●] Shares SUPER LEAGUE GAMING, INC. Common Stock, par value $0.001 per share UNDERWRITING AGREEMENT
Exhibit
1.1
[●] Shares
Common Stock, par value $0.001 per share
[●], 2019
NORTHLAND
SECURITIES, INC.
c/o
Northland Securities, Inc.
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And
LAKE
STREET CAPITAL MARKETS, LLC
▇/▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLC
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▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇,
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As
Representatives of the several Underwriters
Named
in Schedule I hereto
Ladies
and Gentlemen:
Super
League Gaming, Inc., a Delaware corporation (the “Company”),
proposes to sell to the several Underwriters named in Schedule I hereto (the
“Underwriters”)
an aggregate of [●]
authorized but unissued shares (the “Firm
Shares”) of Common Stock, par value $0.001 per share
(the “Common
Stock”), of the Company. The Company also proposes to
grant to the several Underwriters an option to purchase up to
[●] 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 hereby confirms its agreement with respect to the sale of
the Securities to the several Underwriters, for whom Northland
Securities, Inc. and Lake Street Capital Markets, LLC are acting as
representatives (the “Representatives” or “you”).
To the extent there are no additional Underwriters named in
Schedule I hereto
other than you, the term Representatives as used herein shall mean
you, as Underwriters, and the terms “Representative”
and “Underwriter” shall mean either the singular or the
plural as the context requires.
1. Registration Statement and
Prospectus. A registration statement on Form S-1
(File No. 333-229144) with respect to the Securities,
including a preliminary form of prospectus, has been prepared by
the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the “Act”),
and the rules and regulations (“Rules and
Regulations”) of the U.S. Securities and Exchange
Commission (the “Commission”)
thereunder and has been filed with the Commission. Such
registration statement, including the amendments, exhibits and
schedules thereto, as of the time it became effective, including
the Rule 430A Information (as defined below), is referred to herein
as the “Registration
Statement.” The Company
will prepare and file a prospectus pursuant to Rule 424(b) of
the Rules and Regulations that discloses the information previously
omitted from the prospectus in the Registration Statement in
reliance upon Rule 430A of the Rules and Regulations, which
information will be deemed retroactively to be a part of the
Registration Statement in accordance with Rule 430A of the Rules
and Regulations (“Rule 430A
Information”). If the Company has elected to rely upon
Rule 462(b) of the Rules and Regulations to increase the size
of the offering registered under the Act, the Company will prepare
and file with the Commission a registration statement with respect
to such increase pursuant to Rule 462(b) of the Rules and
Regulations (such registration statement, including the contents of
the Registration Statement incorporated by reference therein is the
“Rule
462(b) Registration Statement”). References herein to
the “Registration
Statement” will be deemed to include the Rule 462(b)
Registration Statement at and after the time of filing of the Rule
462(b) Registration Statement. “Preliminary
Prospectus” means any prospectus included in the
Registration Statement prior to the effective time of the
Registration Statement, any prospectus filed with the Commission
pursuant to Rule 424(a) under the Rules and Regulations and each
prospectus that omits Rule 430A Information used after the
effective time of the Registration Statement. “Prospectus”
means the prospectus that discloses the public offering price and
other final terms of the Securities and the offering and otherwise
satisfies Section 10(a) of the Act. All references
in this Agreement to the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement to any of
the foregoing, is 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 herein to the Registration Statement, any Preliminary
Prospectus or a Prospectus shall be deemed as of any time to
include the documents and information incorporated therein by
reference in accordance with the Rules and
Regulations.
2. Representations and
Warranties of the Company.
(a) Representations
and Warranties of the Company. The Company represents and
warrants to, and agrees with, the several Underwriters as
follows:
(i) Registration
Statement and Prospectuses. The Registration Statement and
any post-effective amendment thereto has become effective under the
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 or any part thereto or
any post-effective amendment thereto has been issued, and no
proceeding for that purpose has been initiated or, to the
Company’s knowledge, threatened by the Commission. 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 Company’s knowledge, threatened by the
Commission. As of the time each part of the Registration Statement
(or any post-effective amendment thereto) became or becomes
effective, 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.
(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
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
Date, included, includes or will include an untrue statement of a
material fact or omitted, omits or will omit to state a material
fact necessary in order to make the statements therein, in 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, or by any
Underwriter through you, specifically for use in the preparation of
such document, it being understood and agreed that the only such
information furnished by any Underwriter consists of the
information described as such in Section 6(e).
-2-
“Time of Sale
Disclosure Package” means the Preliminary Prospectus
dated [●], 2019 and the information on Schedule III, 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 [●] [a.m.][p.m.] (New York City
time) on the date of this Agreement.
(iii) 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, further, that the Company has not made and will not make
any offer relating to the Securities that would constitute a free
writing prospectus and, except as set
forth on
Schedule IV, the Company has not
made and will not make any communication relating to the Securities
that would constitute a Testing-the-Waters Communication (as
defined below), except in accordance with the provisions of
Section 2(a)(v) of this
Agreement.
(iv) Emerging
Growth Company. From the time of
initial confidential submission of the Registration Statement to
the Commission (or, if earlier, the first date on which the Company
engaged directly or through any person authorized to act on its
behalf in any Testing-the-Waters Communication (as defined below))
through the date hereof, the Company has been and is an
“emerging growth company,” as defined in
Section 2(a) of the Act (an “Emerging
Growth Company”). “Testing-the-Waters
Communication” means any oral or
written communication with potential investors undertaken in
reliance on Section 5(d) of the Act.
