Exhibit 1.1
JOINT BookRunning
Manager AGREEMENT
[ ], 2017
HCFP/Capital Markets LLC
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
[ ]
Attn:___________________
Gentlemen:
Introduction. This agreement
(this “Agreement”) constitutes the agreement between Chicken Soup for the Soul Entertainment, Inc., a Delaware
corporation (the “Company”), the stockholders of the Company named in Schedule I hereof (‘Selling
Stockholders”), HCFP/Capital Markets LLC (“HCFP”) and _________ (“_________”), pursuant to
which HCFP and _________ shall serve as joint bookrunning managers (“Managers”) for the Company and the Selling
Stockholders in connection with the proposed Offering (as defined below) to investors (“Investors”) under Tier 2
of Regulation A under the Securities Act of 1933, as amended (“Securities Act”), of up to an aggregate of
$30,000,000, or 2,500,000 shares of the Company’s Class A Common Stock (“Shares”), of which up to 641,983
Shares are initially being sold by the Company (“Company Shares”) and up to 258,071 Shares are being sold by the
Selling Stockholders (“Selling Stockholder Shares”). To the extent less than 900,000 Shares are sold in the
Offering, the aggregate number of Shares sold in the Offering will be allocated pro rata between the Company Shares and
Selling Stockholder Shares and the Selling Stockholder Shares will be allocated pro rata among the Selling Stockholders. In
the event all of such 900,000 Shares are sold, the Managers shall have the right to sell up to an additional 1,600,000 Shares
in the Offering. As between HCFP and _________, HCFP shall be the sole representative of the Managers
(“Representative”) and all actions of the Representative hereunder shall be binding upon _________. The
Company and the Selling Stockholders hereby confirm their agreement with the Managers as follows:
Section 1. Agreement
to Act as Managers.
(a) On
the basis of the representations, warranties and agreements of the Company and the Selling Stockholders herein contained, and subject
to all the terms and conditions of this Agreement, the Managers shall be the exclusive Managers in connection with the offering
and sale by the Company and the Selling Stockholders of the Shares pursuant to the Company’s Offering Statement (as defined
below), with the terms of such offering (the “Offering”) to be subject to market conditions and negotiations between
the Company and the Managers. The Managers will act on a commercially reasonable best efforts basis and the Company and the Selling
Stockholders agree and acknowledge that there is no guarantee of the successful sale of the Shares, or any portion thereof, in
the prospective Offering. Under no circumstances will the Managers or any of their Affiliates (as defined below) be obligated to
underwrite or purchase any of the Shares for their own account or otherwise provide any financing. The Managers shall act solely
as the Company’s and the Selling Stockholders’ agents and not as principals. The Managers shall have no authority to
bind the Company or the Selling Stockholders with respect to any prospective offer to purchase Shares and the Company shall have
the sole right to accept offers to purchase Company Shares and may reject any such offer, in whole or in part. The Managers may
rely on soliciting dealers who are members of the Financial Industry Regulatory Authority (“FINRA”) to participate
in placing a portion of the Offering. The Managers may also retain other brokers or dealers to act as sub-managers or selected
dealers on their behalf in connection with the Offering. Subject to the terms and conditions hereof, payment of the purchase price
for, and delivery of, the Shares shall be made at one or, at the discretion of the Representative and the Company, more closings
(each, a “Closing” and the date on which a Closing occurs, a “Closing Date”). As compensation for services
rendered, the Company and the Selling Stockholders shall pay to the Managers the fees and expenses set forth below:
(i) Retainer
Fees: Two retainer fees (the “Retainer Fees”) of $25,000 each with the first of such fees already having been paid
and the second to be paid upon qualification of the Offering Statement (as defined below).
(ii) Commission:
On each Closing Date, ___% of the gross proceeds received by the Company from the sale of the Shares at each Closing and ___% of
the gross proceeds received by the Selling Stockholders at each Closing (the “Selling Stockholder Commission”), which
such commission will be allocated by the Managers among the Managers and the members of the selling syndicate and soliciting dealers
in their sole discretion.
(iii) Expenses:
On each Closing Date and subject to compliance with FINRA Rule 5110(f)(2)(B), the Company agrees to pay the Representative a non-accountable
expense fee equal to 2.0% (“Expense Fee”) of the gross proceeds received by the Company and the Selling Stockholders
from the sale of the Shares at each Closing which such Expense Fee will be allocated by the Managers among the Managers and the
members of the selling syndicate and soliciting dealers in their sole discretion; provided, however, that such expense
fee in no way limits or impairs the indemnification and contribution provisions of this Agreement. In addition, the Company shall
reimburse each Agent for fees and expenses which are customarily the responsibility of the Company to pay in securities offerings,
including, without limitation, management background report fees, custody fees and third party investment platform fees if such
fees are paid by an Agent. In no event will the Managers incur a reimbursable cost in excess of $2,500 without the consent of the
Company.
(iv) Expenses
if no Closing: In the event following the date of qualification of the offering statement (“Qualification Date”)
that there is no Closing, subject to compliance with FINRA Rules 5110(f)(2)(D), the Company agrees to pay the Managers up to $50,000
towards application of expenses that the Managers actually incurred in connection with the Offering; provided, however,
that such expense cap in no way limits or impairs the indemnification and contribution provisions of this Agreement.
Other than the payment of any Selling Stockholder
Commission, the Selling Stockholders shall not be liable to pay any other fees, commissions or expenses set forth in this Section
1(a).
(b) The
term of the Managers’ exclusive engagement will be until the completion of the Offering. Notwithstanding anything to the
contrary contained herein, the provisions concerning confidentiality, indemnification and contribution contained herein and the
Company’s and the Selling Stockholders’ obligations contained in the indemnification provisions will survive any expiration
or termination of this Agreement, and the Company’s obligation to pay fees actually earned and payable and to reimburse expenses
actually incurred and reimbursable pursuant to Section 1 hereof and which are permitted to be reimbursed under FINRA Rule 5110(f)(2)(D),
will survive any expiration or termination of this Agreement. Nothing in this Agreement shall be construed to limit the ability
of any Agent or its Affiliates to pursue, investigate, analyze, invest in, or engage in investment banking, financial advisory
or any other business relationship with Persons (as defined below) other than the Company and the Selling Stockholders. As used
herein (i) “Persons” 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 and (ii) “Affiliate” means any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under
the Securities Act of 1933, as amended (the “Securities Act”).
(c) The
Managers and the Company agree to utilize the _________ (“_________”) platform to enable purchasers who are
not purchasing through a broker which is an agent or a dealer to purchase Shares in the Offering. As of the date hereof, the Company
has entered into an agreement with _________ and agrees that all of the fees due under such agreement shall not constitute any of the
non-accountable expense payment to the Managers. The Company agrees that _________ may also become a dealer for this Offering.
