MALIBU MINERALS, INC. PLACEMENT AGENT AGREEMENT
International
Capital Partners ▇▇
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▇▇▇▇▇ ▇▇
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
June
29, 2007
Ladies
and Gentlemen:
This
Placement Agent Agreement (the “Agreement”)
confirms the retention by Malibu Minerals, Inc., a Nevada corporation (“MMI” or
the “Company”), of International Capital Partners SA (“ICP”
or
the
“Placement Agent”;
the
Company and ICP shall be collectively referred to as the “Parties”),
to
act as the sales agent, on a best efforts basis, in connection with the
Placement (as defined below) for IOGI, on the terms set forth below.
MMI
proposes to offer and sell in a Private Placement Offering (the “PPO”
or
the
“Placement”)
shares
of common stock of MMI, $0.001 par value per share (the “Common
Stock”
or
the
“Shares”),
having an aggregate purchase price (“Purchase
Price”)
of up
to $5,000,000.
The PPO
offering will be made on a “best efforts, no minimum (the “Minimum Offering
Amount), $5,000,000 maximum basis (the “Maximum Offering Amount). The Shares
will be offered and sold in accordance with Regulation S of the Securities
Act
of 1933, as amended (the “1933 Act”), and Rule 903(b)(3) promulgated thereunder,
although the Company reserves the right to expand the Placement, at some future
time, to include offers and sales to US Persons that comply with Section 4(2)
and/or Regulation D under the 1933 Act. ICP will act as Placement Agent for
the
Shares.
The
Purchase Price per Share shall be $0.90.
The
Private Placement Memorandum to be used in connection with the PPO (the
“Memorandum”),
as it
may be amended or supplemented from time to time, and the forms of the
Subscription Agreement (the “Subscription
Agreement”),
investors registration rights agreement (the “Registration
Rights Agreement”),
and
Confidential Prospective Purchaser Questionnaire (the “Questionnaire”)
to be
entered into by and between the Company and each subscriber for the Placement
(the “Subscribers”)
and
the exhibits which are part of the Memorandum, Subscription Agreement,
Questionnaire and Registration Rights Agreement are collectively referred to
herein as the “Offering
Documents.”
The
Offering Documents, together with (i) this Agreement, (ii) the Escrow Agreement
(as defined in Section (b)(iv)(vi)(B)(viii)
hereof),
and (iii) any exhibits, schedules, supplements and appendices which are part
of
the Offering Documents or this Agreement are collectively referred to herein
as
the “Transaction
Documents.”
The
Company will deliver to ICP a reasonable number of copies of the Transaction
Documents in form and substance satisfactory to ICP and its
counsel.
Each
Subscriber will be required to deliver, among other things, executed copies
of
the Subscription Agreement, the Registration Rights Agreement and the
Questionnaire which shall include, among other things, representations by the
Subscriber to the Company and the Placement Agent, that such Subscriber has
received and reviewed the Company’s SEC filings including the Company’s Current
Report on Form 8-K dated May 29, 2007 which discloses, among other things,
the
closing under the December 29, 2006 Acquisition Agreement, as amended (the
“Acquisition Agreement”), entered into by and among the Company, Flex Fuels
Energy Limited (“Flex Fuels”), the shareholders of Flex Fuels and the individual
signatories’ thereto. The Company shall provide to each Subscriber a copy of the
Acquisition Agreement, as amended, in order to disclose the material terms
of
the Company’s acquisition of the remaining 85% of the entire authorized share
capital of Flex Fuels. The Subscription Agreement and the Questionnaire shall
include, among other things, representations by the Subscriber to the Company
and the Placement Agent, of such Subscriber’s ability to participate in the
Placement as is reasonably deemed necessary by counsel to the Company and the
Placement Agent, including but not limited to, representations by each
Subscriber that such Subscriber is not deemed to be “U.S. Person” (as such term
is defined in the Securities Act) pursuant to Regulation S and that such person
is an “accredited investor” under Regulation D promulgated under the 1933 Act.
The Subscription Agreement shall include, among other things, a representation
that the Subscriber will not offer or sell the Shares for a period of twelve
months from closing and that thereafter the Subscriber will not offer or sell
the Shares except pursuant to an effective Registration Statement, in compliance
with Regulation S, or in compliance with another exemption from registration
under the 1933 Act.
1. Appointment
of Placement Agent.
ICP
is
hereby appointed as exclusive placement agent of the Company (subject to ICP’s
right to have foreign dealers (“Selected
Dealers”)
participate in the Placement) during the “PPO Period” (defined below) for the
purposes of assisting the Company in finding qualified Subscribers. The offering
period for the PPO (the “PPO
Period”)
shall
commence on the day the Offering Documents are first made available to the
Placement Agent by the Company for delivery in connection with the PPO, which
is
expected to be on or about June 29, 2007 (the “Delivery
Date”
or
the
“Commencement Date”) and shall continue until the earlier to occur of: (i) the
sale of all of the Shares, or (ii) the close of business on July 31, 2007.
The
day that the PPO Period expires is hereinafter referred to as the “PPO
Termination Date.
(a) Subject
to the performance by the Company of all of its obligations to be performed
under this Agreement and to the completeness and accuracy of all representations
and warranties of the Company contained in this Agreement, the Placement Agent
hereby accepts such agency and agrees to use its best efforts to assist the
Company in finding qualified Subscribers. It is understood that the Placement
Agent has no commitment to sell the Shares. ICP’s agency hereunder is not
terminable by the Company except upon termination of the PPO Offering
Period.
(b) Subscriptions
for Shares shall be evidenced by the execution by Subscribers of a Subscription
Agreement, Registration Rights Agreement and Questionnaire. No Subscription
Agreement shall be effective unless and until it is accepted and countersigned
by the Company. The Placement Agent or the Company shall not have any obligation
to independently verify the accuracy or completeness of any information
contained in any Subscription Agreement or the authenticity, sufficiency, or
validity of any check delivered by any prospective Subscriber in payment for
Shares.
(c) The
Placement Agent and/or its affiliates may be Subscribers in the Placement;
provided that said Placement Agent and/or its affiliates satisfy all of the
conditions and provide appropriate representations set forth in the Transaction
Documents.
2. Representations
and Warranties of the Company.
Except
as
set forth in the Transaction Documents or in a Disclosure Schedule attached
hereto, the Company represents and warrants to the Placement Agent and each
Selected Dealer, if any, as follows:
(a) Securities
Law Compliance. The offer, offer for sale, and sale of the Shares have not
been
registered with the United States Securities and Exchange Commission (the
“SEC”). The Shares are to be offered, offered for sale and sold in reliance upon
the exemptions from the registration requirements of Section 5 of the 1933
Act.
