PLACEMENT AGENCY AGREEMENT July 22, 2010
July 22,
2010
▇▇▇▇▇▇▇
▇▇▇▇▇ & Company, L.L.C.
▇▇▇ ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
Lightbridge
Corporation, a Nevada corporation (the “Company”), proposes, subject
to the terms and conditions herein, to issue and sell an aggregate of up to (i)
2,069,992 shares (the “Shares”) of its common stock,
$0.001 par value per share (the “Common Stock”), and (ii)
warrants to purchase 1,034,996 shares of Common Stock (the “Warrants”), to certain
investors (each an “Investor” and collectively
the “Investors”), in an
offering under its registration statement on Form S-3 (Registration
No. 333-162671). The shares of Common Stock issuable upon
exercise of the Warrants are hereinafter referred to as the “Warrant Shares” and the
Shares, the Warrants and the Warrant Shares are hereinafter referred to as the
“Securities.” The
Securities are more fully described in the Prospectus (as defined in Section 2(a)(iii)
hereof). The Company desires to engage ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Company, L.L.C. as the Company’s exclusive placement agent (in such capacity,
the “Placement Agent”)
in connection with such issuance and sale of the Shares.
The
Company hereby confirms its agreement with you as follows:
Section 1. Agreement
to Act as Placement Agent.
(a) On
the basis of the representations, warranties and agreements of the Company
herein contained, and subject to all the terms and conditions of this Placement
Agency Agreement (this “Agreement”) between the
Company and the Placement Agent, the Placement Agent shall act as placement
agent on a commercially reasonable efforts basis, in connection with the
issuance and sale by the Company of the Securities to the Investors in a
proposed takedown under the Registration Statement (as defined in Section 2(a)(1)
hereof), with the terms of the offering to be subject to market conditions and
negotiations between the Company, the Placement Agent and the prospective
Investors (such takedown shall be referred to herein as the “Offering”). As
compensation for services rendered, and provided that any of the Securities are
sold to Investors in the Offering, on the Closing Date (as defined in subsection (d) of
this Section 1)
of the Offering, the Company shall pay to the Placement Agent an amount equal to
6% of the gross proceeds received by the Company from the sale of the Securities
(the “Placement
Fee”). The sale of the Securities shall be made pursuant to
securities purchase agreements in the form included as Exhibit A hereto
(each, a “Subscription
Agreement” and collectively, the “Subscription Agreements”) on
the terms described on Exhibit B
hereto. The Company shall have the sole right to accept offers to
purchase the Securities and may reject any such offer in whole or in
part. Notwithstanding the foregoing, it is understood and agreed that
the Placement Agent or any of its affiliates may, solely at their discretion and
without any obligation to do so, purchase Securities as principal; provided, however, that any
such purchases by the Placement Agent (or its affiliates) shall be fully
disclosed to the Company and approved by the Company in accordance with the
previous sentence.
(b) This
Agreement shall not give rise to any commitment by the Placement Agent to
purchase any of the Securities, and the Placement Agent shall have no authority
to bind the Company to accept offers to purchase the Securities. The
Placement Agent shall act on a commercially reasonable efforts basis and does
not guarantee that it will be able to raise new capital in the
Offering. The Placement Agent may retain other brokers or dealers to
act as sub-agents on its behalf in connection with the Offering, the fees of
which shall be paid out of the Placement Fee. Prior to the earlier of
(i) the date on which this Agreement is terminated and (ii) the Closing Date,
the Company shall not, without the prior written consent of the Placement Agent,
solicit or accept offers to purchase Securities (other than pursuant to the
exercise of options or warrants to purchase shares of Common Stock that are
outstanding at the date hereof) otherwise than through the Placement Agent in
accordance herewith.
(c) The
Company acknowledges and agrees that the Placement Agent shall act as an
independent contractor, and not as a fiduciary, and any duties of the Placement
Agent with respect to providing investment banking services to the Company,
including the offering of the Securities contemplated hereby (including in
connection with determining the terms of the Offering), shall be contractual in
nature, as expressly set forth herein, and shall be owed solely to the
Company. Each party hereto disclaims any intention to impose any
fiduciary or similar duty on any other party hereto. Additionally, the Placement
Agent has not advised, nor is advising, the Company or any other person as to
any legal, tax, investment, accounting or regulatory matters in any jurisdiction
with respect to the transactions contemplated hereby. The Company
shall consult with its own advisors concerning such matters and shall be
responsible for making its own independent investigation and appraisal of the
transactions contemplated hereby, and the Placement Agent shall have no
responsibility or liability to the Company with respect thereto. Any
review by the Placement Agent of the Company, the transactions contemplated
hereby or other matters relating to such transactions has been and will be
performed solely for the benefit of the Placement Agent and has not been and
shall not be performed on behalf of the Company or any other
person. It is understood that the Placement Agent has not and will
not be rendering an opinion to the Company as to the fairness of the terms of
the Offering. Notwithstanding anything in this Agreement to the contrary, the
Company acknowledges that the Placement Agent may have financial interests in
the success of the Offering contemplated hereby that are not limited to the
Placement Fee. The Company hereby waives and releases, to the fullest
extent permitted by law, any claims that the Company may have against the
Placement Agent with respect to any breach or alleged breach of fiduciary
duty.
(d) Payment
of the purchase price for, and delivery of, the Securities shall be made at a
closing (the “Closing”)
at the offices of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC, counsel for the Placement Agent,
located at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ at 10:00 a.m.,
local time, as soon as practicable after the determination of the public
offering price of the Securities, but not later than on July 28, 2010 (such date
of payment and delivery being herein called the “Closing
Date”). All such actions taken at the Closing shall be deemed
to have occurred simultaneously. No Securities which the Company has
agreed to sell pursuant to this Agreement and the Subscription Agreements shall
be deemed to have been purchased and paid for, or sold by the Company, until
such Securities shall have been delivered to the Investor thereof against
payment therefore by such Investor. If the Company shall default in
its obligations to deliver Securities to an Investor whose offer it has
accepted, the Company shall indemnify and hold the Placement Agent harmless
against any loss, claim or damage incurred by the Placement Agent arising from
or as a result of such default by the Company.
(e) Concurrently
with the execution and delivery of this Agreement, the Company, the Placement
Agent and Collateral Agents, LLC, as escrow agent (the “Escrow Agent”), shall enter
into an escrow agreement in substantially the form of Exhibit C attached
hereto (the “Escrow
Agreement”), pursuant to which an escrow account (the “Escrow Account”) will be
established for the benefit of the Company and the Investors to settle their
purchase through the facilities of The Depository Trust Company’s DWAC
system. Prior to the Closing, each such Investor shall deposit into
the Escrow Account an amount equal to the product of (x) the number
of Securities such Investor has agreed to purchase and (y) the purchase price
per unit as set forth on the cover page of the Prospectus (as defined
below). The aggregate of such amounts is herein referred to as the
“Escrow
Funds”. On the Closing Date, the Escrow Agent will disburse
the Escrow Funds to the Company and the Placement Agent as provided in the
Escrow Agreement and the Company shall deliver or cause to be delivered the
Securities to the Investors, with the delivery of the Shares to be made, if
possible, through the facilities of The Depository Trust Company's DWAC system,
and the delivery of the Warrants to be made by mail to the Investors to the
addresses set forth on the applicable Subscription Agreement.
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(f) The
Securities shall be registered in such names and in such denominations as the
Placement Agent shall request by written notice to the Company.
Section
2. Representations, Warranties and Agreements of the
Company.
The
Company hereby represents, warrants and covenants to the Placement Agent as of
the date hereof as follows:
(a) Registration Statement.
(i) The Company has prepared and filed with the Securities and
Exchange Commission (the “Commission”) a registration
statement on Form S-3 (File No. 333-162671) under the Securities Act of 1933, as
amended and the rules and regulations of the Commission thereunder
(collectively, the “Securities
Act”), and such amendments to such registration statement as may have
been required to the date of this Agreement. Such registration
statement has been declared effective by the Commission. Each part of
such registration statement, at any given time, including amendments thereto at
such time, the exhibits and any schedules thereto at such time, the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Securities Act at such time and the documents and information otherwise deemed
to be a part thereof or included therein by Rule 430A, 430B or 430C under the
Securities Act or otherwise pursuant to the Securities Act at such time, is
herein called the “Registration
Statement.” Any registration statement filed by the Company
pursuant to Rule 462(b) under the Securities Act is called the “Rule 462(b) Registration
Statement” and, from and after the date and time of filing of the Rule
462(b) Registration Statement, the term “Registration Statement” shall
include the Rule 462(b) Registration Statement. The Company and the
transactions contemplated by this Agreement meet the requirements and comply
with the conditions for the use of Form S-3 under the Securities
Act. The offering of the Securities by the Company complies with the
applicable requirements of Rule 415 under the Securities Act. The
Company has complied with all requests of the Commission for additional or
supplemental information.
(ii) No
stop order preventing or suspending use of the Registration Statement, any
Preliminary Prospectus (as defined in subsection (a)(iii)
of this Section
2) or the Prospectus or the effectiveness of the Registration Statement,
has been issued by the Commission, and no proceedings for such purpose have been
instituted or, to the Company’s knowledge, are contemplated or threatened by the
Commission.
(iii) The
Company proposes to file with the Commission pursuant to Rule 424 under the
Securities Act a final prospectus supplement relating to the Securities to a
form of prospectus included in the Registration Statement relating to the
Securities in the form heretofore delivered to the Placement
Agent. Such prospectus included in the Registration Statement at the
time it was declared effective by the Commission or in the form in which it has
been most recently filed with the Commission on or prior to the date of this
Agreement is hereinafter called the “Base
Prospectus.” Such prospectus supplement, in the form in which
it shall be filed with the Commission pursuant to Rule 424(b) (including the
Base Prospectus as so supplemented) is hereinafter called the “Prospectus.” Any
preliminary form of prospectus which is filed or used prior to filing of the
Prospectus is hereinafter called a “Preliminary
Prospectus.” Any reference herein to the Base Prospectus, any
Preliminary Prospectus or the Prospectus or to any
amendment or supplement to any of the foregoing shall be deemed to include any
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act as of the date of such prospectus, and, in the case of
any reference herein to the Prospectus, also shall be deemed to include any
documents incorporated by reference therein, and any supplements or amendments
thereto, filed with the Commission after the date of filing of the Prospectus
pursuant to Rule 424(b) under the Securities Act, and prior to the termination
of the offering of the Securities by the Placement Agent.
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(iv) For
purposes of this Agreement, all references to the Registration Statement, the
Base Prospectus, any Preliminary Prospectus, the Prospectus or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval System (“▇▇▇▇▇”). All
references in this Agreement to amendments or supplements to the Registration
Statement, the Base Prospectus, any Preliminary Prospectus or the Prospectus
shall be deemed to mean and include the subsequent filing of any document under
the Securities Exchange Act of 1934, as amended (collectively with the rules and
regulations promulgated thereunder, the “Exchange Act”), and which is
deemed to be incorporated by reference therein or otherwise deemed to be a part
thereof.
