NOVUSTERRA INC. UNDERWRITING AGREEMENT
Exhibit 1.1
[
],
2021
XX
Xxxxxx, division of Benchmark Investments, LLC
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
As Representative of the Underwriters
named on Schedule A
hereto
Ladies
and Gentlemen:
Novusterra Inc., a
Florida corporation (the “Company”), proposes,
subject to the terms and conditions stated herein, to issue and
sell an aggregate of [ ] units (the “Units”), with each Unit
consisting of one share of the Company’s common stock, no par
value per share (the “Shares”), and one warrant
to purchase one Share (the “Warrant”) to the several
underwriters (such underwriters, for whom XX Xxxxxx, division of
Benchmark Investments, LLC (“XX Xxxxxx” or the
“Representative”) is
acting as representative, the “Underwriters” and each an
“Underwriter”). Such Units
are hereinafter collectively called the “Firm Securities.” The
Company has also agreed to grant to the Representative on behalf of
the Underwriters an option (the “Option”) to purchase up
to an additional [ ] Shares (the “Option Shares”) and/or [
] Warrants (the “Option Warrants”, and
together with the Units and Option Shares and Option Warrants, the
“Offered
Units”) on the terms set forth in Section 1(b) hereof.
The Option Shares and Option Warrants are hereinafter collectively
called the “Option
Securities.” The Offered Units are hereinafter also
called the “Offered
Securities” and the offering of such Offered
Securities is hereinafter called the “Offering”. The Shares
issuable upon the exercise of the Warrants are hereinafter called
the “Warrant
Shares.” The Offered Securities and all Shares
underlying the securities therein (including the Shares and Warrant
Shares) and the Underwriters’ Securities are herein
collectively called the “Securities.”
The
Company confirms as follows its agreement with each of the
Underwriters:
1. Agreement to Sell and
Purchase.
(a) Purchase of Firm Securities. On the
basis of the representations, warranties and agreements of the
Company contained herein and subject to all the terms and
conditions of this Agreement, the Company agrees to sell to the
Underwriters, severally and not
jointly, and the Underwriters,
severally and not jointly, agree to purchase from the
Company, the Units, at a purchase price (the “Purchase Price”) (prior
to discount and commissions) of $[ ] per Unit (or $[ ] per Unit net
of discount and commissions).
(b) Purchase of Option Shares and/or Option
Warrants. Subject to all the terms and conditions of this
Agreement, the Company grants to the Representative on behalf of
the Underwriters the Option to purchase, severally and not jointly,
all or less than all of the Shares and/or Warrants included in the
Option Securities, which may be
purchased in any combination of Shares and/or Warrants. The
purchase price (net of discount and commissions) to be paid for
each Share will be the same
Purchase Price (net of discount and commissions) allocated to each
Firm Unit, minus $0.000001. The
purchase price (net of discount and commissions) to be paid for
each Warrant shall be $0.000001. The Option may be exercised
in whole or in part at any time and from time to time on or before
the 45th day after the date of this Agreement, upon written notice
(the “Option
Notice”) by the Representative to the Company no later
than 12:00 noon, New York City time, at least one and no more than
five business days before the date specified for closing in the
Option Notice (the “Option Closing Date”)
setting forth the aggregate number of Shares and/or Warrants to be purchased and the
time and date for such purchase. Upon
exercise of the Option, the Company will become obligated to convey
to the Underwriters, and, subject to the terms and conditions set
forth herein, the Underwriters will become obligated to purchase,
the number of Shares and/or Warrants specified in the Option
Notice. If any Option Shares or Option Warrants are to be
purchased, each Underwriter agrees, severally and not jointly, to
purchase the number of Option Shares or Option Warrants, as
applicable (as adjusted by the
Representative in such manner as it deems advisable to avoid
fractional securities) that bears the
same proportion to the number of Firm Units to be purchased by it as set forth on
Schedule
A opposite such
Underwriter’s name as the total number of Option
Shares to be purchased bears to the
total number of Firm Units.
(c) Underwriters’ Warrants. The
Company hereby agrees to issue to the Underwriters (and/or their
respective designees) on the Closing Date and each Option Closing
Date, as the case may be, Warrants to purchase an aggregate of five
percent (5%) of the shares of Common Stock issued at such closing
(the “Underwriters’
Warrants”). The Underwriters’ Warrants shall be
exercisable, in whole or in part, commencing 180 days after the
Effective Date and expiring on the five-year anniversary of the
date on which the Underwriters’ Warrants first become
exercisable, at an initial exercise price of $[ ] per share, which
is equal to one hundred and twenty five percent (125%) of the
initial public offering price of the Firm Units issued at such
closing. The Underwriters’ Warrants and the shares of Common
Stock issuable upon exercise of the Underwriters’ Warrants
are hereinafter referred to collectively as the “Underwriters’
Securities.”
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2. Delivery and
Payment.
(a) Closing. Delivery of the Firm
Securities shall be made to the Representative through the
facilities of the Depository Trust Company (“DTC”) for the respective
accounts of the Underwriters against payment of the Purchase Price
by wire transfer of immediately available funds to the order of the
Company. Such payment shall be made at 10:00 a.m., New York
City time, on the second business day (the third business day,
should the Offering be priced after 4:00 p.m., New York City
Time) after the date of this Agreement or at such time on such
other date, not later than ten business days after such date, as
may be agreed upon by the Company and the Representative (such date
is hereinafter referred to as the “Closing Date”).
Notwithstanding the foregoing, in the
case of a Warrant for which an Exercise Notice (as defined therein)
is delivered on or prior to 12:00 p.m. (New York City time) on the
Closing Date, which such Exercise Notice may be delivered at any
time after the time of execution of this Agreement, the Company
agrees to deliver the Warrant Shares subject to such notice(s) by
4:00 p.m. (New York City time) on the Closing
Date.
(b) Option Closing. To the extent the
Option is exercised, delivery of the Option Securities against
payment by the Underwriters (in the manner and at the location
specified above) shall take place at the time and date (which may
be the Closing Date, but not earlier than the Closing Date)
specified in the Option Notice.
(c) Electronic Transfer. Electronic
transfer of the Offered Securities shall be made at the time of
purchase in such names and in such denominations as the
Representative shall specify.
(d) Tax Stamps. The cost of original issue
tax stamps, if any, in connection with the issuance and delivery of
the Securities by the Company to the Underwriters shall be borne by
the Company. The Company shall pay and hold each Underwriter and
any subsequent holder of the Securities harmless from any and all
liabilities with respect to or resulting from any failure or delay
in paying United States federal and state and foreign stamp and
other transfer taxes, if any, which may be payable or determined to
be payable in connection with the original issuance, sale and
delivery to such Underwriter of the Securities.
3. Representations and Warranties of the
Company. The Company represents and warrants to, and
covenants with, each of the Underwriters as follows:
(a) Compliance with Registration
Requirements. A registration statement on Form S-1
(Registration No. 377-04958) relating to the Offered Securities,
Warrants and Warrant Shares, including a preliminary prospectus and
such amendments to such registration statement as may have been
required prior to the date of this Agreement, has been prepared by
the Company under the provisions of the Securities Act of 1933, as
amended (the “Act”), and the rules and
regulations (collectively referred to as the “Rules and Regulations”)
of the Securities and Exchange Commission (the “Commission”) thereunder,
and has been filed with the Commission. Copies of such registration
statement and of each amendment thereto, if any, including the
related preliminary prospectuses, heretofore filed by the Company
with the Commission have been delivered to the Underwriters. The
term “Registration
Statement” means such registration statement on Form
S-1 as amended at the time it becomes or became effective,
including financial statements, all exhibits and any information
deemed to be included or incorporated by reference therein,
including any information deemed to be included pursuant to
Rule 430A or Rule 430B of the Rules and Regulations, as
applicable. If the Company files a registration statement to
register a portion of the Offered Securities, Warrants or Warrant
Shares and relies on Rule 462(b) of the Rules and Regulations
for such registration statement to become effective upon filing
with the Commission (the “Rule 462 Registration
Statement”), then any reference to the
“Registration Statement” shall be deemed to include the
Rule 462 Registration Statement, as amended from time to time.
The term “preliminary prospectus”
as used herein means a preliminary prospectus as contemplated by
Rule 430 or Rule 430A of the Rules and Regulations
included at any time as part of, or deemed to be part of or
included in, the Registration Statement. The term
“Prospectus” means the
final prospectus in connection with this Offering as first filed
with the Commission pursuant to Rule 424(b) of the Rules and
Regulations or, if no such filing is required, the form of final
prospectus included in the Registration Statement at the effective
date, except that if any revised prospectus or prospectus
supplement shall be provided to the Representative by the Company
for use in connection with the Offered Securities which differs
from the Prospectus (whether or not such revised prospectus or
prospectus supplement is required to be filed by the Company
pursuant to Rule 424(b)), the term “Prospectus” shall
also refer to such revised prospectus or prospectus supplement, as
the case may be, from and after the time it is first provided to
the Representative for such use. Any
reference herein to the terms “amend”,
“amendment” or “supplement” with respect to
the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to refer to and include: (i) the filing
of any document under the Securities Exchange Act of 1934, as
amended, and together with the rules and regulations promulgated
thereunder (collectively, the “Exchange
Act”) after the effective
date of the Registration Statement, the date of such preliminary
prospectus or the date of the Prospectus, as the case may be, which
is incorporated therein by reference, and (ii) any such document so
filed.
(b) Effectiveness of Registration. The
Registration Statement, any Rule 462 Registration Statement
and any post-effective amendment thereto have been declared
effective by the Commission under the Act or have become effective
pursuant to Rule 462 of the Rules and Regulations. The Company has
responded to all requests, if any, of the Commission for additional
or supplemental information. No stop order suspending the
effectiveness of the Registration Statement or any Rule 462
Registration Statement is in effect and no proceedings for such
purpose have been instituted or are pending or, to the knowledge of
the Company, are threatened by the Commission.
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(c) Accuracy of Registration Statement.
Each of the Registration Statement, any Rule 462 Registration
Statement and any post-effective amendment thereto, at the time it
became effective, when any document
filed under the Exchange Act was or is filed and at all
subsequent times, complied and will comply in all material respects
with the Act and the Rules and Regulations, and did not and will
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading. The
Prospectus, as amended or supplemented, as of its date and at all
subsequent times when a prospectus is delivered or required (or,
but for the provisions of Rule 172, would be required) by
applicable law to be delivered in connection with sales of
Securities, complied and will comply in all material respects with
the Act, the Exchange Act and the Rules and Regulations, and did
not or will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein not misleading, in the light of the circumstances under
which they were made. Each preliminary prospectus (including the
preliminary prospectus or prospectuses filed as part of the
Registration Statement or any amendment thereto) complied when so
filed in all material respects with Act, the Exchange Act and the
Rules and Regulations, and each preliminary prospectus and the
Prospectus delivered to the Representative for use in connection
with this Offering is identical to the electronically transmitted
copies thereof filed with the Commission on XXXXX, except to the
extent permitted by Regulation S-T. The foregoing representations
and warranties in this Section 3(c) do not apply to any statements
or omissions made in reliance on and in conformity with information
relating to the Underwriters furnished in writing to the Company by
the Underwriters through the Representative specifically for
inclusion in the Registration Statement or Prospectus or any
amendment or supplement thereto. For all purposes of this
Agreement, the information set forth in the Prospectus (i) in the
third paragraph under the caption "Underwriting" setting forth the
amount of the selling concession, and (ii) in the thirteenth
paragraph under the caption "Underwriting" regarding stabilization,
short positions and penalty bids constitutes the only information
(the “Underwriters’
Information”) relating to the Underwriters furnished
in writing to the Company by the Underwriters through the
Representative specifically for inclusion in the preliminary
prospectus, the Registration Statement or the
Prospectus.
