UNDERWRITING AGREEMENT between BRIDGELINE DIGITAL, INC. and THINKEQUITY, A DIVISION OF FORDHAM FINANCIAL MANAGEMENT, INC., as Representative of the Several Underwriters BRIDGELINE DIGITAL, INC. UNDERWRITING AGREEMENT
between
and
THINKEQUITY,
A DIVISION OF FORDHAM FINANCIAL MANAGEMENT, INC.,
as Representative of the Several Underwriters
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[●], 2018
ThinkEquity,
A
Division of Fordham Financial Management, Inc.
As Representative of the several Underwriters named on Schedule 1
attached hereto
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The
undersigned, Bridgeline Digital, Inc., a corporation formed under
the laws of the State of Delaware (collectively with its
subsidiaries and affiliates, including, without limitation, all
entities disclosed or described in the Registration Statement (as
hereinafter defined) as being subsidiaries or affiliates of
Bridgeline Digital, Inc., the “Company”), hereby confirms its
agreement (this “Agreement”) with ThinkEquity, a
division of Fordham Financial Management, Inc. (hereinafter
referred to as “you” (including its correlatives) or
the “Representative”), and with the
other underwriters named on Schedule 1 hereto for which the
Representative is acting as representative (the Representative and
such other underwriters being collectively called the
“Underwriters”
or, individually, an “Underwriter”) as
follows:
1. Purchase
and Sale of Securities.
1.1 Firm
Securities.
1.1.1 Nature
and Purchase of Firm Securities.
(i) On
the basis of the representations and warranties herein contained,
but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to the several Underwriters, an
aggregate of [●]
Class A Units (each, a
“Class
A Unit” and collectively,
the “Class A
Units”), each Class A
Unit consisting of one share of the Company’s common stock,
par value $0.001 per share (the “Common Stock”), and a warrant, in the form filed as an
exhibit to the Registration Statement (as defined in Section 2.1.1
below), to purchase one share of Common Stock (each, a
“Warrant” and collectively, the
“Warrants”), and an aggregate of [●] Class B
Units (each, a “Class B Unit” and collectively, the
“Class
B Units”), each Class B
Unit consisting of one share of Series B Convertible Preferred
Stock, par value $0.001 per share (the “Preferred
Stock”), each share of
Preferred Stock convertible into [●] shares of Common Stock
at a conversion price of [●] per share, subject to
adjustments, and Warrants to purchase up to [●] shares of
Common Stock . Each Warrant shall be exercisable for a period of
five years at an exercise price of [●] per share, subject to
adjustment as provided in the Warrants. The [●] Class A Units
and the [●] Class B Units are collectively referred to herein
as the “Firm
Securities.”
(ii) The
Underwriters, severally and not jointly, agree to purchase from the
Company the number of Firm Securities set forth opposite their
respective names on Schedule 1 attached hereto and
made a part hereof at a purchase price of $[●] per Class A Xxxx (00%0 of the per Class A Unit offering price)
and $930.00 per Class B Unit (93% of the per Class B Unit offering
price) . The Firm Securities are to be offered initially to the
public at units at the respective offering prices set forth on the
cover page of the Prospectus (as defined in Section 2.1.1
hereof).
_____________
1 3.5% for shares
sold to Company Investors.
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1.1.2 Shares
Payment and Delivery.
(i) Delivery
and payment for the Firm Securities shall be made at 10:00 a.m.,
Eastern time, on the second (2nd) Business Day following the
effective date (the “Effective
Date”) of the
Registration Statement (as defined in Section 2.1.1
below) under the Securities Act of
1933, as amended (the “Securities
Act”) (or the third (3rd)
Business Day following the Effective Date if the pricing for the
Offering (as defined in Section 2.1.1
below) occurs after 4:01 p.m., Eastern
time on the Effective Date), or at such earlier time as
shall be agreed upon by the Representative and the Company, at the
offices of Gracin & Xxxxxx, LLP, The Chrysler Building, 000
Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000
(“Representative
Counsel”), or at such other place (or remotely by
facsimile or other electronic transmission) as shall be agreed upon
by the Representative and the Company. The hour and date of
delivery and payment for the Firm Securities is called the
“Closing Date.”
.. The term “Business
Day” means any day other than a Saturday, a Sunday or
a legal holiday or a day on which banking institutions are
authorized or obligated by law to close in New York, New
York.
(ii) Payment
for the Firm Securities shall be made on the Closing Date by wire
transfer in Federal (same day) funds, payable to the order of the
Company upon delivery of certificates (in form and substance
satisfactory to the Underwriters) representing the Firm Securities
(or through the facilities of the Depository Trust Company
(“DTC”)) for the
account of the Representative. The Firm Securities shall be
registered in such name or names and in such authorized
denominations as the Representative may request in writing at least
two (2) full Business Days prior to the Closing Date. The Company
shall not be obligated to sell or deliver the Firm Securities
except upon tender of payment by the Representative for all of the
Firm Securities. The term “Business Day” means any day
other than a Saturday, a Sunday or a legal holiday or a day on
which banking institutions are authorized or obligated by law to
close in New York, New York.
1.2 Over-allotment
Option.
1.2.1 Option
Securities. For the purposes of covering any over-allotments
in connection with the distribution and sale of the Firm
Securities, the Company hereby grants to the Representative an
option (the “Over-allotment
Option”) to purchase up to (a) [●] additional shares of Common
Stock, representing fifteen percent (15%) of the shares of Common
Stock sold as part of the Class A Units and the shares of Common
Stock issuable upon conversion of the Preferred Stock sold as part
of the Class B Units (the “Option Shares”), and/or (b)
warrants to purchase up to [●] shares of Common Stock,
representing fifteen percent (15%) of the Warrants sold as part of
the Class A Units and the Warrants sold as part of the Class B
Units (the “Option
Warrants” and collectively with the Option Shares, the
“Option
Securities”). The purchase price to be paid per Option
Share shall be [●] and
the purchase price to be paid per Option Warrant shall be $0.0093.
The shares of Common Stock issuable upon exercise of the Firm
Warrants and the Option Warrants are hereinafter referred to as the
“Warrant
Shares.” The Shares of Common Stock issuable upon
conversion of the Preferred Stock are hereinafter referred to as
the “Preferred Conversion
Shares.” The Firm Securities, the Warrant Shares, the
Preferred Conversion Shares and the Option Securities are
hereinafter referred to together as the “Public Securities.” The offering
and sale of the Public Securities is hereinafter referred to as the
“Offering.”
1.2.2 Exercise
of Option. The Over-allotment Option granted pursuant to
Section 1.2.1
hereof may be exercised by the Representative as to all (at any
time) or any part (from time to time) of the Option Securities
within 45 days after the date of the Prospectus (as defined below).
The Underwriters shall not be under any obligation to purchase any
Option Securities prior to the exercise of the Over-allotment
Option. The Over-allotment Option granted hereby may be exercised
by the giving of oral notice to the Company from the
Representative, which must be confirmed in writing by overnight
mail or facsimile or other electronic transmission setting forth
the number of Option Securities to be purchased and the date and
time for delivery of and payment for the Option Securities (the
“Option Closing
Date”), which shall not be later than five (5) full
Business Days after the date of the notice or such other time as
shall be agreed upon by the Company and the Representative, at the
offices of Representative Counsel or at such other place (including
remotely by facsimile or other electronic transmission) as shall be
agreed upon by the Company and the Representative. If such delivery
and payment for the Option Securities does not occur on the Closing
Date, the Option Closing Date will be as set forth in the notice.
Upon exercise of the Over-allotment Option with respect to all or
any portion of the Option Securities, subject to the terms and
conditions set forth herein, (i) the Company shall become obligated
to sell to the Underwriters the number of Option Securities
specified in such notice and (ii) each of the Underwriters, acting
severally and not jointly, shall purchase that portion of the total
number of Option Securities then being purchased as set forth in
Schedule 1 opposite
the name of such Underwriter bears to the total number of Firm
Securities, subject, in each case, to such adjustments as the
Representative, in its sole discretion, shall
determine.
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1.2.3 Payment
and Delivery. Payment for the Option Securities shall be
made on the Option Closing Date by wire transfer in Federal (same
day) funds, payable to the order of the Company upon delivery to
you of certificates (in form and substance satisfactory to the
Underwriters) representing the Option Securities (or through the
facilities of DTC) for the account of the Underwriters. The Option
Securities shall be registered in such name or names and in such
authorized denominations as the Representative may request in
writing at least two (2) full Business Days prior to the Option
Closing Date. The Company shall not be obligated to sell or deliver
the Option Securities except upon tender of payment by the
Representative for applicable Option Securities. The Option Closing
Date may be simultaneous with, but not earlier than, the Closing
Date; and in the event that such time and date are simultaneous
with the Closing Date, the term “Closing Date” shall refer to the
time and date of delivery of the Firm Securities and Option
Securities.
1.3 Representative’s
Warrants.
1.3.1.
Purchase Warrants.
The Company hereby agrees to issue and sell to the Representative
(and/or its designees) on the Closing Date an option (the
“Representative’s
Warrant”) for the purchase of an aggregate of
[●] shares of Common Stock, representing 5.0% (2.5% of the
aggregate number of share of Common Stock sold as part of the Class
A Units and shares of Common Stock
into which the Preferred Stock sold as part of the Class B
Units is convertible.
(excluding the Option Securities), for an aggregate purchase price
of $100.00. The Representative’s Warrant agreement, in the
form attached hereto as Exhibit A (the
“Representative’s
Warrant Agreement”), shall be exercisable, in whole or
in part, commencing on a date which is one hundred and eighty (180)
days after the Effective Date and expiring on the five-year
anniversary of the Effective Date at an initial exercise price per
share of Common Stock of $[●], which is equal to 125.0% of
the public offering price of each Class A Unit. The
Representative’s Warrant Agreement and the shares of Common
Stock issuable upon exercise thereof are hereinafter referred to
together as the “Representative’s
Securities.” The Representative understands and agrees
that there are significant restrictions pursuant to FINRA Rule 5110
against transferring the Representative’s Warrant and the
underlying shares of Common Stock during the one hundred eighty
(180) days immediately following the Effective Date and by its
acceptance thereof shall agree that the Representative’s
Warrant and the underlying shares of Common Stock shall not be sold
during the Offering, or sold, transferred, assigned, pledged, or
hypothecated, or be the subject of any hedging, short sale,
derivative, put, or call transaction that would result in the
effective economic disposition of the Representative’s
Warrant or the underlying shares of Common Stock by any person for
a period of one hundred eighty (180) days immediately following the
Effective Date, except as provided for in FINRA Rule
5110(g)(2).
1.3.2.
Delivery. Delivery
of the Representative’s Warrant Agreement shall be made on
the Closing Date and shall be issued in the name or names and in
such authorized denominations as the Representative may
request.
2. Representations
and Warranties of the Company. The Company represents and
warrants to the Underwriters as of the Applicable Time (as defined
below), as of the Closing Date and as of the Option Closing Date,
if any, as follows:
2.1 Filing
of Registration Statement.
2.1.1 Pursuant
to the Securities Act. The
Company has filed with the U.S. Securities and Exchange Commission
(the “Commission”) a registration statement, and an
amendment or amendments thereto, on Form S-1 (File No. 333-227430),
including any related prospectus or prospectuses, for the
registration of the Public Securities and the
Representative’s Securities under the Securities Act, which
registration statement and amendment or amendments have been
prepared by the Company in all material respects in conformity with
the requirements of the Securities Act and the rules and
regulations of the Commission under the Securities Act (the
“Securities Act
Regulations”) and will
contain all material statements that are required to be stated
therein in accordance with the Securities Act and the Securities
Act Regulations. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at
the time the registration statement became effective (including the
Preliminary Prospectus included in the registration statement,
financial statements, schedules, exhibits and all other documents
filed as a part thereof or incorporated therein and all information
deemed to be a part thereof as of the Effective Date pursuant to
paragraph (b) of Rule 430A of the Securities Act Regulations (the
“Rule
430A Information”)), is
referred to herein as the “Registration
Statement.” If the
Company files any registration statement pursuant to Rule 462(b) of
the Securities Act Regulations, then after such filing, the term
“Registration
Statement” shall include
such registration statement filed pursuant to Rule 462(b). The
Registration Statement has been declared effective by the
Commission on the date hereof.
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Each prospectus used prior to the effectiveness of
the Registration Statement, and each prospectus that omitted the
Rule 430A Information that was used after such effectiveness and
prior to the execution and delivery of this Agreement, is herein
called a “Preliminary
Prospectus.” The
Preliminary Prospectus, subject to completion, dated [●],
2018, that was included in the Registration Statement immediately
prior to the Applicable Time is hereinafter called the
“Pricing
Prospectus.” The final
prospectus in the form first furnished to the Underwriters for use
in the Offering is hereinafter called the
“Prospectus.”
Any reference to the “most recent Preliminary
Prospectus” shall be
deemed to refer to the latest Preliminary Prospectus included in
the Registration Statement.
“Applicable
Time” means [ ]:00
[a.m.][p.m.], Eastern time, on the date of this
Agreement.
“Issuer Free Writing
Prospectus” means any
“issuer free writing prospectus,” as defined in Rule
433 of the Securities Act Regulations (“Rule 433”), including without limitation any
“free writing prospectus” (as defined in Rule 405 of
the Securities Act Regulations) relating to the Public Securities
that is (i) required to be filed with the Commission by the
Company, (ii) a “road show that is a written
communication” within the meaning of Rule 433(d)(8)(i),
whether or not required to be filed with the Commission, or (iii)
exempt from filing with the Commission pursuant to Rule
433(d)(5)(i) because it contains a description of the Public
Securities or of the Offering that does not reflect the final
terms, in each case in the form filed or required to be filed with
the Commission or, if not required to be filed, in the form
retained in the Company’s records pursuant to Rule
433(g).
“Issuer General Use Free Writing
Prospectus” means any
Issuer Free Writing Prospectus that is intended for general
distribution to prospective investors (other than a
“bona
fide electronic road
show,” as defined in Rule 433), as evidenced by its being
specified in Schedule 2-B
hereto.
“Issuer Limited Use Free Writing
Prospectus” means any
Issuer Free Writing Prospectus that is not an Issuer General Use
Free Writing Prospectus.
“Pricing Disclosure
Package” means any Issuer
General Use Free Writing Prospectus issued at or prior to the
Applicable Time, the Pricing Prospectus and the information
included on Schedule 2-A
hereto, all considered together.
2.1.2 Pursuant
to the Exchange Act. The Company has filed with the
Commission a Form 8-A (Accession No. 001-33567) providing for the
registration pursuant to Section 12(b) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), of the shares of
Common Stock. The registration of the shares of Common Stock and
related Form 8-A have become effective under the Exchange Act on or
prior to the date hereof. The Company has taken no action designed
to, or likely to have the effect of, terminating the registration
of the shares of Common Stock under the Exchange Act, nor has the
Company received any notification that the Commission is
contemplating terminating such registration.
2.2 Stock
Exchange Listing. The shares of Common Stock have been
approved for listing on The NASDAQ Capital Market (the
“Exchange”), and
the Company has taken no action designed to, or likely to have the
effect of, delisting the shares of Common Stock from the Exchange,
nor has the Company received any notification that the Exchange is
contemplating terminating such listing except as described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus. The Company has submitted the Listing of Additional
Shares Notification Form with the Exchange with respect to the
Offering of the shares of Common Stock included in the Public
Securities (including the Warrants Shares and the Preferred
Conversion Shares).
2.3 No
Stop Orders, etc. Neither the Commission nor, to the
Company’s knowledge, any state regulatory authority has
issued any order preventing or suspending the use of the
Registration Statement, any Preliminary Prospectus or the
Prospectus or has instituted or, to the Company’s knowledge,
threatened to institute, any proceedings with respect to such an
order. The Company has complied with each request (if any) from the
Commission for additional information.
