectus, inquiries of officials of the
Company responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in the Comfort Letter to a date not
more than five days prior to the date of the Comfort Letter, nothing came to
their attention that caused them to believe that: (A) as of a specified date not
more than five days prior to the date of the Comfort Letter, there have been any
changes in the capital stock of the Company or any increase in the long-term
debt of the Company, or any decreases in net current assets or net assets or
other items specified by the Placement Agent, or any increases in any items
specified by the Placement Agent, in each case as compared with amounts shown in
the latest balance sheet included in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in the Comfort Letter; and (B) for the period
from the date of the latest financial statements included in the Prospectus to
the specified date referred to in Clause (A), there were any decreases in
revenues or the total or per share amounts of net income or other items
specified by the Placement Agent, or any increases in any items specified by the
Placement Agent, in each case as compared with the comparable period of the
preceding year and with any other period of corresponding length specified by
the Placement Agent, except in each case for decreases or increases which the
Prospectus discloses have occurred or may occur or which are described in the
Comfort Letter; and (iv) in addition to the examination referred to in their
reports included in the Prospectus and the procedures referred to in clause
(iii) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Placement Agent, which are derived from the general
accounting, financial or other records of the Company, as the case may be, which
appear in the Prospectus or in Part II of, or in exhibits or schedules to, the
Registration Statement, and have compared such amounts, percentages and
financial information with such accounting, financial and other records and have
found them to be in agreement. On the Closing Date, the Accountants
shall have furnished to the Placement Agent a “bring down” letter, dated the
Closing Date, confirming the statements contained in the Comfort Letter and
updating the procedures specified in the Comfort Letter to a specified date not
more than five days prior to the Closing Date.
-16-
(g) At
the Closing, the Company shall furnish to the Placement Agent a certificate,
dated the date of its delivery, signed by each of the Chief Executive Officer
and the Chief Financial Officer of the Company, in form and substance
satisfactory to the Placement Agent to the effect that each signer has carefully
examined the Registration Statement, the Prospectus and the Pricing Disclosure
Materials, and that to each of such person’s knowledge:
(i) (A)
As of the date of such certificate, (x) the Registration Statement does not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading and (y) neither the Prospectus nor the Pricing Disclosure
Materials contains any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (B) no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein not untrue or misleading in any material respect.
(ii) Each
of the representations and warranties of the Company contained in this Agreement
were, when originally made, and are, at the time such certificate is delivered,
true and correct in all material respects.
(iii) Each
of the covenants required herein to be performed by the Company on or prior to
the date of such certificate has been duly, timely and fully performed and each
condition herein required to be complied with by the Company on or prior to the
delivery of such certificate has been duly, timely and fully complied
with.
(iv) Subsequent
to the date of the most recent financial statements in the Prospectus, there has
been no Material Adverse Change.
-17-
(v) No
stop order or other order suspending the effectiveness of the Registration
Statement, or any part thereof, or the use of the Prospectus or any Free Writing
Prospectus, or the qualification or registration of the Offered Securities under
the securities or Blue Sky laws of any jurisdiction, has been issued and no
proceedings for that purpose have been instituted or are contemplated by any
securities or other governmental authority (including, without limitation, the
Commission).
(vi) The
Company has complied with any request for additional information from the staff
of any securities or other governmental authority (including, without
limitation, the Commission) to the satisfaction of the staff of the Commission
or such authorities.
(h) At
the Closing, the Company shall furnish to the Placement Agent a certificate,
dated the date of its delivery, signed by the Secretary or an Assistant
Secretary of the Company, in form and substance reasonably satisfactory to the
Placement Agent.
(i) The
Offered Securities shall be qualified for sale in such states as the Placement
Agent may reasonably request, and each such qualification shall be in effect and
not subject to any stop order or other proceeding on the Closing
Date.
(j) The
Company shall have furnished or caused to be furnished to the Placement Agent
such certificates, in addition to those specifically mentioned herein, as the
Placement Agent may have reasonably requested as to the accuracy and
completeness at the Closing Date of any statement in the Registration Statement
or the Prospectus, as to the accuracy at the Closing Date of the representations
and warranties of the Company as to the performance by the Company of its
obligations hereunder, or as to the fulfillment of the conditions concurrent and
precedent to the obligations hereunder of the Placement Agent.