Except as the Placement may be expanded in the future to include offers and
sales to US Persons made in compliance with Section 4(2) and/or Regulation
D
under the 1933 Act, the Company and the Placement Agent will conduct the
Placement in compliance with the requirements of Regulation S under the 1933
Act
and Rule 903(b)(3) thereof. The Company will prepare the Offering Documents.
None of the representations or warranties of the Company contained in this
Agreement or any information appearing in any of the Transaction Documents
contains, or on or prior to Closing will contain, any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the
statements therein, in light of the circumstances in which they were made,
not
misleading. If at any time prior to the completion of the Placement or other
termination of this Agreement any event shall occur as a result of which it
might become necessary to amend or supplement the Offering Documents so that
they do not include any untrue statement of any material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances then existing, not misleading, the Company will
promptly notify the Placement Agreement and will supply the Placement Agreement
with amendments or supplements correcting such statement or omission. The
Company will also provide the Placement Agent for delivery to all offerees
and
purchasers and their representatives, if any, any information, documents and
instruments which the Placement Agent deems reasonably necessary to comply
with
applicable securities laws, subject to the non-disclosure obligations of the
offerees reasonably required by the Company.
(b) Organization.
The Company is duly organized and validly existing under the laws of the
jurisdiction in which it was organized, and has the requisite power and
authorization to own its properties and to carry on its business as now being
conducted. The Company is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which its ownership of property
or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing
would not have a Material Adverse Effect. As used in this Agreement, “Material
Adverse Effect” means any event or change in circumstance, whether or not
directly or indirectly caused by management or arising independently of
management’s control, that has or could reasonably be deemed to have in the
future, a material adverse effect on the business, properties, assets,
operations, results of operations, financial condition or prospects of the
Company or on the transactions contemplated hereby, or on the other Transaction
Documents or the agreements and instruments to be entered into in connection
herewith or therewith, or on the authority or ability of the Company to perform
its obligations under the Transaction Documents.
(c) SEC
Documents: Financial Statements. Except as set forth on Schedule 2(c), the
Company has filed all reports, schedules, forms, statements and other documents
currently required to be filed by it with the SEC under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) (all of the foregoing filed prior
to the date hereof or amended after the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein, being hereinafter referred to as the “SEC
Documents”). The Company has delivered to ICP, or made available through the
SEC’s website at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇., true and complete copies of the SEC
Documents. As of their respective dates, the financial statements of the Company
disclosed in the SEC Documents (the “Financial Statements”) complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as
may
be otherwise indicated in such Financial Statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and, fairly present in
all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company
to
ICP which is not included in the SEC Documents, including, without limitation,
information referred to in the other Transaction Documents, contains any untrue
statement of a material fact or omits to state any material fact necessary
in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(d) 10(b)-5.
The SEC Documents do not include any untrue statements of material fact, nor
do
they omit to state any material fact required to be stated therein necessary
to
make the statements made, in light of the circumstances under which they were
made, not misleading.
(e) Absence
of Changes. Since the date (the “Balance Sheet Date”) of the most recent balance
sheet (the “Balance Sheet”) included in the SEC Documents and except as set
forth in the SEC Documents, the Company has not (i) incurred any debts,
obligations or liabilities, absolute, accrued, contingent or otherwise, whether
due or to become due, except current liabilities incurred in the usual and
ordinary course of business and consistent with past practices, having
individually or in the aggregate a Material Adverse Effect, (ii) made or
suffered any material changes in its contingent obligations by way of guaranty,
endorsement (other than the endorsement of checks for deposit in the usual
and
ordinary course of business), indemnity, warranty or otherwise, (iii) discharged
or satisfied any material liens other than those securing, or paid
any
obligation or liability other than, current liabilities shown on the Balance
Sheet, and current liabilities incurred since the Balance Sheet Date, in each
case in the usual and ordinary course of business and consistent with past
practices, (iv) mortgaged, pledged or subjected to lien any of its material
assets, tangible or intangible, (v) sold, transferred or leased any of its
material assets except in the usual and ordinary course of business and
consistent with past practices, (vi) cancelled or compromised any debt or claim,
or waived or released any right, of material value except in the usual and
ordinary course of business and consistent with past practices, (vii) suffered
any physical damage, destruction or loss (whether or not covered by insurance)
materially adversely affecting the properties or business of the Company, (viii)
entered into any material transaction other than in the usual and ordinary
course of business except for this Agreement, the other Transaction Documents
and the related agreements referred to herein and therein, (ix) encountered
any
material labor difficulties or labor union organizing activities, (x) made
or
granted any wage or salary increase or entered into any employment agreement
other than in the ordinary course of business, (xi) issued or sold any shares
of
capital stock or other securities or granted any options with respect thereto,
or modified any equity security of the Company, (xii) declared or paid any
dividends on or made any other distributions with respect to, or purchased
or
redeemed, any of its outstanding equity securities, (xiii) suffered or
experienced any change in, or condition affecting, its condition (financial
or
otherwise), properties, assets, liabilities, business operations, or results
of
operations other than changes, events or conditions in the usual and ordinary
course of its business and consistent with past practices, having (either by
itself or in conjunction with all such other changes, events and conditions)
a
Material Adverse Effect, (xiv) made any change in the accounting principles,
methods or practices followed by it or depreciation or amortization policies
or
rates theretofore adopted, or (xv) entered into any agreement, or otherwise
obligated itself, to do any of the foregoing.
(f) Litigation.
Except as disclosed in the SEC Documents, there is no material action, suit,
investigation, customer complaint, claim or proceeding at law or in equity
by or
before any arbitrator, court, governmental instrumentality or agency,
self-regulatory organization or body or public board now pending or, to the
knowledge of the Company, threatened against the Company of any of the officers
or directors of the Company in their capacities as such (or basis therefor
known
to the Company), the adverse outcome of which would have a Material Adverse
Effect. To its knowledge, the Company is not subject to any judgment, order,
writ, injunction or decree of any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign which have a Material Adverse Effect.
(g) Non-Defaults;
Non-Contravention. The Company is not in violation of or in default under,
nor
will the execution and delivery of this Agreement or any of the Transaction
Documents or consummation of the transactions contemplated herein or therein
result in a violation of or constitute a default in the performance or
observance of any obligation under: (i) its Articles of Incorporation, or its
By-laws; or (ii) any indenture, mortgage, contract, material purchase order
or
other agreement or instrument to which the Company is a party or by which it
or
its property is bound, where such violation or default would have a Material
Adverse Effect; or (iii) any material order, writ, injunction or decree of
any
court of any Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic
or foreign, where such violation or default would have a Material Adverse
Effect, and to the Company’s knowledge, there exists no condition, event or act
which constitutes, nor which after notice, the lapse of time or both, could
constitute a default under any of the foregoing, which in either case would
have
a Material Adverse Effect.
(h) Taxes.
