806,451 Shares1 Issuer Direct Corporation Common Stock, par value $0.001 per share UNDERWRITING AGREEMENT
Exhibit 1.1
Execution Version
806,451 Shares1
Issuer Direct Corporation
Common Stock, par value $0.001
per share
August
17, 2018
NORTHLAND
SECURITIES, INC.
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Ladies
and Gentlemen:
Issuer
Direct Corporation, a Delaware corporation (the “Company”),
proposes to sell to Northland Securities, Inc. (“you” or
the “Underwriter”),
an aggregate of 806,451 shares (the “Firm
Shares”) of Common Stock, par value $0.001 per share
(the “Common
Stock”), of the Company. The Firm Shares consist of
authorized but unissued shares of Common Stock to be issued and
sold by the Company. The Company also has granted to the
Underwriter an option to purchase up to 120,967 additional shares
of Common Stock on the terms and for the purposes set forth in
Section 3 hereof (the “Option
Shares”). The Firm Shares and any Option Shares
purchased pursuant to this Underwriting Agreement (this
“Agreement”)
are herein collectively called the “Securities.”
The
Company and the Underwriter hereby confirm their agreement with
respect to the sale of the Securities by the Company to the
Underwriter as follows:
1. Registration Statement and
Prospectus. The Company has prepared and filed with the
Securities and Exchange Commission (the “Commission”)
a registration statement on Form S-3 (File No. 333-226530) under
the Securities Act of 1933, as amended (the “Securities
Act” or the “Act”),
and the rules and regulations (the “Rules and
Regulations”) of the Commission thereunder, and such
amendments to such registration statement as may have been required
to the date of this Agreement. Such registration statement has been
declared effective by the Commission. Each part of such registration
statement, including the amendments, exhibits and any schedules
thereto, the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act and the documents
and information otherwise deemed to be a part thereof or included
therein by Rule 430B under the Securities Act (the “Rule 430B
Information”) or otherwise pursuant to the Rules and
Regulations, as of the time the Registration Statement became
effective, is herein called the “Registration
Statement.” Any registration statement filed by the
Company pursuant to Rule 462(b) under the Securities Act is called
the “Rule
462(b) Registration Statement” and, from and after the
date and time of filing of the Rule 462(b) Registration Statement,
the term “Registration Statement” shall include the
Rule 462(b) Registration Statement.
_______________
1
Plus an option to
purchase up to 120,967 additional shares to
cover over-allotments.
The
prospectus in the form in which it has most recently been filed
with the Commission on or prior to the date of this Agreement is
herein called the “Base
Prospectus.” Each preliminary prospectus supplement to
the Base Prospectus (including the Base Prospectus as so
supplemented), that describes the Securities and the offering
thereof, that omitted the Rule 430B Information and that was used
prior to the filing of the final prospectus supplement referred to
in the following sentence is herein called a “Preliminary
Prospectus.” Promptly after execution and delivery of
this Agreement, the Company will prepare and file with the
Commission a final prospectus supplement to the Base Prospectus
relating to the Securities and the offering thereof in accordance
with the provisions of Rule 430B and Rule 424(b) of the Rules and
Regulations. Such final supplemental form of prospectus (including
the Base Prospectus as so supplemented), in the form filed with the
Commission pursuant to Rule 424(b), is herein called the
“Prospectus.”
Any reference herein to the Base Prospectus, any Preliminary
Prospectus or the Prospectus shall be deemed to include the
documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the Securities Act as of the date of such
prospectus.
For
purposes of this Agreement, all references to the Registration
Statement, the Rule 462(b) Registration Statement, the Base
Prospectus, any Preliminary Prospectus, the Prospectus or any
amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval System or any
successor system thereto (“▇▇▇▇▇”).
All references in this Agreement to financial statements and
schedules and other information which is “described,”
“contained,” “included” or
“stated” in the Registration Statement, the Base
Prospectus, any Preliminary Prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all
such financial statements and schedules and other information which
is incorporated by reference in or otherwise deemed by the Rules
and Regulations to be a part of or included in the Registration
Statement, the Base Prospectus, any Preliminary Prospectus or the
Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration
Statement, the Base Prospectus, any Preliminary Prospectus or the
Prospectus shall be deemed to mean and include the subsequent
filing of any document under the Securities Exchange Act of 1934,
as amended (the “Exchange
Act”), and which is deemed to be incorporated by
reference therein or otherwise deemed by the Rules and Regulations
to be a part thereof.
2. Representations and
Warranties of the Company.
(a) Representations
and Warranties of the Company. The Company represents and
warrants to, and agrees with, the Underwriter as
follows:
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(i) Registration
Statement and Prospectuses. No order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus
(or any supplement thereto) has been issued by the Commission and
no proceeding for that purpose has been initiated or is pending or,
to the knowledge of the Company, threatened by the Commission. As
of the time each part of the Registration Statement (or any
post-effective amendment thereto) became or becomes effective
(including each deemed effective date with respect to the
Underwriter pursuant to Rule 430B or otherwise under the Securities
Act), such part conformed or will conform in all material respects
to the requirements of the Act and the Rules and Regulations. Upon
the filing or first use within the meaning of the Rules and
Regulations, each Preliminary Prospectus and the Prospectus (or any
supplement to either) conformed or will conform in all material
respects to the requirements of the Act and the Rules and
Regulations. The Registration Statement and any post-effective
amendment thereto have become effective under the Securities Act.
The Company has complied, to the Commission’s satisfaction,
with all requests of the Commission for additional or supplemental
information. No stop order suspending the effectiveness of the
Registration Statement, any post-effective amendment or any part
thereof is in effect and no proceedings for such purpose have been
instituted or are pending or, to the knowledge of the Company, are
threatened by the Commission.
(ii) Accurate
Disclosure. Each Preliminary Prospectus, at the time of
filing thereof or the time of first use within the meaning of the
Rules and Regulations, did not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. Neither the Registration Statement nor any amendment
thereto, at the effective time of each part thereof, at the First
Closing Date (as defined below) or at the Second Closing Date (as
defined below), 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. As of the Time of Sale
(as defined below), neither (A) the Time of Sale Disclosure Package
(as defined below) nor (B) any issuer free writing prospectus (as
defined below), when considered together with the Time of Sale
Disclosure Package, included an untrue statement of a material fact
or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. Neither the Prospectus nor any
supplement thereto, as of its issue date, at the time of any filing
with the Commission pursuant to Rule 424(b) of the Rules and
Regulations, at the First Closing Date or at the Second Closing,
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 light of
the circumstances under which they were made, not misleading. The
representations and warranties in this Section 2(a)(ii) shall
not apply to statements in or omissions from any Preliminary
Prospectus, the Registration Statement (or any amendment thereto),
the Time of Sale Disclosure Package or the Prospectus (or any
supplement thereto) made in reliance upon, and in conformity with,
written information furnished to the Company by you specifically
for use in the preparation of such document, it being understood
and agreed that the only such information furnished by the
Underwriter consists of the information described as such in
Section 6(e).
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Each
reference to an “issuer free writing
prospectus” herein means an issuer free writing
prospectus as defined in Rule 433 of the Rules and
Regulations.
“Time of Sale
Disclosure Package” means the Preliminary Prospectus
dated August 17, 2018, any free writing prospectus set forth
on Schedule I and the information on Schedule II, all considered
together.
Each
reference to a “free writing
prospectus” herein means a free writing prospectus as
defined in Rule 405 of the Rules and Regulations.
“Time of
Sale” means 6:00 a.m. (Eastern time) on the date of
this Agreement.
(iii) Issuer
Free Writing Prospectuses. (A) Each issuer free writing
prospectus does not include any information that conflicts with the
information contained in the Registration Statement, any
Preliminary Prospectus or the Prospectus. The foregoing sentence
does not apply to statements in or omissions from any issuer free
writing prospectus based upon and in conformity with written
information furnished to the Company by you specifically for use
therein; it being understood and agreed that the only such
information furnished by the Underwriter consists of the
information described as such in Section 6(e).
(B)
(1) At the earliest time after the filing of the Registration
Statement that the Company or another offering participant made a
bona fide offer (within the
meaning of Rule 164(h)(2) under the Securities Act) of the
Securities and (2) at the date hereof, the Company was not and is
not an “ineligible issuer,” as defined in Rule 405
under the Securities Act, including the Company or any subsidiary
in the preceding three years not having been convicted of a felony
or misdemeanor or having been made the subject of a judicial or
administrative decree or order as described in Rule 405 of the
Rules and Regulations (without taking account of any determination
by the Commission pursuant to Rule 405 of the Rules and Regulations
that it is not necessary that the Company be considered an
ineligible issuer), nor an “excluded issuer” as defined
in Rule 164 under the Securities Act.
(C)
Each issuer free writing prospectus, if any, satisfied, as of its
issue date and at all subsequent times to the Time of Sale, all
other conditions to use thereof as set forth in Rules 164 and 433
under the Securities Act.
(iv) No
Other Offering Materials. The Company has not distributed
and will not distribute any prospectus or other offering material
in connection with the offering and sale of the Securities other
than any Preliminary Prospectus, the Time of Sale Disclosure
Package or the Prospectus or other materials permitted by the Act
to be distributed by the Company; provided, however, that, except as set
forth on Schedule I, the Company has not made and will not make any
offer relating to the Securities that would constitute a free
writing prospectus, except in accordance with the provisions of
Section 4(a)(xv) of this Agreement.
