INUVO, INC. UNDERWRITING AGREEMENT 13,750,000 Shares of Common Stock1
Exhibit 1.1
13,750,000 Shares of Common Stock1
July 11, 2019
▇▇▇▇ Capital Partners, LLC
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Inuvo, Inc., a Nevada corporation (the
“Company”),
proposes, subject to the terms and conditions stated herein, to
issue and sell to ▇▇▇▇ Capital Partners, LLC (the
“Underwriter”)
an aggregate of 13,750,000 authorized but unissued shares (the
“Firm
Shares”) of common stock,
par value $0.001 per share (the “Common
Stock”), of the Company.
The Company also proposes to sell to the Underwriter, upon the
terms and conditions set forth in Section 4 hereof, up to an
additional 2,062,500 shares of Common Stock (the
“Option
Shares”). The Firm Shares
and the Option Shares are hereinafter collectively referred to as
the “Shares”.
The Company and the Underwriter hereby
confirms their agreement as follows:
1. Registration
Statement and Prospectus.
The Company has prepared and filed with the
Securities and Exchange Commission (the “Commission”)
a registration statement on Form S-3 (File No. 333-220317) under
the Securities Act of 1933, as amended (the
“Securities
Act”), and the rules and
regulations (the “Rules and
Regulations”) of the
Commission thereunder relating to the Shares and such amendments to such registration statement
(including post effective amendments) as may have been required to
the date of this agreement between the Company and the Underwriter,
dated July 11, 2019 (the “Agreement”).
Such registration statement, as amended (including any post
effective amendments), has been declared effective by the
Commission. The registration statement, together with the
amendments prior to the date of this Agreement, including the
information (if any) deemed to be a part of, or incorporated by
reference into, the registration statement at the time of
effectiveness pursuant to Rule 430A or Rule 430B under the
Securities Act, or at such time as the case may be, is hereinafter
referred to as the “Registration
Statement” and the
related prospectus, included in the Registration Statement at the
time the Registration Statement first became effective is
hereinafter called the “Base
Prospectus”. If
the Company has filed or files an abbreviated registration
statement pursuant to Rule 462(b) under the Securities Act (the
“Rule 462
Registration Statement”), then any reference herein to
the term Registration Statement shall include such Rule 462
Registration Statement.
The Company is filing with the Commission pursuant
to Rule 424 under the Securities Act a preliminary prospectus
supplement and final prospectus supplement to the Base Prospectus
relating to the Shares. The final prospectus supplement as filed,
along with the Base Prospectus, is hereinafter called the
“Final
Prospectus.” The term
“Preliminary
Prospectus” means the
Base Prospectus, together with any preliminary prospectus
supplement used or filed with the Commission pursuant to
Rule 424 of the Rules and Regulations, in the form
provided to the Underwriter by the Company for use in connection
with the offering of the Shares. Such
Final Prospectus and any Preliminary Prospectus in the form in
which they shall be filed with the Commission pursuant to Rule
424(b) under the Securities Act (including the Base Prospectus as
so supplemented) is hereinafter called a “Prospectus.”
Reference made herein to the Base Prospectus, any Preliminary
Prospectus or to the Prospectus shall be deemed to refer to and
include any documents incorporated by reference therein and any
reference to any amendment or supplement to the Base Prospectus,
any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include any document filed under the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”), and the rules and
regulations of the Commissions thereunder, incorporated by
reference in such Preliminary Prospectus or the Prospectus, as the
case may be. The term
“Effective
Date” shall mean each
date that the Registration Statement and any post-effective
amendment or amendments thereto became or become
effective.
The
Commission has not notified the Company of any objection to the use
of form of Registration Statement or any post-effective amendment
thereto.
2. Representations
and Warranties of the Company Regarding the
Offering.