(b) Compliance with Registration
Requirements. As of the time of filing of the Registration
Statement or any post-effective amendment thereto, at the time it became
effective (including each deemed effective date with respect to the Placement
Agent pursuant to Rule 430B under the Securities Act) and as of the Closing
Date, the Registration Statement complied and will comply, in all material
respects, with the requirements of the Securities Act and did not and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. Each Preliminary Prospectus and the Prospectus, at the
time of filing or the time of first use and as of the Closing Date, complied and
will comply, in all material respects, with the requirements of the Securities
Act and did not and will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
provided, that the
Company makes no representations or warranty in this paragraph with respect to
any Placement Agent Information (as defined in Section
7).
(c) Disclosure
Package. As of the Time of Sale (as defined below) and as of
the Closing Date, neither (A) the Issuer General Free Writing Prospectus(es) (as
defined below) issued at or prior to the Time of Sale, the Prospectus or any
Preliminary Prospectus (as amended or supplemented as of the Time of Sale), and
the information included on Exhibit D hereto, all
considered together (collectively, the “Disclosure Package”), nor
(B) any individual Issuer Limited-Use Free Writing Prospectus (as defined
below), when considered together with the Disclosure Package, included or will
include any untrue statement of a material fact or omitted or will omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided, that the Company
makes no representations or warranty in this paragraph with respect to any
Placement Agent Information. No statement of material fact included
in the Prospectus has been omitted from the Disclosure Package and no statement
of material fact included in the Disclosure Package that is required to be
included in the Prospectus has been omitted therefrom. As used in
this paragraph and elsewhere in this Agreement:
(1) “Time of Sale” with respect
to an Investor means the time of receipt and acceptance of an executed
Subscription Agreement from such Investor.
(2) “Issuer Free
Writing Prospectus” means any “issuer free writing prospectus,” as
defined in Rule 433 under the Securities Act (“Rule 433”), relating to the
Securities in the form filed or required to be filed with the Commission or, if
not required to be filed, in the form retained in the Company’s records pursuant
to Rule 433(g) under the Securities Act.
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(3) “Issuer General Free Writing
Prospectus” means any Issuer Free Writing Prospectus that is intended for
general distribution to prospective investors as identified on Schedule I hereto,
and does not include a “bona fide electronic road show” as defined in Rule
433.
(4) “Issuer Limited-Use Free Writing
Prospectus” means any Issuer Free Writing Prospectus that is not an
Issuer General Free Writing Prospectus, including any “bona fide electronic road
show” as defined in Rule 433, that is made available without restriction
pursuant to Rule 433(d)(8)(ii), even though not required to be filed with the
Commission.
(d) Conflict with Registration
Statement. Each Issuer Free Writing Prospectus, as of its
issue date and at all subsequent times through the completion of the offering
and sale of the Securities or until any earlier date that the Company notified
or notifies the Placement Agent, did not, does not and will not include any
information that conflicted, conflicts or will conflict with the information
contained in the Registration Statement or the Prospectus including any document
incorporated by reference therein and any prospectus supplement deemed to be a
part thereof that has not been superseded or modified; provided, that the
Company makes no representations or warranty in this paragraph with respect to
any Placement Agent Information.
(e) Distributed
Materials. The Company has not, directly or indirectly,
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 Disclosure Package or the Prospectus, and other
materials, if any, permitted under the Securities Act to be distributed and
consistent with Section 3(d) below.
The Company will file with the Commission all Issuer Free Writing Prospectuses
in the time required under Rule 433(d) under the Securities Act. The Company has
satisfied or will satisfy the conditions in Rule 433 under the Securities Act to
avoid a requirement to file with the Commission any electronic road show. The
parties hereto agree and understand that the content of any and all “road shows”
related to the offering of the Securities contemplated hereby is solely the
property of the Company.
(f) Not an Ineligible
Issuer. (1) At the time of filing the Registration Statement
and (2) at the date hereof and at the Closing Date, the Company was not, is not
and will not be an “ineligible issuer,” as defined in Rule 405 under the
Securities Act, without taking account of any determination by the Commission
pursuant to Rule 405 that it is not necessary that the Company be considered an
ineligible issuer including, without limitation, for purposes of Rules 164 and
433 under the Securities Act with respect to the offering of the Securities as
contemplated by the Registration Statement.
(g) Incorporated
Documents. The documents incorporated by reference in the
Disclosure Package and in the Prospectus, when they became effective or were
filed with the Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act or the Exchange Act, as
applicable, and were filed on a timely basis with the Commission and none of
such documents contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(h) Due
Incorporation. The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, with the corporate power and authority to own its properties and to
conduct its business as currently being carried on and as described in the
Registration Statement, the Disclosure Package and the
Prospectus. The Company is duly qualified to transact business as a
foreign corporation and is in good standing under the laws of each other
jurisdiction in which its ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified and in good standing would not, individually or in the aggregate,
result in any material adverse effect upon, or material adverse change in, the
general affairs, business, operations, prospects, properties, financial
condition, or results of operations of the Company and the Subsidiaries (as
defined below) taken as a whole (a “Material Adverse
Effect”). The Company is duly qualified to transact business
as a foreign corporation and is in good standing in each jurisdiction in which
the conduct of its business or its ownership, leasing or operation of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not result in a Material Adverse
Effect.
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(i) Subsidiaries. Each
subsidiary of the Company (individually, a “Subsidiary” and
collectively, the “Subsidiaries”) has been duly
incorporated or organized, is validly existing as a corporation or other legal
entity in good standing (or the foreign equivalent thereof) under the laws of
the jurisdiction of its incorporation or organization, has the corporate power
and authority to own its properties and to conduct its business as currently
being carried on and as described in the Registration Statement, the Disclosure
Package and the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or its
ownership, leasing or operation of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing would
not result in a Material Adverse Effect. All of the issued and
outstanding shares of capital stock or other equity interests of each Subsidiary
of the Company have been duly and validly authorized and issued, are fully paid
and non-assessable and, except as otherwise described in the Registration
Statement, the Disclosure Package and in the Prospectus, are owned directly by
the Company or through its wholly-owned subsidiaries, free and clear of all
liens, encumbrances, equities or claims. There is no outstanding
option, right or agreement of any kind relating to the issuance, sale or
transfer of any capital stock or other equity securities of the Subsidiaries to
any person or entity except the Company, and none of the outstanding shares of
capital stock or other equity interests of any Subsidiary was issued in
violation of any preemptive or other rights to subscribe for or to purchase or
acquire any securities of any of the Subsidiaries. Except for its Subsidiaries,
the Company owns no beneficial interest, directly or indirectly, in any
corporation, partnership, joint venture or other business entity. The
Company has no “significant subsidiaries” (as such term is defined in Rule
1-02(w) of Regulation S-X promulgated by the Commission) other than the
Subsidiaries listed on Schedule II attached
hereto.
(j) Capitalization. The
Company has duly and validly authorized capital stock as set forth in each of
the Registration Statement, Disclosure Package and Prospectus; all outstanding
shares of Common Stock of the Company conform, or when issued will conform, to
the description thereof in the Registration Statement, the Disclosure Package
and the Prospectus and have been, or, when issued and paid for in the manner
described herein will be, duly authorized, validly issued, fully paid and
non-assessable; and except as disclosed in the Registration Statement, the
Disclosure Package and the Prospectus, the issuance of the Securities to be
purchased from the Company hereunder is not subject to preemptive or other
similar rights, or any restriction upon the voting or transfer thereof pursuant
to applicable law or the Company’s Articles of Incorporation, Bylaws or
governing documents or any agreement to which the Company is a party or by which
it may be bound.
(k) Authorization,
Issuance. All corporate action required to be taken by the
Company for the authorization, issuance and sale of the Securities has been duly
and validly taken. The Shares and the Warrant Shares have been duly
and validly authorized. When the Shares and the Warrant Shares have been issued
and delivered against payment therefor as provided herein and in the Warrant, as
the case may be, the Shares, when so issued and sold, and the Warrant Shares,
when issued upon exercise of the Warrants, will be duly and validly issued,
fully paid and non-assessable and the Investors or other persons in whose names
Shares or Warrant Shares are registered will acquire good and valid title to
such Shares or Warrant Shares, in each case free and clear of all liens,
encumbrances, equities, preemptive rights and other claims. The Shares and the
Warrant Shares will conform in all material respects to the description thereof
contained in the Registration Statement, the Disclosure Package and the
Prospectus. No further approval or authority of the shareholders or
the Board of Directors of the Company will be required for the issuance and sale
of the Shares, the Warrants or the Warrant Shares as contemplated herein and in
the Subscription Agreements. The Warrants conform, or when issued
will conform, to the description thereof contained in the Disclosure Package and
the Prospectus and have been duly and validly authorized by the Company and upon
delivery to the Investors at the Closing Date will be valid and binding
obligations of the Company, enforceable in accordance with their terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights and remedies of creditors
generally or subject to general principles of equity. Except as
disclosed in each of the Disclosure Package and Prospectus, there are no
outstanding subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or rights related to or entitling any person to
purchase or otherwise to acquire any shares of, or any security convertible into
or exchangeable or exercisable for, the capital stock of, or other ownership
interest in, the Company, except for such options or rights as may have been
granted by the Company to employees, directors or consultants pursuant to the
Company’s Second Amended and Restated 2006 Stock Plan.
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(l) No Registration
Rights. Neither the filing of the Registration Statement nor
the offering or sale of the Securities as contemplated by this Agreement gives
rise to any rights, other than those which have been waived or satisfied, for or
relating to the registration of any shares of Common Stock or other securities
of the Company.
(m) Due Authorization and
Enforceability. This Agreement, each Subscription Agreement and the
Escrow Agreement have been duly authorized, executed and delivered by the
Company, and constitutes a valid, legal and binding obligation of the Company,
enforceable against the Company 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 applicable bankruptcy,
insolvency, reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.
(n) No
Violation. Neither the Company nor any of the Subsidiaries is
in breach or violation of or in default (nor has any event occurred which with
notice, lapse of time or both would result in any breach or violation of, or
constitute a default) (i) under the provisions of its Articles of Incorporation,
Bylaws or other governing documents, (ii) in the performance or observance of
any term, covenant, obligation, agreement or condition contained in any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
evidence of indebtedness, or any license, lease, contract or other agreement or
instrument to which the Company or any of the Subsidiaries is a party or by
which any of them or any of their properties may be bound or affected, except as
set forth in the Registration Statement, the Disclosure Package and the
Prospectus, or (iii) in the performance or observance of any statute, law, rule,
regulation, ordinance, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company, the Subsidiaries or any of their respective
properties; except, with respect to clauses (ii) and (iii) above, to the extent
any such contravention would not result in a Material Adverse
Effect.
