AGENCY AGREEMENT

Attention: 

Mr. Richard L. Franklin

(a)

The issuance of the Shares shall be completed (the “Closing”) at the offices of the Corporation, or such other place or places as the Corporation and the Agent may agree, at 5:30 p.m. (Eastern Standard Time) (the “Closing Time”) on the Closing Date.

(b)

On or prior to each Closing Date, the Agent shall provide to the Corporation a subscription agreement from each purchaser of Shares (a “Purchaser”) who is to acquire Shares on such Closing Date.  Purchasers shall be required to complete and sign the form of Subscription Agreement attached hereto as Appendix I.

(c)

At the Closing Time on each Closing Date, upon satisfaction of the conditions contained herein, the Agent shall pay or cause payment to be made of the net purchase price of the Shares sold by the Agent in United States funds by wire transfer to such bank and account as may be designated by the Corporation, or in such other manner as may be agreed with the Corporation, such net purchase price to be equal to the aggregate Issue Price of the Shares sold by the Agent less the cash portion of the Commission (if the Agent elects to receive all or a part thereof in cash), any amount paid by tendering to the Corporation promissory notes previously issued by Pathfinder evidencing debt in like principal amount and the amount in reimbursement of expenses referred to in Section 8 hereof. Such payment and delivery shall be made against:

 

(i)

delivery by the Corporation to its transfer agent of instructions to issue certificates or, in the Agent’s discretion, book-entry receipts, representing (A) the Shares to be issued on the Closing Date registered in such name or names as are directed in the Subscription Agreements and (B) any Commission Shares;

 

(ii)

delivery of the Commission and the Broker Warrants; and

 

(iii)

delivery to the Agent of copies of the certificates, opinions and other documents contemplated hereby.

(a)

each of the Corporation and Pathfinder is validly existing in good standing under the laws of its jurisdiction;

(b)

each of the Corporation and Pathfinder is duly qualified and authorized to do business in the jurisdiction(s) in which it carries on business or to own property where required under the laws of the jurisdiction(s) in which any such property is located;

(c)

each of the Corporation and Pathfinder is current with all material filings required to be made under the laws of any jurisdiction in which it carries on any material business, and each of the Corporation and Pathfinder has all necessary licenses, leases, permits, authorizations and other approvals necessary to permit it to conduct its business as currently conducted, except where the failure to have any such license, lease, permit, authorization or approval would not have a material adverse effect on the Corporation or Pathfinder, as applicable, and its business;

(d)

the audited financial statements of the Corporation as at and for the year ended December 31, 2010 and the interim financial statements of the Corporation as at and for the three-month period ended March 31, 2011 present fairly, in all material respects, the financial position of the Corporation as at the respective period-end dates, and the results of its operations and the changes in its financial position for the 12-month period ended December 31, 2010 in the case of the audited financial statements, and the 3-month period ended March 31, 2011 in the case of the interim financial statements, all in accordance with generally accepted accounting principles,  and, since March 31, 2011, there has been no material adverse change in the business, affairs or financial or other condition of the Corporation, except as disclosed in the notes to the financial statements for the quarter then ended or in the Corporation’s SEC filings;

(e)

the audited financial statements of Pathfinder as at and for the years ended December 31, 2010 and 2009 and the interim financial statements of Pathfinder as at and for the 3-month period ended March 31, 2011 present fairly, in all material respects, the financial position of Pathfinder as at the respective period end dates, and the results of its operations and the changes in its financial position for the 12-month periods ended December 31, 2010 and 2009 in the case of the audited financial statements, and the 3-month period ended March 31, 2011 in the case of the interim financial statements, all in accordance with generally accepted accounting principles, and since March 31, 2011 there has been no material adverse change in the business, affairs or financial or other condition of Pathfinder except as disclosed in the notes to the financial statements for the quarter then ended or in the Merger Proxy;

(f)

the Corporation has all requisite power and authority to carry out its obligations under this Agreement, the Subscription Agreement, and the Broker Warrants;