(v) Testing-the-Waters
Materials. The Company
(i) has not alone engaged in any Testing-the-Waters
Communications, other than Testing-the-Waters Communications with
the prior consent of the Representatives with entities that are
qualified institutional buyers within the meaning of Rule 144A
under the Act or institutions that are accredited investors within
the meaning of Rule 501 under the Act and (ii) has not
authorized anyone other than the Representatives to engage in
Testing-the-Waters Communications. The Company has not distributed
any Written Testing-the-Waters Communications (as defined below)
other than those listed on
Schedule IV hereto. “Written
Testing-the-Waters Communication” means any
Testing-the-Waters Communication that is a written communication
within the meaning of Rule 405 under the Act. Any individual
Written Testing-the-Waters Communication does not conflict with the
information contained in the Registration Statement or the Time of
Sale Disclosure Package, complied in all material respects with the
Act, and when taken together with the Time of Sale Disclosure
Package as of the Applicable Time, did not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not
misleading.
(vi) Financial
Statements. The financial statements of the Company,
together with the related notes, set forth in the Registration
Statement, the Time of Sale Disclosure Package and Prospectus
comply in all material respects with the requirements of the Act
and the Rules and Regulations and fairly present the financial
condition of the Company as of the dates indicated and the results
of operations, cash flows and changes in stockholders’ equity
for the periods therein specified. The financial statements of the
Company, together with the related notes, set forth in the
Registration Statement, the Time of Sale Disclosure Package and
Prospectus are in conformity with generally accepted accounting
principles in the United States (“GAAP”)
consistently applied throughout the periods involved. The
supporting schedules of the Company included in 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. Except as disclosed in the
Registration Statement, 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.
Squar ▇▇▇▇▇▇ LLP, which has expressed its opinion with respect to
the financial statements of the Company and related 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
registered 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.
-3-
(vii) Organization
and Good Standing. The Company has been duly
organized and is validly existing as an entity in good standing
under the laws of its jurisdiction of organization. The Company has
full corporate power and authority 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 entity 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,
taken as a whole (“Material Adverse
Effect”).
(viii) Absence
of Certain Events. Except as contemplated in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus, subsequent to the respective dates as of which
information is given in the Time of Sale Disclosure Package, the
Company has not 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 material adverse change in
the general affairs, condition (financial or otherwise), business,
prospects, management, properties, operations or results of
operations of the Company, taken as a whole (“Material Adverse
Change”) or any development which could reasonably be
expected to result in any Material Adverse Change.
(ix) Absence
of Proceedings.
Except as set forth in the Time of Sale Disclosure Package and the
Prospectus, there is no pending or, to the knowledge of the
Company, threatened or contemplated, action, suit or proceeding (a)
to which the Company is a party or (b) which has as the subject
thereof any officer or director of the Company, any employee
benefit plan sponsored by the Company or any property or assets
owned or leased by the Company 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 the Representative’s Warrant (as defined below)
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 is subject or (y) which has
as the subject thereof any officer or director of the Company, any
employee plan sponsored by the Company or any property or assets
owned or leased by the Company, 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.
(x) Authorization; No
Conflicts; Authority. This Agreement has been duly
authorized, executed and delivered by the Company. The
Representative’s Warrant has been duly authorized and, at the
First Closing Date and, if applicable, the Second Closing Date,
will be duly executed and delivered by the Company. This Agreement
constitutes, and the Representative’s Warrant will constitute
at the First Closing Date and, if applicable, the Second Closing
Date, 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 Representative’s Warrant 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 pursuant to any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company is a party or by which the Company
is bound or to which any of the property or assets of the Company
is subject, (B) result in any violation of the provisions of the
Company’s charter or bylaws 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 properties or assets
(each, a “Governmental
Authority”), except in the case of clause (A) 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 the Representative’s Warrant
or for the consummation of the transactions contemplated hereby,
including the issuance or sale of the Securities by the Company or
the issuance of shares of Common Stock upon the exercise of the
Representative’s Warrant, except such as may be required
under the Act, the rules of the Financial Industry Regulatory
Authority, Inc. (“FINRA”),
the Nasdaq Capital Market or state securities or blue sky laws; and
the Company has full power and authority to enter into this
Agreement and the Representative’s Warrant and to consummate
the transactions contemplated hereby, including the authorization,
issuance and sale of the Securities as contemplated by this
Agreement and the issuance of shares of Common Stock upon the
exercise of the Representative’s Warrant.
-4-
(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 Underwriters), 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 and the
shares of Common Stock which may be sold pursuant to the
Representative’s Warrant have been duly authorized and, when
issued, delivered and paid for in accordance with the terms of this
Agreement and the Representative’s Warrant (as applicable),
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, bylaws or any
agreement or other instrument to which the Company is a party or by
which the Company is bound, (B) none of the filing of the
Registration Statement, the offering, the sale of the Securities or
the Representative’s Warrant as contemplated by this
Agreement, or the issuance of shares of Common Stock upon exercise
of the Representative’s Warrant, give 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). 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 under the
caption “Description of Capital Stock.” 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.
(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 any shares of the
capital stock 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 (the “Options”)
or other rights granted thereunder, 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, options and rights. Each grant of an Option
(A) was duly authorized no later than the date on which the grant
of such Option 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 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 the Company has not 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
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 has good and marketable title to, or
has valid rights to lease or otherwise use, all property (whether
real or personal) described in the Registration Statement, the Time
of Sale Disclosure Package and the Prospectus as being owned,
leased or used by it, 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, the Time of
Sale Disclosure Package and the Prospectus. The property held under
lease by the Company is held by it 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.
(xv) Intellectual
Property.
(A) The
Company owns or has the right to use pursuant to a valid and
enforceable written license or other legally enforceable right, or
can acquire on commercially reasonable terms, all Intellectual
Property (as defined below) necessary for the conduct of the
Company’s business as now conducted or as described in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus to be conducted, except as such failure to own, right to
use or acquire such rights would not result in a Material Adverse
Effect (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.
