Up to 3,346,500 Shares RUMBLEON, INC. Class B Common Stock UNDERWRITING AGREEMENT
Exhibit 1.1
Up to 3,346,500 Shares
Class B Common Stock
October
19, 2017
▇▇▇▇
Capital Partners, LLC
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▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
And
Maxim
Group LLC
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▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
As
Representatives of the several Underwriters named on Schedule 1
attached hereto
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
The
undersigned, RumbleOn, Inc., a corporation formed under the laws of
the State of Nevada (the “Company”), hereby confirms its
agreement (this “Agreement”) with ▇▇▇▇ Capital
Partners, LLC and Maxim Group LLC (hereinafter collectively
referred to as “you” (including their correlatives) or
the “Representatives”) and with the
other underwriters named on Schedule 1 hereto for which the
Representatives are acting as representatives (the Representatives
and such other underwriters being collectively called the
“Underwriters”
or, individually, an “Underwriter”) as
follows:
1.
Purchase and Sale of
Shares.
1.1 Firm
Shares.
1.1.1. Nature
and Purchase of Firm Shares.
(i) On
the basis of the representations and warranties herein contained,
but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to the several Underwriters, an
aggregate of 2,910,000 shares (“Firm Shares”) of the
Company’s Class B Common Stock, par value $0.001 per share
(the “Class B
Common
Stock”).
(ii) The
Underwriters, severally and not jointly, agree to purchase from the
Company the number of Firm Shares set forth opposite their
respective names on Schedule 1 attached hereto and
made a part hereof at a purchase price of $5.115 per share (93% of
the per Firm Share offering price). The Firm Shares are to be
offered initially to the public at the offering price set forth on
the cover page of the Prospectus (as defined in Section 2.1.1).
1.1.2. Shares
Payment and Delivery.
(i) Delivery
and payment for the Firm Shares shall be made at 10:00 a.m., New
York City time, on the third (3rd) Business Day
following the effective date (the “Effective Date”) of the
Registration Statement (as defined in Section 2.1.1) (or the fourth
(4th)
Business Day following the Effective Date if the Registration
Statement is declared effective after 4:01 p.m., New York City
time) or at such earlier time as shall be agreed upon by the
Representatives and the Company, at the offices of ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ LLP, ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (“Representatives’ Counsel”),
or at such other place (or remotely by facsimile or other
electronic transmission) as shall be agreed upon by the
Representatives and the Company. The hour and date of delivery and
payment for the Firm Shares is called the “Closing Date.”
(ii) Payment
for the Firm Shares shall be made on the Closing Date by wire
transfer in Federal (same day) funds, payable to the order of the
Company upon delivery of the certificates (in form and substance
satisfactory to the Underwriters) representing the Firm Shares (or
through the facilities of the Depository Trust Company
(“DTC”)) for the
account of the Underwriters. The Firm Shares shall be registered in
such name or names and in such authorized denominations as the
Representatives may request in writing at least two (2) full
Business Days prior to the Closing Date. The Company shall not be
obligated to sell or deliver the Firm Shares except upon tender of
payment by the Representatives for all of the Firm Shares. The term
“Business Day”
means any day other than a Saturday, a Sunday or a legal holiday or
a day on which banking institutions are authorized or obligated by
law to close in New York, New York.
1.2 Over-allotment
Option.
1.2.1. Option
Shares. For the purposes of covering any over-allotments in
connection with the distribution and sale of the Firm Shares, the
Company hereby grants to the Underwriters an option to purchase up
to 436,500 additional
shares of Class B Common Stock, representing fifteen percent (15%)
of the Firm Shares sold in the offering, from the Company (the
“Over-allotment
Option”). Such 436,500 additional shares of Class B
Common Stock, the net proceeds of which will be deposited with the
Company’s account, are hereinafter referred to as
“Option Shares.”
The purchase price to be paid per Option Share shall be equal to
the price per Firm Share set forth in Section 1.1.1. The Firm Shares
and the Option Shares are hereinafter referred to together as the
“Public Securities.” The
offering and sale of the Public Securities is hereinafter referred
to as the “Offering.”
1.2.2. Exercise
of Option. The Over-allotment Option granted pursuant to
Section 1.2.1 may
be exercised by the Representatives as to all (at any time) or any
part (from time to time) of the Option Shares within thirty (30)
days after the Effective Date. The Underwriters shall not be under
any obligation to purchase any Option Shares prior to the exercise
of the Over-allotment Option. The Over-allotment Option granted
hereby may be exercised by the giving of oral notice to the Company
from the Representatives, which must be confirmed in writing by
overnight mail or facsimile or other electronic transmission
setting forth the number of Option Shares to be purchased and the
date and time for delivery of and payment for the Option Shares
(the “Option Closing
Date”), which shall not be earlier than the Closing
Date nor earlier than the first Business Day after the date on
which the option shall have been exercised or such other time as
shall be agreed upon by the Company and the Representatives, at the
offices of Representatives’ Counsel or at such other place
(including remotely by facsimile or other electronic transmission)
as shall be agreed upon by the Company and the Representatives. If
such delivery and payment for the Option Shares does not occur on
the Closing Date, the Option Closing Date will be as set forth in
the notice. Upon exercise of the Over-allotment Option with respect
to all or any portion of the Option Shares, subject to the terms
and conditions set forth herein, (i) the Company shall become
obligated to sell to the Underwriters the number of Option Shares
specified in such notice and (ii) each of the Underwriters, acting
severally and not jointly, shall purchase that portion of the total
number of Option Shares then being purchased as set forth in
Schedule 1 opposite
the name of such Underwriter.
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1.2.3. Payment
and Delivery. Payment for the Option Shares shall be made on
the Option Closing Date by wire transfer in Federal (same day)
funds, payable to the order of the Company upon delivery to you of
certificates (in form and substance satisfactory to the
Underwriters) representing the Option Shares (or through the
facilities of DTC) for the account of the Underwriters. The Option
Shares shall be registered in such name or names and in such
authorized denominations as the Representatives may request in
writing at least one (1) full Business Day prior to the Option
Closing Date. The Company shall not be obligated to sell or deliver
the Option Shares except upon tender of payment by the
Representatives for applicable Option Shares.
1.3 Representatives’
Warrants.
1.3.1. Purchase
Warrants. The Company hereby agrees to issue and sell to the
Representatives (and/or their designees) on the Closing Date an
option (“Representatives’ Warrant”)
for the purchase of an aggregate of up to 250,988 shares of Class B
Common Stock, representing 7.5% of the Firm Shares and the Option
Shares (if any), for an aggregate purchase price of $100.00. The
Representatives’ Warrant agreement, in the form attached
hereto as Exhibit A (the
“Representatives’
Warrant Agreement”), shall be exercisable, in whole or
in part, commencing on a date which is one (1) year after the
Effective Date and expiring on the five-year anniversary of the
Effective Date at an initial exercise price per share of Class B
Common Stock of $6.325, which is equal to 115% of the initial
public offering price of the Firm Shares. The
Representatives’ Warrant Agreement and the shares of Class B
Common Stock issuable upon exercise thereof are hereinafter
referred to together as the “Representatives’
Securities.” The Representatives understand and agree
that there are significant restrictions pursuant to FINRA Rule 5110
against transferring the Representatives’ Warrant Agreement
and the underlying shares of Class B Common Stock during the one
hundred eighty (180) days after the Effective Date and by its
acceptance thereof shall agree that they will not sell, transfer,
assign, pledge or hypothecate the Representatives’ Warrant
Agreement, or any portion thereof, or be the subject of any
hedging, short sale, derivative, put or call transaction that would
result in the effective economic disposition of such securities for
a period of one hundred eighty (180) days following the Effective
Date to anyone other than (i) an Underwriter or a selected dealer
in connection with the Offering, or (ii) a bona fide officer or
partner of the Representatives or of any such Underwriter or
selected dealer; and only if any such transferee agrees to the
foregoing lock-up restrictions.
1.3.2. Delivery.
Delivery of the Representatives’ Warrant Agreement shall be
made on the Closing Date and shall be issued in the name or names
and in such authorized denominations as the Representatives may
request.
1.4 ▇▇▇▇
Capital Advisory Fee. The Company hereby agrees to pay to
▇▇▇▇ Capital Partners, LLC on the Closing Date an advisory fee in
the amount of $150,000 (the “Advisory Fee”).
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2.
Representations and Warranties of the
Company. The Company represents and warrants to the
Underwriters as of the Applicable Time (as defined below), as of
the Closing Date and as of the Option Closing Date, if any, as
follows:
2.1 Filing
of Registration Statement.
2.1.1. Pursuant
to the Securities Act. The Company has filed with the U.S.
Securities and Exchange Commission (the “Commission”) a registration
statement, and an amendment or amendments thereto, on Form S-1
(File No. 333-220308), including any related prospectus or
prospectuses, for the registration of the Public Securities and the
Representatives’ Securities under the Securities Act of 1933,
as amended (the “Securities
Act”), which registration statement and amendment or
amendments have been prepared by the Company in all material
respects in conformity with the requirements of the Securities Act
and the rules and regulations of the Commission under the
Securities Act (the “Securities Act Regulations”) and
will contain all material statements that are required to be stated
therein in accordance with the Securities Act and the Securities
Act Regulations. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at
the time the registration statement became effective (including the
Preliminary Prospectus included in the registration statement,
financial statements, schedules, exhibits and all other documents
filed as a part thereof or incorporated therein and all information
deemed to be a part thereof as of the Effective Date pursuant to
paragraph (b) of Rule 430A of the Securities Act Regulations (the
“Rule 430A
Information”)), is referred to herein as the
“Registration Statement.” If the Company files any
registration statement pursuant to Rule 462(b) of the Securities
Act Regulations, then after such filing, the term
“Registration
Statement” shall include such registration statement
filed pursuant to Rule 462(b). The Registration Statement has been
declared effective by the Commission on the date
hereof.
Each
prospectus used prior to the effectiveness of the Registration
Statement, and each prospectus that omitted the Rule 430A
Information that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a
“Preliminary
Prospectus.” The Preliminary Prospectus, subject to
completion, dated October 17, 2017, that was included in the
Registration Statement immediately prior to the Applicable Time is
hereinafter called the “Pricing Prospectus.” The final
prospectus in the form first furnished to the Underwriters for use
in the Offering is hereinafter called the “Prospectus.” Any reference to the
“most recent Preliminary
Prospectus” shall be deemed to refer to the latest
Preliminary Prospectus included in the Registration
Statement.
“Applicable Time” means 8:00 a.m.,
New York City time, on the date of this Agreement.
“Issuer Free Writing Prospectus”
means any “issuer free writing prospectus,” as defined
in Rule 433 of the Securities Act Regulations (“Rule 433”), including without
limitation any “free writing prospectus” (as defined in
Rule 405 of the Securities Act Regulations) relating to the Public
Securities that is (i) required to be filed with the
Commission by the Company, (ii) a “road show that is a
written communication” within the meaning of Rule
433(d)(8)(i), whether or not required to be filed with the
Commission, or (iii) exempt from filing with the Commission
pursuant to Rule 433(d)(5)(i) because it contains a description of
the Public 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
(other than a “bona
fide electronic road show,” as defined in Rule 433
(the “Bona Fide Electronic
Road Show”)), as evidenced by its being specified in
Schedule 2-B
hereto.
“Issuer Limited Use Free Writing
Prospectus” means any Issuer Free Writing Prospectus
that is not an Issuer General Use Free Writing
Prospectus.
“Pricing Disclosure Package” means
any Issuer General Use Free Writing Prospectus issued at or prior
to the Applicable Time, the Pricing Prospectus and the information
included on Schedule
2-A hereto, all considered together.
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2.1.2. Pursuant
to the Exchange Act. The Company has filed with the
Commission a Form 8-A ( File Number 001-38248) providing for the
registration pursuant to Section 12(b) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), of the shares of
Class B Common Stock. The registration of the shares of Class B
Common Stock under the Exchange Act has been declared effective by
the Commission on or prior to the date hereof. The Company has
taken no action designed to, or likely to have the effect of,
terminating the registration of the shares of Class B Common Stock
under the Exchange Act, nor has the Company received any
notification that the Commission is contemplating terminating such
registration.
2.2 Stock
Exchange Listing. The shares of Class B Common Stock have
been approved for listing on The NASDAQ Capital Market (the
“Exchange”), and
the Company has taken no action designed to, or likely to have the
effect of, delisting the shares of Class B Common Stock from the
Exchange, nor has the Company received any notification that the
Exchange is contemplating terminating such listing except as
described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus.
2.3 No
Stop Orders, etc. Neither the Commission nor, to the
Company’s knowledge, any state regulatory authority has
issued any order preventing or suspending the use of the
Registration Statement, any Preliminary Prospectus or the
Prospectus or has instituted or, to the Company’s knowledge,
threatened to institute, any proceedings with respect to such an
order. The Company has complied with each request (if any) from the
Commission for additional information.
2.4 Disclosures
in Registration Statement.
2.4.1. Compliance
with Securities Act and 10b-5 Representation.
(i) Each
of the Registration Statement and any post-effective amendment
thereto, at the time it became effective, complied in all material
respects with the requirements of the Securities Act and the
Securities Act Regulations. Each Preliminary Prospectus, including
the prospectus filed as part of the Registration Statement as
originally filed or as part of any amendment or supplement thereto,
and the Prospectus, at the time each was filed with the Commission,
complied in all material respects with the requirements of the
Securities Act and the Securities Act Regulations. Each Preliminary
Prospectus delivered to the Underwriters for use in connection with
this Offering and
the Prospectus was or will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to
▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
(ii) Neither
the Registration Statement nor any amendment thereto, at its
effective time, as of the Applicable Time, at the Closing Date or
at any Option Closing Date (if any), contained, contains or will
contain an untrue statement of a material fact or omitted, omits or
will omit to state a material fact required to be stated therein or
necessary to make the statements therein not
misleading.
(iii) The
Pricing Disclosure Package, as of the Applicable Time, at the
Closing Date or at any Option Closing Date (if any), did not, does
not and will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; and each Issuer Limited Use Free
Writing Prospectus hereto does not conflict with the information
contained in the Registration Statement, any Preliminary
Prospectus, the Pricing Prospectus or the Prospectus, and each such
Issuer Limited Use Free Writing Prospectus, as supplemented by
andtaken together with the Pricing Prospectus as of the Applicable
Time, did not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which
theywere made, not misleading; provided, however, that this
representation and warranty shall not apply to statements made or
statements omitted in reliance upon and in conformity with written
information furnished to the Company with respect to the
Underwriters by the Representatives expressly for use in the
Registration Statement, the Pricing Prospectus or the Prospectus or
any amendment thereof or supplement thereto. The parties
acknowledge and agree that such information provided by or on
behalf of any Underwriter consists solely of the following
disclosure contained in the “Underwriting” section of
the Prospectus: the third, fourteenth, fifteenth, sixteenth,
seventeenth and eighteenth paragraphs (the “Underwriters’ Information”);
and
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(iv) Neither
the Prospectus nor any amendment or supplement thereto (including
any prospectus wrapper), as of its issue date, at the time of any
filing with the Commission pursuant to Rule 424(b), at the Closing
Date or at any Option Closing Date, included, includes or will
include an untrue statement of a material fact or omitted, omits or
will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this
representation and warranty shall not apply to
the Underwriters’ Information.
2.4.2. Disclosure
of Agreements. The agreements and documents described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus conform in all material respects to the descriptions
thereof contained therein and there are no agreements or other
documents required by the Securities Act and the Securities Act
Regulations to be described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus or to be filed with
the Commission as exhibits to the Registration Statement, that have
not been so described or filed. Each agreement or other instrument
(however characterized or described) to which the Company is a
party or by which it is or may be bound or affected and
(i) that is referred to in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, 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 therefor may be brought. None of such agreements or
instruments has been assigned by the Company, and neither the
Company nor, to the Company’s knowledge, any other party is
in default thereunder and, to 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 (each, a “Governmental Entity”), including,
without limitation, those relating to environmental laws and
regulations.
2.4.3. Prior
Securities Transactions. No securities of the Company have
been sold by the Company or by or on behalf of, or for the benefit
of, any person or persons controlling, controlled by or under
common control with the Company, except as disclosed in the
Registration Statement, the Pricing Disclosure Package and the
Preliminary Prospectus.
2.4.4. Regulations.
The disclosures in the Registration Statement, the Pricing
Disclosure Package and the Prospectus concerning the effects of
federal, state, local and all foreign regulation on the Offering
and the Company’s business as currently contemplated are
correct in all material respects and no other such regulations are
required to be disclosed in the Registration Statement, the Pricing
Disclosure Package and the Prospectus which are not so
disclosed.