Except as set forth on Schedule 2(h), the Company has filed all Federal, state,
local and foreign tax returns which are required to be filed by it or otherwise
met its disclosure obligations to the relevant agencies and all such returns
are
true and correct in all material respects. The Company has paid or adequately
provided for all tax liabilities of the Company as reflected on such returns
or
pursuant to any assessments received by it or which it is obligated to withhold
from amounts owing to any employee, creditor or third party. The tax returns
of
the Company have never been audited by any state, local or Federal authorities.
The Company has not waived any statute of limitations with respect to taxes
or
agreed to any extension of time with respect to any tax assessment or
deficiency.
(i) Compliance
With Laws; Licenses, Etc. The Company has not received notice of any violation
of or noncompliance with any Federal, state, local or foreign, laws, ordinances,
regulations and orders applicable to its business which has not been cured,
the
violation of, or noncompliance with which, would have a Material Adverse
Effect.
(j) Authorization
of Agreement, Etc. The Company has the requisite corporate power and authority
to enter into and perform its obligations under this Agreement and the other
Transaction Documents. The execution and delivery of the Transaction Documents
by the Company and the consummation by the Company of the transactions
contemplated by the Transaction Documents, including without limitation the
issuance of the Shares, have been duly authorized by the Company’s Board of
Directors (the “Board”) and no further consent or authorization is required by
the Company, the Board or the Company’s stockholders. The Transaction Documents,
when executed, will have been duly executed and delivered by the Company, and
will constitute valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may
be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors’ rights and
remedies.
(k) Authorization
of the Shares. The issuance, sale and delivery of the Shares, shall have been
duly authorized by all requisite corporate action of the Company. When issued,
sold and delivered in accordance with the Transaction Documents for the
consideration set forth therein, the Shares will be duly executed, issued and
delivered, will be free and clear of all liens, encumbrances and claims, and
will constitute valid and legal obligations of the Company enforceable in
accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors’ rights and remedies and, in
each case, will not be subject to preemptive or any other similar rights of
the
stockholders of the Company or others which rights except as set forth herein
or
which shall not have been waived prior to the closing of the
Placement.
(l) Exemption
from Registration. Assuming (i) the accuracy of the information provided by
the
respective Subscribers in the Offering Documents and (ii) that the Placement
Agent has complied in all material respects with this Agreement and the
provisions of Regulation S promulgated under the 1933 Act, the offer and sale
of
the Shares in the Placement pursuant to the terms of this Agreement will be
exempt from the registration requirements of the 1933 Act and the rules and
regulations promulgated thereunder.
(m) Brokers.
Neither the Company nor any of its officers, directors, employees or
stockholders has employed any broker or finder in connection with the
transactions contemplated by this Agreement other than the Placement Agent
and
Selected Dealers.
(n) No
Integrated Offering. None of the Company, any of its affiliates, and any person
acting on its behalf has, directly or indirectly, made any offers or sales
of
any security or solicited any offers to buy any security, under circumstances
that would require registration of any of the Shares under the 1933 Act or
cause
the Placement to be integrated with prior offerings by the Company for purposes
of the 1933 Act or any applicable stockholder approval provisions, including
without limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company is currently
listed or designated. None of the Company, its affiliates and any person acting
on its behalf will take any action or steps referred to in the preceding
sentence that would require registration of any of the Shares under the 1933
Act
or cause the Placement to be integrated with other offerings.
(o) Application
of Takeover Protections; Rights Agreement. Except as set forth on Schedule
2(o),
the Company and the Board have not adopted any poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
and have not taken any action to render inapplicable any control share
acquisition or business combination which is or could become applicable as
a
result of the transactions contemplated by this Agreement. The Company has
not
adopted a shareholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control
of
the Company.
(p) Right
of
First
Refusal.
No person, firm or other business entity is a party to any agreement, contract
or understanding, written or oral entitling such party to a right of first
refusal with respect to offerings by the Company.
(q) Foreign
Corrupt
Practices. Neither the Company, nor any director, officer, agent, employee
or
other person acting on behalf of the Company has, 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; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds, (ii) violated
or is in violation of any provision of the U.S. Foreign Corrupt Practices Act
of
1977, as amended, or (iii) made any unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
(r) Capitalization.
As at the date hereof, the authorized capital for the Company consists of
510,000,000 shares consisting of authority to issue up to 500,000,000 shares
of
Common Stock and 10,000,000 shares of preferred stock, $0.001 par value per
share (the “Preferred
Stock”) of which 64,454,494 shares of Common Stock and no shares of Preferred
Stock are presently issued and outstanding. As at the date hereof, the Company
has not granted any stock options or common stock purchase warrants and no
other
securities exercisable or convertible into shares of Common Stock are issued
and
outstanding.
(s) Disclosure
Controls and Procedures. The Company maintains disclosure controls and
procedures required by the 1934 Act and such controls and procedures are
effective to insure that all material information concerning the Company is
made
known, on a timely basis, to the individuals responsible for the preparation
of
the Company’s filings with the SEC.
(t) ▇▇▇▇▇▇▇▇-▇▇▇▇▇.
The
Company is in material compliance with all of the applicable securities laws
and
is in compliance with all required provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002
and the rules of the SEC thereunder applicable to it on the date
hereof.
(u) Environmental
Compliance.
The
operations carried on by the Company are in material compliance with all
applicable federal, state and municipal environmental, health and safety
statutes, regulations and permits. To the knowledge of the Company, none of
such
operations is subject to any judicial or administrative proceeding alleging
the
violation of any federal, state or municipal environmental, health or safety
statute or regulation or is subject to any investigation concerning whether
any
remedial action is needed to respond to a release of any hazardous material
into
the environment.
3. Closing;
Placement and Fees.
(a) Closing
of the Placement. The closing (the “Closing”) shall take place at the New York
offices of Gottbetter & Partners, LLP, counsel for the Placement Agent, no
later than five days following the PPO Termination Date, which Closing Date
may
be adjourned by written agreement between the Company and the Placement Agent.
At the Closing, payment for the Shares issued and sold by the Company shall
be
made against delivery of the certificates for the Shares sold.
(b) Conditions
to Placement Agent’s Obligations.
The
obligations of the Placement Agent hereunder will be subject to the accuracy
of
the representations and warranties of the Company herein contained as of the
date hereof and as of the Closing Date of the Placement, to the performance
by
the Company of its obligations hereunder and to the following additional
conditions:
(i) Due
Qualification or Exemption. At Closing no stop order suspending the sale of
the
Shares shall have been issued, and no proceedings by a governmental agency,
self-regulatory organization or any securities exchange for that purpose shall
have been initiated or threatened.
(ii) No
Material Misstatements. Neither the Offering Documents or any supplement
thereto, will contain any untrue statement of a fact which in the opinion of
the
Placement Agent is material, or omit to state a fact, which in the opinion
of
the Placement Agent is material and is required to be stated therein, or is
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(iii) Completion
and Compliance with Agreements.