Section 2. Representations,
Warranties and Covenants of the Company. The Company hereby represents, warrants and covenants to the Managers, as of the date
hereof, and as of each Closing Date, as follows:
(a) Filings.
In connection with the offering herein contemplated, on May 16, 2017, the Company filed with the Securities and Exchange Commission
(the “Commission”) an offering statement on Form 1-A (Registration File No. 024-10704 under the Securities Act
and the rules and regulations (the “Rules and Regulations”) of the Commission promulgated thereunder filed Amendment
No. 1 thereto with the Commission on June 1, 2017 and filed Amendment No. 2 of June __, 2017. At the time of such filings, the
Company met the requirements for an offering statement of a Tier 2 offering under Regulation A of the Securities Act. The Company
will file with the Commission under the Securities Act, a final Offering Circular included in such Offering Statement (as defined
below) relating to the offering of the Shares and the plan of distribution thereof and has advised the Managers of all further
information (financial and other) with respect to the Company required to be set forth therein. Such Offering Statement, including
the exhibits thereto, as amended at the date of this Agreement and as the same may be hereafter amended from time to time, is hereinafter
called the “Offering Statement”; such Offering Circular in the form in which it appears in the Offering Statement as
amended at the date of this Agreement and as hereinafter amended is called the “Offering Circular”; and any supplement
to the Offering Circular filed after qualification of the Offering Statement is hereafter referred to as a “Circular Supplement”.
All references in this Agreement to financial statements and schedules and other information that is “contained,” “included,”
“described,” “referenced,” “set forth” or “stated” in the Offering Statement, the
Offering Circular or the Circular Supplement (and all other references of like import) shall be deemed to mean and include all
such financial statements and schedules and other information that is or is deemed to be incorporated by reference in the Offering
Statement or any Circular Supplement, as the case may be.
(b) Assurances.
The Offering Statement (and any further documents to be filed with the Commission) contains all exhibits and schedules as required
by the Securities Act. Each of the Offering Statement and any post-qualification amendment thereto, at the time it became qualified,
complied in all material respects with the Securities Act and the applicable Rules and Regulations 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 (provided, however, that the preceding
representations and warranties contained in this sentence shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company by the Managers expressly for use therein (the “Agent
Information”)). The Offering Statement, the Offering Circular, and any Circular Supplement, each as of its respective date,
comply in all material respects with the Securities Act and the applicable Rules and Regulations. Each of the Offering Circular
and the Circular 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 (provided, however, that the preceding representations and warranties
contained in this sentence shall not apply to any Agent Information). All post-qualification amendments to the Offering Statement
reflecting facts or events arising after the date thereof which represent, individually or in the aggregate, a fundamental change
in the information set forth therein will have been so 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 Offering Circular, any Circular Supplement, or to be filed as exhibits or schedules to the Offering Statement,
that have not been described or filed as required.
(c) Offering
Materials. The Company has delivered, or will as promptly as practicable deliver, to the Managers complete conformed copies
of the Offering Statement and of each consent and certificate of experts filed as a part thereof, and conformed copies of the Offering
Statement (without exhibits) and any Circular Supplement, as amended or supplemented, in such quantities and at such places as
the Managers reasonably request. Neither the Company nor any of its directors and officers has distributed and none of them will
distribute, prior to a Closing Date, any offering material in connection with the offering and sale of the Shares other than the
Offering Circular, any Circular Supplement, and any other materials permitted by the Securities Act, including any testing the
waters communications under Regulation A.
(d) Subsidiaries.
The Company has no subsidiaries.
(e) Organization
and Qualification. The Company is an entity duly incorporated or otherwise organized, validly existing and in good standing
(where applicable) 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. The Company is not in violation or
default of any of the provisions of its certificate of incorporation, bylaws or other organizational or charter documents. The
Company 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 reasonably be expected to result in: (i) a material adverse
effect on the legality, validity or enforceability of this Agreement or any other agreement entered into between the Company and
the Investors, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial
or otherwise) of the Company or (iii) a material adverse effect on the Company’s ability to perform in any material respect
on a timely basis its obligations under this Agreement or the transactions contemplated under the Offering Statement (any of (i),
(ii) or (iii), a “Material Adverse Effect”) and no action, claim, suit, investigation or proceeding (including, without
limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened (“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.
(f) Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and the Offering Statement and otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Company and no further action is required by the Company, the Company’s
Board of Directors (the “Board of Directors “) or the Company’s shareholders in connection therewith other than
in connection with the Required Approvals (as defined below). This Agreement has been duly executed by the Company and, when delivered
in accordance with the terms hereof, 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.
(g) No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the transactions contemplated hereby
do not and will not (i) conflict with or violate any provision of the Company’s certificate 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 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 debt or otherwise) or other understanding
to which the Company is a party or by which any property or asset of the Company 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 is subject (including federal and state Shares laws
and regulations), or by which any property or asset of the Company is bound or affected; except in the case of each of clauses
(ii) and (iii), such as could not reasonably be expected to result in a Material Adverse Effect.
(h) 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 this Agreement and the transactions contemplated
hereby, other than: (i) the filing with the Commission of the Offering Statement and any Circular Supplement, (ii) application(s)
to the NASDAQ Global Market or Capital Market (the “Trading Market”) for the listing of the Shares for trading thereon
in the time and manner required thereby and (iii) such filings as are required to be made under applicable state securities laws
(collectively, the “Required Approvals”).
(i) Issuance
of the Shares. The Shares are duly authorized and, when issued and paid for in accordance with this Agreement and the Offering
Circular, will be duly and validly issued, fully paid and non-assessable, 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 the
Offering Circular.
(j) Capitalization.
The capitalization of the Company is as set forth in the Offering Circular. The Company has not issued any capital stock since
the date of filing of its latest periodic report pursuant to Section 13(a) or 15(d) of the Shares Exchange Act of 1934, as amended
(the “Exchange Act”) or, in the event that the Company is not required to file periodic reports pursuant to Section
13(a) or 15(d) of the Exchange Act, the Company has not issued any capital stock since the date of filing of the Offering Circular
other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares
of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and exercise
of securities of the Company which would entitle the holder thereof to acquire at any time any Common Stock, including, without
limitation, any debt, preferred stock, rights, options, warrants 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 (“Common Stock Equivalents”)
outstanding as of the date of the filing of the Offering Circular or any Circular Supplement. No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by this
Agreement and the transactions contemplated pursuant to the Offering Statement. Except as a result of the purchase and sale of
the Shares and except for stock options issued pursuant to the Company’s stock option plans or as described in the offering
Circular, including with respect to the Company’s Class W and Class Z warrants and its Trema Credit facility promissory note,
there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating
to, or shares, 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. The issuance and sale of the Shares will
not obligate the Company to issue shares of Common Stock or other shares to any Person (other than the Investors) and will not
result in a right of any holder of shares to adjust the exercise, conversion, exchange or reset price under any of such shares.