(d) Company Not Ineligible Issuer. (i) At
the time of filing the Registration Statement relating to the
Securities and (ii) as of the date of the execution and delivery of
this Agreement (with such date being used as the determination date
for purposes of this clause (ii)), the Company was not and is not
an “ineligible issuer” (as defined in Rule 405 of the
Rules and Regulations).
(e) Disclosure at the Time of Sale. As of
the Applicable Time, neither (i) the Issuer General Use Free
Writing Prospectus(es) (as defined below) issued at or prior to the
Applicable Time, the most recent preliminary prospectus related to
this Offering, and the information included on Schedule II hereto, all
considered together (collectively, the “General Disclosure
Package”), nor (ii) any individual Issuer Limited Use
Free Writing Prospectus, when considered together with the General
Disclosure Package, included any untrue statement of a material
fact or omitted to state any material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading. The preceding sentence
does not apply to statements in or omissions from the General
Disclosure Package based upon and in conformity with written
information furnished to the Company by the Underwriters through
the Representative specifically for use therein, it being
understood and agreed that the only such information furnished by
the Underwriters consists of the Underwriters’
Information.
As used
in this subsection and elsewhere in this Agreement:
“Applicable Time” means
5:00 p.m. (New York City Time) on [Time of Pricing], 2021 or such
other time as agreed by the Company and the
Representative.
“Issuer Free Writing
Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 of the Rules and
Regulations, relating to the Offered Securities that (i) is
required to be filed with the Commission by the Company,
(ii) is “a written communication that is a road
show” within the meaning of Rule 433(d)(8)(i), whether or not
required to be filed with the Commission or (iii) is exempt
from filing pursuant to Rule 433(d)(5)(i) because it contains a
description of the Securities or of the Offering that does not
reflect the final terms, in each case in the form filed or required
to be filed with the Commission or, if not required to be filed, in
the form retained in the Company’s records pursuant to Rule
433(g).
“Issuer General Use Free Writing
Prospectus” means any Issuer Free Writing Prospectus
that is intended for general distribution to prospective investors,
as evidenced by its being specified in Schedule I hereto.
“Issuer Limited Use Free Writing
Prospectus” means any Issuer Free Writing Prospectus
that is not an Issuer General Use Free Writing
Prospectus.
(f) Issuer Free Writing Prospectuses. Each
Issuer Free Writing Prospectus, as of its issue date and at all
subsequent times through the Prospectus Delivery Period (as defined
below), does not include any information that conflicts with the
information contained in the Registration Statement. The foregoing
sentence does not apply to statements in or omissions from any
Issuer Free Writing Prospectus based upon and in conformity with
the Underwriters’ Information. If at any time following the
issuance of an Issuer Free Writing Prospectus there occurred an
event or development as a result of which such Issuer Free Writing
Prospectus conflicted with the information contained in the
Registration Statement relating to the Securities or included an
untrue statement of material fact or omitted to state a material
fact necessary in order to make the statements therein, in light of
the circumstances prevailing at that subsequent time, not
misleading, the Company has promptly notified the Representative
and has promptly amended or supplemented, at its own expense, such
Issuer Free Writing Prospectus to eliminate or correct such
conflict, untrue statement or omission.
(g) Distribution of Offering Material by the
Company. The Company has not distributed and will not
distribute, prior to the later of the Closing Date, any Option
Closing Date and the completion of the Underwriters’
distribution of the Offered Securities, any offering material in
connection with the offering or sale of the Offered Securities, the
Registration Statement, the preliminary prospectus, the Permitted
Free Writing Prospectuses reviewed and consented to by the
Representative and included in Schedule I hereto, and the
Prospectus. None of the Marketing Materials, as of their respective
issue dates and at all subsequent times through the Prospectus
Delivery Period (as defined below), include any information that
conflicts with the information contained in the Registration
Statement. If at any time following the issuance of any Marketing
Material there occurred an event or development as a result of
which such Marketing Material conflicted with the information
contained in the Registration Statement relating to the Securities
or included an untrue statement of material fact or omitted to
state a material fact necessary in order to make the statements
therein, in light of the circumstances prevailing at that
subsequent time, not misleading, the Company has promptly notified
the Representative and has promptly amended or supplemented, at its
own expense, such Marketing Material to eliminate or correct such
conflict, untrue statement or omission.
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(h) Subsidiaries. All of the direct and
indirect material subsidiaries of the Company (each, a
“Subsidiary”) are set
forth in the Registration Statement, the General Disclosure Package
and the Prospectus. The Company owns, directly or indirectly, all
of the capital stock or other equity interests of each Subsidiary
free and clear of any lien, charge, pledge, security interest,
encumbrance, right of first refusal, preemptive right or other
similar restriction (each, a “Lien”), and all of the
issued and outstanding shares of capital stock of each Subsidiary
are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase
securities.
(i) Organization and Qualification. The
Company and each of the Subsidiaries is an entity duly incorporated
or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization,
with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation
nor default of any of the provisions of its respective certificate
or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, would not have
or reasonably be expected to result in: (i) a material adverse
effect on the legality, validity or enforceability of this
Agreement, the Warrant Agreement (as hereinafter defined), the
Warrants, the Underwriters’ Warrants, or any other agreement, document, certificate or
instrument required to be delivered pursuant to this Agreement
(collectively, the “Transaction
Documents”), (ii)
a material adverse effect on the results of operations, assets,
business, prospects or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (iii) a material
adverse effect on the Company’s ability to perform in any
material respect on a timely basis its obligations under any
Transaction Document (any of (i), (ii) or (iii), a
“Material Adverse
Effect”) and no action, claim, suit or proceeding
(including, without limitation, a partial proceeding, such as a
deposition), whether commenced or threatened (each, a
“Proceeding”) has been
instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and
authority or qualification.
(j) Authorization; Enforcement. The Company
has the requisite corporate power and authority to enter into and
to consummate the transactions contemplated by this Agreement and
each of the other Transaction Documents and otherwise to carry out
its obligations hereunder and thereunder. The execution and
delivery of this Agreement and each of the other Transaction
Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Company and
no further action is required by the Company, the Board of
Directors or the Company’s stockholders in connection
herewith or therewith other than in connection with the Required
Approvals (as hereinafter defined in Section 3(l)). This Agreement
and each other Transaction Document to which it is a party has been
(or upon delivery will have been) duly executed by the Company and,
when delivered in accordance with the terms hereof and thereof,
assuming due authorization, execution and delivery by the
Representative, 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.
(k) No Conflicts. The execution, delivery
and performance by the Company of this Agreement and the other
Transaction Documents to which it is a party, the issuance and sale
of the Securities and the consummation by it of the transactions
contemplated hereby and thereby do not and will not (i) conflict
with or violate any provision of the Company’s or any
Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents, or (ii) conflict
with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the
Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in
a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a
Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as would not have or reasonably be
expected to result in a Material Adverse Effect.
(l) Filings, Consents and Approvals. The
Company is not required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing
or registration with, any court or other federal, state, local or
other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the
Transaction Documents, other than: (i) the filing with the
Commission of the Registration Statement and the Prospectus, (ii)
application(s) to the Nasdaq Capital Market for the listing of the
Securities for trading thereon in the time and manner required
thereby, (iii) such filings, if any, as are required to be made
under applicable state securities laws, (iv) such notices, filings
or authorizations as are required to be obtained or made under
applicable rules of the Financial Industry Regulatory Authority,
Inc. (“FINRA”) and The Nasdaq
Stock Market, and (v) such notices, filings or authorizations as
have been obtained, given or made as of the date hereof
(collectively, the “Required
Approvals”).
(m) [Reserved.]
(n) Issuance of the Securities. The
Securities are duly authorized and, when issued and paid for in
accordance with the applicable Transaction Documents, will be duly
and validly issued, fully paid and nonassessable, free and clear of
all Liens imposed by the Company. The Company has reserved from its
duly authorized capital stock the maximum number of Shares issuable
pursuant to this Agreement.
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(o) Capitalization. The capitalization of
the Company as of the date hereof is as set forth in the
Registration Statement, the General Disclosure Package and the
Prospectus. The Company has not issued any capital stock since its
most recently filed periodic report under the Exchange Act, other
than pursuant to the Company’s equity incentive plans, the
issuance of Shares to employees, directors or consultants pursuant
to the Company’s equity incentive plans and pursuant to the
conversion and/or exercise of any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at
any time Shares, including, without limitation, any debt, preferred
stock, right, option, warrant or other instrument that is at any
time convertible into or exercisable or exchangeable for, or
otherwise entitles the holder thereof to receive, Shares
(“Common Stock
Equivalents”) and is outstanding as of the date of the
most recently filed periodic report under the Exchange Act. No
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 (each, a
“Person”) has any right of
first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by
the Transaction Documents. Except as a result of the purchase and
sale of the Securities or as disclosed in the Registration
Statement, the General Disclosure Package and the Prospectus, there
are no outstanding options, warrants, scrip rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable
or exchangeable for, or giving any Person any right to subscribe
for or acquire, any Shares or the capital stock of any Subsidiary,
or contracts, commitments, understandings or arrangements by which
the Company or any Subsidiary is or may become bound to issue
additional Shares or Common Stock Equivalents or capital stock of
any Subsidiary. The issuance and sale of the Securities will not
obligate the Company or any Subsidiary to issue Shares or other
securities to any Person (other than the Underwriters) and will not
result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under any of such
securities. There are no securities of the Company or any
Subsidiary that have any anti-dilution or similar adjustment rights
(other than adjustments for stock splits, recapitalizations, and
the like) to the exercise or conversion price, have any exchange
rights, or reset rights. Except as set forth in the Registration
Statement, the General Disclosure Package and the Prospectus, there
are no outstanding securities or instruments of the Company or any
Subsidiary that contain any redemption or similar provisions, and
there are no contracts, commitments, understandings or arrangements
by which the Company or any Subsidiary is or may become bound to
redeem a security of the Company or such Subsidiary. The Company
does not have any stock appreciation rights or “phantom
stock” plans or agreements or any similar plan or agreement.
All of the outstanding shares of capital stock of the Company are
duly authorized, validly issued, fully paid and nonassessable, have
been issued in compliance in all material respects with all federal
and state securities laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. No further approval or
authorization of any stockholder, the Board of Directors or others
is required for the issuance and sale of the Securities. There are
no stockholders agreements, voting agreements or other similar
agreements with respect to the Company’s capital stock to
which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s
stockholders.
(p) SEC Reports; Financial Statements. The
Company has filed all reports, schedules, forms, statements and
other documents required to be filed by the Company under the
Securities Act and the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for such period as the Company was required
by law or regulation to file such material (the foregoing
materials, including the exhibits thereto and documents
incorporated by reference therein, together with the Registration
Statement, the General Disclosure Package and the Prospectus, 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 Securities
Act and the Exchange Act, as applicable, and none of the SEC
Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The Company has never been an issuer subject to Rule
144(i) under the Securities Act. The financial statements of the
Company included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at
the time of filing. Such financial statements have been prepared in
accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods
involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not
contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments. The agreements and
documents described in the SEC Reports conform to the descriptions
thereof contained therein and there are no agreements or other
documents required by the Securities Act and the rules and
regulations thereunder to be described in the SEC Reports or to be
filed with the Commission as exhibits to the Registration
Statement, that have not been so described or filed. Each agreement
or other instrument (however characterized or described) to which
the Company is a party or by which it is or may be bound or
affected and (i) that is referred to in the SEC Reports, or (ii) is
material to the Company’s business, has been duly authorized
and validly executed by the Company, is in full force and effect in
all material respects and is enforceable against the Company and,
to the Company’s knowledge, the other parties thereto, in
accordance with its terms, except (x) as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors’ rights generally, (y) as enforceability
of any indemnification or contribution provision may be limited
under the federal and state securities laws, and (z) that the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to
the discretion of the court before which any proceeding therefore
may be brought. Except as disclosed in the SEC Reports, none of
such agreements or instruments has been assigned by the Company,
and neither the Company nor, to the best of the Company’s
knowledge, any other party is in default thereunder and, to the
best of the Company’s knowledge, no event has occurred that,
with the lapse of time or the giving of notice, or both, would
constitute a default thereunder. To the best of the Company’s
knowledge, performance by the Company of the material provisions of
such agreements or instruments will not result in a violation of
any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign,
having jurisdiction over the Company or any of its assets or
businesses, including, without limitation, those relating to
environmental laws and regulations.
