3,275,333 Shares of Common Stock and Warrants to Purchase up to 655,066 Shares of Common Stock NEW GENERATION BIOFUELS HOLDINGS, INC. PLACEMENT AGENT AGREEMENT July 22, 2009
Exhibit
1.1
3,275,333 Shares
of Common Stock
and
Warrants to Purchase up to 655,066 Shares of Common Stock
July 22,
0000
XXXXXXXX
INVESTMENTS
000 Xxxxx
Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx,
XX 00000
Ladies
and Gentlemen:
1. Introduction. New
Generation Biofuels Holdings, Inc., a Florida corporation (the “Company”), proposes to issue
and sell to the certain purchasers, pursuant to the terms and conditions of this
Placement Agent Agreement (this “Agreement ”) and the
Subscription Agreements in the form of Exhibit A attached
hereto (the “Subscription
Agreements”) entered into with the purchasers identified therein (each a
“Purchaser “and
collectively, the “Purchasers ”), up to an
aggregate of 3,275,333 units (the “Units”), with each Unit
consisting of: (i) one share of common stock (a “Share “and, collectively,
the “Shares”), $0.001
par value per share (the “Common Stock ”) of the Company
and (ii) one warrant to purchase 0.20 of a share of Common Stock (the
“Warrants”). Units
will not be issued or certificated and will not trade on any exchange or be
listed for quotation on any market. The Shares and Warrants are
immediately separable and will be issued separately. The terms and
conditions of the Warrants are set forth in a warrant certificate, the form
of which is attached as Exhibit B
hereto. The Shares issuable upon exercise of the Warrants are referred to
herein as the “Warrant
Shares” and, together with the Units, the Shares and the Warrants, are
referred to herein as the “Securities.” The Company
hereby confirms its agreement with Capstone Investments (the “Placement Agent”) to act as
placement agent in accordance with the terms and conditions hereof.
2. Agreement to Act as Placement Agent; Placement
of
Securities. 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:
2.1 The
Company acknowledges and hereby authorizes the Placement Agent to act as its
exclusive placement agent on a best efforts basis to solicit offers for the
purchase of all or part of the Units from the Company in connection with the
proposed offering of the Units (the “Offering”). Until the
earlier of the termination of this Agreement or the Closing Date (as defined
in Section 4 hereof), the Company shall not, without the prior written
consent of the Placement Agent, solicit or accept offers to purchase Units
otherwise than through the Placement Agent.
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2.2 The
Placement Agent agrees, as agent of the Company, to use its best efforts to
solicit offers to purchase the Units from the Company on the terms and subject
to the conditions set forth in the Prospectus (as defined below). The
Placement Agent shall use commercially reasonable efforts to assist the Company
in obtaining performance by each Purchaser whose offer to purchase Units has
been solicited by the Placement Agent and accepted by the Company, but the
Placement Agent shall not, except as otherwise provided in this Agreement, be
obligated to disclose the identity of any potential purchaser or have any
liability to the Company in the event any such purchase is not consummated for
any reason. Under no circumstances will the Placement Agent be
obligated to underwrite or purchase any Units for its own account. In
soliciting purchases of Units, the Placement Agent shall act solely as the
Company’s agents and not as a principal. Furthermore, the execution
of this Agreement does not ensure any placement of Units or any portion thereof
or a constitute a guarantee or warranty of the ability of the Placement Agent
with respect to securing any financing on behalf of the Company, all of which
are expressly disclaimed by the Placement Agent. Notwithstanding the
foregoing and except as otherwise provided in Section 2.3, it is understood and
agreed that the Placement Agent (or its affiliates) may, solely at their
discretion and without any obligation to do so, purchase Units as
principals.
2.3 Subject
to the provisions of this Section 2, offers for the purchase of Units
may be solicited by the Placement Agent as agent for the Company at such times
and in such amounts as the Placement Agent deems advisable. The
Placement Agent shall communicate to the Company, orally or in writing, each
reasonable offer to purchase Units received by it as agent of the Company.
The Company shall have the sole right to accept offers to purchase the
Units and may reject any such offer, in whole or in part.
2.4 The
Units are being sold to the Purchasers at a price of $1.05 per Unit. The
purchases of the Units by the Purchasers shall be evidenced by the execution of
Subscription Agreements by each of the Purchasers and the Company.
2.5 As
compensation for services rendered, on the Closing Date (as defined in
Section 4 hereof), the Company shall:
(a) pay
to the Placement Agent by wire transfer of immediately available funds to an
account or accounts designated by the Placement Agent, an aggregate amount equal
to seven percent (7%) of the gross proceeds received by the Company from the
sale of the Units on such Closing Date (the “Placement Fee”);
and
(b) issue
to the Placement Agent a warrant (the “PA Warrant”) to purchase up to
five percent (5)% of shares of Common Stock underlying the Units (on a fully
diluted basis) sold in the Offering. The PA Warrant shall provide for
the same terms and provisions as the Warrant; provided that the PA Warrant shall
contain a provision of “cashless” exercise.
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2.6 No Units
which the Company has agreed to sell pursuant to this Agreement and the
Subscription Agreements shall be deemed to have been purchased and paid for, or
sold by the Company, until such Shares and Warrants included in the Units shall
have been delivered to the Purchaser thereof against payment by such Purchaser.
If the Company shall default in its obligations to deliver the Shares and
Warrants to a Purchaser whose offer it has accepted, the Company shall indemnify
and hold the Placement Agent harmless against any loss, claim, damage or expense
arising from or as a result of such default by the Company in accordance with
the procedures set forth in Section 8(c) hereof.
3. Representations and
Warranties of the Company. The Company represents, warrants to each
of the Placement Agent and the Purchasers that, as of the date hereof and as of
the Closing Date, that:
3.1 The
Company has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and rules
and regulations thereunder (the “Rules and Regulations”)
adopted by the Securities and Exchange Commission (the “Commission ”) a “shelf”
Registration Statement (as hereinafter defined) on Form S-3 (File No.
333-156449), which became effective as of January 27, 2009 (the “Effective Date”), including a
base prospectus relating to the Units (the “Base Prospectus ”), and such
amendments and supplements thereto as may have been required to the date of this
Agreement. The term “Registration
Statement “as used in this Agreement means the registration
statement (including all exhibits, financial schedules and all documents and
information deemed to be a part of the Registration Statement pursuant to
Rule 430A of the Rules and Regulations), as amended or supplemented to the
date of this Agreement, including the Base Prospectus. The Registration
Statement is effective under the Securities Act and no stop order preventing or
suspending the effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus has been issued by the Commission and no
proceedings for that purpose have been instituted or, to the best knowledge of
the Company, are threatened by the Commission. The Company, if required by
the Rules and Regulations of the Commission, will file the Prospectus (as
defined below), with the Commission pursuant to Rule 424(b) of the Rules and
Regulations. The term “Prospectus “as used in
this Agreement means the final Prospectus relating to the Securities, in the
form in which it is to be filed with the Commission pursuant to Rule 424(b) of
the Rules and Regulations, or, if the Prospectus is not to be filed with the
Commission pursuant to Rule 424(b), the Prospectus in the form included as
part of the Registration Statement as of the Effective Date, except that if any
revised prospectus or prospectus supplement shall be provided to the Placement
Agent by the Company for use in connection with the offering and sale of the
Units which differs from the Prospectus (whether or not such revised prospectus
or prospectus supplement is required to be filed by the Company pursuant to Rule
424(b) of the Rules and Regulations), the term “Prospectus” shall refer to
such revised prospectus or prospectus supplement, as the case may be, from and
after the time it is first provided to the Placement Agent for such use.
Any preliminary prospectus or prospectus relating to the Securities
subject to completion included in the Registration Statement or filed with the
Commission pursuant to Rule 424 of the Rules and Regulations is hereafter
called a “Preliminary
Prospectus.” Any reference herein to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 which were filed under the Securities Exchange Act of
1934, as amended (the “Exchange
Act”), on or before the last to occur of the Effective Date, the date of
the Preliminary Prospectus, or the date of the Prospectus, and any reference
herein to the terms “amend,” “amendment,” or “supplement” with respect to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include: (i) the filing of any document under the
Exchange Act after the Effective Date, the date of such Preliminary Prospectus
or the date of the Prospectus, as the case may be, which is incorporated by
reference and (ii) any such document so filed. If the Company has
filed an abbreviated registration statement to register additional securities
pursuant to Rule 462(b) under the Rules and Regulations (the “462(b) Registration
Statement”), then any reference herein to the Registration Statement
shall also be deemed to include such 462(b) Registration Statement.
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3.2 As
of the Applicable Time (as defined below) and as of the Closing Date, neither:
(i) any General Use Free Writing Prospectus (as defined below) issued at or
prior to the Applicable Time, and the Pricing Prospectus (as defined below) and
the information included on Schedule A hereto, all
considered together (collectively, the “General Disclosure Package”),
(ii) any individual Limited Use Free Writing Prospectus (as defined below)
nor (iii) the bona fide electronic road show (as defined in
Rule 433(h)(5) of the Rules and Regulations), if any, that has been made
available without restriction to any person, when considered together with the
General Disclosure Package, included or will include, any untrue statement of a
material fact or omitted or as of the Closing Date will 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; provided, however, that the
Company makes no representations or warranties as to information contained in or
omitted from any Issuer Free Writing Prospectus, in reliance upon, and in
conformity with, written information furnished to the Company by the Placement
Agent specifically for inclusion therein, which information the parties hereto
agree is limited solely and exclusively to the PA Information (as defined
in Section 17 hereof ). As used in this Agreement, the following
capitalized terms have the following meanings:
(a) “Applicable Time” means
4 p.m., New York City time, on the date of this Agreement.
(b) “General Use Free Writing
Prospectus” means any Issuer Free Writing Prospectus that is identified
on Schedule A to
this Agreement.
(c) “Issuer Free Writing
Prospectus” means any “issuer free writing prospectus,” as defined in
Rule 433 of the Rules and Regulations relating to the Units in the form
filed or required to be filed with the Commission or, if not required to be
filed, in the form retained in the Company’s records pursuant to Rule 433(g) of
the Rules and Regulations.
(d) “Limited Use Free Writing
Prospectuses” means any Issuer Free Writing Prospectus that is not a
General Use Free Writing Prospectus.
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(e) “Pricing Prospectus” means the
Preliminary Prospectus, if any, and the Base Prospectus, each as amended and
supplemented immediately prior to the Applicable Time, including any document
incorporated by reference therein and any prospectus supplement deemed to be a
part thereof.
3.3 No
order preventing or suspending the use of any Preliminary Prospectus, any Issuer
Free Writing Prospectus or the Prospectus relating to the Offering has been
issued by the Commission, and no proceeding for that purpose or pursuant to
Section 8A of the Securities Act has been to the best knowledge of the
Company instituted or threatened by the Commission, and each Preliminary
Prospectus, if any, at the time of filing thereof, conformed in all material
respects to the requirements of the Securities Act and the Rules and
Regulations, and unless otherwise corrected, modified or supplemented did not
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 representations or warranties as to information contained in or
omitted from any Issuer Free Writing Prospectus, in reliance upon, and in
conformity with, written information furnished to the Company by the Placement
Agent specifically for inclusion therein, which information the parties hereto
agree is limited solely and exclusively to the PA Information.