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2.5 Changes
After Dates in Registration Statement.
2.5.1. No
Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, except as otherwise
specifically stated therein: (i) there has been no material
adverse change in the financial position or results of operations
of the Company, nor any change or development that, singularly or
in the aggregate, would involve a material adverse change or a
prospective material adverse change, in or affecting the condition
(financial or otherwise), results of operations, business, assets
or prospects of the Company (a “Material Adverse Change”);
(ii) there have been no material transactions entered into by
the Company, other than as contemplated pursuant to this Agreement;
and (iii) no officer or director of the Company has resigned
from any position with the Company.
2.5.2. Recent
Securities Transactions, etc. Subsequent to the respective
dates as of which information is given in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, and
except as may otherwise be indicated or contemplated herein or
disclosed in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, the Company has not: (i) issued
any securities or incurred any liability or obligation, direct or
contingent, for borrowed money; or (ii) declared or paid any
dividend or made any other distribution on or in respect to its
capital stock.
2.6 Independent
Accountants. To the knowledge of the Company, ▇▇▇▇▇▇ Pera
& Co., PLCC (the “Auditor”), whose report is filed
with the Commission as part of the Registration Statement, the
Pricing Disclosure Package and the Prospectus, is an independent
registered public accounting firm as required by the Securities Act
and the Securities Act Regulations and the Public Company
Accounting Oversight Board. The Auditor has not, during the periods
covered by the financial statements included in the Registration
Statement, the Pricing Disclosure Package and the Prospectus,
provided to the Company any non-audit services, as such term is
used in Section 10A(g) of the Exchange Act.
2.7 Financial
Statements, etc. The financial statements, including the
notes thereto and supporting schedules included in the Registration
Statement, the Pricing Disclosure Package and the Prospectus,
fairly present the financial position and the results of operations
of the Company and NextGen Dealer Solutions, LLC
(“NextGen”) at
the dates and for the periods to which they apply; and such
financial statements have been prepared in conformity with U.S.
generally accepted accounting principles (“GAAP”), consistently applied
throughout the periods involved (provided that unaudited interim
financial statements are subject to year-end audit adjustments that
are not expected to be material in the aggregate and do not contain
all footnotes required by GAAP); and the supporting schedules
included in the Registration Statement present fairly the
information required to be stated therein. Except as included
therein, no historical or pro forma financial statements are
required to be included in the Registration Statement, the Pricing
Disclosure Package or the Prospectus under the Securities Act or
the Securities Act Regulations, other than the unaudited pro-forma
condensed combined financial statements relating to the acquisition
by the Company of NextGen and included in the Registration
Statement, the Pricing Disclosure Package and the Prospectus
(collectively, the “NextGen
Pro Forma Financials”). The NextGen Pro Forma
Financials, pro forma and pro forma as adjusted financial
information and the related notes, if any, included in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus have been properly compiled and prepared in accordance
with the applicable requirements of the Securities Act and the
Securities Act Regulations and present fairly the information shown
therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
All disclosures contained in the Registration Statement, the
Pricing Disclosure Package or the Prospectus regarding
“non-GAAP financial measures” (as such term is defined
by the rules and regulations of the Commission), if any, comply
with Regulation G of the Exchange Act and Item 10 of Regulation S-K
of the Securities Act, to the extent applicable. Each of the
Registration Statement, the Pricing Disclosure Package and the
Prospectus discloses all material off-balance sheet transactions,
arrangements, obligations (including contingent obligations), and
other relationships of the Company with unconsolidated entities or
other persons that may have a material current or future effect on
the Company’s financial condition, changes in financial
condition, results of operations, liquidity, capital expenditures,
capital resources, or significant components of revenues or
expenses. Except as disclosed in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, (a) the Company has not incurred any material
liabilities or obligations, direct or contingent, or entered into
any material transactions other than in the ordinary course of
business, (b) the Company has not declared or paid any dividends or
made any distribution of any kind with respect to its capital
stock, (c) there has not been any change in the capital stock of
the Company, or, other than in
the course of business, any grants under any stock compensation
plan, and (d) there has not
been any material adverse change in the Company’s long-term
or short-term debt.
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2.8 Authorized
Capital; Options, etc. The Company had, at the date or dates
indicated in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, the duly authorized, issued and
outstanding capitalization as set forth therein. Based on the
assumptions stated in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, the Company will have on the
Closing Date the adjusted stock capitalization set forth therein.
Except as set forth in, or contemplated by, the Registration
Statement, the Pricing Disclosure Package and the Prospectus, on
the Effective Date, as of the Applicable Time and on the Closing
Date and any Option Closing Date, there will be no stock options,
warrants, or other rights to purchase or otherwise acquire any
authorized, but unissued shares of the Company’s Class A
Common Stock, $0.001 per share (the “Class A Common Stock”) or the
Class B Common Stock or any security convertible or exercisable
into shares of Class A Common Stock or Class B Common Stock, or any
contracts or commitments to issue or sell shares of Class A Common
Stock, Class B Common Stock or any such options, warrants, rights
or convertible securities.
2.9 Valid
Issuance of Securities, etc.
2.9.1. Outstanding
Securities. All issued and outstanding securities of the
Company issued prior to the transactions contemplated by this
Agreement have been duly authorized and validly issued and are
fully paid and non-assessable; the holders thereof have no rights
of rescission with respect thereto, and are not subject to personal
liability by reason of being such holders; and none of such
securities were issued in violation of the preemptive rights of any
holders of any security of the Company or similar contractual
rights granted by the Company. The authorized shares of Class B
Common Stock conform in all material respects to all statements
relating thereto contained in the Registration Statement, the
Pricing Disclosure Package and the Prospectus. The offers and sales
of the outstanding shares of Class A Common Stock and Class B
Common Stock were at all relevant times either registered under the
Securities Act and the applicable state securities or “blue
sky” laws or, based in part on the representations and
warranties of the purchasers of such shares of Class A Common Stock
and Class B Common Stock, exempt from such registration
requirements.
2.9.2. Securities
Sold Pursuant to this Agreement. The Public Securities and
Representatives’ Securities have been duly authorized for
issuance and sale and, when issued and paid for, will be validly
issued, fully paid and non-assessable; the holders thereof are not
and will not be subject to personal liability by reason of being
such holders; the Public Securities and Representatives’
Securities are not and will not be subject to the preemptive rights
of any holders of any security of the Company or similar
contractual rights granted by the Company; and all corporate action
required to be taken for the authorization, issuance and sale of
the Public Securities and Representatives’ Securities has
been duly and validly taken. The Public Securities and
Representatives’ Securities conform in all material respects
to all statements with respect thereto contained in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus. All corporate action required to be taken for the
authorization, issuance and sale of the Representatives’
Warrant Agreement has been duly and validly taken; the shares of
Class B Common Stock issuable upon exercise of the
Representatives’ Warrant have been duly authorized and
reserved for issuance by all necessary corporate action on the part
of the Company and when paid for and issued in accordance with the
Representatives’ Warrant and the Representatives’
Warrant Agreement, such shares of Class B Common Stock will be
validly issued, fully paid and non-assessable; the holders thereof
are not and will not be subject to personal liability by reason of
being such holders; and such shares of Class B Common Stock are not
and will not be subject to the preemptive rights of any holders of
any security of the Company or similar contractual rights granted
by the Company.
- 8 -
2.10 Registration
Rights of Third Parties. Except as set forth in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, no holders of any securities of the Company or any
rights exercisable for or convertible or exchangeable into
securities of the Company have the right to require the Company to
register any such securities of the Company under the Securities
Act or to include any such securities in a registration statement
to be filed by the Company.
2.11 Validity
and Binding Effect of Agreements. This Agreement and the
Representatives’ Warrant Agreement have been duly and validly
authorized by the Company, and, when executed and delivered, will
constitute, the valid and binding agreements of the Company,
enforceable against the Company in accordance with their respective
terms, except: (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally; (ii) as enforceability of
any indemnification or contribution provision may be limited under
the federal and state securities laws; and (iii) 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 therefor
may be brought.
2.12 No
Conflicts, etc. The execution, delivery and performance by
the Company of this Agreement, the Representatives’ Warrant
Agreement and all ancillary documents, the consummation by the
Company of the transactions herein and therein contemplated and the
compliance by the Company with the terms hereof and thereof do not
and will not, with or without the giving of notice or the lapse of
time or both: (i) result in a material breach of, or conflict
with any of the terms and provisions of, or constitute a material
default under, or result in the creation, modification, termination
or imposition of any lien, charge or encumbrance upon any property
or assets of the Company pursuant to the terms of any agreement or
instrument to which the Company is a party; (ii) result in any
violation of the provisions of the Company’s Articles of
Incorporation (as the same may be amended or restated from time to
time, the “Charter”) or the Company’s
bylaws (the “Bylaws”); or (iii) violate
any existing applicable law, rule, regulation, judgment, order or
decree of any Governmental Entity as of the date
hereof.
2.13 No
Defaults; Violations. No material default exists in the due
performance and observance of any term, covenant or condition of
any material license, contract, indenture, mortgage, deed of trust,
note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any
other material agreement or instrument to which the Company is a
party or by which the Company may be bound or to which any of the
properties or assets of the Company is subject. The Company is not
in violation of any term or provision of its Charter or Bylaws, or
in violation of any franchise, license, permit, applicable law,
rule, regulation, judgment or decree of any Governmental
Entity.
2.14 Corporate
Power; Licenses; Consents.
2.14.1. Conduct of Business. Except as
described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, the Company has all requisite corporate
power and authority, and has all necessary authorizations,
approvals, orders, licenses, certificates and permits of and from
all governmental regulatory officials and bodies that it needs as
of the date hereof to conduct its business purpose as described in
the Registration Statement, the Pricing Disclosure Package and the
Prospectus.
- 9 -
2.14.2. Transactions Contemplated
Herein. The Company has all corporate power and authority to
enter into this Agreement and to carry out the provisions and
conditions hereof, and all consents, authorizations, approvals and
orders required in connection therewith have been obtained. No
consent, authorization or order of, and no filing with, any court,
Governmental Entity or other body is required for the valid
issuance, sale and delivery of the Public Securities and the
consummation of the transactions and agreements contemplated by
this Agreement and the Representatives’ Warrant Agreement and
as contemplated by the Registration Statement, the Pricing
Disclosure Package and the Prospectus, except with respect to
applicable federal and state securities laws and the rules and
regulations of the Financial Industry Regulatory Authority, Inc.
(“FINRA”).
2.15 Independence
Questionnaires. To the Company’s knowledge, all
information contained in the independence questionnaires (the
“Questionnaires”) completed by each
of the Company’s directors and officers immediately prior to
the Offering (the “Insiders”) as supplemented by all
information concerning the Company’s directors, officers and
principal shareholders as described in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, as well as in
the Lock-Up Agreement (as defined in Section 2.24), provided to the
Underwriters, is true and correct in all material respects and the
Company has not become aware of any information which would cause
the information disclosed in the Questionnaires to become
materially inaccurate and incorrect.
2.16 Litigation;
Governmental Proceedings. There is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or
governmental proceeding pending or, to the Company’s
knowledge, threatened against, or involving the Company which has
not been disclosed in the Registration Statement, the Pricing
Disclosure Package and the Prospectus or in connection with the
Company’s listing application for the listing of the Public
Securities on the Exchange, which if resolved adversely to the
Company is reasonably likely to result in a Material Adverse
Change.
2.17 Good
Standing. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of
the State of Nevada as of the date hereof, and is duly qualified to
do business and is in good standing in each other jurisdiction in
which its ownership or lease of property or the conduct of business
requires such qualification, except where the failure to qualify,
singularly or in the aggregate, would not have or reasonably be
expected to result in a Material Adverse Change.
2.18 Insurance.
The Company carries or is entitled to the benefits of insurance,
with reputable insurers, in such amounts and covering such risks
which the Company believes are adequate, including, but not limited
to, directors and officers insurance coverage at least equal to
$5,000,000 and the Company has included each Underwriter as an
additional insured party to the directors and officers insurance
coverageand all such insurance is in full force and effect. The
Company has no reason to believe that it will not be able (i) to
renew its existing insurance coverage as and when such policies
expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its
business as now conducted and at a cost that would not result in a
Material Adverse Change.
- 10 -
2.19 Transactions
Affecting Disclosure to FINRA.
2.19.1. Finder’s Fees. Except as
described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, there are no claims, payments,
arrangements, agreements or understandings relating to the payment
of a finder’s, consulting or origination fee by the Company
or any Insider with respect to the sale of the Public Securities
hereunder or any other arrangements, agreements or understandings
of the Company or, to the Company’s knowledge, any of its
shareholders that may affect the Underwriters’ compensation,
as determined by FINRA.
2.19.2. Payments Within Twelve (12)
Months. Except as described in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, the Company has
not made any direct or indirect payments (in cash, securities or
otherwise) to: (i) any person, as a finder’s fee,
consulting fee or otherwise, in consideration of such person
raising capital for the Company or introducing to the Company
persons who raised or provided capital to the Company; (ii) any
FINRA member; or (iii) any person or entity that has any
direct or indirect affiliation or association with any FINRA
member, within the twelve (12) months prior to the Effective Date,
other than the payment to the Underwriters as provided hereunder in
connection with the Offering.
2.19.3. Use of Proceeds. None of the
net proceeds of the Offering will be paid by the Company to any
participating FINRA member or its affiliates, except as
specifically authorized herein.
2.19.4. FINRA Affiliation. There is no
(i) officer or director of the Company, (ii) beneficial owner of 5%
or more of any class of the Company's securities or (iii)
beneficial owner of the Company's unregistered equity securities
which were acquired during the 180-day period immediately preceding
the filing of the Registration Statement that is an affiliate or
associated person of a FINRA member participating in the Offering
(as determined in accordance with the rules and regulations of
FINRA).
2.19.5. Information. All information
provided by the Company in its FINRA questionnaire to
Representatives’ Counsel specifically for use by
Representatives’ Counsel in connection with its Public
Offering System filings (and related disclosure) with FINRA is
true, correct and complete in all material respects.
2.20 Foreign
Corrupt Practices Act. The Company or, to the
Company’s knowledge, any director, officer, agent, employee
or affiliate of the Company or any other person acting on behalf of
the Company, has not, directly or indirectly, given or agreed to
give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or
official or employee of any governmental agency or instrumentality
of any government (domesticor foreign) or any political party or
candidate for office (domestic or foreign) or other person who was,
is, or may be in a position to help or hinder the business of the
Company (or assist it in connection with any actual or proposed
transaction) that (i) might subject the Company to any damage
or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, might have had a
Material Adverse Change or (iii) if not continued in the
future, might adversely affect the assets, business, operations or
prospects of the Company. The Company has taken reasonable steps to
ensure that its accounting controls and procedures are sufficient
to cause the Company to comply in all material respects with the
Foreign Corrupt Practices Act of 1977, as amended.
2.21 Compliance
with OFAC. The Company or, to the Company’s knowledge,
any director, officer, agent, employee or affiliate of the Company
or any other person acting on behalf of the Company, is not
currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Department of the Treasury
(“OFAC”), and
the Company will not, directly or indirectly, use the proceeds of
the Offering hereunder, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or
other person or entity, for the purpose of financing the activities
of any person currently subject to any U.S. sanctions administered
by OFAC.
2.22 Money
Laundering Laws. The operations of the Company are and have
been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any Governmental
Entity (collectively, the “Money Laundering Laws”); and no
action, suit or proceeding by or before any Governmental Entity
involving the Company with respect to the Money Laundering Laws is
pending or, to the best knowledge of the Company,
threatened.
- 11 -
2.23 Officers’
Certificate. Any certificate signed by any duly authorized
officer of the Company and delivered to you or to
Representatives’ Counsel shall be deemed a representation and
warranty by the Company to the Underwriters as to the matters
covered thereby.
2.24 Lock-Up
Agreements. Schedule 3 hereto contains a
complete and accurate list of the Company’s executive
officers, directors and each owner of 10% or more of the the
Company’s outstanding shares of Class B Common Stock (or
securities convertible or exercisable into shares of Class B Common
Stock) and each owner of Class A Common Stock (collectively, the
“Lock-Up
Parties”). The Company has caused each of the Lock-Up
Parties to deliver to the Representatives an executed Lock-Up
Agreement, in the form attached hereto as Exhibit B (the
“Lock-Up
Agreement”), prior to the execution of this
Agreement.
2.25 Subsidiaries.
Except as set forth in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, the Company has no direct or
indirect subsidiaries.