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(v) Financial
Statements. The financial statements of the Company,
together with the related notes, set forth or incorporated by
reference in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus comply in all material
respects with the applicable requirements of the Securities Act and
the Exchange Act and fairly present the financial condition of the
Company and its consolidated subsidiaries as of the dates indicated
and the results of operations and changes in cash flows for the
periods therein specified in conformity with generally accepted
accounting principles in the United States consistently applied
throughout the periods involved; the supporting schedules included
in or incorporated by reference into the Registration Statement
present fairly the information required to be stated therein; all
non-GAAP financial information included in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus
complies with the requirements of Regulation G and Item 10 of
Regulation S-K under the Act; and, except as disclosed in the Time
of Sale Disclosure Package and the Prospectus, there are no
material off-balance sheet arrangements (as defined in Regulation
S-K under the Act, Item 303(a)(4)(ii)) or any other relationships
with unconsolidated entities or other persons, that may have a
material current or, to the Company’s knowledge, material
future effect on the Company’s financial condition, results
of operations, liquidity, capital expenditures, capital resources
or significant components of revenue or expenses. No other
financial statements or schedules are required to be included in
the Registration Statement, the Time of Sale Disclosure Package or
the Prospectus. To the Company’s knowledge, Cherry Bekaert LLP, which has
expressed its opinion with respect to the financial statements and
schedules filed as a part of the Registration Statement and
included in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus, is (x) an
independent public accounting firm within the meaning of the Act
and the Rules and Regulations, (y) a registered public accounting
firm (as defined in Section 2(a)(12) of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act of 2002 (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”)) and (z) not in
violation of the auditor independence requirements of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(vi) Organization
and Good Standing. Each of the Company and its
subsidiaries has been duly organized and is validly existing as a
corporation, limited liability company or other business entity, as
applicable, in good standing under the laws of its jurisdiction of
incorporation, organization or formation, as applicable. Each of
the Company and its subsidiaries has full corporate, limited
liability company or business organization power and authority, as
applicable, to own its properties and conduct its business as
currently being carried on and as described in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus,
and is duly qualified to do business as a foreign corporation,
limited liability company or other business entity, as applicable,
in good standing in each jurisdiction in which it owns or leases
real property or in which the conduct of its business makes such
qualification necessary and in which the failure to so qualify
would have a material adverse effect upon the business, prospects,
management, properties, operations, condition (financial or
otherwise) or results of operations of the Company and its
subsidiaries, taken as a whole (“Material Adverse
Effect”).
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(vii) Absence
of Certain
Events. Except as contemplated in the Time of Sale
Disclosure Package and in the Prospectus, subsequent to the
respective dates as of which information is given in the Time of
Sale Disclosure Package and the Prospectus, neither the Company nor
any of its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock; and
there has not been any change in the capital stock (other than a
change in the number of outstanding shares of Common Stock due to
the issuance of shares upon the exercise of outstanding options or
warrants or conversion of convertible securities), or any material
change in the short-term or long-term debt (other than as a result
of the conversion of convertible securities), or any issuance of
options, warrants, convertible securities or other rights to
purchase the capital stock, of the Company or any of its
subsidiaries, or any material adverse change in the general
affairs, condition (financial or otherwise), business, prospects,
management, properties, operations or results of operations of the
Company and its subsidiaries, taken as a whole (“Material Adverse
Change”) or any development which could reasonably be
expected to result in any Material Adverse Change. Notwithstanding
the above, the Company declared a cash dividend of $0.05 per share
of outstanding Common Stock on July 12, 2018 and paid such cash
dividend on August 13, 2018.
(viii) Absence
of Proceedings.
Except as set forth in the Time of Sale Disclosure Package and in
the Prospectus, there is not pending or, to the knowledge of the
Company, threatened or contemplated, any action, suit or proceeding
(a) to which the Company or any of its subsidiaries is a party or
(b) which has as the subject thereof any officer or director of the
Company or any subsidiary, any employee benefit plan sponsored by
the Company or any subsidiary or any property or assets owned or
leased by the Company or any subsidiary before or by any court or
Governmental Authority (as defined below), or any arbitrator,
which, individually or in the aggregate, might result in any
Material Adverse Change, or would materially and adversely affect
the ability of the Company to perform its obligations under this
Agreement or which are otherwise material in the context of the
sale of the Securities. There are no current or, to the knowledge
of the Company, pending, legal, governmental or regulatory actions,
suits or proceedings (x) to which the Company or any of its
subsidiaries is subject or (y) which has as the subject thereof any
officer or director of the Company or any subsidiary, any employee
plan sponsored by the Company or any subsidiary or any property or
assets owned or leased by the Company or any subsidiary, that are
required to be described in the Registration Statement, Time of
Sale Disclosure Package and Prospectus by the Act or by the Rules
and Regulations and that have not been so described.
(ix) Disclosure
of Legal Matters. There are no statutes, regulations,
contracts or documents that are required to be described in the
Registration Statement, in the Time of Sale Disclosure Package and
in the Prospectus or required to be filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations that have not been so described or filed.
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(x) Authorization; No
Conflicts; Authority. This Agreement has been duly
authorized, executed and delivered by the Company, and constitutes
a valid, legal and binding obligation of the Company, enforceable
in accordance with its terms, except as rights to indemnity
hereunder may be limited by federal or state securities laws and
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity.
The execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not (A)
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its subsidiaries
pursuant to any indenture, mortgage, deed of trust, loan agreement
or other material agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, (B)
result in any violation of the provisions of the Company’s
charter or by-laws or (C) result in the violation of any law or
statute or any judgment, order, rule, regulation or decree of any
court or arbitrator or federal, state, local or foreign
governmental agency or regulatory authority having jurisdiction
over the Company or any of its subsidiaries or any of their
properties or assets (each, a “Governmental
Authority”), except in the case of clauses (A) and (C)
as would not result in a Material Adverse Effect. No consent,
approval, authorization or order of, or registration or filing with
any Governmental Authority is required for the execution, delivery
and performance of this Agreement or for the consummation of the
transactions contemplated hereby, including the issuance or sale of
the Securities by the Company, except such as may be required under
the Act, the rules of the Financial Industry Regulatory Authority,
Inc. (“FINRA”),
the rules of the NYSE American (the “Exchange
Rules”) or state securities or blue sky laws; and the
Company has full power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby, including
the authorization, issuance and sale of the Securities as
contemplated by this Agreement.
(xi) Capitalization;
the Securities; Registration Rights. All of the issued and
outstanding shares of capital stock of the Company, including the
outstanding shares of Common Stock, are duly authorized and validly
issued, fully paid and nonassessable, have been issued in
compliance with all federal and state and foreign securities laws,
were not issued in violation of or subject to any preemptive rights
or other rights to subscribe for or purchase securities that have
not been waived in writing (a copy of which has been delivered to
counsel to the Underwriter), and the holders thereof are not
subject to personal liability by reason of being such holders; the
Securities which may be sold hereunder by the Company have been
duly authorized and, when issued, delivered and paid for in
accordance with the terms of this Agreement, will have been validly
issued and will be fully paid and nonassessable, and the holders
thereof will not be subject to personal liability by reason of
being such holders; and the capital stock of the Company, including
the Common Stock, conforms to the description thereof in the
Registration Statement, in the Time of Sale Disclosure Package and
in the Prospectus. Except as otherwise stated in the Registration
Statement, in the Time of Sale Disclosure Package and in the
Prospectus, (A) there are no preemptive rights or other rights to
subscribe for or to purchase, or any restriction upon the voting or
transfer of, any shares of Common Stock pursuant to the
Company’s charter, by-laws or any agreement or other
instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound;
(B) neither the filing of the Registration Statement nor the
offering or sale of the Securities as contemplated by this
Agreement gives rise to any rights for or relating to the
registration of any shares of Common Stock or other securities of
the Company (collectively “Registration
Rights”); and (C) any person to whom the Company
has granted Registration Rights has agreed not to exercise such
rights until after expiration of the Lock-Up Period (as defined
below). All of the issued and outstanding shares of capital stock
of each of the Company’s subsidiaries have been duly and
validly authorized and issued and are fully paid and nonassessable,
and, except as otherwise described in the Registration Statement,
in the Time of Sale Disclosure Package and in the Prospectus, the
Company owns of record and beneficially, free and clear of any
security interests, claims, liens, proxies, equities or other
encumbrances, all of the issued and outstanding shares of such
stock. The Company has an authorized and outstanding capitalization
as set forth in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus. The Common Stock
(including the Securities) conforms in all material respects to the
description thereof contained in the Time of Sale Disclosure
Package and the Prospectus.
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(xii) Stock
Options. Except as described in the Registration Statement,
in the Time of Sale Disclosure Package and in the Prospectus, there
are no options, warrants, agreements, contracts or other rights in
existence to purchase or acquire from the Company or any subsidiary
of the Company any shares of the capital stock of the Company or
any subsidiary of the Company. The description of the
Company’s stock option, stock bonus and other stock plans or
arrangements (the “Company Stock
Plans”), and the options or other rights granted
thereunder (collectively, the “Awards”),
set forth in the Time of Sale Disclosure Package and the Prospectus
accurately and fairly presents the information required to be shown
with respect to such plans, arrangements and Awards. Each grant of
an Award (A) was duly authorized no later than the date on which
the grant of such Award was by its terms to be effective by all
necessary corporate action, including, as applicable, approval by
the board of directors of the Company (or a duly constituted and
authorized committee thereof) and any required stockholder approval
by the necessary number of votes or written consents, and the award
agreement governing such grant (if any) was duly executed and
delivered by each party thereto and (B) was made in accordance
with the terms of the applicable Company Stock Plan, and all
applicable laws and regulatory rules or requirements, including all
applicable federal securities laws.