3.4 At
the time the Registration Statement became effective, at the date of this
Agreement and at the Closing Date, the Registration Statement conformed and will
conform in all material respects to the requirements of the Securities Act and
the Rules and Regulations and did not and will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; and the
Prospectus, at the time the Prospectus was issued and at the Closing Date,
conformed and will conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and did not and will not contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the foregoing
representations and warranties in this Section 3.4 shall not apply to
information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by the Placement Agent specifically for inclusion
therein, which information the parties hereto agree is limited solely and
exclusively to the PA Information.
3.5 Each
Issuer Free Writing Prospectus, if any, as of its issue date and at all
subsequent times through the completion of the public offer and sale of the
Units or until any earlier date that the Company notified or notifies the
Placement Agent as described in Section 5.5, did not, does not and will not
include any information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement, Pricing Prospectus or the
Prospectus, including any document incorporated by reference therein and any
prospectus supplement deemed to be a part thereof that has not been superseded
or modified, or includes an untrue statement of a material fact or omitted or
would omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The foregoing sentence does not
apply to statements in or omissions from any Issuer Free Writing Prospectus in
reliance upon, and in conformity with, written information furnished to the
Company by the Placement Agent specifically for inclusion therein, which
information the parties hereto agree is limited solely and exclusively to the PA
Information.
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3.6 The
documents incorporated by reference in the Prospectus, when they became
effective or were filed with the Commission, as the case may be, conformed in
all material respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission thereunder
and none of such documents contained any untrue statement of a material fact or
omitted to state any 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; and any further documents so filed and incorporated by
reference in the Prospectus, when such documents become effective or are filed
with the Commission, as the case may be, will conform in all material respects
to the requirements of the Securities Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder and will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances under which they were made not
misleading.
3.7 The
Company is not an “ineligible issuer” in connection with the Offering pursuant
to and as defined in Rule 405 under the Securities Act. The Company has
not, directly or indirectly, distributed and will not distribute any offering
material in connection with the Offering other than any Preliminary Prospectus,
the Prospectus, the documents incorporated by reference therein and other
materials, if any, permitted under the Securities Act and consistent with
Section 5.2 below. The Company will file with the Commission all
Issuer Free Writing Prospectuses (other than a “road show,” as defined in Rule
433(d)(8) of the Rules and Regulations), if any, in the time and manner required
under Rules 163(b) (2) and 433(d) of the Rules and Regulations.
3.8 The
Company has been duly organized and is validly existing as a corporation in good
standing (or the foreign equivalent thereof) under the laws of the State of
Florida. The Company is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which its ownership or
lease of property or the conduct of its business requires such qualification and
has all power and authority necessary to own or hold its properties and to
conduct the business in which it is engaged, except where the failure to so
qualify or have such power or authority: (i) would not have, singularly or
in the aggregate, a material adverse effect on the financial condition,
business, prospects (as such prospects are disclosed in the Registration
Statement, the Prospectus and the General Disclosure Package), properties,
assets, management or results of operations of the Company and its
subsidiaries, taken as a whole, or (ii) impair in any material respect the
ability of the Company to perform its obligations under this Agreement or to
consummate any transactions contemplated by the Agreement, the General
Disclosure Package or the Prospectus (any such effect as described in clauses
(i) or (ii), a “Material
Adverse Effect”).
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3.9 Except
for New Generation Biofuels, Inc., a Delaware corporation (“NGBI”) and NGB Marketing LLC,
a Delaware limited liability company (“NGBM”), each a wholly-owned
subsidiary of the Company, the Company has no subsidiaries and does not own more
than 5% of the equity interest or control, directly or indirectly, any
corporation, partnership, association or other entity. NGBM conducts
no material operations as of the date hereof. Each of NGBI and NGBM
are validly existing as, respectively, a corporation and a limited liability
company in good standing under the laws of the State of
Delaware. Each of NGBI and NGBM is duly qualified to do business and
is in good standing as a foreign corporation or limited liability company in
each jurisdiction in which its ownership or lease of property or the conduct of
its business requires such qualification and has all power and authority
necessary to own or hold its properties and to conduct the business in which it
is engaged, except where the failure to so qualify or have such power or
authority would not have a Material Adverse Effect. In this Section 3
with respect to the Company’s representations and warranties, unless the context
specifically requires otherwise, all references to the “Company” shall include
the Company and each of NGBI and NGBM collectively (it being agreed that only
the Company is making representations and warranties hereunder).
3.10 Except
as set forth in or otherwise contemplated by the Registration Statement, the
General Disclosure Package and the Prospectus, since the date of the most recent
consolidated financial statements of the Company included or incorporated by
reference in the Registration Statement and prior to the Closing: (i) there has
not been and will not have been (A) 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 upon the exercise of stock options
or upon the grant of restricted stock to the Company’s directors and officers,
the issuance of shares pursuant to the Company’s stock option plan), or the
long-term debt of the Company 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 (B) any material adverse change, or any development that would
reasonably be expected to result in a material adverse change, in or affecting
the financial condition, business, prospects (as such prospects are disclosed in
the Registration Statement, the Prospectus and the General Disclosure Package),
properties, assets, management or results of operations of the Company and
its subsidiaries, either individually or taken as a whole (a “Material Adverse Change”) and
(ii) the Company has not 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, the
General Disclosure Package and the Prospectus.
3.11 The
Company has the full right, power and authority to enter into this Agreement,
each of the Subscription Agreements, the Warrants, the PA Warrant, that certain
Escrow Agreement, dated as of the date hereof by and among the Company, the
Placement Agent and the escrow agent named therein (the “Escrow Agreement”) and each
document and instrument contemplated by this Agreement, the Subscription
Agreements and the Warrants, and to perform and to discharge its obligations
hereunder and thereunder; and each of this Agreement, each of the Subscription
Agreements, the Warrants, the PA Warrant and the Escrow Agreement and each
such other document and instrument has been duly authorized, executed and
delivered by the Company, and constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms, except: (i) as limited by
laws of general application relating to bankruptcy, insolvency and the relief of
debtors; (ii) as limited by rules of law governing specific performance,
injunctive relief or other equitable remedies and by general principles of
equity; and (iii) to the extent any indemnification provisions contained
therein may further be limited by applicable laws and principles of public
policy.
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3.12 The
Shares and Warrants to be issued and sold by the Company to the Purchasers under
the Subscription Agreements, and the PA Warrant to be issued to the Placement
Agent, have been duly and validly authorized and, when issued and delivered
against payment therefor as provided herein and the Subscription Agreements, and
the Warrant Shares and shares of Common Stock underlying the PA Warrant, when
issued and delivered against payment therefor as provided in the Warrants and
the PA Warrant, respectively, will be duly and validly issued, fully paid and
nonassessable and free of any preemptive or similar rights and will conform to
the description thereof contained in the General Disclosure Package and the
Prospectus.
3.13 The
Company has an authorized capitalization, and the issued and outstanding shares
of capital stock as of March 31, 2009 were, as set forth in the General
Disclosure Package and the Prospectus, and all of the issued shares of capital
stock of the Company have been duly and validly authorized and issued, are fully
paid and non-assessable, have been issued in compliance with federal and state
securities laws, and conform to the description thereof contained in the General
Disclosure Package and the Prospectus. Since March 31, 2009, the
Company has not issued any securities, other than: (i) options to purchase
Common Stock of the Company pursuant to the Company’s Omnibus Incentive Plan,
(ii) the issuance of Common Stock pursuant to the Omnibus Incentive Plan, (iii)
the issuance of Common Stock upon the exercise of warrants or pursuant to the
conversion of preferred stock outstanding as of March 31, 2009, (iv) the
issuance of warrants to certain Company consultants or (v) as otherwise
described in the General Disclosure Package and the Prospectus. None of
the outstanding shares of Common Stock, preferred stock or any other securities
of the Company was issued in violation of any preemptive rights, rights of first
refusal or other similar rights to subscribe for or purchase securities of the
Company. There are no authorized or outstanding shares of capital stock,
options, warrants, preemptive rights, rights of first refusal or other rights to
purchase, or equity or debt securities convertible into or exchangeable or
exercisable for, any capital stock of the Company other than those described
above or accurately described in the General Disclosure Package. The
description of the Company’s stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted thereunder, as described
in the General Disclosure Package and the Prospectus, accurately and fairly
present the information required to be shown with respect to such plans,
arrangements, options and rights in all material respects.
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3.14 The
execution, delivery and performance of this Agreement, the Subscription
Agreements and the Escrow Agreement by the Company, the issuance and sale of the
Units and the PA Warrant by the Company and the consummation of the transactions
contemplated hereby and thereby will not (with or without notice or lapse of
time or both) conflict with or result in a breach or violation of any of the
terms or provisions of, constitute a default or Debt Repayment Triggering Event
(as defined below) under, give rise to any right of termination or other right
or the cancellation or acceleration of any right or obligation or loss of a
benefit under, or give rise to the creation or imposition of any lien,
encumbrance, security interest, claim or charge upon any property or assets of
the Company pursuant to: (i) any indenture, mortgage, deed of trust, loan
agreement or other agreement, contract or instrument to which the Company is a
party or by which the Company is bound or to which any of the property or assets
of the Company is subject, (ii) result in any violation of the provisions
of the charter or by-laws (or analogous governing instruments, as applicable) of
the Company or (iii) result in any violation of any law, statute, rule,
regulation, judgment, order or decree of any court or governmental agency or
body, domestic or foreign, having jurisdiction over the Company or any of its
properties or assets, except with respect to clauses (i) and
(iii) where, any such conflict, breach, violation, default or right would
not reasonably be expected to have a Material Adverse Effect. A “Debt Repayment Triggering
Event” means any event or condition that gives, or with the giving of
notice or lapse of time would give the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company.
3.15 Except
for the registration of the Units under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state or foreign securities laws, the
Financial Industry Regulatory Authority, Inc. (“FINRA ”) and The Nasdaq Stock
Market (“Nasdaq”) in
connection with the offering and sale of the Units by the Company, no consent,
approval, authorization or order of, or filing, qualification or registration
with, any court or governmental agency or body, foreign or domestic, which has
not been made, obtained or taken and is not in full force and effect, is
required for the execution, delivery and performance of this Agreement, the
Subscription Agreements and the Escrow Agreement by the Company, the offer or
sale of the Units, the issuance of the PA Warrant or the consummation of the
transactions contemplated hereby or thereby.
3.16 Imowitz
Xxxxxx & Co., LLP, whose reports relating to the financial statements of the
Company are incorporated by reference in the General Disclosure Package, the
Prospectus and in the Registration Statement, is an independent registered
public accounting firm as required by the Securities Act and the Rules and
Regulations and the Public Company Accounting Oversight Board (United States)
(the “PCAOB”). Except as
disclosed in the Registration Statement and as pre-approved in accordance with
the requirements set forth in Section 10A of the Exchange Act, Imowitz
Xxxxxx & Co., LLP have not been engaged by the Company to perform any
“prohibited activities”(as defined in Section 10A of the Exchange
Act).
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3.17 The
financial statements, together with the related notes and schedules, included or
incorporated by reference in the General Disclosure Package, the Prospectus and
in the Registration Statement fairly present in all material respects the
financial position and the results of operations and changes in financial
position of the Company at the respective dates or for the respective periods
therein specified. Such statements and related notes and schedules have
been prepared in accordance with the generally accepted accounting principles in
the United States (“GAAP”) applied on a consistent
basis throughout the periods involved except as may be set forth in the related
notes included or incorporated by reference in the General Disclosure Package.
The financial statements, together with the related notes and schedules,
included or incorporated by reference in the General Disclosure Package and the
Prospectus comply in all material respects with the Securities Act, the Exchange
Act, and the Rules and Regulations and the rules and regulations under the
Exchange Act.