The
Company will have provided Placement Agent with executed copies of all
Transaction Documents in forms reasonably acceptable to the Placement Agent
and
its counsel and will have complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to
Closing.
(iv) Corporate
Action.
The
Company will have taken all necessary corporate action, including, without
limitation, obtaining the approval of the Board, and, if necessary, its
stockholders, for the execution and delivery of this Agreement, the performance
by the Company of its obligations hereunder and the Placement contemplated
hereby.
(v) Opinion
of Counsel.
The
Placement Agent shall receive the opinion of Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LLP, counsel to the Company, addressed to the Placement Agent and the
Subscribers, covering any legal matters that the Placement Agent may reasonably
request.
(vi) Officers’
Certificate.
The
Placement Agent shall receive a customary certificate of the Company at or
prior
to Closing.
(A) signed
by
the Chief Executive Officer and Chief Financial Officer thereof, that the
representations and warranties contained in Section 2 hereof are true and
accurate in all material respects as of the date hereof and at such Closing
with
the same effect as though expressly made at such Closing; and
(B) signed
by
the Chief Executive Officer or the Secretary thereof, with respect to the
matters set forth in Sections (b)(iii)
and
(c)(iv) hereinabove.
(vii) Due
Diligence. The Placement Agent shall have completed and been satisfied with
the
results of its due diligence investigation of the Company, including, without
limitation, the Company’s financial statements, projections, expense budgets,
business prospects, capital structure, background searches and contractual
arrangements.
(viii) Escrow
Agreement.
The
Placement Agent shall receive a copy of a duly executed escrow agreement
regarding the deposit of funds pending the Closing of the PPO with a bank or
trust company acceptable to the Placement Agent (the “Escrow Agreement”).
Gottbetter & Partners, LLP shall serve as escrow agent under the Escrow
Agreement.
(c) Blue
Sky.
At the
direction of special counsel to the Placement Agent, the Company will file
the
necessary documents, if any, so that offers and sales of Shares to be offered
in
the Placement may be made in all foreign jurisdictions where the Shares are
intended to be offered.
(d) Placement
Fees and Expenses.
(i) PPO.
Simultaneously with payment for and delivery of the Shares at Closing, the
Company shall pay to ICP a placement agent fee equal to 10% of the raised
proceeds.
(ii) Interest.
In the
event that for any reason the Company shall fail to pay to the Placement Agent
all or any portion of the fees payable hereunder when due, interest shall accrue
and be payable on the unpaid cash balance due hereunder from the date when
first
due through and including the date when actually collected by the Placement
Agent, at a rate equal to four percent above the prime rate of Citibank, N.A.,
in New York, New York, computed on a daily basis and adjusted as announced
from
time to time.
The
Placement Agent will be paid a placement fee as set forth in Section 3(e)(i),
payable by wire transfer to the order of the Placement Agent out of the
subscription proceeds to be disbursed from the escrow account on the Closing
Date.
(e) No
Adverse Changes. There shall not exist at the time of the Closing (i) any
domestic or international event, act or occurrence which has materially
disrupted, or is substantially likely to in the immediate future materially
disrupt, the securities markets; (ii) a general suspension of, or a general
limitation on prices for, trading in securities on the New York Stock Exchange
or other national market or exchange or in the over-the-counter market; (iii)
any outbreak of major hostilities or other national or international calamity;
(iv) any banking moratorium declared by a state or federal authority; (v) any
moratorium declared in foreign exchange trading by major international banks
or
other persons; (vi) any material interruption in the mail service or other
means
of communication within the United States; (vii) any material adverse change
in
the business, properties, assets, results of operations, or financial condition
of the Company; or (viii) any material adverse change in the market for
securities in general or in political, financial, or economic conditions which,
in the Placement Agent’s reasonable judgment, makes it inadvisable to proceed
with the Placement. If
this
Agreement is terminated pursuant to this section, such termination shall be
without liability of any character (including, but not limited to, loss of
anticipated profits or consequential damages) of any party to any other party
hereto.
(f) Additional
Fees and Expenses. If at the request or agreement of the Company, the Placement
Agent performs other or additional services beyond those set forth in this
Agreement, the Company and the Placement Agent will negotiate in good faith
an
appropriate level of additional compensation for such services. The Company
and
the Placement Agent will reach an agreement in such negotiations prior to the
Placement Agent performing such other or additional services.
4. Covenants
of the Company.
(a) Use
of
Proceeds. The net proceeds of the PPO will be used by the Company substantially
as set forth in the Memorandum.
(b) Expenses
of Offering. Except as otherwise provided herein, the Company shall be
responsible for, and shall bear all expenses directly incurred in connection
with, the proposed Placement including, but not limited to, (i) legal fees
of
the Company’s counsel relating to the costs of preparing and/or reviewing the
Transaction Documents and all amendments, supplements and exhibits thereto,
and
(ii) printing fees relating to the Transaction Documents. ICP shall be
responsible for Blue Sky fees, escrow agent fees, and the fees and disbursements
of Placement Agent’s counsel and special blue sky counsel.
If
the
Company decides not to proceed with the Placement for any reason (other than
the
material breach of the Placement Agent’s representations, warranties or
covenants contained in this Agreement, or any situation resulting from any
SEC
action which interferes with, delays or prohibits completion of the Placement)
or if the Placement Agent decides not to proceed with the Placement because
of a
material breach by the Company of its representations, warranties, or covenants
in this Agreement or as a result of material adverse changes in the affairs
of
the Company, the Company will be obligated to pay the Placement Agent, as
liquidated damages, a financial advisory and structuring fee of
$30,000.
(c) Notification.
The Company shall notify the Placement Agent immediately, and in writing, (i)
when any event shall have occurred during the period commencing on the date
hereof and ending on the later of the Closing or the Termination Date as a
result of which the Offering Documents would include 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 (ii) of the
receipt of any notification with respect to the modification, rescission,
withdrawal or suspension of the qualification or registration of the Shares,
or
of any exemption from such registration or qualification, in any jurisdiction.
The Company will use its best efforts to prevent the issuance of any such
modification, rescission, withdrawal or suspension and, if any such
modification, rescission, withdrawal or suspension is issued and the Placement
Agent so request, to obtain the lifting thereof as promptly as
possible.
(d) Press
Releases, Etc. Except as set forth on Schedule 4(d) and except where deemed
advisable by the Company’s legal counsel to comply with applicable
international, federal and/or state laws, rules and regulations or if required
by applicable international, federal and/or state laws, rules and regulations,
the Company shall not, during the period commencing on the date hereof and
ending on the PPO Termination Date, issue any press release or other
communication, or hold any press conference with respect to the Company, or
its
financial condition, results of operations, business, properties, assets, or
liabilities, or the Placement, without the prior consent of the Placement Agent,
which consent shall not be unreasonably withheld, condition or delayed. The
Company shall not include information with respect to the Placement or use
the
Placement Agent’s name in any press release, advertisement or on any website
maintained by the Company with out the prior written consent of the Placement
Agent, such consent not to be unreasonably withheld, conditioned or
delayed.