(xiii) Compliance with
Laws. The
Company and each of its subsidiaries holds, and is operating in
compliance in all material respects with, all franchises, grants,
authorizations, licenses, permits, easements, consents,
certificates and orders of any Governmental Authority or
self-regulatory body required for the conduct of its business and
all such franchises, grants, authorizations, licenses, permits,
easements, consents, certifications and orders are valid and in
full force and effect; and neither the Company nor any of its
subsidiaries has received notice of any revocation or modification
of any such franchise, grant, authorization, license, permit,
easement, consent, certification or order or has reason to believe
that any such franchise, grant, authorization, license, permit,
easement, consent, certification or order will not be renewed in
the ordinary course; and the Company and each of its subsidiaries
is in compliance in all material respects with all applicable
federal, state, local and foreign laws, regulations, orders and
decrees.
(xiv) Ownership
of Assets. The Company and its subsidiaries have good and
marketable title to, or have valid rights to lease or otherwise
use, all property (whether real or personal) described in the
Registration Statement, in the Time of Sale Disclosure Package and
in the Prospectus as being owned, leased or used by them, in each
case free and clear of all liens, claims, security interests, other
encumbrances or defects except such as are described in the
Registration Statement, in the Time of Sale Disclosure Package and
in the Prospectus. The property held under lease by the Company and
its subsidiaries is held by them under valid, subsisting and
enforceable leases with only such exceptions with respect to any
particular lease as do not interfere in any material respect with
the conduct of the business of the Company or its
subsidiaries.
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(xv) Intellectual
Property.
(A)
The Company and each of its subsidiaries owns or has the right to
use pursuant to a valid and enforceable written license or other
legally enforceable right, all Intellectual Property necessary for
the conduct of the Company’s and its subsidiaries’
businesses as now conducted or as described in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus
to be conducted (the “Company
IP”). “Intellectual
Property” means all patents, patent applications,
trade and service marks, trade and service ▇▇▇▇ registrations,
trade names, copyrights, licenses, inventions, trade secrets,
domain names, technology, know-how and other intellectual
property.
(B)
To the knowledge of the Company, there is no infringement,
misappropriation or violation by third parties of any Company IP.
There is no pending or, to the knowledge of the Company,
threatened, action, suit, proceeding or claim by others challenging
the Company’s or its subsidiaries’ rights in or to any
Company IP, and the Company is unaware of any facts which would
form a reasonable basis for any such claim. The Intellectual
Property owned by the Company and its subsidiaries, and to the
knowledge of the Company, the Intellectual Property licensed to the
Company and its subsidiaries, has not been adjudged invalid or
unenforceable, in whole or in part, and there is no pending or, to
the knowledge of the Company, threatened action, suit, proceeding
or claim by others challenging the validity or scope of any Company
IP, and the Company is unaware of any facts which would form a
reasonable basis for any such claim. There is no pending or, to the
knowledge of the Company, threatened action, suit, proceeding or
claim by others that the Company or its subsidiaries infringe,
misappropriate or otherwise violate any Intellectual Property or
other proprietary rights of others, and neither the Company nor any
of its subsidiaries has received any written notice of such claim
and the Company is unaware of any other fact which would form a
reasonable basis for any such claim.
(C)
To the Company’s knowledge, no employee of the Company or any
of its subsidiaries is in or has ever been in violation 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 any of its
subsidiaries or actions undertaken by the employee while employed
with the Company or any of its subsidiaries.
(D)
The Company and its subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all
of their material Intellectual Property.
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(E) All patent
applications owned by the Company or its subsidiaries and filed
with the U.S. Patent and Trademark Office (the “PTO”)
or any foreign or international patent authority that have resulted
in patents or currently pending applications that describe
inventions necessary to conduct the business of the Company or its
subsidiaries as now conducted or as described in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus
to be conducted (collectively, the “Company Patent
Applications”) have been or were duly and properly
filed.
(F) The Company and its
subsidiary have complied with their duty of candor and disclosure
to the PTO for the Company Patent Applications. To the
Company’s knowledge, there are no facts required to be
disclosed to the PTO that were not disclosed to the PTO and which
would preclude the grant of a patent for the Company Patent
Applications. The Company has
no knowledge of any facts which would preclude it or its applicable
subsidiary from having clear title to the Company Patent
Applications that have been identified by the Company as being
exclusively owned by the Company or one of its
subsidiaries.
(xvi) No
Violations or Defaults. Neither the Company nor any of its
subsidiaries is in violation of its respective charter, by-laws or
other organizational documents, or in breach of or otherwise in
default, and no event has occurred which, with notice or lapse of
time or both, would constitute such a default in the performance of
any obligation, agreement or condition contained in any bond,
debenture, note, indenture, loan agreement or any other contract,
lease or other instrument to which it is subject or by which any of
them may be bound, or to which any of the property or assets of the
Company or any of its subsidiaries is subject, except as would not
have a Material Adverse Effect.
(xvii) Taxes.
The Company and its subsidiaries have timely filed all federal,
state, local and foreign income and franchise tax returns required
to be filed and are not in default in the payment of any taxes
which were payable pursuant to said returns or any assessments with
respect thereto, other than any which the Company or any of its
subsidiaries is contesting in good faith. There is no pending
dispute with any taxing authority relating to any of such returns,
and the Company has no knowledge of any proposed liability for any
tax to be imposed upon the properties or assets of the Company for
which there is not an adequate reserve reflected in the
Company’s financial statements included in the Registration
Statement, the Time of Sale Disclosure Package and the
Prospectus.
-10-
(xviii) Exchange
Listing and Exchange Act Registration. The Common Stock is
registered pursuant to Section 12(b) of the Exchange Act and
is included or approved for listing on the NYSE American and the
Company has not taken any action designed to, or likely to have the
effect of, terminating the registration of the Common Stock under
the Exchange Act or delisting the Common Stock from the NYSE
American, and the Company has not received any notification that
the Commission or the NYSE American is contemplating terminating
such registration or listing. The Company has complied in all
material respects with the applicable requirements of the NYSE
American for maintenance of inclusion of the Common Stock thereon.
The Company has filed an application to include the Securities on
the NYSE American. Except as previously disclosed to counsel for
the Underwriter or as set forth in the Time of Sale Disclosure
Package and the Prospectus, to the knowledge of the Company, no
beneficial owners of the Company’s capital stock who,
together with their associated persons and affiliates, hold in the
aggregate 10% or more of such capital stock, have any direct or
indirect association or affiliate with a FINRA member.
(xix) Ownership
of Other Entities. Other than the subsidiaries of the
Company listed in Exhibit 21.1 to the Company’s Annual
Report on Form 10-K/A for the fiscal year ended December 31, 2017,
Filing Services Canada Inc. and ACCESSWIRE Ltd., the Company,
directly or indirectly, owns no capital stock or other equity or
ownership or proprietary interest in any corporation, partnership,
association, trust or other entity.
(xx) Internal
Controls. The Company and its subsidiaries 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 to permit
preparation of financial statements in conformity with generally
accepted accounting principles in the United States and to maintain
accountability for assets; (iii) access to assets is permitted
only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets
is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. Except
as disclosed in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus, the Company’s
internal control over financial reporting is effective and none of
the Company, its board of directors and audit committee is aware of
any “significant deficiencies” or “material
weaknesses” (each as defined by the Public Company Accounting
Oversight Board) in its internal control over financial reporting,
or any fraud, whether or not material, that involves management or
other employees of the Company and its subsidiaries who have a
significant role in the Company’s internal controls; and
since the end of the latest audited fiscal year, there has been no
change in the Company’s internal control over financial
reporting (whether or not remediated) that has materially affected,
or is reasonably likely to materially affect, the Company’s
internal control over financial reporting. The Company’s
board of directors has, subject to the exceptions, cure periods and
the phase in periods specified in the Exchange Rules, validly
appointed an audit committee to oversee internal accounting
controls whose composition satisfies the applicable requirements of
the Exchange Rules and the Company’s board of directors
and/or the audit committee has adopted a charter that satisfies the
requirements of the Exchange Rules.
-11-
(xxi) No
Brokers or Finders. Other than as contemplated by this
Agreement, the Company has not incurred any liability for any
finder’s or broker’s fee or agent’s commission in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(xxii) Insurance.
The Company and each of its subsidiaries carries, or is covered by,
insurance from reputable insurers in such amounts and covering such
risks as is adequate for the conduct of its business and the value
of its properties and the properties of its subsidiaries and as is
customary for companies engaged in similar businesses in similar
industries; all policies of insurance and any fidelity or surety
bonds insuring the Company or any of its subsidiaries or its
business, assets, employees, officers and directors are in full
force and effect; the Company and its subsidiaries are in
compliance with the terms of such policies and instruments in all
material respects; there are no claims by the Company or any of its
subsidiaries under any such policy or instrument as to which any
insurance company is denying liability or defending under a
reservation of rights clause; neither the Company nor any of its
subsidiaries has been refused any insurance coverage sought or
applied for; and neither the Company nor any of its subsidiaries
has reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material
Adverse Effect.
(xxiii) Investment
Company Act. The Company is not and, after giving effect to
the offering and sale of the Securities, will not be an
“investment company,” as such term is defined in the
Investment Company Act of 1940, as amended.
(xxiv) Eligibility
to Use Form S-3. The conditions for use of Form S-3, in
connection with the offer and sale of the Securities, as set forth
in the General Instructions thereto, have been
satisfied.
(xxv)
Incorporated
Documents. The documents incorporated by reference in the
Time of Sale Disclosure Package and in the Prospectus, when they
became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and were filed
on a timely basis with the Commission and none of such documents
contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; any further documents so filed and incorporated by
reference in the Time of Sale Disclosure Package or in the
Prospectus, when such documents are filed with the Commission, will
conform in all material respects to the requirements of the
Exchange Act, and will not contain an untrue statement of a
material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading.
