HYPERDYNAMICS CORPORATION PLACEMENT AGENCY AGREEMENT
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Exhibit
1.1
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HYPERDYNAMICS
CORPORATION
PLACEMENT AGENCY
AGREEMENT
May 11,
2008
X.X.
XXXXXX & COMPANY, INC.
00000 Xxx
Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxxxx 00000
Ladies
and Gentlemen:
Hyperdynamics
Corporation, a Delaware corporation (the “Company”), proposes,
subject to the terms and conditions stated herein, to issue and sell to one or
more qualified investors (collectively, the “Investors”) (i) up to
an aggregate of 2,424,242 shares (the “Shares”) of the
Company’s Common Stock, par value $0.001 per share (the “Common Stock”) and
(ii) warrants to purchase up to 2,424,242 shares of Common Stock (the “Warrants” and
collectively with the Shares, the “Securities”). The
shares of Common Stock issuable upon exercise of the Warrants are hereinafter
referred to as the “Warrant
Shares”. The Company desires to engage X.X. Xxxxxx &
Company, Inc. as its exclusive placement agent (the “Placement Agent”) in
connection with the issuance and sale of the Securities. The
Securities are described more fully in the Prospectus that is referred to
below.
The
Company confirms its agreements with the Placement Agent as
follows:
Agreement
to Act as Placement Agent.
On the
basis of the representations, warranties and agreements of the Company herein
contained and subject to all of the terms and conditions of this Agreement, the
Company engages the Placement Agent to act as its exclusive placement agent in
connection with the issuance and sale of the Securities and the Placement Agent
hereby agrees, as an agent of the Company, to use its commercially reasonable
efforts to solicit offers to purchase the Securities upon the terms and
conditions set forth in the Prospectus (as defined below). Prior to
the earlier of (i) the date on which this Agreement is terminated and (ii) the
Closing Date (as defined below), the Company shall not, without the prior
consent of the Placement Agent, solicit or accept offers to purchase Common
Stock (other than pursuant to the exercise of options or warrants to purchase
shares of Common Stock that are outstanding as of the date hereof) otherwise
than through the Placement Agent in accordance herewith.
1
As
compensation for the services rendered hereunder, on the Closing Date (as
defined below), the Company shall pay to the Placement Agent, by wire transfer
of immediately available U.S. funds payable to the order of the Placement Agent,
to an account or accounts designated by the Placement Agent, an amount equal to
8% of the aggregate gross proceeds received by the Company from the sale of the
Securities (the “Fee”). The
Placement Agent may, in its discretion, retain other brokers or dealers to act
as sub-agents on the Placement Agent’s behalf in connection with the offering of
the Securities, provided that the Company shall not be obligated to pay any
additional amounts to the Placement Agent or any such sub-agent with respect
thereto.
This
Agreement shall not give rise to a commitment by the Placement Agent or any of
its affiliates to underwrite or purchase any of the Securities or otherwise
provide any financing, and the Placement Agent shall have no authority to bind
the Company in respect of the sale of any Securities. The Company
shall have the sole right to accept offers to purchase the Securities and may
reject any such offer in whole or in part. The Placement Agent shall
have the right, in its discretion reasonably exercised, without notice to the
Company, to reject any offer to purchase Securities received by it, in whole or
in part, and any such rejection shall not be deemed a breach of its agreement
contained herein. The sale of the Securities shall be made pursuant
to one or more purchase agreements in substantially the form attached hereto as
Exhibit A (the
“Purchase
Agreements”).
Delivery
and Payment. Subject to the
terms and conditions hereof, delivery of the Securities shall be made by the
Company to the Investors, and payment of the purchase price shall be made by the
Investors, in accordance with the Purchase Agreements.
Representations
and Warranties of the Company. The Company represents, warrants and
covenants to the Placement Agent that:
The
Company meets the requirements for use of Form S-3 under the Securities Act
of 1933, as amended (the “1933 Act”) for a
primary offering. A Registration Statement on Form S-3
(Registration No. 333-148287) with respect to the Securities, including a base
prospectus (the “Base
Prospectus”), and such amendments to such registration statement as may
have been required to the date of this Agreement, has been carefully prepared by
the Company pursuant to and in conformity with the requirements of the 1933 Act,
and the rules and regulations thereunder (the “Rules and
Regulations”) of the Securities and Exchange Commission (the “SEC”) and has been
filed with the SEC under the 1933 Act. Such registration statement
has been declared effective by the SEC. Copies of such registration
statement, including any amendments thereto, each related preliminary prospectus
(meeting the requirements of Rule 430, 430A or 430B of the Rules and
Regulations) contained therein, and the exhibits, financial statements and
schedules thereto have heretofore been delivered by the Company to the Placement
Agent. A final prospectus supplement containing information permitted
to be omitted at the time of effectiveness by Rule 430A or 430B of the Rules and
Regulations will be filed promptly by the Company with the SEC in accordance
with Rule 424(b) of the Rules and Regulations. The term “Registration
Statement” as used herein means the registration statement as amended at
the time it became effective by the SEC under the 1933 Act (the “Effective Date”),
including financial statements, all exhibits and all documents incorporated by
reference therein and, if applicable, the information deemed to be included by
Rule 430A or 430B of the Rules and Regulations. If an
abbreviated registration statement is prepared and filed with the SEC in
accordance with Rule 462(b) under the 1933 Act (an “Abbreviated Registration
Statement”), the term “Registration
Statement” as used in this Agreement includes the Abbreviated
Registration Statement. The term “Prospectus” as used
herein means, together with the Base Prospectus, (i) the final prospectus
supplement as first filed with the SEC pursuant to Rule 424(b) of the Rules and
Regulations, or (ii) if no such filing is required, the form of final
prospectus included in the Registration Statement at the Effective Date,
including, in each case, the documents incorporated by reference
therein. The term “Preliminary
Prospectus” as used herein shall mean a preliminary prospectus as
contemplated by Rule 430, 430A or 430B of the Rules and Regulations
included at any time in the Registration Statement, including the Base
Prospectus and any preliminary prospectus supplement, and including in each case
the documents incorporated by reference therein. The term “Free Writing
Prospectus” as used herein shall have the meaning set forth in Rule 405
of the Rules and Regulations. The term “Issuer Free Writing
Prospectus” as used herein shall have the meaning set forth in Rule 433
of the Rules and Regulations. The term “Disclosure Package”
as used herein shall mean the Preliminary Prospectus as most recently amended or
supplemented prior to the Initial Time of Sale (as defined below) together with
the Issuer Free Writing Prospectuses identified in Schedule I hereto, if
any, and any other Free Writing Prospectus that the parties hereto shall
hereafter expressly agree to treat as part of the Disclosure
Package. The Preliminary Prospectus, if any, any Issuer Free Writing
Prospectus required to be filed pursuant to Rule 433(d) of the Rules and
Regulations and the Prospectus delivered to the Placement Agent for use in
connection with the offering of the Securities have been and will be identical
to the respective versions thereof transmitted to the SEC for filing via the
Electronic Data Gathering Analysis and Retrieval System (“XXXXX”), except to
the extent permitted by Regulation S-T. For purposes of this Agreement, the
words “amend,” “amendment,” “amended,” “supplement” or “supplemented” with
respect to the Registration Statement, the Prospectus, any Free Writing
Prospectus or the Disclosure Package shall mean amendments or supplements to the
Registration Statement, the Prospectus, any Free Writing Prospectus or the
Disclosure Package, as the case may be, as well as documents filed after the
date of this Agreement and prior to the completion of the distribution of the
Securities and incorporated by reference therein as described
above.