3.18 Except
for the financial statements and exhibits included or incorporated by reference
therein, no other financial statements or supporting schedules or exhibits
(including, without limitation, any material contracts or agreements of the
Company) are required by the Securities Act or the Rules and Regulations to be
described, or included or incorporated by reference in the Registration
Statement, the General Disclosure Package or the Prospectus.
3.19 There
is no pro forma or as adjusted financial information which is required to be
included in the Registration Statement, the General Disclosure Package or the
Prospectus or a document incorporated by reference therein in accordance with
the Securities Act and the Rules and Regulations which has not been included or
incorporated as so required.
3.20 Except
as set forth in the Registration Statement, the General Disclosure Package and
the Prospectus, there is no legal or governmental action, suit, claim or
proceeding pending to which the Company is a party or of which any property or
assets of the Company is the subject which is required to be described in the
Registration Statement, the General Disclosure Package or the Prospectus or a
document incorporated by reference therein and is not described therein, or
which, singularly or in the aggregate, if determined adversely to the Company
would reasonably be expected to have a Material Adverse Effect; and to the
Company’s knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
3.21 The
Company (including, for clarity, each of NGBI and NGBM) is not in:
(i) violation of its charter or by-laws (or analogous governing instrument,
as applicable), (ii) default in any respect, and no event has occurred
which, with notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition contained
in any material indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it is bound or
to which any of its property or assets is subject or (iii) violation in any
respect of any law, ordinance, governmental rule, regulation or court order,
decree or judgment to which it or its property or assets may be subject except,
in the case of clauses (ii) and (iii) of this Section 3.21, for any
violations or defaults which, singularly or in the aggregate, would not have a
Material Adverse Effect.
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3.22 The
Company possesses all licenses, certificates, authorizations and permits issued
by, and has made all declarations and filings with, the appropriate local,
state, federal or foreign regulatory agencies or bodies which are necessary or
desirable for the ownership of its properties or the conduct of its business as
currently being conducted as described in the General Disclosure Package and the
Prospectus (collectively, the “Governmental Permits”) except
where any failures to possess or make the same, singularly or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. The
Company is in compliance with all such Governmental Permits and all such
Governmental Permits are valid and in full force and effect, except where the
lack of compliance or validity or the failure to be in full force and effect
would not, singularly or in the aggregate, reasonably be expected to have a
Material Adverse Effect. All such Governmental Permits are free and clear
of any material restriction or condition that are in addition to, or materially
different from those normally applicable to similar licenses, certificates,
authorizations and permits. The Company has not received notification of
any revocation or modification (or proceedings related thereto) of any such
Governmental Permit except as would not reasonably be expected to have a
Material Adverse Effect.
3.23 The
Company is not or, after giving effect to the offering of the Units, including
the Warrant Shares issuable upon exercise of the Warrants, and the application
of the proceeds thereof as described in the General Disclosure Package and the
Prospectus, will become an “investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations of the
Commission thereunder.
3.24 Neither
the Company nor, to the Company’s knowledge, any of the Company’s officers,
directors or affiliates has taken or will take, directly or indirectly, any
action designed or intended to stabilize or manipulate the price of any security
of the Company, or which caused or resulted in, or which might in the future
reasonably be expected to cause or result in, stabilization or manipulation of
the price of any security of the Company.
3.25 Except,
in each case, as disclosed in the Registration Statement and the Prospectus or
except as would not reasonably be expected to result in a Material Adverse
Effect:
(a) the
Company owns, possesses, licenses or has other rights to use the patents and
patent applications, copyrights, trademarks, service marks, trade names,
technology, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary rights), domain names and other intellectual property
(or could acquire such intellectual property upon commercially reasonable terms)
necessary to conduct its business in the manner in which it is being conducted
and in the manner in which it is contemplated to be conducted as set forth in
the Prospectus (collectively, the “Company Intellectual Property
”);
(b) the
conduct of the current and future business of the Company in the manner
described in the Registration Statement, the General Disclosure Package and the
Prospectus does not and will not infringe, interfere or conflict with any valid
issued patent claim or other intellectual property right of any third party, or
any claim of a patent application filed by any third party, which patent
application has been published by the U.S. Patent and Trademark Office (the
“USPTO”) or similar
foreign authority or is otherwise known to the Company and which claim would
reasonably be expected to issue as a valid claim;
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(c) none
of the patents owned or licensed by the Company is unenforceable or invalid, and
none of the patent applications owned or licensed by the Company would be
unenforceable or invalid if issued as patents;
(d) each
of the technologies currently being utilized by the Company and which the
Company reasonably expects to utilize in connection with its business as
described in the Registration Statement and the Prospectus falls within the
scope of at least one claim in the patents and/or applications licensed or
assigned to the Company;
(e) the
Company is not obligated to pay a royalty, grant a license, or provide other
consideration to any third party in connection with the Company Intellectual
Property;
(f) the
Company has not received any written notice of violation or conflict with rights
of others with respect to the Company Intellectual Property;
(g) there
are no pending or to the Company’s knowledge, threatened actions, suits,
proceedings or claims by others that the Company or any licensor of any Company
Intellectual Property is infringing any patent, trade secret, trade xxxx,
service xxxx, copyright or other intellectual property or proprietary right, nor
has the Company received any notice of infringement of or conflict with asserted
rights of others with respect to the Company Intellectual Property;
(h) the
products or processes of the Company referenced in the Prospectus do not, to the
knowledge of the Company, violate or conflict with any intellectual property or
proprietary right of any third person, or any discovery, invention, product or
process that is the subject of a patent application filed by any third
person;
(i) to
the Company’s knowledge, no third party, including any academic or governmental
organization, possesses or could obtain rights to the patents, patent
applications or patent rights of the Company which, if exercised, would allow
such third party to develop products competitive with those of the Company;
and
(j) all
information material to patentability has been timely disclosed to the USPTO and
any other patent office or similar commission in each jurisdiction where the
Company maintains or is applying for patent protection, during the prosecutions
of all patent applications as to the Company Intellectual Property.
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3.26 The
Company owns no real property. Other than liens on personal or other
property securing indebtedness of the Company in the ordinary course and as
described in the Prospectus, the Company has good and valid title to all
personal property which is material to the business of the Company, free and
clear of all liens, encumbrances, security interests, claims and
defects, except those that, individually or in the aggregate if determined
adversely to the Company, would not reasonably be expected to have a Material
Adverse Effect. All of the leases or subleases material to the
business of the Company and under which the Company holds properties described
in the General Disclosure Package and the Prospectus, are in full force and
effect, and the Company has not received any written notice of any material
claim of any sort that has been asserted by anyone adverse to the rights of the
Company under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company to the continued possession of the leased
or subleased premises under any such lease or sublease.
3.27 No
labor disturbance by the employees of the Company exists or, to the Company’s
knowledge, is imminent, and the Company has not received written notice of any
existing or imminent labor disturbance by the employees of any of its principal
suppliers, manufacturers, customers or contractors, that would reasonably be
expected, singularly or in the aggregate, to have a Material Adverse Effect.
The Company is not aware that any key employee or significant group of
employees of the Company plans to terminate employment with the
Company.
3.28 No
“prohibited transaction”(as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder (“ERISA”), or Section 4975
of the Internal Revenue Code of 1986, as amended from time to time (the “Code”)) or “accumulated
funding deficiency”(as defined in Section 302 of ERISA) or any of the
events set forth in Section 4043(b) of ERISA (other than events with respect to
which the thirty (30)-day notice requirement under Section 4043 of ERISA
has been waived) has occurred or would reasonably be expected to occur with
respect to any employee benefit plan of the Company that would, singularly or in
the aggregate, be reasonably expected to have a Material Adverse Effect. Each
employee benefit plan of the Company is in compliance in all material respects
with applicable law, including ERISA and the Code. The Company has not
incurred and would not reasonably be expected to incur liability under Title IV
of ERISA with respect to the termination of, or withdrawal from, any pension
plan (as defined in ERISA). Each pension plan for which the Company would have
any liability that is intended to be qualified under Section 401(a) of the Code
is so qualified, and nothing has occurred, whether by action or by failure to
act, that would, singularly or in the aggregate, be reasonably expected to cause
the loss of such qualification.
3.29 The
Company is in compliance with all foreign, federal, state and local laws,
ordinances, rules, regulations, licenses, permits, approvals, plans,
authorizations or other requirements relating to the use, treatment, storage and
disposal of hazardous or toxic substances or waste, occupational safety
or the protection of health and safety or the environment which are
applicable to its business (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)
(“Environmental Laws”),
except where the failure to comply would not, singularly or in the aggregate,
reasonably be expected to have a Material Adverse Effect. There has been
no storage, generation, transportation, handling, treatment, disposal,
discharge, emission, or other release of any kind of toxic or other wastes or
other hazardous substances by, due to, or caused by the Company (or, to the
Company’s knowledge, any other entity for whose acts or omissions the Company is
or may otherwise be liable) upon any of the property now or previously owned or
leased by the Company in violation of any law, statute, ordinance, rule,
regulation, order, judgment, decree or permit or which would, under any law,
statute, ordinance, rule (including rule of common law), regulation, order,
judgment, give rise to any liability, except for any violation or liability
which would not have, singularly or in the aggregate with all such violations
and liabilities, a Material Adverse Effect; there has been no disposal,
discharge, emission or other release of any kind onto such property or into the
environment surrounding such property of any toxic or other wastes or other
hazardous substances with respect to which the Company has knowledge, except for
any such disposal, discharge, emission, or other release of any kind which would
not have, singularly or in the aggregate with all such discharges and other
releases, a Material Adverse Effect; and the Company has not received any notice
from any governmental instrumentality or any third party alleging any material
violation thereof or liability under any Environmental Law (including, without
limitation, liability for costs of investigating or remediating sites containing
hazardous substances and/or damages to natural resources).
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3.30 The
Company: (i) has timely filed all necessary federal, state, local and foreign
tax returns, and all such returns were true, complete and correct, (ii) has
paid all federal, state, local and foreign taxes, assessments, governmental or
other charges due and payable for which it is liable, including, without
limitation, all sales and use taxes and all taxes which the Company is obligated
to withhold from amounts owing to employees, creditors and third parties, and
(iii) does not have any tax deficiency or claims outstanding or assessed
or, to the best of its knowledge, proposed against any of them, except those, in
each of the cases described in clauses (i), (ii) and (iii) of this
Section 3.31, that would not, singularly or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company has not engaged in
any transaction which to the Company’s knowledge a corporate tax shelter or
could be characterized as such by the Internal Revenue Service or any other
taxing authority. The accruals and reserves on the books and records of
the Company in respect of tax liabilities for any taxable period not yet finally
determined are adequate to meet any assessments and related liabilities for any
such period, and since March 31, 2009, the Company has not incurred any
liability for taxes other than in the ordinary course.
3.31 The
Company carries, or is covered by, insurance provided by recognized institutions
with policies in such amounts and covering such risks as, to the Company’s
knowledge, are adequate for the conduct of its business and the value of its
properties and to the knowledge of the Company is customary for companies
engaged in similar businesses in similar industries. The Company has not
received any notice and has no reason to believe that it 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 result in a Material Adverse Effect. The Company has
not been denied any insurance coverage that it has sought or for which it has
applied.