(k) The
Offered Securities shall have been duly authorized for quotation on the OTC
Bulletin Board or traded on a national securities exchange upon official notice
of issuance.
(l) FINRA
shall not have raised any unresolved objection with respect to the fairness and
reasonableness of the terms and arrangements relating to the issuance and sale
of the Offered Securities.
(m) The
Placement Agent shall have received copies of the executed Lock-Up Agreements
executed by each person listed on Exhibit B hereto, and
such Lock-Up Agreements shall be in full force and effect on the Closing
Date.
8. Indemnification.
(a) The
Company shall indemnify and hold harmless the Placement Agent, its directors,
officers, employees and agents and each person, if any, who controls the
Placement Agent within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, liabilities, expenses
and damages, joint or several, (including any and all investigative, legal and
other expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
it, or any of them, may become subject under the Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, liabilities, expenses or damages arise out of or are based on (i) any
untrue statement or alleged untrue statement made by the Company in Section 3 of
this Agreement, (ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement, the Base Prospectus,
any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, (B) the Pricing Disclosure Materials or any amendment or supplement
thereto or (C) any application or other document, or any amendment or supplement
thereto, executed by the Company based upon written information furnished by or
on behalf of the Company filed in any jurisdiction in order to qualify the
Offered Securities under the securities or Blue Sky laws thereof or filed with
the Commission or any securities association or securities exchange (each, an
“Application”),
or (iii) the omission or alleged omission to state in the Registration
Statement, the Base Prospectus, any Preliminary Prospectus, the Prospectus, the
Pricing Disclosure Materials or any amendment or supplement thereto, or in any
Permitted Issuer Information or any Application a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that the
Company will not be liable to the extent that such loss, claim, liability,
expense or damage arises from the sale of the Offered Securities in the public
offering to any person and is based solely on an untrue statement or omission or
alleged untrue statement or omission made in reliance on and in conformity with
information relating to such Placement Agent furnished in writing to the Company
by the Placement Agent expressly for inclusion therein (as set forth in
paragraph (b) below). This indemnity agreement will be in addition to
any liability which the Company may otherwise have.
-18-
(b) The
Placement Agent will indemnify and hold harmless the Company, each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, each director of the Company and each officer of
the Company who signs the Registration Statement to the same extent as the
foregoing indemnity from the Company to the Placement Agent, but only insofar as
losses, claims, liabilities, expenses or damages arise out of or are based on
any untrue statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information relating to the Placement Agent
furnished in writing to the Company by such Placement Agent expressly for use in
the Registration Statement, the Base Prospectus, any Preliminary Prospectus, the
Prospectus or the Pricing Disclosure Materials. This indemnity agreement will be
in addition to any liability that the Placement Agent might otherwise have. The
Company acknowledges that, for all purposes under this Agreement, the name of
the Placement Agent and the paragraph relating to the Placement Agent’s fees and
reimbursement of expenses under the heading “Plan of Distribution”
in the Prospectus, constitute the only information relating to the Placement
Agent furnished in writing to the Company by the Placement Agent expressly for
inclusion in the Registration Statement, the Base Prospectus, any Preliminary
Prospectus, the Prospectus or the Pricing Disclosure Materials.
