Exhibit 1.1
____________ SHARES of
Common Stock
CACHET FINANCIAL SOLUTIONS, INC.
UNDERWRITING AGREEMENT
_______________, 0000
Xxxxxxxxx Xxxxxxxx & Co. Inc.
As the Representative of the
Several underwriters, if any, named in Schedule
I hereto
0000 Xxxxxxxx Xxxx., 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
The undersigned, CACHET
FINANCIAL SOLUTIONS, INC. (the “Company”), a company incorporated under the laws of Delaware (collectively with
its subsidiaries and affiliates, including, without limitation, Cachet Financial Solutions Inc., a Minnesota corporation, and all
other entities disclosed or described in the Registration Statement as being subsidiaries or affiliates of the Company), hereby
confirms its agreement (this “Agreement”) with the several underwriters named in Schedule I hereto (such
underwriters, including the Representative (as defined below), the “Underwriters” and each an “Underwriter”)
for which LADENBURG XXXXXXXX & CO. INC. is acting as representative to the Underwriters (the “Representative,”
and if there are no Underwriters other than the Representative, references to multiple Underwriters shall be disregarded and the
term Representative as used herein shall have the same meaning as Underwriter) on the terms and conditions set forth herein.
It is understood that
the several Underwriters are to make a public offering of the Securities as soon as the Representative deems it advisable to do
so. The Securities are to be initially offered to the public at the public offering price set forth in the Prospectus. The Representative
may from time to time thereafter change the public offering price and other selling terms.
It is further understood
that you will act as the Representative for the Underwriters in the offering and sale of the Closing Securities (as defined below)
and, if any, the Option Securities (as defined below) in accordance with this Agreement.
ARTICLE I.
DEFINITIONS
1.1 Definitions. In
addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings
set forth in this Section 1.1:
“Action”
shall have the meaning ascribed to such term in Section 3.1(k).
“Affiliate”
means with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls or
is controlled by or is under common control with such Person as such terms are used in and construed under Rule 405 under the Securities
Act.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.
“Closing”
means the closing of the purchase and sale of the Closing Securities pursuant to Section 2.1.
“Closing
Date” means the hour and the date on the Trading Day on which all conditions precedent to (i) the Underwriters’
obligations to pay the Closing Purchase Price and (ii) the Company’s obligations to deliver the Closing Securities, in each
case, have been satisfied or waived, but in no event later than 10:00 a.m. (New York City time) on the third Trading Day following
the date hereof or at such earlier time as shall be agreed upon by the Representative and the Company.
“Closing
Purchase Price” shall have the meaning ascribed to such term in Section 2.1(b), which aggregate purchase price shall
be net of the underwriting discounts and commissions.
“Closing
Securities” shall have the meaning ascribed to such term in Section 2.1(a).
“Combined
Purchase Price” shall have the meaning ascribed to such term in Section 2.1(b).
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
“Company
Auditor” means Xxxxx, LLP, with offices located at 0000 Xxxxxxx
Xxxxxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx.
“Company
Counsel” means Davies Xxxx Xxxxxxxx & Xxxxxxxx LLP, with offices located at 000 Xxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx.
“Controlling
Person” shall have the meaning ascribed to such term in Section 6.1.
“Effective
Date” shall have the meaning ascribed to such term in Section 3.1(f).
“Engagement
Agreement” shall have the meaning ascribed to such term in Section 7.2.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Execution
Date” shall mean the date on which the parties execute and enter into this Agreement.
“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers, directors or consultants
of the Company pursuant to any stock or option plan duly adopted for such purpose, by the Board of Directors or a committee of
the Board of Directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement
to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities,
(c) shares of Common Stock or Common Stock Equivalents to employees or consultants approved by the Board of Directors or a committee
of the Board of Directors, (d) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equity holders of
a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic
with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, and
which strategic transaction shall include but not be limited to transactions with distributors of the Company’s products,
or any Affiliates of such Person, (e) securities issued in connection with a loan from a commercial bank or other credit facility,
and (f) securities issued with the prior written consent of the Representative.
“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.
“FINRA”
means the Financial Industry Regulatory Authority.
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(i).
“Indebtedness”
means (a) any liabilities for borrowed money or amounts owed in
excess of $50,000
(other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated
balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $50,000 due under
leases required to be capitalized in accordance with GAAP.
“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Lock-Up
Agreements” means the lock-up agreements, in the form of Exhibit D attached hereto, delivered on the date hereof
by each of the Company’s officers and directors holding Common Stock or Common Stock Equivalents and each holder of Common
Stock and Common Stock Equivalents holding, on a fully diluted basis, more than 10% of the Company’s issued and outstanding
Common Stock.
“Material
Adverse Effect” means (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document,
(ii) a material adverse effect on the results of operations, assets, business, operations, prospects or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability
to perform in any material respect on a timely basis its obligations under any Transaction Document.
“Money
Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(ff).
“Offering”
shall have the meaning ascribed to such term in Section 2.1(c).
“Option
Closing Date” shall have the meaning ascribed to such term in Section 2.2(c).
“Option
Closing Purchase Price” shall have the meaning ascribed to such term in Section 2.2(b), which aggregate purchase price
shall be net of the underwriting discounts and commissions.
“Option
Securities” shall have the meaning ascribed to such term in Section 2.2(a).
“Over-Allotment
Option” shall have the meaning ascribed to such term in Section 2.2(a).
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Personal
Information” shall have the meaning ascribed to such term in Section
3.1(ee).
“Preliminary
Prospectus” means, if any, any preliminary prospectus relating to the Securities included in the Registration Statement
or filed with the Commission pursuant to Rule 424(b).
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
“Prospectus”
means the final prospectus filed for the Registration Statement.
“Prospectus
Supplement” means, if any, any supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is
filed with the Commission.
“Registration
Statement” means, collectively, the various parts of the registration statement prepared by the Company on Form S-1 (File
No. 333-212610) with respect to the Securities, each as amended as of the date hereof, including the Prospectus and Prospectus
Supplement, if any, the Preliminary Prospectus, if any, and all exhibits filed with or incorporated by reference into such registration
statement.
“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.
“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(i).
“Securities”
means the Closing Securities and the Option Securities.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Selected
Dealer” shall have the meaning ascribed to such term in Section 6.1.