-5-
(B) To
the knowledge of the Company, there is no infringement,
misappropriation or violation by third parties of any Company IP,
except for as such infringement, misappropriation or violation that
would not result in a Material Adverse Effect. There is no pending
or, to the knowledge of the Company, threatened, action, suit,
proceeding or claim by others challenging the Company’s
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 to the knowledge of
the Company, the Intellectual Property licensed to the Company, 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 infringes, misappropriates or otherwise violates any
Intellectual Property or other proprietary rights of others, and
the Company has not 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 is in or
has ever been in material 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 actions undertaken
by the employee while employed with the Company.
(D) The
Company has taken commercially reasonable security measures to
protect the secrecy, confidentiality and value of all of their
material Intellectual Property.
(E) All
patent applications owned by the Company 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 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 has complied with its 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 from having clear title to the Company
Patent Applications that have been identified by the Company as
being exclusively owned by the Company.
(xvi) No
Violations or Defaults. The Company is not in violation of
its charter, bylaws 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 material obligation, agreement or condition
contained in any bond, debenture, note, indenture, loan agreement
or any other material contract, lease or other instrument to which
it is subject or may be bound, or to which any of the material
property or assets of the Company is subject.
(xvii) Payment
of Taxes. The Company has timely filed all federal, state,
local and foreign income and franchise tax returns required to be
filed and is not in default in the payment of any taxes which were
payable pursuant to said returns or any assessments with respect
thereto, other than any which the Company is contesting in good
faith. 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.
-6-
(xviii) Exchange
Listing and Exchange Act Registration. The Securities have been
approved for listing on the Nasdaq Capital Market upon official
notice of issuance and, on the date the Registration Statement
became effective, the Company’s Registration Statement on
Form 8-A or other applicable form under the Securities Exchange Act
of 1934, as amended (the
“Exchange Act”), became or was
effective. Except as previously disclosed to counsel for the
Underwriters or as set forth in the Time of Sale Disclosure Package
and the Prospectus, there are no affiliations with members of FINRA
among the Company’s officers or directors or, to the
knowledge of the Company, any five percent or greater stockholders
of the Company or any beneficial owner of the Company’s
unregistered equity securities that were acquired during the
180-day period immediately preceding the initial filing date of the
Registration Statement. The Company is currently in compliance in
all material respects with the applicable requirements of the
Nasdaq Capital Market for maintenance of inclusion of the Common
Stock thereon and has not received any notice regarding the removal
of the Company’s listing with such exchange.
(xix) Ownership
of Other Entities. 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 maintains 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 GAAP and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
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 its 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 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 applicable stock exchange rules
(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.
(xxi) No
Brokers or Finders. Other than as contemplated by this
Agreement, the Company has not incurred and will not incur 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 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 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 its business, assets, employees,
officers and directors are in full force and effect; the Company is
in compliance with the terms of such policies and instruments in
all material respects; there are no claims by the Company under any
such policy or instrument as to which any insurance company is
denying liability or defending under a reservation of rights
clause; the Company has not been refused any insurance coverage
sought or applied for; and the Company has no 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.
-7-
(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) ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act. The Company is in compliance with all applicable
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and regulations
of the Commission thereunder.
(xxv) 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 is made known to the principal executive officer and the
principal financial officer and such controls and procedures are
effective to perform the functions for which they were established.
The Company has utilized such controls and procedures in preparing
and evaluating the disclosures in the Registration Statement, the
Time of Sale Disclosure Package and the Prospectus.
(xxvi) Anti-Bribery
and Anti-Money Laundering Laws. The Company, its officers,
directors, supervisors, managers and employees, and to the
knowledge of the Company, its affiliates or agents and any of their
respective officers, directors, supervisors, managers, agents and
employees, has not violated, its participation in the offering will
not violate, and the Company has instituted and maintains policies
and procedures designed to ensure continued compliance with, each
of the following laws: (A) 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
(B) 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.
(xxvii) OFAC.
(A) Neither
the Company nor any of its directors, officers or employees, nor,
to the Company’s knowledge, any agent, affiliate or
representative of the Company, 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
(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) The
Company will not, 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, whether or not currently existing, 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.
-8-
(xxviii) Compliance
with Environmental Laws. Except as disclosed in the
Registration Statement, the Time of Disclosure Package and the
Prospectus, the Company is not in violation of any statute, 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. The Company does not anticipate incurring any material
capital expenditures relating to compliance with Environmental
Laws.
(xxix) Compliance
with Occupational Laws. The Company (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 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 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.
(xxx) 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) the Company does not have any obligations under
any collective bargaining agreement with any union and no
organization efforts are underway with respect to employees of the
Company. 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 (x) any current or former employee, director or
independent contractor of the Company has any present or future
right to benefits and which are contributed to, sponsored by or
maintained by the Company or (y) the Company 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.
-9-
(xxxi) Business
Arrangements. Except as disclosed in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus,
the Company has not granted any material rights to develop,
manufacture, produce, assemble, distribute, license, market or sell
its products to any other person and is not bound by any material
agreement that affects the exclusive right of the Company to
develop, manufacture, produce, assemble, distribute, license,
market or sell its products.
(xxxii) Labor
Matters. No labor problem or dispute with the employees of
the Company 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 principal suppliers, contractors or
customers, that could have a Material Adverse Effect.
(xxxiii) Disclosure
of Legal Matters.
There are no statutes, regulations, legal or governmental
proceedings or contracts or other documents required to be
described in the Time of Sale Disclosure Package or in the
Prospectus or included as exhibits to the Registration Statement
that are not described or included as required.
(xxxiv) 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 reliable and accurate in
all material respects.
(xxxv) 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.
(xxxvi) No
Rated Securities. There
are no debt securities or preferred stock of, or guaranteed by, the
Company that are rated by a “nationally recognized
statistical rating organization,” as such term is defined in
Section 3(a)(62) of the Exchange Act.