(a) The
Company represents and warrants to, and agrees with, the
Underwriter, as of the date hereof and as of the Closing Date (as
defined in Section 4(d) below and as of each Option Closing Date
(as defined in Section 4(n) below), as follows:
(i) No
Material Misstatements or Omissions. At each time of effectiveness, at the date
hereof, at the Closing Date, and at each Option Closing Date, if
any, the Registration Statement and any post-effective amendment
thereto complied or will comply in all material respects with the
requirements of the Securities Act and the Rules and Regulations
and did not, does not, and will not, as the case may be, 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. The Time of Sale Disclosure
Package (as defined below) as of 8:30 A.M. (Eastern time) (the
“Applicable
Time”) on the date hereof
and at the Closing Date and on each Option Closing Date, if any,
and the Final Prospectus, as amended or supplemented, as of its
date, at the time of filing pursuant to Rule 424(b) under the
Securities Act and at the Closing Date and at each Option Closing
Date, if any, and any individual Written Testing-the-Waters
Communication, when considered together with the Time of Sale Disclosure Package, did not, does 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, in the light of the
circumstances under which they were made, not misleading. The
representations and warranties set forth in the two immediately
preceding sentences shall not apply to statements in or omissions
from the Registration Statement, the Time of Sale Disclosure
Package or any Prospectus in reliance upon, and in conformity with,
written information furnished to the Company by the Underwriter
specifically for use in the preparation thereof, which written
information is described in Section 7(g). The Registration
Statement contains all exhibits and schedules required to be filed
by the Securities Act or the Rules and Regulations. No order preventing or suspending the
effectiveness or use of the Registration Statement or any
Prospectus is in effect and no proceedings for such purpose have
been instituted or are pending, or, to the knowledge of the
Company, are contemplated or threatened by the
Commission.
(ii)
Marketing
Materials. The Company has not distributed any prospectus or
other offering material in connection with the offering and sale of
the Shares other than the Time
of Sale Disclosure Package and the roadshow or investor presentations delivered to
and approved by the Underwriter for use in connection with the
marketing of the offering of the Shares (the
“Marketing
Materials”).
(iii) Intentionally
Omitted.
(iv) Intentionally
Omitted.
2
(v) Accurate
Disclosure. (A) The Company has provided a copy to the
Underwriter of each Issuer Free Writing Prospectus (as defined
below) used in the sale of Shares. The Company has filed all
Issuer Free Writing Prospectuses required to be so filed with the
Commission, and no order preventing or
suspending the effectiveness or use of any Issuer Free Writing
Prospectus is in effect and no proceedings for such purpose have
been instituted or are pending, or, to the knowledge of the
Company, are contemplated or threatened by the
Commission. When taken together with the rest of the
Time of Sale Disclosure Package or the Final Prospectus, no
Issuer Free Writing Prospectus, as of its issue date and at all
subsequent times though the completion of the public offer and sale
of Shares, has, does or will
include (1) any untrue statement of a material fact or
omission 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, or (2) information
that conflicted, conflicts or will conflict with the
information contained in the Registration Statement, the
Preliminary Prospectus, or the Final Prospectus. The representations and warranties set forth in
the immediately preceding sentence shall not apply to statements in
or omissions from the Time of Sale Disclosure Package, the Final
Prospectus or any Issuer Free Writing Prospectus in reliance upon,
and in conformity with, written information furnished to the
Company by the Underwriter specifically for use in the preparation
thereof, which written information is described in Section
7(g). As used in this paragraph and elsewhere in
this Agreement:
(1) “Time
of Sale Disclosure Package” means the Base Prospectus,
the Prospectus most recently filed with the Commission before
the time of this Agreement, including any preliminary prospectus
supplement deemed to be a part thereof, each Issuer Free Writing
Prospectus, and the description of the transaction provided by
the Underwriter included on Schedule II.