“Share
Purchase Price” shall have the meaning ascribed to such term in Section 2.1(b).
“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company
formed or acquired after the date hereof.
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock
Exchange (or any successors to any of the foregoing).
“Transaction
Documents” means this Agreement, the Lock-Up Agreements, and any other documents or agreements executed in connection
with the transactions contemplated hereunder.
“Transfer
Agent” means the current transfer agent of the Company and any successor transfer agent of the Company.
“Underwriter
Counsel” means DLA Piper LLP, with offices located at 0000 Xxxxxxxxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxxxxxxxx.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing.
(a) Upon
the terms and subject to the conditions set forth herein, the Company agrees to sell in the aggregate ____________ shares of Common
Stock, and each Underwriter agrees to purchase, severally and not jointly, at the Closing, the number of shares of Common Stock
set forth opposite the name of such Underwriter on Schedule I hereof (such shares to be purchased by all the Underwriters,
collectively, the “Closing Securities”); and
(b) The
aggregate purchase price for the Closing Securities shall equal the amount set forth opposite the name of such Underwriter on Schedule
I hereto (the “Closing Purchase Price”); and
(c)
On the Closing Date, each Underwriter shall deliver or cause to be delivered to the Company, via wire transfer, immediately available
funds equal to such Underwriter’s Closing Purchase Price and the Company shall deliver to, or as directed by, such Underwriter
its respective Closing Securities and the Company shall deliver the other items required pursuant to Section 2.3 deliverable at
the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.3 and 2.4, the Closing shall occur at the
offices of Underwriter Counsel or such other location as the Company and Representative shall mutually agree. The Securities are
to be offered initially to the public at the offering price set forth on the cover page of the Prospectus (the “Offering”).
2.2 Over-Allotment
Option.
(a) For
the purposes of covering any over-allotments in connection with the distribution and sale of the Closing Securities, the Representative
is hereby granted an option (the “Over-Allotment Option”) to purchase, in the aggregate, up to ____________
shares of Common
Stock (the “Option Securities”).
(b) In
connection with an exercise of the Over-Allotment Option, the purchase price to be paid for the Option Securities is equal to the
product of the Share Purchase Price multiplied by the number of Option Securities to be purchased (the aggregate purchase price
to be paid on an Option Closing Date, the “Option Closing Purchase Price”).
(c) The
Over-Allotment Option granted pursuant to this Section 2.2 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 Execution Date. An Underwriter will not be under any
obligation to purchase any Option Securities prior to the exercise of the Over-Allotment Option by the Representative. 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 (each, an “Option Closing Date”),
which will not be later than three (3) 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 Underwriter 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, each Option Closing Date will be as set forth in the notice. Upon exercise
of the Over-Allotment Option, the Company will become obligated to convey to the Underwriters, and, subject to the terms and conditions
set forth herein, the Underwriters will become obligated to purchase, the number of Option Securities specified in such notice.
The Representative may cancel the Over-Allotment Option at any time prior to the expiration of the Over-Allotment Option by written
notice to the Company.
2.3 Deliveries. The
Company shall deliver or cause to be delivered to each Underwriter (if applicable) the following:
(i) At
the Closing Date, the Option Securities and, as to each Option Closing Date, if any, the applicable Option Securities, which shares
shall be delivered via The Depository Trust Company Deposit or Withdrawal at Custodian system for the accounts of the several Underwriters;
(ii) At
the Closing Date, a legal opinion of Company Counsel addressed to the Underwriters, including, without limitation, a negative assurance
letter, substantially in the form of Exhibit A attached hereto and as to each Option Closing Date, if any, a bring-down
opinion from Company Counsel in form and substance reasonably satisfactory to the Representative;
(iii) Contemporaneously
herewith, a cold comfort letter, addressed to the Underwriters and in form and substance satisfactory in all respects to the Representative
from the Company Auditor dated,
respectively, as of the date of this Agreement and a bring-down letter dated as of the Closing Date and each Option Closing Date,
if any;
(iv) Contemporaneously
herewith, on the Closing Date and on each Option Closing Date, the duly executed and delivered Officer’s Certificate, substantially
in the form required by Exhibit B attached hereto;
(v) Contemporaneously
herewith, on the Closing Date and on each Option Closing Date, the duly executed and delivered Secretary’s Certificate, substantially
in the form required by Exhibit C attached hereto; and
(vi) Contemporaneously
herewith, the duly executed and delivered Lock-Up Agreements, to the extent not delivered to the Underwriters prior to the date
hereof.
2.4 Closing
Conditions. The respective obligations of each Underwriter hereunder in connection with the Closing and each Option Closing
Date are subject to the following conditions being met:
(i) the
accuracy in all material respects when made and on the date in question (other than representations and warranties of the Company
already qualified by materiality, which shall be true and correct in all respects) of the representations and warranties of the
Company contained herein (unless as of a specific date therein);
(ii) all
obligations, covenants and agreements of the Company required to be performed at or prior to the date in question shall have been
performed;
(iii) the
delivery by the Company of the items set forth in Section 2.3 of this Agreement;
(iv) the
Registration Statement shall be effective on the date of this Agreement and at each of the Closing Date and each Option Closing
Date, if any, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings
for that purpose shall have been instituted or shall be pending or contemplated by the Commission and any request on the part of
the Commission for additional information shall have been complied with to the reasonable satisfaction of the Representative;
(v) by
the Execution Date, if required by FINRA, the Underwriters shall have received clearance from FINRA as to the amount of compensation
allowable or payable to the Underwriters as described in the Registration Statement;
(vi) the
Securities have been approved for listing on the Trading Market; and
(vii) 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 results of operations, assets, business, operations, prospects
or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole,
from the latest dates as of which such condition is set forth in the Registration Statement and Prospectus; (ii) no action
suit or proceeding, at law or in equity, shall have been pending or threatened against the Company or any Affiliate of the Company
before or by any court or federal or state commission, board or other administrative agency wherein an unfavorable decision, ruling
or finding may have a Material Adverse Effect, except as set forth in the Registration Statement and 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; and (iv) the Registration Statement 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 rules and
regulations thereunder and shall conform in all material respects to the requirements of the Securities Act and the rules and regulations
thereunder, and neither the Registration Statement nor 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 light of the circumstances under which they were made, not misleading.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations
and Warranties of the Company. The Company represents and warrants to the Underwriters as of the Execution Date,
as of the Closing Date and as of each Option Closing Date, if any, as follows:
(a) Subsidiaries. All
of the direct and indirect Subsidiaries of the Company are set forth in the SEC Reports. The Company owns, directly or indirectly,
all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities.
