PLACEMENT AGENCY AGREEMENT
Exhibit 1.1
October 12, 2023
00000 Xxxxxx Xxxx Xxxx
Eden Prairie, Minnesota 55344
Attn: Xxxxxx Xxxxxxxxx, Xx., Chief Executive Officer
Dear Xx. Xxxxxxxxx:
This letter agreement (the “Agreement”) constitutes the agreement between Lake Street Capital Markets, LLC and Maxim Group LLC, as placement agents (each a “Placement Agent” and,
collectively, the “Placement Agents”) and Nuwellis, Inc., a Delaware corporation (together with its subsidiaries, the “Company”), that Placement Agents shall serve as exclusive placement agents for the Company, on a “reasonable best
efforts” basis, for the proposed placement to certain purchasers (the “Purchasers”) of up to an aggregate of 150,000 units (each a “Unit” and collectively, the “Units”), with each Unit consisting of (A) one share (each a “Share”
and collectively, the “Shares”) of the Company’s Series J Convertible Redeemable Preferred Stock, par value $0.0001 per share (the “Series J Preferred Stock”), (B) one warrant (each a “Warrant” and collectively, the “Warrants”)
to purchase one-half of one share of the Series J Preferred Stock (the “Warrant Shares”) exercisable immediately and expiring three years after the date of issuance at an exercise price of $7.50 per one-half of one share of the Series J
Preferred Stock. The Units and the securities included therein (i.e., the Shares, the Warrants, the Warrant Shares, the shares of Series J Preferred Stock which may be issued as dividends on the Series J Preferred Stock and shares of common stock of
the Company, par value $0.0001 per share (“Common Stock”)) underlying the Series J Preferred Stock are referred to herein as the “Securities.” The documents executed and delivered by the Company and the Purchasers in connection with the
Offering (as defined below), including, without limitation, a securities purchase agreement (the “Purchase Agreement”), shall be collectively referred to herein as the “Transaction Documents.” The purchase price to the Purchasers for
each Unit is $15.00. The Placement Agents may retain other brokers or dealers to act as sub-agents or selected-dealers on its behalf in connection with the Offering.
Notwithstanding anything herein to the contrary, in the event that the Placement Agents determine that any of the terms provided for hereunder do not comply with a rule of the Financial Industry
Regulatory Authority (“FINRA”), including but not limited to FINRA Rule 5110, then the Company shall agree to amend this Agreement in writing upon the request of the Placement Agents to comply with any such rules; provided that any such
amendments shall not provide for terms that are less favorable to the Company than the terms of this Agreement.
Section 1. Agreement to Act as Placement Agents.
(a) On the basis of the representations, warranties and agreements of the Company herein contained, and subject to all the terms and conditions of this Agreement, the Placement Agents shall be the
exclusive placement agents in connection with the offering and sale by the Company of the Securities pursuant to the Company’s registration statement on Form S-1 (File No. 333-274610) (and including any registration statement prepared and filed by
the Company in accordance with Rule 462(b) pursuant to the Securities Act) (the “Registration Statement”), with the terms of such offering (the “Offering”) to be subject to market conditions and negotiations between the Company, the
Placement Agents and the prospective Purchasers. The Placement Agents will act on a reasonable best efforts basis and the Company agrees and acknowledges that there is no guarantee of the successful placement of the Securities, or any portion
thereof, in the prospective Offering. Under no circumstances will the Placement Agents or any of their “Affiliates” (as defined below) be obligated to underwrite or purchase any of the Securities for its own account or otherwise provide any
financing. The Placement Agents shall act solely as the Company’s agent and not as principal. The Placement Agents shall have no authority to bind the Company with respect to any prospective offer to purchase the Securities and 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. Subject to the terms and conditions hereof, payment of the purchase price for, and delivery of, the Securities shall be made at the closing
(the “Closing” and the date on which the Closing occurs, the “Closing Date”). The Closing shall occur via “Delivery Versus Payment”/”Receipt Versus Payment”, i.e., on the Closing Date, the Company shall issue the Shares directly to the
account designated by the Placement Agents and, upon receipt of such Shares, the Placement Agents shall electronically deliver such Shares to the applicable Purchaser and payment shall be made by the Placement Agents (or their clearing firm) by wire
transfer to the Company, and delivery of the Warrants shall be delivered via The Depository Trust Company Deposit or Withdrawal at Custodian system for the account of the applicable Purchaser as set forth in the Purchase Agreement. As compensation
for services rendered, the Company shall pay to the Placement Agents the fees and expenses set forth below:
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(i)
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a cash fee equal to eight percent (8.0%) of the gross proceeds received by the Company from the sale of the Units at the Closing; and
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(ii)
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subject to compliance with FINRA Rule 5110(f)(2)(D), the Company also agrees to reimburse the Placement Agents for all travel and other out-of-pocket expenses, including the reasonable fees, costs and
disbursements of its legal counsel, in an amount not to exceed an aggregate of $100,000.00. The Company will reimburse the Placement Agents directly out of the Closing of the Placement. In the event the Offering is terminated, the Placement
Agents will only be entitled to the reimbursement of out-of-pocket accountable expenses actually incurred in accordance with FINRA Rule 5110(f)(2)(C).
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The Placement Agents reserve the right to reduce any item of compensation or adjust the terms thereof as specified herein in the event that a determination shall be made by FINRA to the effect that
the Placement Agents’ aggregate compensation is in excess of FINRA Rules or that the terms thereof require adjustment.
(b) The Placement Agents’ engagement hereunder shall become effective on the date hereof and shall continue until the earlier of (i) the Closing Date and (ii) March 6, 2024 (the “Termination Date”).