All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued
in compliance with all federal and state Shares laws, and none of such outstanding shares was issued in violation of any preemptive
rights or similar rights to subscribe for or purchase Shares. No further approval or authorization of any shareholder, the Board
of Directors or others is required for the issuance and sale of the Shares. There are no shareholders 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 shareholders.
(k) Financial
Statements, Material Changes; Undisclosed Events, Liabilities or Developments. The audited financial statements of the
Company including related schedules, disclosures and notes included or referenced in the Offering Circular fairly present in all
material respects the financial condition of the Company as of the dates indicated and the results of operations and cash flows
for the periods specified. The unaudited financial statements (including the related notes and disclosures) included or referenced
in the Offering Circular comply as to form and in all material respects to the applicable accounting requirements of Regulation
A and Regulation S-X under the Securities Act. Such unaudited financial statements fairly present in all material respects the
financial position, results of operations and other information purported to be shown therein at the respective dates and for the
respective periods indicated. Since the date of the latest audited financial statements included within the Offering Statement
(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 shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock
and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company
stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information.
Except for the issuance of the Shares contemplated by the Offering Circular or disclosed in any Circular Supplement, 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 business, 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.
(l) Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its properties before or by any court, arbitrator, governmental or administrative
agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely
affects or challenges the legality, validity or enforceability of any of this Agreement and the transactions contemplated pursuant
to the Offering Statement or the Shares or (ii) could, if there were an unfavorable decision, reasonably be expected to result
in a Material Adverse Effect. Neither the Company nor any director or officer thereof, is or has within the last 10 years been
the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach
of fiduciary duty. Neither the Company, any predecessor of the Company, any executive officer or other officer of the Company nor
any beneficial holder of 20% or more of the Company’s outstanding voting securities is subject to the disqualification provisions
of Rule 262 under the Securities Act. 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. To the Company’s
knowledge, the Commission has not issued any stop order or other order suspending the qualification of any Offering Statement filed
by the Company under the Exchange Act or the Securities Act.
(m) 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, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s employees
is a member of a union that relates to such employee’s relationship with the Company, and the Company is not a party to a
collective bargaining agreement, and the Company believes that its relationships with its employees are good. No executive officer,
to the knowledge of the Company, 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
to any liability with respect to any of the foregoing matters. The Company is in compliance with all U.S. 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.
(n) Compliance.
The Company: (i) is not in default under or in violation of (and no event has occurred that has not been waived that, with notice
or lapse of time or both, would result in a default by the Company under), nor has the Company 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 not in violation of any judgment, decree or order of any court, arbitrator or governmental body or (iii) is not or has
not been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation
all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product
quality and safety and employment and labor matters, except in each case as could not reasonably be expected to result in a Material
Adverse Effect.
(o) Regulatory
Permits. The Company possesses all certificates, authorizations and permits issued by the appropriate federal, state, local
or foreign regulatory authorities necessary to conduct its business as described in the Offering Circular, except where the failure
to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”),
and the Company has not received any notice of proceedings relating to the revocation or modification of any Material Permit.
(p) Title
to Assets. The Company has good and marketable title in fee simple to all real property owned by it and good and marketable
title in all personal property owned by it that is material to the business of the Company, in each case free and clear of all
Liens, except for Liens disclosed in the Offering Circular, 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 Liens for the payment of
federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities
held under lease by the Company are held by it under valid, subsisting and enforceable leases with which the Company is in compliance.
(q) Patents
and Trademarks. The Company has, or has 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 material for use in connection with their respective businesses as described in the Offering Circular and which
the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). The
Company has not 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.
The Company has not received, since the date of the latest audited financial statements included within the Offering Circular,
a notice (written or otherwise) of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe
upon the rights of any Person, except as would not have a Material Adverse Effect. 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 has 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.
(r) Insurance.
The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as
are prudent and customary in the business in which the Company is engaged, including, but not limited to, directors and officers
insurance coverage. The Company has no 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.
(s) Transactions
With Affiliates and Employees. Except as set forth in the Offering Circular, none of the officers or directors of the Company
and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company
(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, 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 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.
(t) Xxxxxxxx-Xxxxx;
Internal Accounting Controls. Except as set forth in the Offering Circular: (I) the Company is in compliance in all material
respects 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 each Closing Date; (II) the Company maintains 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; and (III) the Company has established disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) for the Company 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.
(u) Certain
Fees. Except as set forth herein and in the Offering Circular, no brokerage or finder’s fees or commissions are or will
be payable by 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 this Agreement and the transactions contemplated pursuant to the Offering
Circular. The Investors shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of
other Persons for fees of a type contemplated in this Section 2(u) that may be due in connection with the transactions contemplated
by this Agreement and the transactions contemplated pursuant to the Offering Circular.
(v) Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Shares, 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.
(w) Registration
Rights. Except as set forth in the Offering Circular, no Person has any right to cause the Company to effect the registration
under the Securities Act of any Shares of the Company.
(x) Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 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.
(y) Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by this Agreement and the transactions
contemplated pursuant to the Offering Statement, the Company confirms that neither it nor any other Person acting on its behalf
has provided any of the Investors or their agents or counsel with any information that it believes constitutes or might constitute
material, non-public information which is not otherwise disclosed in the Offering Statement or any free writing prospectus. The
Company understands and confirms that the Investors will rely on the foregoing representation in effecting transactions in Shares
of the Company. All of the disclosure furnished by or on behalf of the Company to the Investors regarding the Company, its business
and the transactions contemplated hereby is true and correct and does not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they
were made, not misleading. 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,
to its knowledge, cause this offering of the Shares to be integrated with prior offerings by the Company.
(aa) Solvency.
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 final Closing Date. The Offering Circular sets forth as of December 31, 2016 and December 31, 2015 all
outstanding secured and unsecured Indebtedness of the Company or for which the Company has commitments. For the purposes of this
Agreement, “Indebtedness” means (x) 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), (y) 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 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 (z) the present value of any lease payments in excess of $50,000 due under leases required
to be capitalized in accordance with GAAP. The Company is not in default with respect to any Indebtedness.
(bb) Tax
Status. Except for matters that would not, individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect, the Company (i) has made or filed all United States federal and state 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 know of no basis for any such claim.
(cc) Foreign
Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of
the Company, 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 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 the Foreign Corrupt Practices Act of 1977, as amended.
(dd) Accountants.
The Company’s accounting firm is set forth in the Offering Circular. To the knowledge and belief of the Company, such accounting
firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) has expressed its opinion with respect
to the financial statements of the Company for the year ended December 31, 2016.
(ee) Regulation
M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Shares, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of,
any of the Shares, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other Shares
of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Managers in connection with the placement
of the Shares.