(b) Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite
power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company
nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in a Material Adverse Effect and no Proceeding has been instituted
in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
(c) Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents to which it is a party and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents
by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s
stockholders in connection herewith or therewith other than in connection with the Required Approvals (as defined below). This
Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by
the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation
of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief
or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(d) No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction
Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated
hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s
certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary
is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities
laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case
of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(e) Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give
any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority
or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than:
(i) the filing with the Commission of
the Prospectus
and (ii) such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).
(f) Registration
Statement. The Company has filed with the Commission the Registration Statement under the Securities Act, which
became effective on _________, 2016 (the “Effective Date”), for the registration under the Securities Act of
the Offering of the Securities. At the time of such filing, the Company met the eligibility requirements for use of Form S-1 under
the Securities Act as set forth in Part I of Form S-1. No stop order suspending the effectiveness of the Registration Statement
or the use of the Prospectus or the Prospectus Supplement has been issued, and no proceeding for any such purpose is pending or
has been initiated or, to the Company's knowledge, is threatened by the Commission. For purposes of this Agreement, “free
writing prospectus” has the meaning set forth in Rule 405 under the Securities Act. The Company will not, without the
prior consent of the Representative, prepare, use or refer to, any free writing prospectus.
(g) Issuance
of Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company. The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable
pursuant to this Agreement. The holder of the Securities will not be subject to personal liability by reason of being such holders.
The 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. All corporate action required to be taken for the authorization, issuance and sale of
the Securities has been duly and validly taken. The Securities conform in all material respects to all statements with respect
thereto contained in the Registration Statement.
(h) Capitalization. The
capitalization of the Company is as set forth in the Prospectus. The Company has not issued any capital stock since the date of
the Prospectus, other than as disclosed in the Prospectus (or, in the case of any issuance of any capital stock that occurs after
the date of the Prospectus, as set forth in the SEC Reports) or pursuant to the exercise of employee stock options under the Company’s
stock option plans, the issuance of shares of Common Stock or Common Stock Equivalents to employees pursuant to the Company’s
employee stock purchase plans or as approved by the Board of Directors or a committee of the Board of Directors and pursuant to
the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the Prospectus. Except as disclosed in
the Prospectus, no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate
in the transactions contemplated by the Transaction Documents. Except as disclosed in the Prospectus, there are no outstanding
options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights
or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company is or may become
bound to issue
additional shares of Common Stock or Common Stock Equivalents. Except as disclosed in the Prospectus, the issuance and sale of
the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the
Underwriters) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or
reset price under any of such securities. All of the outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and nonassessable, have been issued in compliance with all applicable federal and state securities laws, and
none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase
securities. The authorized shares of the Company conform in all material respects to all statements relating thereto contained
in the Registration Statement and the Prospectus. The offers and sales of the Company’s securities 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, exempt from such registration requirements. No further approval or authorization of any stockholder,
the Board of Directors or others is required for the issuance and sale of the Securities. Except as set forth in the Prospectus,
there are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.
(i) SEC
Reports; Financial Statements. Except as disclosed on Schedule 3.1(i), the Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company
was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, together with the Prospectus and the Prospectus Supplement, being collectively referred to herein
as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed
any such SEC Reports prior to the expiration of any such extension. Except as disclosed on Schedule 3.1(i), as of their respective
dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable,
and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles
applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in
such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required
by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as
of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the
case of unaudited
statements, to normal, immaterial, year-end audit adjustments. The agreements and documents described in the Registration Statement,
the Prospectus, the Prospectus Supplement and the SEC Reports conform in all material respects to the descriptions thereof contained
therein and there are no agreements or other documents required by the Securities Act and the rules and regulations thereunder
to be described in the Registration Statement, the Prospectus, the Prospectus Supplement or the SEC Reports or to be filed with
the Commission as exhibits to the Registration Statement, that have not been so described or filed. 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 in the Registration Statement, the Prospectus, the Prospectus Supplement or the SEC Reports, 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
therefore 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 best of 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, including, without
limitation, those relating to environmental laws and regulations.
(j) Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements
included within the Prospectus, except as specifically disclosed in the Prospectus, (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial
statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting,
(iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital stock, (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans, and (vi) no officer or
director of the Company has resigned from any position with the Company. The Company does not have pending before the
Commission
any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement,
no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or
exist with respect to the Company or its Subsidiaries or their respective businesses, prospects, properties, operations, assets
or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this
representation is made or deemed made that has not been publicly disclosed at least one Trading Day prior to the date that this
representation is made. Unless otherwise disclosed in 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.
(k) Litigation. Except
as disclosed in the Prospectus, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or,
to the knowledge of the Company, threatened against the Company, any Subsidiary or any of their respective properties before or
by any court, arbitrator, governmental or administrative agency or regulatory authority (Canadian, provincial, U.S., federal, state,
county, local or foreign) (collectively, an “Action”) including any one that (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary,
nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under
Canadian, provincial, U.S., federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to
the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or
any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities
Act.
(l) Labor
Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any
of the employees of the Company. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates
to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries
is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their
employees are good. To the knowledge of the Company, no executive officer (as defined in Rule 501(f) of the Securities Act) of
the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company
or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are
in compliance with all applicable federal, state, local and foreign laws and regulations relating to employment and employment
practices, terms and conditions of employment and wages and hours, except where the failure to be in
compliance
could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(m) Compliance. Except
as disclosed in the Prospectus, neither the Company nor any Subsidiary: (i) is in default under or in violation of, nor has the
Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any
court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation
of any governmental authority, including without limitation all federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and employment and labor matters, except as could not have
or reasonably be expected to result (individually or collectively) in a Material Adverse Effect.