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3.32 The
Company 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-14 and 15d-14) for the Company
and designed such disclosure controls and procedures to ensure that material
information relating to the Company are made known to the certifying officers by
others within those entities, particularly during the period in which the
Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the
case may be, is being prepared. The Company presented in its Form
10-Q for the quarter ended March 31, 2009 (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.
3.33 There
is no indenture, franchise, lease, contract, agreement, instrument or other
document required by the Securities Act or by the Rules and Regulations to be
described in the General Disclosure Package and in the Prospectus or a document
incorporated by reference therein or to be filed as an exhibit to the
Registration Statement or a document incorporated by reference therein which is
not described or filed therein as required (all such filed indentures,
franchises, leases, contracts, agreements, instruments or other documents, the
“Company Agreements”);
all descriptions of the Company Agreements (including, without limitation, that
certain Exclusive License Agreement, dated as of March 20, 2006, between
H2Diesel, Inc. (the Company’s predecessor) and Xxxxxxxxxx Xxxxxxxx, as
amended) contained in
the Registration Statement or in a document incorporated by reference therein
are accurate descriptions of such documents in all material respects, which
descriptions are sufficiently comprehensive to fulfill the Company’s obligations
under applicable law with respect to thereto. Except as described in
the General Disclosure Package and the Prospectus or where the failure to do so,
singularly or in the aggregate, would not result in a Material Adverse Effect,
as of the date hereof and as of the Closing Date, the Company has performed all
its obligations required to be performed under all Company Agreements, and no
Company Agreement has been suspended, not renewed or terminated for convenience
or breach or default by the Company or any of the other parties thereto, and the
Company has not received notice nor does the Company have any other knowledge of
any such pending or threatened suspension, termination or non-renewal; to the
Company’s knowledge, no other party under any Company Agreement is in breach or
default in any respect thereunder; and all Company Agreements have been duly
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, except: (i) as limited by laws of general
application relating to bankruptcy, insolvency and the relief of debtors;
(ii) as limited by rules of law governing specific performance, injunctive
relief or other equitable remedies and by general principles of equity; and
(iii) to the extent any indemnification provisions contained therein may
further be limited by applicable laws and principles of public
policy.
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3.34 No
relationship, direct or indirect, exists between or among the Company on the one
hand, and the directors, officers, shareholders (or analogous interest holders),
customers or suppliers of the Company or any of its affiliates on the other
hand, which is required to be described in the General Disclosure Package and
the Prospectus or a document incorporated by reference therein and which is not
so described.
3.35 No
person or entity has the right to require registration of shares of Common Stock
or other securities of the Company because of the filing or effectiveness of the
Registration Statement or the sale of the Units, except for persons and entities
who have expressly waived such right in writing or who have been given timely
and proper written notice and have failed to exercise such right within the time
or times required under the terms and conditions of such right. Except as
described in the General Disclosure Package, there are no persons with
registration rights or similar rights to have any securities registered by the
Company under the Securities Act.
3.36 The
Company does not own any “margin securities” as that term is defined in
Regulation U of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), and
none of the proceeds of the sale of the Units will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security, for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the Units to be considered a “purpose credit” within the
meanings of Regulation T, U or X of the Federal Reserve Board.
3.37 Except
for payments contemplated by this Agreement, the Registration Statement, the
General Disclosure Package or the Prospectus, the Company is not a party to any
contract, agreement or understanding with any person that would give rise to a
valid claim against the Company or the Placement Agent for a brokerage
commission, finder’s fee or like payment in connection with the offering and
sale of the Units or any transaction contemplated by this Agreement, the
Registration Statement, the General Disclosure Package or the
Prospectus.
3.38 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 or incorporated by reference in the Registration Statement, the
Prospectus or the General Disclosure Package has been made or reaffirmed without
a reasonable basis or has been disclosed other than in good
faith. The Forward Looking Statements incorporated by reference in
the Registration Statement, the Prospectus or the General Disclosure Package
from the Company’s Annual Report on Form 10-K for the year ended December 31,
2008 and Quarterly Reports on Form 10-Q for the period ending March 31, 2009
(including, in each case, those contained under the heading “Management’s
Discussion and Analysis of Financial Condition and Results of Operations): (i)
are within the coverage of the safe harbor for forward looking statements set
forth in Section 27A of the Securities Act, Rule 175(b) under the Securities Act
or Rule 3b-6 under the Exchange Act, as applicable, (ii) were made by the
Company with a reasonable basis and in good faith and reflect the Company’s good
faith reasonable best estimate of the matters described therein, and (iii) have
been prepared in accordance with Rule 10 of Regulation S-K under the Securities
Act.
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3.39 The
Company is subject to and in compliance in all material respects with the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act.
The Common Stock is registered pursuant to Section 12(g) of the Exchange
Act and is listed on the Nasdaq Capital Market, and the Company has taken no
action designed to, or reasonably likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the Nasdaq Capital Market, nor has the Company received any
notification that the Commission or the Nasdaq Capital Market is contemplating
terminating such registration or listing that has not subsequently resulted in a
decision or finding by the Commission or the Nasdaq Capital Market that the
Company is in compliance. No consent, approval, authorization or order of,
or filing, notification or registration with, the Nasdaq Capital Market is
required for the listing and trading of the shares of Common Stock on the Nasdaq
Capital Market, except for: (i) a Notification Form: Listing of
Additional Shares and (ii) a Notification Form: Change in the Number of
Shares Outstanding.
3.40 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 “Xxxxxxxx-Xxxxx
Act”), except failures that, individually or in the aggregate if
determined adversely to the Company, would not reasonably be expected to have a
Material Adverse Effect.. 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 reports, schedules, forms,
statements and other documents 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. The Company has taken all necessary actions to
ensure that it is in compliance with all provisions of the Xxxxxxxx-Xxxxx Act
that are in effect and with which the Company is required to
comply.
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3.41 The
Company is in compliance in all material respects with all applicable corporate
governance requirements set forth in the rules of the Nasdaq. 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 Nasdaq Capital
Market to the effect that the Company is not in compliance with its listing or
maintenance requirements that has not subsequently resulted in a decision or
finding by the Commission or the Nasdaq Capital Market that the Company is in
compliance. 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.
3.42 There
are no transactions, arrangements or other relationships between and/or among
the Company, any of its affiliates (as such term is defined in Rule 405 of
the Securities Act) and any unconsolidated entity, including, but not limited
to, any structure finance, special purpose or limited purpose entity that would
reasonably be expected to materially affect the Company’s liquidity or the
availability of or requirements for its capital resources required to be
described in the General Disclosure Package and the Prospectus or a document
incorporated by reference therein which have not been described as
required.
3.43 There
are no outstanding loans, advances (except normal advances for business expenses
in the ordinary course of business) or guarantees or indebtedness by the Company
to or for the benefit of any of the officers or directors of the Company, or any
of their respective family members, except as disclosed in the Registration
Statement, the General Disclosure Package and the Prospectus.
3.44 To
the Company’s knowledge, neither the Company nor any of its affiliates (within
the meaning of FINRA Conduct Rule 2720(b)(1)(a)) directly or indirectly
controls, is controlled by, or is under common control with, or is an associated
person (within the meaning of Article I, Section 1(ee) of the By-laws
of FINRA) of, any member firm of FINRA.
3.45 To
the Company’s knowledge, no proceeds of the Offering, excluding compensation,
fees or expenses paid to the Placement Agent, will be paid to any FINRA member,
or any person or entity associated or affiliated with a member of
FINRA.
3.46 To
the Company’s knowledge, no person or entity to whom securities of the Company
have been privately issued within the 180-day period prior to either: (a) the
initial filing date of the Registration Statement or (b) the date hereof has any
relationship or affiliation or association with any member of
FINRA.
3.47 No
approval of the shareholders of the Company under the rules and regulations of
Nasdaq is required for the Company to issue and deliver to the Purchasers the
Units.
3.48 The
Company’s operations (including all financing and accounting functions) are
conducted solely within the jurisdiction of the United States.
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3.49 Neither
the Company nor, to the knowledge of the Company, any director, officer, agent,
employee or other person acting on behalf of the Company 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.
3.50 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.
3.51 Any
certificate signed by or on behalf of the Company and delivered to the Placement
Agent or to counsel for the Placement Agent shall be deemed to be a
representation and warranty by the Company to the Placement Agent and the
Purchasers as to the matters covered thereby.
3.52 As
used in this Agreement, references to matters being “material” with respect to the
Company shall mean a material event, change, condition, status or effect related
to the condition (financial or otherwise), properties, assets (including
intangible assets), liabilities, business, prospects, operations or results of
operations of the Company, NGBI and NGBM, taken as a whole.
3.53 As
used in this Agreement, the term “knowledge of the Company” (or
similar language) shall mean the knowledge of Xxx X. Xxxxx, Xxxx X. Xxxxxxxxx,
Xxxxxx Xxxxxxxxx, Xxxxx X. Xxxxxx, Xx., C. Xxxxx Xxxxxx and Xxxxxx Xxxxxxxxxxx,
with the assumption that such individuals shall have made reasonable and
diligent inquiry of the matters presented.
4. The Closing. The
time and date of closing and delivery of the documents required to be delivered
to the Placement Agent pursuant to Sections 5 and 7 hereof shall be at
10:00 A.M., New York City time, on July 28, 2009 (the “Closing Date ”) at the office
of Ellenoff Xxxxxxxx & Schole LLP, 000 Xxxx 00xx Xxxxxx,
00xx
Xxxxx, Xxx Xxxx, XX 00000 or at such time, date or location as may be agreed
upon by the Company and the Placement Agent. The closing of the
Offering is sometimes referred to herein as the “Closing.”
5. Further Agreements of the
Company. The Company agrees with the Placement Agent and the
Purchasers:
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5.1 To
prepare the Prospectus in a form approved by the Placement Agent (which
approval shall not be unreasonably withheld) containing information previously
omitted at the time of effectiveness of the Registration Statement in reliance
on rules 430A, 430B and 430C of the Rules and Regulations and to file such
Prospectus pursuant to Rule 424(b) of the Rules and Regulations not later than
the second (2nd)
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A of the Rules
and Regulations; to notify the Placement Agent promptly of the Company’s
intention to file or prepare any supplement or amendment to any Registration
Statement or to the Prospectus in connection with this Offering and to provide a
draft of any such amendment or supplement to the Registration Statement, the
General Disclosure Package or to the Prospectus to the Placement Agent within an
amount of time that is reasonably practical to review under the circumstances
and prior to filing; to advise the Placement Agent, promptly after it receives
notice thereof, of the time when any amendment to any Registration Statement has
been filed in connection with the Offering or becomes effective or any
supplement to the General Disclosure Package or the Prospectus or any amended
Prospectus has been filed in connection with the Offering and to furnish the
Placement Agent copies thereof; to file promptly all material required to be
filed by the Company with the Commission pursuant to Rule 433(d) or 163(b)(2),
as the case may be; to file within the time periods prescribed by the Exchange
Act, including any extension thereof, all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of the Prospectus and for so long as the delivery of a prospectus (or
in lieu thereof, the notice referred to in Rule 173(a) of the Rules and
Regulations) is required in connection with the Offering; to advise the
Placement Agent, promptly after it receives notice thereof, of the issuance by
the Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the
Prospectus, of the suspension of the qualification of the Units for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement, the General Disclosure Package or
the Prospectus or for additional information; and, in the event of the issuance
of any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus or
suspending any such qualification, and promptly to use its best efforts to
obtain the withdrawal of such order.