5
(q) Material Changes; Undisclosed Events,
Liabilities or Developments. Since the date of the latest
audited financial statements included within the SEC Reports,
except as reflected or specifically disclosed in a subsequent SEC
Report filed prior to the date hereof, (i) there has been no event,
occurrence or development that has had or that would reasonably be
expected to result in a Material Adverse Effect, (ii) the Company
has not incurred any material liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made
with the Commission, (iii) the Company has not altered its method
of accounting, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the
Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company equity
incentive plans or as set forth in the Registration Statement, the
General Disclosure Package and the Prospectus. The Company does not
have pending before the Commission any request for confidential
treatment of information. Except for the issuance of the Securities
contemplated by this Agreement, no event, liability, fact,
circumstance, occurrence or development has occurred or exists or
is reasonably expected to occur or exist with respect to the
Company or its Subsidiaries or their respective businesses,
prospects, properties, operations, assets or financial condition
that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made
or deemed made that has not been publicly disclosed at least 1
Trading Day prior to the date that this representation is
made.
(r) Litigation. There is no action, suit,
inquiry, notice of violation or proceeding pending or, to the
knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative
agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the
Securities or (ii) would, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse
Effect. Except as disclosed in the Registration Statement, the
General Disclosure Package and the Prospectus, neither the Company
nor any Subsidiary, nor any director or officer thereof, is or has
been the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of
breach of fiduciary duty. There has not been, and to the knowledge
of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any
current or former director or officer of the Company. The
Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the
Company or any Subsidiary under the Exchange Act or the Securities
Act.
(s) Labor Relations. No labor dispute
exists or, to the knowledge of the Company, is imminent with
respect to any of the employees of the Company, which would
reasonably be expected to result in a Material Adverse Effect. None
of the Company’s or its Subsidiaries’ employees is a
member of a union that relates to such employee’s
relationship with the Company or such Subsidiary, and neither the
Company nor any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the
knowledge of the Company, no executive officer of the Company or
any Subsidiary, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition
agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment
of each such executive officer does not subject the Company or any
of its Subsidiaries to any liability with respect to any of the
foregoing matters. The Company and its Subsidiaries are in
compliance with all U.S. federal, state, local and foreign laws and
regulations relating to employment and employment practices, terms
and conditions of employment and wages and hours, except where the
failure to be in compliance would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(t) Compliance. Except as disclosed in the
SEC Reports and except as set forth in the Registration Statement,
the General Disclosure Package and the Prospectus, neither the
Company nor any Subsidiary: (i) is in default under or in violation
of (and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under
or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is in
violation of any judgment, decree or order of any court, arbitrator
or other governmental authority or (iii) is or has been in
violation of any statute, rule, ordinance or regulation of any
governmental authority, including, without limitation, all foreign,
federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as
would not have or reasonably be expected to result in a Material
Adverse Effect.
(u) Environmental Laws. The Company and its
Subsidiaries (i) are in compliance in all material respects with
all federal, state, local and foreign laws relating to pollution or
protection of human health or the environment (including ambient
air, surface water, groundwater, land surface or subsurface
strata), including laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or
toxic or hazardous substances or wastes (collectively,
“Hazardous
Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials, as well as all authorizations, codes, decrees, demands,
or demand letters, injunctions, judgments, licenses, notices or
notice letters, orders, permits, plans or regulations, issued,
entered, promulgated or approved thereunder (“Environmental Laws”);
(ii) have received all permits licenses or other approvals required
of them under applicable Environmental Laws to conduct their
respective businesses; and (iii) are in compliance with all terms
and conditions of any such permit, license or approval where in
each clause (i), (ii) and (iii), the failure to so comply would be
reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect.
(v) Regulatory Permits. The Company and the
Subsidiaries possess all certificates, authorizations and permits
issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their respective
businesses as described in the SEC Reports, except where the
failure to possess such permits would not reasonably be expected to
result in a Material Adverse Effect (“Material Permits”), and
neither the Company nor any Subsidiary has received any written
notice of proceedings relating to the revocation or modification of
any Material Permit.
6
(w) Title to Assets. The Company and its
Subsidiaries have good and marketable title to all real property
owned by them, if any, and good and marketable title in all
personal property owned by them, in each case, that is material to
the business of the Company and the Subsidiaries, and in such case
free and clear of all Liens, except for Liens that (i) are
described in the Registration Statement, the General Disclosure
Package and the Prospectus, (ii) would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect, (iii) do not materially affect the value of such property
and do not materially interfere with the use made and proposed to
be made of such property by the Company and the Subsidiaries, or
(iv) are for the payment of federal, state or other taxes, for
which appropriate reserves have been made therefor in accordance
with GAAP and, the payment of which is neither delinquent nor
subject to penalties. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under
valid, subsisting and enforceable leases with which the Company and
the Subsidiaries are in compliance in all material
respects.
(x) Intellectual Property. To the knowledge
of the Company, the Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets,
inventions, copyrights, licenses and other intellectual property
rights and similar rights necessary or required for use in
connection with their respective businesses as described in the SEC
Reports and which the failure to so have could have a Material
Adverse Effect (collectively, the “Intellectual Property
Rights”). None of, and neither the Company nor any
Subsidiary has received a notice (written or otherwise) that any
of, the Intellectual Property Rights has expired, terminated or
been abandoned, or is expected to expire or be abandoned, within
two (2) years from the date of this Agreement, except where such
action would not reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any Subsidiary has received, since
the date of the latest audited financial statements included within
the SEC Reports, a written notice of a claim or otherwise has any
knowledge that the Intellectual Property Rights violate or infringe
upon the rights of any Person, except as would not have or
reasonably be expected to not have a Material Adverse Effect. To
the knowledge of the Company, all such Intellectual Property Rights
are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights. The Company and
its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual
properties, except where failure to do so would not, individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has no knowledge that it lacks or will
be unable to obtain any rights or licenses to use all Intellectual
Property Rights that are necessary to conduct its
business.
(y) Insurance. The Company and the
Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which the Company
and the Subsidiaries are engaged, including, but not limited to,
directors and officers insurance coverage at least equal to the
aggregate Purchase Price. Neither the Company nor any Subsidiary
has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary
to continue its business without a significant increase in
cost.
(z) Transactions With Affiliates and
Employees. Except as set forth in the SEC Reports, none of
the officers or directors of the Company or any Subsidiary and, to
the knowledge of the Company, none of the employees of the Company
or any Subsidiary is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from,
providing for the borrowing of money from or lending of money to or
otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee, stockholder, member
or partner, in each case in excess of $120,000 other than for (i)
payment of salary or consulting fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including stock option agreements
under any stock option plan of the Company.
(aa) Xxxxxxxx-Xxxxx;
Internal Accounting Controls. The Company and the
Subsidiaries are in compliance with any and all applicable
requirements of the Xxxxxxxx-Xxxxx Act of 2002 that are effective
and applicable to the Company as of the date hereof, and any and
all applicable rules and regulations promulgated by the Commission
thereunder that are effective as of the date hereof and as of the
Closing Date or the Option Closing Date, as applicable. Except as
set forth in the SEC Reports, the Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to
provide reasonable assurance that: (i) transactions are executed in
accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP
and to maintain asset accountability, (iii) access to assets is
permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
The Company and the Subsidiaries have established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Company and the Subsidiaries and designed
such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the
Commission’s rules and forms. The Company’s certifying
officers have evaluated the effectiveness of the disclosure
controls and procedures of the Company and the Subsidiaries as of
the end of the period covered by the most recently filed periodic
report under the Exchange Act (such date, the “Evaluation
Date”).
7
(bb) Certain
Fees; FINRA Affiliation. Except as set forth in the
Registration Statement, the General Disclosure Package and the
Prospectus, no brokerage or finder’s fees or commissions are
or will be payable by the Company or any Subsidiary to any broker,
financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents. To the
Company’s knowledge, there are no other arrangements,
agreements or understandings of the Company or, to the
Company’s knowledge, any of its stockholders that may affect
the Underwriters’ compensation, as determined by FINRA. The
Company has not made any direct or indirect payments (in cash,
securities or otherwise) to (i) any person, as a finder’s
fee, investing fee or otherwise, in consideration of such person
raising capital for the Company or introducing to the Company
persons who provided capital to the Company, (ii) any FINRA member,
or (iii) any person or entity that has any direct or indirect
affiliation or association with any FINRA member within the
12-month period prior to the date on which the Registration
Statement was filed with the Commission (the “Filing Date”) or
thereafter. To the Company’s knowledge, no (i) officer or
director of the Company or its subsidiaries, (ii) owner of 5% or
more of the Company’s unregistered securities or that of its
subsidiaries or (iii) owner of any amount of the Company’s
unregistered securities acquired within the 180-day period prior to
the Filing Date, has any direct or indirect affiliation or
association with any FINRA member. The Company will advise the
Underwriters and their respective counsel if it becomes aware that
any officer, director or stockholder of the Company or its
subsidiaries is or becomes an affiliate or associated person of a
FINRA member participating in the Offering.
(cc) Investment
Company. The Company is not, and is not an affiliate of, and
immediately after receipt of payment for the Offered Securities,
will not be or be an affiliate of, an “investment
company” within the meaning of the Investment Company Act of
1940, as amended.
(dd) Registration
Rights. Except as set forth in the Registration Statement,
the General Disclosure Package and the Prospectus, no Person has
any right to cause the Company or any Subsidiary to effect the
registration under the Securities Act of any securities of the
Company or any Subsidiary.
(ee) Listing
and Maintenance Requirements. The Shares are registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge
is likely to have the effect of, terminating the registration of
the Shares under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such
registration. Except as disclosed in the SEC Reports, the Company
has not, in the 12 months preceding the date hereof, received
notice from the Nasdaq Capital Market to the effect that the
Company is not in compliance with the listing or maintenance
requirements of such the Nasdaq Capital Market. Except as disclosed
in the SEC Reports, 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
Shares are currently eligible for electronic transfer through the
Depository Trust Company or another established clearing
corporation and the Company is current in payment of the fees to
the Depository Trust Company (or such other established clearing
corporation) in connection with such electronic transfer. The
issuance and sale of the Securities hereunder does not contravene
the rules and regulations of The Nasdaq Stock Market.
(ff) [Reserved.]
(gg) No
Integrated Offering. Neither the Company or any Person
acting on its behalf, nor, to the Company’s knowledge, any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with the Company (as such terms are used in and construed
under Rule 405 under the Securities Act) (each, an
“Affiliate”) or any Person
acting on 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
Offered Securities to be integrated with prior offerings by the
Company for purposes of any applicable shareholder approval
provisions of The Nasdaq Stock Market.