(xxxvii) Related-Party
Transactions. To the
Company’s knowledge, no transaction has occurred between or
among the Company, on the one hand, and any of the Company’s
officers, directors or five percent or greater stockholders or any
affiliate or affiliates of any such officer, director or five
percent or greater stockholders that is required to be described
that is not so described in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus. The Company has not,
directly or indirectly, extended or maintained credit, or arranged
for the extension of credit, or renewed an extension of credit, in
the form of a personal loan to or for any of its directors or
executive officers in violation of applicable laws, including
Section 402 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(xxxviii) Cybersecurity;
Data Protection. The Company’s information technology assets
and equipment, computers, systems, networks, hardware, software,
websites, applications, and databases (collectively,
“IT
Systems”) are adequate in
all material respects for, and operate and perform in all material
respects as required in connection with the operation of the
business of the Company as currently conducted, and to the
knowledge of the Company, free and clear of all material bugs,
errors, defects, Trojan horses, time bombs, malware and other
corruptants. The Company has implemented and maintains commercially
reasonable controls, policies, procedures and safeguards to
maintain and protect its material confidential information and the
integrity, continuous operation, redundancy and security of all IT
Systems and data (including all personal, personally identifiable,
sensitive, confidential or regulated data
(“Personal
Data”)) used in
connection with its businesses, and to the knowledge of the
Company, there have been no material breaches, violations, outages
or unauthorized uses of or accesses to the same, except for those
that have been remedied without material cost or liability or the
duty to notify any other person, nor are there any material
incidents under internal review or investigations relating to the
same. The Company is presently in compliance with all applicable
laws or statutes and all judgments, orders, rules and regulations
of any court or arbitrator or governmental or regulatory authority,
internal policies and contractual obligations relating to the
privacy and security of IT Systems and Personal Data and to the
protection of such IT Systems and Personal Data from unauthorized
use, access, misappropriation or modification, except as would not
reasonably be expected to have a Material Adverse
Effect.
-10-
(b) Effect of
Certificates. Any certificate signed by any officer of the
Company and delivered to you or to counsel for the Underwriters
shall be deemed a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
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 several Underwriters, and each Underwriter
agrees, severally and not jointly, to purchase from the Company the
number of Firm Shares set forth opposite the name of such
Underwriter in Schedule
I hereto. The purchase price for each Firm Share shall be
$[●] per share. In making this Agreement, each Underwriter is
contracting severally and not jointly. Except as provided in
paragraph (d) of this Section 3, the agreement of
each Underwriter is to purchase only the respective number of Firm
Shares specified in Schedule I.
(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
several Underwriters 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
Underwriters in the sale and distribution of the Firm Shares. The
option granted hereunder may be exercised in whole or in part at
any time within 30 days after the effective date of this Agreement
upon notice (confirmed in writing) by the Representatives to the
Company setting forth the aggregate number of Option Shares as to
which the several Underwriters are exercising the option and the
date and time, as determined by you, when the Option Shares are to
be delivered, but in no event earlier than the First Closing Date
(as defined below) nor (unless otherwise agreed by you and the
Company) earlier than the second business day or later than the
tenth business day after the date on which the option shall have
been exercised. The number of Option Shares to be purchased by each
Underwriter shall be the same percentage of the total number of
Option Shares to be purchased by the several Underwriters as the
number of Firm Shares to be purchased by such Underwriter is of the
total number of Firm Shares to be purchased by the several
Underwriters, as adjusted by the Representatives in such manner as
the Representatives deems advisable to avoid fractional shares. No
Option Shares shall be sold and delivered unless the Firm Shares
previously have been, or simultaneously are, sold and
delivered.
(c) Payment and
Delivery.
(i)
The Securities to
be purchased by each Underwriter hereunder, in book-entry form in
such authorized denominations and registered in such names as you
may request upon at least forty-eight hours’ prior notice to
the Company, shall be delivered by or on behalf of the Company to
you, through the facilities of the Depository Trust Company
(“DTC”),
for the account of such Underwriter, with any transfer taxes
payable in connection with the transfer of the Securities to the
Underwriters duly paid, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of
Federal (same-day) funds to the account specified by the Company to
you at least forty-eight hours in advance. The time and date of
such delivery and payment shall be, with respect to the Firm
Shares, 9:30 a.m., New York City time, on [●], 2019, or
such other time and date as you and the Company may agree upon in
writing, and, with respect to the Option Shares, 9:30 a.m.,
New York City time, on the date specified by you in each written
notice given by you of the election to purchase such Option Shares,
or such other time and date as you and the Company may agree upon
in writing. Such time and date for delivery of the Firm Shares is
herein called the “First Closing
Date,” each such
time and date for delivery of the Option Shares, if not the First
Closing Date, is herein called a “Second Closing
Date,” and each such time and date for delivery is
herein called a “Closing”
or a “Closing
Date.”
(ii)
The documents to be
delivered at each Closing by or on behalf of the parties hereto
pursuant to Section 5 hereof,
including the cross receipt for the Securities and any additional
documents requested by the Underwriters pursuant to Section 5(n) hereof, will
be delivered at the offices of the Company, and the Securities will
be delivered to you, through the facilities of the DTC, for the
account of such Underwriter, all at such Closing.
-11-
(d) Purchase by
Representatives on Behalf of Underwriters. It is understood
that you, individually and not as Representatives of the several
Underwriters, may (but shall not be obligated to) make payment to
the Company, on behalf of any Underwriter for the Securities to be
purchased by such Underwriter. Any such payment by you shall not
relieve any such Underwriter of any of its obligations hereunder.
Nothing herein contained shall constitute any of the Underwriters
an unincorporated association or partner with the
Company.