2
Neither
the SEC nor any state or other jurisdiction or other regulatory body has issued,
and neither is, to the knowledge of the Company, threatening to issue, any stop
order under the 1933 Act or other order suspending the effectiveness of the
Registration Statement (as amended or supplemented) or preventing or suspending
the use of any Preliminary Prospectus, Issuer Free Writing Prospectus, the
Disclosure Package or the Prospectus or suspending the qualification or
registration of the Securities for offering or sale in any jurisdiction nor
instituted or, to the knowledge of the Company, threatened to institute
proceedings for any such purpose. The Preliminary Prospectus at its
date of issue and as of 10:00 a.m. Eastern Standard Time on the date hereof (the
“Initial Time of
Sale”), the Registration Statement at each effective date and the Initial
Time of Sale, and the Prospectus and any amendments or supplements thereto or to
the Registration Statement when they are filed with the SEC or become effective,
as the case may be, contain or will contain, as the case may be, all statements
that are required to be stated therein by, and in all material respects conform
or will conform, as the case may be, to the requirements of, the 1933 Act and
the Rules and Regulations. Neither the Registration Statement nor any
amendment thereto, as of the applicable effective date, contains or will
contain, as the case may be, any untrue statement of a material fact or omits or
will omit to state any material fact required to be stated therein or necessary
to make the statements therein, not misleading. Neither the
Preliminary Prospectus, the Prospectus nor any supplement thereto contains, as
of the date thereof, or will contain, as the case may be, any untrue statement
of a material fact or omits or will omit to state any material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading. Neither
the Disclosure Package nor any supplement thereto, at the Initial Time of Sale,
contains or will contain, as the case may be, any untrue statement of a material
fact or omits or will omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not
misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty as to information contained in or omitted from the
Registration Statement, the Disclosure Package or the Prospectus, or any such
amendment or supplement, in reliance upon, and in conformity with, written
information furnished to the Company relating to the Placement Agent by or on
behalf of the Placement Agent expressly for use in the preparation thereof (as
provided in Section 12 hereof). The documents incorporated by
reference in the Disclosure Package or the Prospectus at the time they were
filed with the SEC, complied in all material respects with the requirements of
the Securities Exchange Act of 1934, as amended (the “1934 Act”), and the
rules and regulations adopted by the SEC thereunder (the “1934 Act Rules and
Regulations”). Any future documents incorporated by reference
so filed, when they are filed, will comply in all material respects with the
requirements of the 1934 Act and the 1934 Act Rules and Regulations; no such
incorporated document contained or will 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; and, when read together
and with the other information in each of the Disclosure Package and the
Prospectus, at the time the Registration Statement became effective, at the
Initial Time of Sale and at the Closing Date, each such incorporated document
did not or will not, as the case may be, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
3
The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Delaware, with full power and
authority (corporate and otherwise) to own its properties and conduct its
business as described in the Disclosure Package, and has been duly qualified as
a foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, except where the
failure to be so qualified or in good standing would not result in a Material
Adverse Effect (as defined below).
Each of
the Company’s subsidiaries is set forth on Exhibit 21.1 to the Company’s Annual
Report on Form 10-K for the year ended June 30, 2007.
The
Company has the full corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
(as defined below) and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the Company and no further consent or action is required
by the Company, its Board of Directors or its stockholders. Each of
the Transaction Documents has been (or upon delivery will be) duly executed by
the Company and is, or 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 as such enforceability may be
limited by applicable (i) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws in effect which affect creditors’ rights
generally, or (ii) laws relating to the availability of specific performance,
injunctive relief or other equitable remedies. The execution,
delivery and performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby,
including the issuance and sale by the Company of the Securities and the
issuance of the Warrant Shares upon due exercise of the Warrants in accordance
with their terms, 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 as of the date of execution of this
Agreement, or (ii) subject to obtaining the Required Approvals (as defined
below), conflict with, breach, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, mortgage, indenture,
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) 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 securities 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, individually or in
the aggregate: (a) adversely affect the legality, validity or enforceability of
this Agreement and any other documents or agreements executed in connection with
the transactions contemplated hereunder (collectively, the “Transaction
Documents”), (b) reasonably be expected to have or result in a material
adverse effect on the results of operations, assets, business, management,
operations, financial condition or prospects of the Company, or (c) adversely
impair the Company’s ability to perform fully on a timely basis its obligations
under any of the Transaction Documents (any of foregoing clauses (a), (b) or
(c), a “Material
Adverse Effect”).
4
Neither
the Company nor any of its subsidiaries is in violation of its Certificate of
Incorporation or bylaws (or similar organizational documents) or in default in
the performance or observance of any material obligation, agreement, covenant or
condition contained in any agreement, mortgage, indenture, credit facility, debt
or other instrument (evidencing a Company debt or otherwise) or other
understanding to which the Company or any of its subsidiaries is a party or by
which any property or asset of the Company or any of its subsidiaries is bound
or affected.
The
Company is not required to obtain any consent, approval, waiver, authorization
or order of, give any notice to, or make any filing or registration with, or
qualification of, any court or other federal, state, local or other governmental
authority or other Person in connection with the execution, delivery and
performance by the Company of the Transaction Documents, including the issuance
and sale by the Company of the Securities and the issuance of the Warrant Shares
upon due exercise of the Warrants in accordance with their terms, other than (i)
the filing of a Form 8-K disclosing the transaction contemplated hereby, (ii)
the filing with the SEC of a prospectus supplement, (iii) the filing of an
application for the listing of additional securities to the American Stock
Exchange (the “Principal Market”)
for the listing of the Shares and the Warrant Shares for trading thereon in the
time and manner required thereby, and (iv) applicable Blue Sky filings
(collectively, the “Required
Approvals”). “Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
There are
no contracts or other documents required to be described in the Registration
Statement or to be filed as exhibits to the Registration Statement by the 1933
Act or by the Rules and Regulations which have not been described in, filed as
exhibits to, or incorporated by reference in the Registration Statement, as
required. The contracts so described in the Disclosure Package to
which the Company or any of its subsidiaries is a party have been duly
authorized, executed and delivered by the Company or its subsidiaries,
constitute valid and binding agreements of the Company or its subsidiaries (as
applicable) and are enforceable against the Company or its subsidiaries (as
applicable) in accordance with their respective terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws in effect which affect
creditors’ rights generally, or (ii) laws relating to the availability of
specific performance, injunctive relief or other equitable remedies, and, to the
Company’s knowledge, such contracts are enforceable in accordance with their
respective terms by the Company against the other parties thereto, except as
such enforceability may be limited by (x) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws in effect
which affect creditors’ rights generally, or (y) laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies, and such contracts are in full force and effect on the date
hereof. Neither the Company nor any of its subsidiaries, nor, to the
best of the Company’s knowledge, any other party thereto, is in breach of or
default under any of such contracts, except for such breaches or defaults that
will not result in a Material Adverse Effect.
5
As of May
11, 2008, the authorized capital stock of the Company consists of 250,000,000
shares of Common Stock, par value $0.001 per share, of which 56,807,771 shares
are issued and outstanding and approximately 18,500,000 shares are reserved for
issuance upon conversion of preferred stock, 11,600,000 shares are reserved for
exercise of stock options or warrants, or the vesting of restricted stock
awards, outstanding under the Company’s stock option plans or otherwise, and
11,275,203 reserved for the potential conversion of debt if and only if there is
a future default. As of May 11, 2008 this leaves 151,817,026 as available for
issuance. All of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the descriptions thereof incorporated by reference
in the Disclosure Package. All of the issued shares of capital stock
of each subsidiary of the Company (i) have been duly and validly authorized and
issued, are fully paid and non-assessable and (ii) except as disclosed in the
Disclosure Package, are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims. Except as disclosed in this
Section 3(h) and except for the transactions contemplated by this Agreement,
neither the Company nor any subsidiary has outstanding any options to purchase,
or any preemptive rights or other rights to subscribe for or to purchase any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations. The description of the
Company’s stock option and stock purchase plans and the options or other rights
granted and exercised thereunder set forth in the Disclosure Package accurately
and fairly presents in all material respects the information required by the
1933 Act and the Rules and Regulations to be shown with respect to such plans,
options and rights.