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2.4 Disclosures
in Registration Statement.
2.4.1 Compliance
with Securities Act and 10b-5 Representation.
(i) Each
of the Registration Statement and any post-effective amendment
thereto, at the time it became effective, complied in all material
respects with the requirements of the Securities Act and the
Securities Act Regulations. Each Preliminary Prospectus, including
the prospectus filed as part of the Registration Statement as
originally filed or as part of any amendment or supplement thereto,
and the Prospectus, at the time each was filed with the Commission,
complied in all material respects with the requirements of the
Securities Act and the Securities Act Regulations. Each Preliminary
Prospectus delivered to the Underwriters for use in connection with
this Offering and the Prospectus was or will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation
S-T.
(ii) Neither
the Registration Statement nor any amendment thereto, at its
effective time, as of the Applicable Time, at the Closing Date or
at any Option Closing Date (if any), contained, contains or will
contain an untrue statement of a material fact or omitted, omits or
will omit to state a material fact required to be stated therein or
necessary to make the statements therein not
misleading.
(iii) The
Pricing Disclosure Package, as of the Applicable Time, at the
Closing Date or at any Option Closing Date (if any), did not, does
not and will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; and any Issuer Limited Use Free
Writing Prospectus hereto does not conflict with the information
contained in the Registration Statement, any Preliminary Prospectus
or the Prospectus, and each such Issuer Limited Use Free Writing
Prospectus, as supplemented by and taken together with the
Prospectus as of the Applicable Time, did not include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
provided, however, that this representation and
warranty shall not apply to statements made or statements omitted
in reliance upon and in conformity with written information
furnished to the Company with respect to the Underwriters by the
Representative expressly for use in the Registration Statement, the
Pricing Disclosure Package or the Prospectus or any amendment
thereof or supplement thereto. The parties acknowledge and agree
that such information provided by or on behalf of any Underwriter
consists solely of the following statements concerning the
Underwriters contained in the “Underwriting” section of
the Prospectus (the “Underwriters Information”): (i)
the second sentence of the subsection entitled “Discounts and
Commissions” related to concessions; (ii) the first three
paragraphs under the subsection entitled “Price
Stabilization, Short Positions and Penalty Bids”; and (iii)
the subsection entitled “Electronic
Distribution.”
(iv) Neither
the Prospectus nor any amendment or supplement thereto (including
any prospectus wrapper), as of its issue date, at the time of any
filing with the Commission pursuant to Rule 424(b), at the Closing
Date or at any Option Closing Date, included, includes or will
include an untrue statement of a material fact or omitted, omits or
will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this representation and warranty shall not
apply to the Underwriters’ Information.
(v) The
documents incorporated by reference in the Registration Statement,
the Pricing Prospectus, the Pricing Disclosure Package and the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects
to the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder and none of such documents contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; and any further documents so filed and
incorporated by reference in the Registration Statement, the
Pricing Prospectus, the Pricing Disclosure Package and the
Prospectus, when such documents become effective or are filed with
the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder, and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not
misleading.
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2.4.2 Disclosure
of Agreements. The agreements and documents described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus conform in all material respects to the descriptions
thereof contained or incorporated by reference therein and there
are no agreements or other documents required by the Securities Act
and the Securities Act Regulations to be described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus or to be filed with the Commission as exhibits to the Registration Statement or to be
incorporated by reference in the Registration Statement, the
Pricing Disclosure Package or the Prospectus, that have not been so
described or filed or incorporated by reference. Each agreement or
other instrument (however characterized or described) to which the
Company is a party or by which it is or may be bound or affected
and (i) that is referred to or incorporated by reference in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, or (ii) is material to the Company’s business,
has been duly authorized and validly executed by the Company, is in
full force and effect in all material respects and is enforceable
against the Company and, to the Company’s knowledge, the
other parties thereto, in accordance with its terms, except (x) as
such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights
generally, (y) as enforceability of any indemnification or
contribution provision may be limited under the federal and state
securities laws, and (z) that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject
to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought. None of such
agreements or instruments has been assigned by the Company, and
neither the Company nor, to the best of the Company’s
knowledge, any other party is in default thereunder and, to the
best of the Company’s knowledge, no event has occurred that,
with the lapse of time or the giving of notice, or both, would
constitute a default thereunder. To the Company’s knowledge,
performance by the Company of the material provisions of such
agreements or instruments will not result in a violation of any
existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign,
having jurisdiction over the Company or any of its assets or
businesses (each, a “Governmental
Entity”), including,
without limitation, those relating to environmental laws and
regulations.
2.4.3 Prior
Securities Transactions. No securities of the Company have
been sold by the Company or by or on behalf of, or for the benefit
of, any person or persons controlling, controlled by or under
common control with the Company, except as disclosed in the
Registration Statement, the Pricing Disclosure Package and the
Preliminary Prospectus.
2.4.4 Regulations.
The disclosures in the Registration Statement, the Pricing
Disclosure Package and the Prospectus concerning the effects of
federal, state, local and all foreign regulation on the Offering
and the Company’s business as currently contemplated are
correct in all material respects and no other such regulations are
required to be disclosed in the Registration Statement, the Pricing
Disclosure Package and the Prospectus that are not so
disclosed.
2.4.5 No
Other Distribution of Offering Materials. The Company has
not, directly or indirectly, distributed and will not distribute
any offering material in connection with the Offering other than
any Preliminary Prospectus, the Pricing Disclosure Package, the
Prospectus and other materials, if any, permitted under the
Securities Act and consistent with Section 3.2 below.
2.5 Changes
After Dates in Registration Statement.
2.5.1 No
Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, except as otherwise
specifically stated therein: (i) there has been no material adverse
change in the financial position or results of operations of the
Company, nor any change or development that, singularly or in the
aggregate, would involve a material adverse change or a prospective
material adverse change, in or affecting the condition (financial
or otherwise), results of operations, business, assets or prospects
of the Company (a “Material
Adverse Change”); (ii) there have been no material
transactions entered into by the Company, other than as
contemplated pursuant to this Agreement; and (iii) no officer or
director of the Company has resigned from any position with the
Company.
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2.5.2 Recent
Securities Transactions, etc. Subsequent to the respective
dates as of which information is given in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, and
except as may otherwise be indicated or contemplated herein or
disclosed in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, the Company has not: (i) issued any
securities or incurred any liability or obligation, direct or
contingent, for borrowed money; or (ii) declared or paid any
dividend or made any other distribution on or in respect to its
capital stock.
2.6 Disclosures
in Commission Filings. Since January 1, 2013, (i) none of
the Company’s filings with the Commission contained any
untrue statement of a material fact or omitted 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; and (ii) the Company has made all filings with the
Commission required under the Exchange Act and the rules and
regulations of the Commission promulgated thereunder (the
“Exchange Act
Regulations”).
2.7 Independent
Accountants. To the knowledge of the Company, Xxxxxx LLP
(the “Auditors”), whose respective
reports are filed with the Commission and included or incorporated
by reference in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, is each an independent registered
public accounting firm as required by the Securities Act and the
Securities Act Regulations and the Public Company Accounting
Oversight Board. The Auditors have not, during the periods covered
by the financial statements included or incorporated by reference
in the Registration Statement, the Pricing Disclosure Package and
the Prospectus, provided to the Company any non-audit services, as
such term is used in Section 10A(g) of the Exchange
Act.
2.8 Financial
Statements, etc. The financial statements, including the
notes thereto and supporting schedules included or incorporated by
reference in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, fairly present the financial position
and the results of operations of the Company at the dates and for
the periods to which they apply; and such financial statements have
been prepared in conformity with U.S. generally accepted accounting
principles (“GAAP”), consistently applied
throughout the periods involved (provided that unaudited interim
financial statements are subject to year-end audit adjustments that
are not expected to be material in the aggregate and do not contain
all footnotes required by GAAP); and the supporting schedules
included or incorporated by reference in the Registration Statement
present fairly the information required to be stated therein. No
other historical or pro forma financial statements or supporting
schedules are required to be included in the Registration
Statement, the Pricing Disclosure Package or the Prospectus by the
Securities Act or the Securities Act Regulations. The pro forma
financial statements and the related notes, if any, included or
incorporated by reference in the Registration Statement, the
Pricing Disclosure Package and the Prospectus have been properly
compiled and prepared in accordance with the applicable
requirements of the Securities Act, the Securities Act Regulations,
the Exchange Act or the Exchange Act Regulations and present fairly
the information shown therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and
circumstances referred to therein. All disclosures contained in the
Registration Statement, the Pricing Disclosure Package or the
Prospectus, or incorporated or deemed incorporated by reference
therein, regarding “non-GAAP financial measures” (as
such term is defined by the rules and regulations of the
Commission), if any, comply with Regulation G of the Exchange Act
and Item 10 of Regulation S-K of the Securities Act, to the extent
applicable. Each of the Registration Statement, the Pricing
Disclosure Package and the Prospectus discloses all material
off-balance sheet transactions, arrangements, obligations
(including contingent obligations), and other relationships of the
Company with unconsolidated entities or other persons that may have
a material current or future effect on the Company’s
financial condition, changes in financial condition, results of
operations, liquidity, capital expenditures, capital resources, or
significant components of revenues or expenses. Except as disclosed
in the Registration Statement, the Pricing Disclosure Package and
the Prospectus, (a) neither the Company nor any of its direct and
indirect subsidiaries, including each entity disclosed or
described in the Registration
Statement, the Pricing Disclosure Package and the Prospectus as
being a subsidiary of the Company (each, a
“Subsidiary” and, collectively, the
“Subsidiaries”), has incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions other than in the ordinary course of business, (b) the
Company has not declared or paid any dividends or made any
distribution of any kind with respect to its capital stock, (c)
there has not been any change in the capital stock of the Company
or any of its Subsidiaries, or, other than in the course of
business or any grants under any stock compensation plan, and (d)
there has not been any Material Adverse Change in the
Company’s long-term or short-term debt.
-8-
2.9 Authorized
Capital; Options, etc. The Company had, at the date or dates
indicated in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, the duly authorized, issued and
outstanding capitalization as set forth therein. Based on the
assumptions stated in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, the Company will have on the
Closing Date the adjusted stock capitalization set forth therein.
The reverse stock split effected on July 24, 2017 was duly
authorized by all requisite action of the Company’s Board of
Directors and shareholders under the Delaware General Corporation
Law. Except as set forth in, or contemplated by, the Registration
Statement, the Pricing Disclosure Package and the Prospectus, on
the Effective Date, as of the Applicable Time and on the Closing
Date and any Option Closing Date, there will be no stock options,
warrants, or other rights to purchase or otherwise acquire any
authorized, but unissued shares of Common Stock of the Company or
any security convertible or exercisable into shares of Common Stock
of the Company, or any contracts or commitments to issue or sell
shares of Common Stock or any such options, warrants, rights or
convertible securities.
2.10 Valid
Issuance of Securities, etc.
2.10.1 Outstanding
Securities. All issued and outstanding securities of the
Company issued prior to the transactions contemplated by this
Agreement have been duly authorized and validly issued and are
fully paid and non-assessable; the holders thereof have no rights
of rescission or similar rights with respect thereto or put rights,
and are not subject to personal liability by reason of being such
holders; and none of such securities were issued in violation of
the preemptive rights, rights of first refusal or rights of
participation of any holders of any security of the Company or
similar contractual rights granted by the Company. The authorized
shares of Common Stock conform in all material respects to all
statements relating thereto contained in the Registration
Statement, the Pricing Disclosure Package and the Prospectus. The
offers and sales of the outstanding shares of Common Stock were at
all relevant times either registered under the Securities Act and
the applicable state securities or “blue sky” laws or,
based in part on the representations and warranties of the
purchasers of such Shares, exempt from such registration
requirements.
2.10.2 Securities
Sold Pursuant to this Agreement. The Public Securities have
been duly authorized for issuance and sale and, when issued and
paid for, will be validly issued, fully paid and non-assessable;
the holders thereof are not and will not be subject to personal
liability by reason of being such holders; the Public Securities
are not and will not be subject to the preemptive rights of any
holders of any security of the Company or similar contractual
rights granted by the Company; and all corporate action required to
be taken for the authorization, issuance and sale of the Public
Securities has been duly and validly taken. The Public Securities
and the Representative’s Warrants conform in all material
respects to all statements with respect thereto contained in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus. All corporate action required to be taken for the
authorization, issuance and sale of the Preferred Stock (or, with
respect to the Series B Preferred Shares, will have been taken
prior to the Closing Date, including the filing of the certificate
of designation of the Preferred Stock (the “Certificate of Designation”)), the
Warrants and the Option Warrants has been duly and validly taken,
the Preferred Conversion Shares, the Warrant Shares and
Representative’s Warrant have been duly and validly taken;
the shares of Common Stock issuable upon exercise of the
Representative’s Warrant, Preferred Stock and Warrants have
been duly authorized and reserved for issuance by all necessary
corporate action on the part of the Company and when paid for and
issued in accordance with the agreements evidencing the
Representative’s Warrant Agreement, Preferred Stock and
Warrant Agreement, as applicable, such shares of Common Stock,
Preferred Conversion Shares and Warrant Shares will be validly
issued, fully paid and non-assessable; the holders thereof are not
and will not be subject to personal liability by reason of being
such holders; and such shares of Common Stock are not and will not
be subject to the preemptive rights of any holders of any security
of the Company or similar contractual rights granted by the
Company.
2.11 Registration
Rights of Third Parties. No holders of any securities of the
Company or any rights exercisable for or convertible or
exchangeable into securities of the Company have the right to
require the Company to register any such securities of the Company
under the Securities Act or to include any such securities in a
registration statement to be filed by the Company.
-9-
2.12 Validity
and Binding Effect of Agreements. This Agreement and the
Representative’s Warrant Agreement have been duly and validly
authorized by the Company, and, when executed and delivered, will
constitute, the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except: (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting
creditors’ rights generally; (ii) as enforceability of any
indemnification or contribution provision may be limited under the
federal and state securities laws; and (iii) that the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
2.13 No
Conflicts, etc. The execution, delivery and performance by
the Company of this Agreement and the Representative’s
Warrant Agreement and all ancillary documents, the consummation by
the Company of the transactions herein and therein contemplated and
the compliance by the Company with the terms hereof and thereof do
not and will not, with or without the giving of notice or the lapse
of time or both: (i) result in a material breach of, or conflict
with any of the terms and provisions of, or constitute a material
default under, or result in the creation, modification, termination
or imposition of any lien, charge, mortgage, pledge, security
interest, claim, equity, trust or other encumbrance, preferential
arrangement, defect or restriction of any kind whatsoever or
encumbrance upon any property or assets of the Company pursuant to
the terms of any indenture, mortgage, deed of trust, note, lease,
loan agreement or any other agreement or instrument, franchise,
license or permit to which the Company is a party or as to which
any property of the Company is a party; (ii) result in any
violation of the provisions of the Company’s Amended and
Restated Certificate of Incorporation (as the same may be amended
or restated from time to time, the “Charter”) or the amended and
restated bylaws of the Company (as the same may be amended or
restated from time to time); or (iii) violate any existing
applicable law, rule, regulation, judgment, order or decree of any
Governmental Entity as of the date hereof.
2.14 No
Defaults; Violations. No material default exists in the due
performance and observance of any term, covenant or condition of
any material license, contract, indenture, mortgage, deed of trust,
note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any
other material agreement or instrument to which the Company is a
party or by which the Company may be bound or to which any of the
properties or assets of the Company is subject. The Company is not
in violation of any term or provision of its Charter or bylaws, or
in violation of any franchise, license, permit, applicable law,
rule, regulation, judgment or decree of any Governmental Entity. As
of the date hereof, the Company is in compliance with all covenants
under its loan agreements, including all EBITDA
metrics.