5.2 The
Company represents and agrees that, unless it obtains the prior written consent
of the Placement Agent, it has not made and will not, make any offer relating to
the Units that would constitute a “free writing prospectus” as defined in
Rule 405 of the Rules and Regulations unless the prior written consent of
the Placement Agent has been received (each, a “Permitted Free Writing
Prospectus”);
provided that the prior written consent of the Placement Agent hereto
shall be deemed to have been given in respect of the Issuer Free Writing
Prospectus included on Schedule A
hereto. The Company represents that it has treated and agrees that it will
treat each Permitted Free Writing Prospectus as an Issuer Free Writing
Prospectus, comply with the requirements of Rules 164 and 433 of the Rules
and Regulations applicable to any Issuer Free Writing Prospectus, including the
requirements relating to timely filing with the Commission, legending and record
keeping and will not take any action that would result the Placement Agent or
the Company being required to file with the Commission pursuant to Rule 433(d)
of the Rules and Regulations a free writing prospectus prepared by or on behalf
of the Placement Agent that the Placement Agent otherwise would not have been
required to file thereunder.
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5.3 If
at any time when a Prospectus relating to the Units is required to be delivered
under the Securities Act, any event occurs or condition exists as a result of
which the Prospectus, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, or the Registration Statement, as then amended or
supplemented, would 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 at any time to amend or supplement
any Registration Statement or the Prospectus to comply with the Securities Act
or the Exchange Act, the Company will promptly notify the Placement Agent, and
upon the Placement Agent’s request, the Company 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.
5.4 If
the General Disclosure Package is being used to solicit offers to buy the Units
at a time when the Prospectus is not yet available to prospective purchasers and
any event shall occur as a result of which, in the judgment of the Company or in
the reasonable opinion of the Placement Agent, it becomes necessary to amend or
supplement the General Disclosure Package in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or to make the statements therein not conflict with the information
contained or incorporated by reference in the Registration Statement then on
file and not superseded or modified, or if it is necessary at any time to amend
or supplement the General Disclosure Package to comply with any law, the Company
promptly will either: (i) prepare, file with the Commission (if required)
and furnish to the Placement Agent and any dealers an appropriate amendment or
supplement to the General Disclosure Package or (ii) prepare and file with
the Commission an appropriate filing under the Exchange Act which shall be
incorporated by reference in the General Disclosure Package so that the General
Disclosure Package as so amended or supplemented will not, in the light of the
circumstances under which they were made, be misleading or conflict with the
Registration Statement then on file, or so that the General Disclosure Package
will comply with law.
5.5 If
at any time following issuance of an Issuer Free Writing Prospectus in
connection with the Offering there occurred or occurs an event or development as
a result of which such Issuer Free Writing Prospectus conflicted or will
conflict with the information contained in the Registration Statement, Pricing
Prospectus or Prospectus, including any document incorporated by reference
therein and any prospectus supplement deemed to be a part thereof and not
superseded or modified or included or would include an untrue statement of a
material fact or omitted or would omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, the
Company has promptly notified or will promptly notify the Placement Agent (and
the Placement Agent agrees to cease any such use promptly upon such
notification) so that any use of the Issuer Free Writing Prospectus may cease
until it is amended or supplemented and has promptly amended or will promptly
amend or supplement, at its own expense, such Issuer Free Writing Prospectus to
eliminate or correct such conflict, untrue statement or omission. The
foregoing sentence does not apply to statements in or omissions from any Issuer
Free Writing Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Placement Agent specifically for
inclusion therein.
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5.6 To
the extent not available on the Commission’s XXXXX or IDEA system, furnish
promptly to the Placement Agent and to counsel for the Placement Agent a signed
copy of the Registration Statement as originally filed with the Commission, and
of each amendment thereto filed with the Commission, including all consents and
exhibits filed therewith.
5.7 To
the extent not available on the Commission’s XXXXX or IDEA system, to deliver
promptly to the Placement Agent in New York City such number of the following
documents as the Placement Agent shall reasonably request: (i) conformed
copies of the Registration Statement as originally filed with the Commission (in
each case excluding exhibits), (ii) each Preliminary Prospectus, if any
(iii) any Issuer Free Writing Prospectus, (iv) the Prospectus (the
delivery of the documents referred to in clauses (i), (ii), (iii) and (iv)
of this Section 5.7 to be made not later than 10:00 A.M., New York
City time, on the business day following the execution and delivery of this
Agreement), (v) conformed copies of any amendment to the Registration
Statement (excluding exhibits), (vi) any amendment or supplement to the
General Disclosure Package or the Prospectus (the delivery of the documents
referred to in clauses (v) and (vi) of this Section 5.7 to be made not
later than 10:00 A.M., New York City time, on the business day following
the date of such amendment or supplement) and (vii) any document
incorporated by reference in the General Disclosure Package or the Prospectus
(excluding exhibits thereto) (the delivery of the documents referred to in
clause (vi) of this Section
5.7 to be made not later than 10:00 A.M., New York City time, on the
business day following the date of such document).
5.8 To
make generally available to its shareholders as soon as practicable, but in any
event not later than eighteen (18) months after the effective date of each
Registration Statement (as defined in Rule 158(c) of the Rules and Regulations),
an earnings statement of the Company (which need not be audited) complying with
Section 11(a) of the Securities Act and the Rules and Regulations (including, at
the option of the Company, Rule 158); and to furnish to its shareholders as
soon as practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, shareholders’ equity and
cash flows of the Company and its consolidated subsidiaries certified by
independent public accountants) and as soon as possible after each of the first
three fiscal quarters of each fiscal year (beginning with the first fiscal
quarter after the effective date of such Registration Statement), consolidated
summary financial information of the Company for such quarter in reasonable
detail.
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5.9 To
take promptly from time to time such actions as the Placement Agent may
reasonably request to qualify the Units for offering and sale under the
securities or Blue Sky laws of such jurisdictions (domestic or foreign) as the
Placement Agent may designate and to continue such qualifications in effect, and
to comply with such laws, for so long as required to permit the offer and sale
of the Securities in such jurisdictions; provided that the Company shall not be
obligated to qualify as foreign corporations in any jurisdiction in which they
are not so qualified or to file a general consent to service of process in any
jurisdiction.
5.10 To
supply the Placement Agent with copies of all correspondence to and from, and
all documents issued to and by: (i) the Commission in connection with the
registration of the Units under the Securities Act or the Registration
Statement, any Preliminary Prospectus or the Prospectus, or any amendment or
supplement thereto or document incorporated by reference therein; and (ii) FINRA
in connection with the filing of Base Prospectus via FINRA’s COBRADesk system
and FINRA’s review of, and comments relating to, the same.
5.11 Prior
to the Closing Date, to furnish to the Placement Agent, as soon as they have
been prepared, copies of any unaudited interim consolidated financial statements
of the Company for any periods subsequent to the periods covered by the
financial statements appearing in the Registration Statement and the Prospectus,
if any.
5.12 Prior
to the Closing Date, not to issue any press release or other communication
directly or indirectly or hold any press conference with respect to the Company,
its condition, financial or otherwise, or earnings, business affairs or business
prospects (except for routine oral communications regarding the Company’s
business in the ordinary course of its business and consistent with the past
practices of the Company and of which the Placement Agent is notified), without
the prior written consent of the Placement Agent, unless in the judgment of the
Company and its counsel, and after notification to the Placement Agent, such
press release or communication is required by law, in which case the Placement
Agent shall nonetheless be granted a reasonable opportunity review and comment
on such press release or other communication.
5.13 Until
the Placement Agent shall have notified the Company of the completion of the
offering of the Units, that the Company will not, and will cause its affiliated
purchasers (as defined in Regulation M under the Exchange Act) not to,
either alone or with one or more other persons, bid for or purchase, for any
account in which it or any of its affiliated purchasers has a beneficial
interest, any Units or securities underlying such Units or related to such
Units, or attempt to induce any person to purchase any Units or securities
underlying such Units or related to such Units; and not to, and to cause its
affiliated purchasers not to, make bids or purchase for the purpose of creating
actual, or apparent, active trading in or of raising the price of the Units or
securities underlying such Units or related to such Units.
5.14 To
at all times comply with all applicable provisions of the Xxxxxxxx-Xxxxx Act in
effect from time to time.
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5.15 To
apply the net proceeds from the sale of the Units as set forth in the
Registration Statement, the General Disclosure Package and the Prospectus under
the heading “Use of Proceeds.”
5.16 To
use commercially reasonable efforts to list, subject to notice of issuance, the
Shares on the Nasdaq, and effect and maintain the listing of the Common Stock on
the Nasdaq.
5.17 To
use reasonable best efforts to assist the Placement Agent and their counsel with
any filings with FINRA and obtaining clearance from FINRA as to the amount of
compensation allowable or payable to the Placement Agent.
5.18 To
use commercially reasonable efforts to do and perform all things required to be
done or performed under this Agreement by the Company prior to the Closing Date
and to satisfy all conditions precedent to the delivery of the
Units.
6. Payment of
Expenses. The Company agrees to pay, or reimburse if paid by
the Placement Agent, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated: (a) the costs incident to the
authorization, issuance, sale, preparation and delivery of the Units to the
Purchasers and any taxes payable in that connection; (b) the costs incident
to the Registration of the Units under the Securities Act; (c) the costs
incident to the preparation, printing and distribution of the Registration
Statement, the Base Prospectus, any Preliminary Prospectus, any Issuer Free
Writing Prospectus, the General Disclosure Package, the Prospectus, any
amendments, supplements and exhibits thereto or any document incorporated by
reference therein and the costs of printing, reproducing and distributing any
transaction document by mail, overnight courier or other means of
communications; (d) subject to the limit set forth in (i) below, the
reasonable and documented fees and expenses (including related fees and expenses
of counsel to the Placement Agent) incurred in connection with securing any
required review by FINRA of the terms of the sale of the Units and any filings
made with FINRA; (e) any applicable listing, quotation or other fees;
(f) the fees and expenses of qualifying the Units under the securities laws
of the several jurisdictions as provided for herein and of preparing, printing
and distributing wrappers, Blue Sky Memoranda; (g) the cost of preparing
and printing stock certificates; (h) all fees and expenses of the registrar
and transfer agent of the Units, Shares and Warrants; (i) the reasonable
and documented fees, disbursements and expenses of counsel to the Placement
Agent not to exceed, along with any fees and expenses incurred in connection
with (d) above, $50,000 and (j) all other costs and expenses incident to
the offering of the Units or the performance of the obligations of the Company
under this Agreement (including, without limitation, the fees and expenses of
the Company’s counsel and the Company’s independent accountants and the travel
and other reasonable, documented expenses incurred by Company personnel in
connection with any “road show” including, without limitation, any expenses
advanced by the Placement Agent on the Company’s behalf (which will be promptly
reimbursed) and any stock transfer taxes incurred in connection with the
transfer of securities from the Company to the Purchasers); provided that, except to the
extent otherwise provided in this Section 6 and in Sections 8 and 10
hereof, the Placement Agent shall pay its own costs and expenses.