(o) No
Conflict. Except as set forth in the Registration Statement,
the Disclosure Package or the Prospectus, the execution, delivery and
performance by the Company of this Agreement, each Subscription Agreement and
the Escrow Agreement and the consummation of the transactions herein
contemplated, including the issuance and sale by the Company of the Securities,
will not conflict with or result in a breach or violation of, or constitute a
default under (nor constitute any event which with notice, lapse of time or both
would result in any breach or violation of or constitute a default under) (i)
the provisions of the Articles of Incorporation, Bylaws or other governing
documents of the Company or any of the Subsidiaries, (ii) any material
indenture, mortgage, deed of trust, bank loan or credit agreement or other
evidence of indebtedness, or any material license, lease, contract or other
agreement or instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective properties may be bound
or affected, or (iii) any federal, state, local or foreign law, regulation or
rule or any decree, judgment or order applicable to the Company or any of the
Subsidiaries.
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(p) No Consents
Required. No approval, authorization, consent or order of or
filing with any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency, or of or with any self-regulatory
organization or other non-governmental regulatory authority (including, without
limitation, the NASDAQ Capital Market), or approval of the stockholders of the
Company (including as may be required pursuant to the rules and regulations of
the Nasdaq Stock Market), is required in connection with the issuance and sale
of the Shares or the consummation by the Company of the transactions
contemplated hereby other than (i) as may be required under the Securities Act,
and (ii) under the rules and regulations of the Financial Industry Regulatory
Authority (“FINRA”). The
Company has full power and authority to enter into this Agreement and each
Subscription Agreement and to authorize, issue and sell the Securities as
contemplated by this Agreement and each Subscription Agreement.
(q) Absence of Material Changes.
Subsequent to the respective dates as of which information is given in
the Disclosure Package, (a) neither the Company nor any of its Subsidiaries has
incurred any material liability or obligation, direct or contingent, or entered
into any material transaction not in the ordinary course of business, (b)
neither the Company nor any of its Subsidiaries has purchased any of the
Company’s outstanding capital stock, or declared, paid or otherwise made any
dividend or distribution of any kind on the Company’s capital stock, except for
the redemption (the “Stock Redemption”) of 28,710 shares of the Company’s Common
Stock at a price of $8.48 per share, or an aggregate of $243,460.80, from the
Company’s Chief Executive Officer which monies were then immediately used in
their entirety by the executive officer to satisfy such officer’s tax
obligations, (c) except for the Stock Redemption, 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 of Common Stock upon the exercise of
outstanding options or warrants which were disclosed in the Disclosure Package
and the Prospectus), or material change in the short-term debt or long-term debt
of the Company and its Subsidiaries or any issue of options, warrants,
convertible securities or other rights to purchase the capital stock (other than
grants of stock options under the Company’s Second Amended and Restated 2006
Stock Plan) of the Company, and (d) there has not been any material adverse
change, or any development involving a prospective material adverse change, in
the business, properties, management, financial condition or results of
operations of the Company and the Subsidiaries, taken as a whole, from that set
forth in the Disclosure Package (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
(r) Permits. The
Company and each of the Subsidiaries possess all necessary licenses,
authorizations, consents and approvals and have made all necessary filings
required under any federal, state, local or foreign law, regulation or rule
(including, without limitation, those from the United States Nuclear Regulatory
Commission (“USNRC”)
and any other foreign, federal, state or local government or regulatory
authorities performing functions similar to those performed by the USNRC) in
order to conduct its business. Neither the Company nor any of the
Subsidiaries is in violation of, or in default under, or has received notice of
any proceedings relating to revocation or modification of, any such license,
authorization, consent or approval. The Company and each of the
Subsidiaries is in compliance in all material respects with all applicable
federal, state, local and foreign laws, regulations, orders or
decrees.
-8-
(s) Legal Proceedings. There are
no legal or governmental proceedings pending or, to the Company’s knowledge,
threatened or contemplated to which the Company or any of the Subsidiaries is or
would be a party or of which any of their respective properties is or would be
subject at law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or agency, or
before or by any self-regulatory organization or other non-governmental
regulatory authority (including, without limitation, NASDAQ Capital Market),
except (i) as described in the Registration Statement, the Disclosure Package
and the Prospectus, (ii) any such proceeding, which if resolved adversely to the
Company or any Subsidiary, would not result in a judgment, decree or order
having, individually or in the aggregate, a Material Adverse Effect or (iii) any
such proceeding that would not prevent or materially and adversely affect the
ability of the Company to consummate the transactions contemplated
hereby. The Disclosure Package contains in all material respects the
same description of the foregoing matters contained in the
Prospectus.
(t) Statutes;
Contracts. There are no statutes or regulations applicable to
the Company or contracts or other documents of the Company which are required to
be described in the Registration Statement, the Disclosure Package or the
Prospectus or filed as exhibits to the Registration Statement by the Securities
Act which have not been so described or filed.
(u) Independent
Accountants. Child, ▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ PLLC, who has
audited the financial statements of the Company and the Subsidiaries, is an
independent registered public accounting firm (as defined in Section 2(a)(12) of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”)) with
respect to the Company within the meaning of the Securities Act and the
applicable rules and regulations thereunder adopted by the Commission and the
Public Company Accounting Oversight Board (United States).
(v) Financial
Statements. The financial statements of the Company, together
with the related schedules and notes thereto, set forth or incorporated by
reference in the Registration Statement, the Disclosure Package and the
Prospectus comply in all material respects with the applicable requirements of
the Securities Act and the Exchange Act, as applicable, and present fairly in
all material respects in accordance with generally accepted accounting
principles as in effect in the United States (“GAAP”) (i) the financial
condition of the Company and the Subsidiaries, taken as a whole, as of the dates
indicated and (ii) the consolidated results of operations, stockholders’ equity
and changes in cash flows of the Company and the Subsidiaries, taken as a whole,
for the periods therein specified; and such financial statements and related
schedules and notes thereto have been prepared in conformity with GAAP,
consistently applied throughout the periods involved (except as otherwise stated
therein and subject, in the case of unaudited financial statements, to the
absence of footnotes and normal year-end adjustments). There are no
other financial statements (historical or pro forma) that are required to be
included in the Registration Statement, the Disclosure Package and the
Prospectus; and the Company and the Subsidiaries do not have any material
liabilities or obligations, direct or contingent (including any off-balance
sheet obligations), not disclosed in the Registration Statement, the Disclosure
Package and the Prospectus; and all disclosures contained in the Registration
Statement, the Disclosure Package and the Prospectus regarding “non-GAAP
financial measures” (as such term is defined by the rules and regulations of the
Commission), if any, comply in all material respects with Regulation G of the
Exchange Act and Item 10(e) of Regulation S-K of the Commission, to the extent
applicable, and present fairly the information shown therein and the Company’s
basis for using such measures.
(w) Not an Investment
Company. Neither the Company nor any of the Subsidiaries is
or, after giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in the Prospectus, will be
required to register as an “investment company” as defined in the Investment
Company Act of 1940, as amended.
-9-
(x) Good Title to
Property. The Company and each of the Subsidiaries has good
and valid title to all property (whether real or personal) described in the
Registration Statement, the Disclosure Package and the Prospectus as being owned
by each of them, in each case free and clear of all liens, claims, security
interests, other encumbrances or defects except such as are described in the
Registration Statement, the Disclosure Package and the Prospectus and those that
would not, individually or in the aggregate materially and adversely affect the
value of such property and do not materially and adversely interfere with the
use made and proposed to be made of such property by the Company and the
Subsidiaries. All of the property described in the Registration
Statement, the Disclosure Package and the Prospectus as being held under lease
by the Company or a Subsidiary is held thereby under valid, subsisting and
enforceable leases, without any liens, restrictions, encumbrances or claims,
except those that, individually or in the aggregate, are not material and do not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries.
(y) Intellectual Property
Rights. Except as described in the Registration Statement, the
Disclosure Package and the Prospectus, the Company and the Subsidiaries own, or
have obtained valid and enforceable licenses for, or other rights to use, the
inventions, patent applications, patents, trademarks (both registered and
unregistered), tradenames, copyrights, trade secrets and other proprietary
information described in the Registration Statement, the Disclosure Package and
the Prospectus as being owned or licensed by them or which are necessary for the
conduct of their respective businesses (collectively, “Intellectual Property”),
except where the failure to own, license or have such rights would not,
individually or in the aggregate, result in a Material Adverse
Effect. Except as described in the Registration Statement, the
Disclosure Package and the Prospectus or as would not have a Material Adverse
Effect (i) there are no third parties who have or, to the Company’s knowledge,
will be able to establish rights to any Intellectual Property, except for the
ownership rights of the owners of the Intellectual Property which is licensed to
the Company; (ii) to the Company’s knowledge, there is no infringement by third
parties of any Intellectual Property; (iii) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or claim by others
challenging the Company’s rights in or to, or the validity, enforceability, or
scope of, any Intellectual Property owned by or licensed to the Company, and the
Company is unaware of any facts which could form a reasonable basis for any such
claim; (iv) there is no pending or, to the Company’s knowledge, threatened
action, suit, proceeding or claim by others that the Company or any of the
Subsidiaries infringes or otherwise violates any patent, trademark, copyright,
trade secret or other proprietary rights of others, and the Company is unaware
of any facts which could form a reasonable basis for any such claim; (v) to the
Company’s knowledge, there is no patent or patent application that contains
claims that interfere with the issued or pending claims of any of the
Intellectual Property; and (vi) to the Company’s knowledge, there is no prior
art that may render any patent owned by the Company invalid, nor is there any
prior art known to the Company that may render any patent application owned by
the Company unpatentable.
(z) Taxes. The Company
and each of the Subsidiaries has timely filed all material federal, state, local
and foreign income and franchise tax returns (or timely filed applicable
extensions therefore) that have been required to be filed and are not in default
in the payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto, other than any which the Company or any of the
Subsidiaries is contesting in good faith and for which adequate reserves have
been provided and reflected in the Company’s financial statements included in
the Registration Statement, the Disclosure Package and the
Prospectus. Neither the Company nor any of its Subsidiaries has any
tax deficiency that has been or, to the knowledge of the Company, might be
asserted or threatened against it that would result in a Material Adverse
Effect.
(aa) Insurance. The
Company and each of the Subsidiaries maintains insurance 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 such insurance is fully in
force on the date hereof and will be fully in force as of the Closing
Date. Neither the Company nor any of the Subsidiaries has any reason
to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
have a Material Adverse Effect.