Except as
disclosed in the Disclosure Package, there are no legal or governmental actions,
suits or proceedings pending or, to the best of the Company’s knowledge,
threatened to which the Company or any of its subsidiaries is or may be a party
or of which property owned or leased by the Company or any of its subsidiaries
is or may be the subject, or related to environmental or discrimination matters,
which actions, suits or proceedings, would reasonably be expected, individually
or in the aggregate, to prevent or adversely affect the transactions
contemplated by the Transaction Documents or have a Material Adverse
Effect. No labor disturbance by the employees of the Company or any
of its subsidiaries exists or, to the knowledge of the Company, is imminent that
would reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any of its subsidiaries is a party or
subject to the provisions of any material injunction, judgment, decree or order
of any court, regulatory body, administrative agency or other governmental body,
that would reasonably be expected to have a Material Adverse
Effect.
The
Company owns, or possesses sufficient rights in, and/or has been granted valid
and enforceable licenses for, all registered patents, patent applications,
trademarks, trademark applications, tradenames, servicemarks and copyrights
necessary to the conduct of its business as such business is described in the
Disclosure Package (collectively, the “Registered Intellectual
Property”). There has been no infringement or misappropriation
by third parties of any of the Registered Intellectual Property, or any material
inventions, manufacturing processes, formulae, trade secrets, know-how,
unregistered trademarks, and other intangible property and assets necessary to
the conduct of its business as such business is described in the Disclosure
Package (collectively, the “Other Intellectual
Property,” and together with the Registered Intellectual Property, the
“Intellectual
Property”), nor is there any pending or, to the best knowledge of the
Company, threatened action, suit, proceeding or claim by others challenging the
Company’s rights of title or other interest in or to any Intellectual
Property. There is no pending or, to the best knowledge of the
Company, threatened action, suit, proceeding or claim by others challenging the
validity and scope of any Intellectual Property. There is no pending
or, to the best knowledge of the Company, threatened action, suit, proceeding or
claim by others that the Company or any of its products or processes or the
Intellectual Property infringe or otherwise violate any patent, trademark,
servicemark, copyright, trade secret or other proprietary right of
others. There is no pending or, to the best knowledge of the Company,
threatened action, suit proceeding or claim by any current or former employee,
consultant or agent of the Company seeking either ownership rights to any
invention or other intellectual property right or compensation from the Company
for any invention or other intellectual property right made by such employee,
consultant or agent in the course of his/her employment with the Company or
otherwise. The Disclosure Package fairly and accurately describes in
all material respects the Company’s rights with respect to the Intellectual
Property.
6
The
Company and its subsidiaries have good and marketable title in fee simple to all
real property and good and marketable title to all tangible properties and
assets described in the Disclosure Package as owned by it, in each case free and
clear of all liens, charges, claims, encumbrances or restrictions, except such
as (i) are described in the Disclosure Package or (ii) do not materially affect
the value of such property and do not interfere with the use made and proposed
to be made of such property by the Company and its subsidiaries. Any
real property and buildings held under lease by the Company and its subsidiaries
are held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and its
subsidiaries. The Company and its subsidiaries own or lease all such
properties as are necessary to its operations as now conducted or as proposed to
be conducted, except where the failure to so own or lease would not have a
Material Adverse Effect.
The
Company and its subsidiaries possess all licenses, certificates, authorizations
or permits issued by the appropriate governmental or regulatory agencies or
authorities that are necessary to enable them to own, lease and operate their
respective properties and to carry on their respective businesses as presently
conducted, except where the failure to possess such licenses, certificates,
authorization or permits would not reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such license, certificate, authority or permit which, singly or in the
aggregate, would reasonably be expected to have a Material Adverse
Effect.
Each of
the Company and its subsidiaries maintains insurance of the types and in the
amounts which it deems adequate for its business, including, but not limited to,
third-party liability and all-risk insurance, and insurance covering real and
personal property owned or leased by the Company and its subsidiaries against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and
effect.
The
Company (i) is in compliance in all material respects with any and all
applicable foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (collectively, “Environmental Laws”),
(ii) has received and is in compliance with all permits, licenses or other
approvals required of it under applicable Environmental Laws to conduct its
business and (iii) has not received notice of any actual or potential liability
for the investigation or remediation of any disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, except where such
non-compliance with Environmental Laws, failure to receive required permits,
licenses or other approvals, or liability would not, individually or in the
aggregate, have a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated by the Disclosure Package. The Company has not been named as a
"potentially responsible party" under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
7
Neither
the Company nor any of its subsidiaries has sustained since the date of the
latest audited financial statements incorporated by reference in the Disclosure
Package any loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, that is in each case
material to the Company and its subsidiaries taken as a whole, otherwise than as
set forth in the Disclosure Package. Since the respective dates as of
which information is given in the Registration Statement, the Prospectus and the
Disclosure Package, (i) there has not been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any Material Adverse
Effect, and (ii) the Company or its subsidiaries have not entered into any
material transaction or incurred any material obligation outside of the ordinary
course of business, otherwise than as set forth, or incorporated by reference,
in the Disclosure Package.
The
Shares have been duly and validly authorized by the Company and, when issued,
delivered and paid for in accordance with the terms of this Agreement and the
Purchase Agreements, will have been duly and validly issued and will be fully
paid and nonassessable and will not be subject to any statutory or contractual
preemptive rights or other rights to subscribe for or purchase or acquire any
shares of Common Stock of the Company, which have not been waived or complied
with and will conform in all material respects to the description thereof
contained in the Disclosure Package and the Prospectus and such description
conforms in all material respects to the rights set forth in the instruments
defining the same. The Warrants conform, or when issued will conform, to the
description thereof contained in the Disclosure Package and the Prospectus and
have been duly and validly authorized by the Company and upon delivery to the
Investors at the Closing Date will be valid and binding obligations of the
Company, enforceable in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights and remedies of creditors
generally or subject to general principles of equity. The Warrant Shares
initially issuable upon exercise of the Warrants conform, or when issued will
conform, to the description thereof contained in the Disclosure Package and the
Prospectus and have been duly authorized and reserved for issuance and when
issued in accordance with the terms thereof will be validly issued, fully paid
and nonassessable.
The
issuance by the Company of the Securities has been registered under the 1933 Act
and all of the Securities are freely transferable and tradable by the Investors
without restriction. No other document with respect to the
Registration Statement or document incorporated by reference in the Registration
Statement or Preliminary Prospectus has heretofore been filed with the
SEC. The “Plan of Distribution” section in the Preliminary Prospectus
permits the issuance and sale of the Securities hereunder. The
description of the Company’s capital stock set forth in the Disclosure Package,
insofar as it purports to constitute a summary of the terms of the Common Stock,
is accurate, complete and fair. Upon payment for, and receipt of, the
Securities, the Investors will have good and marketable title to the Securities
free and clear of any liens or encumbrances except those incurred by the
Investors.
8
Neither
the Company, nor any of its Affiliates, nor any Person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of the Principal Market, nor will the Company take any
action or steps that would cause the offering of the Securities to be integrated
with other offerings. Except as disclosed in the SEC Reports (as
defined below), the Company has not, in the 12 months preceding the date hereof,
received notice from the Principal Market to the effect that the Company is not
in compliance with the listing or maintenance requirements of the Principal
Market. The Company is, and has no reason to believe that it will not
in the foreseeable future continue to be, in compliance with all such listing
and maintenance requirements. The issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the Principal Market
and no stockholder approval is required for the Company to fulfill its
obligations under the Transaction Documents. The Common Stock has
been registered pursuant to Section 12(b) of the 1934 Act and is currently
listed on the Principal Market.