(xxvi) ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act. The Company is in compliance with all applicable
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and regulations
of the Commission thereunder.
-12-
(xxvii) Disclosure
Controls. The Company has established and maintains
disclosure controls and procedures (as defined in Rules 13a-14 and
15d-14 under the Exchange Act) and such controls and procedures are
effective in ensuring that material information relating to the
Company, including its subsidiaries, is made known to the principal
executive officer and the principal financial officer. The Company
has utilized such controls and procedures in preparing and
evaluating the disclosures in the Registration Statement, in the
Time of Sale Disclosure Package and in the Prospectus.
(xxviii) Anti-Bribery
and Anti-Money Laundering Laws. Each of the Company, its
subsidiaries, its affiliates and any of their respective officers,
directors, supervisors, managers, agents, or employees, has not
violated, its participation in the offering will not violate, and
the Company and each of its subsidiaries has instituted and
maintains policies and procedures designed to ensure continued
compliance with, each of the following laws: anti-bribery laws,
including but not limited to, any applicable law, rule, or
regulation of any locality, including but not limited to any law,
rule, or regulation promulgated to implement the OECD Convention on
Combating Bribery of Foreign Public Officials in International
Business Transactions, signed December 17, 1997, including the
U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.K.
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, or any other law, rule or regulation of similar
purposes and scope, or anti-money laundering laws, including but
not limited to, applicable federal, state, international, foreign
or other laws, regulations or government guidance regarding
anti-money laundering, including, without limitation, Title 18 U.S.
Code Section 1956 and 1957, the Patriot Act, the Bank Secrecy Act,
and international anti-money laundering principles or procedures by
an intergovernmental group or organization, such as the Financial
Action Task Force on Money Laundering, of which the United States
is a member and with which designation the United States
representative to the group or organization continues to concur,
all as amended, and any Executive order, directive, or regulation
pursuant to the authority of any of the foregoing, or any orders or
licenses issued thereunder.
(xxix) OFAC.
(A) Neither
the Company nor any of its subsidiaries, nor any or their
directors, officers or employees, nor, to the Company’s
knowledge, any agent, affiliate or representative of the Company or
its subsidiaries, is an individual or entity that is, or is owned
or controlled by an individual or entity that is:
(1) the
subject of any sanctions administered or enforced by the U.S.
Department of Treasury’s Office of Foreign Assets Control,
the United Nations Security Council, the European Union, Her
Majesty’s Treasury, or other relevant sanctions authority
(collectively, “Sanctions”),
nor
-13-
(2) located,
organized or resident in a country or territory that is the subject
of Sanctions (including, without limitation, the Crimea Region of
the Ukraine, Cuba, Iran, North Korea, Sudan and
Syria).
(B) Neither
the Company nor any of its subsidiaries will, directly or
indirectly, use the proceeds of the offering, or lend, contribute
or otherwise make available such proceeds to any subsidiary, joint
venture partner or other individual or entity:
(1) to
fund or facilitate any activities or business of or with any
individual or entity or in any country or territory that, at the
time of such funding or facilitation, is the subject of Sanctions;
or
(2) in
any other manner that will result in a violation of Sanctions by
any individual or entity (including any individual or entity
participating in the offering, whether as underwriter, advisor,
investor or otherwise).
(C) For
the past five years, neither the Company nor any of its
subsidiaries has knowingly engaged in, and is not now knowingly
engaged in, any dealings or transactions with any individual or
entity, or in any country or territory, that at the time of the
dealing or transaction is or was the subject of
Sanctions.
(xxx) Compliance
with Environmental Laws. Except as disclosed in the Time of
Disclosure Package and the Prospectus, neither the Company nor any
of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any Governmental Authority or any
court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, “Environmental
Laws”), owns or operates any real property
contaminated with any substance that is subject to any
Environmental Laws, is liable for any off-site disposal or
contamination pursuant to any Environmental Laws, or is subject to
any claim relating to any Environmental Laws, which violation,
contamination, liability or claim would, individually or in the
aggregate, have a Material Adverse Effect; and the Company is not
aware of any pending investigation which might lead to such a
claim. Neither the Company nor any of its subsidiaries anticipates
incurring any material capital expenditures relating to compliance
with Environmental Laws.
(xxxi) Compliance
with Occupational Laws. The Company and each of its
subsidiaries (A) is in compliance, in all material respects, with
any and all applicable foreign, federal, state and local laws,
rules, regulations, treaties, statutes and codes promulgated by any
and all Governmental Authorities (including pursuant to the
Occupational Health and Safety Act) relating to the protection of
human health and safety in the workplace (“Occupational
Laws”); (B) has received all material permits,
licenses or other approvals required of it under applicable
Occupational Laws to conduct its business as currently conducted;
and (C) is in compliance, in all material respects, with all terms
and conditions of any such permits, licenses or approvals. No
action, proceeding, revocation proceeding, writ, injunction or
claim is pending or, to the Company’s knowledge, threatened
against the Company or any of its subsidiaries relating to
Occupational Laws, and the Company does not have knowledge of any
facts, circumstances or developments relating to its operations or
cost accounting practices that could reasonably be expected to form
the basis for or give rise to such actions, suits, investigations
or proceedings.
-14-
(xxxii) ERISA
and Employee Benefits Matters. (A) To the knowledge of the
Company, no “prohibited transaction” as defined under
Section 406 of ERISA (as defined below) or Section 4975 of the Code
(as defined below) and not exempt under ERISA Section 408 and the
regulations and published interpretations thereunder has occurred
with respect to any Employee Benefit Plan (as defined below). At no
time has the Company or any ERISA Affiliate (as defined below)
maintained, sponsored, participated in, contributed to or has or
had any liability or obligation in respect of any Employee Benefit
Plan subject to Part 3 of Subtitle B of Title I of ERISA, Title IV
of ERISA, or Section 412 of the Code or any “multiemployer
plan” as defined in Section 3(37) of ERISA or any multiple
employer plan for which the Company or any ERISA Affiliate has
incurred or could incur liability under Section 4063 or 4064 of
ERISA. No Employee Benefit Plan provides or promises, or at any
time provided or promised, retiree health, life insurance, or other
retiree welfare benefits except as may be required by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
or similar state law. Each Employee Benefit Plan is and has been
operated in material compliance with its terms and all applicable
laws, including but not limited to ERISA and the Code and, to the
knowledge of the Company, no event has occurred (including a
“reportable event” as such term is defined in Section
4043 of ERISA) and no condition exists that would subject the
Company or any ERISA Affiliate to any material tax, fine, lien,
penalty or liability imposed by ERISA, the Code or other applicable
law. Each Employee Benefit Plan intended to be
qualified under Code Section 401(a) is so qualified and has a
favorable determination or opinion letter from the IRS upon which
it can rely, and any such determination or opinion letter remains
in effect and has not been revoked; to the knowledge of the
Company, nothing has occurred since the date of any such
determination or opinion letter that is reasonably likely to
adversely affect such qualification; (B) with respect to
each Foreign Benefit Plan (as defined below), such Foreign Benefit
Plan (1) if intended to qualify for special tax treatment, meets,
in all material respects, the requirements for such treatment, and
(2) if required to be funded, is funded to the extent required by
applicable law, and with respect to all other Foreign Benefit
Plans, adequate reserves therefor have been established on the
accounting statements of the applicable Company or subsidiary; (C)
neither the Company nor any of its subsidiaries has any obligations
under any collective bargaining agreement with any union and no
organization efforts are underway with respect to employees of the
Company or any of its subsidiaries. As used in this Agreement,
“Code”
means the Internal Revenue Code of 1986, as amended; “Employee Benefit
Plan” means any “employee benefit plan”
within the meaning of Section 3(3) of ERISA, including, without
limitation, all stock purchase, stock option, stock-based
severance, employment, change-in-control, medical, disability,
fringe benefit, bonus, incentive, deferred compensation, employee
loan and all other employee benefit plans, agreements, programs,
policies or other arrangements, whether or not subject to ERISA,
under which (1) any current or former employee, director or
independent contractor of the Company or its subsidiaries has any
present or future right to benefits and which are contributed to,
sponsored by or maintained by the Company or any of its
subsidiaries or (2) the Company or any of its subsidiaries has
had or has any present or future obligation or liability;
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended; “ERISA
Affiliate” means any member of the Company’s
controlled group as defined in Code Section 414(b), (c), (m) or
(o); and “Foreign Benefit
Plan” means any Employee Benefit Plan established,
maintained or contributed to outside of the United States of
America or which covers any employee working or residing outside of
the United States.
-15-
(xxxiii) Business
Arrangements. Except as disclosed in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus,
neither the Company nor any of its subsidiaries has granted
exclusive rights to develop, manufacture, produce, assemble,
distribute, license, market or sell its products to any other
person and is not bound by any agreement that affects the exclusive
right of the Company or such subsidiary to develop, manufacture,
produce, assemble, distribute, license, market or sell its
products.
(xxxiv) Labor
Matters. No labor problem or dispute with the employees of
the Company or any of its subsidiaries exists or is threatened or
imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or its
subsidiaries’ principal suppliers, contractors or customers,
that could have a Material Adverse Effect.
(xxxv) Restrictions
on Subsidiary Payments to the Company. No subsidiary of the
Company is currently prohibited, directly or indirectly, from
paying any dividends to the Company, from making any other
distribution on such subsidiary’s capital stock, from
repaying to the Company any loans or advances to such subsidiary
from the Company or from transferring any of such
subsidiary’s property or assets to the Company or any other
subsidiary of the Company, except as provided by applicable state
law or described in or contemplated by the Time of Sale Disclosure
Package and the Prospectus.