(bb) Accounting
Controls. The Company and each of the Subsidiaries 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 generally
accepted accounting principles as in effect in the United States and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
-10-
(cc) Disclosure
Controls. The Company has established, maintains and evaluates
“disclosure controls and procedures” (as such term is defined in Rule 13a-15(e)
and 15d-15(e) under the Exchange Act), which (i) are designed to ensure that
material information relating to the Company is made known to the Company’s
principal executive officer and its principal financial officer by others within
the Company, particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared, (ii) have been evaluated for
effectiveness as of the end of the last fiscal period covered by the
Registration Statement, and (iii) such disclosure controls and procedures are
effective to perform the functions for which they were established. There are no
significant deficiencies or material weaknesses in the design or operation of
internal controls which could adversely affect the Company’s ability to record,
process, summarize, and report financial data to management and the Board of
Directors. The Company is not aware of any fraud, whether or not material, that
involves management or other employees who have a role in the Company’s internal
controls; and since the date of the most recent evaluation of such disclosure
controls and procedures, there have been no significant changes in internal
controls or in other factors that could significantly affect internal controls,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
(dd) Corrupt
Practices. Neither the Company nor, to the Company’s
knowledge, any other person associated with or acting on behalf of the Company,
including without limitation any director, officer, agent or employee of the
Company or its Subsidiaries has, directly or indirectly, while acting on behalf
of the Company or its Subsidiaries (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds, (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (iv) made any other unlawful
payment.
(ee) No Price
Stabilization. Neither the Company nor any of the Subsidiaries
nor, to the Company’s knowledge, any of their respective officers, directors,
affiliates or controlling persons has taken or will take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities.
(ff) No Undisclosed
Relationships. No relationship, direct or indirect, exists
between or among the Company on the one hand and the directors, officers,
stockholders, customers or suppliers of the Company on the other hand which is
required to be described in the Registration Statement, the Disclosure Package
and the Prospectus which has not been so described. There are no outstanding
loans, advances (except normal advances for business expenses in the ordinary
course of business) or guarantees of indebtedness by the Company to or for the
benefit of any of the officers or directors of the Company or any member of
their respective immediate families, except as disclosed in the Registration
Statement, the Disclosure Package and the Prospectus. The Company has not, in
violation of the Sarbanes Oxley Act, directly or indirectly, extended or
maintained credit, arranged for the extension of credit, or renewed an extension
of credit, in the form of a personal loan to or for any director or executive
officer of the Company.
-11-
(gg) ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act. The Company, and to its knowledge after due inquiry, all
of the Company’s directors or officers, in their capacities as such, are in
compliance in all material respects with all effective provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act currently applicable to the Company and any related rules and
regulations promulgated by the Commission.
(hh) Brokers
Fees. Neither the Company nor any of the Subsidiaries is a
party to any contract, agreement or understanding with any person (other than
this Agreement) that would give rise to a valid claim against the Company or the
Subsidiaries or the Placement Agent for a brokerage commission, finder’s fee or
other like payment in connection with the offering and sale of the
Securities.
(ii) Exchange Act Requirements.
The Company has filed in a timely manner (or received an extension and has filed
prior to the expiration of such extension) all reports required to be filed
pursuant to Sections 13(a), 13(e), 14 and 15(d) of the Exchange Act during the
preceding 12 months (except to the extent that Section 15(d) requires reports to
be filed pursuant to Sections 13(d) and 13(g) of the Exchange Act, which shall
be governed by the next clause of this sentence); and the Company has filed in a
timely manner all reports required to be filed pursuant to Sections 13(d) and
13(g) of the Exchange Act since January 1, 2004, except where the failure to
timely file could not reasonably be expected individually or in the aggregate to
have a Material Adverse Effect.
(jj) FINRA
Affiliations. To the Company’s knowledge, there are no
affiliations or associations between (i) any member of FINRA and (ii) the
Company or any of the Company’s officers, directors or 5% or greater
securityholders or any beneficial owner of the Company’s unregistered equity
securities that were acquired at any time on or after the one hundred eightieth
(180th) day
immediately preceding (A) the date the Registration Statement was initially
filed with the Commission and (B) the date the Prospectus was filed with the
Commission, except as set forth in the Registration Statement, the Disclosure
Package and the Prospectus.
(kk) Compliance with Environmental
Laws. The Company and the Subsidiaries (a) are in compliance
with any and all applicable foreign, federal, state and local laws, orders,
rules, regulations, directives, decrees and judgments relating to the protection
of human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants (“Environmental Laws”), (b)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (c) are
in compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate, result in a Material Adverse
Effect. There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties) which
would, individually or in the aggregate, result in a Material Adverse
Effect.
(ll) No Labor
Disputes. Neither the Company nor any Subsidiary is engaged in
any unfair labor practice; except for matters that would not, individually or in
the aggregate, result in a Material Adverse Effect. (i) There is (A)
no unfair labor practice complaint pending or, to the Company’s knowledge after
due inquiry, threatened against the Company or any Subsidiary before the
National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under collective bargaining agreements is pending or
threatened, (B) no strike, labor dispute, slowdown or stoppage pending or, to
the Company’s knowledge after due inquiry, threatened against the Company or any
Subsidiary and (C) to the Company’s knowledge no union representation dispute
currently existing concerning the employees of the Company or any Subsidiary,
and (ii) to the Company’s knowledge (A) no union organizing activities are
currently taking place concerning the employees of the Company or any Subsidiary
and (B) there has been no violation of any federal, state, local or foreign law
relating to discrimination in the hiring, promotion or pay of employees or any
applicable wage or hour laws concerning the employees of the Company or any
Subsidiary, except as would not have a Material Adverse Effect.
-12-
(mm) ERISA. The Company
is in compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder (“ERISA”); no “reportable
event” (as defined in ERISA) has occurred with respect to any “pension plan” (as
defined in ERISA) for which the Company would have any liability; the Company
has not incurred and does not expect to incur liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any “pension plan” or
(ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the “Code”); and each “pension
plan” for which the Company would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(nn) NASDAQ Capital Market; Exchange Act
Registration. The Common Stock is registered pursuant to
Section 12(b) of the Exchange Act and accepted for listing on the NASDAQ Capital
Market, and the Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act or delisting the Common Stock from the NASDAQ Capital Market, nor has the
Company received any notification that the Commission or the NASDAQ Capital
Market is contemplating terminating such registration or listing. The Company
has complied in all material respects with the applicable requirements of the
NASDAQ Capital Market for maintenance of listing of the Common Stock
thereon.
(oo) PFIC Status. The
Company is not, for the taxable year ended December 31, 2009, and upon
consummation of the transactions described hereby and the application of the
proceeds as described in the Registration Statement, the Disclosure Package and
the Prospectus is not expected to become, a Passive Foreign Investment Company
within the meaning of Section 1297 of the Internal Revenue Code, as
amended.
(pp) Statistical or Market-Related
Data. Any statistical, industry-related and market-related
data included or incorporated by reference in the Registration Statement, the
Disclosure Package and the Prospectus, is based on or derived from sources that
the Company reasonably and in good faith believes to be reliable and accurate in
all material respects, and such data agrees with the sources from which it is
derived in all material respects.
(qq) Descriptions of
Documents. The statements set forth in each of the
Registration Statement, the Disclosure Package and the Prospectus describing the
Securities and this Agreement, insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate, complete
and fair in all material respects.
-13-
(rr) Money Laundering
Laws. The operations of the Company are and have been
conducted at all times in compliance in all material respects with applicable
financial recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, the “Money Laundering Laws”) and
no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company with respect to the
Money Laundering Laws is pending, or to the knowledge of the Company,
threatened.
(ss) OFAC. Neither the
Company nor any of its Subsidiaries nor, to the knowledge of the Company, any
director, officer, agent, employee or affiliate of the Company or any of its
Subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and 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 person or entity that, to the Company’s knowledge, will use
such proceeds, for the purpose of financing the activities of any person
currently subject to any U.S. sanctions administered by OFAC.
(tt) Lock-Up
Agreements. The Company has obtained for the benefit of
the Placement Agent the agreement, in the form set forth as Exhibit E hereto, of
its directors and officers listed on Schedule III hereto (each a “Lock-Up Agreement” and
collectively, the “Lock-Up
Agreements”).
Any
certificate signed by any officer of the Company or a Subsidiary and delivered
to the Placement Agent or to counsel for the Placement Agent in connection with
the offering of the Securities shall be deemed a representation and warranty by
the Company (and not such officer in an individual capacity) to the Placement
Agent as to the matters covered thereby.
Section
3. Covenants.
The
Company covenants and agrees with the Placement Agent as follows:
(a) Reporting Obligations; Exchange Act
Compliance. The Company will (i) file the Preliminary
Prospectus, if any, and the Prospectus with the Commission within the time
periods specified by Rule 424(b) and Rules 430A, 430B and 430C, as applicable,
under the Securities Act, (ii) file any Issuer Free Writing Prospectus to the
extent required by Rule 433 under the Securities Act, if applicable, (iii) file
promptly all reports required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act subsequent to the
date of the Prospectus and during such period as the Prospectus would be
required by law to be delivered (whether physically or through
compliance with Rule 172 under the Securities Act or any similar rule) (the
“Prospectus Delivery
Period”), and (iv) furnish copies of each Issuer Free Writing Prospectus,
if any, (to the extent not previously delivered) to the Placement Agent prior to
11:00 a.m. Eastern time, on the second business day next succeeding the date of
this Agreement in such quantities as the Placement Agent shall reasonably
request.
(b) Abbreviated Registration
Statement. If the Company elects to rely upon Rule 462(b)
under the Securities Act, the Company shall file a registration statement under
Rule 462(b) with the Commission in compliance with Rule 462(b) by 8:00 a.m.,
Eastern time, on the business day next succeeding the date of this Agreement,
and the Company shall at the time of filing either pay to the Commission the
filing fee for such Rule 462(b) registration statement or give irrevocable
instructions for the payment of such fee pursuant to the Rules and
Regulations.
-14-
(c) Amendments or
Supplements. The Company will not, during the Prospectus Delivery Period in
connection with the Offering contemplated by this Agreement, file any amendment
or supplement to the Registration Statement or the Prospectus unless a copy
thereof shall first have been submitted to the Placement Agent within a
reasonable period of time prior to the filing thereof and the Placement Agent
shall not have reasonably objected thereto in good faith.
(d) Free Writing
Prospectuses. The Company will (i) not make any offer relating
to the Securities that would constitute an “issuer free writing prospectus” (as
defined in Rule 433) or that would otherwise constitute a “free writing
prospectus” (as defined in Rule 405 under the Securities Act) required to be
filed by the Company with the Commission under Rule 433 under the Securities Act
unless the Placement Agent approves its use in writing prior to first use (each,
a “Permitted Free Writing
Prospectus”); provided that the prior written consent of the Placement
Agent hereto shall be deemed to have been given in respect of the Issuer Free
Writing Prospectus(es) included in Schedule I hereto,
(ii) treat each Permitted Free Writing Prospectus as an Issuer Free Writing
Prospectus, (iii) comply with the requirements of Rules 164 and 433 under the
Securities Act applicable to any Issuer Free Writing Prospectus, including the
requirements relating to timely filing with the Commission, legending and record
keeping and (iv) not take any action that would result in the Placement Agent or
the Company being required to file with the Commission pursuant to Rule 433(d)
under the Securities Act a free writing prospectus prepared by or on behalf of
such Placement Agent that such Placement Agent otherwise would not have been
required to file thereunder. The Company will satisfy the conditions in Rule 433
under the Securities Act to avoid a requirement to file with the Commission any
electronic road show.