2.15 Corporate
Power; Licenses; Consents.
2.15.1 Conduct
of Business. The Company has all requisite corporate power
and authority, and has all necessary authorizations, approvals,
orders, licenses, certificates and permits of and from all
governmental regulatory officials and bodies that it needs as of
the date hereof to conduct its business purpose as described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus.
2.15.2 Transactions
Contemplated Herein. The Company has all corporate power and
authority to enter into this Agreement and the Warrant Agreement
and to carry out the provisions and conditions hereof, and all
consents, authorizations, approvals and orders required in
connection therewith have been obtained. No consent, authorization
or order of, and no filing with, any court, government agency or
other body is required for the valid issuance, sale and delivery of
the Public Securities and the consummation of the transactions and
agreements contemplated by this Agreement, the
Representative’s Warrant Agreement and as contemplated by the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, except with respect to applicable federal and state
securities laws and the rules and regulations of the Exchange and
the Financial Industry Regulatory Authority, Inc.
(“FINRA”).
2.16 D&O
Questionnaires. To the Company’s knowledge, all
information contained in the questionnaires (the
“Questionnaires”)
completed by each of the Company’s directors and officers
immediately prior to the Offering (the “Insiders”), as supplemented by all
information concerning the Company’s directors, officers and
principal shareholders as described in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, as well as in
the Lock-Up Agreement (as defined in Section 2.27 below) provided to the Underwriters, is true and
correct in all material respects and the Company has not become
aware of any information which would cause the information
disclosed in the Questionnaires to become materially inaccurate and
incorrect.
-10-
2.17 Litigation;
Governmental Proceedings. There is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or
governmental proceeding pending or, to the Company’s
knowledge, threatened against, or involving the Company or, to the
Company’s knowledge, any executive officer or director which
has not been disclosed in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, or in connection with the
Company’s listing application for the listing of the Public
Securities on the Exchange, and which is required to be
disclosed.
2.18 Good
Standing. The Company has been duly incorporated and is
validly existing as a corporation and is in good standing under the
laws of the State of Delaware as of the date hereof, and is duly
qualified to do business and is in good standing in each other
jurisdiction in which its ownership or lease of property or the
conduct of business requires such qualification, except where the
failure to be so qualified or in good standing, singularly or in
the aggregate, would not have or reasonably be expected to result
in a Material Adverse Change.
2.19 Insurance.
The Company carries or is entitled to the benefits of insurance,
with reputable insurers, in such amounts and covering such risks
which the Company believes are adequate, including, but not limited
to, directors and officers insurance coverage at least equal to
$3,000,000, not including excess Side A coverage of $2,000,000, and
all such insurance is in full force and effect. The Company has no
reason to believe that it will not be able (i) to renew its
existing insurance coverage as and when such policies expire or
(ii) to obtain comparable coverage from similar institutions as may
be necessary or appropriate to conduct its business as now
conducted and at a cost that would not result in a Material Adverse
Change.
2.20 Transactions
Affecting Disclosure to FINRA.
2.20.1 Finder’s
Fees. Except as described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, there are no claims,
payments, arrangements, agreements or understandings relating to
the payment of a finder’s, consulting or origination fee by
the Company or any Insider with respect to the sale of the Public
Securities hereunder or any other arrangements, agreements or
understandings of the Company or, to the Company’s knowledge,
any of its shareholders that may affect the Underwriters’
compensation, as determined by FINRA.
2.20.2 Payments
Within Six Months. Except for payments made to Think Equity
and except as described in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, the Company has not made any
direct or indirect payments (in cash, securities or otherwise) to:
(i) any person, as a finder’s fee, consulting fee or
otherwise, in consideration of such person raising capital for the
Company or introducing to the Company persons who raised or
provided capital to the Company; (ii) any FINRA member; or (iii)
any person or entity that has any direct or indirect affiliation or
association with any FINRA member, within the six months prior to
the date of this Agreement, other than the payment to the
Underwriters as provided hereunder in connection with the
Offering.
2.20.3 Use
of Proceeds. None of the net proceeds of the Offering will
be paid by the Company to any participating FINRA member or its
affiliates, except as specifically authorized herein.
2.20.4 FINRA
Affiliation. Other than Xxxxxxx Xxxxxxx, a member of the
Company’s Board of Directors, who is associated with Taglich
Brothers, Inc., there is no (i) officer or director of the Company,
(ii) beneficial owner of 5% or more of any class of the Company's
securities or (iii) beneficial owner of the Company’s
unregistered equity securities which were acquired during the
180-day period immediately preceding the filing of the Registration
Statement that is an affiliate or associated person of a FINRA
member participating in the Offering (as determined in accordance
with the rules and regulations of FINRA). Except as disclosed in
the Registration Statement, the Pricing Disclosure Package and the
Prospectus, the Company (i) does not have any material lending or
other relationship with any bank or lending affiliate of any
Underwriter and (ii) does not intend to use any of the proceeds
from the sale of the Public Securities to repay any outstanding
debt owed to any affiliate of any Underwriter.
2.20.5 Information.
All information provided by the Company in its FINRA questionnaire
to Representative Counsel specifically for use by Representative
Counsel in connection with its Public Offering System filings (and
related disclosure) with FINRA is true, correct and complete in all
material respects.
-11-
2.21 Foreign
Corrupt Practices Act. None of the Company and its
Subsidiaries or, to the Company’s knowledge, any director,
officer, agent, employee or affiliate of the Company and its
Subsidiaries or any other person acting on behalf of the Company
and its Subsidiaries, has, directly or indirectly, given or agreed
to give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or
official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was,
is, or may be in a position to help or hinder the business of the
Company (or assist it in connection with any actual or proposed
transaction) that (i) might subject the Company to any damage or
penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, might have had a
Material Adverse Change; (iii) if not continued in the future,
might adversely affect the assets, business, operations or
prospects of the Company. The Company has taken reasonable steps to
ensure that its accounting controls and procedures are sufficient
to cause the Company to comply in all material respects with the
Foreign Corrupt Practices Act of 1977, as amended, and the rules
and regulations thereunder (collectively, the “FCPA”) or employee; (iv) violated
or is in violation of any provision of the FCPA or any applicable
non-U.S. anti-bribery statute or regulation; (v) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful
payment; or (vi) received notice of any investigation, proceeding
or inquiry by any Governmental Entity regarding any of the matters
in clauses (i)-(v) above; and the Company and, to the knowledge of
the Company, the Company’s affiliates have conducted their
respective businesses in compliance with the FCPA and have
instituted and maintain policies and procedures designed to ensure,
and which are reasonably expected to continue to ensure, continued
compliance therewith.
2.22 Compliance
with OFAC. None of the Company and its Subsidiaries or, to
the Company’s knowledge, any director, officer, agent,
employee or affiliate of the Company and its Subsidiaries or any
other person acting on behalf of the Company and its Subsidiaries,
is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Department of the
Treasury (“OFAC”), and the Company will not,
directly or indirectly, use the proceeds of the Offering hereunder,
or lend, contribute or otherwise make available such proceeds to
any subsidiary, joint venture partner or other person or entity,
for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
2.23 Forward-Looking
Statements. No forward-looking statement (within the meaning
of Section 27A of the Securities Act and Section 21E of the
Exchange Act) contained in either the Registration Statement,
Disclosure Package or Prospectus has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good
faith.
2.24 Money
Laundering Laws. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance
with applicable financial recordkeeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all jurisdictions, the
rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
Governmental Entity (collectively, the “Money Laundering Laws”); and no
action, suit or proceeding by or before any Governmental Entity
involving the Company with respect to the Money Laundering Laws is
pending or, to the best knowledge of the Company,
threatened.
2.25 Regulatory.
(a) The operations conducted by or on behalf of the Company and its
Subsidiaries that are described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus or the results of
which are referred to in the Registration Statement, the Pricing
Disclosure Package and the Prospectus were and, if still ongoing,
are being conducted in material compliance with all laws and
regulations applicable thereto in the jurisdictions in which they
are being conducted and with all laws and regulations applicable
thereto. The descriptions in the Registration Statement, the
Pricing Disclosure Package and the Prospectus of the results of such studies are
accurate and complete in all material respects and fairly present
the business and operations of the Company.
-12-
(b)
Regulatory Filings and
Permits. The Company and its Subsidiaries have such permits,
licenses, clearances, registrations, exemptions, patents,
franchises, certificates of need and other approvals, consents and
other authorizations (“Permits”) issued by the
appropriate domestic or foreign regional, federal, state, or local
regulatory agencies or bodies necessary to conduct the business of
the Company, except for any of the foregoing that would not
reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect; the Company is in compliance in all
material respects with the requirements of the Permits, and all of
such Permits are valid and in full force and effect; the Company
has not received any notice of proceedings relating to the
revocation, termination, modification or impairment of rights of
any of the Permits that, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would
reasonably be expected to result in a Material Adverse
Effect.
2.26 Officers’
Certificate. Any certificate signed by any duly authorized
officer of the Company and delivered to you or to Representative
Counsel shall be deemed a representation and warranty by the
Company to the Underwriters as to the matters covered
thereby.
2.27 Lock-Up
Agreements. To the best of the Company’s knowledge,
based on filings under Section 13(d) and Section 13(g) of the
Exchange Act, Schedule
3 hereto contains a complete and accurate list of the
Company’s officers, directors and each owner of 5% or more of
the Company’s outstanding shares of Common Stock (or
securities convertible into or exercisable for shares of Common
Stock) (collectively, the “Lock-Up Parties”). The Company has
caused each of the Lock-Up Parties to deliver to the Representative
an executed Lock-Up Agreement, in the form attached hereto as
Exhibit B
(the “Lock-Up
Agreement”), prior to the execution of this
Agreement.
2.28 Subsidiaries.
All direct and indirect Subsidiaries of the Company are duly
organized and in good standing under the laws of the place of
organization or incorporation, and each Subsidiary is in good
standing in each jurisdiction in which its ownership or lease of
property or the conduct of business requires such qualification,
except where the failure to qualify would not have a Material
Adverse Change. The Company’s ownership and control of each
Subsidiary is as described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus.
2.29 Related
Party Transactions.
2.29.1 Business
Relationships. There are no business relationships or
related party transactions involving the Company or any other
person required to be described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus that have not been
described as required.
2.29.2 No
Relationships with Customers and Suppliers. No relationship,
direct or indirect, exists between or among the Company on the one
hand, and the directors, officers, 5% or greater stockholders,
customers or suppliers of the Company or any of the Company’s
affiliates on the other hand, which is required to be described in
the Pricing Disclosure Package and the Prospectus or a document
incorporated by reference therein and which is not so
described.
2.29.3 No
Unconsolidated Entities. There are no transactions,
arrangements or other relationships between and/or among the
Company, any of its affiliates (as such term is defined in Rule 405
of the Securities Act) and any unconsolidated entity, including,
but not limited to, any structure finance, special purpose or
limited purpose entity that could reasonably be expected to
materially affect the Company’s liquidity or the availability
of or requirements for its capital resources required to be
described in the Pricing Disclosure
Package and the Prospectus or a document incorporated by reference
therein which have not been described as
required.
2.29.4 No
Loans or Advances to Affiliates. There are no outstanding
loans, advances (except normal advances for business expenses in
the ordinary course of business) or guarantees or indebtedness by
the Company to or for the benefit of any of the officers or
directors of the Company, any other affiliates of the Company or
any of their respective family members, except as disclosed in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus.
-13-
2.30 Board
of Directors. The Board of Directors of the Company is
comprised of the persons disclosed in the Registration Statement,
the Pricing Disclosure Package and the Prospectus. The
qualifications of the persons serving as board members and the
overall composition of the board comply with the Exchange Act, the
Exchange Act Regulations, the Xxxxxxxx-Xxxxx Act of 2002 and the
rules promulgated thereunder (the “Xxxxxxxx-Xxxxx Act”) applicable to
the Company and the listing rules of the Exchange. At least one
member of the Audit Committee of the Board of Directors of the
Company qualifies as an “audit committee financial
expert,” as such term is defined under Regulation S-K and the
listing rules of the Exchange. In addition, at least a majority of
the persons serving on the Board of Directors qualify as
“independent,” as defined under the listing rules of
the Exchange.
2.31 Xxxxxxxx-Xxxxx
Compliance.
2.31.1 Disclosure
Controls. The Company has developed and currently maintains
disclosure controls and procedures that will comply with Rule
13a-15 or 15d-15 under the Exchange Act Regulations, and such
controls and procedures are effective to ensure that all material
information concerning the Company will be made known on a timely
basis to the individuals responsible for the preparation of the
Company’s Exchange Act filings and other public disclosure
documents.
2.31.2 Compliance.
The Company is, or at the Applicable Time and on the Closing Date
will be, in material compliance with the provisions of the
Xxxxxxxx-Xxxxx Act applicable to it, and has implemented or will
implement such programs and taken reasonable steps to ensure the
Company’s future compliance (not later than the relevant
statutory and regulatory deadlines therefor) with all of the
material provisions of the Xxxxxxxx-Xxxxx Act.
2.32 Accounting
Controls. The Company and its Subsidiaries maintain systems
of “internal control over financial reporting” (as
defined under Rules 13a-15 and 15d-15 under the Exchange Act
Regulations) that comply with the requirements of the Exchange Act
and have been designed by, or under the supervision of, their
respective principal executive and principal financial officers, or
persons performing similar functions, to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with GAAP, including, but not limited to, internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s
general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as disclosed in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, the
Company is not aware of any material weaknesses in its internal
controls. The Company’s auditors and the Audit Committee of
the Board of Directors of the Company have been advised of: (i) all
significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are
known to the Company’s management and that have adversely
affected or are reasonably likely to
adversely affect the Company’ ability to record, process,
summarize and report financial information; and (ii) any fraud
known to the Company’s management, whether or not material,
that involves management or other employees who have a significant
role in the Company’s internal controls over financial
reporting. Since the date of the latest audited financial
statements included in the Pricing Disclosure Package, there has
been no change in the Company’s internal control over
financial reporting that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control
over financial reporting.
2.33 No
Investment Company Status. The Company is not and, after
giving effect to the Offering and the application of the proceeds
thereof as described in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, will not be, required to
register as an “investment company,” as defined in the
Investment Company Act of 1940, as amended.
2.34
No Labor Disputes.
No labor dispute with the employees of the Company or any of its
Subsidiaries exists or, to the knowledge of the Company, is
imminent.
-14-
2.35 Intellectual
Property Rights. The Company and each of its Subsidiaries
owns or possesses or has valid rights to use all patents, patent
applications, trademarks, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights, licenses,
inventions, trade secrets and similar rights (“Intellectual Property Rights”)
necessary for the conduct of the business of the Company and its
Subsidiaries as currently carried on and as described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus. To the knowledge of the Company, no action or use by
the Company or any of its Subsidiaries necessary for the conduct of
its business as currently carried on and as described in the
Registration Statement and the Prospectus will involve or give rise
to any infringement of, or license or similar fees (other than
license or similar fees described or contemplated in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus) for, any Intellectual Property Rights of others.