(g)

this Agreement and the Subscription Agreement have been, and the Broker Warrants will be on the Closing Date, duly authorized, executed and delivered by the Corporation and constitute or on the Closing Date will constitute, legal, valid and binding obligations of the Corporation enforceable in accordance with their terms except that: (i) the enforcement hereof or thereof may be limited by bankruptcy, insolvency, reorganization and other laws affecting the enforcement of creditors’ rights generally, (ii) rights of indemnity thereunder may be limited under applicable law, and (iii) equitable remedies, including without limitation specific performance and injunctive relief, may be granted only in the discretion of a court of competent jurisdiction;

(h)

the Shares are or on the Closing Date will be duly and validly authorized and, when issued and delivered against payment therefor, will be duly and validly issued, fully paid and non-assessable shares in the capital stock of the Corporation;

(i)

the Corporation will reserve a sufficient number of shares of Common Stock unissued as may be required to be issued pursuant to the exercise of the Broker Warrants and, when issued and delivered upon such exercise, such shares of Common Stock will be duly and validly issued as fully paid and non-assessable shares in the capital stock of the Corporation;

(j)

the authorized capital of the Corporation consists of 150,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value of $0.01 per share.  As of the Closing Date, the number of authorized shares of Common Stock will increase to one billion.  Of the preferred stock, 200,000 shares have been designated as Series D Junior Participating Preferred Stock (underlying outstanding rights applicable to outstanding shares of Common Stock under a shareholder rights agreement adopted effective May 20, 2008, which rights and shareholder rights agreement will expire upon consummation of the Merger), and no other series or class of preferred stock is designated.  As of June 7, 2011, there were 110,527,370 shares of Common Stock and no shares of preferred stock outstanding.  In addition, as of that date, the Corporation had an aggregate of 27,378,950 shares of Common Stock reserved for issuance upon exercise or conversion of the following outstanding securities: (i) options which have been granted under the Corporation’s stock option plans and other agreements, to purchase an aggregate of 6,838,950 shares of Common Stock; and (ii) warrants to purchase an aggregate of 20,540,000 shares of Common Stock.  In addition, the Corporation has agreed (i) to issue 3,000,000 shares of Common Stock pursuant to an agreement settling and terminating an engagement with an investment banker and (ii) upon completion of the Merger, (A) to issue the Merger Shares to holders of Pathfinder membership interests, (B) to assume outstanding Pathfinder options which will be exercisable following the Merger on a merger-adjusted basis for the Common Stock, (C) to issue 660,000 shares of the Common Stock to members of the special committee of the Board of Directors of the Corporation and (D) to issue options to former management of the Corporation to purchase a number of shares of the Common Stock equal in the aggregate to approximately $140,000 divided by the closing stock price on the trading day immediately preceding the Merger.  In addition, prior to consummation of the Merger, the Corporation anticipates entering into an agreement restructuring its rights and obligations relating to its core polymer technology assets and the agreement under which it acquired such rights, which agreement, as presently contemplated, would require, among other things, the issuance by the Corporation of 1,000,000 shares of Common Stock and, upon consummation of the Merger and the Company raising at least $3,000,000 in equity financing, a cash payment of $150,000;

(k)

as at Closing, the Corporation will own all of the issued and outstanding securities of Pathfinder and there will be no rights, subscriptions, warrants, options, conversion rights, calls, commitments or plans or agreements of any kind outstanding which would enable any person to purchase or otherwise acquire any shares or other securities of Pathfinder including, without limitation, any securities convertible into or exchangeable or exercisable for shares or other securities of Pathfinder; the Corporation is not, and at the Closing Date will not be: (i) in breach or violation of any of the terms or provisions of, or in default under, this Agreement, a subscription agreement for the purchase of Shares, any indenture, mortgage, deed of trust or loan agreement, (except as disclosed in the Corporation’s SEC filings), other agreement (written or oral) 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, which breach or violation or the consequences thereof would result in a material adverse change to it or its business; or (ii) in violation of the provisions of its articles, by-laws, resolutions or any statute or any other rule or regulation of any court or governmental agency or body having jurisdiction over it or any of its properties which violation or the consequences thereof would result in a material adverse change to it or its business;