(e) Notice to Placement
Agent. The Company will notify the Placement Agent promptly,
and will, if requested, confirm such notification in writing: (i) of the receipt
of any comments of, or requests for additional information from, the Commission;
(ii) of the time and date of any filing of any post-effective amendment to the
Registration Statement or any amendment or supplement to the Disclosure Package
or the Prospectus; (iii) of the time and date when any post-effective amendment
to the Registration Statement becomes effective; (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement, or any post-effective amendment thereto or any order preventing or
suspending the use of any prospectus included in the Disclosure Package, the
Prospectus or any Issuer Free Writing Prospectus, or the initiation of any
proceedings for that purpose or the threat thereof; (v) of receipt by the
Company of any notification with respect to any suspension or the approval of
the Shares and Warrant Shares from any securities exchange upon which they are
listed for trading or included or designated for quotation, or the initiation or
threatening of any proceeding for such purpose. The Company will use
its best efforts to prevent the issuance or invocation of any such stop order or
suspension by the Commission and, if any such stop order or suspension is so
issued or invoked, to obtain as soon as possible the withdrawal or removal
thereof.
(f) Filing of Amendments or
Supplements. If, during the Prospectus Delivery Period, any event shall
occur or condition exist as a result of which it is necessary to amend or
supplement the Prospectus (or, if the Prospectus is not yet available to
prospective purchasers, the Disclosure Package) in order to make the statements
therein, in the light of the circumstances when the Prospectus (or, if the
Prospectus is not yet available to prospective purchasers, the Disclosure
Package) is delivered to an Investor, not misleading, or if, in the opinion of
counsel for the Placement Agent, it is necessary to amend or supplement the
Prospectus (or, if the Prospectus is not yet available to prospective
purchasers, the Disclosure Package) to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Placement Agent, either amendments or supplements to the Prospectus (or, if the
Prospectus is not yet available to prospective purchasers, the Disclosure
Package) so that the statements in the Prospectus (or, if the Prospectus is not
yet available to prospective purchasers, the Disclosure Package) as so amended
or supplemented will not, in the light of the circumstances when the Prospectus
(or, if the Prospectus is not yet available to prospective purchasers, the
Disclosure Package) is delivered to an Investor, be misleading or so that the
Prospectus (or, if the Prospectus is not yet available to prospective
purchasers, the Disclosure Package), as amended or supplemented, will comply
with law. If at any time following issuance of an Issuer Free Writing Prospectus
there occurred or occurs an event or development as a result of which such
Issuer Free Writing Prospectus conflicted or would conflict with the information
contained in the Registration Statement 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 promptly will notify the Placement Agent and will
promptly amend or supplement, at its own expense, such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or
omission.
-15-
(g) Delivery of
Copies. The Company will deliver promptly to the Placement
Agent and their counsel such number of the following documents as the Placement
Agent shall reasonably request: (i) conformed copies of the
Registration Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits), (ii) copies of any
Preliminary Prospectus or Issuer Free Writing Prospectus, (iii) during the
Prospectus Delivery Period, copies of the Prospectus (or any amendments or
supplements thereto); (iii) any document incorporated by reference in the
Prospectus (other than any such document that is filed with the Commission
electronically via ▇▇▇▇▇ or any successor system) and (iv) all correspondence to
and from, and all documents issued to and by, the Commission in connection with
the registration of the Securities under the Securities Act.
(h) Earnings
Statement. As soon as practicable, but in any event not
later than 15 months after the end of the Company’s current fiscal quarter, the
Company will make generally available to holders of its securities and deliver
to the Placement Agent, an earnings statement of the Company (which need not be
audited) that will satisfy the provisions of Section 11(a) and Rule 158 of the
Securities Act.
(i) Use of
Proceeds. The Company will apply the net proceeds from the
sale of the Securities in the manner set forth in the Registration Statement,
Disclosure Package and the Prospectus under the heading “Use of
Proceeds”.
(j) Public
Communications. Prior to the Closing Date, the Company will
not issue any press release or other communication directly or indirectly or
hold any press conference with respect to the Company, its condition, financial
or otherwise, or the earnings, business, operations or prospects of any of them,
or the offering of the Securities, without the prior consent of the
Placement Agent, unless in the reasonable judgment of the Company and its
counsel, and after notification to the Placement Agent, such press release or
communication is required by law, in which case the Company shall use its
reasonable best efforts to allow the Placement Agent reasonable time to comment
on such release or other communication in advance of such issuance.
(k) Lock-Up
Period. For a period of 60 days after the date hereof (the
“Lock-Up Period”), the
Company will not directly or indirectly, (1) offer to sell, hypothecate, pledge,
announce the intention to sell, sell, contract to sell, sell any option or
contract to purchase (to the extent such option or contract to purchase is
exercisable within one year from the Closing Date), purchase any option or
contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent position within
the meaning of Section 16 of the Exchange Act, with respect to, any shares of
Common Stock, or any securities convertible into or exercisable or exchangeable
for shares of Common Stock; (2) file or cause to become effective a registration
statement under the Securities Act relating to the offer and sale of any shares
of Common Stock or securities convertible into or exercisable or exchangeable
for shares of Common Stock or (3) 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 clauses (1), (2) or
(3) above is to be settled by delivery of shares of Common Stock or such other
securities, in cash or otherwise, without the prior written consent of the
Placement Agent (which consent may be withheld in its sole discretion), other
than (i) the Securities to be sold hereunder, (ii) the issuance of stock options
or shares of restricted stock to employees, directors and consultants pursuant
to the Company’s Second Amended and Restated 2006 Stock Plan, (iii) issuances of
shares of Common Stock upon the exercise of options or warrants disclosed as
outstanding in the Disclosure Package and the Prospectus or upon the conversion
or exchange of convertible or exchangeable securities disclosed as outstanding
in the Disclosure Package and the Prospectus, (iv) the issuance by the Company
of any shares of Common Stock as consideration for mergers, acquisitions, other
business combinations, or strategic alliances, occurring after the date of this
Agreement; provided
that each recipient of shares pursuant to this clause (iv) agrees that all such
shares remain subject to restrictions substantially similar to those contained
in this subsection
3(k), or (v) the purchase or sale of the Company’s securities pursuant to
a plan, contract or instruction that satisfies all of the requirements of Rule
10b5-1(c)(1)(i)(B) that was in effect prior to the date
hereof. Notwithstanding the foregoing, for the purpose of allowing
the Placement Agent to comply with FINRA Rule 2711(f)(4), if (1) during the last
17 days of the Lock-Up Period, the Company releases earnings results or publicly
announces other material news or a material event relating to the Company occurs
or (2) prior to the expiration of the Lock-Up Period, the Company announces that
it will release earnings results during the 16 day period beginning on the last
day of the Lock-Up Period, then in each case the Lock-Up Period will be extended
until the expiration of the 18 day period beginning on the date of release of
the earnings results or the public announcement regarding the material news or
the occurrence of the material event, as applicable, unless the Placement Agent
waives, in writing, such extension. The Placement Agent agrees to
waive such extension if the provisions of FINRA Rule 2711(f)(4) are not
applicable to the Offering. The Company agrees not to accelerate the vesting of
any option or warrant or the lapse of any repurchase right prior to the
expiration of the Lock-Up Period.
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(l) Stabilization. The
Company will not take directly or indirectly any action designed, or that might
reasonably be expected to cause or result in, or that will constitute,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities.
(m) Transfer
Agent. The Company shall maintain, at its expense, a transfer
agent and, if necessary under the jurisdiction of incorporation of the Company,
a registrar for the Shares and Warrant Shares.
(n) Investment Company
Act. The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Securities in such a
manner as would require the Company to register as an investment company under
the Investment Company Act.
(o) ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act. The Company will comply with all effective provisions of
the Sarbanes Oxley Act applicable to the Company.
(p) Periodic
Reports. The Company will file with the Commission such
periodic and special reports as required by the Exchange Act.
(q) NASDAQ Capital
Market. The Company will use its reasonable best efforts to
obtain approval for, and maintain the listing of the Shares and the Warrant
Shares on the NASDAQ Capital Market for so long as the Common Stock is listed
thereon.
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Section 4. Costs and
Expenses.
The
Company, whether or not the transactions contemplated hereunder are consummated
or this Agreement is terminated, will pay or reimburse if paid by the Placement
Agent all costs and expenses incident to the performance of its obligations
under this Agreement and in connection with the transactions contemplated
hereby, including but not limited to costs and expenses of or relating to (i)
the preparation, printing, filing, delivery and shipping of the Registration
Statement, any Issuer Free Writing Prospectus, each Preliminary Prospectus, the
Disclosure Package and the Prospectus, and any amendment or supplement to any of
the foregoing and the printing and furnishing of copies of each thereof to the
Placement Agent and dealers (including costs of mailing and shipment), (ii) the
registration, issue, sale and delivery of the Securities including any stock or
transfer taxes and stamp or similar duties payable upon the sale, issuance or
delivery of the Securities and the printing, delivery, shipping of the
certificates representing the Securities, (iii) the fees and expenses of any
transfer agent or registrar for the Securities, (iv) the filing fees required to
be paid by the Placement Agent or Company with FINRA (including all COBRADesk
fees), (v) fees, disbursements and other charges of counsel to the Company (vi)
listing fees, if any, for the listing or quotation of the Shares and Warrant
Shares and on the NASDAQ Capital Market, (vii) fees and disbursements of the
Company’s auditor incurred in delivering the letters described in Sections 5(i) hereof,
and (viii) the costs and expenses of the Company in connection with the
marketing of the Offering and the sale of the Securities to prospective
investors including, but not limited to, those related to any presentations or
meetings undertaken in connection therewith including, without limitation,
expenses associated with the production of road show slides and graphics, fees
and expenses of any consultants (other than the Placement Agent) engaged by the
Company in connection with the road show presentations, travel, lodging and
other expenses incurred by the officers of the Company and any such consultants,
and the cost of any aircraft or other transportation chartered by the Company in
connection with the road show.
If the
Offering is consummated, the Company shall reimburse the Placement Agent for all
reasonable out-of-pocket expenses incurred by the Placement Agent in connection
with the Offering, including, but not limited to (i) the fees and disbursements
of counsel to the Placement Agent and (ii) travel, lodging, and other road show
expenses, mailing, printing and reproduction expenses, and any expenses incurred
by the Placement Agent in conducting due diligence of the
Company. Notwithstanding the foregoing, the expenses of the Placement
Agent which the Company shall be obligated to reimburse hereunder shall not
exceed the lesser of (i) an amount equal to $150,000 in the aggregate or (ii) 8%
of the gross proceeds received by the Company from the sale of the Securities,
less the Placement Fee. It is understood that except as provided in
this Section 4,
Section 6 and
Section 8(b),
the Placement Agent shall pay all of their own expenses.