4. Covenants. The
Company covenants and agrees with the several Underwriters as
follows:
(a) Required
Filings. The Company will prepare and file a Prospectus with
the Commission containing the Rule 430A Information omitted
from the Preliminary Prospectus within the time period required by,
and otherwise in accordance with the provisions of,
Rules 424(b) and 430A of the Rules and Regulations. If the
Company has elected to rely upon Rule 462(b) of the Rules and
Regulations to increase the size of the offering registered under
the Act and the Rule 462(b) Registration Statement has not yet been
filed and become effective, the Company will prepare and file the
Rule 462(b) Registration Statement with the Commission within the
time period required by, and otherwise in accordance with the
provisions of, Rule 462(b) of the Rules and Regulations and
the Act. The Company will prepare and file with the Commission,
promptly upon your request, any amendments or supplements to the
Registration Statement or Prospectus that, in your opinion, may be
necessary or advisable in connection with the distribution of the
Securities by the Underwriters; and the Company will furnish you
and counsel for the Underwriters a copy of any proposed amendment
or supplement to the Registration Statement or Prospectus and will
not file any amendment or supplement to the Registration Statement
or Prospectus to which you shall reasonably object by notice to the
Company after having been furnished a copy a reasonable time prior
to the filing.
(b) Notification of
Certain Commission Actions. The Company will advise you,
promptly after it shall receive notice or obtain knowledge thereof,
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, or any post-effective
amendment thereto or preventing or suspending the use of any
Preliminary Prospectus, the Time of Sale Disclosure Package, the
Prospectus or any issuer free writing prospectus, of the suspension
of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding
for any such purpose; and the Company will promptly use its best
efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such a stop order should be issued.
(c) Continued
Compliance with Securities Laws.
(A) Within
the time during which a prospectus (assuming the absence of Rule
172) relating to the Securities is required to be delivered under
the Act by any Underwriter or any dealer, the Company will comply
with all requirements imposed upon it by the Act, as now and
hereafter amended, and by the Rules and Regulations, as from time
to time in force, 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 to amend the Registration
Statement or supplement the Prospectus (or if the Prospectus is not
yet available to prospective investors, the Time of Sale Disclosure
Package) to comply with the 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) (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 a Written Testing-the-Waters
Communication there occurred or occurs an event or development as a
result of which such Written Testing-the-Waters Communication
conflicted or would conflict with the information contained in the
Registration Statement, any Preliminary Prospectus or the
Prospectus relating to the Securities 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 Representatives of such
conflict, untrue statement or omission, (y) has promptly amended or
will promptly amend or supplement, at its own expense, such Written
Testing-the-Waters Communication 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 to the extent required to be filed by
the Rules and Regulations.
-12-
(d) Blue Sky
Qualifications. The Company shall take or cause to be taken
all necessary action to qualify the Securities for sale under the
securities laws of such domestic United States or foreign
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.
(e) Provision of
Documents. The Company will furnish, at its own expense, to
the Underwriters and counsel for the Underwriters copies of the
Registration Statement, and to the Underwriters and any dealer each
Preliminary Prospectus, the Time of Sale Disclosure Package, the
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.
(f) 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
beginning after the effective date of the Registration Statement
(which, for purposes of this paragraph, will be deemed to be the
effective date of the Rule 462(b) Registration Statement, if
applicable) that shall satisfy the provisions of Section 11(a)
of the Act and Rule 158 of the Rules and
Regulations.
(g) 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
Underwriters of the Securities, (B) all expenses and fees
(including, without limitation, fees and expenses of the
Company’s accountants and 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, 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 and fees incurred in connection with the
qualification of the Securities for offering and sale by the
Underwriters 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 any transfer agent or registrar, (E) the
reasonable out-of-pocket accountable fees and disbursements
incurred by the Underwriters in connection with the offer, sale or
marketing of the Securities and performance of the
Underwriters’ obligations hereunder, including all reasonable
out-of-pocket accountable fees and disbursements of
Underwriters’ counsel, and for the avoidance of doubt,
excluding any general overhead, salaries, supplies, or similar
expenses of the Underwriters incurred in the normal conduct of
business, (F) listing fees, if any, (G) all fees, expenses and disbursements relating to
background checks of the Company’s officers and
directors, (H) the cost and expenses of the Company relating
to investor presentations or any “road show” undertaken
in connection with marketing of the Securities, including, without
limitation, expenses associated with the preparation or
dissemination of any electronic road show, expenses associated with
the production of road show slides and graphics, fees and expenses
of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company
and any such consultants, and the cost of any aircraft chartered in
connection with the road show, 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.
The expenses to be paid by the Company and reimbursed to the
Underwriters under this Section 4(g) shall not exceed
$275,000 without the prior approval of the Company. If this
Agreement is terminated by you pursuant to Section 8 hereof or if the sale
of the Securities provided for herein is not consummated by reason
of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed, or because any
other condition of the Underwriters’ obligations hereunder
required to be fulfilled by the Company is not fulfilled, the
Company will reimburse the several Underwriters for all reasonable
out-of-pocket accountable disbursements (including but not limited
to fees and disbursements of counsel, printing expenses, travel
expenses, postage, facsimile and telephone charges) incurred by the
Underwriters in connection with their investigation, preparing to
market and marketing the Securities or in contemplation of
performing their obligations hereunder.
(h) 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 and will file such reports with the Commission with
respect to the sale of the Securities and the application of the
proceeds therefrom as may be required in accordance with
Rule 463 of the Rules and Regulations.
(i) Company
Lock-Up. The Company will not, without the prior written
consent of the Representatives, from the date of execution of this
Agreement and continuing to and including the date 180 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 to the Underwriters pursuant to this Agreement and
(x) grants of options, shares of Common Stock and other awards
to purchase or receive shares of Common Stock under the Company
Stock Plans that are in effect as of or prior to the date hereof,
(y) issuances of shares of Common Stock upon the exercise of
options or other awards granted under such Company Stock Plans, or
(z) [issuances of shares of Common Stock upon conversion of the
Company’s outstanding 9.00% secured convertible promissory
notes and upon exercise of the Company outstanding warrants that
are described in the Prospectus]. The Company agrees not to
accelerate the vesting of any option or warrant or exercise any
repurchase or expiry right in respect of any option, warrant or
convertible promissory note prior to the expiration of the Lock-Up
Period.