The
Company has filed all reports required to be filed by it under the 1934 Act,
including pursuant to Section 13(a) or 15(d) thereof, for the three (3) years
preceding the filing date of the Registration Statement and for the three (3)
year period preceding the date hereof (the foregoing materials being
collectively referred to herein as the “SEC Reports”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder, and none of the SEC Reports, when
filed, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
The
Company is in material compliance with the Xxxxxxxx-Xxxxx Act of 2002, and the
rules and regulations promulgated thereunder by all government and regulatory
authorities and agencies. 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 generally accepted
accounting principles in the United States and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance with management’s
general or specific authorization and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect thereto. The Company has
established and maintains and evaluates “disclosure controls and procedures” (as
such term is defined in Rule 13a-15 and Rule 15d-15 under the 0000 Xxx) and
“internal control over financial reporting” (as such term is defined in Rule
13a-15 and Rule 15d-15 under the 1934 Act). Such disclosure controls
and procedures are designed to ensure that material information relating to the
Company, including its consolidated subsidiaries, is made known to the Company’s
principal executive officer and principal financial officer by others within
those entities, and such disclosure controls and procedures are effective to
perform the functions for which they were established.
9
The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the SEC with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis, as
certified by the Company’s independent registered public accounting firm (with
respect to the Company’s audited financial statements), during the periods
involved (“GAAP”), except as may
be otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company as
of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments. Xxxxxx & Xxxxxx, PC, who
has audited certain financial statements of the Company, are independent public
accountants as required by the 1933 Act and the Rules and Regulations and have
been appointed by the Company’s audit committee and such audit committee is
comprised entirely of independent directors of the Board of Directors of the
Company.
Since the
date of the latest audited financial statements included within the SEC Reports,
except as specifically disclosed in the SEC Reports: (i) there has been no
event, occurrence or development that, individually or in the aggregate, has had
or could 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 required to be disclosed in filings
made with the SEC, (iii) the Company has not altered its method of accounting or
the identity of its auditors, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock, and (v) the Company has not issued any equity securities
to any officer, director or Affiliate, except pursuant to existing Company stock
option and purchase plans. “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 144. “Rule 144” means Rule
144 promulgated by the SEC pursuant to the 1933 Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
SEC having substantially the same effect as such Rule.
The
Company and its subsidiaries have timely filed all federal, state, local and
foreign income and franchise tax returns (or timely filed applicable extensions
therefore) that have been required to be filed and are not in default in the
payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto, other than any which the Company is contesting
in good faith and for which adequate reserves have been provided and reflected
in the Company’s financial statements included in the Registration Statements,
the Disclosure Package and the Prospectus. The Company does not have any tax
deficiency that has been or, to the knowledge of the Company, might be asserted
or threatened against it that would result in a Material Adverse
Effect.
The
Company is not engaged in any unfair labor practice; except for matters that
would not, individually or in the aggregate, result in a Material Adverse Effect
(i) there is (A) no unfair labor practice complaint pending or, to the Company’s
knowledge after due inquiry, threatened against the Company before the National
Labor Relations Board, and no grievance or arbitration proceeding arising out of
or under collective bargaining agreements is pending or threatened, (B) no
strike, labor dispute, slowdown or stoppage pending or, to the Company’s
knowledge after due inquiry, threatened against the Company and (C) no union
representation dispute currently existing concerning the employees of the
Company, and (ii) to the Company’s knowledge (A) no union organizing activities
are currently taking place concerning the employees of the Company and (B) there
has been no violation of any federal, state, local or foreign law relating to
discrimination in the hiring, promotion or pay of employees or any applicable
wage or hour laws concerning the employees of the Company.
10
The
Company and its subsidiaries are in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder (“ERISA”); no
“reportable event” (as defined in ERISA) has occurred with respect to any
“pension plan” (as defined in ERISA) for which the Company would have any
liability; the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any “pension plan” or (ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the “Code”); and each
“pension plan” for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
Neither
the Company nor, to the knowledge of the Company, any other Person associated
with or acting on behalf of the Company including, without limitation, any
director, officer, agent or employee of the Company or any of its subsidiaries,
has, directly or indirectly, while acting on behalf of the Company or any of its
subsidiaries (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses, or received or retained any funds,
relating to political activity; (ii) made any unlawful payment from corporate
funds to, or received or retained any unlawful funds from, foreign or domestic
government officials or employees or to or from foreign or domestic political
parties or campaigns; (iii) violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any other unlawful payment or
received or retained any other unlawful funds.
As the
time of filing of the Registration Statement, the Company was not, and the
Company on the date of this Agreement is not, an “ineligible issuer” as defined
in Rule 405 under the 1933 Act.
Without
the prior consent of the Placement Agent, the Company has not made and will not
make any offer relating to the Securities that would constitute a “free writing
prospectus” as defined in Rule 405 under the 1933 Act.
The
Company will comply with the requirements of Rules 164 and 433 under the 1933
Act applicable to any Issuer Free Writing Prospectus, including timely filing
with the SEC or retention where required and legending.
Neither
the Company, nor any director or officer thereof, is or has 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, or any criminal statute
during the term of such director or officer’s tenure with the Company, nor, to
the knowledge of the Company, prior to such tenure that is of a nature that
would be required to be disclosed in the Company’s SEC Reports pursuant to Item
103 of Regulation S-K with regard to the Company or Item 401 of Regulation S-K
with regard to the Company’s officer’s or directors. There has not
been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the SEC involving the Company. The SEC has not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company under the 1934 Act or the 1933
Act.
11
There are
no transactions, arrangements or other relationships between and/or among the
Company, any of its affiliates (as such term is defined in Rule 405 of the 0000
Xxx) and any unconsolidated entity, including, but not limited to, any
structured finance, special purpose or limited purpose entity that
could reasonably be expected to materially affect the Company's liquidity or the
availability of or requirements for its capital resources required to be
described in the Registration Statement that have not been described as
required.
Other
than as contemplated by this Agreement, neither the Company nor any
of its subsidiaries is a party to any contract, agreement or understanding with
any person that would give rise to a valid claim against the Company or the
Placement Agent for a brokerage commission, finder's fee or like payment in
connection with the offering and sale of the Securities.
The
Company is not an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an “investment company”, as such
terms are defined in the Investment Company Act of 1940, as amended (the “Investment Company
Act”).
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 Securities, (ii) sold, bid for,
purchased, or, paid any compensation for soliciting purchases of, any of the
Securities (other than for the placement agent’s placement of the Securities),
or (iii) paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
The
Company represents that the Company (i) has a non-affiliate, public common
equity float of at least $150 million or a non-affiliate, public common equity
float of at least $100 million and annual trading volume of at least three
million shares and (ii) has been subject to the 1934 Act reporting requirements
for a period of at least 36 months.
To the
Company’s knowledge, there are no affiliations or associations between (i) any
member of the Financial Industry Regulatory Authority (“FINRA”) and (ii) the
Company or any of the Company’s officers, directors or 5% or greater
securityholders or any beneficial owner of the Company’s unregistered equity
securities that were acquired from the Company at any time on or after the 180th
day immediately preceding the date either of the Registration Statements was
initially filed with the SEC, except as set forth in the Registration
Statements, the Disclosure Package and the Prospectus.
Agreements
of the Company. The Company
covenants and agrees with the Placement Agent as follows:
The
Company will not, during such period as the Prospectus is required by law to be
delivered in connection with sales of the Securities, file any amendment or
supplement to the Registration Statement, any Issuer Free Writing Prospectus or
the Prospectus, unless a copy thereof shall first have been submitted to the
Placement Agent within a reasonable period of time prior to the filing thereof
(to the extent practicable) and the Placement Agent shall not have objected
thereto in good faith.