2.26 Related
Party Transactions. There are no business relationships or
related party transactions involving the Company or any other
person required to be described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus that have not been
described as required.
2.27 Board
of Directors. The Board of Directors of the Company is
comprised of the persons set forth under the heading of the Pricing
Prospectus and the Prospectus captioned “Management.”
The qualifications of the persons serving as board members and the
overall composition of the board comply with the Exchange Act, the
rules and regulations of the Commission under the Exchange Act (the
“Exchange Act
Regulations”), the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the
rules promulgated thereunder (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”) applicable to
the Company and the listing rules of the Exchange. At least one
member of the Audit Committee of the Board of Directors of the
Company qualifies as an “audit committee financial
expert,” as such term is defined under Regulation S-K and the
listing rules of the Exchange. In addition, at least a majority of
the persons serving on the Board of Directors qualify as
“independent,” as defined under the listing rules of
the Exchange.
2.28 ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Compliance.
2.28.1. Disclosure Controls. The
Company has developed and currently maintains disclosure controls
and procedures that comply with Rule 13a-15 or 15d-15 under the
Exchange Act Regulations, and such controls and procedures are
effective to ensure that all material information concerning the
Company are made known on a timely basis to the individuals
responsible for the preparation of the Company’s Exchange Act
filings and other public disclosure documents.
2.28.2. Compliance. The Company is, or
at the Applicable Time and on the Closing Date will be, in material
compliance with the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act applicable
to it, and has implemented or will implement such programs and
taken reasonable steps to ensure the Company’s future
compliance (not later than the relevant statutory and regulatory
deadlines therefor) with all of the material provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
2.29 Accounting
Controls. The Company maintains systems of “internal
control over financial reporting” (as defined under Rules
13a-15 and 15d-15 under the Exchange Act Regulations) that comply
with the requirements of the Exchange Act and have been designed
by, or under the supervision of, their respective principal
executive and principal financial officers, or persons performing
similar functions, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP,
including, but not limited to, 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. Except as disclosed in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, the
Company is not aware of any material weaknesses in its internal
controls. The Company’s auditors and the Audit Committee of
the Board of Directors of the Company have been advised of: (i) all
significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are
known to the Company’s management and that have adversely
affected or are reasonably likely to adversely affect the
Company’ ability to record, process, summarize and report
financial information; and (ii) any fraud known to the
Company’s management, whether or not material, that involves
management or other employees who have a significant role in the
Company’s internal controls over financial
reporting.
- 12 -
2.30 No
Investment Company Status. The Company is not and, after
giving effect to the Offering and the application of the proceeds
thereof as described in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, will not be, required to
register as an “investment company,” as defined in the
Investment Company Act of 1940, as amended.
2.31 No
Labor Disputes. No labor dispute with the employees of the Company
exists or, to the knowledge of the Company, is
imminent.
2.32 Intellectual
Property Rights. The Company owns or possesses or has valid
rights to use all patents, trademarks, service marks, trade names,
trademark registrations, service ▇▇▇▇ registrations, copyrights,
licenses, trade secrets and similar rights (“Intellectual Property Rights”), if
any, necessary for the conduct of the business of the Company as
currently carried on and as described in the Registration
Statement, the Pricing Disclosure Package and the Prospectus. To
the knowledge of the Company, no action or use by the Company
necessary for the conduct of its business as currently carried on
and as described in the Registration Statement and the Prospectus
will involve or give rise to any infringement of, or license or
similar fees for, any Intellectual Property Rights of others. The
Company has not received any notice alleging any such infringement,
fee or conflict with asserted Intellectual Property Rights of
others. Except as would not reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Change (A)
to the knowledge of the Company, there is no infringement,
misappropriation or violation by third parties of any of the
Intellectual Property Rights owned by the Company; (B) there is no
pending or, to the knowledge of the Company, threatened action,
suit, proceeding or claim by others challenging the rights of the
Company in or to any such Intellectual Property Rights, and the
Company is unaware of any facts which would form a reasonable basis
for any such claim, that would, individually or in the aggregate,
together with any other claims in this Section 2.32, reasonably be
expected to result in a Material Adverse Change; (C) the
Intellectual Property Rights owned by the Company and, to the
knowledge of the Company, the Intellectual Property Rights licensed
to the Company have not been adjudged by a court of competent
jurisdiction invalid or unenforceable, in whole or in part, and
there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging
the validity or scope of any such Intellectual Property Rights, and
the Company is unaware of any facts which would form a reasonable
basis for any such claim that would, individually or in the
aggregate, together with any other claims in this Section 2.32, reasonably be
expected to result in a Material Adverse Change; (D) there is no
pending or, to the Company’s knowledge, threatened action,
suit, proceeding or claim by others that the Company infringes,
misappropriates or otherwise violates any Intellectual Property
Rights or other proprietary rights of others, the Company has not
received any written notice of such claim and the Company is
unaware of any other facts which would form a reasonable basis for
any such claim that would, individually or in the aggregate,
together with any other claims in this Section 2.32, reasonably be
expected to result in a Material Adverse Change; and (E) to the
Company’s knowledge, no employee of the Company is in
violation in any material respect of any term of any employment
contract, patent disclosure agreement, invention assignment
agreement, non-competition agreement, non-solicitation agreement,
nondisclosure agreement or any restrictive covenant to or with a
former employer where the basis of such violation relates to such
employee’s employment with the Company, or actions undertaken
by the employee while employed with the Company and could
reasonably be expected to result, individually or in the aggregate,
in a Material Adverse Change. To the Company’s knowledge, all
material trade secrets developed by and belonging to the Company
which has not been patented has been kept confidential. The Company
is not a party to or bound by any options, licenses or agreements
with respect to the Intellectual Property Rights of any other
person or entity that are required to be set forth in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus and are not described therein. The Registration
Statement, the Pricing Disclosure Package and the Prospectus
contain in all material respects the same description of the
matters set forth in the preceding sentence. None of the technology
employed by the Company has been obtained or is being used by the
Company in violation of any contractual obligation binding on the
Company or, to the Company’s knowledge, any of its officers,
directors or employees, or otherwise in violation of the rights of
any persons.
- 13 -
2.33 Taxes.
The Company has filed all returns (as hereinafter defined) required
to be filed with taxing authorities prior to the date hereof or has
duly obtained extensions of time for the filing thereof. The
Company has paid all taxes (as hereinafter defined) shown as due on
such returns that were filed and has paid all taxes imposed on or
assessed against the Company. The provisions for taxes payable, if
any, shown on the financial statements filed with or as part of the
Registration Statement are sufficient for all accrued and unpaid
taxes, whether or not disputed, and for all periods to and
including the dates of such financial statements. Except as
disclosed in writing to the Underwriters, (i) no issues have been
raised (and are currently pending) by any taxing authority in
connection with any of the returns or taxes asserted as due from
the Company, and (ii) no waivers of statutes of limitation with
respect to the returns or collection of taxes have been given by or
requested from the Company. The term “taxes” means all federal, state,
local, foreign and other net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license,
lease, service, service use, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, windfall
profits, customs, duties or other taxes, fees, assessments or
charges of any kind whatever, together with any interest and any
penalties, additions to tax or additional amounts with respect
thereto. The term “returns” means all returns,
declarations, reports, statements and other documents required to
be filed in respect to taxes.
2.34 ERISA
Compliance. The Company and any “employee benefit
plan” (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, “ERISA”)) established or maintained
by the Company or its “ERISA Affiliates” (as defined
below) are in compliance in all material respects with ERISA.
“ERISA
Affiliate” means, with respect to the Company, any
member of any group of organizations described in Sections
414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as
amended, and the regulations and published interpretations
thereunder (the “Code”) of which the Company is a
member. No “reportable event” (as defined under ERISA)
has occurred or is reasonably expected to occur with respect to any
“employee benefit plan” established or maintained by
the Company or any of its ERISA Affiliates. No “employee
benefit plan” established or maintained by the Company or any
of its ERISA Affiliates, if such “employee benefit
plan” were terminated, would have any “amount of
unfunded benefit liabilities” (as defined under ERISA).
Neither the Company nor any of its ERISA Affiliates has incurred or
reasonably expects to incur any material liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any
“employee benefit plan” or (ii) Sections 412, 4971,
4975 or 4980B of the Code. Each “employee benefit plan”
established or maintained by the Company or any of its ERISA
Affiliates that is intended to be qualified under Section 401(a) of
the Code is so qualified and, to the knowledge of the Company,
nothing has occurred, whether by action or failure to act, which
would cause the loss of such qualification.
2.35 Compliance
with Laws. The Company: (A) is and at all times has been in
compliance with all statutes, rules, or regulations applicable to
the conduct of the Company’s business (collectively, the
“Applicable
Laws”), except as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Change; (B) has not received any warning letter, untitled letter or
other correspondence or notice from any other Governmental Entity
alleging or asserting noncompliance with any Applicable Laws or any
licenses, certificates, approvals, clearances, authorizations,
permits and supplements or amendments thereto required by any such
Applicable Laws (collectively, the “Authorizations”); (C) possesses
all material Authorizations and such Authorizations are valid and
in full force and effect and are not in material violation of any
term of any such Authorizations; (D) has not received notice of any
claim, action, suit, proceeding, hearing, enforcement,
investigation, arbitration or other action from any Governmental
Entity or third party alleging that any of the Company’s
activities is in violation of any Applicable Laws or Authorizations
and has no knowledge that any such Governmental Entity or third
party is considering any such claim, litigation, arbitration,
action, suit, investigation or proceeding; (E) has not received
notice that any Governmental Entity has taken, is taking or intends
to take action to limit, suspend, modify or revoke any
Authorizations and has no knowledge that any such governmental
authority is considering such action;and (F) has filed, obtained,
maintained or submitted all material reports, documents, forms,
notices, applications, records, claims, submissions and supplements
or amendments as required by any Applicable Laws or Authorizations
and that all such reports, documents, forms, notices, applications,
records, claims, submissions and supplements or amendments were
complete and correct on the date filed (or were corrected or
supplemented by a subsequent submission).
2.36 Ineligible
Issuer. At the time of filing the Registration
Statement and any post-effective amendment thereto, at the time of
effectiveness of the Registration Statement and any amendment
thereto, at the earliest time thereafter that the Company or
another offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) of the Securities Act Regulations) of the
Public Securities and at the date hereof, the Company was not and
is not an “ineligible issuer,” as defined in Rule 405,
without taking account of any determination by the Commission
pursuant to Rule 405 that it is not necessary that the Company be
considered an ineligible issuer.
2.37 Real
Property. Except as set forth in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, the Company has
good and marketable title in fee simple to, or have valid rights to
lease or otherwise use, all items of real or personal property
which are material to the business of the Company, in each case
free and clear of all liens, encumbrances, security interests,
claims and defects that do not, singly or in the aggregate,
materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the
Company; and all of the leases and subleases material to the
business of the Company, and under which the Company holds
properties described in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, are in full force and
effect, and the Company has not received any notice of any material
claim of any sort that has been asserted by anyone adverse to the
rights of the Company under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the
Company to the continued possession of the leased or subleased
premises under any such lease or sublease.
2.38 Contracts
Affecting Capital. There are no transactions, arrangements
or other relationships between and/or among the Company, any of its
affiliates (as such term is defined in Rule 405 of the Securities
Act Regulations) and any unconsolidated entity, including, but not
limited to, any structured finance, special purpose or limited
purpose entity that could reasonably be expected to materially
affect the Company’s liquidity or the availability of or
requirements for their capital resources required to be described
or incorporated by reference in the Registration Statement, the
Pricing Disclosure Package and the Prospectus which have not been
described or incorporated by reference as required.
- 14 -
2.39 Loans
to Directors or Officers. There are no outstanding loans,
advances (except normal advances for business expenses in the
ordinary course of business) or guarantees or indebtedness by the
Company to or for the benefit of any of the officers or directors
of the Company or any of their respective family members, except as
disclosed in the Registration Statement, the Pricing Disclosure
Package and the Prospectus.
2.40 Smaller
Reporting Company. As of the time of filing of the
Registration Statement, the Company was a “smaller reporting
company,” as defined in Rule 12b-2 of the Exchange Act
Regulations.
2.41 Industry
Data. The statistical and market-related data included
in each of the Registration Statement, the Pricing Disclosure
Package and the Prospectus are based on or derived from sources
that the Company reasonably and in good faith believes are reliable
and accurate or represent the Company’s good faith estimates
that are made on the basis of data derived from such
sources.
2.42 Emerging
Growth Company. From the time of the initial filing of the
Registration Statement to the Commission (or, if earlier, the first
date on which the Company engaged directly in or through any Person
authorized to act on its behalf in any Testing-the Waters
Communication) through the date hereof, the Company has been and is
an “emerging growth company,” as defined in Section
2(a) of the Securities Act (an “Emerging Growth Company”). For
purposes of this Agreement, the term “Testing-the-Waters Communication”
means any oral or written communication with potential investors
undertaken in reliance on Section 5(d) of the Securities
Act.
2.43 Testing-the-Waters
Communications. The Company has not (i) alone engaged in any
Testing-the-Waters Communications, other than Testing-the-Waters
Communications with the written consent of the Representatives and
with entities that are qualified institutional buyers within the
meaning of Rule 144A under the Securities Act or institutions that
are accredited investors within the meaning of Rule 501 under the
Securities Act and (ii) authorized anyone other than the
Representatives to engage in Testing-the-Waters Communications. The
Company confirms that the Representatives have been authorized to
act on its behalf in undertaking Testing-the-Waters Communications.
The Company has not distributed any Written Testing-the-Waters
Communications other than those listed on Schedule 2-C hereto.
“Written Testing-the-Waters Communication” means any
Testing-the-Waters Communication that is a written communication
within the meaning of Rule 405 under the Securities
Act.
2.44 Electronic
Road Show. The Company has made available a Bona Fide
Electronic Road Show in compliance with Rule 433(d)(8)(ii) of
the Securities Act Regulations such that no filing of any
“road show” (as defined in Rule 433(h) of the
Securities Act Regulations) is required in connection with the
Offering.
2.45 Margin
Securities. The Company owns no “margin
securities” as that term is defined in Regulation U of the
Board of Governors of the Federal Reserve System (the
“Federal Reserve
Board”), and none of the proceeds of Offering will be
used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might
cause any of the shares of Class B Common Stock to be considered a
“purpose credit” within the meanings of Regulation T, U
or X of the Federal Reserve Board.
- 15 -
3.
Covenants of the Company. The
Company covenants and agrees as follows:
3.1 Amendments
to Registration Statement. The Company shall deliver to the
Representatives, prior to filing, any amendment or supplement to
the Registration Statement or Prospectus proposed to be filed after
the Effective Date and not file any such amendment or supplement to
which the Representatives shall reasonably object in
writing.
3.2 Federal
Securities Laws.
3.2.1. Compliance.
The Company, subject to Section 3.2.2, shall comply
with the requirements of Rule 430A of the Securities Act
Regulations, and will notify the Representatives promptly, and
confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective or
any amendment or supplement to the Prospectus shall have been
filed; (ii) of the receipt of any comments from the
Commission; (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information;
(iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment or of any order preventing or suspending
the use of any Preliminary Prospectus or the Prospectus, or of the
suspension of the qualification of the Public Securities and
Representatives’ Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes or of any examination pursuant
to Section 8(d) or 8(e) of the Securities Act concerning the
Registration Statement and (v) if the Company becomes the
subject of a proceeding under Section 8A of the Securities Act
in connection with the Offering of the Public Securities and
Representatives’ Securities. The Company shall effect all
filings required under Rule 424(b) of the Securities Act
Regulations, in the manner and within the time period required by
Rule 424(b) (without reliance on Rule 424(b)(8)), and shall take
such steps as it deems necessary to ascertain promptly whether the
form of prospectus transmitted for filing under Rule 424(b) was
received for filing by the Commission and, in the event that it was
not, it will promptly file such prospectus. The Company shall use
its best efforts to prevent the issuance of any stop order,
prevention or suspension and, if any such order is issued, to
obtain the lifting thereof at the earliest possible
moment.