(xxxvi) Statistical
Information. Any third-party statistical and market-related
data included in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus are based on or derived from
sources that the Company believes to be reasonably current and
reliable and accurate in all material respects.
(xxxvii) Forward-looking
Statements. No forward-looking statement (within the meaning
of Section 27A of the Act and Section 21E of the Exchange
Act) contained in the Registration Statement, the Time of Sale
Disclosure Package or the Prospectus has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good
faith.
(b) Effect of
Certificates. Any certificate signed by any officer of the
Company and delivered to you or to counsel for the Underwriter
shall be deemed a representation and warranty by the Company to the
Underwriter as to the matters covered thereby.
-16-
3. Purchase, Sale and Delivery
of Securities.
(a) Firm
Shares. On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell
the Firm Shares to the Underwriter, and the Underwriter agrees to
purchase from the Company the Firm Shares. The purchase price for
each Firm Share shall be $14.57 per share.
The
Firm Shares will be delivered by the Company to you against payment
of the purchase price therefor by wire transfer of same day funds
payable to the order of the Company at the offices of Northland
Securities, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other location as may be mutually
acceptable, at 9:00 a.m. Central time on the second (or if the
Securities are priced, as contemplated by Rule 15c6-1(c) under the
Exchange Act, after 4:30 p.m. Eastern time, the fourth) full
business day following the date hereof, or at such other time and
date as you and the Company determine pursuant to Rule 15c6-1(a)
under the Exchange Act, such time and date of delivery being herein
referred to as the “First Closing
Date.”
(b) Option
Shares. On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants to the
Underwriter an option to purchase all or any portion of the Option
Shares at the same purchase price as the Firm Shares, for use
solely in covering any over-allotments made by the Underwriter in
the sale and distribution of the Firm Shares. The option granted
hereunder may be exercised in whole or in part at any time (but not
more than once) within 30 days after the effective date of this
Agreement upon notice (confirmed in writing) by the Underwriter to
the Company setting forth the aggregate number of Option Shares as
to which the Underwriter is exercising the option, the names and
denominations in which the certificates for the Option Shares are
to be registered and the date and time, as determined by you, when
the Option Shares are to be delivered, such time and date being
herein referred to as the “Second
Closing” and “Second Closing
Date”, respectively; provided, however, that the
Second Closing Date shall not be earlier than the First Closing
Date nor earlier than the second business day after the date on
which the option shall have been exercised. No Option Shares shall
be sold and delivered unless the Firm Shares previously have been,
or simultaneously are, sold and delivered.
The
Option Shares will be delivered by the Company to you against
payment of the purchase price therefor by wire transfer of same day
funds payable to the order of the Company at the offices of
Northland Securities, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other location as may be
mutually acceptable at 9:00 a.m., Central time, on the Second
Closing Date.
(c) Delivery.
If the Underwriter so elects, delivery of the Firm Shares or the
Option Shares may be made by credit through full fast transfer to
the accounts at The Depository Trust Company designated by the
Underwriter. Certificates representing the Firm Shares and the
Option Shares in definitive form and in such denominations and
registered in such names as you have set forth in your notice of
option exercise, or evidence of their issuance, will be made
available for checking at a reasonable time preceding the First
Closing Date or the Second Closing Date, as applicable, at the
office of Northland Securities, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other location as may
be mutually acceptable.
-17-
4. Covenants.
(a) Covenants of the
Company. The Company covenants and agrees with the
Underwriter as follows:
(i) Required
Filings. During the period beginning on the date hereof and
ending on the later of the Second Closing Date or such date, as in
the opinion of counsel for the Underwriter, the Prospectus is no
longer required by law to be delivered (assuming the absence of
Rule 172 under the Securities Act), in connection with sales by the
Underwriter or a dealer (the “Prospectus Delivery
Period”), prior to amending or supplementing the
Registration Statement (including any Rule 462(b) Registration
Statement), the Time of Sale Disclosure Package or the Prospectus,
the Company shall furnish to the Underwriter for review a copy of
each such proposed amendment or supplement, and the Company shall
not file any such proposed amendment or supplement to which the
Underwriter or counsel to the Underwriter reasonably objects.
Subject to this Section 4(a)(i), immediately following execution of
this Agreement, the Company will prepare the Prospectus containing
the Rule 430B Information and other selling terms of the
Securities, the plan of distribution thereof and such other
information as may be required by the Securities Act or the Rules
and Regulations or as the Underwriter and the Company may deem
appropriate, and if requested by the Underwriter, an issuer free
writing prospectus containing the selling terms of the Securities
and such other information as the Company and the Underwriter may
deem appropriate, and will file or transmit for filing with the
Commission, in accordance with Rule 424(b) or Rule 433, as the case
may be, copies of the Prospectus and each issuer free writing
prospectus.
(ii) Notification
of Certain Commission Actions. After the date of this
Agreement, the Company shall promptly advise the Underwriter in
writing (A) of the receipt of any comments of, or requests for
additional or supplemental information from, the Commission, (B) of
the time and date of any filing of any post-effective amendment to
the Registration Statement or any amendment or supplement to any
Preliminary Prospectus, the Time of Sale Disclosure Package or the
Prospectus, (C) of the time and date that any post-effective
amendment to the Registration Statement becomes effective, (D) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereto or of any order preventing or suspending its use
or the use of any Preliminary Prospectus, the Time of Sale
Disclosure Package, the Prospectus or any issuer free writing
prospectus, or (E) of any proceedings to remove, suspend or
terminate from listing or quotation the Common Stock from any
securities exchange upon which it is listed for trading or included
or designated for quotation, or of the threatening or initiation of
any proceedings for any of such purposes. If the Commission shall
enter any such stop order at any time, the Company will use its
best efforts to obtain the lifting of such order at the earliest
possible moment. Additionally, the Company agrees that it shall
comply with the provisions of Rules 424(b) and 430B, as applicable,
under the Securities Act and will use its reasonable efforts to
confirm that any filings made by the Company under Rule 424(b),
Rule 433 or Rule 462 were received in a timely manner by the
Commission (without reliance on Rule 424(b)(8) or Rule
164(b)).
-18-
(iii) Continued
Compliance with Securities Laws. (A) During the Prospectus
Delivery Period, the Company will comply with all requirements
imposed upon it by the Securities Act, as now and hereafter
amended, and by the Rules and Regulations, as from time to time in
force, and by the Exchange Act so far as necessary to permit the
continuance of sales of or dealings in the Securities as
contemplated by the provisions hereof, the Time of Sale Disclosure
Package and the Prospectus. If during such period any event occurs
as a result of which the Prospectus (or if the Prospectus is not
yet available to prospective purchasers, the Time of Sale
Disclosure Package) would include an untrue statement of a material
fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances then
existing, not misleading, or if during such period it is necessary
or appropriate in the opinion of the Company or its counsel or the
Underwriter or counsel to the Underwriter to amend the Registration
Statement or supplement the Prospectus (or, if the Prospectus is
not yet available to prospective purchasers, the Time of Sale
Disclosure Package) to comply with the Securities Act or to file
under the Exchange Act any document which would be deemed to be
incorporated by reference in the Prospectus (or if the Prospectus
is not yet available to prospective purchasers, the Time of Sale
Disclosure Package) in order to comply with the Securities Act or
the Exchange Act, the Company promptly will (x) notify you of
such untrue statement or omission, (y) amend the Registration
Statement or supplement the Prospectus (or, if the Prospectus is
not yet available to prospective purchasers, the Time of Sale
Disclosure Package) or file such document (at the expense of the
Company) so as to correct such statement or omission or effect such
compliance, and (z) notify you when any amendment to the
Registration Statement is filed or becomes effective or when any
supplement to the Prospectus (or, if the Prospectus is not yet
available to prospective purchasers, the Time of Sale Disclosure
Package) is filed.
(B)
If at any time following issuance of an issuer free writing
prospectus there occurred or occurs an event or development as a
result of which such issuer free writing prospectus conflicted or
would conflict with the information contained in the Registration
Statement, the Preliminary Prospectus or the Prospectus 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
prevailing at that subsequent time, not misleading, the Company
(x) has promptly notified or promptly will notify the
Underwriter of such conflict, untrue statement or omission,
(y) has promptly amended or will promptly amend or supplement,
at its own expense, such issuer free writing prospectus to
eliminate or correct such conflict, untrue statement or omission,
and (z) has notified or promptly will notify you when such
amendment or supplement was or is filed with the Commission where
so required to be filed.
(iv) Blue
Sky Qualifications. The Company shall take or cause to be
taken all necessary action required by law to qualify the
Securities for sale under the securities laws of such jurisdictions
as you reasonably designate and to continue such qualifications in
effect so long as required for the distribution of the Securities,
except that the Company shall not be required in connection
therewith to qualify as a foreign corporation or to execute a
general consent to service of process in any state.
-19-
(v) Provision of
Documents. The Company will furnish, at its own expense, to
the Underwriter and counsel for the Underwriter copies of the
Registration Statement, and to the Underwriter and any dealer each
Preliminary Prospectus, the Time of Sale Disclosure Package, the
Prospectus, any issuer free writing prospectus, and all amendments
and supplements to such documents, in each case as soon as
available and in such quantities as you may from time to time
reasonably request.
(vi) Rule
158. The Company will make generally available to its
security holders as soon as practicable, but in no event later than
15 months after the end of the Company’s current fiscal
quarter, an earnings statement (which need not be audited) covering
a 12-month period that shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 of the
Rules and Regulations.