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7. Conditions to the Obligations of the Placement Agent
and
the Purchasers, and the Sale of the
Units. The respective obligations of the Placement Agent
hereunder and the Purchasers under the Subscription Agreements, and the Closing
of the sale of the Units, are subject to the accuracy, when made and as of the
Applicable Time and on the Closing Date, of the representations and warranties
of the Company contained herein, to the accuracy of the statements of the
Company made in any certificates pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder, and to each of the
following additional terms and conditions:
7.1 No
stop order suspending the effectiveness of the Registration Statement or any
part thereof, preventing or suspending the use of any Base Prospectus, any
Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus
or any part thereof shall have been issued and no proceedings for that purpose
or pursuant to Section 8A under the Securities Act shall have been
initiated or threatened by the Commission, and all requests for additional
information on the part of the Commission (to be included or incorporated by
reference in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to the reasonable satisfaction of the Placement Agent;
each Issuer Free Writing Prospectus, if any, and the Prospectus shall have been
filed with the Commission within the applicable time period prescribed for such
filing by, and in compliance with, the Rules and Regulations and in accordance
with Section 5.1 hereof; and FINRA shall have raised no objection to the
fairness and reasonableness of the terms of this Agreement or the transactions
contemplated hereby.
7.2 The
Placement Agent shall not have discovered and disclosed to the Company on or
prior to the Closing Date that the Registration Statement or any amendment or
supplement thereto contains an untrue statement of a fact which, in the opinion
of counsel for the Placement Agent, is material or omits to state any fact
which, in the opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading, or that
the General Disclosure Package, any Issuer Free Writing Prospectus or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of fact which, in the opinion of such counsel, is material or omits to state any
fact which, in the opinion of such counsel, is material and is necessary in
order to make the statements, in the light of the circumstances in which they
were made, not misleading.
7.3 All
corporate proceedings and other legal matters incident to the authorization,
form and validity of each of this Agreement, the Subscription Agreements, the
Escrow Agreement, the Units (including the Common Stock and Warrants included
therein), the Registration Statement, the General Disclosure Package, each
Issuer Free Writing Prospectus, if any, and the Prospectus and all other legal
matters relating to this Agreement and the transactions contemplated hereby
shall be reasonably satisfactory in all material respects to counsel for the
Placement Agent, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to
pass upon such matters.
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7.4 The
Placement Agent shall have received the favorable written opinion and negative
assurances of Xxxxx & Xxxxxxx LLP, legal counsel for the Company, dated as
of the Closing Date addressed to the Placement Agent, in the form attached
hereto as Exhibit C.
7.5 At
the time of the execution of this Agreement, the Placement Agent shall have
received from Imowitz Xxxxxx & Co., LLP a letter, addressed to the Placement
Agent, executed and dated such date, in form and substance reasonably
satisfactory to the Placement Agent: (i) confirming that they are an
independent registered accounting firm with respect to the Company within the
meaning of the Securities Act and the Rules and Regulations and PCAOB and
(ii) stating the conclusions and findings of such firm, of the type
ordinarily included in accountants’ “comfort letters” to underwriters, with
respect to the financial statements and certain financial information contained
or incorporated by reference in the Registration Statement, the General
Disclosure Package and the Prospectus.
7.6 On
the effective date of any post-effective amendment to any Registration Statement
and on the Closing Date, the Placement Agent shall have received a letter (the
“Bring-Down Letter”)
from Imowitz Xxxxxx & Co., LLP addressed to the Placement Agent and to the
Company’s Board of Directors and dated the Closing Date confirming, as of the
date of the Bring-Down Letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the General Disclosure Package and the Prospectus, as
the case may be, as of a date not more than three (3) business days prior
to the date of the Bring-Down Letter), the conclusions and findings of such
firm, of the type ordinarily included in accountants’ “comfort letters” to
underwriters, with respect to the financial information and other matters
covered by its letter delivered to the Placement Agent concurrently with the
execution of this Agreement pursuant to Section 7.5 hereof.
7.7 The
Company shall have furnished to the Placement Agent and the Purchasers a
certificate, dated the Closing Date, of its Chairman of the Board and Chief
Executive Officer and Chief Financial Officer stating that: (i) such
officers have carefully examined the Registration Statement, the General
Disclosure Package, any Permitted Free Writing Prospectus and the Prospectus
and, in their opinion, the Registration Statement and each amendment thereto, at
the Applicable Time and as of the date of this Agreement and as of the Closing
Date did not include any untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and the General Disclosure Package, as of the
Applicable Time and as of the Closing Date, any Permitted Free Writing
Prospectus as of its date and as of the Closing Date, the Prospectus and each
amendment or supplement thereto, as of the respective date thereof and as of the
Closing Date, did not include any untrue statement of a material fact and did
not omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances in which they were made, not
misleading, (ii) since the date of the final prospectus supplement, no
event has occurred which should have been set forth in a supplement or amendment
to the Registration Statement, the General Disclosure Package or the Prospectus,
(iii) to their knowledge as of the Closing Date, the representations and
warranties of the Company in this Agreement are true and correct in all material
respects, except that any such representation or warranty shall be true and
correct in all respects where such representation or warranty is qualified with
respect to materiality or Material Adverse Effect, and the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date, and (iv) there has not
been, subsequent to the date of the most recent unaudited financial statements
included or incorporated by reference in the General Disclosure Package, any
Material Adverse Effect, except as set forth in the Prospectus.
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7.8 Since
the date of the latest unaudited financial statements included in the General
Disclosure Package or incorporated by reference in the General Disclosure
Package as of the date hereof: (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 loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth in the General Disclosure Package, the effect of which, in any such case
described in clause (i) or (ii) of this Section 7.8, is, in the
judgment of the Placement Agent, makes it impracticable or inadvisable to
proceed with the sale or delivery of the Units on the terms and in the manner
contemplated in the General Disclosure Package.
7.9 No
action shall have been taken and no law, statute, rule, regulation or order
shall have been enacted, adopted or issued by any governmental agency or body
which would prevent the issuance or sale of the Units or materially and
adversely affect the business or operations of the Company; and no injunction,
restraining order or order of any other nature by any federal or state court of
competent jurisdiction shall have been issued which would prevent the issuance
or sale of the Units or materially and adversely affect the business or
operations of the Company.
7.10 Subsequent
to the execution and delivery of this Agreement there shall not have occurred
any of the following: (i) trading in securities generally on the New York
Stock Exchange, Nasdaq or the NYSE Amex or in the over-the-counter market, or
trading in any securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or materially limited, or
minimum or maximum prices or maximum range for prices shall have been
established on any such exchange or such market by the Commission, by such
exchange or market or by any other regulatory body or governmental authority
having jurisdiction, (ii) a banking moratorium shall have been declared by
Federal or state authorities or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States,
(iii) the United States shall have become engaged in hostilities, other
than current hostilities, or the subject of an act of terrorism, or there shall
have been an outbreak of or escalation in hostilities involving the United
States, or there shall have been a declaration of a national emergency or war by
the United States or (iv) there shall have occurred such a material adverse
change in general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States shall be
such) as to make it, in the judgment of the Placement Agent, impracticable or
inadvisable to proceed with the sale or delivery of the Units on the terms and
in the manner contemplated in the General Disclosure Package and the
Prospectus.
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7.11 The
Company shall have filed a notification for the listing of the Securities with
the Nasdaq and shall have received no objection thereto from the
Nasdaq.
7.12 The
Company shall have entered into the Escrow Agreement and such agreement shall be
in full force and effect.
7.13 The
Company shall have entered into Subscription Agreements with each of the
Purchasers and such agreements shall be in full force and effect.
7.14 The
Placement Agent shall have received clearance from FINRA as to the amount of
compensation allowable or payable to the Placement Agent as described in the
Pricing Prospectus.
7.15 The
Placement Agent shall have received the PA Warrant, duly executed by the
Company.
7.16 Prior
to the Closing Date, the Company shall have furnished to the Placement Agent
such further customary information, opinions, certificates (including a
Secretary’s Certificate), letters or documents as the Placement Agent shall have
reasonably requested.
All
opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Placement Agent.
8. Indemnification and
Contribution.
8.1 The
Company shall indemnify and hold harmless the Placement Agent, its affiliates
and each of its directors, officers, members, managers, employees,
representatives and agents, and each of its and their respective directors,
officers, members, employees, representatives and agents, and each person, if
any, who controls the Placement Agent within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act (collectively the
“Placement Agent Indemnified
Parties ,”and each a “Placement Agent Indemnified
Party ”) against any loss, claim, damage, expense or liability whatsoever
(or any action, investigation or proceeding in respect thereof), joint or
several, to which such Placement Agent Indemnified Party may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
expense, liability, action, investigation or proceeding arises out of or is
based upon (a) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, any Issuer Free Writing
Prospectus, any “issuer information” filed or required to be filed pursuant to
Rule 433(d) of the Rules and Regulations, any Registration Statement
or the Prospectus, or in any amendment or supplement thereto or document
incorporated by reference therein, or (b) the omission or alleged omission
to state in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any
“issuer information” filed or required to be filed pursuant to
Rule 433(d) of the Rules and Regulations, any Registration Statement
or the Prospectus, or in any amendment or supplement thereto or document
incorporated by reference therein, a material fact required to be stated therein
or necessary to make the statements therein not misleading or (c) any
breach of the representations and warranties of the Company contained herein or
failure of the Company to perform its obligations hereunder or pursuant to any
law (provided, that the Company shall not
be liable in the case of any matter covered by this subclause (c) to the
extent that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, expense or liability resulted
directly from any such act or failure to act undertaken or omitted to be taken
by such Placement Agent Indemnified Party through its gross negligence or
willful misconduct), and shall reimburse each Placement Agent Indemnified Party
promptly upon demand for all legal fees or other expenses and disbursements
reasonably incurred by that Placement Agent Indemnified Party in connection with
investigating, or preparing to defend, or defending against, or appearing as a
third party witness in respect of, or otherwise incurred in connection with, any
such loss, claim, damage, expense, liability, action, investigation or
proceeding, as such fees and expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, expense or liability arises out of or is based upon an untrue statement
or alleged untrue statement in, or omission or alleged omission from any
Preliminary Prospectus, any Registration Statement or the Prospectus, or any
such amendment or supplement thereto, or any Issuer Free Writing Prospectus made
in reliance upon, and in conformity with, written information furnished to the
Company by the Placement Agent specifically for inclusion therein, which
information the parties hereto agree is limited solely and exclusively to the PA
Information. This indemnity agreement is not exclusive and will be in
addition to any liability which the Company might otherwise have and shall not
limit any rights or remedies which may otherwise be available at law or in
equity to each Placement Agent Indemnified Party (including, without limitation,
those provided for in that certain engagement letter agreement, dated May 8,
2009, between the Company and the Placement Agent).
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8.2 The
Placement Agent shall indemnify and hold harmless the Company and its directors,
its officers who signed the Registration Statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act (collectively the “Company Indemnified
Parties “and each a “Company Indemnified Party ”)
against any loss, claim, damage, expense or liability whatsoever (or any action,
investigation or proceeding in respect thereof), joint or several, to which such
Company Indemnified Party may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, expense, liability, action,
investigation or proceeding arises out of or is based upon: (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any Issuer Free Writing Prospectus, any “issuer
information” filed or required to be filed pursuant to Rule 433(d) of the Rules
and Regulations, any Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or (ii) the omission or alleged omission
to state in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any
“issuer information” filed or required to be filed pursuant to Rule 433(d) of
the Rules and Regulations, any Registration Statement or the Prospectus, or in
any amendment or supplement thereto, a material fact required to be stated
therein or necessary to make the statements therein not misleading, but in each
case only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon, and in conformity with,
written information furnished to the Company by the Placement Agent specifically
for inclusion therein (which information the parties hereto agree is limited
solely and exclusively to the PA Information), and shall reimburse the Company
promptly upon demand for any legal or other expenses reasonably incurred by such
party in connection with investigating or preparing to defend or defending
against or appearing as third party witness in connection with any such loss,
claim, damage, liability, action, investigation or proceeding, as such fees and
expenses are incurred. Notwithstanding the provisions of this
Section 8.2, in no event shall any indemnity by the Placement Agent under
this Section 8.2 exceed the total compensation received by the Placement Agent
in accordance with Section 2.5(a) hereof.