3.2.2. Continued
Compliance. The Company shall comply with the Securities
Act, the Securities Act Regulations, the Exchange Act and the
Exchange Act Regulations so as to permit the completion of the
distribution of the Public Securities as contemplated in this
Agreement and in the Registration Statement, the Pricing Disclosure
Package and the Prospectus. If at any time when a prospectus
relating to the Public Securities is (or, but for the exception
afforded by Rule 172 of the Securities Act Regulations
(“Rule 172”),
would be) required by the Securities Act to be delivered in
connection with sales of the Public Securities, any event shall
occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel for the Underwriters or for
the Company, to (i) amend the Registration Statement in order
that the Registration Statement will not include an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; (ii) amend or supplement the Pricing
Disclosure Package or the Prospectus in order that the Pricing
Disclosure Package or the Prospectus, as the case may be, will not
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time
it is delivered to a purchaser or (iii) amend the Registration
Statement or amend or supplement the Pricing Disclosure Package or
the Prospectus, as the case may be, in order to comply with the
requirements of the Securities Act or the Securities Act
Regulations, the Company will promptly (A) give the
Representatives notice of such event; (B) prepare any
amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement, the
Pricing Disclosure Package or the Prospectus comply with such
requirements and, a reasonable amount of time prior to any proposed
filing or use, furnish the Representatives with copies of any such
amendment or supplement and (C) file with the Commission any
such amendment or supplement; provided that the Company shall not
file or use any such amendment or supplement to which the
Representatives or counsel for the Underwriters shall reasonably
object. The Company will furnish to the Underwriters such number of
copies of such amendment or supplement as the Underwriters may
reasonably request. The Company has given the Representatives
notice of any filings made pursuant to the Exchange Act or the
Exchange Act Regulations within 48 hours prior to the Applicable
Time. The Company shall give the Representatives notice of its
intention to make any such filing from the Applicable Time until
the later of the Closing Date and the exercise in full or
expiration of the Over-allotment Option specified in Section 1.2 and will furnish
the Representatives with copies of the related document(s) a
reasonable amount of time prior to such proposed filing, as the
case may be, and will not file or use any such document to which
the Representatives or counsel for the Underwriters shall
reasonably object.
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3.2.3. Exchange
Act Registration. For a period of three (3) years after the
date of this Agreement, the Company shall use its best efforts to
maintain the registration of the shares of Class B Common Stock
under the Exchange Act. The Company shall not deregister the shares
of Class B Common Stock under the Exchange Act without the prior
written consent of the Representatives.
3.2.4. Free
Writing Prospectuses. The Company agrees that, unless it
obtains the prior written consent of the Representatives, it shall
not make any offer relating to the Public Securities that would
constitute an Issuer Free Writing Prospectus or that would
otherwise constitute a “free writing prospectus,” or a
portion thereof, required to be filed by the Company with the
Commission or retained by the Company under Rule 433;provided, however, that the
Representatives shall be deemed to have consented to each Issuer
General Use Free Writing Prospectus hereto and any “road show
that is a written communication” within the meaning of Rule
433(d)(8)(i) that has been reviewed by the Representatives. The
Company represents that it has treated or agrees that it will treat
each such free writing prospectus consented to, or deemed consented
to, by the Underwriters as an “issuer free writing
prospectus,” as defined in Rule 433, and that it has complied
and will comply with the applicable requirements of Rule 433 with
respect thereto, including timely filing with the Commission where
required, legending and record keeping. If at any time following
issuance of an Issuer Free Writing Prospectus there occurred or
occurs an event or developmentas a result of which such Issuer Free
Writing Prospectus conflicted or would conflict with the
information contained in the Registration Statement or included or
would include an untrue statement of a material fact or omitted or
would omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at
that subsequent time, not misleading, the Company will promptly
notify the Underwriters 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.
3.2.5. Testing-the-Waters
Communications. If at any time following the distribution of
any Written Testing-the-Waters Communication there occurred or
occurs an event or development as a result of which such Written
Testing-the-Waters Communication included or would include an
untrue statement of a material fact or omitted or would omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at that
subsequent time, not misleading, the Company shall promptly notify
the Representatives and shall promptly amend or supplement, at its
own expense, such Written Testing-the-Waters Communication to
eliminate or correct such untrue statement or
omission.
3.3 Delivery
to the Underwriters of Registration Statements. The Company
has delivered or made available or shall deliver or make available
to the Representatives and counsel for the Representatives, without
charge, signed copies of the Registration Statement as originally
filed and each amendment thereto (including exhibits filed
therewith) and signed copies of all consents and certificates of
experts, and will also deliver to the Underwriters, without charge,
a conformed copy of the Registration Statement as originally filed
and each amendment thereto (without exhibits) for each of the
Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
- 17 -
3.4 Delivery
to the Underwriters of Prospectuses. The Company has
delivered or made available or will deliver or make available to
each Underwriter, without charge, as many copies of each
Preliminary Prospectus as such Underwriter reasonably requested,
and the Company hereby consents to the use of such copies for
purposes permitted by the Securities Act. The Company will furnish
to each Underwriter, without charge, during the period when a
prospectus relating to the Public Securities is (or, but for the
exception afforded by Rule 172, would be) required to be delivered
under the Securities Act, such number of copies of the Prospectus
(as amended or supplemented) as such Underwriter may reasonably
request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
3.5 Effectiveness
and Events Requiring Notice to the Representatives. The
Company shall use its best efforts to cause the Registration
Statement to remain effective with a current prospectus until the
latter of nine (9) months after the Applicable Time and the date on
which the Representatives’ Warrants are no longer
exercisable, and shall notify the Representatives immediately and
confirm the notice in writing: (i) of the effectiveness of the
Registration Statement and any amendment thereto; (ii) of the
issuance by the Commission of any stop order or of the initiation,
or the threatening, of any proceeding for that purpose;
(iii) of the issuance by any state securities commission of
any proceedings for the suspension of the qualification of the
Public Securities for offering or sale in any jurisdiction or of
the initiation, or the threatening, of any proceeding for that
purpose; (iv) of the mailing and delivery to the Commission
for filing of any amendment or supplement to the Registration
Statement or Prospectus; (v) of the receipt of any comments or
request for any additional information from the Commission; and
(vi) of the happening of any event during the period described
in this Section 3.5
that, in the judgment of the Company, makes any statement of a
material fact made in the Registration Statement, the Pricing
Disclosure Package or the Prospectus untrue or that requires the
making of any changes in (a) the Registration Statement in order to
make the statements therein not misleading, or (b) in the Pricing
Disclosure Package or the Prospectus in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. If the Commission or any state
securities commission shall enter a stop order or suspend such
qualification at any time, the Company shall make every reasonable
effort to obtain promptly the lifting of such order.
3.6 Review
of Financial Statements. For a period of five (5) years
after the date of this Agreement, the Company, at its expense,
shall cause its regularly engaged independent registered public
accounting firm to review (but not audit) the Company’s
financial statements for each of the three fiscal quarters
immediately preceding the announcement of any quarterly financial
information.
3.7 Listing.
The Company shall use its best efforts to maintain the listing of
the shares of Class B Common Stock (including the Public
Securities) on the Exchange for at least three (3) years from the
date of this Agreement.
3.8 Financial
Public Relations Firm. As of the Effective Date, the Company
shall have retained a financial public relations firm reasonably
acceptable to the Representatives and the Company, which shall
initially be ICR Inc., which firm shall be experienced in assisting
issuers in initial public offerings of securities and in their
relations with their security holders, and shall retain such firm
or another firm reasonably acceptable to the Representatives for a
period of not less than two (2) years after the Effective
Date.
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3.9 Reports
to the Representatives.
3.9.1. Periodic
Reports, etc. For a period of three (3) years after the date
of this Agreement, the Company shall furnish or make available to
the Representatives copies of such financial statements and other
periodic and special reports as the Company from time to time
furnishes generally to holders of any class of its securities and
also promptly furnish to the Representatives: (i) a copy of each
periodic report the Company shall be required to file with the
Commission under the Exchange Act and the Exchange Act Regulations;
(ii) a copy of every press release and every news item and article
with respect to the Company or its affairs which was released by
the Company; (iii) a copy of each Form 8-K prepared and filed by
the Company; (iv) five copies of each registration statement filed
by the Company under the Securities Act; and (v) such additional
documents and information with respect to the Company and the
affairs of any future subsidiaries of the Company as the
Representatives may from time to time reasonably request; provided
the Representatives shall sign, if requested by the Company, a
Regulation FD compliant confidentiality agreement which is
reasonably acceptable to the Representatives and
Representatives’ Counsel in connection with the
Representatives’ receipt of such information. Documents filed
with the Commission pursuant to its ▇▇▇▇▇ system shall be deemed to
have been delivered to the Representatives pursuant to this
Section
3.9.1.
3.9.2. Transfer
Agent; Transfer Sheets. For a period of three (3) years
after the date of this Agreement, the Company shall retain a
transfer agent and registrar acceptable to the Representatives
(the “Transfer
Agent”) and shall furnish to the Representatives at
the Company’s sole cost and expense such transfer sheets of
the Company’s securities as the Representatives may
reasonably request, including the daily and monthly consolidated
transfer sheets of the Transfer Agent and DTC. West Coast Stock
Transfer, Inc. is acceptable to the Representatives to act as
Transfer Agent for the shares of Class B Common Stock.
3.9.3. Trading
Reports. During such time as the Public Securities are
listed on the Exchange, the Company shall provide to the
Representatives, at the Company’s expense, such reports
published by Exchange relating to price trading of the Public
Securities, as the Representatives shall reasonably
request.
3.10 Payment
of Expenses and Advisory Fee. The Company hereby agrees to
pay on each of the Closing Date and the Option Closing Date, if
any, to the extent not paid at the Closing Date, all expenses
incident to the performance of the obligations of the Company under
this Agreement, including, but not limited to: (a) all filing fees
and communication expenses relating to the registration of the
shares of Class B Common Stock to be sold in the Offering
(including the Over-allotment Shares) with the Commission; (b) all
Public Filing System filing fees associated with the review of the
Offering by FINRA; (c) all fees and expenses relating to the
listing of such Public Securities on the Exchange and such other
stock exchanges as the Company and the Representatives together
determine; (d) all fees, expenses and disbursements relating to the
registration or qualification of the Public Securities under the
“blue sky” securities laws of such states and other
jurisdictions as the Representatives may reasonably designate
(including, without limitation, all filing and registration fees);
(e) all fees, expenses and disbursements relating to the
registration, qualification or exemption of the Public Securities
under the securities laws of such foreign jurisdictions as the
Representatives may reasonably designate; (f) the costs of all
mailing and printing of the underwriting documents (including,
without limitation, the Underwriting Agreement, any Blue Sky
Surveys and, if appropriate, any Agreement Among Underwriters,
Selected Dealers’ Agreement, Underwriters’
Questionnaire and Power of Attorney), Registration Statements,
Prospectuses and all amendments, supplements and exhibits thereto
and as many preliminary and final Prospectuses as the
Representatives may reasonably deem necessary; (g) the costs and
expenses of a public relations firm; (h) the costs of preparing,
printing and delivering certificates representing the Public
Securities; (i) fees and expenses of the transfer agent for the
shares of Class B Common Stock; (j) stock transfer and/or stamp
taxes, if any, payable upon the transfer of securities from the
Company to the Underwriters; (k) to the extent approved by the
Company in writing, the costs associated with post-Closing
advertising the Offering in the national editions of the Wall
Street Journal and New York Times; (l) the fees and expenses of the
Company’s accountants; (m) the fees and expenses of the
Company’s legal counsel and other agents and
representatives;and (n) all reasonable accountable out-of-pocket
expenses of the Representatives related to the transactions
contemplated herein (including the fees and disbursements of
Representatives’ Counsel) up to $150,000. The Company also
agrees to pay on the Closing Date the Advisory Fee to ▇▇▇▇ Capital
Partners, LLC. The Representative may deduct from the net proceeds
of the Offering payable to the Company on the Closing Date, or the
Option Closing Date, if any, (A) the expenses set forth herein to
be paid by the Company to the Underwriters and (B) the Advisory Fee
to be paid by the Company to ▇▇▇▇ Capital Partners,
LLC.
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3.11 Application
of Net Proceeds. The Company shall apply the net proceeds
from the Offering received by it in a manner consistent with the
application thereof described under the caption “Use of
Proceeds” in the Registration Statement, the Pricing
Disclosure Package and the Prospectus.
3.12 Delivery
of Earnings Statements to Security Holders. The Company
shall make generally available to its security holders as soon as
practicable, but not later than the first day of the fifteenth
(15th)
full calendar month following the date of this Agreement, an
earnings statement (which need not be certified by independent
registered public accounting firm unless required by the Securities
Act or the Securities Act Regulations, but which shall satisfy the
provisions of Rule 158(a) under Section 11(a) of the Securities
Act) covering a period of at least twelve (12) consecutive months
ending after the date of this Agreement.
3.13 Stabilization.
Neither the Company nor, to its knowledge, any of its employees,
directors or shareholders (without the consent of the
Representatives) has taken or shall take, directly or indirectly,
any action designed to or that has constituted or that might
reasonably be expected to cause or result in, under Regulation M of
the Exchange Act, or otherwise, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of the Public Securities.
3.14 Internal
Controls. The Company shall maintain a system of internal
accounting controls sufficient to provide reasonable assurances
that: (i) transactions are executed in accordance with
management’s general or specific authorization;
(ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with GAAP and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any
differences.
3.15 Accountants.
As of the date of this Agreement, the Company shall retain an
independent registered public accounting firm reasonably acceptable
to the Representatives, and the Company shall continue to retain a
nationally recognized independent registered public accounting firm
for a period of at least three (3) years after the date of this
Agreement. The Representatives acknowledge that the Auditor is
acceptable to the Representatives.
3.16 FINRA.
The Company shall advise the Representatives (who shall make an
appropriate filing with FINRA) if it is or becomes aware that (i)
any officer or director of the Company, (ii) any beneficial owner
of 5% or more of any class of the Company's securities or (iii) any
beneficial owner of the Company’s unregistered equity
securities which were acquired during the 180-day period
immediately preceding the filing of the Registration Statement is
or becomes an affiliate or associated person of a FINRA member
participating in the Offering (as determined in accordance with the
rules and regulations of FINRA).
3.17 No
Fiduciary Duties. The Company acknowledges and agrees that
the Underwriters’ responsibility to the Company is solely
contractual in nature and that none of the Underwriters or their
affiliates or any selling agent shall be deemed to be acting in a
fiduciary capacity, or otherwise owes any fiduciary duty to the
Company or any of its affiliates in connection with the Offering
and the other transactions contemplated by this
Agreement.
- 20 -
3.18 Company
Lock-Up Agreements.
3.18.1. Restriction on Sales of Capital
Stock. The Company, on behalf of itself and any successor
entity, agrees that, without the prior written consent of the
Representatives, it will not, for a period of 180 days after the
date of this Agreement (the “Lock-Up Period”), (i) 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, any shares of capital stock
of the Company or any securities convertible into or exercisable or
exchangeable for shares of capital stock of the Company; (ii) file
or caused to be filed any registration statement with the
Commission relating to the offering of any shares of capital stock
of the Company or any securities convertible into or exercisable or
exchangeable for shares of capital stock of the Company; (iii)
complete any offering of debt securities of the Company, other than
commercial debt, equipment financing, inventory financing, seller
financing in connection with any acquisition by the Company and/or
any financing with existing investors or (iv) enter into any swap
or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of capital
stock of the Company, whether any such transaction described in
clause (i), (ii), (iii) or (iv) above is to be settled by delivery
of shares of capital stock of the Company or such other securities,
in cash or otherwise. The restrictions contained in this
Section 3.18.1
shall not apply to (i) the shares of Class B Common Stock to be sold
hereunder, (ii) the issuance by the Company of shares of Class B
Common Stock upon the exercise of a stock option or warrant or the
conversion or vesting of a security outstanding on the date hereof,
(iii) the issuance by the Company of equity awards of the Company
under any equity compensation plan of the Company, (iv) the
issuance by the Company of shares of Class B Common Stock or
securities convertible into, exchangeable for or that represent the
right to receive shares of Class B Common Stock in connection with
the acquisition by the Company of the securities, business,
technology, property or other assets of another person or entity,
(v) the saleof shares of Class B Common Stock to cover the payment
of exercise prices or the payment of taxes associated with the
exercise or vesting of equity awards under any equity compensation
plan of the Company, or (vi) the filing of a post-effective
amendment to the Company’s registration statements on Form
S-1 (Reg. No. 333-219048) and Form S-8 (Reg. No. 333-219203) with
the Commission to maintain effectiveness of such registration
statements, provided that in each of (ii) and (iii) above, the
underlying shares shall be restricted from sale during the entire
Lock-Up Period.
3.18.2. Restriction on Continuous
Offerings. Notwithstanding the restrictions contained in
Section 3.18.1, the
Company, on behalf of itself and any successor entity, agrees that,
without the prior written consent of the Representatives, it will
not, for a period of twelve (12) months after the date of this
Agreement, directly or indirectly in any
“at-the-market” or continuous equity transaction, offer
to sell, sell, contract to sell, grant any option to sell or
otherwise dispose of shares of capital stock of the Company or any
securities convertible into or exercisable or exchangeable for
shares of capital stock of the Company.