(2) “Issuer
Free Writing Prospectus”
means any “issuer free writing prospectus,” as defined
in Rule 433 under the Securities Act, relating to the Shares that
(A) is required to be filed with the Commission by the Company, or
(B) is exempt from filing pursuant to Rule 433(d)(5)(i) or (d)(8)
under the Securities Act, in each case in the form filed or
required to be filed with the Commission or, if not required to be
filed, in the form retained in the Company’s records pursuant
to Rule 433(g) under the Securities Act.
(B) At
the time of filing of the Registration Statement and at the date
hereof, the Company was not and is not an “ineligible
issuer,” as defined in Rule 405 under the Securities Act or
an “excluded issuer” as defined in Rule 164 under the
Securities Act.
(C) Each
Issuer Free Writing Prospectus listed on Schedule 2(a)(v)(B)
satisfied, as of its issue date and at all subsequent times through
the Prospectus Delivery Period, all other conditions as may be
applicable to its use as set forth in Rules 164 and 433 under the
Securities Act, including any legend, record-keeping or other
requirements.
(vi) Financial
Statements. The financial
statements of the Company, together with the related notes and
schedules, included or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package and the
Final Prospectus comply in all material respects with the
applicable requirements of the Securities Act and the
Exchange Act, and the rules and regulations of the Commission
thereunder,
and fairly present the financial
condition of the Company as of the dates indicated and the results
of operations and changes in cash flows for the periods therein
specified in conformity with U.S. generally accepted accounting
principles (“GAAP”)
consistently applied throughout the periods involved. No other
financial statements or schedules are required under the Securities
Act, the Exchange Act, or the Rules and Regulations to be included
or incorporated by reference in the Registration Statement, the
Time of Sale Disclosure Package or the Final
Prospectus.
(vii) Intentionally
Omitted.
(viii)
Independent
Accountants. To the
Company’s knowledge, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
P.C., which has expressed its opinion
with respect to the financial statements and schedules included as
a part of the Registration Statement and included in the
Registration Statement, the Time of Sale Disclosure Package and the
Final Prospectus, is an independent public accounting firm with
respect to the Company within the meaning of the Securities Act and
the Rules and Regulations.
3
(ix) Accounting
and Disclosure Controls. The Company and its subsidiaries
maintain systems of “internal control over financial
reporting” (as defined under Rules 13a-15 and 15d-15 under
the Exchange Act) that comply with the requirements of the Exchange
Act and have been designed by, or under the supervision of, their
respective principal executive and principal financial officers, or
persons performing similar functions, to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with GAAP, including, but not limited to, internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s
general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with
management’s general or specific authorization; (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences; and (v) the interactive data in
eXtensible Business Reporting Language included or incorporated by
references in the Registration
Statement, the Time of Sale Disclosure Package and the Final
Prospectus fairly present the information called for in all
material respects and are prepared in accordance with the
Commission’s rules and guidelines applicable thereto. Since
the date of the latest audited financial statements included or
incorporated by reference in the Registration Statement, the Time
of Sale Disclosure Package and the Final Prospectus, there has been
no change in the Company’s internal control over financial
reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over
financial reporting.
The
Company maintains disclosure controls and procedures that have been
designed to ensure that material information relating to the
Company and any subsidiaries is made known to the Company’s
principal executive officer and principal financial officer by
others within those entities; and such disclosure controls and
procedures are effective.
(x)
Forward-Looking
Statements. The Company had a reasonable basis for, and made
in good faith, each “forward-looking statement” (within
the meaning of Section 27A of the Securities Act or Section 21E of
the Exchange Act) contained or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package, the
Final Prospectus or the Marketing Materials.
(xi)
Statistical and Marketing-Related
Data. All statistical or market-related data included or
incorporated by reference in the Registration Statement, the Time
of Sale Disclosure Package or the Final Prospectus, or included in
the Marketing Materials, are based on or derived from sources that
the Company reasonably believes to be reliable and accurate, and
the Company has obtained the written consent to the use of such
data from such sources, to the extent required.