(c) Any
party that proposes to assert the right to be indemnified under this Section 8
will, promptly after receipt of notice of commencement of any action against
such party in respect of which a claim is to be made against an indemnifying
party or parties under this Section 8, notify each such indemnifying party of
the commencement of such action, enclosing a copy of all papers served, but the
omission so to notify such indemnifying party will not relieve it from any
liability that it may have to any indemnified party under the foregoing
provisions of this Section 8 unless, and only to the extent that, such omission
results in the forfeiture of substantive rights or defenses by the indemnifying
party. If any such action is brought against any indemnified party and it
notifies the indemnifying party of its commencement, the indemnifying party will
be entitled to participate in and, to the extent that it elects by delivering
written notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any other
indemnifying party similarly notified, to assume the defense of the action, with
counsel reasonably satisfactory to the indemnified party, and after notice from
the indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense. The indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(1) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based on advice of counsel) that a conflict exists (based on advice
of counsel to the indemnified party) between the indemnified party and the
indemnifying party that would prevent the counsel selected by the indemnifying
party from representing the indemnified party (in which case the indemnifying
party will not have the right to direct the defense of such action on behalf of
the indemnified party) or (3) the indemnifying party has not in fact employed
counsel to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred. The indemnifying party
will not, without the prior written consent of the indemnified party (which
consent will not be unreasonably withheld or delayed), settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification has been sought
hereunder, unless such settlement, compromise or consent includes an
unconditional release of the indemnified party and each such controlling person
from all liability arising out of such claim, action, suit or proceeding. An
indemnifying party will not be liable for any settlement of any action or claim
effected without its written consent (which consent will not be unreasonably
withheld).
-19-
(d) In
order to provide for just and equitable contribution in circumstances in which
the indemnification provided for in the foregoing paragraphs of this Section 8
is applicable in accordance with its terms but for any reason is held to be
unavailable from the Company or the Placement Agent, the Company and the
Placement Agent will contribute to the total losses, claims, liabilities,
expenses and damages (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted, but after deducting any
contribution received by the Company from persons other than the Placement Agent
such as persons who control the Company within the meaning of the Act or the
Exchange Act, officers of the Company who signed the Registration Statement and
directors of the Company, who also may be liable for contribution) to which the
Company and the Placement Agent may be subject in such proportion as shall be
appropriate to reflect the relative benefits received by the Company on the one
hand and the Placement Agent on the other. The relative benefits received by the
Company on the one hand and the Placement Agent on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering (before
deducting Company expenses) received by the Company as set forth in the table on
the cover page of the Prospectus bear to the fee received by such Placement
Agent hereunder. If, but only if, the allocation provided by the foregoing
sentence is not permitted by applicable law, the allocation of contribution
shall be made in such proportion as is appropriate to reflect not only the
relative benefits referred to in the foregoing sentence but also the relative
fault of the Company, on the one hand, and the Placement Agent on the other,
with respect to the statements or omissions which resulted in such loss, claim,
liability, expense or damage, or action in respect thereof, as well as any other
relevant equitable considerations with respect to such offering. Such relative
fault shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Placement Agent, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Placement Agent agree that it would not be just and equitable if
contributions pursuant to this Section 8(d) were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, liability, expense or
damage, or action in respect thereof, referred to above in this Section 8(d)
shall be deemed to include, for purpose of this Section 8(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), the Placement Agent shall not be required to
contribute any amount in excess of the fee received by it, and no person found
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) will be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 8(d), any person
who controls a party to this Agreement within the meaning of the Act or the
Exchange Act will have the same rights to contribution as that party, and each
officer of the Company who signed the Registration Statement will have the same
rights to contribution as the Company, subject in each case to the provisions
hereof. Any party entitled to contribution, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim for
contribution may be made under this Section 8(d), will notify any such party or
parties from whom contribution may be sought, but the omission so to notify will
not relieve the party or parties from whom contribution may be sought from any
other obligation it or they may have under this Section 8(d). No party will be
liable for contribution with respect to any action or claim settled without its
written consent (which consent will not be unreasonably withheld).