(hh) Solvency.
Based on the consolidated financial condition of the Company as of
the Closing Date and as of the Option Closing Date, after giving
effect to the receipt by the Company of the proceeds from the sale
of the Offered Securities hereunder, the current cash flow of the
Company, together with the proceeds the Company would receive, were
it to liquidate all of its assets, after taking into account all
anticipated uses of the cash, may be insufficient to pay all
amounts on or in respect of its liabilities when such amounts are
required to be paid. The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in
respect of its debt). Except as set forth in the Registration
Statement, the General Disclosure Package and the Prospectus, the
Company has no knowledge of any facts or circumstances which lead
it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction
within one year from the Closing Date or the Option Closing Date,
as applicable. The Registration Statement, the General
Disclosure Package and the Prospectus sets forth as of the date
hereof all outstanding secured and unsecured Indebtedness of the
Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments. For the purposes of this Agreement,
“Indebtedness” means (x)
any liabilities for borrowed money or amounts owed in excess of
$50,000 (other than trade accounts payable incurred in the ordinary
course of business), (y) all guaranties, endorsements and other
contingent obligations in respect of indebtedness of others,
whether or not the same are or should be reflected in the
Company’s consolidated balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary
course of business; and (z) the present value of any
lease payments in excess of $50,000 due under leases required
to be capitalized in accordance with GAAP. Except as set forth in
the Registration Statement, the General Disclosure Package and the
Prospectus, neither the Company nor any Subsidiary is in default
with respect to any Indebtedness.
(ii) Tax
Status. Except for matters that would not, individually or
in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, each of the Company and its Subsidiaries
(i) has made or filed all United States federal, state and local
income and all foreign income and franchise tax returns, reports
and declarations required by any jurisdiction to which it is
subject, (ii) has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations and (iii) has set
aside on its books provision reasonably adequate for the payment of
all material taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company or
of any Subsidiary know of no basis for any such claim.
8
(jj) Foreign
Corrupt Practices. Neither the Company nor any Subsidiary,
nor to the knowledge of the Company or any Subsidiary, any agent or
other person acting on behalf of the Company or any Subsidiary, has
(i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or
campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company or any Subsidiary (or made by any
person acting on its behalf of which the Company is aware) which is
in violation of law, or (iv) violated in any material respect any
provision of Foreign Corrupt Practices Act of 1977, as
amended.
(kk) Accountants.
The Company’s accounting firm is Xxxxxxxx & Ko (the
“Accountants”). To the
knowledge and belief of the Company, such accounting firm (i) is a
registered public accounting firm as required by the Exchange Act
and (ii) shall express its opinion with respect to the financial
statements to be included in the Company’s Annual Report for
the fiscal year ending December 31, 2020.
(ll) Regulation
M Compliance. The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of any of the Securities,
(ii) sold, bid for, purchased, or, paid any compensation for
soliciting purchases of, any 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, other than, in the
case of clauses (ii) and (iii), compensation paid to the
Underwriters in connection with the Offering.
(mm) [Reserved.]
(nn) Office
of Foreign Assets Control. Neither the Company nor any
Subsidiary nor, to the Company’s knowledge, any director,
officer, agent, employee or Affiliate of the Company or any
Subsidiary is currently subject to any U.S. sanctions administered
by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”).
(oo) U.S.
Real Property Holding Corporation. The Company is not and
has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company shall so certify upon the
Representative’s request.
(pp) Bank
Holding Company Act. Neither the Company nor any of its
Subsidiaries or Affiliates is subject to the Bank Holding Company
Act of 1956, as amended (the “BHCA”), and to regulation
by the Board of Governors of the Federal Reserve System (the
“Federal
Reserve”). Neither the Company nor any of its
Subsidiaries or Affiliates owns or controls, directly or
indirectly, five percent (5%) or more of the outstanding shares of
any class of voting securities or twenty-five percent or more of
the total equity of a bank or any entity that is subject to the
BHCA and to regulation by the Federal Reserve. Neither the Company
nor any of its Subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity
that is subject to the BHCA and to regulation by the Federal
Reserve.
(qq) Money
Laundering. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, applicable money laundering statutes and applicable rules
and regulations thereunder (collectively, the “Money Laundering Laws”),
and no Action or Proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company
or any Subsidiary with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company or any Subsidiary,
threatened.
(rr) Share
Option Plans. Each share option granted by the Company under
the Company’s share option plans was granted (i) in
accordance with the terms of the Company’s share option plans
and (ii) with an exercise price at least equal to the fair market
value of the Shares on the date such share option would be
considered granted under GAAP and applicable law. No share option
granted under the Company’s share option plan has been
backdated. The Company has not knowingly granted, and there is no
and has been no Company policy or practice to knowingly grant,
share options prior to, or otherwise knowingly coordinate the grant
of share options with, the release or other public announcement of
material information regarding the Company or its Subsidiaries or
their financial results or prospects.
(ss) Officer’s
Certificates. Any certificate signed by any officer of the
Company or any of its Subsidiaries delivered to the Representative
or its counsel shall be deemed a representation and warranty by the
Company to the Underwriters as to the matters covered
thereby.
4. Agreements of the Company. The
Company agrees with the Underwriters as follows:
(a) Amendments and Supplements to Registration
Statement. The Company shall not, either prior to any
effective date or thereafter during such period as the Prospectus
is required by law to be delivered (whether physically or through
compliance with Rule 172 of the Rules and Regulations or any
similar rule) (the “Prospectus Delivery
Period”) in connection with sales of the Securities by
an Underwriter or dealer, amend or supplement the Registration
Statement, the General Disclosure Package or the Prospectus, unless
a copy of such amendment or supplement thereof shall first have
been submitted to the Representative within a reasonable period of
time prior to the filing or, if no filing is required, the use
thereof and the Representative shall not have objected thereto in
good faith.
9
(b) Amendments and Supplements to the Registration
Statement, the General Disclosure Package, and the Prospectus and
Other Securities Act Matters. During the Prospectus Delivery Period, the Company
will comply with all requirements imposed upon it by the Securities
Act, as now and hereafter amended, and by the Rules and
Regulations, as from time to time in force, and by the Exchange Act
so far as necessary to permit the continuance of sales of or
dealings in the Securities as contemplated by the provisions
hereof, the General Disclosure Package, the Registration Statement
and the Prospectus. If, during the Prospectus Delivery
Period, any event or development shall occur or condition exist as
a result of which the General Disclosure Package or the Prospectus,
as then amended or supplemented, would include any untrue statement
of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances then prevailing or under which they were made, as the
case may be, not misleading, or if it shall be necessary to amend
or supplement the General Disclosure Package or the Prospectus in
order to make the statements therein, in the light of the
circumstances then prevailing or under which they were made, as the
case may be, not misleading, or if in the opinion of the
Representative it is otherwise necessary to amend or supplement the
Registration Statement, the General Disclosure Package or the
Prospectus, or to file a new registration statement containing the
Prospectus, in order to comply with the Act, the Rules and
Regulations, the Exchange Act or the Exchange Act Rules, including
in connection with the delivery of the Prospectus, the Company
agrees to (i) promptly notify the Representative of any such event
or condition and (ii) promptly prepare (subject to Section 4(a) and 4(f) hereof), file with the Commission
(and use its best efforts to have any amendment to the Registration
Statement or any new registration statement to be declared
effective) and furnish at its own expense to the Representative
(and, if applicable, to dealers), amendments or supplements to the
Registration Statement, the General Disclosure Package or the
Prospectus, or any new registration statement, necessary in order
to make the statements in the General Disclosure Package or the
Prospectus as so amended or supplemented, in the light of the
circumstances then prevailing or under which they were made, as the
case may be, not misleading, or so that the Registration Statement
or the Prospectus, as amended or supplemented, will comply with the
Act, the Rules and Regulations, the Exchange Act or the Exchange
Act Rules or any other applicable law.
(c) Notifications to the Underwriters. The
Company shall use its best efforts to cause the Registration
Statement to become effective, and shall notify the Representative
promptly, and shall confirm such advice in writing, (i) when any
post-effective amendment to the Registration Statement has become
effective and when any post-effective amendment thereto becomes
effective, (ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus or for
additional information, (iii) of the commencement by the Commission
or by any state securities commission of any proceedings for the
suspension of the qualification of any of the Offered Securities
for offering or sale in any jurisdiction or of the initiation, or
the threatening, of any proceeding for that purpose, including,
without limitation, the issuance by the Commission 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 Prospectus
Delivery Period that in the judgment of the Company makes any
statement made in the Registration Statement or the Prospectus
misleading (including by omission) or untrue or that requires the
making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances in which they are made, not misleading (including by
omission), and (v) of receipt by the Company or any representative
of the Company of any other communication from the Commission
relating to the Company, the Registration Statement, any
preliminary prospectus or the Prospectus. If at any time the
Commission shall issue any order suspending the effectiveness of
the Registration Statement, the Company shall use best efforts to
obtain the withdrawal of such order at the earliest possible
moment. The Company shall comply with the provisions of and make
all requisite filings with the Commission pursuant to
Rules 424(b), 430A, 430B and 462(b) of the Rules and
Regulations and to notify the Representative promptly of all such
filings.
(d) Executed Registration Statement. The
Company shall furnish to the Representative, without charge, one
signed copy of the Registration Statement, and of any
post-effective amendment thereto, including financial statements
and schedules, and all exhibits thereto, and shall furnish to the
Representative, without charge, a copy of the Registration
Statement and any post-effective amendment thereto, including
financial statements and schedules but without
exhibits.
(e) Undertakings. The Company shall comply
with all the provisions of any undertakings contained and required
to be contained in the Registration Statement.
(f) Prospectus. The Company shall prepare
the Prospectus in a form approved by the Representative and shall
file such Prospectus with the Commission pursuant to Rule 424(b) of
the Rules and Regulations with a filing date not later than the
second business day following the execution and delivery of this
Agreement. Promptly after the effective date of the Registration
Statement, and thereafter from time to time during the period when
the Prospectus is required (or, but for the provisions of Rule 172
under the Act, would be required) to be delivered, the Company
shall deliver to the Representative, without charge, as many
electronic copies of the Prospectus and any amendment or supplement
thereto as the Representative may reasonably request. The Company
consents to the use of the Prospectus and any amendment or
supplement thereto by the Representative and by all dealers to whom
the Offered Securities may be sold, both in connection with the
offering or sale of the Offered Securities and for any period of
time thereafter during the Prospectus Delivery Period. If, during
the Prospectus Delivery Period any event shall occur that in the
judgment of the Company or counsel to the Underwriters 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 (including by omission), or if it is necessary to
supplement or amend the Prospectus to comply with law, the Company
shall forthwith prepare and duly file with the Commission an
appropriate supplement or amendment thereto, and shall deliver to
the Representative, without charge, such number of electronic
copies thereof as the Representative may reasonably
request.
10
(g) Permitted Free Writing Prospectuses.