(n) Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
Canadian, provincial, U.S. federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses
as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in
a Material Adverse Effect (each, a “Material Permit”), and neither the Company nor any Subsidiary has received
any notice of proceedings relating to the revocation or modification of any Material Permit. The disclosures in the Registration
Statement concerning the effects of Federal, State, local and all foreign regulation on the Company’s business as currently
contemplated are correct in all material respects.
(o) Title
to Assets. Except as set forth in the Prospectus, the Company and the Subsidiaries have good and marketable title
in fee simple to, or have valid and marketable rights to lease or otherwise use, all real property and all personal property that
is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens
as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made
of such property by the Company and the Subsidiaries and (ii) Liens for the payment of Canadian, provincial, U.S., federal, state
or other taxes, for which appropriate reserves have been made in accordance with GAAP, and the payment of which is neither delinquent
nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance in all material respects.
(p) Intellectual
Property. Except as disclosed in the Prospectus, the Company and the Subsidiaries have, or have rights to
use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions,
copyrights, licenses and other intellectual property rights and similar rights necessary or required for use in connection with
their respective businesses and which the failure to so
have could
have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Except as set forth in the
Prospectus, neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property
Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from
the date of this Agreement. Except as disclosed in the Prospectus, neither the Company nor any Subsidiary has received, since the
date of the latest audited financial statements included within the Prospectus, a written notice of a claim or otherwise has any
knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person. To the knowledge of the Company,
all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual
Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(q) Insurance. The
Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but
not limited to, directors and officers insurance coverage. Neither the Company nor any Subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a significant increase in cost that would have a Material
Adverse Effect.
(r) Transactions
With Affiliates and Employees. Except as set forth in the Prospectus, none
of the officers or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the
Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services
to or by, providing for rental of real or personal property to or from, providing for the borrowing of money from or lending of
money to or otherwise requiring payments to or from, any officer, director or such employee or, to the knowledge of the Company,
any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee,
stockholder, member or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for
services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including
stock option agreements under any stock option plan of the Company.
(s) Xxxxxxxx-Xxxxx;
Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements
of the Xxxxxxxx-Xxxxx Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i)
transactions
are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets
is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of
the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange
Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal
control over financial reporting of the Company and its Subsidiaries.
(t) Certain
Fees. Except as set forth in the Prospectus, no brokerage or finder’s fees or commissions are or will be payable
by the Company, any Subsidiary or Affiliate of the Company to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. To the Company’s
knowledge, there are no other arrangements, agreements or understandings of the Company or, to the Company’s knowledge, any
of its stockholders that may affect the Underwriters’ compensation, as determined by FINRA. 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 twelve months prior to the Execution Date, other than (A) the prior
payment of $80,000 to the Representative as an advancement for expenses in connection with the Offering and (B) the prior payment
of $76,650 to the Representative in connection with private placements by the Company of certain notes. 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.
(u) Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities will not
be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940,
as amended.
The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration
under the Investment Company Act of 1940, as amended.
(v) Registration
Rights. Except as set forth in the SEC Reports, no Person has any right to cause the Company or any Subsidiary to
effect the registration under the Securities Act of any securities of the Company or any Subsidiary.
(w) Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(g) of the Exchange Act,
and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance requirements.
(x) Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order
to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter
documents) or the laws of its state of incorporation that is or could become applicable as a result of the Underwriters and the
Company fulfilling their obligations or exercising their rights under the Transaction Documents.
(y) Disclosure;
10b-5. The Registration Statement contains all exhibits and schedules as required by the Securities Act. Each
of the Registration Statement and any post-effective amendment thereto, if any, at the time it became effective, complied in all
material respects with the Securities Act and the Exchange Act and the applicable rules and regulations under the Securities Act
and did not and, as amended or supplemented, if applicable, will not, contain any 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. The Prospectus
and the Prospectus Supplement, each as of its respective date, comply in all material respects with the Securities Act and the
Exchange Act and the applicable rules and regulations. Each of the Prospectus and the Prospectus Supplement, as amended or supplemented,
did not and will not contain as of the date thereof any untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under which they were made, not misleading; and any further
documents so filed with the Commission from the date of this Agreement
through the
Closing Date and thereafter for so long as a Prospectus is required to be delivered under the Securities Act, when such documents
are filed with the Commission, will conform in all material respects to the requirements of the Exchange Act and the applicable
rules and regulations, as applicable, and will not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances under which they were made not misleading. Except
as disclosed in Schedule 3.1(i), the SEC Reports, when they were filed with the Commission, conformed in all material respects
to the requirements of the Exchange Act and the applicable rules and regulations, and none of such documents, when they were filed
with the Commission, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made not misleading. Except as disclosed in Schedule 3.1(y),
no post-effective amendment to the Registration Statement reflecting any facts or events arising after the date thereof which represent,
individually or in the aggregate, a fundamental change in the information set forth therein is required to be filed with the Commission.
There are no documents required to be filed with the Commission in connection with the transaction contemplated hereby that (x)
have not been filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time period. There
are no contracts or other documents required to be described in the Prospectus or Prospectus Supplement, or to be filed as exhibits
or schedules to the Registration Statement, which have not been described or filed as required. The press releases disseminated
by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made and when made, not misleading.
(z) No
Integrated Offering. 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 this offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable
shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.
(aa) Solvency. Based
on the consolidated financial condition of the Company and the Subsidiaries as of the Closing Date, after giving effect to the
receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s
assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities
(including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital
to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital
requirements
of the business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and
(iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of
its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay
such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The
Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. The Prospectus sets forth
as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company
or any Subsidiary has commitments.
(bb) Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all Canadian, provincial, United States
federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction
to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown
or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate
for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company or of any Subsidiary know of no basis for any such claim. 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. The term “taxes”
mean 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 whatsoever, 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.
(cc) Foreign
Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary,
any agent or other person acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii)
made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties
or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made
by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material
respect
any provision
of FCPA. 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 FCPA.
(dd) Accountants. To
the knowledge and belief of the Company, the Company Auditor (i) is an independent registered public accounting firm as required
by the Exchange Act and (ii) will express its opinion with respect to the financial statements to be included in the Company’s
Annual Report for the fiscal year ending December 31, 2016. The Company Auditor has not, during the periods covered by the financial
statements included in the Prospectus, provided to the Company any non-audit services, as such term is used in Section 10A(g) of
the Exchange Act.