Notwithstanding anything to the contrary contained herein, the provisions concerning confidentiality, indemnification and contribution contained herein and the Company’s obligations contained in the indemnification provisions will survive any
expiration or termination of this Agreement, and the Company’s obligation to pay fees actually earned and payable and to reimburse expenses actually incurred and reimbursable pursuant to Section 1 hereof and which are permitted to be
reimbursed under the FINRA Rules, will survive any expiration or termination of this Agreement. All such fees and reimbursements due shall be paid to the Placement Agents on or before the Termination Date (in the event such fees and reimbursements
are earned or owed as of the Termination Date) or upon the closing of the Offering or any applicable portion thereof (in the event such fees are due pursuant to the terms of Section 1 hereof).
(c) Nothing in this Agreement shall be construed to limit the ability of the Placement Agents or their Affiliates to pursue, investigate, analyze, invest in, or engage in investment banking,
financial advisory or any other business relationship with Persons (as defined below) other than the Company. As used herein (i) “Persons” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint
venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind and (ii) “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or
is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”).
Section 2. Representations, Warranties and Covenants of the Company. The Company hereby represents, warrants and covenants to the Placement Agents as of the
date hereof, and as of the Closing Date, unless such representation, warranty or agreement specifies a different date or time, as follows:
(a) Securities Law Filings. The Company has filed with the Securities and Exchange Commission (the “Commission”) the Registration Statement under the Securities Act, which was filed on
September 21, 2023, as amended on September 29, 2023 and October 6, 2023, and declared effective on Septembr 29, 2023 for the registration of the Securities under the Securities Act. Following the determination of pricing among the Company and the
prospective Purchasers introduced to the Company by Placement Agents, the Company will file with the Commission pursuant to Rules 430A and 424(b) under the Securities Act, and the rules and regulations (the “Rules and Regulations”) of the
Commission promulgated thereunder, a final prospectus relating to the placement of the Securities, their respective pricings and the plan of distribution thereof and will advise the Placement Agents of all further information (financial and other)
with respect to the Company required to be set forth therein. Such registration statement, at any given time, including the exhibits thereto filed at such time, as amended at such time, is hereinafter called the “Registration Statement”; such
prospectus in the form in which it appears in the Registration Statement at the time of effectiveness, is hereinafter called the “Preliminary Prospectus”; and the final prospectus, in the form in which it will be filed with the Commission
pursuant to Rules 430A and/or 424(b) (including the Preliminary Prospectus as it may be amended or supplemented) is hereinafter called the “Final Prospectus.” The Registration Statement at the time it originally became effective is hereinafter
called the “Original Registration Statement.” Any reference in this Agreement to the Registration Statement, the Original Registration Statement, the Preliminary Prospectus or the Final Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein (the “Incorporated Documents”), if any, which were or are filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), at any given time, as the case may be; and any
reference in this Agreement to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement, the Original Registration Statement, the Preliminary Prospectus or the Final Prospectus shall be deemed to refer to and include
the filing of any document under the Exchange Act after the date of this Agreement, or the issue date of the Preliminary Prospectus or the Final Prospectus, as the case may be, deemed to be incorporated therein by reference. All references in this
Agreement to financial statements and schedules and other information which is “contained,” “included,” “described,” “referenced,” “set forth” or “stated” in the Registration Statement, the Preliminary Prospectus or the Final Prospectus (and all
other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which is or is deemed to be incorporated by reference in the Registration Statement, the Preliminary Prospectus or
the Final Prospectus, as the case may be. As used in this paragraph and elsewhere in this Agreement, “Time of Sale Disclosure Package” means the Preliminary Prospectus, the Transaction Documents, the final terms of the Offering provided to the
Purchasers (orally or in writing), and any issuer free writing prospectus as defined in Rule 433 under the Securities Act (each, an “Issuer Free Writing Prospectus”), if any, that the parties hereto shall hereafter expressly agree in writing
to treat as part of the Time of Sale Disclosure Package. The term “any Prospectus” shall mean, as the context requires, the Preliminary Prospectus, the Final Prospectus and any supplement to either. The Company has not received any notice that
the Commission has issued or intends to issue a stop order suspending the effectiveness of the Registration Statement or the use of the Preliminary Prospectus or the Final Prospectus or intends to commence a proceeding for any such purpose.
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(b) Assurances. The Original Registration Statement, as amended (and any further documents to be filed with the Commission) contains all exhibits and schedules as required by the Securities
Act. Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in all material respects with the Securities Act and the applicable Rules and Regulations and did not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Final Prospectus, as of its date, complied or will comply in all material respects with the
Securities Act and the applicable Rules and Regulations. The Final Prospectus, as amended or supplemented, did not and will not contain as of the date thereof any untrue statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they were made, not misleading. No post-effective amendment to the Registration Statement reflecting any facts or events arising after the date thereof which represent,
individually or in the aggregate, a fundamental change in the information set forth therein is required to be filed with the Commission. Except for this Agreement and the Transaction Documents, there are no documents required to be filed with the
Commission in connection with the transaction contemplated hereby that (i) have not been filed as required pursuant to the Securities Act or (ii) will not be filed within the requisite time period under the Rules and Regulations. Except for this
Agreement and the Transaction Documents, there are no contracts or other documents required to be described in the Final Prospectus, or to be filed as exhibits or schedules to the Registration Statement, which have not been described or filed as
required. The foregoing shall not apply to statements in, or omissions from, any such document made in reliance upon, and in conformity with, information furnished to the Company by the Placement Agents specifically for use in the preparation
thereof.
(c) Offering Materials. Neither the Company nor any of its directors and officers has distributed and none of them will distribute, prior to the Closing Date, any offering material in
connection with the offering and sale of the Securities other than the Time of Sale Disclosure Package.
(d) Authorization; Enforcement. The Company has full legal right, power and authority to enter into this Agreement and perform the transactions contemplated hereby. This Agreement has been
duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
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(e) No Conflicts. The execution, delivery and performance by the Company of this Agreement, the Transaction Documents and the transactions contemplated pursuant to the Time of Sale Disclosure
Package, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby to which it is a party do not and will not (i) conflict with or violate any provision of the Company’s, or any of its
subsidiaries’, certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in
the creation of any lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction upon any of the properties or assets of the Company, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a debt or otherwise) or other understanding to which the Company is a party or by which any property
or asset of the Company is bound or affected, or (iii) subject to any required approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including federal and state 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 would not
reasonably be expected to result in a material adverse effect on: (x) the legality, validity or enforceability of any Transaction Document; (y) the results of operations, assets, business, or condition (financial or otherwise) of the Company; or (z)
the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (x), (y), or (z), a “Material Adverse Effect”).