(ff) Office
of Foreign Assets Control. Neither the Company nor, to the Company’s knowledge, any director, officer, agent, employee
or affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of
the U.S. Treasury Department (“OFAC”).
(gg) U.S.
Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended.
(hh) Bank
Holding Company Act. The Company is not subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”)
and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). The Company does
not own or control, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities
or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation
by the Federal Reserve. The Company does not exercise a controlling influence over the management or policies of a bank or any
entity that is subject to the BHCA and to regulation by the Federal Reserve.
(ii) Certificates.
Any certificate signed by an officer of the Company and delivered to any of the Managers or to counsel for any of the Managers
shall be deemed to be a representation and warranty by the Company to the Managers as to the matters set forth therein.
(jj) Reliance.
The Company acknowledges that the Managers will rely upon the accuracy and truthfulness of the foregoing representations and warranties
and hereby consents to such reliance.
(kk) Forward-Looking
Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) contained in either the Offering Statement, the Offering Circular or any Circular Supplement has been made or reaffirmed without
a reasonable basis or has been disclosed other than in good faith.
(ll) Statistical
or Market-Related Data. Any statistical, industry-related and market-related data included or incorporated by reference in
the Offering Statement or any Circular Supplement, are based on or derived from sources that the Company reasonably and in good
faith believes to be reliable and accurate, and such data agree with the sources from which they are derived.
(mm) FINRA
Affiliations. Except as set forth on Schedule 2(mm), there are no affiliations with any FINRA member firm among the
Company’s officers, directors or, to the knowledge of the Company, except as set forth on Schedule 2(mm), any five
percent (5%) or greater shareholder of the Company.
Section 3. Representations
and Warranties of Selling Stockholders. Each of the Selling Stockholders individually and not jointly represents and
warrants to, and agrees with the Managers and the Company that:
(a) Consents. All
consents, approvals, authorizations and orders necessary for the execution and delivery by such Selling Stockholder of this Agreement,
the Custody Agreement and POA hereinafter referred to, and for the sale and delivery of the Shares to be sold by such Selling Stockholder
hereunder, have been obtained; and such Selling Stockholder has full right, power and authority to enter into this Agreement, the
Custody Agreement and POA and to sell, assign, transfer and deliver the Shares to be sold by such Selling Stockholder hereunder.
(b) No
Conflict. The sale of the Shares to be sold by such Selling Stockholder hereunder and the
compliance by such Selling Stockholder with this Agreement, the Custody Agreement and POA and the consummation of the transactions
herein and therein contemplated will not (A) conflict with or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any statute, indenture, mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which such Selling Stockholder is a party or by which such Selling Stockholder is bound or to which any of the property
or assets of such Selling Stockholder is subject, (B) result in any violation of the provisions of the Selling Stockholders’
organizational or charter documents, or (C) result in the violation of any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over such Selling Stockholder or any of its subsidiaries or any
property or assets of such Selling Stockholder, except for such conflicts, breaches, violations defaults, in the case of clause
(A) as would not reasonably be expected to impair in any material respect the ability of such Selling Stockholder to perform
its obligations under this Agreement, the Custody Agreement and POA; and no consent, approval, authorization, order, registration
or qualification of or with any such court or governmental body or agency is required for the performance by such Selling Stockholder
of its obligations under this Agreement, the Custody Agreement and POA and the consummation by such Selling Stockholder of the
transactions contemplated by this Agreement, the Custody Agreement and POA in connection with the Shares to be sold by such Selling
Stockholder hereunder, except the registration under the Act of the Shares, and such consents, approvals, authorizations, orders,
registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Managers.
(c) Title. Such
Selling Stockholder has, and immediately prior to each Closing at which Shares of such Selling Stockholder are being sold such
Selling Stockholder will have, good and valid title to the Shares to be sold by such Selling Stockholder hereunder at such Time
of Delivery, free and clear of all Liens; and, upon delivery of such Shares and payment therefor pursuant hereto, good and valid
title to such Shares, free and clear of all Liens, will pass to the Managers.
(d) No
Manipulation. Such Selling Stockholder will not take, directly or indirectly, any action that is designed to or
that has constituted or might reasonably be expected to cause or result in stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Shares.
(e) Information. To
the extent that any statements or omissions made in the Offering Statement any Circular Supplement thereto are made in reliance
upon and in conformity with written information furnished to the Company by such Selling Stockholder expressly for use therein,
such Offering Statement or any Circular Supplement will, when they become qualified or are filed with the Commission, as the case
may be, conform in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder
and not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, it being understood and agreed that the only such information furnished by such
Selling Stockholder consists of (A) the legal name, address and the number of shares of Common Stock owned by such Selling
Stockholder and (B) the other information with respect to such Selling Stockholder (excluding percentages) which appear in
the table (and corresponding footnotes) under the caption “Selling Stockholders” (with respect to each Selling Stockholder,
the “Selling Stockholder Information”).
(f) Tax
Compliance. In order to document the Managers’ compliance with the reporting and withholding
provisions of the Tax Equity and Fiscal Responsibility Act of 1982 with respect to the transactions herein contemplated, such Selling
Stockholder will deliver to the Representative a properly completed and executed United States Treasury Department Form W-9
(or other applicable form or statement specified by Treasury Department regulations in lieu thereof).
(g) Custody. Certificates
in negotiable form representing all of the Shares to be sold by such Selling Stockholder hereunder have been placed in custody
under a Custody Agreement and Power of Attorney, in the forms heretofore furnished to you (the “Custody Agreement”
and “POA”)), duly executed and delivered by such Selling Stockholder to Continental Stock Transfer & Trust
Company, as custodian (the “Custodian”).
Section 4 . Delivery and Payment.
Each Closing shall occur at the offices of the Representative (or at such other place as shall be agreed upon by the Representative
and the Company).
Until any Closing, upon any Agent’s
receipt of any and all checks, drafts, and money orders received from prospective purchasers of the Shares, the Agent shall deliver
same to Continental Stock Transfer & Trust Company, acting as escrow agent for the Offering, for deposit in a segregated escrow
account by noon of the next business day following the receipt, together with a written account of each purchaser which sets forth,
among other things, the name and address of the purchaser, the number of Shares purchased and the amount paid therefor. Any checks
received which are made payable to any party other than “CST&T CSSE Escrow Account” shall be returned to the purchaser
who submitted the check and not accepted.
Subject to the terms and conditions hereof,
and except as may otherwise be agreed or arranged between the parties, at the Closing payment of the purchase price for the Shares
sold on a Closing Date shall be made by Federal Funds wire transfer, against delivery of such Shares, and such Shares shall be
registered in such name or names and shall be in such denominations, as an Agent may request at least one business day before the
time of purchase (as defined below).
Except as may otherwise be agreed or arranged
between the parties, deliveries of the documents with respect to the purchase of the Shares, if any, shall be made at the offices
of HCFP. All actions taken at a Closing shall be deemed to have occurred simultaneously.