12
Until the
earlier of the completion of the offering contemplated by this Agreement or the
termination of this Agreement, the Company will notify the Placement Agent
promptly, and will confirm such advice in writing, (i) when any post-effective
amendment to the Registration Statement becomes effective, (ii) of any request
by the SEC for amendments or supplements to the Registration Statement or the
Prospectus or for additional information, (iii) of the issuance by the SEC of
any stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose or the threat thereof, (iv) of
the happening of any event during the period mentioned in the second sentence of
Section 4(e) that in the judgment of the Company makes any statement made in the
Registration Statement, any Issuer Free Writing Prospectus or the Prospectus
untrue or that requires the making of any changes in the Registration Statement
or the Prospectus in order to make the statements therein, in the light of the
circumstances in which they are made, not misleading, and (v) of receipt by the
Company or any representative or attorney of the Company of any other
communication from the SEC relating to the Company, the Registration Statement,
any preliminary prospectus or the Prospectus or any Issuer Free Writing
Prospectus. Upon the Placement Agent’s request, prepare and furnish
as many copies as the Placement Agent may from time to time reasonably request
of an amended Prospectus or a supplement to the Prospectus that will correct any
misstatements or omissions. If at any time the SEC shall issue any
order suspending the effectiveness of the Registration Statement, the Company
will make every reasonable effort to obtain the withdrawal of such order at the
earliest possible moment. If the Company has omitted any information
from the Registration Statement pursuant to Rule 430A of the Rules and
Regulations, the Company will comply with the provisions of and make all
requisite filings with the SEC pursuant to said Rule 430A and notify the
Placement Agent promptly of all such filings. If the Company elects
to rely upon Rule 462(b) under the 1933 Act, the Company shall file a
registration statement under Rule 462(b) with the SEC in compliance with Rule
462(b) by 10:00 P.M., Eastern Standard Time, on the date of this Agreement, and
the Company shall at the time of filing either pay to the SEC the filing fee for
such Rule 462(b) registration statement or give irrevocable instructions for the
payment of such fee pursuant to the Rules and Regulations.
If
requested by the Placement Agent, the Company will furnish to the Placement
Agent, without charge, a copy of one signed copy of each of the Registration
Statement and any pre-or post-effective amendment thereto, including financial
statements and schedules, and all exhibits thereto.
The
Company will comply with all the provisions of any undertakings contained in the
Registration Statement.
From time
to time, the Company will deliver to the Placement Agent, without charge, as
many copies of the Prospectus or any amendment or supplement thereto as the
Placement Agent may reasonably request. The Company consents to the use of the
Prospectus or any amendment or supplement thereto by the Placement Agent, both
in connection with the offering or sale of the Securities and for any period of
time thereafter during which the Prospectus is required by law to be delivered
in connection therewith. If during such period of time any event shall occur
that in the judgment of the Company or counsel to the Placement Agent should be
set forth in the Prospectus in order to make any statement therein, in the light
of the circumstances under which it was made, not misleading, or if it is
necessary to supplement or amend the Prospectus to comply with law, the Company
will forthwith prepare and duly file with the SEC an appropriate supplement or
amendment thereto, and will deliver to the Placement Agent, without charge, such
number of copies of such supplement or amendment to the Prospectus as the
Placement Agent may reasonably request.
Prior to
any public offering of the Securities, the Company will cooperate with the
Placement Agent and counsel to the Placement Agent in connection with the
registration or qualification of the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Placement Agent may
request; provided, that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not now so qualified or to take any
action that would subject it to general service of process in any jurisdiction
where it is not now so subject.
13
During
the period of two years commencing on the date hereof, if requested by the
Placement Agent, the Company will furnish to the Placement Agent copies of
such financial statements and other periodic and special reports as the Company
may from time to time distribute generally to the holders of any class of its
capital stock, and will furnish to the Placement Agent a copy of each annual or
other report it shall be required to file with the SEC, the Principal Market or
FINRA.
If
required by the Rules and Regulations, as soon as practicable, but in any event
not later than 18 months after the effective date of the Registration Statement
(as defined in Rule 158(c) under the Securities Act), the Company will make
generally available to holders of its securities and deliver to the Placement
Agent, an earnings statement of the Company (which need not be audited) that
will satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
of the Rules and Regulations..
Whether
or not the transactions contemplated by this Agreement are consummated or this
Agreement is terminated, the Company will pay or reimburse if paid by the
Placement Agent all costs and expenses incident to the performance of the
obligations of the Company under this Agreement and in connection with the
transactions contemplated hereby, including but not limited to costs and
expenses of or relating to (i) the preparation, printing and filing of the
Registration Statement and exhibits to it, each preliminary prospectus, the
Prospectus and any amendment or supplement to any of the foregoing, (ii) the
preparation and delivery of certificates representing the Securities, (iii)
furnishing (including costs of shipping and mailing) such copies of the
Registration Statement, the Prospectus and any preliminary prospectus, and all
amendments and supplements thereto, as may be requested by the Placement Agent
for use in connection with the offering and sale of the Securities, (iv) the
listing of the Shares and the Warrant Shares on the Principal Market, (v) any
filings required to be made by the Placement Agent or the Company with FINRA,
and the reasonable fees and disbursements of counsel for the Placement Agent in
connection therewith, (vi) the registration or qualification of the Securities
for offer and sale under the securities or Blue Sky laws of applicable
jurisdictions, including the fees, disbursements and other charges of counsel to
the Placement Agent in connection therewith, and the preparation and printing of
preliminary, supplemental and final Blue Sky memoranda, (vii) fees,
disbursements and other charges of counsel to the Company and its independent
registered public accounting firm, (viii) the transfer agent for the Shares, and
(ix) any travel expenses of the Company’s officers, directors and employees and
any other expenses of the Company in connection with attending or hosting
meetings with prospective Investors. In addition, whether or not the
transactions contemplated by this Agreement are consummated or this Agreement is
terminated, the Company shall reimburse the Placement Agent for up to $50,000 of
its reasonable expenses (including fees and disbursements of counsel) incurred
in connection with the transactions contemplated by the Transaction
Documents.
The
Company shall reserve and keep available at all times a sufficient number of
shares of Common Stock for the purpose of enabling the Company to issue the
Warrant Shares.
The
Company will not at any time, directly or indirectly, take any action designed
or that might reasonably be expected to cause or result in, or that will
constitute, stabilization of the price of the shares of Common Stock to
facilitate the sale or resale of any of the Securities.
14
The
Company will apply the net proceeds from the offering and sale of the Securities
to be sold by the Company in the manner set forth in the Preliminary Prospectus
under “Use of Proceeds” and in a manner such that the Company will not become an
“investment company” as such term is defined in the Investment Company
Act.
Further
Agreements.
The
Company shall, on or before 8:30 a.m., New York City Time, on the business day
following the date hereof, issue a press release disclosing all material terms
of the transactions contemplated hereby in compliance with applicable SEC
rules. On or before 8:30 a.m., New York City Time, on the first
business day following the execution and delivery of this Agreement, the Company
shall file a Current Report on Form 8-K describing the terms of the transactions
contemplated by the Transaction Documents in the form required by the 1934 Act,
and attaching the form of this Agreement as an exhibit to such filing (including
all attachments, the “8-K
Filing”). The Company shall not, and shall cause each of its
officers, directors, employees and agents, not to, provide the Placement Agent
with any material, nonpublic information regarding the Company from and after
the filing of the press release referred to in the first sentence of this
Section without the express written consent of the Placement
Agent. Subject to the foregoing, neither the Company nor the
Placement Agent shall issue any press releases or any other public statements
with respect to the transactions contemplated hereby nor shall the Company
disclose the name of the Placement Agent in any filing, announcement, release or
otherwise without the Placement Agent’s consent; provided, however, that the
Company shall be entitled, without the prior approval of the Placement Agent, to
make any press release or other public disclosure with respect to such
transactions (i) in substantial conformity with the 8-K Filing and
contemporaneously therewith and (ii) as is required by applicable law and
regulations, including the applicable rules and regulations of the Principal
Market. The Company acknowledges that the Placement Agent may place
advertisements in mailings and financial and other newspapers and journals at
the Placement Agent’s expense describing its services to the Company for any
publicly announced or completed transaction and use the Company’s
logo.