(f) Reliance. The Company has not relied upon the Placement Agents or legal counsel for the Placement Agents for any legal, tax or accounting advice in connection with the offering and sale
of the Securities.
(g) Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act (“Forward-Looking Statement”)
contained in the Time of Sale Disclosure Package has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
(h) Certificates. Any certificate signed by any duly authorized officer of the Company and delivered to the Placement Agents or counsel shall be deemed a representation and warranty by the
Company to the Purchasers as to the matters covered thereby.
(i) Representations and Warranties Incorporated by Reference. Each of the representations and warranties (together with any related disclosure schedules thereto) made by the Company to the
Purchasers in the Purchase Agreement is hereby incorporated herein by reference (as though fully restated herein) and is hereby made to, and in favor of, the Placement Agents.
(j) FINRA Affiliations. There are no affiliations with any FINRA member firm among the Company’s officers, directors or, to the knowledge of the Company, any 5.0% or greater stockholder of
the Company.
Section 3. Delivery and Payment. The Closing shall occur at the offices of Xxxxxxxx & Worcester LLP, located at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (“Placement
Agent Counsel”) (or at such other place as shall be agreed upon by the Placement Agents and the Company, including remotely via electronic transmission). Subject to the terms and conditions hereof and of the Purchase Agreement, at the Closing,
payment of the purchase price for the Units sold on the Closing Date shall be made by Federal Funds wire transfer, against delivery of such Units, and such Units shall be registered in such name or names and shall be in such denominations, as the
Placement Agents may request at least one business day before the Closing Date. Deliveries of the documents with respect to the purchase of the Units, if any, shall be made at the offices of Placement Agent Counsel. All actions taken at the Closing
shall be deemed to have occurred simultaneously.
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Section 4. Covenants and Agreements of the Company. The Company further covenants and agrees with the Placement Agents as follows:
(a) Registration Statement Matters. The Company will advise the Placement Agents promptly after it receives notice thereof of the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the Final Prospectus has been filed and will furnish the Placement Agents with copies thereof. The Company will file promptly all reports and any definitive proxy or information statements required
to be filed by the Company with the Commission pursuant to Section 13(a), 14 or 15(d) of the Exchange Act subsequent to the date of any Prospectus and for so long as the delivery of a prospectus is required in connection with the Offering. The
Company will advise the Placement Agents, promptly after it receives notice thereof (i) of any request by the Commission to amend the Registration Statement or to amend or supplement any Prospectus or for additional information, and (ii) of the
issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or any order directed at any Incorporated Document, if any, or any amendment or supplement thereto or any
order preventing or suspending the use of the Preliminary Prospectus or the Final Prospectus or any prospectus supplement or any amendment or supplement thereto or any post-effective amendment to the Registration Statement, of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, of the institution or threatened institution of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration
Statement or a Prospectus or for additional information. The Company shall use its best efforts to prevent the issuance of any such stop order or prevention or suspension of such use. If the Commission shall enter any such stop order or order or
notice of prevention or suspension at any time, the Company will use its best efforts to obtain the lifting of such order at the earliest possible moment, or will file a new registration statement and use its best efforts to have such new
registration statement declared effective as soon as practicable. Additionally, the Company agrees that it shall comply with the provisions of Rules 424(b), 430A, 430B and 430C, as applicable, under the Securities Act, including with respect to the
timely filing of documents thereunder, and will use its reasonable efforts to confirm that any filings made by the Company under such Rule 424(b) are received in a timely manner by the Commission.
(b) Blue Sky Compliance. The Company will cooperate with the Placement Agents and the Purchasers in endeavoring to qualify the Securities for sale under the securities laws of such
jurisdictions (United States and foreign) as the Placement Agents and the Purchasers may reasonably request and will make such applications, file such documents, and furnish such information as may be reasonably required for that purpose, provided
the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction where it is not now so qualified or required to file such a consent, and provided further that the Company
shall not be required to produce any new disclosure document. The Company will, from time to time, prepare and file such statements, reports and other documents as are or may be required to continue such qualifications in effect for so long a period
as the Placement Agents may reasonably request for distribution of the Securities. The Company will advise the Placement Agents promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Securities for
offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company shall use its best
efforts to obtain the withdrawal thereof at the earliest possible moment.
(c) Amendments and Supplements to a Prospectus and Other Matters. The Company will comply with the Securities Act and the Exchange Act, and the rules and regulations of the Commission
thereunder, so as to permit the completion of the distribution of the Securities as contemplated in this Agreement, the Incorporated Documents and any Prospectus. If during the period in which a prospectus is required by law to be delivered in
connection with the distribution of Securities contemplated by the Incorporated Documents or any Prospectus (the “Prospectus Delivery Period”), any event shall occur as a result of which, in the judgment of the Company or in the opinion of the
Placement Agents or counsel for the Placement Agents, it becomes necessary to amend or supplement the Incorporated Documents or any Prospectus in order to make the statements therein, in light of the circumstances under which they were made, as the
case may be, not misleading, or if it is necessary at any time to amend or supplement the Incorporated Documents or any Prospectus or to file under the Exchange Act any Incorporated Document to comply with any law, the Company will promptly prepare
and file with the Commission, and furnish at its own expense to the Placement Agents and to dealers, an appropriate amendment to the Registration Statement or supplement to the Registration Statement, the Incorporated Documents or any Prospectus that
is necessary in order to make the statements in the Incorporated Documents and any Prospectus as so amended or supplemented, in light of the circumstances under which they were made, as the case may be, not misleading, or so that the Registration
Statement, the Incorporated Documents or any Prospectus, as so amended or supplemented, will comply with law. Before amending the Registration Statement or supplementing the Incorporated Documents or any Prospectus in connection with the Offering,
the Company will furnish the Placement Agents with a copy of such proposed amendment or supplement and will not file any such amendment or supplement to which the Placement Agents reasonably objects.