Neither the Company nor any of its Subsidiaries has received any
notice alleging any such infringement of, license or similar fees
for, or conflict with, any asserted Intellectual Property Rights of
others. Except as would not reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Change, (i)
to the knowledge of the Company, there is no infringement,
misappropriation or violation by third parties of any of the
Intellectual Property Rights owned by the Company; (ii) there is no
pending or, to the knowledge of the Company, threatened action,
suit, proceeding or claim by others challenging the rights of the
Company in or to any such Intellectual Property Rights, and the
Company is unaware of any facts which would form a reasonable basis
for any such claim, that would, individually or in the aggregate,
together with any other claims in this Section 2.35, reasonably be
expected to result in a Material Adverse Change; (iii) the
Intellectual Property Rights owned by the Company and, to the
knowledge of the Company, the Intellectual Property Rights licensed
to the Company have not been adjudged by a court of competent
jurisdiction invalid or unenforceable, in whole or in part, and
there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging
the validity or scope of any such Intellectual Property Rights, and
the Company is unaware of any facts which would form a reasonable
basis for any such claim that would, individually or in the
aggregate, together with any other claims in this Section 2.35, reasonably be
expected to result in a Material Adverse Change; (iv) there is no
pending or, to the Company’s knowledge, threatened action,
suit, proceeding or claim by others that the Company infringes,
misappropriates or otherwise violates any Intellectual Property
Rights or other proprietary rights of others, the Company has not
received any written notice of such claim and the Company is
unaware of any other facts which would form a reasonable basis for
any such claim that would, individually or in the aggregate,
together with any other claims in this Section 2.35, reasonably be
expected to result in a Material Adverse Change; and (v) to the
Company’s knowledge, no employee of the Company is in or has
ever been in violation in any material respect of any term of any
employment contract, patent disclosure agreement, invention
assignment agreement, non-competition agreement, non-solicitation
agreement, nondisclosure agreement or any restrictive covenant to
or with a former employer where the basis of such violation relates
to such employee’s employment with the Company, or actions
undertaken by the employee while employed with the Company and
could reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Change. To the Company’s
knowledge, all material technical information developed by and
belonging to the Company which has not been disclosed in a filed
patent application has been kept confidential. The Company is not a
party to or bound by any options,
licenses or agreements with respect to the Intellectual Property
Rights of any other person or entity that are required to be set
forth in the Registration Statement, the Pricing Disclosure Package
and the Prospectus and are not described therein. The Registration
Statement, the Pricing Disclosure Package and the Prospectus
contain in all material respects the same description of the
matters set forth in the preceding sentence. None of the technology
employed by the Company has been obtained or is being used by the
Company in violation of any contractual obligation binding on the
Company or, to the Company’s knowledge, any of its officers,
directors or employees, or otherwise in violation of the rights of
any persons.
All
licenses for the use of the Intellectual Property described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus are in full force and effect in all material respects
and are enforceable by the Company and, to the Company’s
knowledge, the other parties thereto, in accordance with their
terms, except (x) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally, (y) as enforceability of any
indemnification or contribution provision may be limited under the
federal and state securities laws, and (z) that the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought. None of such agreements or instruments has been assigned
by the Company, and the Company has not, and to the Company’s
knowledge, no other party is in default thereunder and no event has
occurred that, with the lapse of time or the giving of notice, or
both, would constitute a default thereunder.
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2.36 Taxes.
Each of the Company and its Subsidiaries has filed all returns (as
hereinafter defined) required to be filed with taxing authorities
prior to the date hereof or has duly obtained extensions of time
for the filing thereof. Each of the Company and its Subsidiaries
has paid all taxes (as hereinafter defined) shown as due on such
returns that were filed and has paid all taxes imposed on or
assessed against the Company or such respective Subsidiary. The
provisions for taxes payable, if any, shown on the financial
statements filed with or as part of the Registration Statement are
sufficient for all accrued and unpaid taxes, whether or not
disputed, and for all periods to and including the dates of such
consolidated financial statements. Except as disclosed in writing
to the Underwriters, (i) no issues have been raised (and are
currently pending) by any taxing authority in connection with any
of the returns or taxes asserted as due from the Company or its
Subsidiaries, and (ii) no waivers of statutes of limitation with
respect to the returns or collection of taxes have been given by or
requested from the Company or its Subsidiaries. The term
“taxes” means
all federal, state, local, foreign and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties or
other taxes, fees, assessments or charges of any kind whatever,
together with any interest and any penalties, additions to tax or
additional amounts with respect thereto. The term
“returns” means
all returns, declarations, reports, statements and other documents
required to be filed in respect to taxes.
2.37 ERISA
Compliance. The Company and any “employee benefit
plan” (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, “ERISA”)) established or maintained
by the Company or its “ERISA Affiliates” (as defined
below) are in compliance in all material respects with ERISA.
“ERISA
Affiliate” means, with respect to the Company, any
member of any group of organizations described in Sections
414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as
amended, and the regulations and published interpretations
thereunder (the “Code”) of which the Company is a
member. No “reportable event” (as defined under ERISA)
has occurred or is reasonably expected to occur with respect to any
“employee benefit plan” established or maintained by
the Company or any of its ERISA Affiliates. No “employee
benefit plan” established or maintained by the Company or any
of its ERISA Affiliates, if such “employee benefit
plan” were terminated, would have any “amount of
unfunded benefit liabilities” (as defined under ERISA).
Neither the Company nor any of its ERISA Affiliates has incurred or
reasonably expects to incur any material liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any
“employee benefit plan” or (ii) Sections 412, 4971,
4975 or 4980B of the Code. Each “employee benefit plan”
established or maintained by the Company or any of its ERISA
Affiliates that is intended to be qualified under Section 401(a) of
the Code is so qualified and, to the knowledge of the Company,
nothing has occurred, whether by action or failure to act, which
would cause the loss of such qualification.
2.38 Compliance
with Laws. The Company: (i) is and at all times has been in
compliance with all statutes, rules, or regulations applicable to
the ownership, testing, development, manufacture, packaging,
processing, use, distribution, marketing, labeling, promotion,
sale, offer for sale, storage, import, export storage or disposal
of any of its products and services (“Applicable Laws”), except as could
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Change; (ii) has not received any notice of
adverse finding, warning letter, untitled letter or other
correspondence or written notice from any governmental authority alleging or asserting
noncompliance with any Applicable Laws or any licenses,
certificates, approvals, clearances, authorizations, permits and
supplements or amendments thereto required by any such Applicable
Laws (“Authorizations”);
(iii) possesses all material Authorizations and such Authorizations
are valid and in full force and effect and are not in material
violation of any term of any such Authorizations; (iv) has not
received written notice of any claim, action, suit, proceeding,
hearing, enforcement, investigation, arbitration or other action
from any governmental authority or third party alleging that any
product operation or activity is in violation of any Applicable
Laws or Authorizations and has no knowledge that any such
governmental authority or third party is considering any such
claim, litigation, arbitration, action, suit, investigation or
proceeding; (v) has not received written notice that any
governmental authority has taken, is taking or intends to take
action to limit, suspend, modify or revoke any Authorizations and
has no knowledge that any such governmental authority is
considering such action; (vi) has filed, obtained, maintained or
submitted all material reports, documents, forms, notices,
applications, records, claims, submissions and supplements or
amendments as required by any Applicable Laws or Authorizations and
that all such reports, documents, forms, notices, applications,
records, claims, submissions and supplements or amendments were
complete and correct in all material respects on the date filed (or
were corrected or supplemented by a subsequent submission); and
(vii) has not, either voluntarily or involuntarily, initiated,
conducted, or issued or caused to be initiated, conducted or
issued, any recall, market withdrawal or replacement, safety alert,
post-sale warning, or other notice or action relating to any
alleged product defect or violation and, to the Company’s
knowledge, no third party has initiated, conducted or intends to
initiate any such notice or action.
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2.39 Environmental
Laws. The Company and its Subsidiaries are in compliance
with all foreign, federal, state and local rules, laws and
regulations relating to the use, treatment, storage and disposal of
hazardous or toxic substances or waste and protection of health and
safety or the environment which are applicable to their businesses
(“Environmental
Laws”), except where the failure to comply would not,
singularly or in the aggregate, result in a Material Adverse
Change. There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission, or other
release of any kind of toxic or other wastes or other hazardous
substances by, due to, or caused by the Company or any of its
Subsidiaries (or, to the Company’s knowledge, any other
entity for whose acts or omissions the Company or any of its
Subsidiaries is or may otherwise be liable) upon any of the
property now or previously owned or leased by the Company or any of
its Subsidiaries, or upon any other property, in violation of any
law, statute, ordinance, rule, regulation, order, judgment, decree
or permit or which would, under any law, statute, ordinance, rule
(including rule of common law), regulation, order, judgment, decree
or permit, give rise to any liability; and there has been no
disposal, discharge, emission or other release of any kind onto
such property or into the environment surrounding such property of
any toxic or other wastes or other hazardous substances with
respect to which the Company has knowledge. In the ordinary course
of business, the Company and its Subsidiaries conduct periodic
reviews of the effect of Environmental Laws on their business and
assets, in the course of which they identify and evaluate
associated costs and liabilities (including, without limitation,
any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or
governmental permits issued thereunder, any related constraints on
operating activities and any potential liabilities to third
parties). On the basis of such reviews, the Company and its
Subsidiaries have reasonably concluded that such associated costs
and liabilities would not have, singularly or in the aggregate, a
Material Adverse Change.
2.40 Real
Property. Except as set forth in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, the Company and
each of its Subsidiaries have good and marketable title in fee
simple to, or have valid rights to lease or otherwise use, all
items of real or personal property which are material to the
business of the Company and its Subsidiaries taken as a whole, in
each case free and clear of all liens, encumbrances, security
interests, claims and defects that do not, singly or in the
aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the Company or any of its
Subsidiaries; and all of the leases and subleases material to the
business of the Company and its subsidiaries, considered as one
enterprise, and under which the Company or any of its subsidiaries
holds properties described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, are in full force
and effect, and neither the Company nor any Subsidiary has received
any notice of any material claim of any sort that has been asserted
by anyone adverse to the rights of the Company or any Subsidiary
under any of the leases or subleases mentioned above, or affecting
or questioning the rights of the Company or such Subsidiary to the
continued possession of the leased or subleased premises under any
such lease or sublease.
2.41 Contracts
Affecting Capital. There are no transactions, arrangements
or other relationships between and/or among the Company, any of its
affiliates (as such term is defined in Rule 405 of the Securities
Act Regulations) and any unconsolidated entity, including, but not
limited to, any structured finance, special purpose or limited
purpose entity that could reasonably be expected to materially
affect the Company’s or any of its Subsidiaries’
liquidity or the availability of or requirements for their capital
resources required to be described or incorporated by reference in
the Registration Statement, the Pricing Disclosure Package and the
Prospectus which have not been described or incorporated by
reference as required.
2.42 Ineligible
Issuer. At the time of filing the Registration Statement and
any post-effective amendment thereto, at the time of effectiveness
of the Registration Statement and any amendment thereto, at the
earliest time thereafter that the Company or another offering
participant made a bona fide offer (within the meaning of Rule
164(h)(2) of the Securities Act Regulations) of the Public
Securities and at the date hereof, the Company was not and is not
an “ineligible issuer,” as defined in Rule 405, without
taking account of any determination by the Commission pursuant to
Rule 405 that it is not necessary that the Company be considered an
ineligible issuer.
2.43 Smaller
Reporting Company. As of the
time of the initial filing of the Registration Statement and as of
the date hereof, the Company was a “smaller reporting
company,” as defined in Rule 12b-2 of the Exchange Act
Regulations.
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2.44 Industry
Data. The statistical and market-related data included in
each of the Registration Statement, the Pricing Disclosure Package
and the Prospectus are based on or derived from sources that the
Company reasonably and in good faith believes are reliable and
accurate or represent the Company’s good faith estimates that
are made on the basis of data derived from such
sources.
2.45 Margin
Securities. The Company owns no “margin
securities” as that term is defined in Regulation U of the
Board of Governors of the Federal Reserve System (the
“Federal Reserve
Board”), and none of the proceeds of Offering will be
used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might
cause any of the shares of Common Stock to be considered a
“purpose credit” within the meanings of Regulation T, U
or X of the Federal Reserve Board.
2.46 Exchange
Act Reports. Other than a Form 8-K filed on December 22,
2017 and a Form 8-K filed on [ ], the Company has filed in a timely
manner all reports required to be filed pursuant to Sections 13(a),
13(e), 14 and 15(d) of the Exchange Act during the preceding 12
months (except to the extent that Section 15(d) requires reports to
be filed pursuant to Sections 13(d) and 13(g) of the Exchange Act,
which shall be governed by the next clause of this sentence); and
the Company has filed in a timely manner all reports required to be
filed pursuant to Sections 13(d) and 13(g) of the Exchange Act,
except where the failure to timely file could not reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Change.
2.47 Minute
Books. The minute books of the Company have been made
available to the Underwriters and counsel for the Underwriters, and
such books (i) contain a complete summary of all meetings and actions of the board of directors
(including each board committee) and stockholders of the Company
(or analogous governing bodies and interest holders, as
applicable), and each of its Subsidiaries since the time of its
respective incorporation or organization through the date of the
latest meeting and action, and (ii) accurately in all material
respects reflect all transactions referred to in such minutes.
There are no material transactions, agreements, dispositions or
other actions of the Company that are not properly approved and/or
accurately and fairly recorded in the minute books of the Company,
as applicable.
2.48 Integration.
Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any
security, under circumstances that would cause the Offering to be
integrated with prior offerings by the Company for purposes of the
Securities Act that would require the registration of any such
securities under the Securities Act.
2.49 No
Stabilization. Neither the Company nor, to its knowledge,
any of its employees, directors or stockholders (without the
consent of the Representative) has taken or shall take, directly or
indirectly, any action designed to or that has constituted or that
might reasonably be expected to cause or result in, under
Regulation M of the Exchange Act, or otherwise, stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Public
Securities.
2.50 Confidentiality
and Non-Competition. To the Company’s knowledge, no
director, officer, key employee or consultant of the Company is
subject to any confidentiality, non-disclosure, non-competition
agreement or non-solicitation agreement with any employer or prior
employer that could reasonably be expected to materially affect his
ability to be and act in his respective capacity of the Company or
be expected to result in a Material Adverse Change.
3. Covenants
of the Company. The Company covenants and agrees as
follows:
3.1 Amendments
to Registration Statement. The Company shall deliver to the
Representative, prior to filing, any amendment or supplement to the
Registration Statement, Preliminary Prospectus, Disclosure Package
or Prospectus proposed to be filed after the Effective Date and not
file any such amendment or supplement to which the Representative
shall reasonably object in writing.
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3.2 Federal
Securities Laws.
3.2.1 Compliance.
The Company, subject to
Section
3.2.2, shall comply with the
requirements of Rule 424(b) and Rule 430A of the Securities Act
Regulations, and will notify the Representative promptly, and
confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement or any amendment or
supplement to any Preliminary Prospectus, the Pricing Disclosure
Package or the Prospectus shall have been filed and when any
post-effective amendment to the Registration Statement shall become
effective; (ii) of the receipt of any comments from the Commission;
(iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to any
Preliminary Prospectus, the Pricing Disclosure Package or the
Prospectus or for additional information; (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of
the Registration Statement or any post-effective amendment or of
any order preventing or suspending the use of any Preliminary
Prospectus, the Pricing Disclosure Package or the Prospectus, or of
the suspension of the qualification of the Public Securities
or the Representative’s Warrants for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such
purposes or of any examination pursuant to Section 8(d) or 8(e) of
the Securities Act concerning the Registration Statement; and (v)
if the Company becomes the subject of a proceeding under Section 8A
of the Securities Act in connection with the Offering of the Public
Securities or the Representative’s Warrants.
The Company shall effect all filings
required under Rule 424(b) of the Securities Act Regulations, in
the manner and within the time period required by Rule 424(b)
(without reliance on Rule 424(b)(8)), and shall take such steps as
it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 424(b) was received
for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company shall use its best
efforts to prevent the issuance of any stop order, prevention or
suspension and, if any such order is issued, to obtain the lifting
thereof at the earliest possible moment.