Beginning
on the date hereof and continuing for a period of 90 days after the date of the
Prospectus (the “Lock-Up Period”), the
Company will not (1) offer to sell, hypothecate, pledge, announce the intention
to sell, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act, with
respect to, any shares of Common Stock, any securities convertible into or
exercisable or exchangeable for Common Stock; (2) file or cause to become
effective a registration statement under the Securities Act relating to the
offer and sale of any shares of Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock except for a registration statement
on Form S-8 relating to employee benefit plans or (3) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (i), (ii) or (iii) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise, without the prior
written consent of the Placement Agent (which consent may be withheld in its
sole discretion), other than: (i) the Securities, (ii) the issuance of employee
stock options or restricted stock awards pursuant to equity incentive plans
described in the Registration Statements (excluding the exhibits thereto), the
Disclosure Package and the Prospectus, (iii) issuances of Common Stock upon the
exercise of options or warrants (either upon current terms thereof or upon
subsequently amended terms but excluding a general repricing) disclosed as
outstanding in the Registration Statements (excluding the exhibits thereto), the
Disclosure Package and the Prospectus or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of the date of this
Agreement; or (iv) agrees that all such shares remain subject to restrictions
substantially similar to those contained in this Section 5(b). Notwithstanding
the foregoing, for the purpose of allowing the Placement Agent to comply with
FINRA Rule 2711(f)(4), if (1) during the last 17 days of the Lock-Up Period, the
Company releases earnings results or publicly announces other material news or a
material event relating to the Company occurs or (2) prior to the expiration of
the Lock-Up Period, the Company announces that it will release earnings results
during the 16 day period beginning on the last day of the Lock-Up Period, then
in each case the Lock-Up Period will be extended until the expiration of the 18
day period beginning on the date of release of the earnings results or the
public announcement regarding the material news or the occurrence of the
material event, as applicable, unless the Placement Agent waives, in writing,
such extension. Without the prior written consent of the Placement Agent, the
Company agrees not to accelerate the vesting of any option or warrant or the
lapse of any repurchase right prior to the expiration of the Lock-Up
Period.
15
Conditions
of the Issuance and Sale of the Securities and the Obligations of the Placement
Agent. The issuance and sale
of the Securities pursuant to the Purchase Agreements and the obligations of the
Placement Agent hereunder are subject to the following
conditions:
All
filings required by Rule 424 and Rule 430A of the Rules and Regulations shall
have been made. If the Company has elected to rely upon Rule 462(b),
the registration statement filed under Rule 462(b) shall have become effective
by 10:00 p.m., Eastern Standard Time, on the date of this
Agreement.
(i) No
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall be pending or threatened
by the SEC, (ii) no order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Securities under the
securities or Blue Sky laws of any jurisdiction shall be in effect and no
proceeding for such purpose shall be pending before or threatened or
contemplated by the SEC or the authorities of any such jurisdiction, (iii) any
request for additional information on the part of the staff of the SEC or any
such authorities shall have been complied with to the satisfaction of the staff
of the SEC or such authorities, (iv) after the date hereof no amendment or
supplement to the Registration Statement or the Prospectus shall have been filed
unless a copy thereof was first submitted to the Placement Agent and the
Placement Agent does not object thereto in good faith, and (v) the Placement
Agent shall have received certificates, dated the Closing Date and signed by the
Chief Executive Officer and the Chief Financial Officer of the Company (who may,
as to proceedings threatened, rely upon the best of their information and
belief), to the effect of clauses (i), (ii) and (iii) of this
paragraph.
Each of
the representations and warranties of the Company contained herein shall be true
and correct in all respects (in the case of any representation or warranty
containing a materiality or Material Adverse Effect qualification) or in all
material respects (in the case of any representation or warranty not containing
a materiality or Material Adverse Effect qualification) at the Closing Date and
all covenants and agreements contained herein to be performed on the part of the
Company and all conditions contained herein to be fulfilled or complied with by
the Company at or prior to the closing date for the transactions contemplated by
the Transaction Documents (the “Closing Date”) shall
have been duly performed, fulfilled or complied with.
16
The
Placement Agent shall have received an opinion, dated the Closing Date,
satisfactory in form and substance to the Placement Agent and counsel for the
Placement Agent, from Xxxx Xxxxxxx, counsel to the Company, in the form attached
hereto as Exhibit
B.
The
Placement Agent shall have received on the date of the Initial Time of Sale, a
letter dated the date hereof, (the “Original Letter”),
addressed to the Placement Agent and in form and substance reasonably
satisfactory to the Placement Agent and its counsel, from Xxxxxx & Xxxxxx,
PC, which letter shall cover, without limitation, the various financial
disclosures, if any, contained in the Disclosure Package and shall contain
statements and information of the type customarily included in accountants’
“comfort letters” to underwriters, delivered according to Statement of Auditing
Standards No. 72 and Statement of Auditing Standard No. 100 (or successor
bulletins), with respect to the audited and unaudited financial statements and
certain financial information contained in or incorporated by reference into the
Registration Statements, the Disclosure Package and the Prospectus.
At the
Closing Date, the Placement Agent shall have received from Xxxxxx & Xxxxxx,
PC a letter (the “Bring-Down
Letter”), dated the
Closing Date, addressed to the Placement Agent, which shall confirm, as of the
date of the Bring-Down Letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Disclosure Package and the Prospectus, as the case
may be, as of a date not more than three (3) business days prior to the date of
the Bring-Down Letter) that on the basis of a review in accordance with the
procedures set forth in the Original Letter, nothing has come to their attention
during the period from the date of the Original Letter referred to in the prior
sentence to a date (specified in the letter) not more than three days prior to
the Closing Date which would require any change in the Original Letter if it
were required to be dated and delivered at the Closing Date.
At the
Closing Date, there shall be furnished to the Placement Agent a certificate,
dated the date of its delivery, executed by each of the Chief Executive Officer
and the Chief Financial Officer of the Company, in form and
substance satisfactory to the Placement Agent, to the effect
that:
they have
reviewed the Registration Statements, the Disclosure Package, any Permitted Free
Writing Prospectus and the Prospectus, and any amendments thereof or supplements
thereto (and any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Disclosure Package and the Prospectus), and
(A) (i) each part of the Registration Statements and any amendments thereof do
not and did not contain when the Registration Statements (or such amendments)
became effective, any untrue statement of a material fact or omit to state, and
did not omit to state when the Registration Statements (or such amendments)
became effective, any material fact required to be stated therein or necessary
to make the statements therein not misleading, (ii) as of the Initial Time of
Sale, neither the Disclosure Package nor any individual Issuer Free Writing
Prospectus, when considered together with the Disclosure Package, contained any
untrue statement of material fact or omits to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading and (iii) the Prospectus, as amended or supplemented,
does not contain, as of the Closing Date, and did not contain, as of its issue
date, any untrue statement of material fact or omit to state and did not omit to
state as of such date, a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(B) since the Initial Time of Sale, there has occurred no event required to be
set forth in an amendment or supplement to the Registration Statements, the
Disclosure Package or the Prospectus which has not been so set forth and there
has been no document required to be filed under the Exchange Act that upon such
filing would be deemed to be incorporated by reference in to the Disclosure
Package and into the Prospectus that has not been so filed;
17
no stop
order suspending the effectiveness of the Registration Statements or any part
thereof or any amendment thereof or the qualification of the Securities for
offering or sale, nor suspending or preventing the use of the Disclosure
Package, the Prospectus or any Issuer Free Writing Prospectus shall have been
issued, and no proceedings for that purpose or pursuant to Section 8A under the
Securities Act shall be pending or to their knowledge, threatened by the SEC or
any state or regulatory body;
Each of
the representations and warranties of the Company contained in this Agreement
was, when originally made, and is, at the time such certificate is delivered,
true and correct in all material respects; and
Each of
the covenants required to be performed by the Company herein on or prior to the
date of such certificate has been duly, timely and fully performed and each
condition herein required to be satisfied or fulfilled on or prior to the date
of such certificate has been duly, timely and fully satisfied or
fulfilled.