Section 5. Covenants
and Agreements of the Company. The Company further covenants and agrees with the Managers as follows:
(a) Offering
Statement Matters. The Company will advise the Representative promptly after it receives notice thereof of the time when any
amendment to the Offering Statement has been filed or becomes qualified or any amendment to the Offering Statement and any Circular
Supplement have been filed and will furnish the Managers with copies thereof. The Company will file promptly all reports and any
definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 14
or 15(d) of the Exchange Act subsequent to the date of any Circular Supplement and for so long as the delivery of an Offering Circular
is required in connection with the Offering. The Company will advise the Representative, promptly after it receives notice thereof
(i) of any request by the Commission to amend the Offering Statement or to amend any Circular Supplement or for additional information,
and (ii) of the issuance by the Commission of any stop order suspending the qualification of the Offering Statement or any post-qualification
amendment thereto or any order preventing or suspending the use of the Offering Statement or any amendment or supplement thereto
or any post-qualification amendment to the Offering Statement, of the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, of the institution or threatened institution of any proceeding for any such purpose, or of any request
by the Commission for the amending or supplementing of the Offering Statement or any Circular Supplement or for additional information.
The Company shall use its best efforts to prevent the issuance of any such stop order or prevention or suspension of such use.
If the Commission shall enter any such stop order or order or notice of prevention or suspension at any time, the Company will
use its best efforts to obtain the lifting of such order at the earliest possible moment, or will file a new Offering Statement
and use its best efforts to have such new Offering Statement declared qualified as soon as practicable.
(b) Blue
Sky Compliance. The Company will cooperate with the Representative in endeavoring to qualify the Shares for sale under the
securities laws of such jurisdictions (United States and foreign) as the Representative may reasonably request and will make such
applications, file such documents, and furnish such information as may be reasonably required for that purpose, provided
the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any
jurisdiction where it is not now so qualified or required to file such a consent, and provided further that the Company
shall not be required to produce any new disclosure document other than a Circular Supplement. The Company will, from time to time,
prepare and file such statements, reports and other documents as are or may be required to continue such qualifications in effect
for so long a period as the Representative may reasonably request for distribution of the Shares. The Company will advise the Representative
promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Shares for offering,
sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the
issuance of any order suspending such qualification, registration or exemption, the Company shall use its best efforts to obtain
the withdrawal thereof at the earliest possible moment.
(c) Amendments
and Supplements to Offering Statement, any Circular Supplement and Other Matters. The Company will comply with the Securities
Act and the Exchange Act, and the rules and regulations of the Commission thereunder, so as to permit the completion of the distribution
of the Shares as contemplated in this Agreement and any Offering Circular. If during the period in which an offering circular is
required by law to be delivered in connection with the distribution of Shares contemplated by the Offering Circular (the “Circular
Delivery Period”), any event shall occur as a result of which, in the judgment of the Company or in the opinion of any of
the Managers or counsel for any of the Managers, it becomes necessary to amend or supplement the Offering Circular in order to
make the statements therein, in the light of the circumstances under which they were made, as the case may be, not misleading,
or if it is necessary at any time to amend or supplement any Circular Supplement to comply with any law, the Company will promptly
prepare and file with the Commission, and furnish at its own expense to the Managers and to dealers, an appropriate amendment to
the Offering Statement or supplement to the Offering Statement or any Circular Supplement that is necessary in order to make the
statements therein as so amended or supplemented, in the light of the circumstances under which they were made, as the case may
be, not misleading, or so that the Offering Statement or any Circular Supplement, as so amended or supplemented, will comply with
law. Before amending the Offering Statement or supplementing any Offering Circular in connection with the Offering, the Company
will furnish the Managers with a copy of such proposed amendment or supplement and will not file any such amendment or supplement
to which the Managers reasonably object.
(d) Copies
of any Amendments and Supplements. The Company will furnish an Agent, without charge, during the period beginning on the date
hereof and ending on the final Closing Date of the Offering, as many copies of any Offering Circular and any amendments and supplements
thereto as any Agent may reasonably request.
(e) Transfer
Agent. The Company will maintain, at its expense, a registrar and transfer agent for the Common Stock.
(f) Earnings
Statement. As soon as practicable and in accordance with applicable requirements under the Securities Act, but in any event
not later than 18 months after the last Closing Date, the Company will make generally available to its security holders and to
the Managers an earnings statement, covering a period of at least 12 consecutive months beginning after the last Closing Date,
that satisfies the provisions of Section 11(a) and Rule 158 under the Securities Act.
(g) Periodic
Reporting Obligations. During the Offering Circular Delivery Period, the Company will duly file, on a timely basis, with the
Commission all reports and documents required to be filed under the Exchange Act within the time periods and in the manner required
by the Exchange Act.
(h) Additional
Documents. The Company will enter into any subscription, purchase or other customary agreements as the Managers deem reasonably
necessary or appropriate to consummate the Offering, all of which will be in form and substance reasonably acceptable to the Company
and the Managers. The Company agrees that the Managers may rely upon, and each is a third party beneficiary of, the representations
and warranties set forth in any such purchase, subscription or other agreement with Investors in the Offering.
(i) No
Manipulation of Price. The Company will not take, directly or indirectly, any action designed to cause or result in, or that
has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any Shares of
the Company.
(j) Acknowledgment.
The Company acknowledges that any advice given by any of the Managers to the Company is solely for the benefit and use of the Board
of Directors of the Company and may not be used, reproduced, disseminated, quoted or referred to, without such Agent’s prior
written consent.
Section 6. Conditions
of the Obligations of the Managers. The obligations of the Managers hereunder shall be subject to the accuracy of the representations
and warranties on the part of the Company set forth in Section 2 hereof and of the Selling Stockholders set forth in Section 3
hereto, in all cases as of the date hereof and as of a Closing Date as though then made, to the timely performance by the Company
of its covenants and other obligations hereunder on and as of such dates, and to each of the following additional conditions:
(a) Accountants’
Comfort Letter. On the date hereof, the Representative shall have received, and the Company shall have caused to be delivered
to the Representative, a letter from Xxxxxxxxxx & Company, PLLC, the independent registered public accounting firm of the Company
(“Xxxxxxxxxx”), addressed to the Representative, dated as of the date hereof, in form and substance satisfactory to
the Representative. The letter shall not disclose any change in the condition (financial or other), earnings, operations, business
or prospects of the Company from that set forth in the Offering Circular or the applicable Circular Supplement, which, in the Representative’s
sole judgment, is material and adverse and that makes it, in the Representative’s sole judgment, impracticable or inadvisable
to proceed with the Offering of the Shares as contemplated by such Offering Statement any Circular Supplement.