3.19 Release
of Lock-up Period. If the Representatives, in their sole
discretion, agree to release or waive the restrictions set forth in
the Lock-Up Agreements described in Section 2.24 for an officer or
director of the Company and provide the Company with notice of the
impending release or waiver at least three (3) 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 C hereto through a
major news service at least two (2) Business Days before the
effective date of the release or waiver.
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3.20 Blue
Sky Qualifications. The Company shall use its best efforts,
in cooperation with the Underwriters, if necessary, to qualify the
Public Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions (domestic or
foreign) as the Representatives may designate and to maintain such
qualifications in effect so long as required to complete the
distribution of the Public Securities;provided, however, that the Company
shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or
to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject.
3.21 Reporting
Requirements. The Company, during the period when a
prospectus relating to the Public Securities is (or, but for the
exception afforded by Rule 172, would be) required to be delivered
under the Securities Act, will file all documents required to be
filed with the Commission pursuant to the Exchange Act within the
time periods required by the Exchange Act and Exchange Act
Regulations. Additionally, the Company shall report the use of
proceeds from the issuance of the Public Securities as may be
required under Rule 463 under the Securities Act
Regulations.
3.22 Emerging
Growth Company Status. The Company shall promptly notify the
Representatives if the Company ceases to be an Emerging Growth
Company at any time prior to the later of (i) completion of the
distribution of the Public Securities within the meaning of the
Securities Act and (ii) fifteen (15) days following the completion
of the Lock-Up Period.
4.
Conditions of
Underwriters’ Obligations. The obligations of the
Underwriters to purchase and pay for the Public Securities, as
provided herein, shall be subject to (i) the continuing accuracy of
the representations and warranties of the Company as of the date
hereof and as of each of the Closing Date and the Option Closing
Date, if any; (ii) the accuracy of the statements of officers of
the Company made pursuant to the provisions hereof; (iii) the
performance by the Company of its obligations hereunder; and (iv)
the following conditions:
4.1 Regulatory
Matters.
4.1.1. Effectiveness
of Registration Statement; Rule 430A Information. The
Registration Statement has become effective not later than 5:00
p.m., New York City time, on the date of this Agreement or such
later date and time as shall be consented to in writing by you,
and, at each of the Closing Date and any Option Closing Date, no
stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto has been issued
under the Securities Act, no order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus has been issued and
no proceedings for any of those purposes have been instituted or
are pending or, to the Company’s knowledge, contemplated by
the Commission. The Company has complied with each request (if any)
from the Commission for additional information. The Prospectus
containing the Rule 430A Information shall have been filed with the
Commission in the manner and within the time frame required by Rule
424(b) (without reliance on Rule 424(b)(8)) or a post-effective
amendment providing such information shall have been filed with,
and declared effective by, the Commission in accordance with the
requirements of Rule 430A.
4.1.2. FINRA
Clearance. On or before the date of this Agreement, the
Representatives shall have received clearance from FINRA as to the
amount of compensation allowable or payable to the Underwriters as
described in the Registration Statement.
4.1.3. Exchange
Stock Market Clearance. On the Closing Date, the
Company’s shares of Class B Common Stock, including the Firm
Shares, shall have been approved for listing on the Exchange,
subject only to official notice of issuance. On the first Option
Closing Date (if any), the Company’s shares of Class B Common
Stock, including the Option Shares, shall have been approved for
listing on the Exchange, subject only to official notice of
issuance.
- 22 -
4.2 Company
Counsel Matters.
4.2.1. Closing
Date Opinion of Company Counsel. On the Closing Date, the
Representatives shall have received the favorable opinion of
Akerman LLP, counsel to the Company (“Company Counsel”), dated the
Closing Date and addressed to the Representatives in form and
substance reasonably satisfactory to the
Representatives.
4.2.2. Option
Closing Date Opinion of Company Counsel. On the Option
Closing Date, if any, the Representatives shall have received the
favorable opinion of Company Counsel, dated the Option Closing
Date, addressed to the Representatives and in form and substance
reasonably satisfactory to the Representatives, confirming as of
the Option Closing Date, the statements made by Company Counsel in
its opinion delivered on the Closing Date.
4.2.3. Reliance.
In rendering its opinion, Company Counsel may rely: (i) as to
matters involving the application of laws other than the laws of
the United States and jurisdictions in which it is admitted, to the
extent Company Counsel deems proper and to the extent specified in
such opinion, if at all, upon an opinion or opinions (in form and
substance reasonably satisfactory to the Representatives) of other
counsel reasonably acceptable to the Representatives, familiar with
the applicable laws; and (ii) as to matters of fact, to the
extent they deem proper, on certificates or other written
statements of officers of the Company and officers of departments
of various jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company, provided that
copies of any such statements or certificates shall be delivered to
Representatives’ Counsel if requested. The opinion of Company
Counsel and any opinion relied upon by Company Counsel shall
include a statement to the effect that it may be relied upon by
Representatives’ Counsel in its opinion delivered to the
Underwriters.
4.3 Comfort
Letters.
4.3.1. Cold
Comfort Letter. At the time this Agreement is executed you
shall have received a cold comfort letter containing statements and
information of the type customarily included in accountants’
comfort letters with respect to the financial statements and
certain financial information contained in the Registration
Statement, the Pricing Disclosure Package and the Prospectus,
addressed to the Representatives and in form and substance
satisfactory in all respects to you and to the Auditor, dated as of
the date of this Agreement.
4.3.2. Bring-down
Comfort Letter. At each of the Closing Date and the Option
Closing Date, if any, the Representatives shall have received from
the Auditor a letter, dated as of the Closing Date or the Option
Closing Date, as applicable, to the effect that the Auditor
reaffirms the statements made in the letter furnished pursuant to
Section 4.3.1,
except that the specified date referred to shall be a date not more
than three (3) Business Days prior to the Closing Date or the
Option Closing Date, as applicable.
- 23 -
4.4 Officers’
Certificates.
4.4.1. Officers’
Certificate. The Company shall have furnished to the
Representatives a certificate, dated the Closing Date and any
Option Closing Date (if such date is other than the Closing Date),
of its Chief Executive Officer and Chairman and its Chief Financial
Officer stating that (i) such officers have carefully examined the
Registration Statement, the Pricing Disclosure Package, any Issuer
Free Writing Prospectus and the Prospectus and, in their opinion,
the Registration Statement and each amendment thereto, as of the
Applicable Time and as of the Closing Date (or any Option Closing
Date if such date is other than the Closing Date) did not include
any untrue statement of a material fact and did not omit to state a
material fact required to be stated therein ornecessary to make the
statements therein not misleading, and the Pricing Disclosure
Package, as of the Applicable Time and as of the Closing Date (or
any Option Closing Date if such date is other than the Closing
Date), any Issuer Free Writing Prospectus as of its date and as of
the Closing Date (or any Option Closing Date if such date is other
than the Closing Date), the Prospectus and each amendment or
supplement thereto, as of the respective date thereof and as of the
Closing Date, did not include any untrue statement of a material
fact and did not omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
in which they were made, not misleading, (ii) since the effective
date of the Registration Statement, no event has occurred which
should have been set forth in a supplement or amendment to the
Registration Statement, the Pricing Disclosure Package or the
Prospectus, (iii) to the best of their knowledge after reasonable
investigation, as of the Closing Date (or any Option Closing Date
if such date is other than the Closing Date), the representations
and warranties of the Company in this Agreement are true and
correct in all material respects and the Company has complied with
all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date
(or any Option Closing Date if such date is other than the Closing
Date), and (iv) there has not been, subsequent to the date of the
most recent audited financial statements included or incorporated
by reference in the Pricing Disclosure Package, any material
adverse change in the financial position or results of operations
of the Company, or any change or development that, singularly or in
the aggregate, would involve a material adverse change or a
prospective material adverse change, in or affecting the condition
(financial or otherwise), results of operations, business, assets
or prospects of the Company, except as set forth in the
Prospectus.
4.4.2. Secretary’s
Certificate. At each of the Closing Date and the Option
Closing Date, if any, the Representatives shall have received a
certificate of the Company signed by the Secretary of the Company,
dated the Closing Date or the Option Date, as the case may be,
respectively, certifying: (i) that each of the Charter and the
Bylaws is true and complete, has not been modified and is in full
force and effect; (ii) that the resolutions of the
Company’s Board of Directors relating to the Offering are in
full force and effect and have not been modified; (iii) as to the
accuracy and completeness of all correspondence between the Company
or its counsel and the Commission; and (iv) as to the
incumbency of the officers of the Company. The documents referred
to in such certificate shall be attached to such
certificate.
4.5 No
Material Changes. Prior to and on each of the Closing Date
and each Option Closing Date, if any: (i) there shall have
been no Material Adverse Change or development involving a
prospective material adverse change in the condition or prospects
or the business activities, financial or otherwise, of the Company
from the latest dates as of which such condition is set forth in
the Registration Statement, the Pricing Disclosure Package and the
Prospectus; (ii) no action, suit or proceeding, at law or in
equity, shall have been pending or threatened against the Company
or any Insider before or by any court or federal or state
commission, board or other administrative agency wherein an
unfavorable decision, ruling or finding may materially adversely
affect the business, operations, prospects or financial condition
or income of the Company, except as set forth in the Registration
Statement, the Pricing Disclosure Package and the Prospectus;
(iii) no stop order shall have been issued under the
Securities Act and no proceedings therefor shall have been
initiated or threatened by the Commission; and (iv) the
Registration Statement, the Pricing Disclosure Package and the
Prospectus and any amendments or supplements thereto shall contain
all material statements which are required to be stated therein in
accordance with the Securities Act and the Securities Act
Regulations and shall conform in all material respects to the
requirements of the Securities Act and the Securities Act
Regulations, and neither the Registration Statement, the Pricing
Disclosure Package nor the Prospectus nor any amendment or
supplement thereto shall contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not
misleading.
- 24 -
4.6 Delivery
of Agreements.
4.6.1. Lock-Up
Agreements. On or before the date of this Agreement, the
Company shall have delivered to the Representatives executed copies
of the Lock-Up Agreements from each of the persons listed in
Schedule 3
hereto.
4.6.2. Representatives’
Warrant Agreement. On the Closing Date, the Company shall
have delivered to the Representatives executed copies of the
Representatives’ Warrant Agreement.
4.7 Additional
Documents. At the Closing Date and at each Option Closing
Date (if any) Representatives’ Counsel shall have been
furnished with such documents and opinions as they may require for
the purpose of enabling Representatives’ Counsel to deliver
an opinion to the Underwriters, or in order to evidence the
accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance
and sale of the Public Securities and the Representatives’
Securities as herein contemplated shall be satisfactory in form and
substance to the Representatives and Representatives’
Counsel.
5.
Indemnification.
5.1 Indemnification
of the Underwriters.
5.1.1. General.
Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Underwriter, its affiliates and
each of its and their respective directors, officers, members,
employees, representatives, partners, shareholders, affiliates,
counsel, and agents and each person, if any, who controls any such
Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act (collectively the
“Underwriter Indemnified
Parties,” and each an “Underwriter Indemnified Party”),
against any and all loss, liability, claim, damage and expense
whatsoever (including but not limited to any and all legal or other
expenses reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any
claim whatsoever, whether arising out of any action between any of
the Underwriter Indemnified Parties and the Company or between any
of the Underwriter Indemnified Parties and any third party, or
otherwise) to which they or any of them may become subject under
the Securities Act, the Exchange Act or any other statute or at
common law or otherwise or under the laws of foreign countries (a
“Claim”), (i)
arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in (A) the Registration
Statement, the Pricing Disclosure Package, any Preliminary
Prospectus, the Prospectus, or in any Issuer Free Writing
Prospectus or in any Written Testing-the-Waters Communication (as
from time to time each may be amended and supplemented); (B) any
materials or information provided to investors by, or with the
approval of, the Company in connection with the marketing of the
Offering, including any “road show” or investor
presentations made to investors by the Company (whether in person
or electronically); or (C) any application or other document or
written communication (in this Section 5, collectively called
“application”)
executed by the Company or based upon written information furnished
by the Company in any jurisdiction in order to qualify the Public
Securities and Representatives’ Securities under the
securities laws thereof or filed with the Commission, any state
securities commission or agency, the Exchange or any other national
securities exchange; or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, unless such statement
or omission was made in reliance upon, and in conformity with, the
Underwriters’ Information or (ii) otherwise arising in
connection with or allegedly in connection with the Offering. The
Company also agrees that it will reimburse each Underwriter
Indemnified Party for all fees and expenses (including but not
limited to any and all legal or other expenses reasonably incurred
in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, whether arising
out of any action between any of the Underwriter Indemnified
Parties and the Company or between any of the Underwriter
Indemnified Parties and any third party, or otherwise)
(collectively, the “Expenses”), and further agrees
wherever and whenever possible to advance payment of Expenses as
they are incurred by an Underwriter Indemnified Party in
investigating, preparing, pursuing or defending any
Claim.
- 25 -
5.1.2. Procedure. If
any action is brought against an Underwriter Indemnified Party in
respect of which indemnity may be sought against the Company
pursuant to Section
5.1.1, such Underwriter Indemnified Party shall promptly
notify the Company in writing of the institution of such action and
the Company shall assume the defense of such action, including the
employment and fees of counsel (subject to the approval of such
Underwriter Indemnified Party) and payment of actual expenses if an
Underwriter Indemnified Party requests that the Company do so. Such
Underwriter Indemnified Party shall have the right to employ its or
their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of the Company, and shall be
advanced by the Company. The Company shall not be liable for any
settlement of any action effected without its consent (which shall
not be unreasonably withheld). In addition, the Company shall not,
without the prior written consent of the Underwriters, settle,
compromise or consent to the entry of any judgment in or otherwise
seek to terminate any pending or threatened action in respect of
whichadvancement, reimbursement, indemnification or contribution
may be sought hereunder (whether or not such Underwriter
Indemnified Party is a party thereto) unless such settlement,
compromise, consent or termination (i) includes an unconditional
release of each Underwriter Indemnified Party, acceptable to such
Underwriter Indemnified Party, from all liabilities, expenses and
claims arising out of such action for which indemnification or
contribution may be sought 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 Underwriter Indemnified Party.
5.2 Indemnification
of the Company. Each Underwriter, severally and not jointly,
agrees to indemnify and hold harmless the Company, its directors,
its officers who signed the Registration Statement and persons who
control the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any and
all loss, liability, claim, damage and expense described in the
foregoing indemnity from the Company to the several Underwriters,
as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Pricing
Disclosure Package or Prospectus or any amendment or supplement
thereto or in any application, in reliance upon, and in strict
conformity with, the Underwriters’ Information. In case any
action shall be brought against the Company or any other person so
indemnified based on any Preliminary Prospectus, the Registration
Statement, the Pricing Disclosure Package or Prospectus or any
amendment or supplement thereto or any application, and in respect
of which indemnity may be sought against any Underwriter, such
Underwriter shall have the rights and duties given to the Company,
and the Company and each other person so indemnified shall have the
rights and duties given to the several Underwriters by the
provisions of Section
5.1.2. The Company agrees promptly to notify the
Representatives of the commencement of any litigation or
proceedings against the Company or any of its officers, directors
or any person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange
Act, in connection with the issuance and sale of the Public
Securities or in connection with the Registration Statement, the
Pricing Disclosure Package, the Prospectus, or any Issuer Free
Writing Prospectus or any Written Testing-the-Waters
Communication.