-20-
9. Termination.
(a) The
obligations of the Placement Agent under this Agreement may be terminated at any
time prior to the Closing Date, by notice to the Company from the Placement
Agent, without liability on the part of the Placement Agent to the Company if,
prior to delivery and payment for the Offered Securities, in the sole judgment
of the Placement Agent (i) trading in the Common Stock of the Company shall have
been suspended by the Commission or by the OTC Bulletin Board, (ii) trading in
securities generally on the New York Stock Exchange, Nasdaq or AMEX or in the
over-the-counter market shall have been suspended or limited or minimum or
maximum prices shall have been generally established on any of such exchange or
additional material governmental restrictions, not in force on the date of this
Agreement, shall have been imposed upon trading in securities generally by any
of such exchange or by order of the Commission or any court or other
governmental authority, (iii) a general banking moratorium shall have been
declared by Federal or New York State authorities, or (iv) any material adverse
change in the financial or securities markets in the United States or any
outbreak or material escalation of hostilities or declaration by the United
States of a national emergency or war or other calamity or crisis shall have
occurred, the effect of any of which is such as to make it, in the sole judgment
of the Placement Agent, impracticable or inadvisable to market the Offered
Securities on the terms and in the manner contemplated by the
Prospectus.
(b) If
this Agreement shall be terminated pursuant to any of the provisions hereof, or
if the sale of the Offered Securities provided for herein is not consummated
because any condition to the obligations of the Placement Agent set forth herein
is not satisfied or because of any refusal, inability or failure on the part of
the Company to perform any agreement herein or comply with any provision hereof,
the Company will, subject to demand by the Placement Agent, reimburse the
Placement Agent for all out-of-pocket expenses incurred in connection
herewith.
10. No Fiduciary Duty.
The Company acknowledges and agrees that in connection with this offering, sale
of the Offered Securities or any other services the Placement Agent may be
deemed to be providing hereunder, notwithstanding any preexisting relationship,
advisory or otherwise, between the parties or any oral representations or
assurances previously or subsequently made by the Placement Agent: (i) no
fiduciary or agency relationship between the Company and any other person, on
the one hand, and the Placement Agent, on the other, exists; (ii) the Placement
Agent is not acting as an advisor, expert or otherwise, to the Company,
including, without limitation, with respect to the determination of the offering
price of the Offered Securities, and such relationship between the Company, on
the one hand, and the Placement Agent, on the other, is entirely and solely
commercial, based on arms-length negotiations; (iii) any duties and obligations
that the Placement Agent may have to the Company shall be limited to those
duties and obligations specifically stated herein; and (iv) the Placement Agent
and its affiliates may have interests that differ from those of the Company. The
Company hereby waives any claims that the Company may have against the Placement
Agent with respect to any breach of fiduciary duty in connection with this
offering.
-21-
11. Notices. Notice given
pursuant to any of the provisions of this Agreement shall be in writing and,
unless otherwise specified, shall be mailed or delivered (a) if to the Company,
at the office of the Company, 0000 Xxxxxxxx Xxxxx, Xxxxx 000, Xx Xxxxxx Xxxxx,
Xxxxxxxxxx 00000, Attention: Xxxx X. Xxxxx, with copies to Xxxxxxxxxx &
Xxxxx LLP, 00000 Xxxxxxxx Xxxx., Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxx X. Xxxxx, Esq., or (b) if to the Placement Agent, at the office
of Xxxxxxxx Curhan Ford & Co., 000 Xxxx 00xx Xxxxxx,
00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxxx, with copies to
Xxxxxxxx Curhan Ford & Co., 000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, Attention: General Counsel and Xxxxxx Xxxxx Xxxxxxxx &
Xxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxxx X. Xxxxxx, Esq. Any such notice shall be effective only upon receipt.
Any notice under Section 8 may be made by facsimile or telephone, but if so made
shall be subsequently confirmed in writing.
-22-
12. Survival. The
respective representations, warranties, agreements, covenants, indemnities and
other statements of the Company and the Placement Agent set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, any of its officers or
directors, the Placement Agent or any controlling person referred to in Section
8 hereof and (ii) delivery of and payment for the Offered Securities. The
respective agreements, covenants, indemnities and other statements set forth in
Sections 6 and 8 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
13. Successors. This
Agreement shall inure to the benefit of and shall be binding upon the Placement
Agent, the Company and their respective successors and legal representatives,
and nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein contained, this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (i) the indemnification and contribution contained
in Sections 8(a) and (d) of this Agreement shall also be for the benefit of the
directors, officers, employees and agents of the Placement Agent and any person
or persons who control the Placement Agent within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act and (ii) the indemnification and
contribution contained in Sections 8(b) and (d) of this Agreement shall also be
for the benefit of the directors of the Company, the officers of the Company who
have signed the Registration Statement and any person or persons who control the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act. No Investor shall be deemed a successor because of such
purchase.