(vii) Payment
and Reimbursement of Expenses. The Company, whether or not
the transactions contemplated hereunder are consummated or this
Agreement is terminated, will pay or cause to be paid (A) all
expenses (including transfer taxes allocated to the respective
transferees) incurred in connection with the delivery to the
Underwriter of the Securities, (B) all expenses and fees
(including, without limitation, fees and expenses of the
Company’s accountants and counsel but, except as otherwise
provided below, not including fees of the Underwriter’s
counsel) in connection with the preparation, printing, filing,
delivery, and shipping of the Registration Statement (including the
financial statements therein and all amendments, schedules, and
exhibits thereto), the Securities, each Preliminary Prospectus, the
Time of Sale Disclosure Package, the Prospectus, any issuer free
writing prospectus and any amendment thereof or supplement thereto,
and the printing, delivery, and shipping of this Agreement and
other underwriting documents, including Blue Sky Memoranda
(covering the states and other applicable jurisdictions), (C) all
filing fees incurred in connection with the qualification of the
Securities for offering and sale by the Underwriter or by dealers
under the securities or blue sky laws of the states and other
jurisdictions which you shall designate, (D) the fees and expenses
of the transfer agent or registrar, (E) the filing fees incident to
any required review and approval by FINRA of the terms of the sale
of the Securities, (F) listing fees, if any, (G) the costs and
expenses of the Company relating to investor presentations or any
“roadshow” undertaken in connection with marketing of
the Securities, (H) all reasonable, out-of-pocket, accountable
expenses of the Underwriter (including but not limited to
reasonable fees and disbursements of the Underwriter’s
counsel and the Underwriter’s reasonable travel, database,
printing, postage, facsimile and telephone expenses) incurred in
connection with the Underwriter’s investigation of the
Company, preparing to market and marketing the Securities, sale of
the Securities or in contemplation of performing its obligations
hereunder, which amount will not exceed $100,000 in the
aggregate, and
(I) all other costs and expenses of the Company incident to
the performance of its obligations hereunder that are not otherwise
specifically provided for herein.
(viii) Use
of Proceeds. The Company will apply the net proceeds from
the sale of the Securities to be sold by it hereunder for the
purposes set forth in the Time of Sale Disclosure Package and in
the Prospectus.
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(ix) Company
Lock Up. The Company will not, without the prior written
consent of the Underwriter, from the date of execution of this
Agreement and continuing to and including the date 90 days after
the date of the Prospectus (the “Lock-Up
Period”), (A) offer, pledge, announce the intention to
sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for
Common Stock or (B) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction
described in clause (A) or (B) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise,
except, in each case, for (x) the sale of the Securities as
contemplated by this Agreement, (y) issuances of shares of Common
Stock upon the exercise, settlement or conversion of options,
warrants, restricted stock units or other convertible securities
disclosed as outstanding in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus, and (z) the issuance of
employee stock options not exercisable during the Lock-Up Period
pursuant to the Company’s stock option, stock bonus and other
stock plans or arrangements, as in effect on the date hereof in the
ordinary course of business consistent with past practices. The
Company agrees not to accelerate the vesting of any option or
warrant or the lapse of any repurchase right prior to the
expiration of the Lock-Up Period.
(x) Stockholder
Lock-Ups. The Company has caused to be delivered to you
prior to the date of this Agreement a letter, in the form of
Exhibit A hereto (the “Lock-Up
Agreement”), from each individual or entity listed on
Schedule III. The Company will enforce the terms of each Lock-Up
Agreement and issue stop-transfer instructions to the transfer
agent for the Common Stock with respect to any transaction or
contemplated transaction that would constitute a breach of or
default under the applicable Lock-Up Agreement.
(xi) No
Market Stabilization or Manipulation. The Company has not
taken and will not take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or
result in, or which has constituted, the stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
(xii) SEC
Reports. During the Prospectus Delivery Period, the Company
will file on a timely basis with the Commission such periodic and
special reports as required by the Rules and
Regulations.
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(xiii) Internal
Controls. During the Prospectus Delivery Period, the Company
and its subsidiaries will maintain such controls and other
procedures, including without limitation those required by Sections
302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the applicable
regulations thereunder, that are designed to ensure that
information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specified in the Commission’s rules and forms, including
without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is accumulated and
communicated to the Company’s management, including its
principal executive officer and its principal financial officer, or
persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure, to ensure that
material information relating to Company, including its subsidiary,
is made known to them by others within those entities.
(xiv) ▇▇▇▇▇▇▇▇-▇▇▇▇▇.
During the Prospectus Delivery Period, the Company and its
subsidiaries will comply with all applicable provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(xv) Free
Writing Prospectuses. The Company represents and agrees
that, unless it obtains the prior written consent of the
Underwriter, it has not made and will not make any offer relating
to the Securities that would constitute an issuer free writing
prospectus or that would otherwise constitute a free writing
prospectus required to be filed with the Commission; provided that
the prior written consent of the Underwriter shall be deemed to
have been given in respect of the free writing prospectuses
included in Schedule I. Any such free writing prospectus consented
to by the Underwriter is hereinafter referred to as a “Permitted Free
Writing Prospectus.” The Company represents that it
has treated or agrees that it will treat each Permitted Free
Writing Prospectus as an issuer free writing prospectus and has
complied and will comply with the requirements of Rule 164 and Rule
433 applicable to any Permitted Free Writing
Prospectus.
5. Conditions of
Underwriter’s Obligations. The obligations of the
Underwriter hereunder are subject to the accuracy, as of the date
hereof and at each of the First Closing Date and the Second Closing
Date (as if made at such Closing Date), of and compliance with all
representations, warranties and agreements of the Company contained
herein, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) Required Filings;
Absence of Certain Commission Actions. If filing of the
Prospectus, or any amendment or supplement thereto, or any issuer
free writing prospectus, is required under the Securities Act or
the Rules and Regulations, the Company shall have filed the
Prospectus (or such amendment or supplement) or such issuer free
writing prospectus with the Commission in the manner and within the
time period so required (without reliance on Rule 424(b)(8) or Rule
164(b)); the Registration Statement shall remain effective; no stop
order suspending the effectiveness of the Registration Statement or
any part thereof, any Rule 462(b) Registration Statement, or any
amendment thereof, nor suspending or preventing the use of the Time
of Sale Disclosure Package, the Prospectus or any issuer free
writing prospectus shall have been issued; no proceedings for the
issuance of such an order shall have been initiated or threatened;
any request of the Commission for additional information (to be
included in the Registration Statement, the Time of Sale Disclosure
Package, the Prospectus, any issuer free writing prospectus or
otherwise) shall have been complied with to your
satisfaction.
-22-
(b) Continued
Compliance with Securities Laws. You shall not have advised
the Company that (i) the Registration Statement or any amendment
thereof or supplement thereto contains an untrue statement of a
material fact which, in your opinion, is material or omits to state
a material fact which, in your opinion, is required to be stated
therein or necessary to make the statements therein not misleading,
or (ii) the Time of Sale Disclosure Package or the Prospectus, or
any amendment thereof or supplement thereto, or any issuer free
writing prospectus contains an untrue statement of fact which, in
your opinion, is material, or omits to state a fact which, in your
opinion, is material and is required to be stated therein, or
necessary to make the statements therein, in light of the
circumstances under which they are made, not
misleading.
(c) Absence of Certain
Events. Except as contemplated in the Time of Sale
Disclosure Package and in the Prospectus, subsequent to the
respective dates as of which information is given in the Time of
Sale Disclosure Package, neither the Company nor any of its
subsidiaries shall have incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock; and
there shall not have been any change in the capital stock (other
than a change in the number of outstanding shares of Common Stock
due to the issuance of shares upon the exercise, vesting or
settlement of outstanding options, warrants or restricted stock
units or conversion of convertible securities), or any material
change in the short-term or long-term debt of the Company (other
than as a result of the conversion of convertible securities), or
any issuance of options, warrants, convertible securities or other
rights to purchase the capital stock of the Company or any of its
subsidiaries, or any Material Adverse Change or any development
involving a prospective Material Adverse Change (whether or not
arising in the ordinary course of business), or any loss by strike,
fire, flood, earthquake, accident or other calamity, whether or not
covered by insurance, incurred by the Company or any subsidiary,
the effect of which, in any such case described above, in your
judgment, makes it impractical or inadvisable to offer or deliver
the Securities on the terms and in the manner contemplated in the
Time of Sale Disclosure Package and in the Prospectus.
(d) Opinion and 10b-5
Statement of Company Counsel. On each Closing Date, there
shall have been furnished to you the opinion and 10b-5 statement of
Quick Law Group PC, counsel for the Company, dated such Closing
Date and addressed to you, in form and substance satisfactory to
you.
(e) Opinion and 10b-5
Statement of Underwriter’s Counsel. On each Closing
Date, there shall have been furnished to you such opinion or
opinions and 10b-5 statement from Faegre ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, counsel
for the Underwriter, dated such Closing Date and addressed to you,
with respect to such matters as you reasonably may request, and
such counsel shall have received such papers and information as
they request to enable them to pass upon such matters.
(f) Comfort
Letter. On the date hereof, on the effective date of any
post-effective amendment to the Registration Statement filed after
the date hereof and on each Closing Date you shall have received an
accountant’s “comfort” letter of Cherry Bekaert
LLP, dated such date and addressed to you, in form and substance
satisfactory to you.