Section
5. Conditions of Placement Agent’s
Obligations.
The
obligations of the Placement Agent hereunder are subject to the following
conditions:
(a) Filings with the
Commission. The Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Securities Act at or before 5:30
p.m., Eastern time, on the second full business day after the date of this
Agreement (or such earlier time as may be required under the Securities
Act).
(b) Abbreviated Registration
Statement. If the Company has elected to rely upon Rule
462(b), the registration statement filed under Rule 462(b) shall have become
effective under the Securities Act by 8:00 a.m., Eastern time, on the business
day next succeeding the date of this Agreement.
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(c) No Stop
Orders. Prior to the Closing: (i) no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
Securities Act and no proceedings initiated under Section 8(d) or 8(e) of the
Securities Act for that purpose shall be pending or threatened by the
Commission, and (ii) any request for additional information on the part of the
Commission (to be included in the Registration Statement, the Disclosure
Package, the Prospectus or any Issuer Free Writing Prospectus or otherwise)
shall have been complied with to the reasonable satisfaction of the Placement
Agent.
(d) Action Preventing
Issuance. No action shall have been taken and no statute,
rule, regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date, prevent the
issuance or sale of the Securities; and no injunction, restraining order or
order of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would prevent
the issuance or sale of the Securities.
(e) Objection of Placement
Agent. No prospectus or amendment or supplement to the
Registration Statement shall have been filed to which the Placement Agent shall
have objected in writing, which objection shall not be
unreasonable. The Placement Agent shall not have advised the Company
that the Registration Statement, the Disclosure Package or the Prospectus, or
any amendment thereof or supplement thereto, or any Issuer Free Writing
Prospectus contains an untrue statement of fact which, in their opinion, is
material, or omits to state a fact which, in their 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 were made, not
misleading.
(f) No Material Adverse
Change. (i) Prior to the Closing, there shall not
have occurred any change, or any development involving a prospective change, in
the condition, financial or otherwise, or in the earnings, business or
operations of the Company from that set forth in the Disclosure Package and the
Prospectus that, in the Placement Agent’s judgment, is material and adverse and
that makes it, in the Placement Agent’s judgment, impracticable to market the
Securities on the terms and in the manner contemplated in the Disclosure
Package.
(ii) There
shall not have occurred any of the following: (i) a suspension
or material limitation in trading in securities generally on the New York Stock
Exchange, the NASDAQ Stock Market, the NASDAQ Global Select Market, the NASDAQ
Global Market, the NASDAQ Capital Market, the NYSE Amex or the over the counter
market or the establishing on such exchanges or markets by the SEC or by such
exchanges or markets of minimum or maximum prices that are not in force and
effect on the date hereof; (ii) a suspension or material limitation in
trading in the Company’s securities on the NASDAQ Capital Market or any other
exchange or market or the establishing on any such market or exchange by the SEC
or by such market of minimum or maximum prices that are not in force and effect
on the date hereof; (iii) a general moratorium on commercial banking
activities declared by either federal or any state authorities; (iv) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, which in the
Placement Agent’s judgment makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Securities in the manner contemplated
in the Prospectus; or (v) any calamity or crisis, change in national,
international or world affairs, act of God, change in the international or
domestic markets, or change in the existing financial, political or economic
conditions in the United States or elsewhere, that in the Placement Agent’s
judgment makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities in the manner contemplated in each of
the Disclosure Package and the Prospectus.
(g) Representations and
Warranties. Each of the representations and warranties of the
Company contained herein shall be true and correct when made and on and as of
the Closing Date, as if made on such date (except that those representations and
warranties that address matters only as of a particular date shall remain true
and correct as of such date), and all covenants and agreements herein contained
to be performed on the part of the Company and all conditions herein contained
to be fulfilled or complied with by the Company at or prior to the Closing Date
shall have been duly performed, fulfilled or complied with.
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(h) Opinion of Counsel to the
Company. The Placement Agent shall have received from
Pillsbury ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ LLP and ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., counsel to the
Company, such counsel’s written opinions, addressed to the Placement Agent and
dated the Closing Date, in form and substance as set forth in Exhibit F and Exhibit G attached
hereto.
(i) The
Placement Agent shall have received from Child, ▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ PLLC
letters dated, respectively, the date of the Prospectus and the Closing Date,
and addressed to the Placement Agent in customary forms reasonably satisfactory
to the Placement Agent, which letters shall cover, without limitation, the
various financial disclosures contained in the Registration Statement, the
Prospectus and the Permitted Free Writing Prospectuses relating to the Company,
if any.
(j) Officer’s
Certificate. The Placement Agent shall have received on the
Closing Date a certificate, addressed to the Placement Agent and dated the
Closing Date, of the chief executive or chief operating officer and the chief
financial officer or chief accounting officer of the Company to the effect
that:
(i) each
of the representations, warranties and agreements of the Company in this
Agreement were true and correct when originally made and are true and correct as
of the Time of Sale and the Closing Date (except that those representations and
warranties that address matters only as of a particular date shall remain true
and correct as of such date); and the Company has complied with all agreements
and satisfied all the conditions on its part required under this Agreement to be
performed or satisfied at or prior to the Closing Date;
(ii) subsequent
to the respective dates as of which information is given in the Disclosure
Package, there has not been (A) a material adverse change or any development
involving a prospective material adverse change in the general affairs,
business, properties, management, financial condition or results of operations
of the Company and the Subsidiaries taken as a whole, (B) any transaction that
is material to the Company and the Subsidiaries taken as a whole, except
transactions entered into in the ordinary course of business, (C) any
obligation, direct or contingent, that is material to the Company and the
Subsidiaries taken as a whole, incurred by the Company or the Subsidiaries,
except obligations incurred in the ordinary course of business, (D) except as
disclosed in the Disclosure Package and in the Prospectus, 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 any material change in the short term or long term indebtedness of
the Company or any of the Subsidiaries taken as a whole, (E) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company or any of the Subsidiaries or (F) any loss or damage (whether or not
insured) to the property of the Company or any of its Subsidiaries which has
been sustained or will have been sustained which has had or is reasonably likely
to result in a Material Adverse Effect;
(iii) no
stop 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 Disclosure
Package, the Prospectus or any Issuer Free Writing Prospectus shall have been
issued, and no proceedings for that purpose shall be pending or to their
knowledge, threatened by the Commission or any state or regulatory body;
and
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(iv) the
signers of said certificate have reviewed the Registration Statement, the
Disclosure Package and the Prospectus, and any amendments thereof or supplements
thereto (and any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Disclosure Package and the Prospectus), and
(A) (i) each part of the Registration Statement and any amendment thereof do not
and did not contain when the Registration Statement (or such amendment) became
effective, any untrue statement of a material fact or omit to state, and did not
omit to state when the Registration Statement (or such amendment) became
effective, any material fact required to be stated therein or necessary to make
the statements therein not misleading and (ii) as of the Time of Sale, neither
the Disclosure Package nor any individual Issuer Limited Use Free Writing
Prospectus, when considered together with the Disclosure Package, contained any
untrue statement of material fact or omits to state any material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading and (iii) the Prospectus, as amended or supplemented,
does not and did not contain, as of its issue date and as of the Closing Date,
any untrue statement of material fact or omit to state and did not omit to state
as of such date, a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and (B)
since the Time of Sale, there has occurred no event required to be set forth in
an amendment or supplement to the Registration Statement, the Disclosure Package
or the Prospectus which has not been so set forth and there has been no document
required to be filed under the Exchange Act that upon such filing would be
deemed to be incorporated by reference in to the Disclosure Package and into the
Prospectus that has not been so filed.
(k) Secretary’s
Certificate. On the Closing Date, the Company shall have
furnished to the Placement Agent a Secretary’s Certificate of the
Company.
(l) Company Corporate
Documents. On the Closing Date, the Company shall have
delivered to the Placement Agent a certificate evidencing the incorporation and
good standing of the Company in the state of Nevada issued by the Secretary of
State of the state of Nevada, dated as of a date within three (3) calendar days
of the Closing Date, as well as written bring-down confirmation from a reputable
corporate service agency, dated as of the Closing Date, as to the good standing
of the Company on the Closing Date.
(m) Subsidiary Corporate
Documents. On the Closing Date, the Company shall have
delivered to the Placement Agent a certificate evidencing the incorporation or
formation, as the case may be, and good standing of each of the Subsidiaries in
their respective state (or country) of incorporation or formation, as the case
may be, issued by the Secretary of State of such state of incorporation or
formation (or comparable authority), as the case may be, dated as of a date
within three (3) calendar days of the Closing Date.
(n) Foreign
Qualifications. On the Closing Date, the Company shall have
delivered to the Placement Agent certificates evidencing (i) the Company’s
qualification as a foreign corporation in good standing issued by the Secretary
of State (or comparable office) of each jurisdiction in which the Company
conducts business and is required to so qualify, dated as of a date within three
(3) calendar days of the Closing Date, and (ii) each Subsidiary’s qualification
as a foreign corporation or other entity, as the case may be, in good standing
issued by the Secretary of State (or comparable office) of each jurisdiction in
which the Subsidiary conducts business and is required to so qualify, dated as
of a date within three (3) calendar days of the Closing Date.
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(o) Certified
Charter. On the Closing Date, the Company shall have delivered
to the Placement Agent a certified copy of the Articles of Incorporation of the
Company as certified by the Secretary of State of the state of Nevada as of a
date within three (3) calendar days of the Closing Date.
(p) Other Filings with the
Commission. The Company shall have prepared and filed with the
Commission a Current Report on Form 8-K with respect to the transactions
contemplated hereby, including as an exhibit thereto this Agreement and any
other documents relating thereto.
(q) No FINRA
Objection. FINRA shall not have raised any objection with
respect to the fairness and reasonableness of the placement agency terms and
arrangements relating to the issuance and sale of the Securities; provided that
if any such objection is raised, the Company and the Placement Agent shall
negotiate promptly and in good faith appropriate modifications to such placement
agency terms and arrangements in order to satisfy such objections.
(r) NASDAQ Capital
Market. The Securities shall have been approved for listing on
the NASDAQ Capital Market, subject to official notice of issuance.
(s) Additional
Documents. Prior to the Closing Date, the Company shall have
furnished to the Placement Agent such further information, certificates or
documents as the Placement Agent shall have reasonably requested for the purpose
of enabling them to pass upon the issuance and sale of the Securities as
contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or
agreements, herein contained.
All
opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Placement Agent.