(b) Compliance
with Registration Requirements; No Stop Order; No Objection from the FINRA. The Offering Statement and any Circular Supplement
shall have been duly filed with the Commission, as appropriate; no stop order suspending the qualification of the Offering Statement
or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission;
no order preventing or suspending the use of any Offering Circular shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; no order having the effect of ceasing or suspending the distribution of the
Shares or any other securities of the Company shall have been issued by any securities commission, securities regulatory authority
or stock exchange and no proceedings for that purpose shall have been instituted or shall be pending or, to the knowledge of the
Company, contemplated by any securities commission, securities regulatory authority or stock exchange; all requests for additional
information on the part of the Commission shall have been complied with; and the FINRA shall have raised no objection to the fairness
and reasonableness of the placement terms and arrangements.
(c) Corporate
Proceedings. All corporate proceedings and other legal matters in connection with this Agreement, the Offering Statement and
any Circular Supplement, and the registration, sale and delivery of the Shares, shall have been completed or resolved in a manner
reasonably satisfactory to each Agent’s counsel, and such counsel shall have been furnished with such papers and information
as it may reasonably have requested to enable such counsels to pass upon the matters referred to in this Section 6.
(d) No
Material Adverse Change. Subsequent to the execution and delivery of this Agreement and prior to any Closing Date, there shall
not have occurred any Material Adverse Effect.
(e) Opinion
of Counsel for the Company. The Representative shall have received on each Closing Date the favorable opinion of legal counsel
to the Company, dated as of such Closing Date, including, without limitation, a negative assurance letter, addressed to the Representative
in form and substance reasonably satisfactory to the Representative.
(f) Officers’
Certificate. The Representative shall have received on each Closing Date a certificate of the Company, dated as of such Closing
Date, signed by the Chief Executive Officer and Chief Financial Officer of the Company, to the effect that the signers of such
certificate have reviewed the Offering Statement, any Circular Supplement, and this Agreement and to the further effect that:
(i) The
representations and warranties of the Company in this Agreement are true and correct, as if made on and as of such Closing Date,
and the Company has, in all material respects, complied with all the agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to such Closing Date;
(ii) No stop order suspending the
qualification of the Offering Statement or the use of the Offering Circular or any Circular Supplement has been issued and no proceedings
for that purpose have been instituted or are pending or, to the Company’s knowledge, threatened under the Securities Act;
no order having the effect of ceasing or suspending the distribution of the Shares or any other Shares of the Company has been
issued by any Shares commission, Shares regulatory authority or stock exchange in the United States and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the Company, contemplated by any Shares commission, Shares
regulatory authority or stock exchange in the United States;
(iii) When
the Offering Statement became qualified, at the time of sale, and at all times subsequent thereto up to the delivery of such certificate,
the Offering Statement, when it became qualified, contained all material information required to be included therein by the Securities
Act and the applicable rules and regulations of the Commission thereunder, as the case may be, and in all material respects conformed
to the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder, as the case may
be, and the Offering Statement, did not and does not include 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, in the light of the circumstances under which they
were made, not misleading (provided, however, that the preceding representations and warranties contained in this
paragraph (iii) shall not apply to any statements or omissions made in reliance upon and in conformity with the Agent Information)
and, since the Qualification Date, there has occurred no event required by the Securities Act and the rules and regulations of
the Commission thereunder to be set forth in the Offering Statement which has not been so set forth; and
(iv) Subsequent
to the respective dates as of which information is given in the Offering Statement and any Circular Supplement, there has not been:
(a) any Material Adverse Effect; (b) any transaction that is material to the Company except transactions entered into in the ordinary
course of business; (c) any obligation, direct or contingent, that is material to the Company, incurred by the Company, except
obligations incurred in the ordinary course of business; (d) any material change in the capital stock (except changes thereto resulting
from the exercise of outstanding stock options or warrants) or outstanding indebtedness of the Company; (e) any dividend or distribution
of any kind declared, paid or made on the capital stock of the Company; or (f) any loss or damage (whether or not insured) to the
property of the Company which has been sustained or will have been sustained which has a Material Adverse Effect.
(g) Bring-down
Comfort Letter. On each subsequent Closing Date, the Managers shall have received from Xxxxxxxxxx or such other independent
registered public accounting firm engaged by the Company at such time, a letter dated as of such Closing Date, in form and substance
satisfactory to the Managers, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection
(a) of this Section 6, except that the specified date referred to therein for the carrying out of procedures shall be no more than
three business days prior to such Closing Date.
(h) Stock
Exchange Listing. The Shares shall be registered under the Exchange Act effective at the date of qualification, shall be approved
for listing on the principal Trading Market by the initial Closing and shall be listed on or about the final Closing and tradable
promptly thereafter on a date established by the Representative, and the Company shall not have taken any action designed to terminate,
or likely to have the effect of terminating, the registration of the Shares under the Exchange Act or delisting or suspending from
trading the Shares from the principal Trading Market, nor shall the Company have received any information suggesting that the Commission
or the principal Trading Market is contemplating terminating such registration or listing.
(i) Lock-Up
Agreements. On or before the initial Closing Date, the Representative shall have received executed lock-up agreements (in form
and substance acceptable to the Representative in its sole discretion) from the holders identified in the Offering Statement that
accurately reflect the lock-up provisions set forth in the Offering Statement applicable to such holders based on their status.
(j) Additional
Documents. On or before each Closing Date, the Representative and counsel for the Representative shall have received such information
and documents as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the Shares
as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein contained. If any condition specified in this Section 6 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the Representative by notice to the Company at any time on or
prior to such Closing Date, which termination shall be without liability on the part of any party to any other party, except that
Section 7 (Payment of Company Expenses), Section 8 (Indemnification and Contribution) and Section 10 (Representations and Indemnities
to Survive Delivery) shall at all times be effective and shall survive such termination.
Section 7. Payment
of Company Expenses. In addition to the Expense Fee, the Company agrees to pay all costs, fees and expenses incurred by the
Company and the Selling Stockholders in connection with the performance of its obligations hereunder and in connection with the
transactions contemplated hereby, including, without limitation: (i) all expenses incident to the issuance, delivery and qualification
of the Shares (including all printing and engraving costs); (ii) all fees and expenses of the registrar and transfer agent of the
Common Stock; (iii) all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the Shares;
(iv) all fees and expenses of the Company’s counsel, independent public or certified public accountants and other advisors;
(v) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and distribution of the Offering
Statement (including financial statements, exhibits, schedules, consents and certificates of experts), the Offering Circular and
each Circular Supplement, and all amendments and supplements thereto, and this Agreement; (vi) all filing fees, reasonable attorneys’
fees and expenses incurred by the Company in connection with qualifying or registering (or obtaining exemptions from the qualification
or registration of) all or any part of the Shares for offer and sale under the state securities or blue sky laws or the securities
laws of any other country, and, if reasonably requested by any of the Managers, preparing and printing a “Blue Sky Survey,”
an “International Blue Sky Survey” or other memorandum, and any supplements thereto, advising the Representative of
such qualifications, registrations and exemptions; (vii) if applicable, the filing fees incident to the review and approval the
FINRA of any Agent’s participation in the offering and distribution of the Shares; (viii) the fees and expenses associated
with including the Shares on the Trading Market; (ix) all costs and expenses incurred by the Company in connection with any “roadshows”
including the travel and accommodation of the Company’s employees on the “roadshow,” if any, and (x) all other
fees, costs and expenses referred to in Part II of the Offering Statement. In no event shall the Company be obligated to pay, or
pay, any expenses incurred by the Managers, it being understood that the Expense Fee is to include reimbursement to the Managers
for all expenses they incur, provided, however, such expense incurred by the Managers is not an expense otherwise payable by the
Company. In addition, in no event will the Selling Stockholders be liable to pay any of the fees or expenses set forth in this
Section 7.