3.2.2 Continued
Compliance. The Company shall comply with the Securities
Act, the Securities Act Regulations, the Exchange Act and the
Exchange Act Regulations so as to permit the completion of the
distribution of the Public Securities as contemplated in this
Agreement and in the Registration Statement, the Pricing Disclosure
Package and the Prospectus. If at any time when a prospectus
relating to the Public Securities is (or, but for the exception
afforded by Rule 172 of the Securities Act Regulations
(“Rule 172”),
would be) required by the Securities Act to be delivered in
connection with sales of the Public Securities, any event shall
occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel
for the Underwriters or for the Company, to (i) amend the
Registration Statement in order that the Registration Statement
will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading; (ii) amend or
supplement the Pricing Disclosure Package or the Prospectus in
order that the Pricing Disclosure Package or the Prospectus, as the
case may be, will not include any untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser
or (iii) amend the Registration Statement or amend or supplement
the Pricing Disclosure Package or the Prospectus, as the case may
be, in order to comply with the requirements of the Securities Act
or the Securities Act Regulations, the Company will promptly (A)
give the Representative notice of such event; (B) prepare any
amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement, the
Pricing Disclosure Package or the Prospectus comply with such
requirements and, a reasonable amount of time prior to any proposed
filing or use, furnish the Representative with copies of any such
amendment or supplement and (C) file with the Commission any such
amendment or supplement; provided, however, that the Company shall not file or use any such
amendment or supplement to which the Representative or counsel for
the Underwriters shall reasonably object. The Company will furnish
to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request. The Company
has given the Representative notice of any filings made pursuant to
the Exchange Act or the Exchange Act Regulations within 48 hours
prior to the Applicable Time. The Company shall give the
Representative notice of its intention to make any such filing from
the Applicable Time until the later of the Closing Date and the
exercise in full or expiration of the Over-allotment Option
specified in Section 1.2
hereof and will furnish the
Representative with copies of the related document(s) a reasonable
amount of time prior to such proposed filing, as the case may be,
and will not file or use any such document to which the
Representative or counsel for the Underwriters shall reasonably
object.
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3.2.3 Exchange
Act Registration. For a period of three (3) years after the
date of this Agreement, the Company shall use its best efforts to
maintain the registration of the shares of Common Stock under the
Exchange Act. The Company shall not deregister the shares of Common
Stock under the Exchange Act without the prior written consent of
the Representative.
3.2.4 Free
Writing Prospectuses. The Company agrees that, unless it
obtains the prior written consent of the Representative, it shall
not make any offer relating to the Public Securities that would
constitute an Issuer Free Writing Prospectus or that would
otherwise constitute a “free writing prospectus,” or a
portion thereof, required to be filed by the Company with the
Commission or retained by the Company under Rule 433; provided, however, that the Representative shall
be deemed to have consented to each Issuer General Use Free Writing
Prospectus hereto and any “road show that is a written
communication” within the meaning of Rule 433(d)(8)(i) that
has been reviewed by the Representative. The Company represents
that it has treated or agrees that it will treat each such free
writing prospectus consented to, or deemed consented to, by the
Underwriters as an “issuer free writing prospectus,” as
defined in Rule 433, and that it has complied and will comply with
the applicable requirements of Rule 433 with respect thereto,
including timely filing with the Commission where required,
legending and record keeping. If at any time following issuance of
an Issuer Free Writing Prospectus there occurred or occurs an event
or development as a result of which such Issuer Free Writing
Prospectus conflicted or would conflict with the information
contained in the Registration Statement or included or would
include an untrue statement of a material fact or omitted or would
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at
that subsequent time, not misleading, the Company will promptly
notify the Underwriters and will promptly amend or supplement, at
its own expense, such Issuer Free Writing Prospectus to eliminate
or correct such conflict, untrue statement or
omission.
3.3 Delivery
to the Underwriters of Registration Statements. The Company
has delivered or made available or shall deliver or make available
to the Representative and the Representative Counsel, without
charge, signed copies of the Registration Statement as originally
filed and each amendment thereto
(including exhibits filed therewith or incorporated by reference
therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the Underwriters,
without charge, a conformed copy of the Registration Statement as
originally filed and each amendment thereto (without exhibits) for
each of the Underwriters. The copies of the Registration Statement
and each amendment thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed
with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
3.4 Delivery
to the Underwriters of Prospectuses. The Company has
delivered or made available or will deliver or make available to
each Underwriter, without charge, as many copies of each
Preliminary Prospectus as such Underwriter reasonably requested,
and the Company hereby consents to the use of such copies for
purposes permitted by the Securities Act. The Company will furnish
to each Underwriter, without charge, during the period when a
prospectus relating to the Public Securities is (or, but for the
exception afforded by Rule 172, would be) required to be delivered
under the Securities Act, such number of copies of the Prospectus
(as amended or supplemented) as such Underwriter may reasonably
request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation
S-T.
3.5 Events
Requiring Notice to the Representative. The Company shall
use its best efforts to cause the Registration Statement to remain
effective with a current prospectus for at least nine (9) months
after the Applicable Time, and shall notify the Representative
immediately and confirm the notice in writing: (i) of the issuance
by the Commission of any stop order or of the initiation, or the
threatening, of any proceeding for that purpose; (ii) of the
issuance by any state securities commission of any proceedings for
the suspension of the qualification of the Public Securities for
offering or sale in any jurisdiction or of the initiation, or the
threatening, of any proceeding for that purpose; (iii) of the
mailing and delivery to the Commission for filing of any amendment
or supplement to the Registration Statement or Prospectus; (iv) of
the receipt of any comments or request for any additional
information from the Commission; and (v) of the happening of any
event during the period described in this Section 3.5 that, in the
judgment of the Company, makes any statement of a material fact
made in the Registration Statement, the Pricing Disclosure Package
or the Prospectus untrue or that requires the making of any changes
in (a) the Registration Statement in order to make the statements
therein not misleading, or (b) in the Pricing Disclosure Package or
the Prospectus in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. If
the Commission or any state securities commission shall enter a
stop order or suspend such qualification at any time, the Company
shall make every reasonable effort to obtain promptly the lifting
of such order.
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3.6 Review
of Financial Statements. For a period of five (5) years
after the date of this Agreement, the Company, at its expense,
shall cause its regularly engaged independent registered public
accounting firm to review (but not audit) the Company’s
financial statements for each of the three fiscal quarters
immediately preceding the announcement of any quarterly financial
information.
3.7 Listing.
The Company shall use its best efforts to maintain the listing of
the shares of Common Stock (including the shares of Common Stock
included in the Public Securities, the Warrant Shares, the
Preferred Conversion Shares and the shares of Common Stock
underlying the Representative’s Warrants) on the Exchange for
at least three years from the date of this Agreement.
3.8 Intentionally
Omitted.
3.9 Reports
to the Representative.
3.9.1 Periodic
Reports, etc. For a period of three (3) years after the date
of this Agreement, the Company shall furnish or make available to
the Representative copies of such financial statements and other
periodic and special reports as the Company from time to time
furnishes generally to holders of any class of its securities and also promptly furnish to the
Representative: (i) a copy of each periodic report the Company
shall be required to file with the Commission under the Exchange
Act and the Exchange Act Regulations; (ii) a copy of every press
release and every news item and article with respect to the Company
or its affairs which was released by the Company; (iii) a copy of
each Form 8-K prepared and filed by the Company; (iv) five copies
of each registration statement filed by the Company under the
Securities Act; (v) a copy of each report or other communication
furnished to stockholders and (vi) such additional documents and
information with respect to the Company and the affairs of any
future subsidiaries of the Company as the Representative may from
time to time reasonably request; provided, however, the Representative shall sign, if requested by
the Company, a Regulation FD compliant confidentiality agreement
which is reasonably acceptable to the Representative and
Representative Counsel in connection with the
Representative’s receipt of such information. Documents filed
with the Commission pursuant to its XXXXX system shall be deemed to
have been delivered to the Representative pursuant to this
Section
3.9.1.
3.10 Transfer
Agent; Transfer Sheets. For a period of three (3) years
after the date of this Agreement, the Company shall retain a
transfer agent and registrar acceptable to the Representative (the
“Transfer
Agent”) and shall furnish to the Representative at the
Company’s sole cost and expense such transfer sheets of the
Company’s securities as the Representative may reasonably
request, including the daily and monthly consolidated transfer
sheets of the Transfer Agent and DTC. American Stock Transfer
& Trust Company,
LLC is acceptable to the Representative to act as Transfer
Agent for the shares of Common Stock.
3.11 Trading
Reports. During such time as the Public Securities are
listed on the Exchange, the Company shall provide to the
Representative, at the Company’s expense, such reports
published by the Exchange relating to price trading of the Public
Securities, as the Representative shall reasonably
request.
3.12 Payment
of Expenses. The Company hereby agrees to pay on each of the
Closing Date and the Option Closing Date, if any, to the extent not
paid at the Closing Date, all expenses incident to the performance
of the obligations of the Company under this Agreement, including,
but not limited to: (i) all filing fees and communication expenses
relating to the registration of Public Securities to be issued and
sold in the Offering with the Commission; (ii) all filing fees
associated with the review of the Offering by FINRA; (iii) all fees
and expenses relating to the listing of such Common Stock on the
Exchange, including any fees charged by The Depository Trust
Company (DTC) for new securities; (iv) all fees, expenses and
disbursements relating to the registration, qualification or
exemption of the Public Securities under the securities laws of
such foreign jurisdictions as the Representative may reasonably
designate; (v) the costs of all mailing and printing of the
underwriting documents (including, without limitation, this
Agreement, any blue sky surveys and, if appropriate, any agreement
among underwriters, selected dealers’ agreement,
underwriters’ questionnaire and power of attorney),
Registration Statements, Prospectuses and all amendments,
supplements and exhibits thereto and as many preliminary and final
Prospectuses as the Representative may reasonably deem necessary;
(vi) the costs of preparing, printing and delivering certificates
representing the Public Securities; (vii) fees and expenses of the
Transfer Agent for the shares of Common Stock; (viii) stock
transfer and/or stamp taxes, if any, payable upon the transfer of
securities from the Company to the Underwriters; (ix) to the
extent
-21-
approved
by the Company in writing, the costs associated with post-Closing
advertising of the Offering in the national editions of The Wall
Street Journal and The New York Times; (x) the fees and expenses of
the Company’s accountants; (xi) the fees and expenses of the
Company’s legal counsel and other agents and representatives;
and (xii) the reasonable and documented fees and expenses of
Underwriter’s legal counsel. Notwithstanding the foregoing,
the amount of expenses to be reimbursed by the Company to the
Underwriters shall not exceed $90,000 in the aggregate. The
Representative may deduct from the net proceeds of the Offering
payable to the Company on the Closing Date, or the Option Closing
Date, if any, the expenses set forth herein to be paid by the
Company to the Underwriters, provided, however, that in the event
that the Offering is terminated, the Company agrees to reimburse
the Underwriters pursuant to Section 8.3
hereof.
3.13 Non-accountable
Expenses. The Company further agrees that, in addition to
the expenses payable pursuant to Section 3.12, on the Closing
Date it shall pay to the Representative, by deduction from the net
proceeds of the Offering contemplated herein, a non-accountable
expense allowance equal to one percent (1.0%) of the gross proceeds
received by the Company from the sale of the Firm Securities (and
not in connection with any sales of securities pursuant to the
Over-allotment Option)), less the Advance (as such term is defined
in Section 8.3
hereof), provided, however, that in the event that the Offering is
terminated, the Company agrees to reimburse the Underwriters
pursuant to Section
8.3 hereof.
3.14 Application
of Net Proceeds. The Company shall apply the net proceeds
from the Offering received by it in a manner consistent with the
application thereof described under the caption “Use of
Proceeds” in the Registration Statement, the Pricing
Disclosure Package and the Prospectus.
3.15 Delivery
of Earnings Statements to Security Holders. The Company
shall make generally available to its security holders as soon as
practicable, but not later than the first day of the fifteenth
(15th) full calendar month following the date of this Agreement, an
earnings statement (which need not be certified by independent
registered public accounting firm unless required by the Securities
Act or the Securities Act Regulations, but which shall satisfy the
provisions of Rule 158(a) under Section 11(a) of the Securities
Act) covering a period of at least twelve (12) consecutive months
beginning after the date of this Agreement.
3.16 Stabilization.
Neither the Company nor, to its knowledge, any of its employees,
directors or shareholders (without the consent of the
Representative) has taken or shall take, directly or indirectly,
any action designed to or that has constituted or that might
reasonably be expected to cause or result in, under Regulation M of
the Exchange Act, or otherwise, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of the Public Securities.
3.17 Internal
Controls. The Company shall maintain a system of internal
accounting controls sufficient to provide reasonable assurances
that: (i) transactions are executed in accordance with
management’s general or specific authorization; (ii)
transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with GAAP and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
3.18 Accountants.
As of the date of this Agreement, the Company shall continue to
retain a nationally recognized independent registered public
accounting firm for a period of at least three (3) years after the
date of this Agreement. The Representative acknowledges that Xxxxxx
LLP is acceptable to the Representative.
3.19 FINRA.
The Company shall advise the Representative (who shall make an
appropriate filing with FINRA) if it is or becomes aware that (i)
any officer or director of the Company, (ii) any beneficial owner
of 5% or more of any class of the Company's securities or (iii) any
beneficial owner of the Company's unregistered equity securities
which were acquired during the 180 days immediately preceding the
filing of the Registration Statement is or becomes an affiliate or
associated person of a FINRA member
participating in the Offering (as determined in accordance with the
rules and regulations of FINRA).
3.20 No
Fiduciary Duties. The Company acknowledges and agrees that
the Underwriters’ responsibility to the Company is solely
contractual in nature and that none of the Underwriters or their
affiliates or any selling agent shall be deemed to be acting in a
fiduciary capacity, or otherwise owes any fiduciary duty to the
Company or any of its affiliates in connection with the Offering
and the other transactions contemplated by this
Agreement.
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3.21 [Intentionally
Left Blank]
3.22 Company
Lock-Up Agreements. The Company, on behalf of itself and any
successor entity, agrees that, without the prior written consent of
the Representative, it will not for a period of ninety (90) days
after the date of this Agreement (the “Lock-Up Period”), (i) offer,
pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer
or dispose of, directly or indirectly, any shares of capital stock
of the Company or any securities convertible into or exercisable or
exchangeable for shares of capital stock of the Company; or (ii)
file or cause to be filed any registration statement with the
Commission relating to the offering of any shares of capital stock
of the Company or any securities convertible into or exercisable or
exchangeable for shares of capital stock of the Company; or (iii)
complete any offering of debt securities of the Company, other than
entering into a line of credit with a traditional bank; or (iv)
enter into any swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership
of capital stock of the Company, whether any such transaction
described in clause (i), (ii), (iii) or (iv) above is to be settled
by delivery of shares of capital stock of the Company or such other
securities, in cash or otherwise.
The
restrictions contained in this Section 3.22 shall not apply to
(i) the shares of Common Stock, Preferred Conversion Shares,
Warrants or Option Warrants to be sold hereunder or issuance of
common stock upon conversion or exercise of any of the foregoing,
(ii) the issuance by the Company of shares of Common Stock upon the
exercise of a stock option or warrant or the conversion of a
security outstanding on the date hereof, which is disclosed in the
Registration Statement, Disclosure Package and Prospectus, or
pursuant to the exercise of the Warrants or the conversion of the
Preferred Stock, (iii) the issuance by the Company of stock
options, shares of capital stock of the Company or other awards
under any equity compensation plan of the Company, provided that in
each of (ii) and (iii) above, the underlying shares shall be
restricted from sale during the entire Lock-Up Period.