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(d) Copies of any Amendments and Supplements to a Prospectus. The Company will furnish the Placement Agents, without charge, during the period beginning on the date hereof and ending on the
Closing Date, as many copies of any Prospectus or prospectus supplement and any amendments and supplements thereto, as the Placement Agents may reasonably request.
(e) Free Writing Prospectus. The Company covenants that it will not, unless it obtains the prior written consent of the Placement Agents, make any offer relating to the Securities that would
constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405 of the Securities Act) required to be filed by the Company with the Commission or retained by the Company under
Rule 433 of the Securities Act. In the event that the Placement Agents expressly consent in writing to any such free writing prospectus (a “Permitted Free Writing Prospectus”), the Company covenants that it shall (i) treat each Permitted Free
Writing Prospectus as an Issuer Free Writing Prospectus, and (ii) comply with the requirements of Rule 164 and 433 of the Securities Act applicable to such Permitted Free Writing Prospectus, including in respect of timely filing with the Commission,
legending and record keeping.
(f) Transfer Agent. The Company will maintain, at its expense, a registrar and transfer agent for the Common Stock for at least three years after the Closing Date.
(g) Earnings Statement. As soon as practicable and in accordance with applicable requirements under the Securities Act, but in any event not later than 18 months after the Closing Date, the
Company will make generally available to its security holders and to the Placement Agents an earnings statement, covering a period of at least 12 consecutive months beginning after the Closing Date, that satisfies the provisions of Section 11(a) and
Rule 158 under the Securities Act.
(h) Periodic Reporting Obligations. During the Prospectus Delivery Period, the Company will use its reasonable efforts to duly file, on a timely basis, with the Commission and the market or
exchange on which the Common Stock is listed or quoted for trading (the “Trading Market”) all reports and documents required to be filed under the Exchange Act within the time periods and in the manner required by the Exchange Act.
(i) Reserved.
(j) No Manipulation of Price. The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or
might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company.
(k) Acknowledgment. The Company acknowledges that any advice given by the Placement Agents to the Company is solely for the benefit and use of the Board of Directors of the Company and may
not be used, reproduced, disseminated, quoted or referred to, without the Placement Agents’ prior written consent.
(l) Publicity. The Company acknowledges and agrees that the Placement Agents may, subsequent to the Closing, make public their involvement with the Offering. The Company agrees that, until 25
days after the final Closing Date, it will not issue press releases or engage in any other publicity, without the Placement Agents’ prior written consent (not to be unreasonably withheld), other than normal and customary releases issued in the
ordinary course of the Company’s business. Notwithstanding the foregoing, in no event shall the Company be prohibited from issuing any press releases or engaging in any other publicity required by law, except that including the name of the Placement
Agents therein shall require the prior written consent of the Placement Agents.
(m) Reliance on Others. The Company confirms that it will rely on its own counsel and accountants for legal and accounting advice.
(n) Research Matters. By entering into this Agreement, the Placement Agents do not provide any promise, either explicitly or implicitly, of favorable or continued research coverage of the
Company and the Company hereby acknowledges and agrees that the Placement Agents’ selection as placement agents for the Offering was in no way conditioned, explicitly or implicitly, on the Placement Agents providing favorable or any research coverage
of the Company. In accordance with the FINRA Rules, the parties acknowledge and agree that the Placement Agents have not directly or indirectly offered favorable research, a specific rating or a specific price target, or threatened to change
research, a rating or a price target, to the Company or inducement for the receipt of business or compensation.
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(o) Trading Market. The Company will use its commercially reasonable best efforts to maintain the listing of its Common Stock on the Trading Market for a period of at least three years after
the Closing Date.
(p) Engagement of Professionals. The Company will retain a nationally recognized, PCAOB registered firm of independent certified public accountants reasonably acceptable to the Placement
Agents for a period of at least three years after the Closing Date.
(q) Subsequent Equity Sales. From the date hereof until ninety (90) days after the Closing Date, without the prior written consent of the Placement Agents, the Company shall not (i) issue,
enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents or (ii) file any registration statement or any amendment or supplement thereto, other than the Final Prospectus
or a registration statement on Form S-8 in connection with any employee benefit plan (the “Lock-Up Period”). Notwithstanding the foregoing, this Section 4(q) shall not apply in respect of an Exempt Issuance. “Exempt Issuance” means the
issuance of (a) the Securities hereunder; (b) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the
Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company; (c) securities upon the exercise or exchange of or conversion of securities exercisable or
exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to
decrease the exercise price, exchange price or conversion price of such securities (other than in connection with stock splits or combinations) or to extend the term of such securities and (d) securities issued pursuant to acquisitions or strategic
transactions and the payment of contractor invoices in the ordinary course of business approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted securities” (as defined in Rule 144)
and carry no registration rights that require or permit the filing of any registration statement in connection therewith during the Lock-Up Period, and provided that any such issuance shall only be to a Person (or to the equityholders of a Person)
which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but
shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.
Section 5. Conditions of the Obligations of the Placement Agents. The obligations of the Placement Agents hereunder shall be subject to the accuracy of the
representations and warranties on the part of the Company set forth in Section 2 hereof, in each case as of the date hereof and as of the Closing Date as though then made, to the timely performance by each of the Company of its covenants and
other obligations hereunder on and as of such dates, and to each of the following additional conditions:
(a) Accountants’ Comfort Letters. On the date hereof, the Placement Agents shall have received, and the Company shall have caused to be delivered to the Placement Agents, a cold “comfort
letter” and a bring-down “comfort letter” as of the Closing Date, from Xxxxx Xxxxx US, LLP, the independent registered public accounting firm of the Company, addressed to the Placement Agents, dated as of the Closing Date, in form and substance
satisfactory to the Placement Agents. The letter shall not disclose any change in the condition (financial or other), earnings, operations, business or prospects of the Company from that set forth in the Incorporated Documents or the applicable
Prospectus or prospectus supplement, which, in the Placement Agents’ sole judgment, is material and adverse and that makes it, in the Placement Agents’ sole judgment, impracticable or inadvisable to proceed with the Offering of the Securities as
contemplated by such Prospectus.