(ee) Data
Privacy. In connection with its collection, storage, transfer (including, without limitation, any transfer
across national borders) and/or use of any personally identifiable information from any individuals, including, without limitation,
any customers, prospective customers, employees and/or other third parties (collectively “Personal Information”),
the Company is and has been in compliance in all material respects with all applicable laws in all relevant jurisdictions, the
Company’s privacy policies and the requirements of any contract or codes of conduct to which the Company is a party. The
Company has commercially reasonable physical, technical, organizational and administrative security measures and policies in place
to protect all Personal Information collected by it or on its behalf from and against unauthorized access, use and/or disclosure.
The Company is and has been in compliance in all material respects with all laws relating to data loss, theft and breach of security
notification obligations.
(ff) Money
Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened.
(gg) D&O
Questionnaires. To the Company’s knowledge, all information contained in the questionnaires completed by each
of the Company’s directors and officers immediately prior to the Offering as well as in the Lock-Up Agreement provided to
the Underwriters is true and correct in all respects and the Company has not become aware of any information which would cause
the information disclosed in such questionnaires become inaccurate and incorrect.
(hh) FINRA
Affiliation. No officer or director or, to the Company’s knowledge, any beneficial owner of 5% or more of
the Company’s unregistered securities has any direct or indirect affiliation or association with any FINRA member (as determined
in accordance with the rules and regulations of FINRA). The Company will advise the Representative and Underwriter Counsel if
it learns that any officer, director or
owner of 5%
or more of the Company’s outstanding shares of Common Stock or Common Stock Equivalents is or becomes an affiliate or associated
person of a FINRA member firm.
(ii) Officers’
Certificate. Any certificate signed by any duly authorized officer of the Company and delivered to the Representative
or to Underwriter Counsel shall be deemed a representation and warranty by the Company to the Underwriters as to the matters covered
thereby.
(jj) Board
of Directors. The Board of Directors is comprised of the persons set forth under the heading of the Prospectus captioned
“Management.” The qualifications of the persons serving as board members and the overall composition of the Board of
Directors comply with the Xxxxxxxx-Xxxxx Act of 2002 and the rules promulgated thereunder applicable to the Company and the rules
of the Trading Market. At least one member of the Board of Directors qualifies as a “financial expert” as such term
is defined under the Xxxxxxxx-Xxxxx Act of 2002 and the rules promulgated thereunder and the rules of the Trading Market. In addition,
at least a majority of the persons serving on the Board of Directors qualify as “independent” as defined under the
rules of the Trading Market.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Amendments
to Registration Statement. The Company has delivered, or will as promptly as practicable deliver, to the Underwriters
complete conformed copies of the Registration Statement and of each consent and certificate of experts, as applicable, filed as
a part thereof, and conformed copies of the Registration Statement (without exhibits), the Prospectus and the Prospectus Supplement,
as amended or supplemented, in such quantities and at such places as an Underwriter reasonably requests. Neither the Company nor
any of its directors and officers has distributed and none of them will distribute, prior to the Closing Date, any offering material
in connection with the offering and sale of the Securities other than the Prospectus, the Prospectus Supplement and the Registration
Statement. The Company shall not file any such amendment or supplement to which the Representative shall reasonably object in writing.
4.2 Federal
Securities Laws.
(a) Compliance. During
the time when a Prospectus is required to be delivered under the Securities Act, the Company will use its best efforts to comply
with all requirements imposed upon it by the Securities Act and the rules and regulations thereunder and the Exchange Act and the
rules and regulations thereunder, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings
in the Securities in accordance with the provisions hereof and the Prospectus. If at any time when a Prospectus relating to the
Securities is required to be delivered under the Securities Act, any event shall have occurred as a result of which, in the opinion
of counsel for the Company or counsel for the Underwriters, the Prospectus, as then
amended or
supplemented, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it
is necessary at any time to amend the Prospectus to comply with the Securities Act, the Company will notify the Underwriters promptly
and prepare and file with the Commission, subject to Section 4.1 hereof, an appropriate amendment or supplement in accordance with
Section 10 of the Securities Act.
(b) Filing
of Final Prospectus. The Company will file the Prospectus (in form and substance satisfactory to the Representative)
with the Commission pursuant to the requirements of Rule 424.
(c) Exchange
Act Registration. For a period of three years from the Execution Date, the Company will use its best efforts to
maintain the registration of the Common Stock under the Exchange Act. The Company will not deregister the Common Stock under the
Exchange Act without the prior written consent of the Representative.
(d) Free
Writing Prospectuses. The Company represents and agrees that it has not made and will not make any offer relating
to the Securities that would constitute an issuer free writing prospectus, as defined in Rule 433 of the rules and regulations
under the Securities Act, without the prior written consent of the Representative. Any such free writing prospectus consented to
by the Representative is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company
represents that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus” as defined
in rule and regulations under the Securities Act, and has complied and will comply with the applicable requirements of Rule 433
of the Securities Act, including timely Commission filing where required, legending and record keeping.
4.3 Delivery
to the Underwriters of Prospectuses. The Company will deliver to the Underwriters, without charge, from time to
time during the period when the Prospectus is required to be delivered under the Securities Act or the Exchange Act such number
of copies of each Prospectus as the Underwriters may reasonably request and, as soon as the Registration Statement or any amendment
or supplement thereto becomes effective, deliver to you two original executed Registration Statements, including exhibits, and
all post-effective amendments thereto and copies of all exhibits filed therewith or incorporated therein by reference and all original
executed consents of certified experts.
4.4 Effectiveness
and Events Requiring Notice to the Underwriters. The Company will use its best efforts to cause the Registration
Statement to remain effective with a current prospectus until the later of nine (9) months from the Execution Date, and will notify
the Underwriters immediately and confirm the notice in writing: (i) of the effectiveness of the Registration Statement and
any amendment thereto; (ii) of the issuance by the Commission of any stop order or of the initiation, or the threatening,
of any proceeding for that purpose; (iii) of the issuance by any state securities commission of any proceedings for the suspension
of the qualification of the Securities for offering or sale in any jurisdiction or of the initiation, or the threatening, of any
proceeding for that purpose; (iv) of the mailing and delivery to the
Commission for filing
of any amendment or supplement to the Registration Statement or Prospectus; (v) of the receipt of any comments or request
for any additional information from the Commission; and (vi) of the happening of any event during the period described in
this Section 4.4 that, in the judgment of the Company, makes any statement of a material fact made in the Registration Statement
or the Prospectus untrue or that requires the making of any changes in the Registration Statement or the Prospectus in order to
make the statements therein, in light of the circumstances 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 will make every reasonable
effort to obtain promptly the lifting of such order.