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8.3 Promptly
after receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8,
notify such indemnifying party in writing of the commencement of that
action; provided,
however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 8 except
to the extent it has been materially prejudiced by such failure; and, provided, further, that the
failure to notify an indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this
Section 8. If any such action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense of such action with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such action, except
as provided herein, the indemnifying party shall not be liable to the
indemnified party under Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense of
such action other than reasonable costs of investigation; provided, however, that any
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense of such action but the fees and
expenses of such counsel (other than reasonable costs of investigation) shall be
at the expense of such indemnified party unless: (i) the employment thereof
has been specifically authorized in writing by the Company in the case of a
claim for indemnification under Section 8.1 or Section 2.6 or the
Placement Agent in the case of a claim for indemnification under
Section 8.2, (ii) representation of both parties by the same counsel would
be inappropriate due to actual or potential conflicts of interests between them
(which such judgment the indemnified person shall have reasonably concluded in
good faith), or (iii) the indemnifying party has failed to assume the
defense of such action and employ counsel reasonably satisfactory to the
indemnified party within a reasonable period of time after notice of the
commencement of the action or the indemnifying party does not diligently defend
the action after assumption of the defense, in which case, if such indemnified
party notifies the indemnifying party in writing that it elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of (or, in the case of a
failure to diligently defend the action after assumption of the defense, to
continue to defend) such action on behalf of such indemnified party and the
indemnifying party shall be responsible for legal or other expenses subsequently
incurred by such indemnified party in connection with the defense of such
action; provided, however, that the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for all such indemnified parties (in addition to any local counsel), which
firm shall be designated in writing by the Placement Agent if the indemnified
parties under this Section 8 consist of any Placement Agent Indemnified
Party or by the Company if the indemnified parties under this Section 8
consist of any Company Indemnified Parties. Subject to this
Section 8.3, the amount payable by an indemnifying party under
Section 8 shall include, but not be limited to, (x) reasonable legal
fees and expenses of counsel to the indemnified party and any other expenses in
investigating, or preparing to defend or defending against, or appearing as a
third party witness in respect of, or otherwise incurred in connection with, any
action, investigation, proceeding or claim, and (y) all amounts paid in
settlement of any of the foregoing. No indemnifying party shall, without
the prior written consent of the indemnified parties, settle or compromise or
consent to the entry of judgment with respect to any pending or threatened
action or any claim whatsoever, in respect of which indemnification or
contribution could be sought under this Section 8 (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent: (i) includes an unconditional release of
each indemnified party in form and substance reasonably satisfactory to such
indemnified party from all liability arising out of such action or claim and
(ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
Subject to the provisions of the following sentence, no indemnifying party
shall be liable for settlement of any pending or threatened action or any claim
whatsoever that is effected without its written consent (which consent shall not
be unreasonably withheld or delayed), but if settled with its written consent,
if its consent has been unreasonably withheld or delayed or if there be a
judgment for the plaintiff in any such matter, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment. In addition, if at any
time an indemnified party shall have requested that an indemnifying party
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated herein effected without its written consent if:
(i) such settlement is entered into more than forty-five (45) days
after receipt by such indemnifying party of the request for reimbursement,
(ii) such indemnifying party shall have received notice of the terms of
such settlement at least thirty (30) days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed
such indemnified party in accordance with such request prior to the date of such
settlement.
Capstone
Investments
July 22, 2009
Page 31 of 37
8.4 If
the indemnification provided for in this Section 8 is unavailable or
insufficient to hold harmless an indemnified party under Section 8.1 or
Section 8.2, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid, payable or otherwise incurred
by such indemnified party as a result of such loss, claim, damage, expense or
liability (or any action, investigation or proceeding in respect thereof), as
incurred: (i) 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 hand from the Offering, or (ii) if the allocation
provided by clause (i) of this Section 8.4 is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) of this Section 8.4 but
also the relative fault of the Company on the one hand and the Placement Agent
on the other with respect to the statements, omissions, acts or failures to act
which resulted in such loss, claim, damage, expense or liability (or any action,
investigation or proceeding in respect thereof) as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Placement Agent on the other with respect to the Offering
shall be deemed to be in the same proportion as the total net proceeds from the
Offering purchased under this Agreement (before deducting expenses) received by
the Company bear to the total cash fee actually received by the Placement Agent,
in each case as set forth in the table on the cover page of the Prospectus.
The relative fault of the Company on the one hand and the Placement Agent
on the other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company on the one hand or the Placement Agent on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement, omission, act or failure to act; provided that the parties
hereto agree that the written information furnished to the Company by the
Placement Agent for use in any Preliminary Prospectus, any Registration
Statement or the Prospectus, or in any amendment or supplement thereto, consists
solely of the PA Information. The Company and the Placement Agent agree
that it would not be just and equitable if contributions pursuant to
this Section 8.4 were to be determined by pro rata allocation or by
any other method of allocation that 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, damage, expense, liability,
action, investigation or proceeding referred to above in
this Section 8.4 shall be deemed to include, for purposes of
this Section 8.4, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating, preparing to defend or
defending against or appearing as a third party witness in respect of, or
otherwise incurred in connection with, any such loss, claim, damage, expense,
liability, action, investigation or proceeding. Notwithstanding the
provisions of this Section 8.4, the Placement Agent shall be required to
contribute any amount in excess of the total cash compensation received by the
Placement Agent in accordance with Section 2.5(a) hereof, less the amount of any
damages which the Placement Agent has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement, omission or alleged omission,
act or alleged act or failure to act or alleged failure to act. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
Capstone
Investments
July 22, 2009
Page 32 of 37
9. Termination. The
obligations of the Placement Agent and the Purchasers hereunder and under the
Subscription Agreements may be terminated by the Placement Agent, in its
absolute discretion by notice given to the Company prior to delivery of and
payment for the Units if, prior to that time, any of the events described
in Sections 7.1, 7.2, 7.8, 7.9 or 7.10 have occurred or if the Purchasers
shall decline to purchase the Units for any reason permitted under this
Agreement or the Subscription Agreements.
Capstone
Investments
July 22, 2009
Page 33 of 37
10. Reimbursement of the Placement
Agent’s
Expenses. Notwithstanding anything to the contrary in this
Agreement, if: (a) this Agreement shall have been terminated pursuant to
Section 9, (b) the Company shall fail to tender the Units or any other of
the Securities for delivery to the Purchasers for any reason not permitted under
the Subscription Agreements, (c) the Purchasers shall decline to purchase
the Units for any reason permitted under the Subscription Agreements or
(d) the sale of the Units is not consummated because any condition to the
obligations of the Purchasers or the Placement Agent set forth herein is not
satisfied or because of the refusal, inability or failure on the part of the
Company to perform any agreement herein or to satisfy any condition or to comply
with the provisions hereof, then in addition to the payment of amounts in
accordance with Section 6, the Company shall reimburse the Placement Agent
for the reasonable and documented fees and expenses of the Placement Agent’s
counsel (up to $50,000) and for such other accountable out-of-pocket expenses as
shall have been reasonably incurred by the Placement Agent in connection with
this Agreement and the proposed purchase of the Units, and promptly upon demand,
the Company shall pay the full amount thereof to the Placement
Agent.
11. Absence of Fiduciary
Relationship. The Company acknowledges and agrees
that:
(a) The
Placement Agent’s responsibility to the Company (including, for these purposes,
any Company Indemnified Party) is solely contractual in nature, the Placement
Agent have been retained solely to act as a placement agent in connection with
the Offering and no fiduciary, advisory or agency relationship between the
Company (or any Company Indemnified Party) and the Placement Agent has been
created in respect of any of the transactions contemplated by this Agreement,
irrespective of whether the Placement Agent has advised or is advising the
Company on other matters;
(b) the
price of the Units set forth in this Agreement was established by the Company
following discussions and arms-length negotiations with the Placement Agent
and/or the Purchasers, and the Company is capable of evaluating and
understanding, and understands and accepts, the terms, risks and conditions of
the transactions contemplated by this Agreement;
(c) the
Company is responsible for making its own independent judgments with respect to
the transactions contemplated by this Agreement, and that any opinions or views
expressed by the Placement Agent to the Company regarding such transactions,
including but not limited to any opinions or views with respect to the price or
market for the Company’s securities, do not constitute advice or recommendations
to the Company;
(d) it
has been advised that the Placement Agent and their affiliates are engaged in a
broad range of transactions which may involve interests that differ from those
of the Company and that the Placement Agent has no obligation to disclose such
interests and transactions to the Company by virtue of any fiduciary, advisory,
agency or similar relationship;
Capstone
Investments
July 22, 2009
Page 34 of 37
(e) The
Placement Agent hereby expressly disclaims any fiduciary or similar obligations
to the Company or Company Indemnified Party, either in connection with the
transactions contemplated by this Agreement or any matters leading up to such
transactions, and the Company hereby confirms its understanding and agreement to
that effect; and
(f) it
(on behalf of itself an each Company Indemnified Party) waives, to the fullest
extent permitted by law, any claims it may have against the Placement Agent for
breach of fiduciary duty or alleged breach of fiduciary duty and agrees that the
Placement Agent shall have no liability (whether direct or indirect) to the
Company in respect of such a fiduciary duty claim or to any person asserting a
fiduciary duty claim on behalf of or in right of the Company, including
stockholders, employees or creditors of the Company or any other Company
Indemnified Party.
12. Successors; Persons Entitled
to Benefit of
Agreement. This Agreement shall inure to the benefit of and be
binding upon the Placement Agent, the Company, and their respective successors
and assigns. This Agreement shall also inure to the benefit of the
Purchasers, and each of their respective successors and assigns, which shall be
third party beneficiaries hereof. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person or entity, other
than the persons and entities mentioned in the preceding sentences, 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 the representations,
warranties, covenants, agreements and indemnities of the Company contained in
this Agreement shall also be for the benefit of the Placement Agent Indemnified
Parties and the indemnities of the Placement Agent shall be for the benefit of
the Company Indemnified Parties.
13. Survival of Indemnities,
Representations, Warranties, etc. The respective indemnities,
covenants, agreements, representations, warranties and other statements of the
Company and the Placement Agent, as set forth in this Agreement or made by them
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Placement Agent, the
Company, the Purchasers or any person controlling any of them and shall survive
delivery of and payment for the Units. Notwithstanding any
termination or purported termination of this Agreement, including without
limitation any termination pursuant to Sections 9, the indemnity and
contribution agreements contained in Section 8 and the covenants,
representations, warranties set forth in this Agreement shall not terminate and
shall remain in full force and effect at all times.