3.23 Release
of D&O Lock-up Period. If the Representative, in its
sole discretion, agrees to release or waive the restrictions set
forth in the Lock-Up Agreements described in Section 2.27 hereof for an
officer or director of the Company and provide the Company with
notice of the impending release or waiver at least three (3)
Business Days before the effective date of the release or waiver,
the Company agrees to announce the impending release or waiver by a
press release substantially in the form of Exhibit C hereto through a
major news service at least two (2) Business Days before the
effective date of the release or waiver.
3.24 Blue
Sky Qualifications. The Company shall use its best efforts,
in cooperation with the Underwriters, if necessary, to qualify the
Public Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions (domestic or
foreign) as the Representative may designate and to maintain such
qualifications in effect so long as required to complete the
distribution of the Public Securities; provided, however, that the
Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so
qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so
subject.
3.25 Reporting
Requirements. The Company, during the period when a
prospectus relating to the Public Securities is (or, but for the
exception afforded by Rule 172, would be) required to be delivered
under the Securities Act, will file all documents required to be
filed with the Commission pursuant to the Exchange Act within the
time periods required by the Exchange Act and Exchange Act
Regulations. Additionally, the Company shall report the use of
proceeds from the issuance of the Public Securities as may be
required under Rule 463 under the Securities Act
Regulations.
3.26 Press
Releases. Prior to the Closing Date and any Option Closing
Date, the Company shall not issue any press release or other
communication directly or indirectly or hold any press conference
with respect to the Company, its condition, financial or otherwise,
or earnings, business affairs or business prospects (except for
routine oral marketing communications in the ordinary course of
business and consistent with the past practices of the Company and
of which the Representative is notified), without the prior written consent of
the Representative, which consent shall not be unreasonably
withheld, unless in the judgment of the Company and its counsel,
and after notification to the Representative, such press release or
communication is required by law.
-23-
3.27 Xxxxxxxx-Xxxxx.
Except as disclosed in the Registration Statement, the Disclosure
Package and the Prospectus, the Company shall at all times comply
with all applicable provisions of the Xxxxxxxx-Xxxxx Act in effect
from time to time.
4.
Conditions of
Underwriters’ Obligations. The obligations of the
Underwriters to purchase and pay for the Public Securities, as
provided herein, shall be subject to (i) the continuing accuracy of
the representations and warranties of the Company as of the date
hereof and as of each of the Closing Date and the Option Closing
Date, if any; (ii) the accuracy of the statements of officers of
the Company made pursuant to the provisions hereof; (iii) the
performance by the Company of its obligations hereunder; and (iv)
the following conditions:
4.1 Regulatory
Matters.
4.1.1 Effectiveness
of Registration Statement; Rule 430A Information. The
Registration Statement has become effective not later than 5:00
p.m., Eastern time, on the Effective Date or such later date and
time as shall be consented to in writing by the Representative,
and, at each of the Closing Date and any Option Closing Date, no
stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto has been issued
under the Securities Act, no order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus has been issued and
no proceedings for any of those purposes have been instituted or
are pending or, to the Company’s knowledge, contemplated by
the Commission. The Company has complied with each request (if any)
from the Commission for additional information. The Prospectus
containing the Rule 430A Information shall have been filed with the
Commission in the manner and within the time frame required by Rule
424(b) (without reliance on Rule 424(b)(8)) or a post-effective
amendment providing such information shall have been filed with,
and declared effective by, the Commission in accordance with the
requirements of Rule 430A.
4.1.2 FINRA
Clearance. On or before the date of this Agreement, the
Representative shall have received clearance from FINRA as to the
amount of compensation allowable or payable to the Underwriters as
described in the Registration Statement.
4.1.3 Exchange Stock
Market Clearance. On the Closing Date, the Company’s
shares of Common Stock, including the Firm Securities, the shares
of Common Stock underlying the Option Securities, the Preferred
Conversion Shares, the Warrant Shares and the shares of Common
Stock underlying the Representative’s Warrants) shall have
been approved for listing on the Exchange, subject only to official
notice of issuance. On the first Option Closing Date (if any), the
Company’s shares of Common Stock (including the shares of
Common Stock underlying the Option Shares, Preferred Stock,
Representative’s Warrants and the Warrant Shares) shall have
been approved for listing on the Exchange, subject only to official
notice of issuance.
4.2 Company
Counsel Matters.
4.2.1 Closing
Date Opinion of Counsel. On the Closing Date, the
Representative shall have received the favorable opinion of
Disclosure Law Group, counsel to the Company, and a written
statement providing certain “10b-5” negative
assurances, dated the Closing Date and addressed to the
Representative, and in form and substance reasonably satisfactory
to the Representative.
4.2.2 Option
Closing Date Opinions of Counsel. On the Option Closing
Date, if any, the Representative shall have received the favorable
opinion and “10b-5” negative assurances of counsel
listed in Section 4.2.1, dated the Option Closing Date, addressed
to the Representative and in form and substance reasonably
satisfactory to the Representative, confirming as of the Option
Closing Date, the statements made by such counsel in its opinion
delivered on the Closing Date.
4.2.3 Reliance.
In rendering such opinion, counsel may rely: (i) as to matters
involving the application of laws other than the laws of the United
States and jurisdictions in which they are admitted, to the extent
such counsel deems proper and to the extent specified in such
opinion, if at all, upon an opinion or opinions (in form and
substance reasonably satisfactory to the Representative) of other
counsel reasonably acceptable to the Representative, familiar with
the applicable laws; and (ii) as to matters of fact, to the extent
they deem proper, on certificates or other written statements of
officers of the Company and officers of departments of various
jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company; provided that copies of any such
statements or certificates shall be delivered to Representative
Counsel if requested. The opinion of Disclosure Law Group, and any
opinion relied upon by Disclosure Law Group, shall include a
statement to the effect that it may be relied upon by
Representative Counsel in its opinion delivered to the
Underwriters.
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4.2.4
Certificate of
Designation. On or prior to the Closing Date, the
Representative shall have received evidence of the filing and
acceptance of the Certificate of Designation of the Preferred Stock
from the Secretary of State of the State of Delaware.
4.3 Comfort
Letters.
4.3.1 Cold
Comfort Letter. At the time this Agreement is executed the
Underwriters shall have received cold comfort letters from the
Auditor containing statements and information of the type
customarily included in accountants’ comfort letters with
respect to the financial statements and certain financial
information contained or incorporated or deemed incorporated by
reference in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, addressed to the Representative and in
form and substance satisfactory in all respects to you and to the
Auditor, dated as of
the date of this Agreement.
4.3.2 Bring-down
Comfort Letter. At each of the Closing Date and the Option
Closing Date, if any, the Representative shall have received from
the Auditor letters, dated as of the Closing Date or the Option
Closing Date, as applicable, to the effect that the Auditor each
reaffirm the statements made in their letters furnished pursuant to
Section 4.3.1, except that the specified date referred to shall be
a date not more than three (3) business days prior to the Closing
Date or the Option Closing Date, as applicable.
4.4 Officers’
Certificates.
4.4.1 Officers’
Certificate. The Company shall have furnished to the
Representative a certificate, dated the Closing Date and any Option
Closing Date (if such date is other than the Closing Date), of its
Chief Executive Officer and its Chief Financial Officer stating
that (i) such officers have carefully examined the Registration
Statement, the Pricing Disclosure Package, any Issuer Free Writing
Prospectus and the Prospectus and, in their opinion, the
Registration Statement and each amendment thereto, as of the
Applicable Time and as of the Closing Date (or any Option Closing
Date if such date is other than the Closing Date) did not include
any untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Pricing Disclosure
Package, as of the Applicable Time and as of the Closing Date (or
any Option Closing Date if such date is other than the Closing
Date), any Issuer Free Writing Prospectus as of its date and as of
the Closing Date (or any Option Closing Date if such date is other
than the Closing Date), and the Prospectus and each amendment or supplement thereto, as of
the respective date thereof and as of the Closing Date, did not
include any untrue statement of a material fact and did not omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances in which they were made,
not misleading, (ii) since the initial effective date of the
Registration Statement, no event has occurred which should have
been set forth in a supplement or amendment to the Registration
Statement, the Pricing Disclosure Package or the Prospectus, (iii)
to the best of their knowledge after reasonable investigation, as
of the Closing Date (or any Option Closing Date if such date is
other than the Closing Date), the representations and warranties of
the Company in this Agreement are true and correct and the Company
has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied hereunder at or prior to the
Closing Date (or any Option Closing Date if such date is other than
the Closing Date), and (iv) there has not been, subsequent to the
date of the most recent audited financial statements included or
incorporated by reference in the Pricing Disclosure Package, any
material adverse change in the financial position or results of
operations of the Company, or any change or development that,
singularly or in the aggregate, would involve a material adverse
change or a prospective material adverse change, in or affecting
the condition (financial or otherwise), results of operations,
business, assets or prospects of the Company, except as set forth
in the Prospectus.
4.4.2 Secretary’s
Certificate. At each of the Closing Date and the Option
Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Secretary of the Company,
dated the Closing Date or the Option Date, as the case may be,
respectively, certifying: (i) that each of the Charter and Bylaws is true and complete, has not been
modified and is in full force and effect; (ii) that the resolutions
of the Company’s Board of Directors relating to the Offering
are in full force and effect and have not been modified; (iii) as
to the accuracy and completeness of all correspondence between the
Company or its counsel and the Commission; and (iv) as to the
incumbency of the officers of the Company. The documents referred
to in such certificate shall be attached to such
certificate.
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4.4.3 Chief
Financial Officer’s Certificate. At each of the
Closing Date and the Option Closing Date, if any, the
Representative shall have received a certificate of the Chief
Financial Officer of the Company, dated the Closing Date or the
Option Date, as the case may be, respectively, with respect to the
accuracy of certain information contained in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, in a form reasonably acceptable
to the Representative.
4.5 No
Material Changes. Prior to and on each of the Closing Date
and each Option Closing Date, if any: (i) there shall have been no
material adverse change or development involving a prospective
material adverse change in the condition or prospects or the
business activities, financial or otherwise, of the Company from
the latest dates as of which such condition is set forth in the
Registration Statement and no change in the capital stock or debt
of the Company, the Pricing Disclosure Package and the Prospectus;
(ii) no action, suit or proceeding, at law or in equity, shall have
been pending or threatened against the Company or any Insider
before or by any court or federal or state commission, board or
other administrative agency wherein an unfavorable decision, ruling
or finding may materially adversely affect the business,
operations, prospects or financial condition or income of the
Company, except as set forth in the Registration Statement, the
Pricing Disclosure Package and the Prospectus; (iii) no stop order
shall have been issued under the Securities Act and no proceedings
therefor shall have been initiated or threatened by the Commission;
(iv) no action shall have been taken and no law, statute, rule,
regulation or order shall have been enacted, adopted or issued by
any Governmental Entity which would prevent the issuance or sale of
the Public Securities or materially and adversely affect or
potentially materially and adversely affect the business or
operations of the Company; (v) no injunction, restraining order or
order of any other nature by any federal or state court of
competent jurisdiction shall have been issued which would prevent
the issuance or sale of the Public Securities or materially and
adversely affect or potentially materially and adversely affect the
business or operations of the Company and (vi) the Registration
Statement, the Pricing Disclosure Package and the Prospectus and
any amendments or supplements thereto shall contain all material
statements which are required to be stated therein in accordance
with the Securities Act and the Securities Act Regulations and
shall conform in all material respects to the requirements of the
Securities Act and the Securities Act Regulations, and neither the
Registration Statement, the Pricing Disclosure Package, the
Prospectus nor any amendment or supplement thereto shall contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading.
4.6 Corporate
Proceedings. All corporate proceedings and other legal
matters incident to the authorization, form and validity of each of
this Agreement, the Public Securities, the Representative’s
Warrant Agreement, the Registration Statement, the Pricing
Disclosure Package and the Prospectus and all other legal matters
relating to this Agreement and the transactions contemplated hereby
and thereby shall be reasonably satisfactory in all material
respects to counsel for the Underwriters, and the Company shall
have furnished to such counsel all documents and information that
they may reasonably request to enable them to pass upon such
matters.
4.7 Delivery
of Agreements.
4.7.1 Lock-Up
Agreements. On or before the date of this Agreement, the
Company shall have delivered to the Representative executed copies
of the Lock-Up Agreements from each of the persons listed in
Schedule 3
hereto.
4.7.2
Closing Date Deliveries. On the
Closing Date, the Company shall have delivered to the
Representative executed copies of the Representative’s
Warrant Agreement
4.8 Additional
Documents. At the Closing Date and at each Option Closing
Date (if any) Representative Counsel shall have been furnished with
such documents and opinions as they may require for the purpose of
enabling Representative Counsel to deliver an opinion to the
Underwriters, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the
Company in connection with the issuance and sale of the Public
Securities as herein contemplated shall be satisfactory in form and
substance to the Representative and Representative
Counsel.
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5. Indemnification.
5.1 Indemnification
of the Underwriters.
5.1.1 General.
Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Underwriter, its affiliates and
each of its and their respective directors, officers, members,
employees, representatives, partners, shareholders, affiliates,
counsel and agents and each person, if any, who controls any such
Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act (collectively the
“Underwriter Indemnified
Parties,” and each an “Underwriter Indemnified Party”),
against any and all loss, liability, claim, damage and expense
whatsoever (including but not limited to any and all legal or other
expenses reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any
claim whatsoever, whether arising out of any action between any of
the Underwriter Indemnified Parties and the Company or between any
of the Underwriter Indemnified Parties and any third party, or
otherwise) to which they or any of them may become subject under
the Securities Act, the Exchange Act or any other statute or at
common law or otherwise or under the laws of foreign countries (a
“Claim”),
arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in (i) the Registration
Statement, the Pricing Disclosure Package, the Preliminary
Prospectus, the Prospectus or any Issuer Free Writing Prospectus
(as from time to time each may be amended and supplemented); (ii)
any materials or information provided to investors by, or with the
approval of, the Company in connection with the marketing of the
Offering, including any “road show” or investor presentations made to
investors by the Company (whether in person or electronically);
(iii) any application or other document or written communication
(in this Section
5, collectively called
“application”) executed by the Company or based upon
written information furnished by the Company in any jurisdiction in
order to qualify the Public Securities under the securities laws
thereof or filed with the Commission, any state securities
commission or agency, the Exchange or any other national securities
exchange; or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading, unless such statement or
omission was made in reliance upon, and in conformity with, the
Underwriters’ Information, or (iv) otherwise arising in
connection with or allegedly in connection with the Offering. The
Company also agrees that it will reimburse each Underwriter
Indemnified Party for all fees and expenses (including but not
limited to any and all legal or other expenses reasonably incurred
in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, whether arising
out of any action between any of the Underwriter Indemnified
Parties and the Company or between any of the Underwriter
Indemnified Parties and any third party, or otherwise)
(collectively, the “Expenses”), and further agrees wherever and whenever
possible to advance payment of Expenses as they are incurred by an
Underwriter Indemnified Party in investigating, preparing, pursuing
or defending any Claim.