(e) Executive
Compensation. The compensation of the Company’s executive officers which are
compensated solely by the Company and not any of its subsidiaries shall not
increase during the 1 year period from May 29, 2007, without the approval of
a
majority of the disinterested members of the Board of Directors of the
Company.
(f) Investor
Registration Rights Agreement. The Company shall register the Shares for resale
by filing a Registration Statement (the “Registration Statement”) on Form SB-2,
or if Form SB-2 is not available, on another appropriate form covering the
Shares. The Company and the
Subscribers shall enter into a Registration Rights Agreement providing that
the
Company will use its best efforts to file the Registration Statement as soon
as
reasonably practicable but on or before August 27, 2007, (the “Filing Date”),
and shall use its best efforts to cause such Registration Statement to become
effective within one hundred twenty (120) days after the Filing Date (the
“Effectiveness Deadline”). The Company agrees to respond to any comments from
the SEC within fifteen (15) days of receiving them.
If
the
Registration Statement has not been filed by the Filing Date (the “Filing Date
Requirement”), or the SEC has not declared the Registration Statement effective
by the Effectiveness Deadline (the “Effective Date Requirement”), the Company
will be liable to the Subscribers for partial liquidated damages, in each
instance, in the amount equal to the product of (i) 0.167 and (ii) 2% of the
aggregate Subscription Amounts for all of the Subscribers. The Company shall
be
further liable to the same extent for each subsequent 30 day period in which
the
Filing Date Requirement or the Effective Date Requirement, as the case may
be,
has not been met, subject to an overall limit of up to 15 months of partial
liquidated damages.
Furthermore,
the Registration Statement shall cover the resale of 100% of the Registrable
Securities (as defined below), including the Shares sold in the PPO, on an
offering to be made on a continuous basis pursuant to Rule 415; provided,
however,
that if
100% of the Registrable Securities hereunder shall equal or exceed 30% of the
issued and outstanding Common Stock of the Company (less any shares of Common
Stock held by affiliates of the Company) on the actual filing date of the
initial Registration Statement, at the Company’s sole election the initial
Registration Statement shall register a number of Registrable Securities which
is equal to 30% of the issued and outstanding shares of Common Stock of the
Company (less any shares of Common Stock held by affiliates of the Company)
on
such actual filing date minus 10,000 shares of Common Stock, and the remaining
Registrable Securities shall be subject to Section 4(i). In such event, the
number of Registrable Securities to be registered for each holder and each
Subscriber shall be reduced pro-rata among all holders of Registrable Securities
and all Subscribers. (For example, in the event the Company successfully sells
the Maximum Offering Amount, there are expected to be approximately 70,010,050
shares of the Company’s Common Stock issued and outstanding (of which
approximately 17,838,518 are expected to be held by affiliates of the Company).
Therefore, 30% of which (less any shares of Common Stock held by affiliates
of
the Company) shall amount to approximately 15,651,460 shares of Common Stock,
and the number of Registrable Securities to be registered for each holder and
each Subscriber shall correspondingly be reduced pro-rata among all holders
of
Registrable Securities and all Subscribers; resulting in approximately 3,549,762
Shares being registered in the initial Registration Statement.)
“Registrable
Securities”
shall
mean the Shares, 2,357,143 shares of Common Stock issued pursuant to the private
placement offering concluded on December 29, 2006, 16,582,621 shares of Common
Stock issued pursuant to the private placement offering concluded on May 29,
2007 and any other securities issued or issuable with respect to or in exchange
for Registrable Securities; provided, that, a security shall cease to be a
Registrable Security upon (A) sale pursuant to a Registration Statement or
Rule
144 under the 1933 Act, or (B) such security becoming eligible for sale by
the
Investors pursuant to Rule 144(k).
(g) Regulation
S Compliance.
(i)
Neither the Company, its affiliates nor any persons acting on its or their
behalf (other than the Placement Agent, its affiliates or any person acting
on
their behalf, in respect of which no representation is made), will engage in:
(A) any offer to sell or any solicitation of an offer to buy, any Shares to
any
person in the United States or to a U.S. Person (as defined in Rule 902(k)
of
Regulation S), or a person that is purchasing for the account or benefit of
a
U.S. Person, or a person who is not an “accredited investor” under Regulation D
promulgated under the 1933 Act; (B) any sale of Shares to any Subscriber unless,
at the time the buy order will have been originated, the Subscriber was outside
the United States, and was not a U.S. Person, and was not purchasing for the
account or benefit of a U.S. Person or person in the United States, or the
Company, its affiliates or persons acting on its behalf reasonably believed
that
such purchaser was outside the United States and was not a U.S. Person, and
was
not purchasing for the account or benefit of a U.S. Person or a person in the
United States, and is an “accredited investor” under Regulation D promulgated
under the 1933 Act; or (C) any Directed Selling Efforts (as defined in Rule
902(c) of Regulation S) with respect to any of the Shares.
(ii) Neither
the Company nor any of its affiliates, nor any person acting on its or their
behalf (other than the Placement Agent, its affiliates or any person acting
on
their behalf, in respect of which no representation is made), during the period
in which the Shares will be offered for sale, will take any action that would
cause the exemption from registration afforded by Rule 903 of Regulation S
to be
unavailable for offers and sales of the Shares outside the United States in
accordance with this Agreement.
(iii) All
Offering Documents used in connection with offers and sales of the Shares prior
to the expiration of the Distribution Compliance Period (as defined in Rule
902(f) of Regulation S) will include statements to the effect that the Shares
have not been registered under the 1933 Act and may not be offered or sold
in
the United States or to, or for the account or benefit of, U.S. Persons or
persons in the United States unless registered under the 1933 Act or an
exemption from the registration requirements of the 1933 Act is available.
Such
statements will appear (A) on the cover or inside cover page of any material
or
document; (B) in the plan of distribution section of any prospectus or offering
memorandum; and (C) in any advertisement made or issued by the Company, any
of
its affiliates or any person acting on its or their behalf (other than the
Company, Placement Agent, its respective affiliates, or any person acting on
any
of their behalf, in respect of which no representation is made).
(iv) The
Company reserves the right to also sell the Shares to Accredited Investors
who
are U.S. Persons via an exemption, if available, from registration under Section
4(2) of, and/or Regulation D promulgated under, the Securities Act of 1933,
as
amended. However, this Agreement does not constitute an offer to sell or the
solicitation of an offer to buy securities in the United States or to U.S.
Persons.
(h) Share
Reservation.