(b) Compliance with Registration Requirements; No Stop Order; No Objection from the FINRA. Each Prospectus shall have been duly filed with the Commission, as appropriate; no stop order
suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or, to the knowledge of the Company, threatened by the Commission; no order preventing
or suspending the use of any Prospectus shall have been issued and no proceeding for that purpose shall have been initiated or, to the knowledge of the Company, threatened by the Commission; no order having the effect of ceasing or suspending the
distribution of the Securities or any other securities of the Company shall have been issued by any securities commission, securities regulatory authority or stock exchange and no proceedings for that purpose shall have been instituted or shall be
pending or, to the knowledge of the Company, contemplated by any securities commission, securities regulatory authority or stock exchange; all requests for additional information on the part of the Commission shall have been complied with; and, prior
to the date hereof, FINRA shall have raised no objection to the fairness and reasonableness of the placement terms and arrangements.
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(c) Corporate Proceedings. All corporate proceedings and other legal matters in connection with this Agreement, the Registration Statement and each Prospectus, and the registration, sale and
delivery of the Securities, shall have been completed or resolved in a manner reasonably satisfactory to the Placement Agents’ counsel, and such counsel shall have been furnished with such papers and information as it may reasonably have requested to
enable such counsel to pass upon the matters referred to in this Section 5.
(d) No Material Adverse Change. Subsequent to the execution and delivery of this Agreement and prior to the Closing Date, in the Placement Agents’ sole judgment after consultation with the
Company, there shall not have occurred any Material Adverse Effect or any material adverse change or development involving a prospective material adverse change in the condition or the business activities, financial or otherwise, of the Company from
the latest dates as of which such condition is set forth in the Registration Statement and Prospectus (“Material Adverse Change”).
(e) Opinion of Counsel for the Company. The Placement Agents shall have received on the Closing Date the favorable opinion and negative assurance letter of Xxxxxxxx LLP, legal counsel to the
Company, dated as of the Closing Date, addressed to the Placement Agents and in form and substance satisfactory to the Placement Agents.
(f) Officers’ Certificate. The Placement Agents shall have received on the Closing Date a certificate of the Company, dated as of the Closing Date, signed by the Chief Executive Officer and
Chief Financial Officer of the Company, to the effect that, and the Placement Agents shall be satisfied that, the signers of such certificate have reviewed the Registration Statement, the Incorporated Documents, the Final Prospectus, the Transaction
Documents and this Agreement and to the further effect that:
(i) The representations and warranties of the Company in this Agreement are true and correct in all material respects as if made on and as of the Closing Date, however, that such
materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text (unless as of a specific date therein in which case they shall be accurate as of such date), and the
Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the Registration Statement or the use of the Final Prospectus has been issued and no proceedings for that purpose have been
instituted or are pending or, to the Company’s knowledge, threatened under the Securities Act; no order having the effect of ceasing or suspending the distribution of the Securities or any other securities of the Company has been issued by any
securities commission, securities regulatory authority or stock exchange in the United States and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, contemplated by any securities commission,
securities regulatory authority or stock exchange in the United States;
(iii) When the Registration Statement became effective, at the time of sale, and at all times subsequent thereto up to the delivery of such certificate, the Registration Statement
and the Incorporated Documents, if any, when such documents became effective or were filed with the Commission, and any Prospectus, contained all material information required to be included therein by the Securities Act and the Exchange Act and the
applicable rules and regulations of the Commission thereunder, as the case may be, and in all material respects conformed to the requirements of the Securities Act and the Exchange Act and the applicable rules and regulations of the Commission
thereunder, as the case may be, and the Registration Statement and the Incorporated Documents, if any, and any Prospectus, did not and do not include any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (provided, however, that the preceding representations and warranties contained in this paragraph (iii) shall not apply to
any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by the Placement Agents expressly for use therein) and, since the effective date of the Registration Statement, there has
occurred no event required by the Securities Act and the rules and regulations of the Commission thereunder to be set forth in the Incorporated Documents which has not been so set forth; and
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(iv) Subsequent to the respective dates as of which information is given in the Registration Statement, the Incorporated Documents and the Final Prospectus, there has not been: (a)
any Material Adverse Change; (b) any transaction that is material to the Company taken as a whole, except transactions entered into in the ordinary course of business; (c) any obligation, direct or contingent, that is material to the Company taken as
a whole, incurred by the Company, except obligations incurred in the ordinary course of business; (d) any material change in the capital stock (except changes thereto resulting from the exercise of outstanding stock options or warrants) or
outstanding indebtedness of the Company; (e) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company; or (f) any loss or damage (whether or not insured) to the property of the Company which has been
sustained or will have been sustained which has a Material Adverse Effect.
(g) Secretary’s Certificate. The Placement Agents shall have received on the Closing Date a certificate of the Company, dated as of the Closing Date, signed by the Secretary of the Company,
dated as of the date of such Closing, certifying to the organizational documents, good standing in the state of incorporation of the Company and board resolutions relating to the Offering.
(h) Stock Exchange Listing. The Common Stock shall be registered under the Exchange Act and shall be listed on the Trading Market, and the Company shall not have taken any action designed to
terminate, or likely to have the effect of terminating, the registration of the Common Stock under the Exchange Act or delisting or suspending from trading the Common Stock from the Trading Market, nor shall the Company have received any information
suggesting that the Commission or the Trading Market is contemplating terminating such registration or listing except as disclosed in any Prospectus.