The Company represents and agrees that it has not made and, unless
it obtains the prior consent of the Representative, will not make,
any offer relating to the Offered Securities that would constitute
a “free writing prospectus” as defined in Rule 405 of
the Rules and Regulations, required to be filed with the Commission
or retained by the Company under Rule 433 of the Rules and
Regulations; provided that
the prior written consent of the Representative hereto shall be
deemed to have been given in respect of the Issuer Free Writing
Prospectuses included in Schedule I hereto. Any such
free writing prospectus consented to by the Representative is
herein referred to as a “Permitted Free Writing
Prospectus.” The Company agrees that (i) it has
treated and will treat, as the case may be, each Permitted Free
Writing Prospectus as an Issuer Free Writing Prospectus, and (ii)
has complied and will comply, as the case may be, with the
requirements of Rules 164 and 433 of the Act applicable to any
Permitted Free Writing Prospectus, including in respect of timely
filing with the Commission, legending and record keeping. If at any
time following the issuance of an Issuer Free Writing Prospectus
there occurs an event or development as a result of which such
Issuer Free Writing Prospectus would conflict with the information
contained in the Registration Statement relating to the Offered
Securities or would include an untrue statement of material fact or
would omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances prevailing at
that subsequent time, not misleading, the Company will promptly
notify the Representative and will promptly amend or supplement, at
its own expense, such Issuer Free Writing Prospectus to eliminate
or correct such conflict, untrue statement, or omission. The
Company represents that it has satisfied and agrees that it will
satisfy the conditions in Rule 433 to avoid a requirement to file
with the Commission any electronic road show.
(h) Compliance with Blue Sky Laws. Prior to
any public offering of the Securities by the Underwriters, the
Company shall cooperate with the Representative and counsel to the
Underwriters in connection with the registration or qualification
(or the obtaining of exemptions from the application thereof) of
the Offered Securities for offer and sale under the securities or
Blue Sky laws of such jurisdictions as the Representative may
request limitation, provided, however, that in no event shall the
Company be obligated to qualify a public offering outside the
United States or to do business as a foreign corporation in any
jurisdiction where it is not now so qualified, to qualify or
register as a dealer in securities, to take any action which would
subject it to general service of process in any jurisdiction where
it is not now so subject or subject itself to ongoing taxation in
respect of doing business in any jurisdiction in which it is not so
subject.
(i) Delivery of Financial Statements.
During the period of five years commencing on the effective date of
the Registration Statement applicable to the Underwriters, the
Company shall furnish to the Representative and each other
Underwriter who may so request 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 Representative and each
other Underwriter who may so request a copy of each annual or other
report it shall be required to file with the Commission; provided,
however, that the availability of electronically transmitted copies
filed with the Commission pursuant to XXXXX shall satisfy the
Company’s obligation to furnish copies
hereunder.
(j) Availability of Earnings Statements.
The Company shall make generally available to holders of its
securities as soon as may be practicable but in no event later than
the last day of the fifteenth (15th) full calendar
month following the calendar quarter in which the most recent
effective date occurs in accordance with Rule 158 of the Rules and
Regulations, an earnings statement (which need not be audited but
shall be in reasonable detail) for a period of twelve (12) months
ended commencing after the effective date, and satisfying the
provisions of Section 11(a) of the Act (including
Rule 158 of the Rules and Regulations).
(k) Consideration; Payment of Expenses. In
consideration of the services to be provided for hereunder, the
Underwriters or their respective designees their pro rata portion
(based on the Securities purchased) of the following aggregate
compensation with respect to the Offered Securities they are
offering plus any other funds remitted by the Company to pay costs
and expenses that are incurred by the Underwriters (including
Underwriters’ counsel’s fees and expenses)
(“Additional
Advanced Amounts”).
(i) An underwriting
discount equal to seven percent (7%) of the aggregate gross
proceeds raised in the Offering;
(ii) A
non-accountable expense allowance equal to one-half percent (0.5%)
of the aggregate gross proceeds raised in the
Offering;
(iii) The
Underwriters’ Warrants; and
(iv) Additionally,
if the Closing occurs, the Company grants the Representative the
right of first refusal for a period of twelve (12) months from the
date of commencement of sales pursuant to the Prospectus to act as
sole managing underwriter and sole book runner for any and all
future public or private equity, equity-linked or debt (excluding
commercial bank debt) offerings undertaken by the Company, or any
successor to or any subsidiary of the Company. The Company shall
provide written notice to the Representative with the terms of such
offering and if the Representative fails to accept in writing any
such proposal within ten (10) business days after receipt of such
written notice, then the Representative will have no claim or right
with respect to any such offering(s).
(v) The Representative
reserves 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 Underwriters’
aggregate compensation is in excess of FINRA rules or that the
terms thereof require adjustment.
(vi) Whether
or not the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus are consummated or this
Agreement is terminated, the Company hereby agrees to pay the
following:
11
0 (1) all
expenses in connection with the preparation, printing, formatting
for XXXXX and filing of the Registration Statement, any Preliminary
Prospectus and the Prospectus and any and all exhibits, amendments
and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers;
1 (2) all
filing fees in connection with filings with FINRA’s Public
Offering System;
2 (3) all
fees, disbursements and expenses of the Company’s counsel,
accountants and other agents and representatives in connection with
the registration of the Securities under the Act and the
Offering;
3 (4) all
expenses in connection with the qualifications of the Securities
for offering and sale under state or foreign securities or blue sky
laws (including, without limitation, all filing and registration
fees, and the fees and disbursements of Underwriters’
counsel;
(5) all
fees and expenses in connection with listing the Securities on a
national securities exchange;
(6) all
expenses, including travel and lodging expenses, of the
Company’s officers, directors and employees and any other
expense of the Company incurred in connection with attending or
hosting meetings with prospective purchasers of the Securities and
any fees and expenses associated with the i-Deal system and
NetRoadshow;
(7) any
stock transfer taxes or other taxes incurred in connection with
this Agreement or the offering, including any stock transfer taxes
payable upon the transfer of securities to the
Underwriters;
(8) the
costs associated with preparing, printing and delivering
certificates representing the Securities;
(9) the
cost and charges of any transfer agent or registrar for the
Securities;
(10) subject
to the following proviso, other costs (including
Underwriters’ counsel’s fees and expenses) and expenses
incident to the Offering that are not otherwise specifically
provided for in this Section 4(k);
(11) costs
relating to background checks of the Company’s officers and
directors;
provided, however, that all such costs
and expenses (including Underwriters’ counsel’s fees
and expenses) that are incurred by the Underwriters shall not
exceed $150,000 in the aggregate.
(l) Non-accountable Expenses. The Company
further agrees that, in addition to the expenses payable pursuant
to Section 4(k), on the Closing Date it shall pay to the
Representative, by deduction from the net proceeds of the Offering
contemplated herein, a non-accountable expense allowance equal to
one-half percent (0.5%) of the aggregate gross proceeds raised in
the Offering, provided, however, that in the event that the
Offering is terminated, the Company agrees to reimburse the
Underwriters pursuant to Section 4(m) hereof.
(m) Reimbursement of Expenses upon Termination of
Agreement. If this Agreement shall be terminated by the
Company pursuant to any of the provisions hereof or if for any
reason the Company shall be unable to perform its obligations or to
fulfill any conditions hereunder, or if the Underwriters shall
terminate this Agreement pursuant to the last paragraph of Section
5, Section 7(a), Section
7(e) or Section 7(f), the Company shall reimburse the Underwriters
for all reasonable accountable out-of-pocket expenses (including
the reasonable fees, disbursements and other charges of counsel to
the Underwriter) actually incurred by the Underwriters in
connection herewith and as allowed under FINRA Rule 5110;
provided, however, that the maximum amount of
costs and expenses to be reimbursed by Company to the Underwriters
pursuant to this Section 4(m) shall not exceed $30,000 (including
the reasonable fees, disbursements and other charges of counsel to
the Underwriters). Any amount payable to the Underwriters pursuant
to this Section 4(m) shall be deducted from an amount equal to the
Additional Advanced Amounts with the balance to be remitted by the
Representative to the Company within ten days following the
termination of this Agreement.
(n) No Stabilization or Manipulation. The
Company shall not at any time, directly or indirectly, take any
action intended to cause or result in, or which might reasonably be
expected to cause or result in, or which will constitute,
stabilization or manipulation, under the Act or otherwise, of the
price of the Shares or the Securities to facilitate the sale or
resale of any of the Securities.
(o) Use of Proceeds. The Company shall
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 General
Disclosure Package and the Prospectus under “Use of
Proceeds” and shall file such reports with the Commission
with respect to the sale of the Securities and the application of
the proceeds therefrom as may be required in accordance with
Rule 463 under the Act.
12
(p) Lock-Up Agreements of Company, Management and
Affiliates. The Company shall not, for a period of one
hundred and eighty (180) days after the Closing Date (the
“Lock-Up
Period”), without the prior written consent of XX
Xxxxxx (which consent may be withheld in its sole discretion), (1)
offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer
or dispose of, directly or indirectly, or file with the Commission
a registration statement under the Act to register, any Shares,
warrants, or any securities convertible into or exercisable or
exchangeable for Shares or (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in
part, directly or indirectly, any of the economic benefits or risks
of ownership of Shares, or Warrants, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery
of Shares, Warrants or other securities, in cash or otherwise, or
publicly disclose the intention to enter into any transaction
described in clause (1) or (2) above. The foregoing sentence shall
not apply to (A) the Securities to be sold hereunder, (B) any
Shares issued pursuant to a trading plan established prior to July
1, 2020 pursuant to Rule 10b5-1 of the Exchange Act, (C) the
issuance of Shares upon the exercise or conversion of options,
warrants or other convertible securities outstanding, and as in
effect, on the date of this Agreement,
and (D) any Shares, dividend equivalent rights or other
equity based awards issued, or options to purchase Shares granted,
pursuant to existing employee benefit plans of the Company referred
to in the Registration Statement, the General Disclosure Package or
the Prospectus (including the filing of a registration statement on
Form S-8 relating to such existing employee benefit plans of the
Company referred to in the Registration Statement, the General
Disclosure Package or the Prospectus). The Company has caused each of its
officers and directors to enter into agreements with the
Representative in the form set forth in Exhibit A.
(q) Lock-Up Releases. If XX Xxxxxx, in its
sole discretion, agrees to release or waive the restrictions set
forth in a lock-up letter described in Section 4(p) hereof for an
officer or director of the Company and provides the Company with
notice of the impending release or waiver at least three business
days before the effective date of the release or waiver, the
Company agrees to announce the impending release or waiver by a
press release substantially in the form of Exhibit B hereto through a
major news service at least two business days before the effective
date of such release or waiver, or any other method that satisfies
the obligations described in FINRA Rule 5131(d)(2) at least two
business days before the effective date of the release or
waiver.
(r) NASDAQ
listing. The
Company will use its reasonable best efforts to effect and maintain
the listing of the Shares on the NASDAQ Capital Market for at least
three (3) years after the Closing Date.
(s) The
Company shall use its reasonable best efforts to maintain the
effectiveness of the Registration Statement and a current
Prospectus relating thereto for as long as the Warrants and the
Underwriters’ Warrants remain outstanding. During any period
when the Company fails to have maintained an effective Registration
Statement or a current Prospectus relating thereto and a holder of
a Warrant or Underwriters’ Warrants desires to exercise such
warrant and, in the opinion of counsel to the holder, Rule 144 is
not available as an exemption from registration for the resale of
the Warrant Shares, the Company shall promptly file a registration
statement registering the resale of the Warrant Shares and use its
reasonable best efforts to have it declared effective by the
Commission within thirty (30) days.
(t) Variable
Rate Transactions.