The
Company shall reserve from its authorized but unissued Common Stock an aggregate
of 5,555,556 Shares for issuance to Subscribers in the Offering.
(i) If
during
the Effectiveness Period, the number of Shares then registered in the initial
Registration Statement as contemplated by the proviso regarding registration
of
Shares in Section 4(f) above, is less than 100% of the number of such Shares,
then, upon the written request
of Subscribers holding at least 30% of the Shares, the Company shall use its
best efforts to file as soon as reasonably practicable, an additional
Registration Statement covering the resale by the Subscribers of not less than
the difference between 100% of Shares and the number of Shares in the initial
Registration Statement. Subject to the terms of this Agreement, the Company
shall use its best efforts to cause a Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, but in any event prior to the applicable Effectiveness Deadline, and
shall use its best efforts to keep such Registration Statement continuously
effective under the Securities Act until all Registrable Securities covered
by
such Registration Statement have been sold, or may be sold without volume
restrictions pursuant to Rule 144(k), as determined by the counsel to the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company’s transfer agent and the affected Holders (the
“Effectiveness
Period”).
5. Restrictions
on Issuances of Securities.
During
the period commencing on the date hereof and ending on the earlier of (i) the
Closing or (ii) the PPO Termination Date, the Company will not, without the
prior written consent of the Placement Agent, issue additional shares of Common
Stock of the Company. Notwithstanding the foregoing, this Section 5 shall not
apply in respect of an Exempt Issuance.
“Exempt
Issuance”
means
the issuance of (a) shares of Common Stock or options to employees, consultants
(up to 500,000 shares), officers or directors of the Company pursuant to any
stock or option plan duly adopted by a majority of the members of the Board
of
Directors of the Company or a majority of the members of a committee of
directors established for such purpose, including, but not limited to, shares
of
Common Stock registered pursuant to a Registration Statement filed on Form
S-8
with the SEC, (b) securities upon the exercise or exchange of or conversion
of
any Shares issued hereunder and/or other securities exercisable or exchangeable
for or convertible into shares of Common Stock issued and outstanding on the
date of this Agreement, provided that such securities have not been amended
since the date of this Agreement to increase the number of such securities
or to
decrease the exercise, exchange or conversion price of any such securities,
(c)
securities issued pursuant to acquisitions or strategic transactions approved
by
a majority of the disinterested directors, provided any such issuance shall
only
be to a Person which is, itself or through its subsidiaries, an operating
company in a business synergistic with the business of the Company and in which
the Company receives benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities, and (d) securities issued with the prior written
consent of the Placement Agent.
6. Representations,
Warranties and Covenants of the Placement Agent.
For
the
purpose of this Section 6, the term “Placement Agent” includes Placement Agent
and its agents. Placement Agent represents and warrants to, and agrees with
the
Company as follows:
(a) Regulation
S Compliance.
Neither
the Placement Agent, its affiliates nor any persons acting on its or their
behalf, will engage in : (i) any offer to sell or any solicitation of an offer
to buy, any Shares to any person in the United States or to a U.S. Person (as
defined in Rule 902(k) of Regulation S), or a person that is purchasing for
the
account or benefit of a person in the United States or a U.S. Person, or a
person who is not an “accredited investor” under Regulation D promulgated under
the 1933 Act; (ii) any sale of Shares to any purchaser unless, at the time
the
buy order was or will have been originated, the purchaser was outside the United
States and not a U.S. Person, and was not purchasing the Shares for the account
or benefit of a U.S. Person or person in the United States, or the Placement
Agent, its affiliates or persons acting on its behalf reasonably believed that
such purchaser was outside the United States and not a U.S. Person, as that
term
is defined in Regulation S under the 1933 Act, and was not purchasing the Shares
for the account or benefit of a U.S. Person or person in the United States,
and
is a person who is an “accredited investor” under Regulation D promulgated under
the 1933 Act; (iii) any Directed Selling Efforts (as defined in Rule 902(c)
of
Regulation S) either during the distribution of the Shares or during the
Distribution Compliance Period (as defined in Rule 902(f) of Regulation S);
or
(iv) any hedging transactions with respect to any of the Shares during the
Distribution Compliance Period except in compliance with the 1933 Act.
(b) Placement
Agent will not take any action or actions (i) in violation of the requirements
of Regulation S, (ii) that would cause the Offering of Shares to be subject
to
registration under the Securities Act, other than as a result of direct actions
by the Company, (iii) that would cause the Issuer to be subject to registration
as an “investment company” under the Investment Company Act, (iv) in violation
of any rules of the National Association of Securities Dealers, Inc.
(“NASD”)
or the
SEC, or (v) other than in accordance with the terms set forth in this Agreement
and the Memorandum.
(c) Placement
Agent agrees that it is not authorized to give any information or make any
representation in connection with the offering, issue, purchase and sale of
the
Shares other than those representations or that information contained in the
Memorandum or any other publicly available written information regarding the
Issuer, the source of which has been accurately identified. In offering
Shares for sale, Placement Agent will not offer Shares for sale, or solicit
any
offers to buy any Shares, or otherwise negotiate with any person in respect
of
Shares, on the basis of any communications or documents relating to Shares
or
any investment therein or to the Issuer or to any investment therein, other
than
the Memorandum, information otherwise furnished in writing to Placement Agent
by
Issuer specifically for such purpose, or any other document, and any cover
or
transmittal letter, satisfactory in form and substance to the Issuer and counsel
for the Issuer. Placement Agent and its personnel will not make any
statement regarding the Issuer or the offering of Shares that is false or
materially misleading
(d) Placement
Agent has not, prior to the date of this Agreement, engaged in any activities
with respect to the Shares that would be inconsistent with this Section.
Any affiliate of Placement Agent, and any person acting on its or their behalf,
has complied and/or will be required to comply with the terms of this
Agreement. Placement Agent shall provide from time to time upon request of
Issuer certificates of its compliance with the requirements of this Agreement
and applicable law in connection with its placement agent activities on behalf
of the Issuer.
(e) Placement
Agent shall make reasonable efforts to assist the Issuer in obtaining
performance by each person or entity whose offer to purchase Shares has been
solicited by Placement Agent and accepted by the Issuer.
(f) This
Agreement has been duly authorized, executed and delivered by Placement Agent
and, when executed and delivered by Placement Agent, will constitute a valid
and
legally binding obligation of Placement Agent enforceable in accordance with
its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles.
(g) Delivery
of Memorandum. Prior to or simultaneously with the sale by the Company to any
purchaser of any of the Shares pursuant hereto, the Placement Agent will furnish
to such purchaser a copy of the Memorandum (and any amendment thereof or
supplement thereto that the Company shall have furnished to the Placement Agent
prior to the date of such sale).
(h) Qualification
to Act. The Placement Agent represents and warrants to the Company that it
is or
will be qualified to act in each jurisdiction in which it will offer and sell
the Shares.