(i) Lock-Up Agreements. On the Closing Date, the Placement Agents shall have received the executed lock-up agreement, in the form attached hereto as Exhibit A, from each of the
directors and officers and any holder of 10% or more of the outstanding Common Stock.
(j) Warrant Agency Agreement. On the Closing Date, the Company shall have executed and delivered the duly executed one or more warrant agency agreements by and between the Company, Equiniti
Trust Company, LLC, acting as warrant agent.
(k) Warrants. On the Closing Date, the Company shall deliver or shall cause to be delivered the Warrants registered in such name or names and in such denominations as the Placement Agents may
request at least one business day before the applicable Closing Date.
(l) Chief Financial Officer Certificate. On the date of this Agreement and on the Closing Date, the Placement Agents shall have received a certificate of Chief Financial Officer addressed to
the Placement Agents and in form and substance satisfactory in all respects to the Placement Agents and Placement Agents’ counsel.
(m) Additional Documents. On or before each Closing Date, the Placement Agents and counsel for the Placement Agents shall have received such information and documents as they may reasonably
require for the purposes of enabling them to pass upon the issuance and sale of the Securities as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or
agreements, herein contained.
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If any condition specified in this Section 5 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Placement Agents by notice to the Company at any
time on or prior to a Closing Date, which termination shall be without liability on the part of any party to any other party, except that Sections 1(a), 7 and 8 shall at all times be effective and shall survive such
termination.
Section 6. Further Agreements.
(a) Other Activities. The Company acknowledges that the Placement Agents have been, and may in the future be, engaged to provide services as an underwriter, placement agent, finder, advisor
or investment banker to other companies in the industry in which the Company is involved. The Company acknowledges and agrees that nothing contained in this Agreement shall limit or restrict the right of the Placement Agents or of any member,
manager, officer, employee, agent or representative of the Placement Agents, to be a member, manager, partner, officer, director, employee, agent or representative of, investor in, or to engage in, any other business, whether or not of a similar
nature to the Company’s business, nor to limit or restrict the right of the Placement Agents to render services of any kind to any other corporation, firm, individual or association; provided that the Placement Agents and any of its members,
managers, officers, employees, agents or representatives shall not use the Information to the detriment of the Company.
(b) Placement Agent Introductions. Upon Closing of the Offering, or if the Termination Date is prior to the Closing of the Offering (other than a termination for “Cause”), then if
within nine (9) months following such time, the Company completes any financing of equity, equity-linked, or debt financing, or any other capital raising activity with, or receives any proceeds from any of the investors contacted and corresponded
with or introduced to the Company by the Placement Agents, then the Company will pay the Placement Agents upon the closing of such financing or receipt of proceeds the compensation equivalent to that set forth in Section 1(a) hereof.
Section 7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the Placement Agents, their affiliates and each person controlling the Placement Agents (within the meaning of Section 15 of the Securities Act),
and the directors, officers, agents and employees of the Placement Agents, their affiliates and each such controlling person (the Placement Agents, and each such entity or person. an “Indemnified Person”) from and against any losses, claims,
damages, judgments, assessments, costs and other liabilities (collectively, the “Liabilities”), and shall reimburse each Indemnified Person for all fees and reasonable expenses (including the reasonable fees and expenses of one counsel for all
Indemnified Persons, except as otherwise expressly provided herein) (collectively, the “Expenses”) as they are incurred by an Indemnified Person in investigating, preparing, pursuing or defending any action, suit, inquiry, notice of violation,
proceeding or investigation (collectively, an “Action”), whether or not any Indemnified Person is a party thereto, (i) caused by, or arising out of or in connection with, any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any Incorporated Document, or any Prospectus or by any omission or alleged omission to state therein a material fact necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading (other than untrue statements or alleged untrue statements in, or omissions or alleged omissions from, information relating to an Indemnified Person furnished in writing by or on behalf of such Indemnified Person expressly
for use in the Incorporated Documents) or (ii) otherwise arising out of or in connection with advice or services rendered or to be rendered by any Indemnified Person pursuant to this Agreement, the transactions contemplated thereby or any Indemnified
Person’s actions or inactions in connection with any such advice, services or transactions; provided, however, that, in the case of clause (ii) only, the Company shall not be responsible for any Liabilities or Expenses of any
Indemnified Person that are finally judicially determined to have resulted solely from such Indemnified Person’s (x) gross negligence or willful misconduct in connection with any of the advice, actions, inactions or services referred to above or (y)
use of any offering materials or information concerning the Company in connection with the offer or sale of the Securities in the Offering which were not authorized for such use by the Company and which use constitutes gross negligence or willful
misconduct. The Company also agrees to reimburse each Indemnified Person for all Expenses as they are incurred in connection with enforcing such Indemnified Person’s rights under this Agreement.
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(b) Upon receipt by an Indemnified Person of actual notice of an Action against such Indemnified Person with respect to which indemnity may be sought under this Agreement, such Indemnified Person
shall promptly notify the Company in writing; provided that failure by any Indemnified Person so to notify the Company shall not relieve the Company from any liability which the Company may have on account of this indemnity or otherwise to such
Indemnified Person, except to the extent the Company shall have been prejudiced by such failure. If the Company so elects or is requested by the Placement Agents, the Company shall assume the defense of any such Action including the employment of
counsel reasonably satisfactory to the Placement Agents, which counsel may also be counsel to the Company. The Company and any Indemnified Person shall have the right to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of the Company or such Indemnified Person, respectively, unless: (i) the Company has failed promptly to assume the defense and employ counsel or (ii) the named parties to any
such Action (including any impeded parties) include such Indemnified Person and the Company, and the Company or such Indemnified Person shall have been advised in the reasonable opinion of counsel that there is an actual conflict of interest that
prevents the counsel selected by the Company from representing both the Company (or another client of such counsel) and any Indemnified Person; provided that the Company shall not in such event be responsible hereunder for the fees and expenses of
more than one firm of separate counsel for all Indemnified Persons in connection with any Action or related Actions, in addition to any local counsel. The Company shall not be liable for any settlement of any Action effected without its written
consent (which shall not be unreasonably withheld). In addition, the Company shall not, without the prior written consent of the Placement Agents (which shall not be unreasonably withheld), settle, compromise or consent to the entry of any judgment
in or otherwise seek to terminate any pending or threatened Action in respect of which indemnification or contribution may be sought hereunder (whether or not such Indemnified Person is a party thereto) unless such settlement, compromise, consent or
termination includes an unconditional release of each Indemnified Person from all Liabilities arising out of such Action for which indemnification or contribution may be sought hereunder. The indemnification required hereby shall be made by periodic
payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable.