(l)

Pathfinder is not, and at the Closing Date will not be: (i) in breach or violation of any of the terms or provisions of, or in default under any indenture, mortgage, deed of trust or loan agreement, other agreement (written or oral) 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, which breach or violation or the consequences thereof would result in a material adverse change to it or its business; or (ii) in violation of the provisions of its articles, by-laws, resolutions or any statute or any other rule or regulation of any court or governmental agency or body having jurisdiction over it or any of its properties which violation or the consequences thereof would result in a material adverse change to it or its business;

(m)

the issue and sale of the Shares, Broker Warrants, any shares of Common Stock on the exercise of the Broker Warrants and the performance and consummation of the transactions contemplated herein will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement (written or oral) or instrument to which the Corporation or Pathfinder is bound or to which any of the property or assets of the Corporation is subject, which breach or violation or the consequences thereof would result in a material adverse change to the Corporation or its business, nor will any such action conflict with or result in any violation of the provisions of the articles, by-laws or resolutions of the Corporation or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Corporation, any subsidiary or any of its properties which violation or the consequences thereof would result in a material adverse change to the Corporation or its business;

(n)

each of the Corporation and Pathfinder has established on its books reserves which are adequate for the payment of all taxes not yet due and payable; there are no liens or other liabilities for taxes on the assets of the Corporation or Pathfinder, as applicable, except for taxes not yet due; there are no audits of any of the tax returns of the Corporation or Pathfinder which are known by the Corporation’s management to be pending and there are no claims which have been or may be asserted relating to any such tax returns which, if determined adversely, would result in the assertion by any government or agency of any deficiency having a material adverse effect on the properties, business or assets of the Corporation or Pathfinder, as applicable;

(o)

the Corporation has good and valid title to its properties, leaseholds and assets, including without limitation the properties, leaseholds and assets reflected in the balance sheet as of March 31, 2011 referred to in clause 5(d) above, except properties, leaseholds and assets disposed of since such date at fair market value in the ordinary course of business, and has good title to all its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance, charge, rights of first refusal or options to purchase, whether or not relating to extensions of credit or the borrowing of money, other than as disclosed in the Corporation’s SEC filings or except as incurred in the ordinary course of business since the date of such balance sheet, and except in any event where the failure to hold good title or the existence of a mortgage, pledge, lien, lease, encumbrance, charge, right of first refusal or option to purchase would not have a material adverse effect on the Corporation or its business;

(p)

Pathfinder has good and valid title to its properties, leaseholds and assets  necessary for the conduct of its business and has and has good title to all its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance, charge, rights of first refusal or options to purchase, whether or not relating to extensions of credit or the borrowing of money, necessary for the conduct of its business, except in any event where the failure to hold good title or the existence of a mortgage, pledge, lien, lease, encumbrance, charge, right of first refusal or option to purchase would not have a material adverse effect on Pathfinder or its business; there exists no condition which interferes with the economic value or use of such properties and assets and all tangible assets are in good working condition and repair (subject to ordinary wear and tear) except where the existence of any such condition would not have a material adverse effect on Pathfinder or its business;

(q)

each of the Corporation and Pathfinder owns or has valid licenses for the use of, or has applied for registration of, all patents, trade-marks, service marks, trade names, and copyrights necessary for the conduct of its business, except where the failure to so own or apply for registration would not have a material adverse effect on the Corporation Pathfinder, as applicable, or its business; to the best of the knowledge, information and belief of the Corporation none of the past or present activities of each of the Corporation and Pathfinder or the products, services or assets of the Corporation or Pathfinder infringe or constitute an unauthorized use of any proprietary rights of others, and the Corporation or Pathfinder have not received any notice of infringement of, or conflict with, asserted rights of others with respect to any patent, trade-mark, service mark, trade name, or copyright that, individually or in the aggregate, if the subject of an unfavorable decision, ruling, or finding, would result in a material adverse change to the Corporation or Pathfinder, as applicable, or its business;