(xii)
Trading
Market. The Common Stock is
registered pursuant to Section 12(b) of the Exchange Act and is
approved for listing on the New York Stock Exchange American (the
“NYSE”).
There is no action pending by the
Company or, to the Company’s knowledge, the NYSE to
delist the Common Stock from the NYSE, nor has the Company received any
notification that the NYSE is
contemplating terminating such listing. When issued, the Shares
will be listed on the NYSE.
(xiii)
Absence of Manipulation. The
Company has not taken, directly or indirectly, any action that is
designed to or that has constituted or that would reasonably be
expected to cause or result in the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of the Shares.
(xiv)
Investment Company
Act. The Company is not and,
after giving effect to the offering and sale of the Shares and the
application of the net proceeds thereof, will not be an
“investment company,” as such term is defined in the
Investment Company Act of 1940, as amended.
4
3. Representations
and Warranties Regarding the Company.
(a) The
Company represents and warrants to, and agrees with, the
Underwriter, as of the date hereof and as of the Closing Date and
as of each Option Closing Date, as follows:
(i) Good
Standing. Each of the Company
and its subsidiaries has been duly organized and is validly
existing as a corporation or other entity in good standing under
the laws of its jurisdiction of incorporation or organization. Each
of the Company and its subsidiaries has the power and authority
(corporate or otherwise) to own its properties and conduct its
business as currently being carried on and as described in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus, and is duly qualified to do business as a foreign
corporation or other entity in good standing in each jurisdiction
in which it owns or leases real property or in which the conduct of
its business makes such qualification necessary, except where the
failure to so qualify would not have or be reasonably likely to
result in a material adverse effect upon the business, prospects,
properties, operations, condition (financial or otherwise) or
results of operations of the Company and its subsidiaries, taken as
a whole, or in its ability to perform its obligations under this
Agreement (“Material Adverse
Effect”).
(ii)
Authorization.
The Company has the power and authority to enter into this
Agreement and to authorize, issue and sell the as contemplated by
this Agreement. This Agreement has been duly authorized by the
Company, and when executed and delivered by the Company, and will
constitute the valid, legal and binding obligations 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 bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally and subject to general
principles of equity.
(iii)
Contracts. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not (A) result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any
law, order, rule or regulation to which the Company or any
subsidiary is subject, or by which any property or asset of the
Company or any subsidiary is bound or affected, (B) conflict with,
result in any violation or breach of, or constitute a default (or
an event that with notice or lapse of time or both would become a
default) under, or give to others any right of termination,
amendment, acceleration or cancellation (with or without notice,
lapse of time or both) (a “Default Acceleration
Event”) of, any
agreement, lease, credit facility, debt, note, bond, mortgage,
indenture or other instrument (the “Contracts”)
or obligation or other understanding to which the Company or any
subsidiary is a party or by which any property or asset of the
Company or any subsidiary is bound or affected, except to the
extent that such conflict, default, or Default Acceleration Event;
not reasonably likely to result in a Material Adverse Effect, or
(C) result in a breach or violation of any of the terms and
provisions of, or constitute a default under, the Company’s
Articles of Incorporation (as amended) charter, or
by-laws.
(iv) No
Violations of Governing Documents. Neither the Company nor any of its subsidiaries
is in violation, breach or default under its certificate of
incorporation, by-laws or other equivalent organizational or
governing documents.
(v) Consents.
No consents, approvals, orders, authorizations or filings are
required on the part of the Company in connection with the
execution, delivery or performance of this Agreement and the issue
and sale of the Shares, except (A) the registration under the
Securities Act of the Shares, which has been effected, (B) the
necessary filings and approvals from the NYSE to list the Shares,
(C) such consents, approvals, authorizations, registrations or
qualifications as may be required under state or foreign securities
or Blue Sky laws and the rules of the Financial Industry Regulatory
Authority, Inc. (“FINRA”) in connection
with the purchase and distribution of the Shares by the
Underwriter, (D) such consents and approvals as have been obtained
and are in full force and effect, and (E) such consents, approvals,
orders, authorizations and filings the failure of which to make or
obtain is not reasonably likely to result in a Material Adverse
Effect.