14. Applicable Law. The
validity and interpretations of this Agreement, and the terms and conditions set
forth herein, shall be governed by and construed in accordance with the laws of
the State of New York, without giving effect to any provisions relating to
conflicts of laws.
15. Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
16. Entire Agreement.
This Agreement constitutes the entire understanding between the parties hereto
as to the matters covered hereby and supersedes all prior understandings,
written or oral, relating to such subject matter, including, without limitation,
the engagement letter dated April 27, 2010.
[Signature
Page Follows]
-23-
Please
confirm that the foregoing correctly sets forth the agreement between the
Company and the Placement Agent.
| Very truly yours, | |||
| PREMIER POWER RENEWABLE ENERGY, INC. | |||
|
|
By:
|
||
| Name: | |||
| Title: | |||
Confirmed
as of the date first
above
mentioned:
XXXXXXXX
CURHAN FORD & CO.
| By: |
|
|
|||
|
Name:
Xxxxxxx X. Xxxxxx
|
|
||||
|
Title:
Managing Director
|
|
-24-
SCHEDULE
1
Other
Information
Number of
Shares:
Price to
Public:
Placement
Agent’s Fee:
Estimated
Offering Expenses:
-25-
SCHEDULE
2
Subsidiaries
|
Subsidiary
|
Jurisdiction
|
Ownership
|
|
Bright
Future Technologies, LLC
|
California
|
|
|
|
||
|
California
|
100%
|
|
|
|
||
|
Premier
Power Sociedad Limitada
|
Spain
|
|
|
|
||
|
Rupinvest
SARL
|
Luxembourg
|
100%
|
|
Premier
Power Italy S.p.A.
|
Italy
|
100%
by Rupinvest
|
-26-
EXHIBIT
A
Form of Subscription
Agreement
-27-
EXHIBIT
B
Persons Executing Lock-Up
Agreements
Directors
Xxxxx
Xxxxxx
Xxxxxx
Xxxxxxxx
Xxxxx
Xxxx
Executive Officers and
Members of Management
Xxxx X.
Xxxxx
Xxxxxx de
Anquin
Xxxxx
Xxxxxxx
Shareholders
Genesis
Capital Advisors, LLC
Vision
Opportunity Master Fund, Ltd.
Xxxxx
Xxxxxxx
Xxxx
Xxxxxx Ostiz Xxxxxxx
Xxxxxx
Ltd.
-28-
EXHIBIT
C
Form of Lock-Up
Agreement
July __,
2010
Xxxxxxxx
Curhan Ford & Co.
000 Xxxx
00xx Xxxxxx
00xx
Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Ladies
and Gentlemen:
The
undersigned understands that Xxxxxxxx Curhan Ford & Co. (the “Placement Agent”)
proposes to enter into a Placement Agent Agreement (the “Placement Agent
Agreement”) with Premier Power Renewable Energy, Inc., a Delaware
corporation (the “Company”), relating
to the offering (the “Offering”) of shares
(the “Shares”)
of the Common Stock, par value $0.0001 per share (the “Common Stock”), of
the Company. Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Placement Agent Agreement.
In
consideration of the foregoing, and in order to induce you to participate as the
placement agent in the Offering, and for other good and valuable consideration
receipt of which is hereby acknowledged, the undersigned hereby agrees that,
without the prior written consent of the Placement Agent (which consent may be
withheld in its sole discretion), the undersigned will not, during the period
(the “Lock-Up
Period”) beginning on the date hereof and ending on the earlier of (i)
the date [_90_] days after the date of the
final prospectus (including the final prospectus supplement) to be used in
confirming the sale of the Shares (the “Final
Prospectus”) or
(ii) the termination of the Placement Agent Agreement by the Placement Agent
prior to the Closing (other than as a result of any breach of Section 4(n) of
the Placement Agent Agreement), (1) offer, pledge, announce the intention to
sell, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase,
or otherwise transfer or dispose of, directly or indirectly, or file (or
participate in the filing of) a registration statement with the Securities and
Exchange Commission in respect of, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for shares of Common Stock
(including without limitation, shares of Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and securities which may
be issued upon exercise of a stock option or warrant), (2) enter into any swap
or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the shares of, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of shares of
Common Stock or such other securities, in cash or otherwise, (3) make any demand
for or exercise any right with respect to, the registration of any shares of
Common Stock or any security convertible into or exercisable or exchangeable for
shares of Common Stock, or (4) publicly announce an intention to effect any
transaction specific in clause (1), (2) or (3) above.