4.5 Expenses
Related to the Offering.
(a) General
Expenses Related to the Offering. The Company hereby agrees to pay on each of the Closing Date and each 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: (a) all filing fees and communication expenses relating to the registration
of the Securities to be sold in the Offering (including the Option Securities) with the Commission; (b) all FINRA Public Offering
Filing System fees associated with the review of the Offering by FINRA; all fees and expenses relating to the listing of such Closing
Securities and Option Securities on the Trading Market and such other stock exchanges as the Company and the Representative together
determine; (c) all fees, expenses and disbursements relating to the registration or qualification of such Securities under the
“blue sky” securities laws of such states and other foreign jurisdictions as the Representative may reasonably designate;
(d) 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; (e) the costs of preparing, printing and
delivering the Securities; (f) fees and expenses of the Transfer Agent for the Securities (including, without limitation, any fees
required for same-day processing of any instruction letter delivered by the Company); (g) stock transfer and/or stamp taxes, if
any, payable upon the transfer of securities from the Company to the Underwriters; (h) the fees and expenses of the Company’s
accountants; (i) the fees and expenses of the Company’s legal counsel and other agents and representatives; (j) the fees
and expenses of Underwriter Counsel and other agents and representatives of the Representative and (k) the Underwriters’
costs of mailing prospectuses to prospective investors. The Underwriters may deduct from
the net proceeds of the Offering payable to the Company on the Closing Date, or each Option Closing Date, if any, the expenses
set forth herein to be paid by the Company to the Underwriters.
(b) Expenses
of the Representative. The Company further agrees that, in addition to the expenses payable pursuant to Section
4.5(a), on the Closing Date and each Option Closing Date, if any, the Company will reimburse the Representative for its out-of-pocket
expenses related
to the Offering by deduction from the proceeds of the Offering contemplated herein.
4.6 Application
of Net Proceeds. The Company will apply the net proceeds from the Offering received by it in a manner consistent
with the application described under the caption “Use Of Proceeds” in the Prospectus.
4.7 Delivery
of Earnings Statements to Security Holders. The Company will make generally available to its security holders as
soon as practicable, but not later than the first day of the fifteenth full calendar month following the Execution Date, an earnings
statement (which need not be certified by independent public or independent certified public accountants unless required by the
Securities Act or the Rules and Regulations under the Securities Act, 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 consecutive months beginning after the Execution Date.
4.8 Stabilization. Neither
the Company, nor, to its knowledge, any of its employees, directors or shareholders (without the consent of the Representative)
has taken or will take, directly or indirectly, any action designed to or that has constituted or that might reasonably be expected
to cause or result in, under 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 Securities.
4.9 Internal
Controls. The Company will 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.
4.10 Accountants. The
Company shall continue to retain an independent certified public accounting firm for a period of at least three years after the
Execution Date. The Underwriters acknowledge that the Company Auditor is acceptable to the Underwriters.
4.11 FINRA. The
Company shall advise the Underwriters (who shall make an appropriate filing with FINRA) if it is aware that any 5% or greater shareholder
of the Company becomes an affiliate or associated person of an Underwriter.
4.12 No
Fiduciary Duties. The Company acknowledges and agrees that the Underwriters’ responsibility to the Company
is solely contractual and commercial in nature, based on arms-length negotiations and that neither the Underwriters nor their affiliates
or any selected dealer 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. Notwithstanding
anything in this Agreement to the contrary, the Company acknowledges that the Underwriters may have financial interests in
the success of the Offering
that are not limited to the difference between the price to the public and the purchase price paid to the Company by the Underwriters
for the shares and the Underwriters have no obligation to disclose, or account to the Company for, any of such additional financial
interests. The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have
against the Underwriters with respect to any breach or alleged breach of fiduciary duty.
4.13 Board
Composition and Board Designations. The Company shall ensure that: (i) the qualifications of the persons serving
as board members and the overall composition of the Board of Directors comply with the Xxxxxxxx-Xxxxx Act of 2002 and the rules
promulgated thereunder and with the listing requirements of the Trading Market and (ii) if applicable, at least one member
of the Board of Directors qualifies as a “financial expert” as such term is defined under the Xxxxxxxx-Xxxxx Act of
2002 and the rules promulgated thereunder.
4.14 Securities
Laws Disclosure; Publicity. At the request of the Representative, by 9:00 a.m. (New York City time) on the date
hereof, the Company shall issue a press release disclosing the material terms of the Offering. The Company and the Representative
shall consult with each other in issuing any other press releases with respect to the Offering, and neither the Company nor any
Underwriter shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company,
with respect to any press release of such Underwriter, or without the prior consent of such Underwriter, with respect to any press
release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law,
in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.
The Company will 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. (New York City time) on the first business day following the 40th day following the Closing Date,
other than normal and customary releases issued in the ordinary course of the Company’s business.
4.15 Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person,
that any Underwriter of the Securities is an “Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter
adopted by the Company, or that any Underwriter of Securities could be deemed to trigger the provisions of any such plan or arrangement,
by virtue of receiving Securities.
4.16 Reservation
of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available
at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company
to issue Option Securities pursuant to the Over-Allotment Option.
4.17 Listing
of Common Stock. The Company hereby agrees to use best efforts to maintain the listing or quotation of the Common Stock on
the Trading Market on which it is currently listed, and concurrently with the Closing, the Company shall apply to list or quote
all of the Closing Securities and Option Securities on such Trading Market and promptly secure the
listing of all of the
Closing Securities and Option Securities on such Trading Market. The Company further agrees, if the Company applies to have the
Common Stock traded on any other Trading Market, it will then include in such application all of the Closing Securities and Option
Securities, and will take such other action as is necessary to cause all of the Closing Securities and Option Securities to be
listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action reasonably necessary
to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the Trading Market.
4.18 Subsequent
Equity Sales.