(c) In the event that the foregoing indemnity is unavailable to an Indemnified Person other than in accordance with this Agreement, the Company shall contribute to the Liabilities and Expenses paid
or payable by such Indemnified Person in such proportion as is appropriate to reflect (i) the relative benefits to the Company, on the one hand, and to the Placement Agents and any other Indemnified Person, on the other hand, of the matters
contemplated by this Agreement or (ii) if the allocation provided by the immediately preceding clause is not permitted by applicable law, not only such relative benefits but also the relative fault of the Company, on the one hand, and the Placement
Agents and any other Indemnified Person, on the other hand, in connection with the matters as to which such Liabilities or Expenses relate, as well as any other relevant equitable considerations; provided that in no event shall the Company contribute
less than the amount necessary to ensure that all Indemnified Persons, in the aggregate, are not liable for any Liabilities and Expenses in excess of the amount of fees actually received by the Placement Agents pursuant to this Agreement. For
purposes of this paragraph, the relative benefits to the Company, on the one hand, and to the Placement Agents on the other hand, of the matters contemplated by this Agreement shall be deemed to be in the same proportion as (a) the total value paid
or contemplated to be paid to or received or contemplated to be received by the Company in the transaction or transactions that are within the scope of this Agreement, whether or not any such transaction is consummated, bears to (b) the fees paid to
the Placement Agents under this Agreement. Notwithstanding the above, no person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act, as amended, shall be entitled to contribution from a party who was not
guilty of fraudulent misrepresentation.
(d) The Company also agrees that no Indemnified Person shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with advice or
services rendered or to be rendered by any Indemnified Person pursuant to this Agreement, the transactions contemplated thereby or any Indemnified Person’s actions or inactions in connection with any such advice, services or transactions except for
Liabilities (and related Expenses) of the Company that are finally judicially determined to have resulted solely from such Indemnified Person’s gross negligence or willful misconduct in connection with any such advice, actions, inactions or services.
(e) The reimbursement, indemnity and contribution obligations of the Company set forth herein shall apply to any modification of this Agreement and shall remain in full force and effect regardless of
any termination of, or the completion of any Indemnified Person’s services under or in connection with, this Agreement.
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Section 8. Representations and Indemnities to Survive Delivery. The respective indemnities, agreements, representations, warranties and other statements of the
Company or any person controlling the Company, of its officers, and of the Placement Agents set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Placement
Agents, the Company, or any of its or their partners, officers or directors or any controlling person, as the case may be, and will survive delivery of and payment for the Units sold hereunder and any termination of this Agreement. A successor to a
Placement Agent, or to the Company, its directors or officers or any person controlling the Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Agreement.
Section 9. Notices. All communications hereunder shall be in writing and shall be mailed, hand delivered, e-mailed or telecopied and confirmed to the parties
hereto as follows:
If to the Placement Agents:
Lake Street Capital Markets, LLC
000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Minneapolis, Minnesota 55402
Attention: Xxxxxxx Xxxxxxx, Head of Investment Banking
Email: xxxx.xxxxxxx@xxxxxxxxxxxx.xxx
And
Maxim Group LLC
000 Xxxx Xxxxxx, 16th Floor
Attention: Xxxxxxxx X. Xxxxxx
Email: xxxxxxx@xxxxxxxx.xxx
With a copy to:
Xxxxxxxx & Worcester LLP
1633 Broadway
Attention: Xxxxx Xxxxxxxxx, Esq.
Email: xxxxxxxxxx@xxxxxxxxxxx.xxx
If to the Company:
00000 Xxxxxx Xxxx Xxxx
Eden Prairie, Minnesota 55344
Attention: Xxxxxx Xxxxxxxxx, Xx., Chief Executive Officer
Email: Xxxxxx.Xxxxxxxxx@xxxxxxxx.xxx
With a copy to:
Xxxxxxxx, LLP
000 Xxxxx Xxxxxx Xxx, Xxxxx 000
Kalamazoo, Michigan 49002
Attention: Xxxxxxx X. Xxxxxxxx
Email: XXxxxxxxx@xxxxxxxx.xxx
Any party hereto may change the address for receipt of communications by giving written notice to the others.
Section 10. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 7 hereof, and to their respective successors, and personal representative, and no other person will have any right or obligation hereunder.