Notwithstanding
the foregoing, the restrictions set forth in clause (1) and (2) above shall not
apply to (a) transfers (i) as a bona fide gift or gifts, provided that the donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein, (ii) to any trust for the direct or indirect benefit of the undersigned
or the immediate family of the undersigned, provided that the trustee of the
trust agrees to be bound in writing by the restrictions set forth herein, and
provided further that any such transfer shall not involve a disposition for
value or (iii) with your prior written consent, (b) the acquisition or exercise
of any stock option issued pursuant to the Company’s existing stock option plan,
including any exercise effected by the delivery of shares of Common Stock of the
Company held by the undersigned, or (c) the purchase or sale of the Company’s
securities pursuant to a plan, contract or instruction that satisfies all of the
requirements of Rule 10b5-1(c)(1)(i)(B) that was in effect prior to the date
hereof. For purposes of this Lock-Up Agreement, “immediate family”
shall mean any relationship by blood, marriage or adoption, not more remote than
first cousin. None of the restrictions set forth in this Lock-Up
Agreement shall apply to shares of Common Stock acquired in open market
transactions.
-29-
For the
purpose of allowing the Placement Agent to comply with FINRA Rule 2711(f)(4), if
(1) during the last 17 days of the Lock-Up Period, the Company releases earnings
results or publicly announces other material news or a material event relating
to the Company occurs or (2) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the 16 day period
beginning on the last day of the Lock-Up Period, then in each case the Lock-Up
Period will be extended until the expiration of the 18 day period beginning on
the date of release of the earnings results or the public announcement regarding
the material news or the occurrence of the material event, as applicable, unless
the Placement Agent waives, in writing, such extension. The Placement Agent
agrees to waive such extension if the provisions of FINRA Rule 2711(f)(4) are
not applicable to the Offering. The undersigned acknowledges that the
Company has agreed not to accelerate the vesting of any option or warrant or the
lapse of any repurchase right prior to the expiration of the Lock-Up Period,
except in accordance with the terms of any existing employment
agreement. In furtherance of the foregoing, the Company, and any duly
appointed transfer agent or depositary for the registration or transfer of the
securities described herein, are hereby authorized to decline to make any
transfer of securities if such transfer would constitute a violation or breach
of this Lock-Up Agreement.
The
foregoing restrictions are expressly agreed to preclude the undersigned from
engaging in any hedging or other transaction which is designed to or reasonably
expected to lead to or result in a sale or disposition of shares of Common Stock
even if such securities would be disposed of by someone other than the
undersigned. Such prohibited hedging or other transactions would
include without limitation any short sale or any purchase, sale or grant of any
right (including without limitation any put option or put equivalent position or
call option or call equivalent position) with respect to any of the shares of
Common Stock or with respect to any security that includes, relates to, or
derives any significant part of its value from such shares.
The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Lock-Up Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company’s transfer agent and registrar or depositary against the
transfer of the undersigned’s shares of Common Stock except in compliance with
the foregoing restrictions.
The
undersigned understands that, if the Placement Agent Agreement does not become
effective, or if the Placement Agent Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares to be sold thereunder, the undersigned
shall be released from all obligations under this Lock-Up
Agreement.
This
Lock-Up Agreement shall be governed by and construed in accordance with the laws
of the State of New York, without regard to the conflict of laws principles
thereof.
[Signature
page immediately follows]
-30-
|
Very
truly yours,
___________________________________
Name:
|
-31-