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(j) 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
II. The Company
will enforce the terms of each Lock-Up Agreement and issue
stop-transfer instructions to its transfer agent and registrar 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.
(k) Lock-up Release or
Waiver. If the
Representatives in their sole discretion, agree to release or waive
the restrictions set forth in a lock-up agreement described in
Section 4(j) hereof
for an officer or director of the Company and provide the Company
with notice of the impending release or waiver at least three
business days before the effective date of the release or waiver,
the Company agrees to announce the impending release or waiver by a
press release substantially in the form of Exhibit C hereto through a
major news service at least two business days before the effective
date of the release or waiver.
(l) 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, and has not
effected any sales of Common Stock which are required to be
disclosed in response to Item 701 of Regulation S-K under
the Act which have not been so disclosed in the Registration
Statement.
(m) SEC
Reports. The Company will file on a timely basis with the
Commission such periodic and special reports as required by the
Rules and Regulations.
(n) Free Writing
Prospectuses. The Company represents and agrees that, unless
it obtains the prior written consent of the Representatives, and
each Underwriter represents and agrees that, unless it obtains the
prior written consent of the Company and the Representatives, 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. Each Underwriter
severally represents and agrees that, (A) unless it obtains
the prior written consent of the Company and the Representatives,
it has not distributed, and will not distribute any Written
Testing-the-Waters Communication other than those listed on
Schedule IV, and (B) any
Testing-the-Waters Communication undertaken by it was with entities
that are qualified institutional buyers with the meaning of
Rule 144A under the Act or institutions that are accredited
investors within the meaning of Rule 501 under the
Act.
(o) Emerging
Growth Company.
The Company
will promptly notify the Representatives if the Company ceases to
be an Emerging Growth Company at any time prior to the later of (A)
completion of the distribution of the Securities within the meaning
of the Act and (B) completion of the Lock-up Period referenced
in
Section 4(i) hereof.
(p) Representative’s
Warrant.
On each Closing Date, the Company shall sell to Northland
Securities, Inc., for an aggregate purchase price of $50, a warrant
in the form attached as Exhibit B hereto (the
“Representative’s
Warrant”) to purchase the number of shares of the
Company’s Common Stock equal to 3.0% of the Firm Shares or
Option Shares, as applicable, issued on such Closing Date (rounded
up to the nearest whole share) at an exercise price equal to 100%
of the public offering price per share in the Offering.
5. Conditions of
Underwriters’ Obligations. The obligations of the
several Underwriters 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. The Registration Statement shall have become
effective not later than 5:30 p.m., New York City time, on the date
of this Agreement, or such later time and date as you, as
Representatives of the several Underwriters, shall approve and
all filings required by Rules 424, 430A and 433 of the
Rules and Regulations shall have been timely made (without reliance
on Rule 424(b)(8) or Rule 164(b)); no stop order suspending the
effectiveness of the Registration Statement or any part thereof or
any amendment thereof, nor suspending or preventing the use of the
Time of Sale Disclosure Package or the Prospectus shall have been
issued by the Commission; no proceedings for the issuance of such
an order shall have been initiated or threatened; and any request
of the Commission for additional information (to be included in the
Registration Statement, the Time of Sale Disclosure Package, the
Prospectus or otherwise) shall have been complied with to your
satisfaction.
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(b) Continued
Compliance with Securities Laws. No Underwriter shall 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,
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 and the Prospectus, the Company shall have
not 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 (subject to the requirements of
Section 4(i)
hereof, 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 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 Material Adverse Change or any
development involving a prospective Material Adverse Change
(whether or not arising in the ordinary course of business), that,
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 of Company
Counsel. On each Closing Date, there shall have been
furnished to you, as Representatives of the several Underwriters,
the opinion and negative assurance statement of Disclosure Law
Group, a Professional Corporation, counsel for the Company, dated
as of such Closing Date and addressed to you in form and substance
reasonably satisfactory to you.
(e) Opinion of Company
Intellectual Property Counsel. On each Closing Date, there
shall have been furnished to you, as Representatives of the several
Underwriters, the opinion of ▇▇▇▇▇▇▇▇▇▇ PC, special intellectual
property counsel for the Company, dated as of such Closing Date and
addressed to you in form and substance reasonably satisfactory to
you.
(f) Opinion
of Underwriters’ Counsel. On each Closing Date, there
shall have been furnished to you, as Representatives of the several
Underwriters, such opinion or opinions and negative assurance
statement of Faegre ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, counsel for the
Underwriters, dated as of 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.
(g) Comfort
Letters. 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, as Representative of
the several Underwriters, shall have received a letter from Squar
▇▇▇▇▇▇ LLP, each dated as of such date and addressed to you, in
form and substance satisfactory to you.
(h) Officers’
Certificate. On each Closing Date, there shall have been
furnished to you, as Representatives of the several Underwriters, a
certificate, dated as of 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:
-15-
(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; and
(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.
(i) Lock-Up
Agreement. The Representatives 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.
(j) Representative’s
Warrant. Northland Securities, Inc. shall have received the
Representative’s Warrant referenced in Section 4(p) with the respect
to the Securities to be delivered on such Closing
Date.
(k) FINRA No
Objections. FINRA shall have raised no objection to the
fairness and reasonableness of the underwriting terms and
arrangements.
(l) Exchange
Listing. The Securities to be delivered on such Closing Date
will have been approved for listing on the Nasdaq Capital
Market.
(m) Other
Documents. The Company shall have furnished to you, as
Representatives of the several Underwriters, and counsel for the
Underwriters such additional documents, certificates and evidence
as you or they may have reasonably requested.
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, as Representatives of the several
Underwriters, and counsel for the Underwriters. The Company will
furnish you with such conformed copies of such opinions,
certificates, letters and other documents as you shall reasonably
request.
6. Indemnification and
Contribution.