5.3 Contribution.
5.3.1. Contribution
Rights. If the indemnification provided for in this
Section 5 shall for
any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 5.1 or 5.2 in respect of any loss,
claim, damage or liability, or any action in respect thereof,
referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid
or payable by such indemnified party as a result of such loss,
claim, damage or liability, or action in respect thereof, (i) 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 Public
Securities, or (ii)if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to
in clause (i) above 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 that resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits
received bythe Company, on the one hand, and the Underwriters, on
the other, with respect to such Offering shall be deemed to be in
the same proportion as the total net proceeds from the Offering of
the Public Securities purchased under this Agreement (before
deducting expenses) received by the Company, as set forth in the
table on the cover page of the Prospectus, on the one hand, and the
total underwriting discounts and commissions received by the
Underwriters with respect to the shares of the Class B Common Stock
purchased under this Agreement, as set forth in the table on the
cover page of the Prospectus, on the other hand. The 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 5.3.1 were to be
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this
Section 5.3.1 shall
be deemed to include, for purposes of this Section 5.3.1, 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 5.3.1 in no event shall
an Underwriter be required to contribute any amount in excess of
the amount by which the total underwriting discounts and
commissions received by such Underwriter with respect to the
Offering of the Public Securities exceeds the amount of any damages
that such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
- 26 -
5.3.2. Contribution
Procedure. Within fifteen (15) days after receipt by any
party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if
a claim for contribution in respect thereof is to be made against
another party (“contributing
party”), notify the contributing party of the
commencement thereof, but the failure to so notify the contributing
party will not relieve it from any liability which it may have to
any other party other than for contribution hereunder. In case any
such action, suit or proceeding is brought against any party, and
such party notifies a contributing party or its representative of
the commencement thereof within the aforesaid 15 days, the
contributing party will be entitled to participate therein with the
notifying party and any other contributing party similarly
notified. Any such contributing party shall not be liable to any
party seeking contribution on account of any settlement of any
claim, action or proceeding affected by such party seeking
contribution on account of any settlement of any claim, action or
proceeding affected by such party seeking contribution without the
written consent of such contributing party. The contribution
provisions contained in this Section 5.3.2 are intended to
supersede, to the extent permitted by law, any right to
contribution under the Securities Act, the Exchange Act or
otherwise available. Each Underwriter’s obligations to
contribute pursuant to this Section 5.3 are several and not
joint.
6.
Default by an
Underwriter.
6.1 Default
Not Exceeding 10% of Firm Shares or Option Shares. If any
Underwriter or Underwriters shall default in its or their
obligations to purchase the Firm Shares or the Option Shares, if
the Over-allotment Option is exercised hereunder, and if the number
of the Firm Shares or Option Shares with respect to which such
default relates does not exceed in the aggregate 10% of the number
of Firm Shares or Option Shares that all Underwriters have agreed
to purchase hereunder, then such Firm Shares or Option Shares to
which the default relates shall be purchased by the non-defaulting
Underwriters in proportion to their respective commitments
hereunder.
6.2 Default
Exceeding 10% of Firm Shares or Option Shares. In the event
that the default addressed in Section 6.1 relates to more
than 10% of the Firm Shares or Option Shares, you may in your
discretion arrange for yourself or for another party or parties to
purchase such Firm Shares or Option Shares to which such default
relates on the terms contained herein. If, within one (1) Business
Day after such default relating to more than 10% of the Firm Shares
or Option Shares, you do not arrange for the purchase of such Firm
Shares or Option Shares, then the Company shall be entitled to a
further period of three (3) Business Days within which to procure
another party or parties satisfactory to you to purchase said Firm
Shares or Option Shares on such terms. In the event that neither
you nor the Company arrange for the purchase of the Firm Shares or
Option Shares to which a default relates as provided in this
Section 6, this
Agreement will automatically be terminated by you or the Company
without liability on the part of the Company (except as provided in
Sections 3.10 and
5) or the non-defaulting Underwriters (except as provided in
Section
5);provided, however, that
if such default occurs with respect to the Option Shares, this
Agreement will not terminate as to the Firm Shares; and
provided, further, that
nothing herein shall relieve a defaulting Underwriter of its
liability, if any, to the other Underwriters and to the Company for
damages occasioned by its default hereunder.
6.3 Postponement
of Closing Date. In the event that the Firm Shares or Option
Shares to which the default relates are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another
party or parties as aforesaid, you or the Company shall have the
right to postpone the Closing Date or Option Closing Date for a
reasonable period, but not in any event exceeding five (5) Business
Days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement, the Pricing Disclosure
Package or the Prospectus or in any other documents and
arrangements, and the Company agrees to file promptly any amendment
to the Registration Statement, the Pricing Disclosure Package or
the Prospectus that in the opinion of counsel for the Underwriter
may thereby be made necessary. The term “Underwriter”
as used in this Agreement shall include any party substituted under
this Section 6 with
like effect as if it had originally been a party to this Agreement
with respect to such shares of Class B Common Stock.
7.
Additional
Covenants.
7.1 Board
Composition and Board Designations. The Company shall ensure
that: (i) the qualifications of the persons serving as members
of the Board of Directors and the overall composition of the Board
of Directors comply with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, with the Exchange
Act and with the listing rules of the Exchange or any other
national securities exchange, as the case may be, in the event the
Company seeks to have its Public Securities listed on another
exchange or quoted on an automated quotation system, and
(ii) if applicable, at least one member of the Audit Committee
of the Board of Directors qualifies as an “audit committee
financial expert,” as such term is defined under Regulation
S-K and the listing rules of the Exchange.
7.2 Prohibition
on Press Releases and Public Announcements. The Company
shall not issue press releases or engage in any other publicity,
without the Representatives’ prior written consent, for a
period ending at 5:00 p.m., New York City time, on the first
(1st)
Business Day following the forty-fifth (45th) day after the
Closing Date, other than normal and customary releases issued in
the ordinary course of the Company’s business.
- 27 -
8.
Effective Date of this Agreement and
Termination Thereof.
8.1 Effective
Date. This Agreement shall become effective when both the
Company and the Representatives have executed the same and
delivered counterparts of such signatures to the other
party.
8.2 Termination.
The Representatives shall have the right to terminate this
Agreement at any time prior to any Closing Date, (i) if any
domestic or international event or act or occurrence has materially
disrupted, or in your opinion will in the immediate future
materially disrupt, general securities markets in the United
States; or (ii) if trading on the New York Stock Exchange or
The NASDAQ Stock Market LLC shall have been suspended or materially
limited, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been
required by FINRA or by order of the Commission or any other
government authority having jurisdiction; or (iii) if the
United States shall have become involved in a new war or an
increase in major hostilities; or (iv) if a banking moratorium
has been declared by a New York State or federal authority; or
(v) if a moratorium on foreign exchange trading has been
declared which materially adversely impacts the United States
securities markets; or (vi) if the Company shall have
sustained a material loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or malicious act
which, whether or not such loss shall have been insured, will, in
your opinion, make it inadvisable to proceed with the delivery of
the Firm Shares or Option Shares; or (vii) if the Company is
in material breach of any of its representations, warranties or
covenants hereunder; or (viii) if the Representatives shall
have become aware after the date hereof of such a material adverse
change in the conditions or prospects of the Company, or such
adverse material change in general market conditions as in the
Representatives’ judgment would make it impracticable to
proceed with the offering, sale and/or delivery of the Public
Securities or to enforce contracts made by the Underwriters for the
sale of the Public Securities.
8.3 Expenses.
Notwithstanding anything to the contrary in this Agreement, except
in the case of a default by the Underwriters, pursuant to
Section 6.2, in the
event that this Agreement shall not be carried out for any reason
whatsoever, within the time specified herein or any extensions
thereof pursuant to the terms herein, the Company shall be
obligated to pay to the Underwriters their reasonable accountable
out-of-pocket expenses related to the transactions contemplated
herein then due and payable (including the fees and disbursements
of Representatives’ Counsel) up to $150,000 and upon demand
the Company shall pay the full amount thereof to the
Representatives on behalf of the Underwriters;provided, however, that such expense
cap in no way limits or impairs the indemnification and
contribution provisions of this Agreement. Notwithstanding the
foregoing, any advance received by the Representatives will be
reimbursed to the Company to the extent not actually incurred in
compliance with FINRA Rule 5110(f)(2)(C).
8.4 Indemnification.
Notwithstanding any contrary provision contained in this Agreement,
any election hereunder or any termination of this Agreement, and
whether or not this Agreement is otherwise carried out, the
provisions of Section
5 shall remain in full force and effect and shall not be in
any way affected by, such election or termination or failure to
carry out the terms of this Agreement or any part
hereof.
8.5 Representations,
Warranties, Agreements to Survive. All representations,
warranties and agreements contained in this Agreement or in
certificates of officers of the Company submitted pursuant hereto,
shall remain operative and in full force and effect regardless of
(i) any investigation made by or on behalf of any Underwriter
or its Affiliates or selling agents, any person controlling any
Underwriter, its officers or directors or any person controlling
the Company or (ii) delivery of and payment for the Public
Securities.
- 28 -
9.
Miscellaneous.
9.1 Notices.
All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed
(registered or certified mail, return receipt requested),
personally delivered or sent by facsimile transmission and
confirmed and shall be deemed given when so delivered or faxed and
confirmed or if mailed, two (2) days after such
mailing.
If to
the Representatives:
▇▇▇▇
Capital Partners, LLC
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
And
Maxim
Group LLC
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
Legal Department
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a
copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LLP
▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq.
Fax No:
(▇▇▇) ▇▇▇-▇▇▇▇
If to
the Company:
RumbelOn,
Inc.
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Chairman and Chief Executive Officer
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Chief Financial Officer
Fax No:
(▇▇▇) ▇▇▇-▇▇▇▇
with a
copy (which shall not constitute notice) to:
Akerman
LLP
▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Esq.
Fax No:
(▇▇▇) ▇▇▇-▇▇▇▇
9.2 Headings.
The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of
this Agreement.
- 29 -
9.3 Amendment.
This Agreement may only be amended by a written instrument executed
by each of the parties hereto.
9.4 Entire
Agreement. This Agreement (together with the other
agreements and documents being delivered pursuant to or in
connection with this Agreement) constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and
thereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter
hereof. Notwithstanding anything to the contrary set forth herein,
it is understood and agreed by the parties hereto that all other
terms and conditions of that certain engagement letter between the
Company and ▇▇▇▇ Capital Partners, LLC, dated August 18, 2017,
shall remain in full force and effect.
9.5 Binding
Effect. This Agreement shall inure solely to the benefit of
and shall be binding upon the Representatives, the Underwriters,
the Company and the controlling persons, directors and officers
referred to in Section
5, and their respective successors, legal representatives,
heirs and assigns, and no other person shall have or be construed
to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provisions herein
contained. The term “successors and assigns” shall not
include a purchaser, in its capacity as such, of securities from
any of the Underwriters.
9.6 Governing
Law; Consent to Jurisdiction; Trial by Jury. This Agreement
shall be governed by and construed and enforced in accordance with
the laws of the State of New York, without giving effect to
conflict of laws principles thereof. The Company hereby agrees that
any action, proceeding or claim against it arising out of, or
relating in any way to this Agreement shall be brought and enforced
in the New York Supreme Court, County of New York, or inthe United
States District Court for the Southern District of New York, and
irrevocably submits to such jurisdiction, which jurisdiction shall
be exclusive. The Company hereby waives any objection to such
exclusive jurisdiction and that such courts represent an
inconvenient forum. Any such process or summons to be served upon
the Company may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 9.1. Such mailing shall
be deemed personal service and shall be legal and binding upon the
Company in any action, proceeding or claim. The Company agrees that
the prevailing party(ies) in any such action shall be entitled to
recover from the other party(ies) all of its reasonable
attorneys’ fees and expenses relating to such action or
proceeding and/or incurred in connection with the preparation
therefor. The Company (on its behalf and, to the extent permitted
by applicable law, on behalf of its stockholders and affiliates)
and each of the Underwriters hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated
hereby.
9.7 Execution
in Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but
all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts
has been signed by each of the parties hereto and delivered to each
of the other parties hereto. Delivery of a signed counterpart of
this Agreement by facsimile or email/pdf transmission shall
constitute valid and sufficient delivery thereof.
9.8 Waiver,
etc. The failure of any of the parties hereto to at any time
enforce any of the provisions of this Agreement shall not be deemed
or construed to be a waiver of any such provision, nor to in any
way effect the validity of this Agreement or any provision hereof
or the right of any of the parties hereto to thereafter enforce
each and every provision of this Agreement. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions
of this Agreement shall be effective unless set forth in a written
instrument executed by the party or parties against whom or which
enforcement of such waiver is sought; and no waiver of any such
breach, non-compliance or non-fulfillment shall be construed or
deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
[Signature
Page Follows]
- 30 -
If the
foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space
provided below for that purpose, whereupon this letter shall
constitute a binding agreement between us.
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By:
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/s/
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
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Title: Chairman and CEO |
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Confirmed as of the
date first written above mentioned, on behalf of itself and as
Representatives of the several Underwriters named on Schedule 1 hereto:
▇▇▇▇
CAPITAL PARTNERS, LLC
By:
/s/
▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:
Head of Equity Capital Markets
MAXIM
GROUP, LLC
By: /s/ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
Name:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:
Head of Investment Banking
SCHEDULE 1
|
Underwriter
|
Number
of
Firm Shares to
be Purchased
|
Number of
Additional Shares to be Purchased if the Over-Allotment Option is
Fully Exercised
|
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▇▇▇▇ Capital
Partners, LLC
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1,455,000
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218,250
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Maxim Group,
LLC
|
1,018,500
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152,775
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Aegis Capital
Corp.
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436,500
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65,475
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TOTAL
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2,910,000
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436,500
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Sch.
1-1
SCHEDULE 2-A
Pricing Information
Number
of Firm Shares: 2,910,000
Number
of Option Shares: 436,500
Public
Offering Price per Share: $5.50
Underwriting
Discount per Share: $0.385
Proceeds
to Company per Share (before expenses): $5.115
SCHEDULE 2-B
Issuer General Use Free Writing Prospectuses
▇▇▇▇▇://▇▇▇.▇▇▇.▇▇▇/▇▇▇▇▇▇▇▇/▇▇▇▇▇/▇▇▇▇/▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇/▇▇▇▇_▇▇▇.▇▇▇
SCHEDULE 2-C
Written Testing-the-Waters Communications
None.
Sch.
2-1
SCHEDULE 3
List of Lock-Up Parties
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇
NextGen
Dealer Solutions, LLC
Berrard
Holdings Limited Partnership
Blue
Flame Capital, LLC
Sch. 3-1
Exhibit
A
WARRANT TO PURCHASE CLASS B COMMON STOCK
Warrant
Shares: [●]
Initial
Exercise Date: [●], 2018
THIS
WARRANT TO PURCHASE CLASS B COMMON STOCK (the “Warrant”) certifies that, for
value received, [●] or its assigns (the “Holder”) is entitled, upon the
terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after [●], 2018 (the
“Initial Exercise
Date”) and, in accordance with FINRA Rule
5110(f)(2)(G)(i), prior to at 5:00 p.m. (New York time) on the date
that is five (5) years following the Effective Date (the
“Termination
Date”) but not thereafter, to subscribe for and
purchase from RumbleOn, Inc., a Nevada corporation (the
“Company”), up
to [●] shares of Class B Common Stock, par value $0.001 per
share (the “Class B Common
Stock”), of the Company (the “Warrant Shares”), as subject to
adjustment hereunder. The purchase price of one share of Class B
Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b).
1. Definitions.
In addition to the terms defined elsewhere in this Agreement, the
following terms have the meanings indicated in this Section 1:
“Affiliate” means any Person that,
directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person, as
such terms are used in and construed under Rule 405 under the
Securities Act.
“Business Day” means any day except
any Saturday, any Sunday, any day which is a federal legal holiday
in the United States or any day on which banking institutions in
the State of New York are authorized or required by law or other
governmental action to close.
“Class B Common Stock Equivalents”
means any securities of the Company which would entitle the holder
thereof to acquire at any time Class B Common Stock, including,
without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into
or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, Class B Common Stock.
“Commission” means the United
States Securities and Exchange Commission.
“Exchange Act” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“Person” means an individual or
corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock
company, government (or an agency or subdivision thereof) or other
entity of any kind.
“Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
Ex.
A-1
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Trading Day” means a day on which
the New York Stock Exchange is open for trading.
“Trading Market” means any of the
following markets or exchanges on which the Class B Common Stock is
listed or quoted for trading on the date in question: the NYSE
American, LLC, The NASDAQ Capital Market, The NASDAQ Global Market,
The NASDAQ Global Select Market, or the New York Stock Exchange (or
any successors to any of the foregoing).
“VWAP” means, for any date, the
price determined by the first of the following clauses that
applies: (a) if the Class B Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average price of the
Class B Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Class B Common Stock is then
listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time)), (b) if Class B Common Stock is not then listed or
quoted for trading on a Trading Market, the volume weighted average
price of a share of Class B Common Stock for such date (or the
nearest preceding date) on the OTCQB or OTCQX as applicable, (c) if
Class B Common Stock is not then listed or quoted for trading on
the OTCQB or OTCQX and if prices for Class B Common Stock are then
reported in the “Pink Sheets” published by OTC Markets
Group, Inc. (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share
of Class B Common Stock so reported, or (d) in all other
cases, the fair market value of the Class B Common Stock as
determined by an independent appraiser selected in good faith by
the Holder and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
2. Exercise.
(a) Exercise
of the purchase rights represented by this Warrant may be made, in
whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to
the Company (or such other office or agency of the Company as it
may designate by notice in writing to the registered Holder at the
address of the Holder appearing on the books of the Company) of a
duly executed facsimile copy (or e-mail attachment) of the Notice
of Exercise Form annexed hereto. Within three (3) Trading Days
following the date of exercise as aforesaid, the Holder shall
deliver the aggregate Exercise Price for the shares specified in
the applicable Notice of Exercise by wire transfer or
cashier’s check drawn on a United States bank unless the
cashless exercise procedure specified in Section 2(c) is specified in
the applicable Notice of Exercise. Notwithstanding anything herein
to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has
purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date the final Notice of Exercise is
delivered to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant
Shares available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased.