From the
date hereof through and including the one year anniversary of the
Closing Date, neither the Company nor any Subsidiary shall enter
into, announce the entering into, or proposed entering into, a
Variable Rate Transaction. For purposes hereof, a “Variable
Rate Transaction” shall mean, collectively, an
“Equity Line of Credit” or similar agreement, or a
Variable Priced Equity Linked Instrument. For purposes hereof,
“Equity Line of Credit” means any transaction involving
a written agreement between the Company and an investor or
underwriter whereby the Company has the right to “put”
its securities to the investor or underwriter over an agreed period
of time and at future determined price or price formula (other than
customary “preemptive” or “participation”
rights or “weighted average” or
“full-ratchet” anti-dilution provisions or in
connection with fixed-price rights offerings and similar
transactions that are not Variable Priced Equity Linked
Instruments), and “Variable Priced Equity Linked
Instruments” means: (A) any debt or equity securities which
are convertible into, exercisable or exchangeable for, or carry the
right to receive additional Shares either (1) at any conversion,
exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for Shares at any
time after the initial issuance of such debt or equity security, or
(2) with a conversion, exercise or exchange price that is subject
to being reset on more than one occasion at some future date at any
time after the initial issuance of such debt or equity security due
to a change in the market price of the Shares since date of initial
issuance (other than customary “preemptive” or
“participation” rights or “weighted
average” or “full-ratchet” anti-dilution
provisions or in connection with fixed-price rights offerings and
similar transactions), and (B) any amortizing convertible security
which amortizes prior to its maturity date, where the Company is
required or has the option to (or any investor in such transaction
has the option to require the Company to) make such amortization
payments in Shares which are valued at a price that is based upon
and/or varies with the trading prices of or quotations for Shares
at any time after the initial issuance of such debt or equity
security (whether or not such payments in stock are subject to
certain equity conditions). For the avoidance of doubt, the
foregoing shall not prevent the Company from conducting
“at-the-market” offerings or similar
equity distribution programs.
5. Conditions of the Obligations of the
Underwriters. The obligation of the Underwriters to purchase
the Firm Securities on the Closing Date or the Option Securities on
the Option Closing Date, as the case may be, as provided herein is
subject to the accuracy of the representations and warranties of
the Company, the performance by the Company of its covenants and
other obligations hereunder and to the following additional
conditions:
(a) Post Effective Amendments and Prospectus
Filings. Notification that the Registration Statement has
become effective shall be received by the Representative not later
than 4:30 p.m., New York City time, on the date of this Agreement
or at such later date and time as shall be consented to in writing
by the Representative and all filings made pursuant to
Rules 424, 430A, or 430B of the Rules and Regulations, as
applicable, shall have been made or will be made prior to the
Closing Date in accordance with all such applicable
rules.
13
(b) No Stop Orders, Requests for Information and
No Amendments. (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 are, to the
knowledge of the Company, threatened by the Commission, (ii) no
order suspending the qualification or registration of the Offered
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
authorities of any such jurisdiction, (iii) any request for
additional information on the part of the staff of the Commission
or any such authorities shall have been complied with to the
satisfaction of the staff of the Commission or such authorities and
(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 Representative and
the Representative did not object thereto in good faith, and the
Representative shall have received certificates, dated the Closing
Date and the Option Closing Date and signed by the Chief Executive
Officer or the Chairman of the Board of Directors and the Chief
Financial Officer of the Company in their capacities as such, and
not individually, (who may, as to proceedings threatened, certify
to their knowledge), to the effect of clauses (i), (ii) and
(iii).
(c) No Material Adverse Changes. Since the
respective dates as of which information is given in the
Registration Statement and the Prospectus, except as set forth in
the Registration Statement, the General Disclosure Package and the
Prospectus (i) there shall not have been a Material Adverse Change,
(ii) the Company shall not have incurred any material liabilities
or obligations, direct or contingent, (iii) the Company shall not
have entered into any material transactions not in the ordinary
course of business other than pursuant to this Agreement and the
transactions referred to herein, (iv) the Company shall not have
issued any securities (other than the Securities or the Shares
issued in the ordinary course of business pursuant to existing
employee benefit plans of the Company referred to in the
Registration Statement, General Disclosure Package and the
Prospectus) or declared or paid any dividend or made any
distribution in respect of its capital stock of any class or debt
(long-term or short-term), and (v) no material amount of the assets
of the Company shall have been pledged, mortgaged or otherwise
encumbered.
(d) No Actions, Suits or Proceedings. Since
the respective dates as of which information is given in the
Registration Statement, the General Disclosure Package and the
Prospectus, there shall have been no actions, suits or proceedings
instituted, or to the Company’s knowledge, threatened against
or affecting, the Company or its subsidiaries or any of their
respective officers in their capacity as such, before or by any
federal, state or local court, commission, regulatory body,
administrative agency or other governmental body, domestic or
foreign.
(e) All Representations True and Correct and All
Conditions Fulfilled. Each of the representations and
warranties of the Company contained herein shall be true and
correct as of the date of the Agreement and at the Closing Date as
if made at the Closing Date and any Option Closing Date, as the
case may be, and all covenants and agreements contained herein to
be performed by the Company and all conditions contained herein to
be fulfilled or complied with by the Company at or prior to the
Closing Date and any Option Closing Date, shall have been duly
performed, fulfilled or complied with.
(f) Opinions of Counsel to the Company. The
Underwriters shall have received the opinions and letters, each
dated the Closing Date and any Option Closing Date, as the case may
be, each reasonably satisfactory in form and substance to the
Representative and counsel for the Underwriters, from Law Office of
Xxxxxxxx X. Xxxx, P.A., as corporate/securities
counsel.
(g) Opinion of Counsel to the Underwriters.
The Representative shall have received an opinion, dated the
Closing Date and any Option Closing Date, as the case may be, from
Xxxxx Xxxxxxx LLP, securities counsel to the Underwriters, with
respect to the Registration Statement, the Prospectus and this
Agreement, which opinions shall be satisfactory in all respects to
the Representative.
(h) Accountants’ Comfort Letter. On
the date of the Prospectus, the Representative shall have received
from the Accountants a letter dated the date of its delivery,
addressed to the Underwriters, in form and substance reasonably
satisfactory to the Representative and counsel to the Underwriters,
containing statements and information of the type ordinarily
included in accountant’s “comfort letters” to
underwriters, delivered according to Statement of Auditing
Standards No. 72 (or any successor bulletin), with respect to the
audited and unaudited financial statements and certain financial
information contained in the Registration Statement and the
Prospectus. At the Closing Date and any Option Closing Date, as the
case may be, the Representative shall have received from the
Accountants a letter dated such date, in form and substance
reasonably satisfactory to the Representative and counsel to the
Underwriters, to the effect that they reaffirm the statements made
in the letter furnished by them pursuant to the preceding sentence
and have conducted additional procedures with respect to certain
financial figures included in the Prospectus, except that the
specified date referred to therein for the carrying out of
procedures shall be no more than three business days prior to the
Closing Date or any Option Closing Date, as the case may
be.
(i) Officers’ Certificates. At the
Closing Date and any Option Closing Date, there shall be furnished
to the Representative an accurate certificate, dated the date of
its delivery, signed by each of the Chief Executive Officer and the
Chief Financial Officer of the Company, in their capacities as
such, and not individually, in form and substance satisfactory to
the Representative and counsel to the Underwriters, to the effect
that:
(i) each signer of such
certificate has carefully examined the Registration Statement and
the Prospectus;
(ii) there
has not been a Material Adverse Change; and
(iii) with
respect to the matters set forth in Sections 5(b)(i) and
5(e).
(j) Effective Warrant Agreement. The
Company and Transfer Online, Inc., as warrant agent for the
Warrants, shall have executed and delivered a warrant agreement
(the “Warrant
Agreement”) and the Warrant Agreement shall be in full
force and effect.
14
(k) Transfer Agent’s Certificate. The
Company’s transfer agent shall have furnished or caused to be
furnished to the Representative a certificate satisfactory to the
Representative of one of its authorized officers with respect to
the issuance of the Shares and Warrants and such other customary
matters related thereto as the Representative may reasonably
request.
(l) Eligible for DTC Clearance. At or prior
to the Closing Date and each Option Closing Date, the Shares and
Warrants shall be eligible for clearance and settlement through the
facilities of the DTC.
(m) Lock-Up Agreements. At the date of this
Agreement, the Representative shall have received the executed
“lock-up” agreements referred to in Section 4(p) hereof
from the Company’s officers and directors.
(n) Compliance with Blue Sky Laws. The
Securities shall be qualified for sale in such states and
jurisdictions as the Representative may reasonably request,
including, without limitation, qualification for exemption from
registration or prospectus delivery requirements in the provinces
and territories of Canada and other jurisdictions outside the
United States, and each such qualification shall be in effect and
not subject to any stop order or other proceeding on the Closing
Date and the Option Closing Date.
(o) Stock Exchange Listing. The Shares
shall have been duly authorized for listing on the NASDAQ Capital
Market, subject to official notice of issuance.
(p) Exchange Act Registration. One or more
registration statements in respect of the Shares and Warrants have
been filed on Form 8-A pursuant to Section 12(b) of the Exchange
Act, each of which registration statement complies in all material
respects with the Exchange Act.
(q) Good Standing. At the Closing Date and
any Option Closing Date, the Company shall have furnished to the
Representative satisfactory evidence of the good standing of the
Company and its subsidiaries, in their respective jurisdictions of
organization (to the extent the concept of “good
standing” or such equivalent concept exists under the laws of
the applicable jurisdictions) and their good standing as foreign
entities in such other jurisdictions as the Representative may
reasonably request, in each case in writing or any standard form of
telecommunication from the appropriate governmental authorities of
such jurisdictions. If the applicable jurisdiction does not have a
concept of “good standing,” the Company will furnish
evidence in writing or any standard form of telecommunication from
the appropriate governmental authorities that the relevant company
was duly incorporated and remains duly registered in the
jurisdiction of its incorporation.
(r) Company Certificates. The Company shall
have furnished to the Representative such certificates, in addition
to those specifically mentioned herein, as the Representative may
have reasonably requested as to the accuracy and completeness at
the Closing Date and any Option Closing Date of any statement in
the Registration Statement, the General Disclosure Package or the
Prospectus, as to the accuracy at the Closing Date and any Option
Closing Date of the representations and warranties of the Company
herein, as to the performance by the Company of its obligations hereunder, or as to
the fulfillment of the conditions concurrent and precedent to the
obligations hereunder of the Underwriters.
(s) No Objection. FINRA has confirmed that
it has not raised any objection with respect to the fairness and
reasonableness of the underwriting terms and arrangements relating
to the offering of the Offered Securities.
If any
of the conditions hereinabove provided for in this Section 5 shall
not have been fulfilled when and as required by this Agreement to
be fulfilled, the obligations of the Underwriters hereunder may be
terminated by the Representative by notifying the Company of such
termination in writing at or prior to the Closing Date or any
Option Closing Date, as the case may be.
(a) Indemnification of the Underwriters.
The Company shall indemnify and hold harmless each Underwriter, its
affiliates, the directors, officers, employees and agents of such
Underwriter and each person, if any, who controls such Underwriter
within the meaning of Section 15 of the Act or Section 20
of the Exchange 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 between any of the indemnified parties and any
indemnifying parties or between any indemnified party and any third
party, or otherwise, or any claim asserted), to which they, or any
of them, may become subject under the Act, the Exchange 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 (i) any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the
information deemed to be a part of the Registration Statement at
the time of effectiveness and at any subsequent time pursuant to
Rules 430A and 430B of the Rules and Regulations, as applicable, or
the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements
therein not misleading or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus, any preliminary prospectus supplement, any Issuer Free
Writing Prospectus or the Prospectus (or any amendment or
supplement to any of the foregoing) or the omission or alleged
omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading or (iii) any untrue statement
or alleged untrue statement of a material fact contained in any
materials or information provided to investors by, or with the
approval of, the Company in connection with the marketing of the
offering of the Securities, including any roadshow or investor
presentations made to investors by the Company (whether in person
or electronically) (collectively, Marketing Materials”) or
the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading or
(iv) in whole or in part any inaccuracy in any material respect in
the representations and warranties of the Company contained herein;
provided, however, that the Company shall not be
liable to the extent that such loss, claim, liability, expense or
damage is based on any untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity
with Underwriters’ Information. This indemnity agreement will
be in addition to any liability that the Company might otherwise
have.