Section 8. Indemnification
and Contribution.
(a) The
Company agrees to indemnify the Managers in accordance with the provisions of Schedule A hereto, which is incorporated by
reference herein and made a part hereof.
(b) Each
of the Selling Stockholders severally and not jointly up to the number of Shares to be sold by such Selling Stockholder hereunder
agrees to indemnify and hold harmless the Managers, their affiliates, directors and officers and each person, if any, who controls
an Agent 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 Schedule A hereto, in each case only insofar as such losses, claims,
damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with any information relating to such Selling Stockholder constituting Selling Stockholder
Information furnished by such Selling Stockholder for inclusion in the Offering Statement or any Circular Supplement or any amendment
or supplement thereto; provided, however, that the provisions of this Section 8 shall not require any such Selling
Stockholder with respect to the indemnity provided under this subsection (b) or otherwise with respect to this Section 8
to indemnify or hold harmless the Managers in excess of the net proceeds received by such Selling Stockholder from the Shares sold
by such Selling Stockholder pursuant to this Offering.
(c) Each
Agent agrees to indemnify and hold harmless the Company, its directors, officers, employees, agents, and counsel, and each person,
if any, who control the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act against any and all
loss, liability, claim, damage and expense described in the foregoing indemnity from the Company to the Managers, as incurred,
but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Offering Statement
or any Circular Supplement or any amendment or supplement thereto or in any application, in reliance upon, and in strict conformity
with, the Agent Information. In case any action shall be brought against the Company or any other person so indemnified based on
the Offering Statement or any Circular Supplement or any amendment or supplement thereto or any application, and in respect of
which indemnity may be sought against any Agent, such Agent shall have the rights and duties given to the Company, and the Company
and each other person so indemnified shall have the rights and duties given to the several Agent by the provisions provided in
Schedule A.
Section
9. Representations and Warranties of the Managers.
Each of the Managers hereby represents, warrants and covenants to the Company and the Selling Stockholders, as of the date hereof,
and as of each Closing Date, as follows:
(a) Agent
is a member in good standing of FINRA or a registered representative thereof and is a broker-dealer registered as such under the
Exchange Act. Each Agent is in compliance with all material rules and regulations applicable to it generally and applicable to
its participation in the Offering.
(b) Agent
has requisite power and authority to execute, deliver and perform this Agreement and consummate the transactions contemplated
hereby.
(c) This
Agreement has been duly authorized, executed, and delivered by each Agent and is the legal, valid, and binding obligation of each
Selling, enforceable against each Agent in accordance with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, or other laws affecting the rights of creditors generally.
(d) Agent
will not intentionally take any action that it reasonably believes would cause the Offering to violate the provision of the Securities
Act, the Exchange Act or the respective rules and regulations promulgated thereunder.
Section 10. Representations
and Indemnities to Survive Delivery. The respective indemnities, agreements, representations, warranties and other statements
of the Company or any person controlling the Company, of its officers, of the Selling Stockholders and of the Managers set forth
in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf
of the Managers, the Selling Stockholders, the Company, or any of its or their partners, officers or directors or any controlling
person, as the case may be, and will survive delivery of and payment for the Shares sold hereunder and any termination of this
Agreement until the earlier of the expiration of any applicable statute of limitations and the seventh anniversary of the final
Closing Date, at which time the representations, warranties and agreements shall terminate and be of no further force and effect.
A successor to either of the Managers, to the Selling Stockholders, or to the Company, its directors or officers or any person
controlling the Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained
in this Agreement.
Section 11. Notices.
All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Managers, to the addresses set
forth above.
With a copy to:
Xxxxxxxxx Xxxxxxx, LLP
0000 Xxxxxx Xxxxxxxxx
XxXxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
If to the Company:
Chicken Soup for the Soul Entertainment, Inc.
With a copy to:
Xxxxxxxx Xxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx Xxxxxx, Esq. and Brain X. Xxxx, Esq.
If to any Selling Stockholder:
To the address set forth in Schedule
I hereto.
Any party hereto may change the address for receipt of communications
by giving written notice to the others.
Section 12. Successors.
This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the employees, officers
and directors and controlling persons referred to in Section 8 hereof, and to their respective successors, and personal representative,
and no other person will have any right or obligation hereunder.
Section 13. Partial
Unenforceability. The invalidity or unenforceability of any section, paragraph or provision of this Agreement shall not affect
the validity or enforceability of any other section, paragraph or provision hereof. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and
only such minor changes) as are necessary to make it valid and enforceable.
Section 14. Governing
Law Provisions. This Agreement shall be deemed to have been made and delivered in New York City and both this Agreement and
the transactions contemplated hereby shall be governed as to validity, interpretation, construction, effect and in all other respects
by the internal laws of the State of New York, without regard to the conflict of laws principles thereof. Each of the Managers,
the Selling Stockholders and the Company: (i) agrees that any legal suit, action or proceeding arising out of or relating to this
Agreement and the transactions contemplated hereby shall be instituted exclusively in New York Supreme Court, County of New York,
or in the United States District Court for the Southern District of New York, (ii) waives any objection which it may now or hereafter
have to the venue of any such suit, action or proceeding, and (iii) irrevocably consents to the jurisdiction of the New York Supreme
Court, County of New York, and the United States District Court for the Southern District of New York in any such suit, action
or proceeding. Each of the Managers, the Selling Stockholders and the Company further agrees to accept and acknowledge service
of any and all process which may be served in any such suit, action or proceeding in the New York Supreme Court, County of New
York, or in the United States District Court for the Southern District of New York and agrees that service of process upon the
Company mailed by certified mail to the Company’s address shall be deemed in every respect effective service of process upon
the Company, in any such suit, action or proceeding, and service of process upon the Managers mailed by certified mail to the Agent
address shall be deemed in every respect effective service process upon such Managers, in any such suit, action or proceeding.