If any
condition specified in this Section 5 is not
satisfied when and as required to be satisfied, this Agreement may be terminated
by the Placement Agent by notice to the Company at any time prior to the Closing
Date, which termination shall be without liability on the part of any party to
any other party, except that Section 4, Section 6 and Section 8 shall at
all times be effective and shall survive such termination.
Section
6. Indemnification and Contribution.
(a) Indemnification of the Placement
Agent. The Company agrees to indemnify, defend and hold
harmless each of the Placement Agent, its respective directors and officers, and
each person, if any, who controls such Placement Agent within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act, and
the successors and assigns of all of the foregoing persons, from and against any
loss, damage, claim or liability, which, jointly or severally, such Placement
Agent or any such person may become subject under the Securities Act, the
Exchange Act, or other federal or state statutory law or regulation, the common
law or otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of the Company), insofar as such loss,
damage, claim or liability (or actions in respect thereof as contemplated below)
arises out of or is based upon: (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, or any
amendment thereto or the omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; (ii) any untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, any Issuer Free Writing Prospectus
or the Prospectus (or any amendment or supplement thereto), or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading; and, in the case of (i) and (ii)
above, to reimburse such Placement Agent and each such controlling person for
any and all reasonable expenses (including reasonable fees and disbursements of
counsel) as such expenses are incurred by such Placement Agent or such
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided,
however, that the foregoing indemnity shall not apply to any loss, claim,
damage, liability or expense to the extent, but only to the extent, it arises
out of or is based upon any untrue statement or alleged untrue statement of a
material fact contained in or omitted from, and in conformity with information
concerning such Placement Agent furnished in writing by or on behalf of such
Placement Agent to the Company expressly for use therein, which information the
parties hereto agree is limited to the Placement Agent Information (as defined
in Section 7),
(iii) any untrue statement or alleged untrue statement made by the Company in
Section 3
hereof or the failure by the Company to perform when and as required any
agreement or covenant contained herein or (iv) any untrue statement or alleged
untrue statement of any material fact contained in any audio or visual materials
provided to Investors by or with the approval of the Company or based upon
written information furnished by or on behalf of the Company with its approval
including, without limitation, slides, videos, films or tape recordings used in
any road show or investor presentations made to investors by the Company
(whether in person or electronically) or in connection with the marketing of the
Securities.
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(b) Indemnification of the
Company. The Placement Agent will indemnify, defend and hold
harmless the Company, its directors and officers, and any person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, and the successors and assigns of all of
the foregoing persons, from and against any loss, claim, damage, liability or
expense, as incurred to which, jointly or severally, the Company or any such
person may become subject under the Securities Act, the Exchange Act, or other
federal or state statutory law or regulation, the common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Placement Agent), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based upon: (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, or
any amendment thereto, or the omission or alleged omission therefrom to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; (ii) any untrue statement or alleged untrue statement of
a material fact contained in any Preliminary Prospectus, any Issuer Free Writing
Prospectus or the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, in the case of each of
(i) and (ii) above, to the extent but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, any Preliminary Prospectus, Issuer Free Writing
Prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with information concerning the Placement Agent
furnished in writing by or on behalf of the Placement Agent to the Company
expressly for use therein and to reimburse the Company, or any such director,
officer or controlling person for any legal and other expense reasonably
incurred by the Company, or any such director, officer or controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, that the parties
hereto hereby agree that such written information provided by the Placement
Agent consists solely of the Placement Agent
Information. Notwithstanding the provisions of this Section 6(b), in no
event shall any indemnity by the Placement Agent under this Section 6(b) exceed
its pro rata share of the Placement Fee.
(c) Notice and
Procedures. If any action, suit or proceeding (each, a “Proceeding”) is brought
against a person (an “indemnified party”) in
respect of which indemnity may be sought against the Company or any Placement
Agent (as applicable, the “indemnifying party”) pursuant
to subsection
(a) or (b), respectively, of
this Section 6,
such indemnified party shall promptly notify such indemnifying party in writing
of the institution of such Proceeding and such indemnifying party shall assume
the defense of such Proceeding, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses;
provided, however, that
the omission to so notify such indemnifying party shall not relieve such
indemnifying party from any liability which such indemnifying party may have to
any indemnified party or otherwise, except to the extent the indemnifying party
does not otherwise learn of the Proceeding and such failure results in the
forfeiture by the indemnifying party of substantial rights or defenses. The
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying party in
connection with the defense of such Proceeding, (ii) the indemnifying party
shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to defend such Proceeding or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from, additional to or in
conflict with those available to such indemnifying party, in any of which events
such reasonable fees and expenses shall be borne by such indemnifying party and
paid as incurred (it being understood, however, that such indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to any local counsel) in any one Proceeding or series of related
Proceedings in the same jurisdiction representing the indemnified parties who
are parties to such Proceeding). An indemnifying party shall not be liable for
any settlement of any Proceeding (including by consent to the entry of any
judgment) effected without its written consent but, if settled with its written
consent or if there be a final judgment for the plaintiff, such indemnifying
party agrees to indemnify and hold harmless the indemnified party or parties
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel (which fees and expenses shall be reasonably
documented) as contemplated by the second sentence of this Section 6(c), then
the indemnifying party agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such settlement is
entered into more than 90 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall not have fully reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days’ prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement, compromise or consent to the entry of judgment in any pending or
threatened Proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such Proceeding and does not include an admission of fault or culpability or a
failure to act by or on behalf of such indemnified party.
-23-
(d) Contribution. If
the indemnification provided for in this Section 6 is
unavailable to an indemnified party under subsections (a) or
(b) of this
Section 6 or
insufficient to hold an indemnified party harmless in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then each
applicable indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages, liabilities or expenses referred to in
subsection (a)
or (b) above,
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Placement Agent 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 indemnifying party or parties on the
one hand and the indemnified party or parties on the other hand in connection
with the statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Placement Agent on the other hand shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Securities (before deducting expenses) received by the Company and the Placement
Fee received by the Placement Agent, in each case as set forth on the cover of
the Prospectus, bear to the aggregate public offering price of the
Securities. The relative fault of the Company on the one hand and the
Placement Agent on the other hand 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, on the one hand, or by the Placement Agent,
on the other hand, and the parties’ relevant intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Placement Agent agree that it would not
be just and equitable if contribution pursuant to this subsection (d) were
to be determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
first sentence of this Section
6(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this Section 6(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 Section
6(d). Notwithstanding the provisions of this Section 6(d), the
Placement Agent shall not be required to contribute any amount in excess of the
Placement Fee less the amount of any damages which such Placement Agent has
otherwise paid or become liable to pay by reason of such untrue statement or
alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
-24-
(e) Representations and Agreements to
Survive Delivery. The obligations of the Company under this
Section 6 shall
be in addition to any liability which the Company may otherwise
have. The indemnity and contribution agreements of the parties
contained in this Section 6 and the
covenants, warranties and representations of the Company contained in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of the Placement Agent, any person who controls the Placement Agent within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act or any affiliate of the Placement Agent, or by or on behalf of the Company,
its directors or officers or any person who controls the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, and (iii) the issuance and delivery of the Securities. The Company and the
Placement Agent agree promptly to notify each other of the commencement of any
Proceeding against it and, in the case of the Company, against any of the
Company’s officers or directors in connection with the issuance and sale of the
Securities, or in connection with the Registration Statement, the Disclosure
Package or the Prospectus.
Section
7. Information Furnished by Placement
Agent.
The
Company acknowledges that the statements set forth in the twelfth (12th)
paragraph of the Plan of Distribution in the Prospectus (the “Placement Agent Information”)
constitute the only information relating to the Placement Agent furnished in
writing to the Company by the Placement Agent as such information is referred to
in Sections 2
and 6
hereof.
Section
8. Termination.
(a) The
Placement Agent shall have the right to terminate this Agreement by giving
notice as hereinafter specified at any time at or prior to the Closing Date,
without liability on the part of the Placement Agent to the Company, if (i)
prior to delivery and payment for the Securities (A) trading in securities
generally shall have been suspended or materially limited on or by the New York
Stock Exchange, the NASDAQ Stock Market, the NASDAQ Global Select Market, the
NASDAQ Global Market, the NASDAQ Capital Market or the NYSE Amex (each, a “Trading Market”), (B) trading
in the shares of Common Stock of the Company shall have been suspended or
materially limited on any exchange or in the over-the-counter market, (C) a
general moratorium on commercial banking activities shall have been declared by
federal or New York state authorities, (D) there shall have occurred any
outbreak or material escalation of hostilities or acts of terrorism involving
the United States or there shall have been a declaration by the United States of
a national emergency or war, (E) there shall have occurred any other calamity or
crisis or any material change in general economic, political or financial
conditions in the United States or elsewhere, if the effect of any such event
specified in clause (D) or (E), in the judgment of the Placement Agent, makes it
impractical or inadvisable to proceed with the completion of the sale of and
payment for the Securities on the Closing Date on the terms and in the manner
contemplated by this Agreement, the Disclosure Package and the Prospectus, or
(ii) since the time of execution of this Agreement or the earlier respective
dates as of which information is given in the Disclosure Package, there has been
(A) any Material Adverse Effect or (B) the Company shall have sustained a loss
by strike, fire, flood, earthquake, accident or other calamity of such character
that in the judgment of the Placement Agent would, individually or in the
aggregate, result in a Material Adverse Effect and which would, in the judgment
of the Placement Agent, make it impracticable or inadvisable to proceed with the
offering or the delivery of the Securities on the terms and in the manner
contemplated in the Disclosure Package and the Prospectus. Any such
termination shall be without liability of any party to any other party except
that the provisions of Section 4, Section 6, Section 8(b) and
Section 11
hereof shall at all times be effective notwithstanding such
termination.
-25-
(b) If
(1) this Agreement shall be terminated by the Placement Agent pursuant to Section 5, Section 8(a)(i)(B) or
Section
8(a)(ii)(A) or (2) the sale of the Securities to Investors is not
consummated because of any failure, refusal or inability on the part of the
Company to comply with the terms or perform any agreement or obligation of this
Agreement or any Subscription Agreement, other than by reason of a default by
the Placement Agent, the Company will, in addition to paying the amounts
described in Section
4 hereof, reimburse the Placement Agent for all of their reasonable and
actual out-of-pocket disbursements (including, but not limited to, the
reasonable fees and disbursements of its counsel).
Section
9. Notices.
All
statements, requests, notices and agreements hereunder shall be in writing or by
facsimile, and:
(a) if
to the Placement Agent, shall be delivered or sent by mail, telex or facsimile
transmission to:
▇▇▇▇▇▇▇
▇▇▇▇▇ & Company, L.L.C.
▇▇▇ ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Managing Director
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
-26-
with a
copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ PC
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if
to the Company shall be delivered or sent by mail, telex or facsimile
transmission to:
Lightbridge
Corporation
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief
Executive Officer
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a
copy (which shall not constitute notice) to:
Pillsbury
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇
▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile
No.: (▇▇▇)
▇▇▇-▇▇▇▇
Any such
notice shall be effective only upon receipt. 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.