15
(b) Indemnification of the Company. Each
Underwriter, severally and not
jointly, agrees to indemnify and hold harmless the Company,
its affiliates, the directors, officers, employees and agents of
the Company and each other person or entity, if any, who controls
the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, against any losses, liabilities, claims,
damages and expenses whatsoever, as incurred (including but not
limited to reasonable attorneys’ fees and any and all
reasonable expenses whatsoever, incurred in investigating,
preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities,
claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement at the time of effectiveness and at any subsequent time
pursuant to Rules 430A and 430B of the Rules and Regulations, any
Preliminary Prospectus, the Prospectus, or any amendment or
supplement to any of them, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that any such loss, liability, claim, damage or expense (or
action in respect thereof) arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon the Underwriters’
Information; provided, however, that in no case shall
any Underwriter be liable or responsible for any amount in excess
of the underwriting discount and commissions applicable to the
Securities purchased by such Underwriter hereunder. The parties
agree that such information provided by or on behalf of the
Underwriters through the Representative consists solely of the
material referred to in the last sentence of Section 3(c)
hereof.
(c) Indemnification Procedures. Any party
that proposes to assert the right to be indemnified under this
Section 6 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 6, notify each such indemnifying party
of the commencement of such action, enclosing a copy of all papers
served, but the omission so to notify such indemnifying party shall
not relieve the indemnifying party from any liability that it may
have to any indemnified party under the foregoing provisions of
this Section 6 unless, and
only to the extent that, such omission results in the forfeiture of
substantive rights or defenses by the indemnifying party. 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 promptly 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 satisfactory to the indemnified
party, and 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 out-of-pocket costs of investigation subsequently
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 one of the indemnifying parties in
connection with the defense of such action, (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) the indemnified party has
reasonably concluded that 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 shall not have the right to direct the defense
of such action on behalf of the indemnified party), (iv)
the indemnifying party does not
diligently defend the action after assumption of the
defense, or (v) the indemnifying party has not in fact
employed counsel 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
shall be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm admitted to practice
in such jurisdiction at any one time for all such indemnified party
or parties. All such fees, disbursements and other charges shall be
reimbursed by the indemnifying party promptly as they are incurred.
An indemnifying party shall 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). No indemnifying
party shall, without the prior written consent of each indemnified
party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding relating
to the matters contemplated by this Section 6 (whether or not any indemnified party
is a party thereto), unless (x) such settlement, compromise or
consent (i) includes an unconditional release of each indemnified
party from all liability arising or that may arise out of such
claim, action or proceeding and (ii) does not include a statement
as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party, and (y) the indemnifying party confirms in writing
its indemnification obligations hereunder with respect to such
settlement, compromise or judgment. Notwithstanding the
foregoing, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees
and expenses of counsel, such indemnifying party agrees that it
shall be liable for any settlement of the nature contemplated by
Section 6(a) effected without its written consent if (A) such
settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (B) such indemnifying
party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii)
such indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of such
settlement.
16
(d) Contribution. In order to provide for
just and equitable contribution in circumstances in which the
indemnification provided for in the foregoing paragraphs of this
Section 6 is applicable in
accordance with its terms but for any reason is held to be
unavailable, the Company and the Underwriters shall contribute to
the total losses, claims, liabilities, expenses and damages
(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 Underwriters, such as persons who control the
Company within the meaning of the Act, officers of the Company who
signed the Registration Statement and directors of the Company, who
may also be liable for contribution), to which the Company and the
Underwriter may be subject in such proportion as shall be
appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other from the
offering of the Securities pursuant to this Agreement. The relative benefits received by the Company and
the Underwriters shall be deemed to be in the same proportion as
(x) the total proceeds from the Offering (net of underwriting
discount and commissions but before deducting expenses) received by
the Company bears to (y) the underwriting discount and commissions
received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus. 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
Underwriters, on the other, with respect to the statements or
omissions which 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 Underwriters, the intent of the
parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 6(d) were to be
determined by pro rata allocation or by any other method of
allocation (even if the Underwriters were treated as one entity for
such purpose) which 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 6(d) shall be deemed to include, for purpose of
this Section 6(d), 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 6(d), no Underwriter shall be required to
contribute any amount in excess of the
underwriting discounts and commissions received by it. No
person found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 6(d), any person
who controls a party to this Agreement within the meaning of the
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, and each
director, officer, employee, counsel or agent of an Underwriter
will have the same rights to contribution as such Underwriter,
subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement
of any action against such party in respect of which a claim for
contribution may be made under this Section 6(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 6(d). The obligations of the Underwriters to contribute
pursuant to this Section 6(d) are several in proportion to the
respective number of Securities to be purchased by each of the
Underwriters hereunder and not joint. 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).
(e) Survival. The indemnity and
contribution agreements contained in this Section 6 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 any Underwriter or any
controlling Person thereof, (ii) acceptance of any of the
Securities and payment therefor or (iii) any termination of this
Agreement.
7. Termination. The obligations of
the Underwriters under this Agreement may be terminated at any time
prior to the Closing Date (or, with respect to the Option
Securities, on or prior to the Option Closing Date), by notice to
the Company from the Representative, without liability on the part
of the Underwriters to the Company, if, prior to delivery and
payment for the Firm Securities (or the Option Securities, as the
case may be), in the sole judgment of the Representative, any of
the following shall occur:
(a) trading or
quotation in any of the equity securities of the Company shall have
been suspended or limited by the Commission, The Nasdaq Stock
Market or by an exchange or otherwise;
(b) trading in
securities generally on the New York Stock Exchange, the NYSE MKT,
the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ
Global Select Market shall have been suspended or limited or
minimum or maximum prices shall have been generally established on
such exchange, or additional material governmental restrictions,
not in force on the date of this Agreement, shall have been imposed
upon trading in securities generally by such exchange or by order
of the Commission or any court or other governmental
authority;
(c) a general banking
moratorium shall have been declared by any of U.S. federal, New
York authorities;
(d) the United States
shall have become engaged in new hostilities, there shall have been
an escalation in hostilities involving the United States or there
shall have been a declaration of a national emergency or war by the
United States or there shall have occurred such a material adverse
change in general economic, political or financial conditions,
including, without limitation, as a result of terrorist activities
after the date hereof (or the effect of international conditions on
the financial markets in the United States shall be such), or any
other calamity or crisis shall have occurred, the effect of any of
which is such as to make it impracticable or inadvisable to market
the Securities on the terms and in the manner contemplated by the
Prospectus;
(e) the Company shall
have sustained a loss material or substantial to the Company by
reason of flood, fire, accident, hurricane, earthquake, theft,
sabotage, or other calamity or malicious act, whether or not such
loss shall have been insured, the effect of any of which is such as
to make it impracticable or inadvisable to market the Securities on
the terms and in the manner contemplated by the Prospectus;
or
(f) there shall have
been a Material Adverse Change.
17
8. Underwriter
Default.
(a) If
any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Securities hereunder, and if the
Securities with respect to which such default relates (the
“Default
Securities”) do not (after giving effect to
arrangements, if any, made by the Representative pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of
the Firm Securities, each non-defaulting Underwriter, acting
severally and not jointly, agrees to purchase from the Company that
number of Default Securities that bears the same proportion to the
total number of Default Securities then being purchased as the
number of Firm Securities set forth opposite the name of such
Underwriter on Schedule
A hereto bears to the aggregate number of Firm Securities
set forth opposite the names of the non-defaulting Underwriters;
subject, however, to such adjustments to eliminate fractional
shares as the Representative in its discretion shall
make.
(b) In
the event that the aggregate number of Default Securities exceeds
10% of the number of Firm Securities, the Representatives may in
their discretion arrange for themselves or for another party or
parties (including any non-defaulting Underwriter or Underwriters
who so agree) to purchase the Default Securities on the terms
contained herein. In the event that within five (5) calendar days
after such a default the Representative does not arrange for the
purchase of the Default Securities as provided in this Section 8,
this Agreement shall thereupon terminate, without liability on the
part of the Company with respect thereto (except in each case as
provided in Sections 4(k), 6 and 8) or the Underwriters, but
nothing in this Agreement shall relieve a defaulting Underwriter or
Underwriters of its or their liability, if any, to the other
Underwriters and the Company for damages occasioned by its or their
default hereunder.
(c) In
the event that any Default Securities are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another
party or parties as aforesaid, the Representatives or the Company
shall have the right to postpone the Closing Date for a period, not
exceeding five (5) Business Days, in order to effect whatever
changes may thereby be necessary in the Registration Statement or
the Prospectus or in any other documents and arrangements, and the
Company agrees to file promptly any amendment or supplement to the
Registration Statement or the Prospectus which, in the reasonable
opinion of Underwriters’ Counsel, may be necessary or
advisable. The term “Underwriter” as used in this
Agreement shall include any party substituted under this Section 8
with like effect as if it had originally been a party to this
Agreement with respect to such Firm Securities.
9. Miscellaneous.
(a) Notices. Notice given pursuant to any
of the provisions of this Agreement shall be in writing and, unless
otherwise specified, shall be mailed, hand delivered or telecopied
(a) if to the Company, at the office of the Company, 000 XX
00xx
Xxxxxx, Xxxxx 000, Xxxxx, Xxxxxxx 00000, telephone number: (000)
000-0000, Attention: Chief Executive Officer, or (b) if to the
Representative or any Underwriter, to XX Xxxxxx, division of
Benchmark Investments, LLC, 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Legal Department, telecopy number: [].
Any such notice shall be effective only upon receipt. Any notice
under Section 6 hereof may
be made by telecopy or telephone, but if so made shall be
subsequently confirmed in writing.
(b) No Third Party Beneficiaries. This
Agreement has been and is made solely for the benefit of the
Underwriters, the Company and, with respect to Section 6, the
controlling persons, directors, officers, employees, counsel and
agents referred to in Section 6 hereof, and their respective
successors and assigns, and no other person shall acquire or have
any right under or by virtue of this Agreement. The term
“successors and assigns” as used in this Agreement
shall not include a purchaser of Securities from any Underwriter in
his, her or its capacity as such a purchaser, as such purchaser of
Securities from such Underwriter.
(c) Survival of Representations and
Warranties. All representations, warranties and agreements
of the Company contained herein or in certificates or other
instruments delivered pursuant hereto shall remain operative and in
full force and effect regardless of any investigation made by or on
behalf of the Underwriters or any of their controlling persons and
shall survive delivery of and payment for the Securities
hereunder.
(d) Disclaimer of Fiduciary Relationship.
The Company acknowledges and agrees that (i) the purchase and sale
of the Securities pursuant to this Agreement, including the
determination of the public offering price of the Offered
Securities and any related discounts and commissions, is an
arm’s-length commercial transaction between the Company, on
the one hand, and the Underwriters, on the other hand, (ii) in
connection with the Offering contemplated by this Agreement and the
process leading to such transaction, the Underwriters are and have
been acting pursuant to a contractual
relationship created solely by this Agreement and are not
agents or fiduciaries of the Company or its securityholders,
creditors, employees or any other party, (iii) no Underwriter has
assumed nor will it assume any advisory or fiduciary responsibility
in favor of the Company with respect to the offering of the
Securities contemplated by this Agreement or the process leading
thereto (irrespective of whether such Underwriter or its affiliates
has advised or is currently advising the Company on other matters)
and each such Underwriter has no obligation to the Company with
respect to the offering of the Securities contemplated by this
Agreement except the obligations expressly set forth in this
Agreement, (iv) the Underwriters and their affiliates may be
engaged in a broad range of transactions that involve interests
that differ from those of the Company, and (v) no Underwriter has
provided any legal, accounting, regulatory or tax advice with
respect to the Offering contemplated by this Agreement and the
Company has consulted its own legal, accounting, regulatory and tax
advisors to the extent it deemed appropriate.