(i) Authorization.
The Placement Agent represents and warrants to the Company that the person
who
has signed this Agreement on its behalf is duly authorized to so sign, and
this
Agreement is a valid and binding obligation of the Placement Agent, enforceable
in accordance with its terms, subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the rights of creditors generally and the discretion of courts in
granting equitable remedies and except that enforceability of the
indemnification and contribution provisions set forth thereunder and hereunder
may be limited by the federal securities laws of the United States or state
securities laws or public policies related thereto.
(j) Investors.
The Placement Agent shall not offer and sell the Shares to any prospective
Subscriber if the Placement Agent has reason to believe that material
information supplied or the representations and warranties made by that person
are not fully accurate.
7. Indemnification.
(a) The
Company agrees to indemnify and hold harmless the Placement Agent and each
Selected Dealer, if any, and their respective shareholders, directors, officers,
agents and controlling persons (an “Agent Indemnified Party”) against any and
all loss, liability, claim, damage and expense whatsoever (and all actions
in
respect thereof), and to reimburse the Placement Agent for reasonable legal
fees
and related expenses as incurred (including, but not limited to the costs of
investigating, preparing or defending any such action or claim whether or not
in
connection with litigation in which the Placement Agent is a party and the
costs
of giving testimony or furnishing documents in response to a subpoena or
otherwise), caused by or arising out of (i) any untrue statement or alleged
untrue statement of a material fact contained in the Transaction Documents
or
the omission or alleged omission therefrom of 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 Company shall not be
liable in any such case to the extent that any such loss, liability, claim,
damage or expense arises out of or is based upon any untrue statement of a
material fact or alleged untrue statement or a material fact provided by the
Placement Agent in writing to the Company), (ii) any violation by the Company
of
applicable securities laws, or otherwise arising out of the Placement Agent’s
engagement hereunder, except in respect of any matters as to which the Placement
Agent shall have been adjudicated to have acted with gross negligence, or (iii)
any breach by the Company of any of its representations, warranties or covenants
contained in this Agreement; provided, however, that in the case of each of
clauses (ii) and (iii) hereof, there has been a final adjudication of such
violation or breach by a court of competent jurisdiction.
(b) The
Placement Agent agrees to indemnify and hold harmless the Company and its
shareholders, directors, officers, agents and controlling persons (a “Company
Indemnified Party” and, together with an Agent Indemnified Party, an
“Indemnified Party”) against any and all loss, liability, claim, damage and
expense whatsoever (and all actions in respect thereof), and to reimburse the
Company for reasonable legal fees and related expenses as incurred (including,
but not limited to the costs of investigating, preparing or defending any such
action or claim whether or not in connection with litigation in which the
Company is a party and the costs of giving testimony or furnishing documents
in
response to a subpoena or otherwise), caused by or arising out of (i) any breach
by the Placement Agent of any of its representations, warranties and covenants
contained in this Agreement, or (ii) any violation by the Placement Agent of
applicable securities laws, or otherwise arising out of the Placement Agent’s
engagement hereunder, except in respect of any matters as to which the Company
shall have been adjudicated to have acted with gross negligence; provided,
however, that in the case of each of clauses (i) and (ii) hereof, there has
been
a final adjudication of such breach or violation by a court of competent
jurisdiction; and provided, however, that the aggregate liability of the
Placement Agent under this Section 7(b) shall not exceed an amount equal to
the
aggregate placement fees received by the Placement Agent pursuant to Section
3(d)(i) or Section 3(d)(ii) hereof.
(c) Promptly
after receipt by an Indemnified Party under this Section of notice of the
commencement of any action, the Indemnified Party will, if a claim in respect
thereof is to be made against the party from whom indemnification is sought
under this Section 7 (the “Indemnifying Party”), notify in writing the
Indemnifying Party of the commencement thereof; but the omission so to notify
the Indemnifying Party will not relieve the Indemnifying Party from any
liability which it may have to the Indemnified Party otherwise under this
Section except to the extent the defense of the claim is prejudiced. In case
any
such action is brought against an Indemnified Party, and it notifies the
Indemnifying Party of the commencement thereof, the Indemnifying Party will
be
entitled to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
subject to the provisions herein stated, with counsel reasonably satisfactory
to
the Indemnified Party, and after notice from the Indemnifying Party to the
Indemnified Party of its election so to assume the defense thereof, the
Indemnifying Party will not be liable to the Indemnified Party under this
Section for any legal or other expenses subsequently incurred by the Indemnified
Party in connection with the defense thereof other than reasonable costs of
investigation (provided the Indemnifying Party has been advised in writing
that
such investigation is being undertaken). The Indemnified Party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall not be at
the
expense of the Indemnifying Party if the Indemnifying Party has assumed the
defense of the action with counsel reasonably satisfactory to the Indemnified
Party; provided that the reasonable fees and expenses of such counsel shall
be
at the expense of the Indemnifying Party if (i) the employment of such counsel
has been specifically authorized in writing by the Indemnifying Party or (ii)
the named parties to any such action (including any impleaded parties) include
both the Indemnified Party or Parties and the Indemnifying Party and, in the
reasonable judgment of counsel for the Indemnified Party, it is advisable for
the Indemnified Party or Parties to be represented by separate counsel due
to an
actual conflict of interest (in which case the Indemnifying Party shall not
have
the right to assume the defense of such action on behalf of an Indemnified
Party
or Parties), it being understood, 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 for all the Indemnified
Parties. No settlement of any action against an Indemnified Party shall be
made
unless such an Indemnified Party is fully and completely released in connection
therewith.
8. Contribution.
To
provide for just and equitable contribution, if an Indemnified Party makes
a
claim for indemnification pursuant to Section 7 but it is found in a final
judicial determination, not subject to further appeal, that such indemnification
may not be enforced in such case, even though this Agreement expressly provides
for indemnification in such case, then the Company (including for this purpose
any contribution made by or on behalf of any officer, director, employee or
agent for the Company, or any controlling person of the Company), on the one
hand, and the Placement Agent and any Selected Dealers (including for this
purpose any contribution by or on behalf of an Indemnified Party), on the other
hand, shall contribute to the losses, liabilities, claims, damages, and expenses
whatsoever to which any of them may be subject, in such proportions as are
appropriate to reflect the relative benefits received by the Company, on the
one
hand, and the Placement Agent and the Selected Dealers, on the other hand;
provided, however, that if applicable law does not permit such allocation,
then
other relevant equitable considerations such as the relative fault of the
Company and the Placement Agent and the Selected Dealers in connection with
the
facts which resulted in such losses, liabilities, claims, damages, and expenses
shall also be considered. In no case shall the Placement Agent or a Selected
Dealer be responsible for a portion of the contribution obligation in excess
of
the compensation received by it or the Selected Dealers, as the case may be.