5
(vi)
Capitalization.
The Company has an authorized capitalization as set forth in
the Registration Statement, the Time of Sale Disclosure Package and
the Final Prospectus. All of the issued and outstanding shares of
capital stock of the Company are duly authorized and validly
issued, fully paid and nonassessable, and have been issued in
compliance with all applicable securities laws, and conform to the description thereof in the
Registration Statement, the Time of Sale Disclosure Package and the
Final Prospectus. All of the issued shares of capital stock
of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and,
except as set forth in the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus, are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims, except as otherwise provide under
the Amended and Restated Business Financing Agreement with Western
Alliance Bank, dated October 11, 2018, and as amended thereafter
(the “Secured Bridge
Line”). Except for the
issuances of options or restricted stock in the ordinary course of
business, since the respective dates as of which information is
provided in the Registration Statement, the Time of Sale Disclosure
Package or the Final Prospectus, the Company has not entered into
or granted any convertible or exchangeable securities,
options, warrants, agreements, contracts or other rights in
existence to purchase or acquire from the Company any shares of the
capital stock of the Company, other than the March 1, 2019 issuance
of certain $1,440,000 Original Issue Discount Unsecured
Subordinated Convertible Notes due September 1, 2020. The Shares,
when issued and paid for as provided herein, will be duly
authorized and validly issued, fully paid and nonassessable, will
be issued in compliance with all applicable securities laws, and
will be free of preemptive, registration or similar
rights and
will conform to the description of the capital stock of the Company
contained in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus. Except for the Company
Rights Agreement dated February 14, 2008, as amended (the original
Rights Agreement which was filed as Exhibit 4.1 to the Current
Report on Form 8-K filed with the SEC on February 19, 2008) (the
“Rights
Plan”), there are no stockholders’ agreements,
voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or,
to the knowledge of the Company, between or among any of the
Company’s stockholders.
(vii) Taxes.
Each of the Company and its subsidiaries has (a) filed all foreign,
federal, state and local tax returns (as hereinafter defined)
required to be filed with taxing authorities prior to the date
hereof or has duly obtained extensions of time for the filing
thereof and (b) paid all taxes (as hereinafter defined) shown as
due and payable on such returns that were filed and has paid all
taxes imposed on or assessed against the Company or such respective
subsidiary. The provisions for taxes payable, if any, shown on the
financial statements included or incorporated by reference in the
Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus are sufficient
for all accrued and unpaid taxes, whether or not disputed, and for
all periods to and including the dates of such consolidated
financial statements. No issues have been raised (and are currently
pending) by any taxing authority in connection with any of the
returns or taxes asserted as due from the Company or its
subsidiaries, and no waivers of statutes of limitation with respect
to the returns or collection of taxes have been given by or
requested from the Company or its subsidiaries. The term
“taxes”
mean all federal, state, local, foreign, and other net income,
gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties or
other taxes, fees, assessments, or charges of any kind whatever,
together with any interest and any penalties, additions to tax, or
additional amounts with respect thereto. The term
“returns” means all
returns, declarations, reports, statements, and other documents
required to be filed in respect to taxes.
(viii)
Material
Change. Since the respective
dates as of which information is given including information
incorporated by reference in the Registration Statement, the Time
of Sale Disclosure Package or the Final Prospectus, (a) neither the
Company nor any of its subsidiaries has incurred any material
liabilities or obligations, direct or contingent, or entered into
any material transactions other than in the ordinary course of
business, (b) the Company has not declared or paid any dividends or
made any distribution of any kind with respect to its capital
stock; (c) there has not been any change in the capital stock of
the Company or any of its subsidiaries (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,
upon the conversion of outstanding shares of preferred stock or
other convertible securities or the issuance of restricted stock
awards or restricted stock units under the Company’s existing
stock awards plan, or any new grants
thereof in the ordinary course of business), (d) there has not been
any material change in the Company’s long-term or short-term
debt, and (e) there has not been the occurrence of any Material
Adverse Effect.