(a) From
the date hereof until ninety (90) days following the Closing Date, neither the Company nor any Subsidiary shall issue, enter into
any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents.
(b) Notwithstanding
the foregoing, this Section 4.18 shall not apply in respect of an Exempt Issuance.
4.19 Research
Independence. The Company acknowledges that each Underwriter’s research analysts and research departments, if any, are
required to be independent from their respective investment banking divisions and are subject to certain regulations and internal
policies, and that such Underwriter’s research analysts may hold 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 its investment bankers.
The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against such
Underwriter with respect to any conflict of interest that may arise from the fact that the views expressed by their independent
research analysts and research departments may be different from or inconsistent with the views or advice communicated to the Company
by such Underwriter’s investment banking divisions. The Company acknowledges that the Representative is a full service securities
firm and as such from time to time, subject to applicable securities laws, may effect transactions for its own account or the account
of its customers and hold long or short position in debt or equity securities of the Company.
ARTICLE V.
DEFAULT
BY UNDERWRITERS
If
on the Closing Date or any Option Closing Date, if any, any Underwriter shall fail to purchase and pay for the portion of the Closing
Securities or Option Securities, as the case may be, which such Underwriter has agreed to purchase and pay for on such date (otherwise
than by reason of any default on the part of the Company), the Representative, or if the Representative is the defaulting Underwriter,
the non-defaulting Underwriters, shall use their reasonable efforts to procure within 36 hours thereafter one or more of the other
Underwriters, or any others, to purchase from the Company such amounts as may be agreed upon and upon the terms set forth
herein,
the Closing Securities or Option Securities, as the case may be, which the defaulting Underwriter or Underwriters failed to purchase.
If during such 36 hours the Representative shall not have procured such other Underwriters, or any others, to purchase the Closing
Securities or Option Securities, as the case may be, agreed to be purchased by the defaulting Underwriter or Underwriters, then
(a) if the aggregate number of Closing Securities or Option Securities, as the case may be, with respect to which such default
shall occur does not exceed 10% of the Closing Securities or Option Securities, as the case may be, covered hereby, the other Underwriters
shall be obligated, severally, in proportion to the respective numbers of Closing Securities or Option Securities, as the case
may be, which they are obligated to purchase hereunder, to purchase the Closing Securities or Option Securities, as the case may
be, which such defaulting Underwriter or Underwriters failed to purchase, or (b) if the aggregate number of Closing Securities
or Option Securities, as the case may be, with respect to which such default shall occur exceeds 10% of the Closing Securities
or Option Securities, as the case may be, covered hereby, the Company or the Representative will have the right to terminate this
Agreement without liability on the part of the non-defaulting Underwriters or of the Company except to the extent provided in Article
VI hereof. In the event of a default by any Underwriter or Underwriters, as set forth in this Article V, the applicable Closing
Date may be postponed for such period, not exceeding seven days, as the Representative, or if the Representative is the defaulting
Underwriter, the non-defaulting Underwriters, may determine in order that the required changes in the Prospectus or in any other
documents or arrangements may be effected. The term “Underwriter” includes any person substituted for a defaulting
Underwriter. Any action taken under this Section shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
ARTICLE VI.
INDEMNIFICATION
6.1 Indemnification
of the Underwriters. Subject to the conditions set forth below, the Company agrees to indemnify and hold harmless
the Underwriters, and each dealer selected by each Underwriter that participates in the offer and sale of the Securities (each
a “Selected Dealer”) and each of their respective directors, officers and employees and each Person, if any,
who controls such Underwriter or any Selected Dealer (“Controlling Person”) 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 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 such Underwriter
and the Company or between such Underwriter 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,
arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in (i) any Preliminary
Prospectus, if any, the Registration Statement or the 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 of the Securities, including any “road show” or investor presentations made to investors by the Company
(whether in person or electronically); or (iii)
any application or other
document or written communication (in this Article VI, collectively called “application”) executed by the Company
or based upon written information furnished by the Company in any jurisdiction in order to qualify the Securities under the securities
laws thereof or filed with the Commission, any state securities commission or agency, Trading Market or any 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 written information furnished to the Company with respect to the applicable Underwriter
by or on behalf of such Underwriter expressly for use in any Preliminary Prospectus, if any, the Registration Statement or Prospectus,
or any amendment or supplement thereto, or in any application, as the case may be. With respect to any untrue statement or omission
or alleged untrue statement or omission made in the Preliminary Prospectus, if any, the indemnity agreement contained in this Section
6.1 shall not inure to the benefit of an Underwriter to the extent that any loss, liability, claim, damage or expense of such Underwriter
results from the fact that a copy of the Prospectus was not given or sent to the Person asserting any such loss, liability, claim
or damage at or prior to the written confirmation of sale of the Securities to such Person as required by the Securities Act and
the rules and regulations thereunder, and if the untrue statement or omission has been corrected in the Prospectus, unless such
failure to deliver the Prospectus was a result of non-compliance by the Company with its obligations under this Agreement. The
Company agrees promptly to notify each Underwriter of the commencement of any litigation or proceedings against the Company or
any of its officers, directors or Controlling Persons in connection with the issue and sale of the Securities or in connection
with the Registration Statement or Prospectus.
6.2 Procedure. If
any action is brought against an Underwriter, a Selected Dealer or a Controlling Person in respect of which indemnity may be sought
against the Company pursuant to Section 6.1, such Underwriter, such Selected Dealer or Controlling Person, as the case may be,
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 reasonable approval of such Underwriter or such Selected Dealer,
as the case may be) and payment of actual expenses. Such Underwriter, such Selected Dealer or Controlling Person 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
such Underwriter, such Selected Dealer or Controlling Person unless (i) the employment of such counsel at the expense of the Company
shall have been authorized in writing by the Company in connection with the defense of such action, or (ii) the Company shall not
have employed counsel to have charge of the defense of such action, or (iii) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different from or additional to those available to the Company
(in which case the Company shall not have the right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events the reasonable fees and expenses of not more than one additional firm of attorneys selected by
such Underwriter (in addition to local counsel), Selected Dealer and/or Controlling Person shall be borne by the Company. Notwithstanding
anything to the contrary contained herein, if any Underwriter, Selected Dealer or Controlling Person shall assume the defense of
such action as provided above, the Company shall have the right to approve the terms of any settlement of such action which approval
shall not be unreasonably withheld.