The Holder and the Company shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise
Form within two (2) Business Days of receipt of such notice.
The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason
of the provisions of this paragraph, following the purchase of a
portion of the Warrant Shares hereunder, the number of Warrant
Shares available for purchase hereunder at any given time may be
less than the amount stated on the face hereof.
Ex.
A-2
(b) Exercise
Price. The exercise price per share of the Class B Common
Stock under this Warrant shall be $[●]1, subject to adjustment hereunder (the
“Exercise
Price”).
(c) Cashless
Exercise. If at any time after the six-month anniversary of
the Initial Exercise Date, there is no effective registration
statement registering, or the prospectus contained therein is not
available for the issuance of the Warrant Shares to the Holder,
then this Warrant may also be exercised, in whole or in part, at
such time by means of a “cashless exercise” in which
the Holder shall be entitled to receive the number of Warrant
Shares equal to the quotient obtained by dividing [(A-B) (X)] by
(A), where:
(A) =
the VWAP on the Trading Day immediately preceding the date on which
Holder elects to exercise this Warrant by means of a
“cashless exercise,” as set forth in the applicable
Notice of Exercise;
(B) =
the Exercise Price of this Warrant, as adjusted hereunder;
and
(X) =
the number of Warrant Shares that would be issuable upon exercise
of this Warrant in accordance with the terms of this Warrant if
such exercise were by means of a cash exercise rather than a
cashless exercise.
If Warrant Shares are issued in such a
“cashless exercise,” the parties acknowledge and agree
that in accordance with Section 3(a)(9) of the Securities Act, the
Warrant Shares shall take on the registered characteristics of the
Warrants being exercised, and the holding period of the Warrants
being exercised may be tacked on to the holding period of the
Warrant Shares. The Company agrees not to take any
position contrary to this Section
2(c).
Notwithstanding
anything herein to the contrary, on the Termination Date, this
Warrant shall be automatically exercised via cashless exercise
pursuant to this Section
2(c).
(d) Mechanics
of Exercise.
Ex.
A-3
(i)
Delivery of Warrant Shares
Upon Exercise. The Company shall cause the Warrant Shares
purchased hereunder to be transmitted by its transfer agent to the
Holder by crediting the account of the Holder’s or its
designee’s balance account with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system
(“DWAC”) if the
Company is then a participant in such system and either
(A) there is an effective registration statement permitting
the issuance of the Warrant Shares to or resale of the Warrant
Shares by Holder, or (B) the Warrant Shares are eligible for resale
by the Holder without volume or manner-of-sale limitations pursuant
to Rule 144 and, in either case, the Warrant Shares have been sold
by the Holder prior to the Warrant Share Delivery Date (as defined
below), and otherwise by physical delivery of a certificate,
registered in the Company’s share register in the name of the
Holder or its designee, for the number of Warrant Shares to which
the Holder is entitled pursuant to such exercise to the address
specified by the Holder in the Notice of Exercise by the date that
is three (3) Trading Days after the delivery to the Company of
the Notice of Exercise (such date, the “Warrant Share Delivery Date”). If
the Warrant Shares can be delivered via DWAC, the transfer agent
shall have received from the Company any legal opinions or other
documentation required by it to deliver such Warrant Shares without
legend (subject to receipt by the Company of reasonable back up
documentation from the Holder, including with respect to affiliate
status) and, if applicable and requested by the Company prior to
the Warrant Share Delivery Date, the transfer agent shall have
received from the Holder a confirmation of sale of the Warrant
Shares (provided the requirement of the Holder to provide a
confirmation as to the sale of Warrant Shares shall not be
applicable to the issuance of unlegended Warrant Shares upon a
cashless exercise of this Warrant if the Warrant Shares are then
eligible for resale pursuant to Rule 144(b)(1)). The Warrant Shares
shall be deemed to have been issued, and Holder or any other person
so designated to be named therein shall be deemed to have become a
holder of record of such shares for all purposes, as of the date
the Warrant has been exercised, with payment to the Company of the
Exercise Price (or by cashless exercise, if permitted) and all
taxes required to be paid by the Holder, if any, pursuant to
Section 2(d)(vi) prior to
the issuance of such shares, having been paid. If the Company fails
for any reason to deliver to the Holder the Warrant Shares subject
to a Notice of Exercise by the second Trading Day following the
Warrant Share Delivery Date, the Company shall pay to the Holder,
in cash, as liquidated damages and not as a penalty, for each
$1,000 of Warrant Shares subject to such exercise (based on the
VWAP of the Class B Common Stock on the date of the applicable
Notice of Exercise), $10 per Trading Day (increasing to $20 per
Trading Day on the fifth Trading Day after such liquidated damages
begin to accrue) for each Trading Day after the second Trading Day
following such Warrant Share Delivery Date until such Warrant
Shares are delivered or Holder rescinds such exercise.
(ii)
Delivery of New Warrants
Upon Exercise. If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of
the Warrant Shares, deliver to the Holder a new Warrant evidencing
the rights of the Holder to purchase the unpurchased Warrant Shares
called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant.
(iii) Rescission
Rights. If the Company fails to cause its transfer agent to
deliver to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant
Share Delivery Date, then the Holder will have the right to rescind
such exercise; provided,
however, that the Holder shall be required to return any
Warrant Shares or Class B Common Stock subject to any such
rescinded exercise notice concurrently with the return to Holder of
the aggregate Exercise Price paid to the Company for such Warrant
Shares and the restoration of Holder’s right to acquire such
Warrant Shares pursuant to this Warrant (including, issuance of a
replacement warrant certificate evidencing such restored
right).
Ex.
A-4
(iv)
Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon
Exercise. In addition to any other rights available to the
Holder, if the Company fails to cause its transfer agent to
transmit to the Holder the Warrant Shares pursuant to an exercise
on or before the second Trading Day following the Warrant Share
Delivery Date, and if after such date the Holder is required by its
broker to purchase (in an open market transaction or otherwise) or
the Holder’s brokerage firm otherwise purchases, shares of
Class B Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a “Buy-In”), then the Company shall
(A) pay in cash to the Holder the amount, if any, by which (x) the
Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Class B Common Stock so
purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue times (2)
the price at which the sell order giving rise to such purchase
obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored (in which
case such exercise shall be deemed rescinded) or deliver to the
Holder the number of shares of Class B Common Stock that would have
been issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder
purchases Class B Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted exercise of
shares of Class B Common Stock with an aggregate sale price giving
rise to such purchase obligation of $10,000, under clause (A) of
the immediately preceding sentence the Company shall be required to
pay the Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of
the Buy-In and, upon request of the Company, evidence of the amount
of such loss. Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company’s failure to timely deliver shares of Class B Common
Stock upon exercise of the Warrant as required pursuant to the
terms hereof.
(v) No Fractional
Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which the Holder would
otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of
such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole
share.
(vi)
Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made
without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such Warrant
Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the
Holder or in such name or names as may be directed by the Holder;
provided, however, that in
the event that Warrant Shares are to be issued in a name other than
the name of the Holder, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto. The Company shall pay all transfer
agent fees required for same-day processing of any Notice of
Exercise.
(vii)
Closing of Books. The Company
will not close its stockholder books or records in any manner which
prevents the timely exercise of this Warrant, pursuant to the terms
hereof.
(viii)
Signature.
This Section 2 and
the exercise form attached hereto set forth the totality of the
procedures required of the Holder in order to exercise this
Purchase Warrant. Without limiting the preceding sentences,
no ink-original exercise form shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of
any exercise form be required in order to exercise this Purchase
Warrant. No additional legal opinion, other information or
instructions shall be required of the Holder to exercise this
Purchase Warrant. The Company shall honor exercises of this
Purchase Warrant and shall deliver shares of Class B Common Stock
underlying this Purchase Warrant in accordance with the terms,
conditions and time periods set forth herein.
Ex.
A-5
(e) Holder’s
Exercise Limitations. The Company shall not effect any
exercise of this Warrant, and a Holder shall not have the right to
exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the
extent that after giving effect to such issuance after exercise as
set forth on the applicable Notice of Exercise, the Holder
(together with the Holder’s Affiliates, and any other Persons
acting as a group together with the Holder or any of the
Holder’s Affiliates), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For
purposes of the foregoing sentence, the number of shares of Class B
Common Stock beneficially owned by the Holder and its Affiliates
shall include the number of shares of Class B Common Stock issuable
upon exercise of this Warrant with respect to which such
determination is being made, but shall exclude the number of shares
of Class B Common Stock which would be issuable upon (i) exercise
of the remaining, nonexercised portion of this Warrant beneficially
owned by the Holder or any of its Affiliates and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other
Class B Common Stock Equivalents) subject to a limitation on
conversion or exercise analogous to the limitation contained herein
beneficially owned by the Holder or any of its Affiliates.
Except as set forth in the preceding sentence, for purposes of this
Section 2(e),
beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is
not representing to the Holder that such calculation is in
compliance with Section 13(d) of the Exchange Act and the Holder is
solely responsible for any schedules required to be filed in
accordance therewith. To the extent that the limitation contained
in this Section
2(e) applies, the determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant
is exercisable shall be in the sole discretion of the Holder, and
the submission of a Notice of Exercise shall be deemed to be the
Holder’s determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with
any Affiliates) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership
Limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a
determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. For purposes of
this Section 2(e),
in determining the number of outstanding shares of Class B Common
Stock, a Holder may rely on the number of outstanding shares of
Class B Common Stock as reflected in (A) the Company’s most
recent periodic or annual report filed with the Commission, as the
case may be, (B) a more recent public announcement by the Company
or (C) a more recent written notice by the Company or the
Company’s transfer agent setting forth the number of shares
of Class B Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two (2) Trading Days
confirm orally and in writing to the Holder the number of shares of
Class B Common Stock then outstanding. In any case, the
number of outstanding shares of Class B Common Stock shall be
determined after giving effect to the conversion or exercise of
securities of the Company, including this Warrant, by the Holder or
its Affiliates since the date as of which such number of
outstanding shares of Class B Common Stock was reported. The
“Beneficial Ownership
Limitation” shall be 9.99% of the number of shares of
the Class B Common Stock outstanding immediately after giving
effect to the issuance of shares of Class B Common Stock issuable
upon exercise of this Warrant. The Holder, upon notice to the
Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 2(e), provided that the
Beneficial Ownership Limitation in no event exceeds 9.99% of the
number of shares of the Class B Common Stock outstanding
immediately after giving effect to the issuance of shares of Class
B Common Stock upon exercise of this Warrant held by the Holder and
the provisions of this Section 2(e) shall continue to
apply. Any increase in the Beneficial Ownership Limitation will not
be effective until the 61st day after such
notice is delivered to the Company. The provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 2(e) to correct this
paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor
holder of this Warrant.
3. Certain
Adjustments.
(a) Stock
Dividends and Splits. If the Company, at any time while this
Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Class B
Common Stock or any other equity or equity equivalent securities
payable in shares of Class B Common Stock (which, for avoidance of
doubt, shall not include any shares of Class B Common Stock issued
by the Company upon exercise of this Warrant), (ii) subdivides
outstanding shares of Class B Common Stock into a larger number of
shares, (iii) combines (including by way of reverse stock split)
outstanding shares of Class B Common Stock into a smaller number of
shares, or (iv) issues by reclassification of shares of the Class B
Common Stock any shares of capital stock of the Company, then in
each case the Exercise Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Class B Common
Stock (excluding treasury shares, if any) outstanding immediately
before such event and of which the denominator shall be the number
of shares of Class B Common Stock outstanding immediately after
such event, and the number of shares issuable upon exercise of this
Warrant shall be proportionately adjusted such that the aggregate
Exercise Price of this Warrant shall remain unchanged. Any
adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in
the case of a subdivision, combination or re-classification. For
the purposes of clarification, the Exercise Price of this Warrant
will not be adjusted in the event that the Company or any future
subsidiary of the Company sells or grants any option to purchase,
or sell or grant any right to reprice, or otherwise dispose of or
issue (or announce any offer, sale, grant or any option to purchase
or other disposition) any Class B Common Stock or Class B Common
Stock Equivalents, at an effective price per share less than the
Exercise Price then in effect.
(b) [RESERVED]
(c)
Subsequent Rights
Offerings. In addition to any adjustments pursuant to
Section 3(a), if at
any time the Company grants, issues or sells any Class B Common
Stock Equivalents or rights to purchase stock, warrants, securities
or other property pro rata to the record holders of any class of
shares of Class B Common Stock (the “Purchase Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of
Class B Common Stock acquirable upon complete exercise of this
Warrant (without regard to any limitations on exercise hereof,
including without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Class B Common Stock are to be determined for the grant, issue
or sale of such Purchase Rights (provided, however, to the extent
that the Holder’s right to participate in any such Purchase
Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such
shares of Class B Common Stock as a result of such Purchase Right
to such extent) and such Purchase Right to such extent shall be
held in abeyance for the Holder until such time, if ever, as its
right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).
(d) Pro
Rata Distributions. During such time as this Warrant is
outstanding, if the Company shall declare or make any dividend
(other than cash dividends) or other distribution of its assets (or
rights to acquire its assets) to holders of shares of Class B
Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of shares or other securities,
property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or
other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder
shall be entitled to participate in such Distribution to the same
extent that the Holder would have participated therein if the
Holder had held the number of shares of Class B Common Stock
acquirable upon complete exercise of this Warrant (without regard
to any limitations on exercise hereof, including without
limitation, the Beneficial Ownership Limitation) immediately before
the date of which a record is taken for such Distribution, or, if
no such record is taken, the date as of which the record holders of
shares of Class B Common Stock are to be determined for the
participation in such Distribution (provided, however, that to the extent
that the Holder’s right to participate in any such
Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to
participate in such Distribution to such extent (or in the
beneficial ownership of any shares of Class B Common Stock as a
result of such Distribution to such extent) and the portion of such
Distribution shall be held in abeyance for the benefit of the
Holder until such time, if ever, as its right thereto would not
result in the Holder exceeding the Beneficial Ownership
Limitation). To the extent that this Warrant has not been partially
or completely exercised at the time of such Distribution, such
portion of the Distribution shall be held in abeyance for the
benefit of the Holder until the Holder has exercised this
Warrant.
Ex.
A-6
(e) Fundamental
Transaction. If, at any time while this Warrant is
outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of
the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii)
any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed
pursuant to which holders of Class B Common Stock are permitted to
sell, tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the
outstanding Class B Common Stock, (iv) the Company, directly or
indirectly, in one or more related transactions effects any
reclassification, reorganization or recapitalization of the Class B
Common Stock or any compulsory share exchange pursuant to which the
Class B Common Stock is effectively converted into or exchanged for
other securities, cash or property, or (v) the Company, directly or
indirectly, in one or more related transactions consummates a stock
or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person or group of
Persons whereby such other Person or group acquires more than 50%
of the outstanding shares of Class B Common Stock (not including
any shares of Class B Common Stock held by the other Person or
other Persons making or party to, or associated or affiliated with
the other Persons making or party to, such stock or share purchase
agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent exercise of
this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard to any
limitation in Section
2(e) on the exercise of this Warrant), the number of shares
of Class B Common Stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and any
additional consideration (the “Alternate Consideration”)
receivable by holders of Class B Common Stock as a result of such
Fundamental Transaction for each share of Class B Common Stock for
which this Warrant is exercisable immediately prior to such
Fundamental Transaction (without regard to any limitation in
Section 2(e) on the
exercise of this Warrant). For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Class B
Common Stock in such Fundamental Transaction, and the Company shall
apportion the Exercise Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Class B
Common Stock are given any choice as to the securities, cash or
property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. The Company shall cause any
successor entity in a Fundamental Transaction in which the Company
is not the survivor (the “Successor Entity”) to assume in
writing all of the obligations of the Company under this Warrant in
accordance with the provisions of this Section 3(e) pursuant to
written agreements in form and substance reasonably satisfactory to
the Holder and approved by the Holder (without unreasonable delay)
prior to such Fundamental Transaction and shall, at the option of
the Holder, deliver to the Holder in exchange for this Warrant a
security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant which
is exercisable for a corresponding number of shares of capital
stock of such Successor Entity (or its parent entity) equivalent to
the shares of Class B Common Stock acquirable and receivable upon
exercise of this Warrant (without regard to any limitations on the
exercise of this Warrant) prior to such Fundamental Transaction,
and with an exercise price which applies the exercise price
hereunder to such shares of capital stock (but taking into account
the relative value of the shares of Class B Common Stock pursuant
to such Fundamental Transaction and the value of such shares of
capital stock, such number of shares of capital stock and such
exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such
Fundamental Transaction), and which is reasonably satisfactory in
form and substance to the Holder. Upon the occurrence of any such
Fundamental Transaction, the Successor Entity shall succeed to, and
be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Warrant referring
to the “Company” shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and
shall assume all of the obligations of the Company under this
Warrant with the same effect as if such Successor Entity had been
named as the Company herein.