(e) Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE.
18
(f) Submission to Jurisdiction. The Company
irrevocably submits to the non-exclusive jurisdiction of any New
York State or United States federal court sitting in The City of
New York, Borough of Manhattan, over any suit, action or proceeding
arising out of or relating to this Agreement, the Disclosure
Package, the Prospectus, the Registration Statement, or the
offering of the Securities. The Company irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of venue of any such suit, action or
proceeding brought in such a court and any claim that any such
suit, action or proceeding brought in such a court has been brought
in an inconvenient forum. To the extent that the Company has or
hereafter may acquire any immunity (on the grounds of sovereignty
or otherwise) from the jurisdiction of any court or from any legal
process with respect to itself or its property, the Company
irrevocably waives, to the fullest extent permitted by law, such
immunity in respect of any such suit, action or proceeding
including without limitation, any immunity pursuant to the U.S.
Foreign Sovereign Immunities Act of 1976, as amended. Each of the Underwriters 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
Supreme Court of the State of New York, New York County, 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 or delivered by Federal Express via overnight
delivery 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 an
Underwriter mailed by certified mail or delivered by Federal
Express via overnight delivery to the Underwriters’ address
shall be deemed in every respect effective service of process upon
such Underwriter in any such suit, action or
proceeding.
(g) Judgment Currency. If for the purposes
of obtaining judgment in any court it is necessary to convert a sum
due hereunder into any currency other than United States dollars,
the parties hereto agree, to the fullest extent permitted by law,
that the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the Underwriters could
purchase United States dollars with such other currency in The City
of New York on the business day preceding that on which final
judgment is given. The obligation of the Company with respect to
any sum due from it to an Underwriter or any person controlling
such Underwriter shall, notwithstanding any judgment in a currency
other than United States dollars, not be discharged until the first
business day following receipt by such Underwriter or controlling
person of any sum in such other currency, and only to the extent
that such Underwriter or controlling person may in accordance with
normal banking procedures purchase United States dollars with such
other currency. If the United States dollars so purchased are less
than the sum originally due to such Underwriter or controlling
person hereunder, the Company agrees as a separate obligation and
notwithstanding any such judgment, to indemnify such Underwriter or
controlling person against such loss. If the United States dollars
so purchased are greater than the sum originally due to such
Underwriter or controlling person hereunder, such Underwriter or
controlling person agrees to pay to the Company an amount equal to
the excess of the dollars so purchased over the sum originally due
to such Underwriter or controlling person hereunder.
(h) Counterparts. 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.
(i) Survival of Provisions Upon Invalidity of Any
Single Provision. 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.
(j) Waiver of Jury Trial. The Company and
each Underwriter each hereby irrevocably waive any right they 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.
(k) Titles and Subtitles. The titles of the
sections and subsections of this Agreement are for convenience and
reference only and are not to be considered in construing this
Agreement.
(l) Entire Agreement. This Agreement
embodies the entire agreement and understanding between the parties
hereto and supersedes all prior agreements and understandings
relating to the subject matter hereof. This Agreement may not be
amended or otherwise modified or any provision hereof waived except
by an instrument in writing signed by the parties
hereto.
[Signature
page follows]
5822207
v231404.00002
- -
B-3
If the foregoing correctly sets forth your
understanding, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding
agreement among us.
Very
truly yours,
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By:
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/s/
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Name
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Title
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Accepted
by the Representatives, acting for themselves and as
Representatives
of the Underwriters named on Schedule A hereto,
as of
the date first written above:
XX XXXXXX,
division of Benchmark Investments, LLC
By:
Name:
Title:
SCHEDULE A
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Name of Underwriter
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Number of Units Being Purchased
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XX
Xxxxxx, division of Benchmark Investments, LLC
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Total
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Schedule
I
ISSUER
FREE WRITING PROSPECTUSES:
S-I-1
Schedule
II
1.
The public offering
price per Unit shall be $[ ].
2.
The Company is
selling [ ] Units.
3.
The Company has
granted an option to the Representative, on behalf of the
Underwriters, to purchase up to an additional [ ] Shares and/or [ ]
Warrants.
S-III-1
EXHIBIT
A
LOCK-UP AGREEMENT
[___],
2021
XX
Xxxxxx, division of Benchmark Investments, LLC
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Re: Novusterra
Inc.
Ladies
and Gentlemen:
As an
inducement to XX Xxxxxx, division of Benchmark Investments, LLC, as
representative of the underwriters (the “Representative”),
to execute an underwriting agreement (the “Underwriting
Agreement”) providing for a public offering (the
“Offering”)
of securities including the common stock, no par value (the
“Shares”),
of Novusterra Inc., a Florida corporation (the “Company”),
the undersigned hereby agrees that without, in each case, the prior
written consent of the Representative, during the period specified
in the second succeeding paragraph (the “Lock-Up
Period”), the undersigned will not (1) offer, 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, make any
short sale or otherwise transfer or dispose of, directly or
indirectly, any Shares or any securities convertible into,
exercisable or exchangeable for or that represent the right to
receive Shares (including, without limitation, Shares which may be
deemed to be beneficially owned by the undersigned in accordance
with the rules and regulations of the U.S. Securities and Exchange
Commission (the “SEC”) and
securities which may be issued upon exercise of a stock option or
warrant) whether now owned or hereafter acquired (the “Undersigned’s
Securities”) or (2) enter into any swap or other
agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Undersigned’s Securities,
whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Shares or such other securities, in
cash or otherwise. The foregoing restriction is expressly agreed to
preclude the undersigned from engaging in any hedging or other
transaction which is designed to or which reasonably could be
expected to lead to or result in a sale or disposition of the
Undersigned’s Securities even if such Undersigned’s
Securities would be disposed of by someone other than the
undersigned. Such prohibited hedging or other transactions would
include, without limitation, any short sale or any purchase, sale
or grant of any right (including, without limitation, any put or
call option) with respect to any of the Undersigned’s
Securities or with respect to any security that includes, relates
to, or derives any significant part of its value from such
Undersigned’s Securities.
In
addition, the undersigned agrees that, without the prior written
consent of the
Representative, it will
not, during the Lock-Up Period, make any demand for or exercise any
right with respect to, the registration of any Shares or any
security convertible into or exercisable or exchangeable for Shares
other than as contemplated in the registration statement relating
to the Offering.
The
Lock-Up Period shall mean the period commencing on the date of this
Lock-Up Agreement and continue and include the date one hundred and
eighty (180) days after the date of the final prospectus supplement
used to sell Shares in the Offering pursuant to the Underwriting
Agreement.
Notwithstanding the
foregoing, the undersigned may transfer the Undersigned’s
Securities (i) to a Permitted Transferee, (ii) as a bona fide gift or gifts, (iii) to any
trust for the direct or indirect benefit of the undersigned or the
immediate family of the undersigned, (iv) by virtue of the laws of
descent and distribution upon death of the undersigned, or (v)
pursuant to a qualified domestic relations order. As used in this
Agreement, the term “Permitted Transferee” shall mean,
if the undersigned is a corporation, company, business trust,
association, limited liability company, partnership, limited
liability partnership or other entity (collectively, the
“Entities” or,
individually, the “Entity”), to
any person or Entity which controls, is directly or indirectly
controlled by, or is under common control with the undersigned and,
if the undersigned is a partnership or limited liability company,
to its partners, former partners or an affiliated partnership (or
members, former members or an affiliated limited liability company)
managed by the same manager or managing partner (or managing
member, as the case may be) or management company, or managed by an
entity controlling, controlled by, or under common control with,
such manager or managing partner (or managing member) or management
company in accordance with partnership (or membership) interests;
provided, in the case of
clauses (i) through (v), that the transferee agrees in writing with
the Representative to be bound by the terms of this Lock-Up
Agreement, and provided,
further, that in the case of clauses (i) through (iii), that no
filing by any party in any public report or filing with the SEC
shall be required or shall be made voluntarily in connection with
such transfer. For purposes of this Lock-Up Agreement,
“immediate family” shall mean any relationship by
blood, marriage or adoption, not more remote than first cousin.
Furthermore, the undersigned may voluntarily forfeit Shares to pay
any withholding tax owed by the undersigned on account of the
vesting of such shares, which may be reported on a Form 4 as
such.
B-1
In
addition, the foregoing restrictions shall not apply to
(i) the exercise of stock options granted pursuant to the
Company’s equity incentive plans; provided,
that such restrictions shall apply to any of the
Undersigned’s Securities issued upon such exercise, or
(ii) the establishment of any contract, instruction or plan (a
“Plan”)
that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B)
under the Exchange Act; provided,
that no sales of the Undersigned’s Securities shall be made
pursuant to such a Plan prior to the expiration of the Lock-Up
Period, and such a Plan may only be established if no public
announcement of the establishment or existence thereof and no
filing with the SEC or other regulatory authority in respect
thereof or transactions thereunder or contemplated thereby, by the
undersigned, the Company or any other person, shall be required,
and no such announcement or filing is made voluntarily, by the
undersigned, the Company or any other person, prior to the
expiration of the Lock-Up Period.
In
furtherance of the foregoing, the Company and its transfer agent
and registrar are hereby authorized to decline to make any transfer
of Shares if such transfer would constitute a violation or breach
of this Lock-Up Agreement.
The
undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Agreement and
that, upon request, the undersigned will execute any additional
documents necessary in connection with the enforcement hereof. All
authority herein conferred or agreed to be conferred and any
obligations of the undersigned shall be binding upon the
successors, assigns, heirs or personal representatives of the
undersigned.
The
undersigned understands that the undersigned shall be released from
all obligations under this Lock-Up Agreement if (i) the
Company or the Representative informs the other that it does not
intend to proceed with the Offering, (ii) the Underwriting
Agreement does not become effective or if the Underwriting
Agreement (other than the provisions thereof which survive
termination) shall terminate or be terminated prior to payment for
and delivery of the Shares to be sold thereunder, or (iii) the
Offering is not completed by [ ].
The
undersigned understands that the Representative is entering into
the Underwriting Agreement and proceeding with the Offering in
reliance upon this Lock-Up Agreement.
This
Lock-Up Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
Whether
or not the Offering actually occurs depends on a number of factors,
including market conditions. Any Offering will only be made
pursuant to the Underwriting Agreement, the terms of which are
subject to negotiation among the parties thereto.
[Signature page
follows]
B-2
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Very truly yours,
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(Name - Please Print)
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(Signature)
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B-3
EXHIBIT
B
Form of
Press Release
[
]
[Date]
Novusterra
Inc., a Florida corporation (the “Company”), announced
today that XX Xxxxxx, division of Benchmark Investments, LLC, the
lead book-running manager in the Company’s recent public sale
of common stock, is [waiving][releasing] a lock-up restriction with
respect to [___] of the Company’s Shares held by [certain
officers or directors][an officer or director] of the Company. The
[waiver][release] will take effect on [___], and the Shares may be
sold on or after such date.
This press release is not an offer for sale of the securities in
the United States or in any other jurisdiction where such offer is
prohibited, and such securities may not be offered or sold in the
United States absent registration or an exemption from registration
under the United States Securities Act of 1933, as
amended.
C-1