(r)

each of the Corporation and Pathfinder has taken reasonable measures to protect and preserve the confidentiality of all trade secrets and other non-patented proprietary information of the Corporation or Pathfinder, as applicable, including without limitation the procurement of proprietary invention assignments and non-disclosure and non-competition agreements from employees, consultants, subcontractors, customers and other persons who have access to such information;

(s)

each of the Corporation and Pathfinder has filed all necessary federal, state and municipal property, income and franchise tax returns and has paid all taxes shown as due thereon or otherwise owed by it to any taxing authority except those contested in good faith and for which appropriate amounts have been reserved in accordance with generally accepted accounting principles; there is no tax deficiency which has been, or to the best of the knowledge, information and belief of the Corporation might be, asserted against the Corporation or Pathfinder which would materially affect the business or operations of the Corporation or Pathfinder; each of the Corporation and Pathfinder has paid all applicable federal and state payroll and withholding taxes;

(t)

there is no collective bargaining or other union agreement to which the Corporation or Pathfinder is a party or by which it is bound, or which is currently being negotiated; except for a defined contribution plan under Section 401(k) of the US Internal Revenue Code, the Corporation or Pathfinder does not sponsor, maintain or contribute to any pension, retirement, profit sharing, incentive compensation, bonus or other employee benefit plan, including without limitation any employee benefit plan covered by Title 4 of the Employee Retirement Income Security Act of 1974 (“ERISA”) or any “multi-employer plan” as defined in Section 4001(a)(3) of ERISA, or any other employee benefit plan; to the best of the knowledge, information and belief of the Corporation, (i) no employee of the Corporation or Pathfinder is a party to or bound by any agreement, contract or commitment, or subject to any restrictions, particularly but without limitation in connection with any previous employment of any such person, which would result in a material adverse change to the Corporation or Pathfinder, as applicable, or its business, and (ii) no senior officer has any present intention of terminating his employment with the Corporation or Pathfinder, as applicable, and the Corporation or Pathfinder has no present intention of terminating any such employment;

(u)

there is no adverse claim, action, proceeding or investigation pending or, to the knowledge, information and belief of the Corporation, threatened, which questions the validity of the issue or sale of the Shares, Broker Warrants, or any shares of Common Stock on exercise of the Broker Warrants or the validity of any action taken or to be taken by the Corporation in connection with this Agreement or the Subscription Agreement or which would result in any material adverse change in the financial condition, results of operations, business or prospects of the Corporation or Pathfinder;

(v)

the Corporation will permit the Agent and its legal counsel to conduct all due diligence which the Agent may reasonably require; and

(w)

during the period commencing with the engagement of the Agent on the date of this Agreement and ending on the date on which the full amount of the Offering is sold or the earlier date of termination of the Offering period (the “Final Closing Date”), the Corporation will inform the Agent in writing of the full particulars of any material change (actual, anticipated or threatened) in the assets, liabilities, business or the financial condition of the Corporation.

(a)

the Merger having been consummated;

(b)

if and to the extent requested by the Agent, the members of Pathfinder prior to the Merger having executed and delivered lock-up agreements restricting sales and other transfers of the Common Stock received by them in the Merger for such period of time and on such other terms as the Agent shall request;

(c)

the Corporation shall have complied with all of its obligations hereunder; the representations and warranties of the Corporation contained herein shall be true and correct in all material respects on and as of each Closing Date as if made on and as of such Closing Date; and the Agent shall have received on each Closing Date a certificate, dated as of such Closing Date and signed by one or more executive officers or directors of the Corporation on behalf of the Corporation and not in his or their personal capacity, to the foregoing effect;

(d)

the Agent shall have received on and as of each Closing Date the favourable opinion of the Corporation’s legal counsel on such matters as the Agent may reasonably request, including:

 

(i)

the Corporation is incorporated and validly existing under the laws of the jurisdiction in which it is incorporated and has the corporate power and authority to conduct its business as currently conducted by it and to issue and sell the Shares and Broker Warrants (including the shares at Common Stock to be issued under the Broker Warrants) (collectively referred to as the “Securities”) and to enter into and carry out its obligations under this Agreement, the Subscription Agreement and the Broker Warrants;