(a) Indemnification by
the Company. The Company agrees to indemnify and hold
harmless each Underwriter, its affiliates, directors and officers
and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any losses, claims, damages or liabilities, joint
or several, to which such 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) (i) 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 430A
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, any issuer information that the
Company has filed or is required to file pursuant to Rule 433(d) of
the Rules and Regulations, any Written
Testing-the-Waters Communication, or any road show as
defined in Rule 433(h) under the Act (a “road
show”), or (ii) 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 each 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, or by any
Underwriter through you, specifically for use in the preparation
thereof; it being understood and agreed that the only information
furnished by an Underwriter consists of the information described
as such in Section
6(e).
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(b) Indemnification by
the Underwriters. Each Underwriter will, severally and not
jointly, 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 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 such
Underwriter), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) (i) arise out of
or are based upon an untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, any
Preliminary Prospectus, the Time of Sale Disclosure Package, the
Prospectus, or any amendment or supplement thereto, any issuer free
writing prospectus, any issuer information that the Company has
filed or is required to file pursuant to Rule 433(d) of the Rules
and Regulations, any Written
Testing-the-Waters Communication, or any road show, or
(ii) 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 conformity with written information furnished
to the Company by you, or by such Underwriter through you,
specifically for use in the preparation thereof (it being
understood and agreed that the only information furnished by an
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 and documented by the Company in connection
with investigating or defending against any such loss, claim,
damage, liability or action as such expenses are
incurred.
(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 your sole
judgment, it is advisable for the Underwriters to be represented as
a group by separate counsel, you shall have the right to employ a
single counsel (in addition to local counsel) to represent all
Underwriters who may be subject to liability arising from any claim
in respect of which indemnity may be sought by the Underwriters
under subsection (a) above, 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 Underwriters as
incurred. An indemnifying party shall not be obligated under any
settlement agreement 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.
(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), (i) in such
proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the
other from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the
Underwriters on the other 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 Underwriters 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
Underwriters, 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 Underwriters and the parties’ relevant
intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were to be
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation 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), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total underwriting
discounts and commissions received by such Underwriter with respect
to the Securities exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters’ obligations in this
subsection (d) to contribute are several in proportion to their
respective underwriting obligations and not joint. 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.
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(e) Information
Provided by the Underwriters. The Underwriters severally
confirm that the statements with respect to the public offering of
the Securities by the Underwriters set forth in the [●] and
[●] paragraphs under the caption “Underwriting”
in the Time of Sale Disclosure Package and in the Prospectus are
correct and the Company acknowledges such statements constitute the
only information concerning the Underwriters furnished in writing
to the Company by or on behalf of the Underwriters specifically for
inclusion in the Registration Statement, any Preliminary
Prospectus, the Time of Sale Disclosure Package, the Prospectus or
any issuer free writing prospectus.
7. Representations and
Agreements to Survive Delivery. All representations,
warranties, and agreements of the Company herein or in certificates
delivered pursuant hereto, and the agreements of the several
Underwriters and the Company contained in Section 6 hereof, shall remain
operative and in full force and effect regardless of any
investigation made by or on behalf of any 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 Underwriters
hereunder and any termination of this Agreement.
8. Termination.
(a) Right to
Terminate. You shall have the right to terminate this
Agreement by giving notice 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
other condition of the Underwriters’ obligations hereunder is
not fulfilled, (iii) trading on the Nasdaq Stock Market or New
York Stock Exchange shall have been wholly 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 Nasdaq Stock Market or New York Stock Exchange, by
such exchange or by order of the Commission or any other
Governmental Authority, (v) a banking moratorium shall have
been declared by federal or state authorities, or (vi) there shall
have occurred any outbreak or escalation of hostilities or any
change in financial markets or any 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. Any such termination shall be without
liability of any party to any other party except that the
provisions of Section 4(g) and
Section 6
hereof shall at all times be effective.
(b) Notice of
Termination. If you elect to terminate this Agreement as
provided in this Section
8, the Company shall be notified promptly by you by
telephone, confirmed by letter.
9. Default by the
Company.
(a) Default by the
Company. If the Company shall fail at the First Closing Date
to sell and deliver the Securities which it is obligated to sell
hereunder, then this Agreement shall terminate without any
liability on the part of any Underwriter.
(b) No Relief from
Liability. No action taken pursuant to this Section 9 shall relieve the
Company from liability, if any, in respect of any default
hereunder.
10. Notices.
Except as otherwise provided herein, all communications hereunder
shall be in writing and, if to the Underwriters, shall be mailed
via overnight delivery service or hand delivered via courier, (i)
to the Representatives (A) c/o Northland Securities, Inc., ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Investment Banking, and (B) c/o Lake Street Capital
Markets, LLC, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Investment Banking, with a copy to
Faegre ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, 2200 ▇▇▇▇▇ Fargo Center, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇ ▇. ▇▇▇▇▇▇; and
(ii) if to the Company, shall be mailed or delivered to it at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇
▇▇▇▇, with a copy to Disclosure Law Group, a Professional
Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. 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.
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11. 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 any of the several Underwriters.
12. Absence of Fiduciary
Relationship. The Company acknowledges and agrees that: (a)
the Representatives have been retained solely to act as
underwriters in connection with the sale of the Securities and that
no fiduciary, advisory or agency relationship between the Company
and the Representatives has been created in respect of any of the
transactions contemplated by this Agreement, irrespective of
whether the Representatives have advised or are 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
Representatives 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 Representatives and their affiliates
are engaged in a broad range of transactions which may involve
interests that differ from those of the Company and that the
Representatives have 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 you are
acting, in respect of the transactions contemplated by this
Agreement, solely for the benefit of the Underwriters, and not on
behalf of the Company; (e) it waives to the fullest extent
permitted by law, any claims it may have against the Underwriters
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 Underwriters 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.