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Section 11. Partial Unenforceability. The invalidity or unenforceability of any section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other section, paragraph or provision hereof. If any section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
Section 12. Governing Law Provisions. This Agreement shall be deemed to have been made and delivered in New York City and both this Agreement and the
transactions contemplated hereby shall be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of New York, without regard to the conflict of laws principles thereof. Each of the
Placement Agents and the Company: (i) agrees that any legal suit, action or proceeding arising out of or relating to this Agreement and/or the transactions contemplated hereby shall be instituted exclusively in the New York Supreme Court, County of
New York, or in the United States District Court for the Southern District of New York (ii) waives any objection which it may have or hereafter to the venue of any such suit, action or proceeding, and (iii) irrevocably consents to the jurisdiction of
the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York in any such suit, action or proceeding. Each of the Placement Agents and the Company further agrees to accept and acknowledge
service of any and all process which may be served in any such suit, action or proceeding in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York and agrees that service of
process upon the Company mailed by certified mail to the Company’s address shall be deemed in every respect effective service of process upon the Company, in any such suit, action or proceeding, and service of process upon the Placement Agents mailed
by certified mail to the Placement Agents’ addresses shall be deemed in every respect effective service process upon the Placement Agents, in any such suit, action or proceeding. Notwithstanding any provision of this Agreement to the contrary, the
Company agrees that neither the Placement Agents nor their affiliates, and the respective officers, directors, employees, agents and representatives of the Placement Agents, their affiliates and each other person, if any, controlling the Placement
Agents or any of their affiliates, shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with the engagement and transaction described herein except for any such liability for
losses, claims, damages or liabilities incurred by us that are finally judicially determined to have resulted from the willful misconduct or gross negligence of such individuals or entities. If either party shall commence an action or proceeding to
enforce any provision of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorney’s fees and other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
Section 13. General Provisions.
(a) This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. Notwithstanding anything to the contrary contained herein, the terms of the letter of engagement between the parties dated September 7, 2023, shall continue to be effective pursuant to the terms thereof.
(b) This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit. Section headings
herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.
(c) The Company acknowledges that in connection with the offering of the Securities: (i) the Placement Agents have acted at arm’s length, are not agents of, and owe no fiduciary duties to the Company
or any other person, (ii) the Placement Agents owes the Company only those duties and obligations set forth in this Agreement and (iii) the Placement Agents may have interests that differ from those of the Company. The Company waives to the full
extent permitted by applicable law any claims it may have against the Placement Agents arising from an alleged breach of fiduciary duty in connection with the offering of the Securities.
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Section 14. Right of First Refusal. The Company grants the Placement Agents (or any affiliate designated by the Placement Agents) the right to provide
investment banking services to the Company on an exclusive basis in all matters involving the Company’s equity securities or other instruments that may at any time be convertible into, exchangeable for, or otherwise entitle the holder thereof to
receive, directly or indirectly, equity securities of the Company, for which investment banking services are sought by the Company (the “Right of First Refusal”), for the period commencing on the date hereof and ending on the 6-month
anniversary of the Closing Date. If the Placement Agents or their affiliate decide to accept any such engagement, the agreement governing such engagement will contain, among other things, provisions for customary fees for transactions of similar size
and nature and the provisions of this Agreement, including indemnification, which are appropriate to such a transaction. For these purposes, investment banking services shall include, without limitation, (i) acting as lead, book-running manager for
any underwritten public offering; and (ii) acting as exclusive placement agent or financial advisor in connection with any private offering of securities of the Company; provided that (ii) shall not include private placements solely to investors in
the Company prior to this Agreement. The Placement Agents shall notify the Company of its intention to exercise the Right of First Refusal within 5 business days following receipt of a written notice by the Company to the Placement Agents that it is
considering any of the above transactions. Any decision by the Placement Agents to act in any such capacity shall be contained in separate agreements, which agreements would contain, among other matters, provisions for customary fees for transactions
of similar size and nature, as may be mutually agreed upon, and indemnification of the Placement Agents and its affiliates and shall be subject to general market conditions. If the Placement Agents decline to exercise the Right of First Refusal
(which they may do in its sole and absolute discretion), the Company shall have the right to retain any other person or persons to provide such services on terms and conditions which are not materially more favorable to such other person or persons
than the terms declined by the Placement Agents. For purposes of clarity, the foregoing Right of First Refusal shall not apply to any sale of equity securities to DaVita, Inc., a Delaware corporation (or any of its affiliates). Notwithstanding the
foregoing, in accordance with FINRA Rule 5110(g)(6)(a), in no event will the Right of First Refusal have a duration of more than three (3) years from the commencement of sales in this offering. The Right of First Refusal shall be subject to FINRA
Rule 5110(g)(5)(B), including that (i) the Right of First Refusal may be terminated by the Company for “cause”, which shall include the material failure by the Placement Agents to provide the services contemplated by this Agreement, and (ii) the
Company’s exercise of its right of “termination for cause” eliminates any obligations with respect to the payment of any termination fee or provision of any right of first refusal.
Section 15. Fee Tail. The Placement Agents shall be entitled to the cash fees calculated in the manner described in Section 1 hereto with respect to any
private or public offering or other financing or capital raising transaction of any kind consummated (each, a “Tail Financing”) within six (6) months from the Closing Date with an investor whom the Placement Agents have, directly or
indirectly, introduced to the Company during the term of this Agreement; provided, that this provision shall not apply to any gross proceeds raised in a Tail Financing from DaVita, Inc., a Delaware corporation or any of its affiliates.
Notwithstanding anything herein to the contrary, the right to receive a Tail Financing fee shall be subject to FINRA Rule 5110(g), and the Company shall have a right of termination for cause in connection with this Agreement. The Company’s exercise
of the right of termination for cause will eliminate any obligations with respect to the payment of any termination fee or provision of any tail financing fee, including the Tail Financing set forth above.
[The remainder of this page has been intentionally left blank.]
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If the foregoing is in accordance with your understanding of our agreement, please sign below whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in
accordance with its terms.
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Very truly yours,
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LAKE STREET CAPITAL MARKETS, LLC
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By:
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/s/ Xxxxxxx Xxxxxxx
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Name:
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Xxxxxxx Xxxxxxx
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Title:
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Head of Investment Banking
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MAXIM GROUP LLC
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By:
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/s/ Xxxxxxxx X. Xxxxxx
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Name:
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Xxxxxxxx X. Xxxxxx
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Title:
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Co-President
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The foregoing Agreement is hereby confirmed and accepted as of the date first written above.
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By:
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/s/ Xxxxxx Xxxxxxxxx, Xx.
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Name:
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Xxxxxx Xxxxxxxxx, Xx.
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Title:
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Chief Executive Officer
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[Signature Page to Placement Agency Agreement]
15
Exhibit A
Form of Lock-Up Agreement
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