 

(ii)

as to the Corporation's authorized and issued and outstanding capital;

 

(iii)

each of this Agreement, the Subscription Agreement and the Securities has been duly authorized, executed and delivered by the Corporation and, as applicable, is a legal, valid and binding obligation of the Corporation enforceable against it in accordance with its terms;

 

(iv)

all necessary action has been taken by the Corporation to authorize the issue of up to 120,000,000 Shares and the issue to the Agent of up to 8,400,000 Commission Shares and Broker Warrants exercisable for up to 8,400,000 shares of Common Stock and the Corporation has sufficient authorized but unissued shares of Common Stock as may be required to be issued upon the exercise of the Broker Warrants;

 

(v)

the execution and delivery of this Agreement and the Subscription Agreement and the completion of the transactions contemplated hereby and thereby, the issue of the Shares, the Commission Shares, the Broker Warrants, and the issue of the shares of Common Stock issuable upon exercise of the Broker Warrants do not violate or constitute a breach of any provisions of the articles of incorporation or by-laws of the Corporation, any material contract or other material agreement to which it is a party or by which it is bound and of which such counsel is aware, or any New York, Delaware corporate or United States law or regulation (other than federal and state Securities or “blue sky” laws, as to which such counsel expresses no opinion in this paragraph);

 

(vi)

the Shares issued to the investors and the Commission Shares issued to the Agent, if any, have been duly and validly issued by the Corporation and the shares of Common Stock underlying same are outstanding as fully paid and non-assessable shares in the capital of the Corporation and the shares of Common Stock issuable upon exercise of the Broker Warrants will, when issued in accordance with the respective terms and conditions of the Broker Warrants, as applicable, be validly issued as fully paid and non-assessable shares in the capital of the Corporation;

 

(vii)

the certificates representing the Shares, Commission Shares and Broker Warrants comply with the requirements of the state laws and any federal laws of the United States applicable to the Corporation and such certificates have been duly and properly approved by the directors of the Corporation;

 

(viii)

the exemption from any consent, approval, authorization, order, registration, filing or qualification of or with any governmental authority of the United States (or New York or Delaware corporate authority) (other than federal and state securities or “blue sky” laws, as to which such counsel expresses no opinion in this paragraph) for the valid authorization, issue, sale and delivery of the Shares, and Commission Shares and the shares of Common Stock issuable upon exercise of the Broker Warrants and the issue and delivery of the Broker Warrants; and

 

(ix)

the exemption from registration of the issuance of the Shares, Commission Shares, Broker Warrants including the shares of Common Stock underlying the Broker Warrants under the terms contemplated by the Subscription Agreement and the Agency Agreement.

(e)

the Agent shall have received copies of the Subscription Agreements executed by the Corporation;

(f)

the Agent shall have received such other agreements, certificates, opinions or documents as the Agent may reasonably request; and

(g)

the fulfilment, to the reasonable satisfaction of counsel for the Agent, of all legal requirements to permit the offer and sale of the Shares and the issue of the Broker Warrants to the Agent.

(a)

As is standard in the UK, the Corporation shall consult with the Agent on the making of any public announcements and in particular shall not make any announcement concerning the subject matter of the Agent’s appointment, whether formal or informal, without the Agent’s prior written consent unless the Corporation is required to do so by any applicable laws or stock exchange rules, in which case the Corporation shall notify the Agent in writing prior to the making of such announcement. The Corporation and its directors will accept full responsibility for the contents of any document or announcement published by the Corporation in connection with the Agent’s duties hereunder.

(b)

The Agent will be entitled to rely on any information supplied or published by the Corporation or its agents or advisers and contained in any such document or announcement and will not be responsible for verifying the accuracy or completeness of any information.