13. 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 each of the
Underwriters hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in
any legal proceeding arising out of or relating to this Agreement,
the Representative’s Warrant or the transactions contemplated
hereby.
14. 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.
15. 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 June 14, 2018, by and between
the Company and Northland Securities, Inc. (the “Engagement
Letter”), except as to the provisions contained in
Sections [●] and [●] thereto that shall survive and
remain 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.
[The
remainder of this page has intentionally been left
blank.]
1 Plus an option to purchase up to
[●]
additional shares to cover
over-allotments, if any.
-19-
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 several Underwriters in accordance with
its terms.
|
|
Very truly
yours,
By:
__________________________________
Name:
▇▇▇ ▇▇▇▇
Title:
Chief Executive Officer, President and Chair of the Board
|
Confirmed
as of the date first
above
mentioned, on behalf of
itself
and the other several
Underwriters
named in Schedule I
hereto.
Northland Securities, Inc.
By:
______________________________
Name:Title:
Lake Street Capital Markets, LLC
By:
______________________________
Name:
Title:
-20-
SCHEDULE I
|
Underwriter
|
Number
of Firm Shares (1)
|
|
Northland
Securities, Inc.
Lake
Street Capital Markets, LLC
National
Securities Corporation
|
[●]
[●]
[●]
|
|
|
_______________
|
|
Total.
.. . . . . . . . . . . . . . . . . . . . . . . . .
|
[●]
|
|
|
|
_________________
(1)
The Underwriters
may purchase up to an additional [●] Option Shares, to the
extent the option described in Section 3(b) of the
Agreement is exercised, in the proportions and in the manner
described in the Agreement.
SCHEDULE II
List of Individuals and Entities Executing Lock-Up
Agreements
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CaliBurger
Pu Luo
▇▇▇▇▇ ▇▇ Private Limited
SCHEDULE III
Pricing Information
Firm
Shares: [●]
Option
Shares: [●]
Price
to the public: $[●] per share
Price
to the Underwriters: $[●] per share
SCHEDULE IV
Written Testing-the-Waters Communications
[●]
EXHIBIT A
Form
of Lock-Up Agreement
A-1
Form of Lock-Up Agreement
Date:
__________________, 20__
Northland
Securities, Inc.
Lake
Street Capital Markets LLC
As
representatives of the several underwriters
named
in Schedule I to the Underwriting Agreement
referred
to below
c/o
Northland
Securities, Inc.
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇ Capital Markets LLC
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
As an
inducement to the underwriters (the “Underwriters”)
to execute an underwriting agreement (the “Underwriting
Agreement”)
providing for a public offering (the “Offering”) of common stock, par value
$[●] per share (the
“Common
Stock”), or
other securities, of Super League Gaming, Inc., 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 Northland
Securities, Inc. (“Northland”),
and Lake Street Capital Markets LLC (“Lake Street”
and together with Northland, the “Representatives”),
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
(this “Agreement”)
and continue and include the date one hundred eighty (180) days
after the date of the final prospectus used to sell Common Stock in
the Offering pursuant to the Underwriting Agreement.
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) transfers 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)
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) transfers 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
Representatives to be bound by the terms of this 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 Agreement, “immediate
family” shall mean any relationship by blood, marriage or
adoption, nor more remote than first cousin.
A-2
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.
If the
undersigned is an officer or director of the Company, the
undersigned further agrees that the restrictions imposed by this
Agreement shall be equally applicable to any issuer-directed shares
of Common Stock the undersigned may purchase in the
Offering.
If the
undersigned is an officer or director of the Company, (i) the
Representatives agree that, at least three business days before the
effective date of any release or waiver of the foregoing
restrictions in connection with a transfer shares of Common Stock,
the Representatives will notify the Company of the impending
release or waiver and (ii) the Company has agreed and has or will
agree in the Underwriting Agreement to announce the impending
release or waiver by press release through a major news service at
least two business days before the effective date of the release or
waiver. Any release or waiver granted by the Representatives
hereunder to any such officer or director shall only be effective
two business days after the publication date of such press release.
The provisions of this paragraph will not apply if (a) the release
or waiver is effected solely to permit a transfer not for
consideration and (b) the transferee has agreed in writing to be
bound by the same terms described in this letter to the extent and
for the duration that such terms remain in effect at the time of
the transfer.
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 Agreement.
The
undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Agreement and that upon
request, the undersigned will execute any additional documents
necessary to ensure the validity or enforcement of this 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 Agreement if (i) the Company
notifies the Representatives 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 to
be sold thereunder, or (iii) the Offering is not completed by
__________, 20__.
The
undersigned understands that the Underwriters are entering into the
Underwriting Agreement and proceeding with the Offering in reliance
upon this Agreement.
This
Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
[Remainder of page intentionally
left blank. Signature page follows.]
A-3
|
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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)
|
A-4
EXHIBIT B
Form of Representative’s Warrant
B-1
EXHIBIT C
Form of Company Press Release for Waivers or Releases
of Officer/Director Lock-Up Agreements
[Date]
Super
League Gaming, Inc., a Delaware corporation (the
“Company”),
announced today that Northland Securities, Inc. and Lake Street
Capital Markets, LLC (the “Representatives”),
as the representatives of the several underwriters pursuant to that
certain Underwriting Agreement, dated as of [●], 2019, by and
between the Company and the Representatives, is [waiving] [releasing] [a] lock-up
restriction[s] with respect to an aggregate of [____] shares of
common stock held by certain [officers] [directors] of the Company.
These [officers] [directors] entered into lock-up agreements with
the Representatives in connection with the Company’s initial
public offering.
This [waiver] [release] will take effect on [date that is at least two
business days following date of this press
release].
This press release is not an offer for sale of the securities in
the United States or in any other jurisdiction where such offer is
prohibited, and such securities may not be offered or sold in the
United States absent registration or an exemption from registration
under the United States Securities Act of 1933, as
amended.
C-1