Notwithstanding any provision of this Agreement to the contrary, the Company and the Selling Stockholders agree that none of the
Managers, any of their affiliates, any of the officers, directors, employees, agents and representatives of the Managers or any
of their respective affiliates and each other person, if any, controlling any of the Managers or any of their respective affiliates
(each a “Relevant Person”), shall have any liability (whether direct or indirect, in contract or tort or otherwise)
to the Company and the Selling Stockholders arising out of the processing of orders for Shares in respect of which the Managers
have not engaged in selling efforts, except for any loss, claim, damage, liability, deficiencies, actions, suits, proceedings,
costs or legal or other expenses that are finally judicially determined to have resulted from the bad faith or gross negligence
of such Relevant Person.
Section 15. General
Provisions.
(a) This
Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no
condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit.
Section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of
this Agreement.
(b) The
Company and the Selling Stockholders acknowledge that in connection with the Offering of the Shares: (i) the Managers have acted
at arm’s length, are not agents of, and owe no fiduciary duties to the Company, the Selling Stockholders or any other person,
(ii) the Managers owe the Company and the Selling Stockholders only those duties and obligations set forth in this Agreement and
(iii) the Managers may have interests that differ from those of the Company and the Selling Stockholders. The Company and the Selling
Stockholders waive, to the full extent permitted by applicable law, any claims they may have against any of the Managers arising
from an alleged breach of fiduciary duty in connection with the offering of the Shares.
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If the foregoing is in accordance with your
understanding of our agreement, please sign below whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
The foregoing Joint Bookrunning Manager Agreement
is hereby confirmed and accepted as of the date first above written.
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Schedule 2(mm)
SCHEDULE A – INDEMNIFICATION
The Company hereby agrees to indemnify and
hold the Managers, their officers, directors, principals, employees, affiliates, and shareholders, and their respective successors
and assigns, harmless from and against any and all loss, claim, damage, liability, deficiencies, actions, suits, proceedings, costs
and legal expenses or expense whatsoever (including, but not limited to, reasonable legal fees and other expenses and reasonable
disbursements incurred in connection with investigating, preparing to defend or defending any action, suit or proceeding, including
any inquiry or investigation, commenced or threatened, or any claim whatsoever, or in appearing or preparing for appearance as
witness in any proceeding, including any pretrial proceeding such as a deposition) (collectively, “Losses”) arising
out of, based upon, or in any way related or attributed to, any breach of a representation, warranty or covenant by the Company
contained in this Agreement.
If an Agent receives written notice of the
commencement of any legal action, suit or proceeding with respect to which the Company is or may be obligated to provide indemnification
pursuant to this Schedule A , then such Agent, shall, within thirty (30) days of the receipt of such written notice, give the Company
written notice thereof (a “Claim Notice”). Failure to give such Claim Notice within such thirty (30) day period shall
not constitute a waiver by the Agent, of its respective right to indemnity hereunder with respect to such action, suit or proceeding.
Upon receipt by the Company of a Claim Notice from an Agent with respect to any claim for indemnification which is based upon a
claim made by a third party (“Third Party Claim”), the Company may assume the defense of the Third Party Claim with
counsel of its own choosing, as described below. The Agent shall cooperate in the defense of the Third Party Claim and shall furnish
such records, information and testimony and attend all such conferences, discovery proceedings, hearings, trial and appeals as
may be reasonably required in connection therewith. The Agent shall have the right to employ its own counsel in any such action,
which shall be at the Company’s expense if (i) the Company and the Agent shall have mutually agreed in writing to the retention
of such counsel, (ii) the Company shall have failed in a timely manner to assume the defense and employ counsel or experts reasonably
satisfactory to the Agent in such litigation or proceeding or (iii) the named parties to any such litigation or proceeding (including
any impleaded parties) include the Company and the Agent and representation of the Company and the Agent by the same counsel or
experts would, in the reasonable opinion of the Agent be inappropriate due to actual or potential differing interests between the
Company and the Agent, as applicable. The Company shall not satisfy or settle any Third Party Claim for which indemnification has
been sought and is available hereunder, without the prior written consent of the Agent, which consent shall not be delayed and
which shall not be required if the Agent, is granted a general release in connection therewith. The indemnification provisions
hereunder shall survive the termination or expiration of this Agreement.
The Company further agrees, upon demand
by the Agent, to promptly reimburse the Agent for, or pay, any reasonable fees, expenses or disbursements as to which the Agent
has been indemnified herein with such reimbursement to be made currently as such fees, expenses or disbursements are incurred by
the Agent. Notwithstanding the provisions of the aforementioned indemnification, any such reimbursement or payment by the Company
of fees, expenses, or disbursements incurred by the Agent shall be repaid by the Agent in the event of any proceeding in which
a final judgment (after all appeals or the expiration of time to appeal) is entered in a court of competent jurisdiction against
or the Agent based solely upon its gross negligence or intentional misconduct in the performance of its duties hereunder, and provided
further, that the Company shall not be required to make reimbursement or payment for any settlement effected without the
Company’s prior written consent (which consent shall not be unreasonably withheld or delayed).
If for any reason the foregoing indemnification
is unavailable or is insufficient to hold any of the Agent harmless, the Company agrees to contribute the amount paid or payable
by any Agent in such proportion as to reflect not only the relative benefits received by the Company, on the one hand, and the
applicable Agent, on the other hand, but also the relative fault of the Company and any of the Agent as well as any relevant equitable
considerations. In no event shall any Agent contribute in excess of the fees actually received by it pursuant to the terms of this
Agreement.
For purposes of this Agreement, each officer,
director, shareholder, and employee or affiliate of any Agent and each person, if any, who controls Agent (or any affiliate) within
the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, shall have the same rights as Agent with
respect to matters of indemnification by the Company hereunder.
Notwithstanding any provision of this Agreement
to the contrary, the Company agrees that none of the Agent, any of its affiliates, any of its officers, directors, employees, agents
and representatives or any of their respective affiliates and each other person, if any, controlling the Agent or any of its affiliates
(each a “Relevant Person”), shall have any liability (whether direct or indirect, in contract or tort or otherwise)
to the Company arising out of the processing of orders for Shares in respect of which the Agent has not engaged in selling efforts,
except for any loss, claim, damage, liability, deficiencies, actions, suits, proceedings, costs or legal or other expenses that
are finally judicially determined to have resulted from the bad faith or gross negligence of such Relevant Person.
SCHEDULE
I – SELLING STOCKHOLDERS
Name | |
Number of Shares Owned | | |
Number of Shares to Be Sold in Offering | |
Quattro Holdings, LLC | |
| 64,504 | | |
| 64,504 | |
Xxxxxxxx Xxxxx | |
| 64,503 | | |
| 64,503 | |
Trinity Credit Company, LLC | |
| 129,010 | | |
| 129,010 | |