(c)

If the Agent is asked by the Corporation to approve any document or announcement which will or might constitute a non real-time financial promotion within the meaning of section 21(1) of the Financial Services and Markets Act 2000 (a “Financial Promotion”), then in addition to the foregoing provisions of this Section 8:

 

(i)

the Corporation shall make such amendments to the Financial Promotion as the Agent considers necessary or desirable prior to any such approval;  and

 

(ii)

the Agent shall be free to qualify such approval in such manner as it considers necessary or appropriate to ensure compliance with the rules and regulations made by the Financial Services Authority (“FSA”) and if the Agent does so the Corporation will ensure that the Financial Promotion is published and distributed only in accordance with the terms of such rules and such approval.

(d)

The Corporation agrees that the Agent shall not be obliged to approve any Financial Promotion.

(a)

The Corporation confirms to the Agent that it will not breach any contractual, legal, regulatory or other obligation by entering into this Agreement and that the Corporation knows of no matter as a result of which it would not be able to give this confirmation were it required to repeat it at any time during the term of the Agent’s appointment. The Corporation confirms that it will at all times comply with all such obligations.

(b)

All services provided by the Agent are subject to the rules and regulations for the time being in force of the FSA.

(c)

The Corporation shall comply with, and shall assist the Agent in complying, with all applicable legal and regulatory requirements relating to the transactions contemplated herein.

(a)

The Corporation will not publish or disclose to any third party (other than to its other advisers for the purposes of the transaction contemplated hereunder) any documents generated by the Agent without the prior written consent of the Agent unless such publication is required by applicable law, regulation, legal process or regulatory authority.

(b)

The Corporation agrees that any advice given by the Agent pursuant to this Agreement is provided solely for the purpose of the Agent’s appointment and for the use and benefit of the Corporation and may not be used or relied on for any other purpose without the prior written consent of the Agent.

(a)

The Corporation has been classified as an “elective professional client” (as defined by the FSA Rules) in respect of all investment services and activities and ancillary services which the Agent may conduct with or for the Corporation, whether in relation to the Agent’s appointment or otherwise, because the Corporation satisfies at least two of the following criteria:

 

(i)

the Corporation carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters;

 

(ii)

the size of the Corporation’s financial instrument portfolio, defined as including cash deposits and financial instruments, exceeds EUR 500,000;

 

(iii)

the Corporation works or has worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged.

(b)

As a consequence, the Corporation will lose the following protections afforded to retail clients (apart from those which are also provided to elective professional clients) under the FSA Rules:

 

(i)

Direct offer financial promotions –the Agent will not be obliged to comply with the FSA Rules relating to restrictions on and the required contents of direct offer financial promotions.  The Agent does not need to provide the Corporation in a direct offer financial promotion, with sufficient information for the Corporation to make an informed assessment of the investment to which it relates;

 

(ii)

Understanding of risk – the Agent will not be required to provide the Corporation with the written risk warnings and notice required for retail clients in relation to transactions in complex financial instruments, in particular derivatives and warrants, and stock lending;

 

(iii)

Disclosure of charges, remuneration and commission – the Agent will not be required to disclose in writing before conducting any designated business on the Corporation’s behalf the basis or amount of their charges for conducting that business, or the amount of remuneration or other income payable to the Agent or its affiliates for conducting the regulated business;

 

(iv)

Financial Ombudsman Service - access to the Financial Ombudsman will not extend to the Corporation as an elective professional client.

(c)

The Corporation’s attention is also drawn to the following rules, which are limited in their application to elective professional clients with the following possible consequences for clients:

 

(i)

Financial promotion - certain FSA Rules relating to the form, content and checking and otherwise concerning financial promotions generally will not apply;

 

(ii)

Appropriateness – the Agent may have regard to the Corporation’s expertise as an elective professional client when complying with the requirements that transactions are appropriate;

 

(iii)

Confirmation of transactions to customers - the FSA Rules relating to the confirmation of transactions will apply in a modified form. Provisions regarding extra reporting requirements for dealings with retail clients and provision of hard copies of confirmations not accessed electronically will not apply.