5.1.2 Procedure.
If any action is brought against an Underwriter Indemnified Party
in respect of which indemnity may be sought against the Company
pursuant to Section
5.1.1, such Underwriter Indemnified Party shall promptly
notify the Company in writing of the institution of such action and
the Company shall assume the defense of such action, including the
employment and fees of counsel (subject to the approval of such
Underwriter Indemnified Party) and payment of actual expenses if an
Underwriter Indemnified Party requests that the Company do so. Such
Underwriter Indemnified Party shall have the right to employ its or
their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of the Company, and shall be
advanced by the Company. The Company shall not be liable for any
settlement of any action effected without its consent (which shall
not be unreasonably withheld). In addition, the Company shall not,
without the prior written consent of the Underwriters, settle,
compromise or consent to the entry of any judgment in or otherwise
seek to terminate any pending or threatened action in respect of
which advancement, reimbursement, indemnification or contribution
may be sought hereunder (whether or not such Underwriter
Indemnified Party is a party thereto) unless such settlement,
compromise, consent or termination (i) includes an unconditional
release of each Underwriter Indemnified Party, acceptable to such
Underwriter Indemnified Party, from all liabilities, expenses and
claims arising out of such action for which indemnification or
contribution may be sought and (ii) does not include a statement as
to or an admission of fault, culpability or a failure to act, by or
on behalf of any Underwriter Indemnified Party.
-27-
5.2 Indemnification
of the Company. Each Underwriter, severally and not jointly,
agrees to indemnify and hold harmless the Company, its directors,
its officers who signed the Registration Statement and persons who
control the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any and
all loss, liability, claim, damage and expense described in the
foregoing indemnity from the Company to the several Underwriters,
as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Pricing
Disclosure Package or Prospectus or any amendment or supplement
thereto or in any application, in reliance upon, and in strict
conformity with, the Underwriters’ Information. In case any
action shall be brought against the Company or any other person so
indemnified based on any Preliminary Prospectus, the Registration
Statement, the Pricing Disclosure Package or Prospectus or any
amendment or supplement thereto or any application, and in respect
of which indemnity may be sought against any Underwriter, such
Underwriter shall have the rights and duties given to the Company,
and the Company and each other person so indemnified shall have the
rights and duties given to the several Underwriters by the
provisions of Section
5.1.2. The Company agrees promptly to notify the
Representative of the commencement of any litigation or proceedings
against the Company or any of its officers, directors or any
person, if any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, in connection with the
issuance and sale of the Public Securities or in connection with
the Registration Statement, the Pricing Disclosure Package, the
Prospectus or any Issuer Free Writing
Prospectus.
5.3 Contribution.
5.3.1 Contribution
Rights. If the indemnification provided for in this
Section 5 shall for
any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 5.1 or 5.2 in respect
of any loss, claim, damage or liability, or any action in respect
thereof, referred to therein, then each indemnifying party shall,
in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of
such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect
the relative benefits received by the Company, on the one hand, and
the Underwriters, on the other, from the Offering of the Public
Securities, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to
in clause (i) above but also the relative fault of the Company, on
the one hand, and the Underwriters, on the other, with respect to
the statements or omissions that resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits
received by the Company, on the one hand, and the Underwriters, on
the other, with respect to such Offering shall be deemed to be in
the same proportion as the total net proceeds from the Offering of
the Public Securities purchased under this Agreement (before
deducting expenses) received by the Company, as set forth in the
table on the cover page of the Prospectus, on the one hand, and the
total underwriting discounts and commissions received by the
Underwriters with respect to the shares of the Common Stock
purchased under this Agreement, as set forth in the table on the
cover page of the Prospectus, on the other hand. The relative fault
shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by the
Company or the Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 5.3.1 were to be
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this
Section 5.3.1 shall
be deemed to include, for purposes of this Section 5.3.1, any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 5.3.1 in no event shall
an Underwriter be required to contribute any amount in excess of
the amount by which the total underwriting discounts and
commissions received by such Underwriter with respect to the
Offering of the Public Securities exceeds the amount of any damages
that such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
-28-
5.3.2 Contribution
Procedure. Within fifteen (15) days after receipt by any
party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if
a claim for contribution in respect thereof is to be made against
another party (“contributing party”), notify the
contributing party of the commencement thereof, but the failure to
so notify the contributing party will not relieve it from any
liability which it may have to any other party other than for
contribution hereunder. In case any such action, suit or proceeding
is brought against any party, and such party notifies a
contributing party or its representative of the commencement
thereof within the aforesaid 15 days, the contributing party will
be entitled to participate therein with the notifying party and any
other contributing party similarly notified. Any such contributing
party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding affected by such party seeking
contribution on account of any settlement of any claim, action or
proceeding affected by such party seeking contribution without the
written consent of such contributing party. The contribution
provisions contained in this Section 5.3.2
are intended to supersede, to the
extent permitted by law, any right to contribution under the
Securities Act, the Exchange Act or otherwise available. Each
Underwriter’s obligations to contribute pursuant to
this Section 5.3
are several and not
joint.
6. Default
by an Underwriter.
6.1 Default
Not Exceeding 10% of Firm Securities or Option Securities.
If any Underwriter or Underwriters shall default in its or their
obligations to purchase the Firm Securities or the Option
Securities, if the Over-allotment Option is exercised hereunder,
and if the number of the Firm Securities or Option Securities with
respect to which such default relates does not exceed in the
aggregate 10% of the number of Firm Securities or Option Securities
that all Underwriters have agreed to purchase hereunder, then such
Firm Securities or Option Securities to which the default relates
shall be purchased by the non-defaulting Underwriters in proportion
to their respective commitments hereunder.
6.2 Default
Exceeding 10% of Firm Securities or Option Securities. In
the event that the default addressed in Section 6.1 relates to more
than 10% of the Firm Securities or Option Securities, you may in
your discretion arrange for yourself or for another party or
parties to purchase such Firm Securities or Option Securities to
which such default relates on the terms contained herein. If,
within one (1) Business Day after such default relating to more
than 10% of the Firm Securities or Option Securities, you do not
arrange for the purchase of such Firm Securities or Option
Securities, then the Company shall be entitled to a further period
of one (1) Business Day within which to procure another party or
parties satisfactory to you to purchase said Firm Securities or
Option Securities on such terms. In the event that neither you nor
the Company arrange for the purchase of the Firm Securities or
Option Securities to which a default relates as provided in this
Section 6, this Agreement will automatically be terminated by you
or the Company without liability on the part of the Company (except
as provided in Section
3.9 and Section
5 hereof) or the several Underwriters (except as provided in
Section 5 hereof);
provided, however, that if such default occurs
with respect to the Option Securities, this Agreement will not
terminate as to the Firm Securities; and provided, further, that nothing herein shall
relieve a defaulting Underwriter of its liability, if any, to the
other Underwriters and to the Company for damages occasioned by its
default hereunder.
6.3 Postponement
of Closing Date. In the event that the Firm Securities or
Option Securities to which the default relates are to be purchased
by the non-defaulting Underwriters, or are to be purchased by
another party or parties as aforesaid, you or the Company shall
have the right to postpone the Closing Date or Option Closing Date
for a reasonable period, but not in any event exceeding five (5)
Business Days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement, the Pricing
Disclosure Package or the Prospectus or in any other documents and
arrangements, and the Company agrees to file promptly any amendment
to the Registration Statement, the Pricing Disclosure Package or
the Prospectus that in the opinion of counsel for the Underwriter
may thereby be made necessary. The term “Underwriter” as used in this
Agreement shall include any party substituted under this
Section 6 with like
effect as if it had originally been a party to this Agreement with
respect to such shares of Common Stock.
-29-
7. Additional
Covenants.
7.1 Board
Composition and Board Designations. The Company shall ensure
that: (i) the qualifications of the persons serving as members of
the Board of Directors and the overall composition of the Board
comply with the Xxxxxxxx-Xxxxx Act, with the Exchange Act and with
the listing rules of the Exchange or any other national securities
exchange, as the case may be, in the event the Company seeks to
have any of its securities listed on another exchange or quoted on
an automated quotation system, and (ii) if applicable, at least one
member of the Audit Committee of the Board of Directors qualifies
as an “audit committee financial
expert,” as such term is defined under Regulation S-K and the
listing rules of the Exchange.
7.2 Prohibition
on Press Releases and Public Announcements. The Company
shall not issue press releases or engage in any other publicity,
without the Representative’s prior written consent, for a
period ending at 5:00 p.m., Eastern time, on the first (1st)
Business Day following the forty-fifth (45th) day after the Closing
Date, other than normal and customary releases issued in the
ordinary course of the Company’s business.
7.3 Right
of First Refusal. Provided that the Firm Securities are sold
in accordance with the terms of this Agreement, the Representative
shall have an irrevocable right of first refusal (the
“Right of First
Refusal”), for a period of six (6) months after the
date the Offering is completed, to act as sole and exclusive
investment banker, sole and exclusive book-runner, sole and
exclusive financial advisor, sole and exclusive underwriter and/or
sole and exclusive placement agent, at the Representative’s
sole and exclusive discretion, for each and every future public
equity offering, including all equity linked financings (each, a
“Subject
Transaction”), during such six (6) month period, of
the Company, or any successor to or subsidiary of the Company, on
terms and conditions customary to the Representative for such
Subject Transactions. For the avoidance of any doubt, the Company
shall not retain, engage or solicit any additional investment
banker, book-runner, financial advisor, underwriter and/or
placement agent in a Subject Transaction without the express
written consent of the Representative. The Representative shall
have the sole right to determine whether or not any other broker
dealer shall have the right to participate in any Subject
Transaction in which it exercises its right of first refusal and
the economic terms of any such participation.
The
Company shall notify the Representative of its intention to pursue
a Subject Transaction, including the material terms thereof, by
providing written notice thereof by registered mail or overnight
courier service addressed to the Representative. If the
Representative fails to exercise its Right of First Refusal with
respect to any Subject Transaction within ten (10) Business Days
after the mailing of such written notice, then the Representative
shall have no further claim or right with respect to the Subject
Transaction. The Representative may elect, in its sole and absolute
discretion, not to exercise its Right of First Refusal with respect
to any Subject Transaction; provided that any such election by the
Representative shall not adversely affect the
Representative’s Right of First Refusal with respect to any
other Subject Transaction during the six (6) month period agreed to
above.
8. Effective
Date of this Agreement and Termination Thereof.
8.1 Effective
Date of this Agreement. This Agreement shall become
effective when both the Company and the Representative have
executed the same and delivered counterparts of such signatures to
the other party.
-30-
8.2 Termination.
The Representative shall have the right to terminate this Agreement
at any time prior to any Closing Date, (i) if any domestic or
international event or act or occurrence has materially disrupted,
or in your opinion will in the immediate future materially disrupt,
general securities markets in the United States; or (ii) if trading
on the New York Stock Exchange or the Nasdaq Stock Market LLC shall
have been suspended or materially limited, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for
prices for securities shall have been required by FINRA or by order
of the Commission or any other government authority having
jurisdiction; or (iii) if the United States shall have become
involved in a new war or an increase in major hostilities; or (iv)
if a banking moratorium has been declared by a New York State or
federal authority; or (v) if a moratorium on foreign exchange
trading has been declared which materially adversely impacts the
United States securities markets; or (vi) if the Company shall have
sustained a material loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or malicious act
which, whether or not such loss shall have been insured, will, in
your opinion, make it inadvisable to proceed with the delivery of
the Firm Securities or Option Securities; or (vii) if the Company
is in material breach of any of its representations, warranties or
covenants hereunder; or (viii) if the Representative shall have
become aware after the date hereof of such a material adverse
change in the conditions or prospects of the Company, or such
adverse material change in general market conditions as in the
Representative’s judgment would make it impracticable to
proceed with the offering, sale and/or delivery of the Public
Securities or to enforce contracts made by the Underwriters for the
sale of the Public Securities.
8.3 Expenses.
Notwithstanding anything to the contrary in this Agreement, except
in the case of a default by the Underwriters, pursuant to
Section 6.2 above,
in the event that this Agreement shall not be carried out for any
reason whatsoever, within the time specified herein or any
extensions thereof pursuant to the terms herein, the Company shall
be obligated to pay to the Underwriters their actual and
accountable out-of-pocket expenses related to the transactions
contemplated herein then due and payable (including the fees and
disbursements of Representative Counsel) up to $90,000 in the
aggregate (inclusive of the $20,000 advance for out-of-pocket
accountable expenses previously paid by the Company to the
Representative (the “Advance”)), and upon demand the
Company shall pay the full amount thereof to the Representative on
behalf of the Underwriters; provided, however, that such expense
cap in no way limits or impairs the indemnification and
contribution provisions of this Agreement. Notwithstanding the
foregoing, any advance received by the Representative will be
reimbursed to the Company to the extent not actually incurred in
compliance with FINRA Rule 5110(f)(2)(C).
8.4 Survival
of Indemnification. Notwithstanding any contrary provision
contained in this Agreement, any election hereunder or any
termination of this Agreement, and whether or not this Agreement is
otherwise carried out, the provisions of Section 5 shall remain in full
force and effect and shall not be in any way affected by, such
election or termination or failure to carry out the terms of this
Agreement or any part hereof.
8.5 Representations,
Warranties, Agreements to Survive. All representations,
warranties and agreements contained in this Agreement or in
certificates of officers of the Company submitted pursuant hereto,
shall remain operative and in full force and effect regardless of
(i) any investigation made by or on behalf of any Underwriter or
its Affiliates or selling agents, any person controlling any
Underwriter, its officers or directors or any person controlling
the Company or (ii) delivery of and payment for the Public
Securities.
-31-
9. Miscellaneous.
9.1 Notices.
All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed
(registered or certified mail, return receipt requested),
personally delivered or sent by e-mail or facsimile transmission
and confirmed and shall be deemed given when so delivered, e-mailed
or faxed and confirmed or if mailed, two (2) days after such
mailing.
If to
the Representative:
ThinkEquity, a
division of Fordham Financial Management, Inc.
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx
Xxxx, Head of Investment Banking
Fax
No.: (000) 000-0000
e-mail:
xx@xxxxx-xxxxxx.xxx
with a
copy (which shall not constitute notice) to:
Gracin& Xxxxxx,
LLP
The
Chrysler Building
000
Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxx Xxxxxx, Esq. or Xxxxxxx X. Xxxx, Esq.
Fax No:
(000) 000-0000
E-mail:
xxxxxxx@xxxxxxxxxxxx.xxx or
xxxxx@xxxxxxxxxxxx.xxx
If to
the Company:
00
Xxxxxxxxx Xxxx
Xxxxxxxxxx,
Xxxxxxxxxxxxx 00000
Attention: Xxx
Xxxx, Chief Executive Officer
Fax No:
(000) 000-0000
E-mail:
xxxxx@xxxxxxxxxx.xxx
with a
copy (which shall not constitute notice) to:
Disclosure Law
Group
One
America Plaza
000
Xxxx Xxxxxxxx Xxxxx 000
Xxx
Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx
Xxxxxx, Esq.
Fax No.
(000) 000-0000
E-mail:
xxxxxxx@xxxxxxxxxxxxxxxxxx.xxx
9.2 Research
Analyst Independence. The Company acknowledges that each
Underwriter’s research analysts and research departments, if
any, are required to be independent from its investment banking
division and are subject to certain regulations and internal
policies, and that such Underwriter’s research analysts may
hold views and make statements or investment recommendations and/or
publish research reports with respect to the Company and/or the
Offering that differ from the views of their investment banking
division. The Company acknowledges that each Underwriter is a full
service securities firm and as such from time to time, subject to
applicable securities laws, rules and regulations, may effect
transactions for its own account or the account of its customers
and hold long or short positions in debt or equity securities of
the Company; provided,
however, that nothing in
this Section 9.2 shall relieve the Underwriter of any
responsibility or liability it may otherwise bear in connection
with activities in violation of applicable securities laws, rules
or regulations.
-32-
9.3 Headings.
The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of
this Agreement.
9.4 Amendment.
This Agreement may only be amended by a written instrument executed
by each of the parties hereto.
9.5 Entire
Agreement. This Agreement (together with the other
agreements and documents being delivered pursuant to or in
connection with this Agreement) constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and
thereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter
hereof. Notwithstanding anything to the contrary set forth herein,
it is understood and agreed by the parties hereto that all other
terms and conditions of that certain engagement letter between the
Company and ThinkEquity, a division of Fordham Financial
Management, Inc., dated August 27, 2018, shall remain in full force
and effect.