No
person guilty of a fraudulent misrepresentation shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person, if any, who
controls the Placement Agent or a Selected Dealer within the meaning of Section
15 of the 1933 Act or Section 20(a) of the 1934 Act and each officer, director,
stockholder, employee and agent of the Placement Agent or a Selected Dealer,
shall have the same rights to contribution as the Placement Agent or the
Selected Dealer, and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act and
each
officer, director, employee and agent of the Company, shall have the same rights
to contribution as the Company, subject in each case to the
provisions of this Section 8. Anything in this Section 8 to the contrary
notwithstanding, no party shall be liable for contribution with respect to
the
settlement of any claim or action effected without its written consent. This
Section 8 is intended to supersede any right to contribution under the 1933
Act,
the 1934 Act, or otherwise.
9. Miscellaneous.
(a) Survival.
Any termination of any offering hereunder without consummation thereof shall
be
without obligation on the part of any party except that the indemnification
provided in Section 7 hereof and the contribution provided in Section 8 hereof
shall survive any termination and shall survive the Closing for a period of
two
years.
(b) Representations,
Warranties and Covenants to Survive Delivery. The respective representations,
warranties, indemnities, agreements, covenants and other statements as of the
date hereof and as of the date of Closing shall survive execution of this
Agreement and delivery of the Shares and the termination of this Agreement
for a
period of one year after such respective event.
(c) No
Other
Beneficiaries. This Agreement is intended for the sole and exclusive benefit
of
the parties hereto and their respective successors and controlling persons,
and
no other person, firm or corporation shall have any third-party beneficiary
or
other rights hereunder.
(d) Governing
Law; Resolution of Disputes. This Agreement shall be governed by and construed
in accordance with the law of the State of New York without regard to conflict
of law provisions. The Placement Agent and the Company will attempt to settle
any claim or controversy arising out of this Agreement through consultation
and
negotiation in good faith and a spirit of mutual cooperation. Should such
attempts fail, then the dispute will be mediated by a mutually acceptable
mediator to be chosen by the Placement Agent and the Company within 15 days
after written notice from either party demanding mediation. Neither party may
unreasonably withhold consent to the selection of a mediator, and the parties
will share the costs of the mediation equally. Any dispute which the parties
cannot resolve through negotiation or mediation within six months of the date
of
the initial demand for it by one of the parties may then be submitted to the
courts for resolution. The use of mediation will not be construed under the
doctrine of latches, waiver or estoppel to affect adversely the rights of either
party. Nothing in this paragraph will prevent either party from resorting to
judicial proceedings if (a) good faith efforts to resolve the dispute under
these procedures have been unsuccessful or (b) interim relief from a court
is
necessary to prevent serious and irreparable injury.
(e) Counterparts.
This Agreement may be signed in counterparts with the same effect as if both
parties had signed one and the same instrument.
(f) Notices.
Any communications specifically required hereunder to be in writing, if sent
to
the Placement Agent, will be sent by overnight courier providing a receipt
of
delivery or by certified or registered mail to it at International Capital
Partners SA, ▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Att: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
with
a copy to Gottbetter & Partners, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇
▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, Att: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and if sent to the Company, will be
sent
by
overnight courier providing a receipt of delivery or by certified or registered
mail to it at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇, Attn:
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇, with a copy to Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
(g) Entire
Agreement. This Agreement constitutes the entire agreement of the parties with
respect to the matters herein referred and supersedes all prior agreements
and
understandings, written and oral, between the parties with respect to the
subject matter hereof. Neither this Agreement nor any term hereof may be
changed, waived or terminated orally, except by an instrument in writing signed
by the party against which enforcement of the change, waiver or termination
is
sought.
If
the
Placement Agent finds the foregoing is in accordance with its understanding
with
the Company, kindly sign and return to the Company a counterpart hereof,
whereupon this instrument along with all counterparts will become a binding
agreement between the Placement Agent the Company.
|
Very
truly yours,
MALIBU
MINERALS, INC.
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| |
|
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| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | |
|
Name:
▇▇▇▇ ▇▇▇▇▇▇▇
Title:
Chief Financial Officer
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||
Agreed:
INTERNATIONAL
CAPITAL PARTNERS SA
| /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | |||
|
Name: ▇▇▇▇▇▇▇
▇▇▇▇▇▇
Title: Chairman
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SCHEDULE
2(c)
SEC
DOCUMENTS: FINANCIAL STATEMENTS
Pursuant
to Item 9.01(b) of Form 8-K, the Company shall furnish with the SEC within
71
days of June 4, 2007, the required pro formal financial information pursuant
to
Article 11 of Regulation S-X regarding its acquisition of Flex
Fuels.
The
Company also intends to promptly file its tax return for the fiscal year ended
December 31, 2006 with the appropriate state and federal
agencies.
SCHEDULE
2(h)
TAXES
The
Company intends to promptly file its tax return for the fiscal year ended
December 31, 2006 with the appropriate state and federal agencies.
SCHEDULE
2(o)
APPLICATION
OF TAKEOVER PROTECTIONS; RIGHTS AGREEMENT
There
are
Change of control provisions in executive contracts and, subject to the adoption
by the board of directors of the Company of a form of a Incentive Stock Option
Plan (the “Plan”), in the Plan; such that upon an occurrence of a corporate
transaction or an event constituting a “Change of Control”, all of the directors
of the Company would be entitled to compensation as stated in their respective
agreements.
For
purposes of the Stock Option Plan, (i) “Change
of Control”
means
a
sale
of
all or
substantially all of the Company's assets, or any merger or consolidation of
the
Company with or into another corporation, or if a “person” or “group” within the
meaning of Sections 13(d) and 14(d) of the Securities and Exchange Act of 1934
(the “Exchange
Act”),
becomes the “beneficial owner” (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of Employer (including options, warrants, rights
and
convertible and exchangeable securities) representing 30% or more of the
combined voting power of the Company’s then outstanding securities in any one or
more transactions, other than a merger or consolidation in which the holders
of
more than 50% of the shares of capital stock of the Company outstanding
immediately prior to such transaction continue to hold (either by the voting
securities remaining outstanding or by their being converted into voting
securities of the surviving entity) more than 50% of the total voting power
represented by the voting securities of the Company, or such surviving entity,
outstanding immediately after such transaction; and (ii) "Corporate
Transaction"
means a
dissolution or liquidation of the Company, a sale of all or substantially all
of
the Company's assets, or a merger, consolidation or other capital reorganization
of the Company with or into another corporation.
SCHEDULE
4(d)
Press
Releases, Etc
In
light
of the acquisition of Flex Fuels Energy Limited (the “Acquisition”), the Company
intends to effectuate its name change from Malibu Minerals, Inc. to Flex Fuels
Energy, Inc. and intends to further publish a press release regarding the same
and relevant details of the Acquisition.