Section 10. Persons
Entitled to Benefit of Agreement.
This
Agreement shall inure to the benefit of and shall be binding upon the Placement
Agent, the Company 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, other than the persons, firms
or corporations mentioned in the preceding sentence, any legal or equitable
remedy or claim under or in respect of this Agreement, or any provision herein
contained, except pursuant to the terms of the Subscription
Agreements. The term “successors and assigns” as herein used shall
not include any purchaser of the Securities by reason merely of such
purchase.
Section
11. Governing Law.
This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without giving effect to the conflicts of laws provisions
thereof.
Section 12. No
Fiduciary Relationship.
The
Company hereby acknowledges that the Placement Agent is acting solely as
placement agent in connection with the offering of the Company’s securities. The
Company further acknowledges that the Placement Agent are acting pursuant to a
contractual relationship created solely by this Agreement entered into on an
arm’s length basis and in no event do the parties intend that the Placement
Agent act or be responsible as a fiduciary to the Company, its management,
stockholders, creditors or any other person in connection with any activity that
the Placement Agent may undertake or have undertaken in furtherance of the
offering of the Company’s securities, either before or after the date hereof.
The Placement Agent hereby expressly disclaims any fiduciary or similar
obligations to the Company, either in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions,
and the Company hereby confirms its understanding and agreement to that effect.
The Company and the Placement Agent agree that they are each responsible for
making their own independent judgments with respect to any such transactions,
and that any opinions or views expressed by the Placement Agent to the Company
regarding such transactions, including but not limited to any opinions or views
with respect to the price or market for the Company’s securities, do not
constitute advice or recommendations to the Company. The Company hereby waives
and releases, to the fullest extent permitted by law, any claims that the
Company may have against the Placement Agent with respect to any breach or
alleged breach of any fiduciary or similar duty to the Company in connection
with the transactions contemplated by this Agreement or any matters leading up
to such transactions.
-27-
Section
13. Headings.
The
Section headings in this Agreement have been inserted as a matter of convenience
of reference and are not a part of this Agreement.
Section
14. Amendments and Waivers.
No
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. The failure of a party to
exercise any right or remedy shall not be deemed or constitute a waiver of such
right or remedy in the future. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.
Section
15. Submission to Jurisdiction.
Except as
set forth below, no Proceeding may be commenced, prosecuted or continued in any
court other than the courts of the State of New York located in the City and
County of New York or in the United States District Court for the Southern
District of New York, which courts shall have jurisdiction over the adjudication
of such matters, and the Company hereby consents to the jurisdiction of such
courts and personal service with respect thereto. The Company hereby consents to
personal jurisdiction, service and venue in any court in which any Proceeding
arising out of or in any way relating to this Agreement is brought by any third
party against the Placement Agent. The Company and the Placement Agent hereby
waive all right to trial by jury in any Proceeding (whether based upon contract,
tort or otherwise) in any way arising out of or relating to this Agreement. The
Company and the Placement Agent agree that a final judgment in any such
Proceeding brought in any such court shall be conclusive and binding upon such
party and may be enforced in any other courts in the jurisdiction of which such
party is or may be subject, by suit upon such judgment.
Section
16. 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. Delivery of an executed counterpart by facsimile shall be
effective as delivery of a manually executed counterpart thereof.
-28-
If the
foregoing is in accordance with your understanding of the agreement between the
Company and the Placement Agent, kindly indicate your acceptance in the space
provided for that purpose below.
|
Very
truly yours,
|
|||
|
LIGHTBRIDGE
CORPORATION
|
|||
|
By:
|
/s/ Seth Grae
|
||
|
Name:
Seth Grae
|
|||
|
Title:
Chief Executive Officer
|
|||
|
Accepted
as of
|
||
|
the
date first above written:
|
||
|
▇▇▇▇▇▇▇
▇▇▇▇▇ & COMPANY, L.L.C.
|
||
|
By:
|
|
|
|
Name:
|
||
|
Title:
|
||
[Signature
Page to Placement Agency Agreement]
Schedules and
Exhibits
|
Schedule
I:
|
Issuer
General Free Writing Prospectuses
|
|
|
Schedule
II:
|
Significant
Subsidiaries
|
|
|
Schedule
III:
|
Directors
and Officers Executing Lock-Up Agreements
|
|
|
Exhibit
A:
|
Form
of Subscription Agreement
|
|
|
Exhibit
B:
|
Pricing
Information
|
|
|
Exhibit
C:
|
Form
of Escrow Agreement
|
|
|
Exhibit
D:
|
Disclosure
Materials
|
|
|
Exhibit
E:
|
Form
of Lock-up Agreement
|
|
|
Exhibit
F:
|
Form
of Legal Opinion of Pillsbury ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ LLP
|
|
|
Exhibit
G:
|
Form
of Legal Opinion of ▇▇▇▇ ▇. ▇▇▇▇▇▇,
Esq.
|
Schedule
I
Issuer
General Free Writing Prospectuses
Schedule
II
Significant
Subsidiaries
None.
Schedule
III
Directors
and Officers Executing Lock-Up Agreements
Seth
Grae
▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇
Mushakov
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇
Exhibit
A
Form
of Subscription Agreement
Exhibit
B
Pricing
Information
Number of
Shares to be Sold: 2,069,992
Number of
Warrants to be Sold: 1,034,996
Offering
Price: $6.60 per Unit
Exercise
Price of Warrants: $9.00
Placement
Agency Fees: $819,716.83
Exhibit
C
Form
of Escrow Agreement
Exhibit
D
Disclosure
Materials
Exhibit
E
Form
of Lock-Up Agreement
July [__],
2010
▇▇▇▇▇▇▇
▇▇▇▇▇ & Company, L.L.C.
▇▇▇ ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
The
undersigned understands that you, as Placement Agent, propose to enter into the
Placement Agency Agreement (the “Placement Agency Agreement”)
with Lightbridge Corporation, a Nevada corporation (the “Company”), providing for the
offering (the “Offering”) of (i) shares (the
“Shares”) of the Common
Stock, par value $0.001 per share (the “Common Stock”), of the
Company and (ii) warrants to purchase shares of Common Stock (the “Warrants”). Capitalized
terms used herein and not otherwise defined shall have the meanings set forth in
the Placement Agency Agreement.
In
consideration of the foregoing, and in order to induce you to participate in the
Offering, and for other good and valuable consideration receipt of which is
hereby acknowledged, the undersigned hereby agrees that, without the prior
written consent of the Placement Agent (which consent may be withheld in its
sole discretion), the undersigned will not, during the period (the “Lock-Up Period”) beginning on
the date hereof and ending on the date sixty (60) days after the date of
the final prospectus (including the final prospectus supplement) to be used in
confirming the sale of the Shares and Warrants (the “Final Prospectus”), (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, or otherwise transfer or dispose of,
directly or indirectly, or file (or participate in the filing of) a registration
statement with the Securities and Exchange Commission in respect of, any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for shares of Common Stock (including without limitation, shares of
Common Stock which may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission and securities which may be issued upon exercise of a stock option or
warrant), (2) enter into any swap or other agreement that transfers, in whole or
in part, any of the economic consequences of ownership of the shares of the
Common Stock, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of shares 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 shares of Common Stock or any security convertible
into or exercisable or exchangeable for shares of Common Stock, or (4) publicly
announce an intention to effect any transaction specific in clause (1), (2) or
(3) above.
Notwithstanding
the foregoing, the restrictions set forth in clauses (1) and (2) above shall not
apply to (a) transfers (i) as a bona fide gift or gifts, provided that the donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein, (ii) to any trust for the direct or indirect benefit of the undersigned
or the immediate family of the undersigned, provided that the trustee of the
trust agrees to be bound in writing by the restrictions set forth herein, and
provided further that any such transfer shall not involve a disposition for
value, (iii) pursuant to the laws of descent, (iv) with your prior written
consent or (v) effected pursuant to any exchange of “underwater” options with
the Company, (b) the acquisition or exercise of any stock option issued pursuant
to the Company’s existing stock option plan, including any exercise effected by
the delivery of shares of Common Stock of the Company held by the undersigned,
or (c) the purchase or sale of the Company’s securities pursuant to a plan,
contract or instruction that satisfies all of the requirements of Rule
10b5-1(c)(1)(i)(B) that was in effect prior to the date hereof. For
purposes of this Lock-Up Agreement, “immediate family” shall mean any
relationship by blood, marriage or adoption, not more remote than first
cousin. None of the restrictions set forth in this Lock-Up Agreement
shall apply to shares of Common Stock acquired in open market
transactions.
For the
purpose of allowing you to comply with FINRA Rule 2711(f)(4), if (1) during the
last 17 days of the Lock-Up Period, the Company releases earnings results or
publicly announces other material news or a material event relating to the
Company occurs or (2) prior to the expiration of the Lock-Up Period, the Company
announces that it will release earnings results during the 16 day period
beginning on the last day of the Lock-Up Period, then in each case the Lock-Up
Period will be extended until the expiration of the 18 day period beginning on
the date of release of the earnings results or the public announcement regarding
the material news or the occurrence of the material event, as applicable, unless
the Placement Agent waives, in writing, such extension. The Placement Agent
agrees to waive such extension if the provisions of FINRA Rule 2711(f)(4) are
not applicable to the Offering. The Company agrees not to accelerate the vesting
of any option or warrant or the lapse of any repurchase right prior to the
expiration of the Lock-Up Period. In furtherance of the foregoing,
the Company, and any duly appointed transfer agent or depositary for the
registration or transfer of the securities described herein, are hereby
authorized to decline to make any transfer of securities if such transfer would
constitute a violation or breach of this Lock-Up Agreement.
The
foregoing restrictions are expressly agreed to preclude the undersigned from
engaging in any hedging or other transaction which is designed to or reasonably
expected to lead to or result in a sale or disposition of shares of Common Stock
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 option or put equivalent position or
call option or call equivalent position) with respect to any of the shares of
Common Stock or with respect to any security that includes, relates to, or
derives any significant part of its value from such shares.
The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Lock-Up Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company’s transfer agent and registrar or depositary against the
transfer of the undersigned’s shares of Common Stock except in compliance with
the foregoing restrictions.
The
undersigned understands that, if the Placement Agency Agreement does not become
effective, or if the Placement Agency Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares and Warrants to be sold thereunder, the
undersigned shall be released from all obligations under this Lock-Up
Agreement.
This
Lock-Up Agreement shall be governed by and construed in accordance with the laws
of the State of New York, without regard to the conflict of laws principles
thereof.
|
Very
truly yours,
________________________________
Name:
|
Exhibit
F
Form
of Legal Opinion of Pillsbury ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ LLP
Exhibit
G
Form
of Legal Opinion of ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.