14. Notices. All
communications hereunder, except as may be otherwise specifically provided
herein, shall be in writing, and:
Capstone
Investments
July 22, 2009
Page 35 of 37
(a) if
sent to the Placement Agent, shall be mailed, delivered, or faxed and confirmed
in writing, to Capstone Investments, 00000 Xxxx Xxxxx Xxxxx, Xxxxx 000, Xxx
Xxxxx, Xxxxxxxxxx 00000, Fax Number: (000) 000-0000, Attention: General Counsel,
in each case, with a copy (which shall not constitute notice) to Ellenoff
Xxxxxxxx & Schole LLP, 000 Xxxx 00xx Xxxxxx,
00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Fax Number: (000) 000-0000, Attention:
Xxxxxxxx X. Xxxxxxxxxx, Esq.; and
(b) if
sent to the Company shall be mailed, delivered, or faxed and confirmed in
writing to the Company and its counsel at the addresses set forth in the
Registration Statement, with a copy (which shall not constitute notice) to Xxxxx
& Xxxxxxx LLP, 000 Xxxxxxxxxx Xxxxxx, XX, Xxxxxxxxxx, XX 00000, Fax Number:
(000) 000-0000, Attention: Xxxxxx X. Xxxxxxx, Esq.
Any such
notices and other communications shall take effect at the time of receipt
thereof.
15. Definition of “Business
Day”. For purposes of this Agreement, “business day” means any
day on which the New York Stock Exchange, Inc. is open for trading.
16. Governing Law; Venue; Waiver
of Jury Trial. This Agreement shall be deemed to have been
executed and delivered in New York and both this Agreement and the transactions
contemplated hereby shall be governed as to validity, interpretation,
construction, effect, and in all other respects by the laws of the State of New
York, without regard to the conflicts of laws principals thereof (other than
Section 5-1401 of The New York General Obligations Law). Each of the
Placement Agent and the Company: (a) agrees that any legal suit, action or
proceeding arising out of or relating to this Agreement and/or the transactions
contemplated hereby shall be instituted exclusively in the Supreme Court of the
State of New York, New York County, or in the United States District Court for
the Southern District of New York, (b) waives any objection which it may have or
hereafter to the venue of any such suit, action or proceeding, and (c)
irrevocably consents to the jurisdiction of Supreme Court of the State of New
York, New York County, or in the United States District Court for the Southern
District of New York in any such suit, action or proceeding. Each of
the Placement Agent and the Company further agrees to accept and acknowledge
service of any and all process which may be served in any such suit, action or
proceeding in the Supreme Court of the State of New York, New York County, or in
the United States District Court for the Southern District of New York and
agrees that service of process upon the Company mailed by certified mail to the
Company’s address or delivered by Federal Express via overnight delivery shall
be deemed in every respect effective service of process upon the Company, in any
such suit, action or proceeding, and service of process upon the Placement Agent
mailed by certified mail to the Placement Agent’s address or delivered by
Federal Express via overnight delivery shall be deemed in every respect
effective service process upon the Placement Agent, in any such suit, action or
proceeding. THE COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST
EXTENT PERMITTED BY LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND
CREDITORS) HEREBY WAIVES ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY CLAIM BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION STATEMENT, THE
PROSPECTUS AND THE GENERAL DISCLOSURE PACKAGE.
Capstone
Investments
July 22, 2009
Page 36 of 37
17. PA Information. The
parties hereto acknowledge and agree that, for all purposes of this Agreement,
the term “PA
Information” consists solely of the following information in the
Prospectus: (i) the second to last paragraph on the front cover page of the
Prospectus concerning the terms of the offering by the Placement Agent; and
(ii) the statements concerning the Placement Agent contained in the second
paragraph under the heading “Plan of Distribution” contained in the
Prospectus.
18. Partial
Unenforceability. The invalidity or unenforceability of any
section, paragraph, clause or provision of this Agreement shall not affect the
validity or enforceability of any other section, paragraph, clause or provision
hereof. If any section, paragraph, clause or provision of this Agreement
is for any reason determined to be invalid or unenforceable, there shall be
deemed to be made such minor changes (and only such minor changes) as are
necessary to make it valid and enforceable.
19. Entire Agreement. This Agreement constitutes
the entire agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof.
20. Pronouns. In
this Agreement, the masculine, feminine and neuter genders and the singular and
the plural include one another.
21. Headings. The
section headings in this Agreement are for the convenience of the parties only
and will not affect the construction or interpretation of this
Agreement.
22. Amendments. This
Agreement may be amended or modified, and the observance of any term of this
Agreement may be waived, only by a writing signed by the Company and the
Placement Agent.
23. Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument. Delivery of a signed counterpart of this
Agreement by facsimile or other electronic transmission shall constitute valid
and sufficient delivery thereof.
[Signature
Page Follows]
Capstone
Investments
July 22, 2009
Page 37 of 37
If the
foregoing correctly sets forth your understanding, please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
| Very truly yours, | |||
| NEW GENERATION BIOFUELS HOLDINGS, INC. | |||
|
By:
|
/s/ Xxxx X. Xxxxxxxxx | ||
|
Name:
Xxxx X. Xxxxxxxxx
|
|||
|
Title:
President, Chief Executive Officer and Chief Financial
Officer
|
|||
Accepted
as of the date first written above:
CAPSTONE
INVESTMENTS
By: /s/ Xxxxx
Xxxxxxx
Name:
Xxxxx Xxxxxxx
Title: Director
of Corporate Finance
[Signature
Page to Placement Agency Agreement]
SCHEDULE
A
GENERAL
USE FREE WRITING PROSPECTUSES
None.
EXHIBIT
A
FORM
OF SUBSCRIPTION AGREEMENT
[attached
hereto]
EXHIBIT
B
FORM
OF WARRANT
[attached
hereto]
EXHIBIT
C
LEGAL
OPINIONS
We are of
the opinion that:
(a)
The Company is validly existing and in good standing as a corporation as of the
date of the Florida Certificate of Status under the laws of the State of
Florida. The Company has the corporate power to own, lease and
operate its current properties and to conduct its business as described in the
Registration Statement, the Prospectus and the General Disclosure
Package. The Company is qualified to do business as a foreign
corporation under the laws of the State of Maryland as of the date of the
Maryland Certificate.
(b)
The Agreement, Subscription Agreements, Offered Warrants and Placement Agent
Warrant (the “Offering
Documents”) have been duly authorized, executed and delivered by the
Company. The Company has corporate power and corporate authority to
execute and deliver the Offering Documents. The execution, delivery
and performance of the Offering Documents by the Company have been duly
authorized by all necessary corporate action.
(c)
Issuance of the Securities has been duly authorized by the
Company. When issued against payment therefor in accordance with the
provisions of the Subscription Agreements, the Offered Shares will be validly
issued, fully paid and non-assessable. When issued against payment
therefor in accordance with the provisions of the Subscription Agreements and
the Agreement, the Offered Warrants and the Placement Agent Warrant will
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms. The Board of Directors has
duly adopted resolutions reserving 8,000,000 shares of Common Stock for issuance
at the Closing or upon exercise of the Offered Warrants and the Placement Agent
Warrant.
When issued and delivered upon valid exercise of the Offered Warrants and
payment of the applicable exercise price, the Warrant Shares will be validly
issued, fully paid and non-assessable. When issued and delivered upon
valid exercise of the Placement Agent Warrant and payment of the applicable
exercise price, the Placement Agent Warrant shares will be validly issued, fully
paid and non-assessable. No holder of outstanding securities of the
Company has any statutory preemptive right under the Corporation Act, any
preemptive right under the Articles or the Bylaws or, to our knowledge, any
contractual right to subscribe for any of the Offered Securities.
(d) Based
solely upon the Notice of Effectiveness of the Registration Statement on the
Securities and Exchange Commission’s (the “SEC’s”) XXXXX system,
the Registration Statement has become effective under the Securities Act, and to
our knowledge, no stop order suspending the effectiveness of the Registration
Statement or suspending or preventing the use of the Prospectus has been issued
and no proceedings for that purpose have been instituted or are threatened by
the SEC. The required filings of the Prospectus pursuant to Rule
424(b) promulgated pursuant to the Securities Act have been made in the manner
and within the time period required by Rule 424(b).
(e)
The Registration Statement and the Prospectus (other than the financial
statements and supporting schedules and other financial information included
therein, as to which we express no opinion) comply as to form in all material
respects with the requirements of the Securities Act. The Company’s
filings (and any other documents) incorporated by reference in the Registration
Statement and the Prospectus (other than the financial statements and supporting
schedules and other financial information included therein, as to which we
express no opinion), when they were filed with the SEC, complied as to form in
all material respects with the requirements of the Exchange Act.
(f) The
information in the Prospectus under the caption “Description of
Securities” (excluding unissued securities described only in the Base
Prospectus) to the extent that such information constitutes matters of law or
legal conclusions, has been reviewed by us and is accurate in all material
respects. The Offered Securities conform as to legal matters in all
material respects to the descriptions thereof set forth in the Prospectus under
the caption “Description of Securities.”
(g) The
execution, delivery and performance, including the issuance and sale of the
Units at the Closing, on the date hereof by the Company of the Offering
Documents do not (i) violate the Corporation Act or the Articles or Bylaws,
(ii) violate any provision of Applicable Federal Law or any provision of
Applicable State Law or (iii) breach or constitute a default under any of
the Company Contracts (except that we express no opinion with respect to any
matters that would require a mathematical calculation or a financial or
accounting determination).
(h) No
approval or consent of, or registration, authorization or qualification or
filing with, any federal governmental agency or any New York or Florida
governmental agency is required to be obtained or made by the Company under
Applicable Federal Law, Applicable State Law or the Corporation Act in
connection with the execution, delivery and performance on the date hereof by
the Company of the Agreement or the Subscription Agreement, including the
issuance of the Securities. This opinion does not address such
consents, approvals, authorizations, registrations or qualifications as may be
required under the Securities Act relating to the Offered Securities (certain
matters which respect to which are addressed elsewhere) or such
consents, approvals, authorizations, registrations or qualifications as may be
required under the rules and regulations of the Financial Industry Regulatory
Authority, Inc. (“FINRA”) and under
state securities or Blue Sky laws in connection with the purchase and sale of
the Units (as to which we express no opinion).
(i) The
Company is not, and will not be upon giving effect to the Offering, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.
(j) The
Offered Securities have been authorized for listing by the Nasdaq Capital
Market.
Very
truly yours,
XXXXX
& XXXXXXX LLP
[Negative
Assurance Letter]
Subject
to the foregoing, we confirm to you that, on the basis of the information we
gained in the course of performing the services referred to above, no facts have
come to our attention that cause us to believe that:
(i)
the Registration Statement, as of the date of the Agreement, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading;
(ii)
the Prospectus, as of its date or the date hereof, contained or contains an
untrue statement of a material fact or omitted or omits 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;
(iii) the
Pricing Disclosure Package, as of 4:00 P.M. (New York City time) on July 22,
2009, (which you have informed us is a time prior to the time of the first sale
of the Offered Securities), insofar as it relates to the offering of the Offered
Securities, contained an untrue statement of a material fact or omitted 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;
(iv) there
are any legal or governmental proceedings pending or threatened against the
Company that are required to be disclosed in the Registration Statement, the
Pricing Disclosure Package, or the Prospectus, other than those disclosed
therein; or
(v) there
are any contracts or documents of a character required to be described in the
Registration Statement, the Pricing Disclosure Package, or the Prospectus or to
be filed as exhibits to the Registration Statement that are not described or
referred to therein or so filed;
provided that in making the
foregoing statements, we do not express any belief with respect to patent or
other intellectual property matters or with respect to the financial statements
and supporting schedules and other financial or accounting information and data
derived from such financial statements and schedules or the books and records of
the Company or assessments of or reports on the effectiveness of
internal control over financial reporting contained or incorporated by reference
in or omitted from the Registration Statement, the Pricing Disclosure Package,
or the Prospectus.
Very
truly yours,
XXXXX
& XXXXXXX LLP