-23-
(g) Officers’
Certificate. On each Closing Date, there shall have been
furnished to you a certificate, dated such Closing Date and
addressed to you, signed by the chief executive officer and by the
chief financial officer of the Company, to the effect
that:
(i) The representations
and warranties of the Company in this Agreement are true and
correct as if made at and as of such Closing Date, and the Company
has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to
such Closing Date;
(ii) No
stop order or other order suspending the effectiveness of the
Registration Statement or any part thereof or any amendment thereof
or the qualification of the Securities for offering or sale nor
suspending or preventing the use of the Time of Sale Disclosure
Package, the Prospectus or any issuer free writing prospectus, has
been issued, and no proceeding for that purpose has been instituted
or, to the best of their knowledge, is contemplated by the
Commission or any state or regulatory body; and
(iii) Affirms
the accuracy of the matters set forth in subsection (c) of this
Section 5.
(h) Lock-Up
Agreement. The Underwriter shall have received all of the
Lock-Up Agreements referenced in Section 4 and the Lock-Up
Agreements shall remain in full force and effect.
(i) FINRA No
Objections. FINRA shall have raised no objection to the
fairness and reasonableness of the underwriting terms and
arrangements.
(j) Other
Documents. The Company shall have furnished to you and
counsel for the Underwriter such additional documents, certificates
and evidence as you or they may have reasonably
requested.
(k) Exchange
Listing. The Securities to be delivered on such Closing Date
have been approved for listing on the NYSE American, subject to
official notice of issuance.
All
such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory
in form and substance to you and counsel for the Underwriter. The
Company will furnish you with such conformed copies of such
opinions, certificates, letters and other documents as you shall
reasonably request.
-24-
6. Indemnification and
Contribution.
(a) Indemnification by
the Company. The Company agrees to indemnify and hold
harmless the Underwriter, its affiliates, directors and officers
and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any losses, claims, damages or
liabilities, joint or several, to which the Underwriter may become
subject, under the Act or otherwise (including in settlement of any
litigation if such settlement is effected with the written consent
of the Company), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including
the 430B Information and any other information deemed to be a part
of the Registration Statement at the time of effectiveness and at
any subsequent time pursuant to the Rules and Regulations, if
applicable, any Preliminary Prospectus, the Time of Sale Disclosure
Package, the Prospectus, or any amendment or supplement thereto,
any issuer free writing prospectus, or any issuer information that
the Company has filed or is required to file pursuant to Rule
433(d) of the Rules and Regulations, or arise out of or are based
upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the
Underwriter for any legal or other expenses reasonably incurred by
it in connection with investigating or defending against such loss,
claim, damage, liability or action as such expenses are incurred;
provided, however, that the
Company will not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is
based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by you
specifically for use in the preparation thereof; it being
understood and agreed that the only information furnished by the
Underwriter consists of the information described as such in
Section 6(e).
(b) Indemnification by
the Underwriter. The Underwriter will indemnify and hold
harmless the Company, its affiliates, directors and officers and
each person, if any, who controls the Company within the meaning of
Section 15 of the Act and Section 20 of the Exchange Act,
from and against any losses, claims, damages or liabilities, joint
or several, to which the Company may become subject, under the Act
or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the
Underwriter), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including
the 430B Information and any other information deemed to be a part
of the Registration Statement at the time of effectiveness and at
any subsequent time pursuant to the Rules and Regulations, if
applicable, any Preliminary Prospectus, the Time of Sale Disclosure
Package, the Prospectus, or any amendment or supplement thereto, or
any issuer free writing prospectus, or any issuer information that
the Company has filed or is required to file pursuant to Rule
433(d) of the Rules and Regulations, or arise out of or are based
upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company
by you specifically for use in the preparation thereof (it being
understood and agreed that the only information furnished by the
Underwriter consists of the information described as such in
Section 6(e)), and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection
with investigating or defending against any such loss, claim,
damage, liability or action as such expenses are
incurred.
-25-
(c) Notice and
Procedures. Promptly after receipt by an indemnified party
under subsection (a) or (b) above of notice of the commencement of
any action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from
any liability that it may have to any indemnified party except to
the extent such indemnifying party has been materially prejudiced
by such failure (through the forfeiture of substantive rights or
defenses). In case any such action shall be brought against any
indemnified party, and it shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be entitled
to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified
party, and after notice from the indemnifying party to such
indemnified party of the indemnifying party’s election so to
assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any
legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that if, in the sole judgment
of the Underwriter, it is advisable for the Underwriter to be
represented by separate counsel, the Underwriter shall have the
right to employ a single counsel (in addition to local counsel) to
represent the Underwriter, in which event the reasonable fees and
expenses of such separate counsel shall be borne by the
indemnifying party or parties and reimbursed to the Underwriter as
incurred. An indemnifying party shall not be obligated under any
settlement agreement, consent to judgment or other compromise
relating to any action under this Section 6 to which it has not
agreed in writing. In addition, no indemnifying party shall,
without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld or delayed), effect any
settlement of any pending or threatened proceeding unless such
settlement includes an unconditional release of such indemnified
party for all liability on claims that are the subject matter of
such proceeding and does not include a statement as to, or an
admission of, fault, culpability or a failure to act by or on
behalf of an indemnified party. Notwithstanding the foregoing, if
at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and
expenses of counsel pursuant to this Section 6(c), such
indemnifying party agrees that it shall be liable for any
settlement effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such
settlement.
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(d) Contribution;
Limitations on Liability; Non-Exclusive Remedy. If the
indemnification provided for in this Section 6 is unavailable
or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified
party as a result of the losses, claims, damages or liabilities
referred to in subsection (a) or (b) above, (i) in such
proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriter on the
other from the offering of the 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
Underwriter on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on
the one hand and the Underwriter on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the
Underwriter, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by the Company or the Underwriter and the parties’ relevant
intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The Company and the
Underwriter agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were to be
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in the first sentence of this
subsection (d). The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending
against any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this
subsection (d), the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total
underwriting discounts and commissions received by the Underwriter
with respect to the Securities purchased by it hereunder exceeds
the amount of any damages that the 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 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 6 are
not exclusive and shall not limit any rights or remedies that might
otherwise be available to any indemnified party at law or in
equity.
(e) Information
Provided by the Underwriter. The Underwriter confirms and
the Company acknowledges that the statements with respect to the
public offering of the Securities by the Underwriter set forth in
the second paragraph under the caption “Underwriting”
in the Time of Sale Disclosure Package and in the Prospectus are
correct and constitute the only information concerning the
Underwriter furnished in writing to the Company by the Underwriter
specifically for inclusion in the Registration Statement, any
Preliminary Prospectus, the Time of Sale Disclosure Package, the
Prospectus or any issuer free writing prospectus.
-27-
7. Representations and
Agreements to Survive Delivery. All representations,
warranties, and agreements of the Company and the Underwriter
herein or in certificates delivered pursuant hereto, including but
not limited to the agreement of the Company and the Underwriter
contained in Section 6 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on
behalf of the Underwriter or any controlling person thereof, or the
Company or any of its officers, directors, or controlling persons,
and shall survive delivery of, and payment for, the Securities to
and by the Underwriter hereunder and any termination of this
Agreement.
8. Termination
of this Agreement.
(a) Right to
Terminate. You shall have the right to terminate this
Agreement by giving notice to the Company as hereinafter specified
at any time at or prior to the First Closing Date, and the option
referred to in Section 3(b), if exercised, may be cancelled at
any time prior to the Second Closing Date, if (i) the Company
shall have failed, refused or been unable, at or prior to such
Closing Date, to perform any agreement on its part to be performed
hereunder, (ii) any condition of the Underwriter’s
obligations hereunder is not fulfilled, (iii) trading in the
Company’s Common Stock shall have been suspended by the
Commission or the NYSE American or trading in securities
generally on the NYSE American, the Nasdaq Stock Market or New York
Stock Exchange shall have been suspended, (iv) minimum or
maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required, on the NYSE
American, the Nasdaq Stock Market or New York Stock Exchange, by
such Exchange or by order of the Commission or any other
Governmental Authority having jurisdiction, (v) a banking
moratorium shall have been declared by federal or New York state
authorities or a material disruption in commercial banking or
securities settlement or clearance services in the United States,
or (vi) there shall have occurred any attack on, outbreak or
escalation of hostilities or act of terrorism involving the United
States, any declaration by the United States of a national
emergency or war, any material adverse change in financial markets,
any substantial change or development involving a prospective
substantial change in United States or international political,
financial or economic conditions, or any other calamity or crisis
that, in your judgment, is material and adverse and makes it
impractical or inadvisable to proceed with the completion of the
sale of and payment for the Securities.
(b) Notice of
Termination. If you elect to terminate this Agreement as
provided in this Section, the Company shall be notified promptly by
you by telephone, confirmed by letter.
(c) Effect of
Termination. No party shall be relieved of any liability
under this Agreement arising from any breach of its obligations
hereunder occurring prior to termination of this Agreement as a
result of the termination of this Agreement.
9. Notices. Except as
otherwise provided herein, all communications hereunder shall be in
writing and, if to the Underwriter, shall be mailed via overnight
delivery service or hand delivered via courier to Northland
Securities, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Investment Banking, with a copy to
(which shall not constitute notice) Faegre ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, 2200
▇▇▇▇▇ Fargo Center, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇; if to the Company, shall
be mailed or delivered to it at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, with a copy to
(which shall not constitute notice) Quick Law Group PC, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. Quick; or
in each case to such other address as the person to be notified may
have requested in writing. Any party to this Agreement may change
such address for notices by sending to the parties to this
Agreement written notice of a new address for such
purpose.