(f) Calculations.
All calculations under this Section 3 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 3, the number of shares
of Class B Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Class B
Common Stock (excluding treasury shares, if any) issued and
outstanding.
(g) Notice
to Holder.
Ex.
A-7
(i)
Adjustment to Exercise
Price. Whenever the Exercise Price is adjusted pursuant to
any provision of this Section 3, the Company shall
promptly mail to the Holder a notice setting forth the Exercise
Price after such adjustment and any resulting adjustment to the
number of Warrant Shares and setting forth a brief statement of the
facts requiring such adjustment.
(ii)
Notice to Allow Exercise
by Holder. If (A) the Company shall declare a dividend (or
any other distribution in whatever form) on the Class B Common
Stock, (B) the Company shall declare a special nonrecurring cash
dividend on or a redemption of the Class B Common Stock, (C) the
Company shall authorize the granting to all holders of the Class B
Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Company shall be required in
connection with any reclassification of the Class B Common Stock,
any consolidation or merger to which the Company is a party, any
sale or transfer of all or substantially all of the assets of the
Company, or any compulsory share exchange whereby the Class B
Common Stock is converted into other securities, cash or property,
or (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be mailed a
notice to the Holder at its last address as it shall appear upon
the Warrant Register of the Company, at least 20 calendar days
prior to the applicable record or effective date hereinafter
specified, stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution, redemption, rights
or warrants, or if a record is not to be taken, the date as of
which the holders of the Class B Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or
warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share
exchange is expected to become effective or close, and the date as
of which it is expected that holders of the Class B Common Stock of
record shall be entitled to exchange their shares of the Class B
Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer
or share exchange; provided that the failure to provide such notice
or any defect therein shall not affect the validity of the
corporate action required to be specified in such notice. To the
extent that any notice provided hereunder constitutes, or contains,
material, non-public information regarding the Company or any
future subsidiaries of the Company, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Holder shall remain entitled to
exercise this Warrant during the period commencing on the date of
such notice to the effective date of the event triggering such
notice except as may otherwise be expressly set forth
herein.
4. Transfer
of Warrant.
(a) Transferability.
Pursuant to FINRA Rule 5110(g)(1), neither this Warrant nor any
Warrant Shares issued upon exercise of this Warrant shall be sold,
transferred, assigned, pledged, or hypothecated, or be the subject
of any hedging, short sale, derivative, put, or call transaction
that would result in the effective economic disposition of the
securities by any person for a period of 180 days immediately
following the date of effectiveness or commencement of sales of the
offering pursuant to which this Warrant is being issued, except the
transfer of any security:
(i)
by operation of law or by reason of reorganization of the
Company;
(ii)
to any FINRA member firm participating in the offering and the
officers or partners thereof, if all securities so transferred
remain subject to the lock-up restriction in this Section 4(a) for
the remainder of the time period;
Ex.
A-8
(iii)
if the aggregate amount of securities of the Company held by the
Holder or related person do not exceed 1% of the securities being
offered;
(iv) that is beneficially owned on a pro-rata basis by all
equity owners of an investment fund, provided that no participating
member manages or otherwise directs investments by the fund, and
participating members in the aggregate do not own more than 10% of
the equity in the fund; or
(v)
the exercise or conversion of any security, if all securities
received remain subject to the lock-up restriction in this Section
4(a) for the remainder of the time period.
Subject
to the foregoing restriction, any applicable securities laws and
the conditions set forth in Section 4(d), this Warrant and
all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon
surrender of this Warrant at the principal office of the Company or
its designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by
the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee
or assignees, as applicable, and in the denomination or
denominations specified in such instrument of assignment, and shall
issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be
cancelled. The Warrant, if properly assigned in accordance
herewith, may be exercised by a new holder for the purchase of
Warrant Shares without having a new Warrant issued.
(b) New
Warrants. This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the
Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by the
Holder or its agent or attorney. Subject to compliance with
Section 4(a), as to
any transfer which may be involved in such division or combination,
the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice. All Warrants issued on transfers or
exchanges shall be dated the initial issuance date of this Warrant
and shall be identical with this Warrant except as to the number of
Warrant Shares issuable pursuant thereto.
(c) Warrant
Register. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the
“Warrant
Register”), in the name of the record Holder hereof
from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose
of any exercise hereof or any distribution to the Holder, and for
all other purposes, absent actual notice to the
contrary.
(d) Representation
by the Holder. The Holder, by the acceptance hereof,
represents and warrants that it is acquiring this Warrant and, upon
any exercise hereof, will acquire the Warrant Shares issuable upon
such exercise, for its own account and not with a view to or for
distributing or reselling such Warrant Shares or any part thereof
in violation of the Securities Act or any applicable state
securities law, except pursuant to sales registered or exempted
under the Securities Act.
Ex.
A-9
5. Miscellaneous.
(a) No
Rights as Stockholder Until Exercise. This Warrant does not
entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof as set
forth in Section
2(d)(i).
(b) Loss,
Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant or any certificate relating to the Warrant Shares, and
in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in
lieu of such Warrant or stock certificate.
(c) Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then, such action may
be taken or such right may be exercised on the next succeeding
Business Day.
(d) Authorized
Shares. The Company covenants that, during the period the
Warrant is outstanding, it will reserve from its authorized and
unissued Class B Common Stock a sufficient number of shares to
provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary
Warrant Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which
the Class B Common Stock may be listed. The Company covenants that
all Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of
the purchase rights represented by this Warrant and payment for
such Warrant Shares in accordance herewith, be duly authorized,
validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will
(i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to
such increase in par value, (ii) take all such action as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the
exercise of this Warrant and (iii) use commercially reasonable
efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may
be, necessary to enable the Company to perform its obligations
under this Warrant.
Ex.
A-10
Before
taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction
thereof.
(e) Jurisdiction.
All questions concerning the construction, validity, enforcement
and interpretation of this Warrant shall be determined in
accordance with the provisions of the underwriting agreement, dated
[●], 2017, by and between the Company and ▇▇▇▇ Capital
Partners, LLC and Maxim Group, LLC, as representatives of the
underwriters set forth therein (the “Underwriting
Agreement”).
(f) Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant, if not registered, and the Holder does
not utilize cashless exercise, will have restrictions upon resale
imposed by state and federal securities laws.
(g) Nonwaiver
and Expenses. No course of dealing or any delay or failure
to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice the Holder’s
rights, powers or remedies. Without limiting any other provision of
this Warrant or the Underwriting Agreement, if the Company
willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder, the
Company shall pay to the Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to,
reasonable attorneys’ fees, including those of appellate
proceedings, incurred by the Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.
(h) Notices.
Any notice, request or other document required or permitted to be
given or delivered to the Holder by the Company shall be delivered
in accordance with the notice provisions of the Underwriting
Agreement.
(i) Limitation
of Liability. No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to
purchase Warrant Shares, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the
Holder for the purchase price of any Class B Common Stock or as a
stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
(j) Remedies.
The Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company
agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of
this Warrant and hereby agrees to waive and not to assert the
defense in any action for specific performance that a remedy at law
would be adequate.
(k) Successors
and Assigns. Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors and permitted
assigns of the Company and the successors and permitted assigns of
Holder. The provisions of this Warrant are intended to be for the
benefit of any Holder from time to time of this Warrant and shall
be enforceable by the Holder or holder of Warrant
Shares.
(l) Amendment.
This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the
Holder.
(m) Severability.
Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be
prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the
remaining provisions of this Warrant.
(n) Headings.
The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of
this Warrant.
********************
(Signature Page Follows)
Ex.
A-11
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized as of the date first above
indicated.
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By:__________________________________________
Name:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
Chairman and CEO
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Ex.
A-12
NOTICE OF EXERCISE
TO:
RUMBLEON, INC.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of
the Company pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the exercise
price in full, together with all applicable transfer taxes, if
any.
(2)
Payment shall take the form of (check applicable box):
[ ] in
lawful money of the United States; or
[ ] if
permitted the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in Section 2(c), to exercise this
Warrant with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise procedure set forth
in Section
2(c).
(3)
Please register and issue said Warrant Shares in the name of the
undersigned or in such other name as is specified
below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account
Number or by physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name of
Investing Entity:
_______________________________________________________________
Signature of Authorized Signatory of Investing Entity:
_________________________________________
Name of
Authorized Signatory:
___________________________________________________________
Title
of Authorized Signatory:
____________________________________________________________
Date:
________________________________________________________________________________
Ex.
A-13
ASSIGNMENT FORM
(To
assign the foregoing warrant, execute
this
form and supply required information.
Do not
use this form to exercise the warrant.)
FOR
VALUE RECEIVED, [____] all of or [_______] shares of the foregoing
Warrant and all rights evidenced thereby are hereby assigned
to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated:
______________, _______
Holder’s
Signature: _____________________________
Holder’s
Address: _____________________________
_____________________________
NOTE:
The signature to this Assignment Form must correspond with the name
as it appears on the face of the Warrant, without alteration or
enlargement or any change whatsoever. Officers of corporations and
those acting in a fiduciary or other representative capacity should
file proper evidence of authority to assign the foregoing
Warrant.
Ex.
A-14
EXHIBIT B
Form of Lock-Up Agreement
September 27,
2017
▇▇▇▇
Capital Partners, LLC
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
And
Maxim
Group LLC
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
The
undersigned understands that ▇▇▇▇ Capital Partners, LLC and Maxim
Group, LLC (collectively, the “Representatives”) propose to enter
into an Underwriting Agreement (the “Underwriting Agreement”) with
RumbleOn, Inc., a Nevada corporation (the “Company”), providing for the
public offering (the “Public
Offering”) of shares of Class B Common Stock, par
value $0.001 per share, of the Company (the “Shares”).
To
induce the Representatives to continue their efforts in connection
with the Public Offering, the undersigned hereby agrees that,
without the prior written consent of the Representatives, the
undersigned will not, during the period commencing on the date
hereof and ending one hundred eighty (180) days after the date of
the final prospectus (the “Prospectus”) relating to the
Public Offering (the “Lock-Up
Period”), (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,
any shares of capital stock of the Company or any securities
convertible into or exercisable or exchangeable for shares of
capital stock of the Company, whether now owned or hereafter
acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition
(collectively, the “Lock-Up
Securities”);(2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of Lock-Up Securities,
whether any such transaction is to be settled by delivery of shares
of Lock-Up Securities, in cash or otherwise; (3) make any demand
for or exercise any right with respect to the registration of any
Lock-Up Securities; or (4) publicly disclose the intention to make
any offer, sale, pledge or disposition, or to enter into any
transaction, swap, hedge or other arrangement relating to any
Lock-Up Securities. Notwithstanding the foregoing, and subject to
the conditions below, the undersigned may transfer Lock-Up
Securities without the prior written consent of the Representatives
in connection with (a) transactions relating to Lock-Up Securities
acquired in open market transactions after the completion of the
Public Offering; provided
that no filing under Section 16(a) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), shall be required
or shall be voluntarily made in connection with subsequent sales of
Lock-Up Securities acquired in such open market transactions; (b)
transfers of Lock-Up Securities as a bona fide gift, by will or intestacy or
to a family member or trust for the benefit of a family member (for
purposes of this lock-up agreement, “family member”
means any relationship by blood, marriage or adoption, not more
remote than first cousin); (c) transfers of Lock-Up Securities to a
charity or educational institution; (d) if the undersigned,
directly or indirectly, controls a corporation, partnership,
limited liability company or other business entity, any transfers
of Lock-Up Securities to any shareholder, partner or member of, or
owner of similar equity interests in, the undersigned, as the case
may be, or (e) the sales of Shares to cover the payment of the
exercise prices or the payment of taxes associated with the
exercise or vesting of equity awards under any equity compensation
plan of the Company;provided that in the case of any
transfer pursuant to the foregoing clauses (b), (c), (d) or
(e), (i) any such transfer shall not involve a disposition for
value, (ii) each transferee shall sign and deliver to the
Representatives a lock-up agreement substantially in the form of
this lock-up agreement and (iii) no filing under Section 16(a)
of the Exchange Act shall be required or shall be voluntarily made,
except for a Form 5. The undersigned also agrees and consents to
the entry of stop transfer instructions with the Company’s
transfer agent and registrar against the transfer of the
undersigned’s Lock-Up Securities except in compliance with
this lock-up agreement.
If the
undersigned is an officer or director of the Company, (i) the
undersigned agrees that the foregoing restrictions shall be equally
applicable to any issuer-directed or “friends and
family” Shares that the undersigned may purchase in the
Public Offering; (ii) the Representatives agree that, at least
three (3) Business Days (as that term is defined in the
Underwriting Agreement) before the effective date of any release or
waiver of the foregoing restrictions in connection with a transfer
of Lock-Up Securities, the Representatives will notify the Company
of the impending release or waiver; and (iii) the Company has
agreed in the Underwriting Agreement to announce the impending
release or waiver by press release through a major news service at
least two (2) Business Days before the effective date of the
release or waiver. Any release or waiver granted by the
Representatives hereunder to any such officer or director shall
only be effective two (2) Business Days after the publication date
of such press release. The provisions of this paragraph will not
apply if (a) the release or waiver is effected solely to permit a
transfer of Lock-Up Securities not for consideration and (b) the
transferee has agreed in writing to be bound by the same terms
described in this lock-up agreement to the extent and for the
duration that such terms remain in effect at the time of such
transfer.
No
provision in this agreement shall be deemed to restrict or prohibit
the exercise, exchange or conversion by the undersigned of any
securities exercisable or exchangeable for or convertible into
Shares, as applicable;provided that the undersigned does not
transfer the Shares acquired on such exercise, exchange or
conversion during the Lock-Up Period, unless otherwise permitted
pursuant to the terms of this lock-up agreement. In addition, no
provision herein shall be deemed to restrict or prohibit the entry
into or modification of a so-called “10b5-1” plan at
any time (other than the entry into or modification of such a plan
in such a manner as to cause the sale of any Lock-Up Securities
within the Lock-Up Period).
The
undersigned understands that the Company and the Representatives
are relying upon this lock-up agreement in proceeding toward
consummation of the Public Offering. The undersigned further
understands that this lock-up agreement is irrevocable and shall be
binding upon the undersigned’s heirs, legal representatives,
successors and assigns.
The
undersigned understands that, if the Underwriting Agreement is not
executed by October 31, 2017, 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, then this lock-up agreement shall be
void and of no further force or effect.
Whether
or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only
be made pursuant to an Underwriting Agreement, the terms of which
are subject to negotiation between the Company and the
Representatives.
Very
truly yours,
_________________________________
(Name -
Please Print)
_________________________________
(Signature)
_________________________________
(Name
of Signatory, in the case of entities - Please Print)
_________________________________
(Title
of Signatory, in the case of entities - Please Print)
Address:
Ex.
B-1
EXHIBIT C
Form of Press Release
[Date]
RumbleOn,
Inc. (the “Company”) announced today that ▇▇▇▇ Capital
Partners, LLC and Maxim Group, LLC, acting as representatives for
the underwriters in the Company’s recent public offering
of _______ shares of the Company’s Class B Common
Stock, are [waiving] [releasing] a lock-up restriction with respect
to _________ shares of the Company’s Class B Common
Stock held by [certain officers or directors] [an officer or
director] of the Company. The [waiver] [release] will take
effect on _________, 20___, and the shares may be sold on or
after such date.
This press release is not an offer or sale of the securities in the
United States or in any other jurisdiction where such offer or sale
is prohibited, and such securities may not be offered or sold in
the United States absent registration or an exemption from
registration under the Securities Act of 1933, as
amended.
Ex.
C-1