9.6 Binding
Effect. This Agreement shall inure solely to the benefit of
and shall be binding upon the Representative, the Underwriters, the
Company and the controlling persons, directors and officers
referred to in Section
5 hereof, and their respective successors, legal
representatives, heirs and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or
claim under or in respect of or by virtue of this Agreement or any
provisions herein contained. The term “successors and
assigns” shall not include a purchaser, in its capacity as
such, of securities from any of the Underwriters.
9.7 Governing
Law; Consent to Jurisdiction; Trial by Jury. This Agreement
shall be governed by and construed and enforced in accordance with
the laws of the State of New York, without giving effect to
conflict of laws principles thereof. The Company hereby agrees that
any action, proceeding or claim against it arising out of, or
relating in any way to this Agreement shall be brought and enforced
in the New York Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York, and
irrevocably submits to such jurisdiction, which jurisdiction shall
be exclusive. The Company hereby waives any objection to such
exclusive jurisdiction and that such courts represent an
inconvenient forum. Any such process or summons to be served upon
the Company may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 9.1 hereof. Such
mailing shall be deemed personal service and shall be legal and
binding upon the Company in any action, proceeding or claim. The
Company agrees that the prevailing party(ies) in any such action
shall be entitled to recover from the other party(ies) all of its
reasonable attorneys’ fees and expenses relating to such
action or proceeding and/or incurred in connection with the
preparation therefor. The Company (on its behalf and, to the extent
permitted by applicable law, on behalf of its stockholders and
affiliates) and each of the Underwriters hereby irrevocably waives,
to the fullest extent permitted by applicable law, any and all
right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated
hereby.
9.8 Execution
in Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but
all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts
has been signed by each of the parties hereto and delivered to each
of the other parties hereto. Delivery of a signed counterpart of
this Agreement by facsimile or email/pdf transmission shall
constitute valid and sufficient delivery thereof.
9.9 Waiver,
etc. The failure of any of the parties hereto to at any time
enforce any of the provisions of this Agreement shall not be deemed
or construed to be a waiver of any such provision, nor to in any
way effect the validity of this Agreement or any provision hereof
or the right of any of the parties hereto to thereafter enforce
each and every provision of this Agreement. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions
of this Agreement shall be effective unless set forth in a written
instrument executed by the party or parties against whom or which
enforcement of such waiver is sought; and no waiver of any such
breach, non-compliance or non-fulfillment shall be construed or
deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
[Signature Page
Follows]
-33-
If the
foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space
provided below for that purpose, whereupon this letter shall
constitute a binding agreement between us.
Very
truly yours,
By: __________________________
Name:
Title:
Confirmed
as of the date first written above
mentioned,
on behalf of itself and as
Representative
of the several Underwriters
named
on Schedule 1
hereto:
THINKEQUITY,
A Division of Fordham Financial Management, Inc.
By:
Name:
Xxxx Xxxx
Title:
Head of Investment Banking
-34-
SCHEDULE 1
|
|
|
|
|
|
|
Underwriter
|
Number of Class A Units
|
Number of Class B Units
|
Number of Option Shares to be Purchased if the Over-Allotment
Option is Fully Exercised by the Representative
|
Number of Option Warrants to be Purchased if the Over-Allotment
Option is Fully Exercised by the Representative
|
|
ThinkEquity, a division of Fordham Financial Management,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
-35-
SCHEDULE 2-A
Pricing
Information
Number
of Class A Units: $[●]
Number
of Class B Units: $[●]
Number
of Option Shares: $[●]
Number
of Option Warrants: $[●]
Public
Offering Price per Class A Unit: $[●]
Public
Offering Price per Class B Unit: $[●]
Warrant
Exercise Price: $[●]
Underwriting
Discount per Class A Unit: $[●]
Underwriting
Discount per Class B Unit: $[●]
Underwriting
Discount per Option Share: $[●]
Underwriting
Discount per Option Warrant: $[●]
Proceeds
to Company per Class A Unit (before expenses): $[●]
Proceeds to Company per Class B Unit (before expenses):
$[●]
Proceeds to Company per Option Share (before expenses):
$[●]
Proceeds to Company per Option Warrant (before expenses):
$0.0093
The
Company shall be credited by an amount equal to 50% of the
underwriting discount and non-accountable expense allowance at
Closing for sale of Shares to investors listed on Schedule A annexed hereto;
which shall reduce the aggregate Underwriting Discount and
Underwriting non-accountable expense
allowance.
-36-
SCHEDULE 2-B
Issuer General Use Free Writing Prospectuses
Free
writing prospectus filed with the SEC on October 9,
2018
Free
writing prospectus filed with the SEC on [ ], 2018
-37-
SCHEDULE 3
List of Lock-Up Parties
-38-
SCHEDULE A
Company Investors:
1. Xxxxxx
Xxxxx
2. Xxxx
Xxxxxx
3. Xxxxx
Xxxxxxx
4. Xxxxxx
Xxxxxx
5. Xxxxx
Xxxxxxxxxxxx
6. Xxxxxxx
Xxxxxxx
7. Xxxxx
Xxxxxxx
8. Xxxxxxxxxxx
Xxxxxx
9. Xxxxx
Fund
10. Xxxxxx
Xxxxx
11. Xxxxxxx
Xxxxxxxx
12. Xxxx
Xxxxxxxx
13. Xxxxxxx
Xxxx
-39-
EXHIBIT
A
Form of Representative’s Warrant Agreement
Reference
is made to Exhibit 4.2 to the Registration Statement on Form S-1,
as amended (File Number 333-227430), of the Company, which is
incorporated by reference.
-40-
EXHIBIT B
Form of Lock-Up Agreement
__________,
2018
ThinkEquity,
A
Division of Fordham Financial Management, Inc.
00
Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
As
Representative of the several Underwriters named on Schedule 1 to
the Underwriting Agreement referenced below
Ladies
and Gentlemen:
The
undersigned understands that you (the “Representative”)
and potentially certain other firms, if any (the
“Underwriters”),
propose to enter into an Underwriting Agreement (the
“Underwriting
Agreement”) providing for the purchase by the
Underwriters of securities (which will include shares of Common
Stock, par value $0.001 per share (the “Common Stock”)
and may also include warrants to purchase shares of Common Stock
(the “Common
Stock”), of Bridgeline Digital, Inc., a Delaware
corporation (the “Company”), and
that the Underwriters propose to reoffer the Common Stock to the
public (the “Offering”).
In
consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the
undersigned hereby irrevocably agrees that, without the prior
written consent of the Representative, on behalf of the
Underwriters, the undersigned will not, directly or indirectly, (1)
offer for sale, sell, pledge, or otherwise transfer or dispose of
(or enter into any transaction or device that is designed to, or
could be expected to, result in the transfer or disposition by any
person at any time in the future of) any shares of Common Stock
(including, without limitation, shares of Common Stock that may be
deemed to be beneficially owned by the undersigned in accordance
with the rules and regulations of the Securities and Exchange
Commission and shares of Common Stock that may be issued upon
exercise of any options or warrants) or securities convertible into
or exercisable or exchangeable for Common Stock, (2) enter into any
swap or other derivatives transaction that transfers to another, in
whole or in part, any of the economic benefits or risks of
ownership of shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery
of Common Stock or other securities, in cash or
otherwise, (3) except as
provided for below, make any demand for or exercise any right or
cause to be filed a registration statement, including any
amendments thereto, with respect to the registration of any shares
of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock or any other securities of the
Company, or (4) publicly disclose the intention to do any of the
foregoing for a period commencing on the date hereof and ending on
the 90th day after the date of the Prospectus relating to the
Offering (such 90-day period, the “Lock-Up
Period”).
-41-
The
foregoing paragraph shall not apply to (a) transactions relating to
shares of Common Stock or other securities acquired in the open
market after the completion of the Offering, provided that no filing under Section
16(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”), shall
be required or shall be voluntarily made in connection with such
transfers; (b) bona fide gifts of
shares of any class of the Company’s capital stock or any
security convertible into Common Stock, in each case that are made
exclusively between and among the undersigned or members of the
undersigned’s family, or affiliates of the undersigned,
including its partners (if a partnership) or members (if a limited
liability company); (c) any transfer of shares of Common Stock or
any security convertible into Common Stock by will or intestate
succession upon the death of the undersigned; (d) transfer of
shares of Common Stock or any security convertible into Common
Stock to an immediate family member (for purposes of this Lock-Up
Letter Agreement, “immediate family” shall mean any
relationship by blood, marriage or adoption, not more remote than
first cousin) or any trust, limited partnership, limited liability
company or other entity for the direct or indirect benefit of the
undersigned or any immediate family member of the
undersigned; provided that, in the case of clauses (b)-(d) above, it
shall be a condition to any such transfer that (i) the
transferee/donee agrees to be bound by the terms of this Lock-Up
Letter Agreement (including, without limitation, the restrictions
set forth in the preceding sentence) to the same extent as if the
transferee/donee were a party hereto, (ii) each party (donor,
donee, transferor or transferee) shall not be required by law
(including without limitation the disclosure requirements of the
Securities Act of 1933, as amended (the “Securities
Act”), and the Exchange
Act) to make, and shall agree to not voluntarily make, any filing
or public announcement of the transfer or disposition prior to the
expiration of the 180-day period referred to above, and (iii) the
undersigned notifies the Representative at least two business days
prior to the proposed transfer or disposition; (e) the transfer of
shares to the Company to satisfy withholding obligations for any
equity award granted pursuant to the terms of the Company’s
stock option/incentive plans, such as upon exercise, vesting, lapse
of substantial risk of forfeiture, or other similar taxable event,
in each case on a “cashless” or “net
exercise” basis (which, for the avoidance of doubt shall not
include “cashless” exercise programs involving a broker
or other third party), provided that as a condition of any transfer pursuant to
this clause (e), that if the undersigned is required to file a
report under Section 16(a) of the Exchange Act, reporting a
reduction in beneficial ownership of shares of Common Stock or any
securities convertible into or exercisable or exchangeable for
Common Stock during the Lock-Up Period, the undersigned shall
include a statement in such report, and if applicable an
appropriate disposition transaction code, to the effect that such
transfer is being made as a share delivery or forfeiture in
connection with a net value exercise, or as a forfeiture or sale of
shares solely to cover required tax withholding, as the case may
be; (f) transfers of shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock
pursuant to a bona fide third party tender offer made to all
holders of the Common Stock, merger, consolidation or other similar
transaction involving a change of control (as defined below) of the
Company, including voting in favor of any such transaction or
taking any other action in connection with such transaction,
provided that in the event
that such merger, tender offer or other transaction is not
completed, the Common Stock and any security convertible into or
exercisable or exchangeable for Common Stock shall remain subject
to the restrictions set forth herein;
(g) the exercise of warrants or the exercise of stock
options granted pursuant to the Company’s stock
option/incentive plans or otherwise outstanding on the date hereof;
provided, that the
restrictions shall apply to shares of Common Stock issued upon such
exercise or conversion; (h) the establishment of any contract,
instruction or plan that satisfies all of the requirements of Rule
10b5-1 (a “Rule 10b5-1
Plan”) under the Exchange Act; provided, however, that no sales of Common Stock
or securities convertible into, or exchangeable or exercisable for,
Common Stock, shall be made pursuant to a Rule 10b5-1 Plan prior to
the expiration of the Lock-Up Period; provided further, that the Company is not
required to report the establishment of such Rule 10b5-1 Plan in
any public report or filing with the Commission under the Exchange
Act during the lock-up period and does not otherwise voluntarily
effect any such public filing or report regarding such Rule 10b5-1
Plan; and (i) any demands or requests for, exercise any right with
respect to, or take any action in preparation of, the registration
by the Company under the Securities Act of the undersigned’s
shares of Common Stock, provided that no transfer of the
undersigned’s shares of Common Stock registered pursuant to
the exercise of any such right and no registration statement shall
be filed under the Securities Act with respect to any of the
undersigned’s shares of Common Stock during the Lock-Up
Period. For purposes of clause (f) above, “change of
control” shall mean the consummation of any bona fide third
party tender offer, merger, purchase, consolidation or other
similar transaction the result of which is that any
“person” (as defined in Section 13(d)(3) of the
Exchange Act), or group of persons, becomes the beneficial owner
(as defined in Rules 13d-3 and 13d-5 of the Exchange Act) of a
majority of total voting power of the voting stock of the
Company.
-42-
The
undersigned also agrees and consents to the entry of stop transfer
instructions with the Company’s transfer agent and registrar
against the transfer of the undersigned’s securities subject
to this Lock-Up Letter Agreement except in compliance with this
Lock-Up Letter Agreement.
If the
undersigned is an officer or director of the Company, (i) the
undersigned agrees that the foregoing restrictions shall be equally
applicable to any shares of Common Stock that the undersigned may
purchase in the Offering; (ii) the Representative agrees that, at
least three (3) business days before the effective date of any
release or waiver of the foregoing restrictions in connection with
a transfer of securities subject to this Lock-Up Letter Agreement,
the Representative will notify the Company of the impending release
or waiver; and (iii) the Company has agreed in the Underwriting
Agreement to announce the impending release or waiver by press
release through a major news service at least two (2) business days
before the effective date of the release or waiver. Any release or
waiver granted by the Representative hereunder to any such officer
or director shall only be effective two (2) business days after the
publication date of such press release. The provisions of this
paragraph will not apply if (a) the release or waiver is effected
solely to permit a transfer of securities subject to this Lock-Up
Letter Agreement not for consideration and (b) the transferee has
agreed in writing to be bound by the same terms described in this
securities subject to this Lock-Up Letter Agreement to the extent
and for the duration that such terms remain in effect at the time
of such transfer.
It is
understood that, if the Company notifies the Underwriters that it
does not intend to proceed with the Offering, if the Underwriting
Agreement does not become effective, or if the Underwriting
Agreement (other than the provisions thereof which survive
termination) shall terminate or be terminated prior to payment for
and delivery of the securities, the undersigned will be released
from its obligations under this Lock-Up Letter
Agreement.
The
undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter
Agreement.
Whether
or not the Offering actually occurs depends on a number of factors,
including market conditions. Any Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are
subject to negotiation between the Company and the
Underwriters.
This
Lock-Up Letter Agreement shall automatically terminate upon the
earliest to occur, if any, of (1) the termination of the
Underwriting Agreement before the sale of any securities to the
Underwriters or (2) November 27, 2018, in the event that the
Underwriting Agreement has not been executed by that
date.
The
undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter
Agreement and that, upon request, the undersigned will execute any
additional documents necessary in connection with the enforcement
hereof. Any obligations of the undersigned shall be binding upon
the heirs, personal representative, successors and assigns of the
undersigned.
Very
truly yours,
By:
______________________________
Name:
Title:
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EXHIBIT C
Form of Press Release
[Date]
Bridgeline
Digital, Inc., a Delaware corporation (the
“Company”), announced today that ThinkEquity,
a division of Fordham Financial Management, Inc., acting as representative for the underwriters in
the Company’s recent public offering of the Company’s
common stock, is [waiving] [releasing] a lock-up restriction with
respect to _________ shares of the Company’s common stock
held by [certain officers, directors or other security holders] [an
officer, director or security holder] of the Company. The [waiver]
[release] will take effect on _________, 20___, and the shares may
be sold on or after such date.
This
press release is not an offer or sale of the securities in the
United States or in any other jurisdiction where such offer or sale
is prohibited, and such securities may not be offered or sold in
the United States absent registration or an exemption from
registration under the Securities Act of 1933, as
amended.
Ex.
C-1
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