-28-
10. Persons Entitled to Benefit
of Agreement. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective
successors and assigns and the controlling persons, officers and
directors referred to in Section 6. Nothing in this Agreement is
intended or shall be construed to give to any other person, firm or
corporation any legal or equitable remedy or claim under or in
respect of this Agreement or any provision herein contained. The
term “successors and assigns” as herein used shall not
include any purchaser, as such purchaser, of any of the Securities
from the Underwriter.
11. Absence of Fiduciary
Relationship. The Company acknowledges and agrees that: (a)
the Underwriter has been retained solely to act as an underwriter
in connection with the sale of the Securities and that no
fiduciary, advisory or agency relationship between the Company and
the Underwriter has been created in respect of any of the
transactions contemplated by this Agreement, irrespective of
whether the Underwriter has advised or is advising the Company on
other matters; (b) the price and other terms of the Securities set
forth in this Agreement were established by the Company following
discussions and arms-length negotiations with the Underwriter and
the Company is capable of evaluating and understanding and
understands and accepts the terms, risks and conditions of the
transactions contemplated by this Agreement; (c) it has been
advised that the Underwriter and its affiliates are engaged in a
broad range of transactions which may involve interests that differ
from those of the Company and that the Underwriter has no
obligation to disclose such interest and transactions to the
Company by virtue of any fiduciary, advisory or agency
relationship; (d) it has been advised that the Underwriter is
acting, in respect of the transactions contemplated by this
Agreement, solely for the benefit of the Underwriter, and not on
behalf of the Company; (e) it waives to the fullest extent
permitted by law, any claims it may have against the Underwriter
for breach of fiduciary duty or alleged breach of fiduciary duty in
respect of any of the transactions contemplated by this Agreement
and agrees that the Underwriter shall have no liability (whether
direct or indirect) to the Company in respect of such a fiduciary
duty claim on behalf of or in right of the Company, including
stockholders, employees or creditors of the Company.
12. Governing Law; Waiver of
Jury Trial. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. The
Company (on its behalf and, to the extent permitted by applicable
law, on behalf of its stockholders and affiliates) and the
Underwriter hereby irrevocably waive, 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.
13. Counterparts. This
Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts
shall each be deemed to be an original and all such counterparts
shall together constitute one and the same instrument.
14. General
Provisions. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written
or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof, including
that certain engagement letter, dated July 26, 2018, by and between
the Company and the Underwriter, except as to the provisions
contained in Sections 5, 6, 9, 10, 11, 13 and 19 thereto that shall
survive and remain and in full force and effect. This Agreement may
not be amended or modified unless in writing by all of the parties
hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant
to benefit. The Section headings herein are for the convenience of
the parties only and shall not affect the construction or
interpretation of this Agreement. The invalidity or
unenforceability of any Section, paragraph or provision of this
Agreement shall not affect the validity or enforceability of any
other Section, paragraph or provision hereof. If any Section,
paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to
be made such minor changes (and only such minor changes) as are
necessary to make it valid and enforceable.
[Remainder
of page intentionally left blank. Signature page
follows.]
-29-
Please
sign and return to the Company the enclosed duplicates of this
letter whereupon this letter will become a binding agreement
between the Company and the Underwriter in accordance with its
terms.
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Very
truly yours,
Issuer Direct Corporation
By:
/s/ ▇▇▇▇▇▇
▇▇▇▇▇
Name:
▇▇▇▇▇▇
▇▇▇▇▇
Title:
CFO
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Confirmed
as of the date first
above
mentioned.
Northland Securities, Inc.
By:
/s/ ▇▇▇▇
▇▇▇▇▇▇▇▇
Name:
▇▇▇▇
▇▇▇▇▇▇▇▇
Title:
Head of Investment
Banking
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SCHEDULE I
Certain Permitted Free Writing Prospectuses
None.
SCHEDULE II
Pricing Information
Firm
Shares: 806,451 shares
Option
Shares: 120,967 shares
Price
to the public: $15.50 per share
Price
to the Underwriter: $14.57 per share
SCHEDULE III
List of Individuals Executing Lock-Up Agreements
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J. ▇▇▇▇▇▇▇
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EXHIBIT A
Form of Common Stock Lock-Up Agreement
Date:
_____________________
Northland
Securities, Inc.
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
As an
inducement to Northland Securities, Inc. (the “Underwriter”),
to execute an underwriting agreement (the “Underwriting
Agreement”),
in its capacity as Underwriter, providing for a public offering
(the “Offering”) of common stock, par value
$0.001 per share (the “Common
Stock”), or
other securities, of Issuer Direct Corporation, a Delaware
corporation, and any successor (by merger or otherwise) thereto
(the “Company”), the undersigned hereby agrees
that without, in each case, the prior written consent of the
Underwriter during the period specified in the second succeeding
paragraph (the “Lock-Up
Period”), the
undersigned will not: (1) offer, pledge, announce the intention to
sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, make any short sale or
otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into,
exercisable or exchangeable for or that represent the right to
receive Common Stock (including without limitation, Common Stock
which may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the U.S. Securities
and Exchange Commission (the “SEC”) and
securities which may be issued upon exercise of a stock option or
warrant) whether now owned or hereafter acquired (the “Undersigned’s
Securities”);
(2) enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences of ownership of the
Undersigned’s Securities, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise; (3)
make any demand for or exercise any right with respect to, the
registration of any Common Stock or any security convertible into
or exercisable or exchangeable for Common Stock; or (4) publicly
disclose the intention to do any of the foregoing.
The
undersigned agrees that the foregoing restrictions preclude the
undersigned from engaging in any hedging or other transaction which
is designed to or which reasonably could be expected to lead to or
result in a sale or disposition of the Undersigned’s
Securities even if such securities would be disposed of by someone
other than the undersigned. Such prohibited hedging or other
transactions would include without limitation any short sale or any
purchase, sale or grant of any right (including without limitation
any put or call option) with respect to any of the
Undersigned’s Securities or with respect to any security that
includes, relates to or derives any significant part of its value
from such securities.
The
Lock-Up Period will commence on the date of this Lock-Up Agreement
and continue and include the date ninety (90) days after the date
of the final prospectus supplement used to sell the Common Stock
(or other securities) in the Offering pursuant to the Underwriting
Agreement.
-A-1-
Notwithstanding the
foregoing, the undersigned may transfer the Undersigned’s
Securities (i) as a bona
fide gift or gifts, (ii) to any trust for the direct or
indirect benefit of the undersigned or the immediate family of the
undersigned, (iii) if the undersigned is a corporation,
partnership, limited liability company, trust or other business
entity (1) to another corporation, partnership, limited liability
company, trust or other business entity that is a direct or
indirect affiliate (as defined in Rule 405 promulgated under the
Securities Act of 1933, as amended) of the undersigned or (2) as
distributions of shares of Common Stock or any security convertible
into or exercisable for Common Stock to limited partners, limited
liability company members or stockholders of the undersigned, (iv)
if the undersigned is a trust, transfers to the beneficiary of such
trust, (v) by testate succession or intestate succession or (vi)
pursuant to the Underwriting Agreement; provided, in the case of clauses (i)
through (v), that (x) such transfer shall not involve a disposition
for value, (y) the transferee agrees in writing with the
Underwriter to be bound by the terms of this Lock-Up Agreement and
(z) no filing by any party under Section 16(a) of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”), shall
be required or shall be made voluntarily in connection with such
transfer. For purposes of this Lock-Up Agreement, “immediate
family” shall mean any relationship by blood, marriage or
adoption, nor more remote than first cousin.
In
addition, the foregoing restrictions shall not apply to
(i) the exercise of stock options granted pursuant to the
Company’s equity incentive plans; provided that such restrictions shall
apply to any of the Undersigned’s Securities issued upon such
exercise, or (ii) the establishment of any contract,
instruction or plan (a “Plan”) that satisfies all of the
requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act;
provided that no sales of
the Undersigned’s Securities shall be made pursuant to such a
Plan prior to the expiration of the Lock-Up Period, and such a Plan
may only be established if no public announcement of the
establishment or existence thereof and no filing with the SEC or
other regulatory authority in respect thereof or transactions
thereunder or contemplated thereby, by the undersigned, the Company
or any other person, shall be required, and no such announcement or
filing is made voluntarily by the undersigned, the Company or any
other person, prior to the expiration of the Lock-Up
Period.
In
furtherance of the foregoing, the Company and its transfer agent
and registrar are hereby authorized to decline to make any transfer
of shares of Common Stock if such transfer would constitute a
violation or breach of this Lock-Up Agreement.
The
undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Agreement and
that upon request, the undersigned will execute any additional
documents necessary to ensure the validity or enforcement of this
Lock-Up Agreement. All authority herein conferred or agreed to be
conferred and any obligations of the undersigned shall be binding
upon the successors, assigns, heirs or personal representatives of
the undersigned.
The
undersigned understands that the undersigned shall be released from
all obligations under this Lock-Up Agreement if (i) the
Company notifies the Underwriter that it does not intend to proceed
with the Offering, (ii) the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the
provisions thereof which survive termination) shall terminate or be
terminated prior to payment for and delivery of the Common Stock
(or other securities) to be sold thereunder or (iii) the
Offering is not completed by December 31, 2018.
The
undersigned understands that the Underwriter is entering into the
Underwriting Agreement and proceeding with the Offering in reliance
upon this Lock-Up Agreement.
This
Lock-Up Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
[The
remainder of this page has intentionally been left
blank]
-A-2-
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Very
truly yours,
______________________________________________
Printed
Name of Holder
______________________________________________
Signature
______________________________________________
Printed
Name and Title of Person
Signing
(if signing as custodian, trustee or on behalf
of an entity)
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-A-3-