6.3 Indemnification
of the Company. Each Underwriter severally and not jointly agrees to indemnify and hold harmless the Company, its
directors, officers and employees and agents 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 such Underwriter, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements
or omissions made in any Preliminary Prospectus, if any, the Registration Statement or Prospectus or any amendment or supplement
thereto or in any application, in reliance upon, and in strict conformity with, written information furnished to the Company with
respect to such Underwriter by or on behalf of such Underwriter expressly for use in such Preliminary Prospectus, if any, the Registration
Statement or Prospectus or any amendment or supplement thereto or in any such application. In case any action shall be brought
against the Company or any other Person so indemnified based on any Preliminary Prospectus, if any, the Registration Statement
or Prospectus or any amendment or supplement thereto or any application, and in respect of which indemnity may be sought against
such 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 such Underwriter by the provisions of this Article VI. Notwithstanding
the provisions of this Section 6.3, no Underwriter shall be required to indemnify the Company for any amount in excess of the underwriting
discounts and commissions applicable to the Securities purchased by such Underwriter. The Underwriters' obligations in this Section
6.3 to indemnify the Company are several in proportion to their respective underwriting obligations and not joint.
6.4 Contribution.
(a) Contribution
Rights. In order to provide for just and equitable contribution under the Securities Act in any case in which (i)
any Person entitled to indemnification under this Article VI makes a claim for indemnification pursuant hereto but it is judicially
determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact
that this Article VI provides for indemnification in such case, or (ii) contribution under the Securities Act, the Exchange Act
or otherwise may be required on the part of any such Person in circumstances for which indemnification is provided under this Article
VI, then, and in each such case, the Company and each Underwriter, severally and not jointly, shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Company
and such Underwriter, as incurred, in such proportions that such Underwriter is responsible for that portion represented by the
percentage that the underwriting discount appearing on the cover page of the Prospectus bears to the initial offering price appearing
thereon and the Company is responsible for the balance; provided, that, no Person guilty of a 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. For purposes of this Section, each director, officer and employee of such Underwriter or the Company,
as applicable, and each Person, if any, who controls such Underwriter or the Company, as applicable, within the meaning of Section
15 of the Securities Act shall have the same rights to contribution as such Underwriter or the
Company, as
applicable. Notwithstanding the provisions of this Section 6.4, no Underwriter shall be required to contribute any amount
in excess of the underwriting discounts and commissions applicable to the Securities purchased by such Underwriter. The Underwriters'
obligations in this Section 6.4 to contribute are several in proportion to their respective underwriting obligations and not joint.
(b) Contribution
Procedure. Within fifteen 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 fifteen 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 without the written consent of such contributing party. The contribution provisions
contained in this Section 6.4 are intended to supersede, to the extent permitted by law, any right to contribution under the Securities
Act, the Exchange Act or otherwise available.
ARTICLE VII.
MISCELLANEOUS
7.1 Termination.
(a) Termination
Right. 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 its opinion will in the immediate
future materially disrupt, general securities markets in the United States; or (ii) if trading on any Trading Market 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 the Representative’s opinion, make it
inadvisable to proceed with the delivery of the 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 Securities or to enforce contracts made by the Underwriters
for the sale of the Securities.
(b) Expenses. In
the event this Agreement shall be terminated pursuant to Section 7.1(a), within the time specified herein or any extensions thereof
pursuant to the terms herein, the Company shall be obligated to pay to the Representative its actual and accountable out of pocket
expenses related to the transactions contemplated herein then due and payable, including the fees and disbursements of Underwriter
Counsel.
(c) 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 Article VI shall not be in any way effected by such election or
termination or failure to carry out the terms of this Agreement or any part hereof.
7.2 Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, the Prospectus and the Prospectus
Supplement, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede
all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been
merged into such documents, exhibits and schedules. Notwithstanding anything herein to the contrary, the Investment Banking Engagement
Agreement, dated May 11, 2016 (“Engagement Agreement”), between the Company and the Representative shall continue
to be effective and the terms therein, including, without limitation, Section 4(b) and Section 5 with respect to any future offerings,
shall continue to survive and be enforceable by the Representative in accordance with its terms, provided that, in the event of
a conflict between the terms of the Engagement Agreement and this Agreement, the terms of this Agreement shall prevail.
7.3 Notices. Any
and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number or email address set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New
York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered
via facsimile or e-mail at the facsimile number or email address as set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the
party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the
signature pages attached hereto.
7.4 Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by the Company and the Representative. No waiver of any default with respect to any provision,
condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder
in any manner impair the exercise of any such right.
7.5 Headings. The
headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
7.6 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and
permitted assigns.
7.7 Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any action,
suit or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either
party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations
of the Company under Article VI, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party
for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.
7.8 Survival. The
representations and warranties contained herein shall survive the Closing and the Option Closing, if any, and the delivery of the
Securities.
7.9 Execution. This
Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood
that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or
by e-mail delivery of a “.pdf” format data file,
such signature shall
create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force
and effect as if such facsimile or “.pdf” signature page were an original thereof.
7.10 Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
7.11 Remedies. In
addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Underwriters
and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction
Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.
7.12 Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next
succeeding Business Day.
7.13 Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.
7.14 WAIVER
OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY,
TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVE FOREVER
ANY RIGHT TO TRIAL BY JURY.
(Signature Page Follows)
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 among the Company and the several Underwriters in accordance
with its terms.
Address for Notice:
00000 Xxxx Xxxxx Xxxx
Xxxxxxxxx Tech Center A
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, CEO
Copy to:
Davies Xxxx Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxx, Esq.
Accepted on the date first above written.
LADENBURG XXXXXXXX & CO. INC.
As the Representative of the several
Underwriters listed on Schedule I
Address for Notice:
0000 Xxxxxxxx Xxxx., 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: General Counsel
Facsimile: ___________
E-mail: ____________
Copy to:
Attention:
Facsimile:
E-mail:
SCHEDULE I
Schedule
of Underwriters
Underwriters | |
Closing
Securities | | |
Option
Securities | | |
Closing
Purchase Price | |
| |
| | |
| | |
| |
Ladenburg Xxxxxxxx & Co. Inc. | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Total | |
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| | |