 

(iv)

Communication – the Agent may have regard to the Corporation’s expertise as an elective professional client when complying with the requirements under the regulatory system that communications be clear, fair and not misleading. Additionally, the Agent may have regard to the Corporation’s expertise as an elective professional client when complying with the requirements to provide the Corporation with a general description of the nature and risks of particular transactions. If the Corporation has any queries on this warning or requires any further information, the Corporation shall contact the Agent’s Compliance Officer.

(a)

The Corporation agrees to ensure that no claim is made by the Corporation or any of its Associates against any Indemnified Person to recover any Loss which the Corporation or any of its Associates may suffer or incur directly or indirectly as a result of the Agent and its Associates’ performance of its services under the Engagement.

(b)

Section 16(a) shall not apply to the extent that the relevant Loss is finally determined by a Court or binding arbitration to be the result of the fraud, gross negligence or wilful default of an Indemnified Person.

(c)

The Corporation will indemnify each of the Indemnified Persons against:

 

(i)

any Loss; or

 

(ii)

any action, proceedings, demand or judgment in respect of any Loss (including the cost of defending such proceedings),

(d)

Section 16(c) shall not apply to the extent that the relevant Loss is finally determined by a Court or binding arbitration to be the result of the fraud, gross negligence or wilful default of an Indemnified Person.

(e)

Neither of Sections 16(a) or (c) shall apply in relation to any particular Loss to the extent that the application of that Section in relation to the Loss would have the effect of excluding or restricting any duty or liability which the Agent may have to the Corporation or any of its Associates under the regulatory system (as defined in the FSA Handbook).

(f)

the Agent will promptly, upon becoming aware of it, notify the Corporation of any claim against an Indemnified Person which is relevant under this Section 16.  The Agent will consult the Corporation on its conduct of the claim and will supply the Corporation with copies of all information and documents relating to the claim that it reasonably requests, subject to:

 

(i)

the Indemnified Persons being indemnified against any increased Loss that may result from consultation with the Corporation or from the Agent supplying the Corporation with such copies; and

 

(ii)

any requirements of the Agent’s insurers.

(g)

Where the Agent or any Indemnified Person is or would be indemnified by the Corporation under Section 16(c), the Corporation shall not, without the Agent’s prior written consent (such consent not to be unreasonably withheld or delayed), settle, admit liability for, or compromise any actual, pending or threatened claim, action, proceeding or investigation (“Claim”) against or in respect of the Corporation, whether or not any Indemnified Person is also an actual or potential party to such Claim.

(h)

All sums payable to an Indemnified Person under this Agreement shall be paid free of any deduction or withholding tax.  If the Corporation is required by law to make any deduction or withhold any tax it shall pay such additional amount as is necessary to ensure that the net amount received by the Indemnified Person remains unaffected by such deduction or withholding.

(i)

Where any accountants or other advisers are engaged by the Corporation or any of its Associates and/or the Agent in connection with the Engagement and a limitation on the liability of those accountants or other advisers is agreed by the Corporation or any of its Associates and/or the Agent, the liability of the Agent for any Loss will not be increased as a result.  Without prejudice to the generality of the preceding sentence, any Loss for which the Agent and those accountants or other advisers would otherwise be jointly and severally liable will only be recoverable from the Agent to the extent of the Agent’s responsibility for such Loss, as if the liability of the accountants or other advisers were not limited.

(j)

For the purposes of this Agreement:

By:

By:

Richard L. Franklin

Executive Chairman

 

·

The perceived quality of the investor.

 

·

The size of investor demand, particularly in relation to the investor’s funds under management and likely order size.

 

·

The propensity of the investor to hold the shares for the medium to long term.

 

·

The probability that the investor will use their allocation as a starting point for building a larger shareholding (this may include indications of after market demand).

 

·

The extent of the investor’s participation in management marketing.

 

·

The extent of the investor’s participation in investor education meetings with syndicate research analysts.

 

·

The price leadership and timeliness of order (particularly in relation to a management meeting).

 

·

The extent to which the order is consistent with the investor’s existing portfolio strategy and/or existing shareholdings.

 

·

The type and location of the investor – to ensure targeting of suitable investor types (eg specialist funds) and geographical spread.