On the
Closing Date, the Company shall have furnished to the Placement Agent a
Secretary’s Certificate of the Company certifying the Company’s Certificate of
Incorporation, bylaw and resolutions of the Company’s Board of Directors
approving the transaction contemplated by this Agreement.
The
Securities shall be qualified for sale in such jurisdictions as the Placement
Agent may reasonably request and each such qualification shall be in effect and
not subject to any stop order or other proceeding on the Closing
Date.
No action
shall have been taken and no law, statute, rule, regulation or order shall have
been enacted, adopted or issued by any governmental agency or body which would
prevent the issuance or sale of the Securities or materially and adversely
affect or potentially materially and adversely affect the business or operations
of the Company; and no injunction, restraining order or order of any other
nature by any federal or state court of competent jurisdiction shall have been
issued which would prevent the issuance or sale of the Securities or materially
and adversely affect or potentially materially and adversely affect the business
or operations of the Company.
Prior to
the Closing Date, the Shares and Warrant Shares shall have been approved for
listing on the Principal Market.
The
Company shall have entered into the Purchase Agreements with each of the
Investors, and such agreements shall be in full force and effect on the Closing
Date.
On or
after the date hereof there shall not have occurred any of the
following: (i) additional material governmental restrictions, not in
force and effect on the date hereof, shall have been imposed upon trading in
securities generally or minimum or maximum prices shall have been generally
established on any national securities exchange or in the over-the-counter
market, or trading in securities generally shall have been suspended on any
national securities exchange or in the over the counter market, or a general
banking moratorium shall have been established by federal or New York
authorities, (ii) a suspension or material limitation in trading in securities
generally on the Principal Market, (iii) a suspension or material limitation in
trading in the Company’s securities on the Principal Market, (iv) an outbreak of
major hostilities or other national or international calamity or any substantial
change in political, financial or economic conditions shall have occurred or
shall have accelerated or escalated to such an extent, as, in the sole judgment
of the Placement Agent, to affect materially and adversely the marketability of
the Securities or (v) there shall be any action, suit or proceeding pending or
threatened, or there shall have been any development or prospective development
involving particularly the business or properties or securities of the Company
or any of its subsidiaries or the transactions contemplated by this Agreement,
which, in the sole judgment of the Placement Agent, has materially and adversely
affected the Company’s business or earnings and makes it impracticable or
inadvisable to consummate the transactions contemplated by the Transaction
Documents.
18
Indemnification.
The
Company will indemnify and hold harmless the Placement Agent, the directors,
officers, employees and agents of the Placement Agent and each person, if any,
who controls any Placement Agent within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act, from and against any and all losses, claims,
liabilities, expenses and damages (including any and all investigative, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted), to
which they, or any of them, may become subject under the 1933 Act, the 1934 Act
or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, liabilities, expenses or damages (i)
arise out of or are based on any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus, the Registration
Statement, the Prospectus or any amendment or supplement thereto, or any Issuer
Free Writing Prospectus, “any issuer information” filed or required to be filed
pursuant to Rule 433(d) under the 1933 Act or any “road show” (as defined in
Rule 433 under the 0000 Xxx) not constituting an Issuer Free Writing Prospectus
(a “Non-Prospectus
Road Show”) or the omission or alleged omission to state, in the case of
the Registration Statement, a material fact required to be stated in it or
necessary to make the statements in it not misleading, and in the case of the
Prospectus, any Issuer Free Writing Prospectus, any “issuer information” filed
or required to be filed pursuant to Rule 433(d) under the 1933 Act or a
Non-Prospectus Road Show, a material fact required to be stated in it or
necessary to make the statements in it not misleading in the light of the
circumstances in which they were made, or (ii) arise out of or are based in
whole or in part on any inaccuracy in the representations and warranties of the
Company contained herein or any failure of the Company to perform its
obligations hereunder or under law in connection with the transactions
contemplated hereby; provided, however, that the Company
will not be liable to the extent that such loss, claim, liability, expense or
damage arises from the sale of the Securities to any Investor and is based on an
untrue statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information relating to the Placement Agent
furnished in writing to the Company by the Placement Agent expressly for
inclusion in any preliminary prospectus, the Registration Statement, the
Prospectus or any Issuer Free Writing Prospectus. The Company
acknowledges that the statements set forth in the paragraphs under the heading
“Plan of Distribution” in the Prospectus constitute the only information
relating to the Placement Agent furnished in writing to the Company by the
Placement Agent expressly for inclusion in any preliminary prospectus, the
Registration Statement or the Prospectus. This indemnity agreement will be in
addition to any liability that the Company might otherwise have.
The
Placement Agent will indemnify and hold harmless the Company, each director of
the Company, each officer of the Company who signs the Registration Statement,
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20 of the 1934 Act, from and against any and all
losses, claims, liabilities, expenses and damages (including any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
1933 Act, the 1934 Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, liabilities, expenses
or damages arise out of or are based on any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement, the Prospectus or any amendment or supplement thereto,
or any Issuer Free Writing Prospectus, “any issuer information” filed or
required to be filed pursuant to Rule 433(d) under the 1933 Act or any
Non-Prospectus Road Show or the omission or alleged omission to state, in the
case of the Registration Statement, a material fact required to be stated in it
or necessary to make the statements in it not misleading, and in the case of the
Prospectus, any Issuer Free Writing Prospectus, any “issuer information” filed
or required to be filed pursuant to Rule 433(d) under the 1933 Act or a
Non-Prospectus Road Show, a material fact required to be stated in it or
necessary to make the statements in it not misleading in the light of the
circumstances in which they were made, in each case to the extent, but only to
the extent, that such losses, claims, liabilities, expenses or damages arise out
of or are based on any untrue statement or omission or alleged untrue statement
or omission made in reliance on and in conformity with information relating to
such Placement Agent furnished in writing to the Company by such Placement Agent
expressly for use in any preliminary prospectus, the Registration Statement, the
Prospectus or any Issuer Free Writing Prospectus. The Company
acknowledges that the statements set forth in the paragraphs under
the heading “Plan of Distribution” in the Prospectus constitute the only
information relating to the Placement Agent furnished in writing to the Company
by the Placement Agent expressly for use in any preliminary prospectus, the
Registration Statement, the Prospectus or any Issuer Free Writing
Prospectus. This indemnity will be in addition to any liability that
the Placement Agent might otherwise have. Notwithstanding the foregoing, in no
case shall the Placement Agent’s total liability under this Section 7(b) exceed
the amount of the Fee received by the Placement Agent pursuant to this
Agreement.
19
Any party
that proposes to assert the right to be indemnified under this Section 7 shall,
promptly after receipt of notice of commencement of any action against such
party in respect of which a claim is to be made against an indemnifying party or
parties under this Section 7, notify each such indemnifying party in writing of
the commencement of such action, enclosing with such notice a copy of all papers
served, but the omission so to notify such indemnifying party will not relieve
it from any liability that it may have to any indemnified party under the
foregoing provisions of this Section 7. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and, to
the extent that it elects by delivering written notice to the indemnified party
after receiving notice of the commencement of the action from the indemnified
party, jointly with any other indemnifying party similarly notified, to assume
the defense of the action, with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying party
will not be liable to the indemnified party for any legal or other expenses
except as provided below and except for the reasonable costs of investigation
incurred by the indemnified party in connection with the defense. The
indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (i) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (ii)
the indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(iii) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (iv) the indemnifying
party has not in fact employed counsel reasonably satisfactory to the
indemnified party to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action, in each of which cases
the reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. All such fees,
disbursements and other charges will be reimbursed by the indemnifying party
promptly as they are incurred. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement or
compromise of, or consent to the entry of judgment with respect to, any pending
or threatened action or claim in respect of which any indemnified party is or
could have been a party and indemnity or contribution could have been sought
hereunder by such indemnified party unless such settlement, compromise or
judgment (i) includes an unconditional release of such indemnified party from
all liability on any claims that are the subject matter of such action and (ii)
does not include a statement as to, or an admission of, fault, culpability or a
failure to act by or on behalf of an indemnified party. An indemnifying party
will not be liable for any settlement of any action or claim effected without
its written consent (which consent will not be unreasonably withheld or
delayed).
20
If the
indemnification provided for in this Section 7 is applicable in accordance with
its terms but for any reason is held to be unavailable to or insufficient to
hold harmless an indemnified party under paragraphs (a), (b) and (c) of this
Section 7 in respect of any losses, claims, liabilities, expenses and damages
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company from persons other than the Placement Agent, such as
persons who control the Company within the meaning of the 1933 Act, officers of
the Company who signed the Registration Statement and directors of the Company,
who also may be liable for contribution) by such indemnified party as a result
of such losses, claims, liabilities, expenses and damages (or actions in respect
thereof) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Placement Agent, on
the other hand. The relative benefits received by the Company, on the one hand,
and the Placement Agent, on the other hand, shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses other than the Fee) received by the Company bear to the total Fee
received by the Placement Agent pursuant to this Agreement. If, but
only if, the allocation provided by the foregoing sentence is not permitted by
applicable law, the allocation of contribution shall be made in such proportion
as is appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one hand,
and the Placement Agent, on the other hand, with respect to the statements or
omissions that resulted in such loss, claim, liability, expense or damage, or
action in respect thereof, as well as any other relevant equitable
considerations with respect to such offering. Such relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Placement Agent, the relative
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Company and the Placement Agent agree that it would not be just and equitable if
contributions pursuant to this Section 7(d) were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss claim, liability, expense or damage
(or action in respect thereof) referred to above in this Section 7(d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7(d), in no
case shall the Placement Agent be required to contribute any amount in excess of
the Fee received by the Placement Agent pursuant to this
Agreement. No person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 0000 Xxx) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7(d), any person who controls a
party to this Agreement within the meaning of the 1933 Act will have the same
rights to contribution as that party, and each officer of the Company who signed
the Registration Statement will have the same rights to contribution as the
Company, subject in each case to the provisions hereof. Any party entitled to
contribution, promptly after receipt of notice of commencement of any action
against any such party in respect of which a claim for contribution may be made
under this Section 7(d), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 7(d). No party will be liable
for contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
21
The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company contained in this Agreement shall
remain operative and in full force and effect regardless of (i) any
investigation made by or on behalf of the Placement Agent, (ii) acceptance by
the Investors of any of the Securities and payment therefor, or (iii) any
termination of this Agreement.
Notices.
Notice given pursuant to
any of the provisions of this Agreement shall be in writing and, unless
otherwise specified, shall be mailed or delivered (a) if to the Company, at the
office of the Company, One Xxxxx Xxxxx Xxxxxx Xxxx, Xxxxx 000 Xxxxx Xxxx, Xxxxx
00000 Attention: Chief Executive Officer, with a copy to Xxxx Xxxxxxx, 000 Xxxxx
Xxxx, Xxxxx 00, Xxxxxxx, Xxxxx 00000, or (b) if to the Placement Agent, at the
offices of the Placement Agent, 00000 Xxx Xxxxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxxxx 00000, Attention: Managing Director, with a copy to
Xxxxxxx X. Hedge, Esq., Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, 000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000. Any such notice
shall be effective only upon receipt. Any notice under Section 8 may
be made by facsimile or telephone, but if so made shall be subsequently
confirmed in writing.
No
Fiduciary Relationship. Notwithstanding any
preexisting relationship, advisory or otherwise, between the parties or any oral
representations or assurances previously or subsequently made by the Placement
Agent, the Company acknowledges and agrees that (i) the purchase and sale of the
Securities pursuant to this Agreement and the Purchase Agreements (including the
determination of the terms of the offering of the Securities) is an arm’s-length
commercial transaction between the Company and the several Investors,
(ii) the Placement Agent has not assumed an advisory or fiduciary
responsibility in favor of the Company with respect to the offering contemplated
hereby or the process leading thereto (irrespective of whether the Placement
Agent has advised or is currently advising the Company on other matters) or any
other obligation to the Company except the obligations expressly set forth in
this Agreement, (iii) the Placement Agent and its Affiliates may be engaged in a
broad range of transactions that involve interests that differ from those of the
Company and have no obligation to disclose or account to the Company for any of
such differing interests, and (iv) the Company has consulted its own legal, tax,
accounting and financial advisors to the extent it deemed appropriate. The
Company hereby agrees that it will not claim that the Placement Agent has
rendered advisory services of any nature or respect, or owe a fiduciary or
similar duty to the Company, in connection with such transaction or the process
leading thereto.
22
Miscellaneous.
This
Agreement has been and is made solely for the benefit of the Placement Agent,
the Company, and the controlling persons, directors and officers referred to in
Section 7, and their respective successors and assigns, and no other person
shall acquire or have any right under or by virtue of this
Agreement.
This
Agreement supersedes all prior agreements and understandings (whether written or
oral) between the Company and the Placement Agent with respect to the subject
matter hereof. This Agreement may be amended upon the mutual written
agreement of the Company and the Placement Agent.
The
obligations of the Placement Agent hereunder may be terminated by the Placement
Agent, in its sole discretion, by notice given to the Company prior to the
payment and delivery of the Securities if, prior to such time, (i) any of the
events described in Sections 6(b)(i), 6(b)(ii), or 6(m) have occurred and/or
(ii) the Securities shall have not been qualified for sale in such jurisdictions
as the Placement Agent may reasonably request (subject to Section 4(f)
hereof) and each such qualification shall not be in effect and subject to any
stop order or other proceeding on the Closing Date.
This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and to be performed entirely
within such State.
This
Agreement may be signed in two or more counterparts with the same effect as if
the signatures thereto and hereto were upon the same instrument.
In case
any provision in this Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Each of
the Company and the Placement Agent hereby waives any right it may have to a
trial by jury in respect of any claim based upon or arising out of this
Agreement or the transactions contemplated hereby.
[Remainder
of Page Intentionally Left Blank; Signature Page Follows]
23
Please
confirm that the foregoing correctly sets forth the agreement between the
Company and the Placement Agent.
|
Very
truly yours,
|
|||||
|
HYPERDYNAMICS
CORPORATION
|
|||||
|
By:
|
/s/
Xxxx Xxxxx
|
||||
|
Name:
Xxxx Xxxxx
|
|||||
|
Title: President
|
|||||
|
Confirmed
as of the date first above mentioned:
|
|||||
|
X.X.
XXXXXX & COMPANY, INC.
|
|||||
|
By:
|
/s/
Xxxxxxxxx X. Xxxxxxx
|
||||
|
Name:
Xxxxxxxxx X. Xxxxxxx
|
|||||
|
Title: Managing
Director
|
|||||
24