(ix) Absence
of Proceedings. There is no
pending or, to the knowledge of the Company, threatened, any
action, suit or proceeding to which the Company or any of its
subsidiaries is a party or of which any property or assets of the
Company or any of its subsidiaries is the subject before or by any
court or governmental agency, authority or body, or any arbitrator
or mediator, which is reasonably likely to result in a Material
Adverse Effect.
6
(x) Permits.
Except as set forth in the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus, the Company and each of its subsidiaries holds,
and is in compliance with, all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates and orders
(“Permits”)
of any governmental or self-regulatory agency, authority or body
(including, without limitation, those administered by the
Food and Drug Administration of the U.S. Department of Health and
Human Services (the “FDA”) or by any foreign,
federal, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA)
required for the conduct of its
business, and all such Permits are in full force and effect,
in each case except where the failure to hold, or comply with, any
of them is not reasonably likely to result in a Material Adverse
Effect or adversely affect the consummation of the transactions
contemplated by this Agreement.
(xi) Good
Title. The Company and each of
its subsidiaries have good and marketable title to all property
(whether real or personal) described in the Registration Statement,
the Time of Sale Disclosure Package and the Final Prospectus as
being owned by them that are material to the business of the
Company, in each case free and clear of all liens, claims, security
interests, other encumbrances or defects, except (a) as
otherwise provide under the Secured Bridge Line and (b)
those that are disclosed in the
Registration Statement, the Time of Sale Disclosure Package and the
Final Prospectus and those that are not reasonably likely to result
in a Material Adverse Effect. The property held under lease by the
Company and its subsidiaries is held by them under valid,
subsisting and enforceable leases with only such exceptions with
respect to any particular lease as do not interfere in any material
respect with the conduct of the business of the Company and its
subsidiaries.
(xii)
Intellectual
Property. The Company and each
of its subsidiaries owns or possesses or has valid right to use all
patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service ▇▇▇▇ registrations,
copyrights, licenses, inventions, trade secrets and similar rights
(“Intellectual
Property”) necessary for
the conduct of the business of the Company and its subsidiaries as
currently carried on and as described in the Registration
Statement, the Time of Sale Disclosure Package and the Final
Prospectus. To the knowledge of the Company, no action or use by
the Company or any of its subsidiaries involves or gives rise to
any infringement of, or license or similar fees for, any
Intellectual Property of others, except where such action, use,
license or fee is not reasonably likely to result in a Material
Adverse Effect. Neither the Company nor any of its subsidiaries has
received any notice alleging any such infringement or fee. To the
Company’s knowledge, none of the technology employed by the
Company or any subsidiary has been obtained or is being used by the
Company or such subsidiary in violation of any contractual
obligation binding on the Company or such subsidiary or, to the
Company’s knowledge, any of the officers, directors or
employees of the Company or any subsidiary, or, to the
Company’s knowledge, otherwise in violation of the rights of
any persons.
(xiii)
Employment Matters. There is
(A) no unfair labor practice complaint pending against the Company,
or any of its subsidiaries, nor to the Company’s knowledge,
threatened against it or any of its subsidiaries, before the
National Labor Relations Board, any state or local labor relation
board or any foreign labor relations board, and no grievance or
arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or any of
its subsidiaries, or, to the Company’s knowledge, threatened
against it and (B) no labor disturbance by the employees of the
Company or any of its subsidiaries exists or, to the
Company’s knowledge, is imminent, and the Company is not
aware of any existing or imminent labor disturbance by the
employees of any of its or its subsidiaries, principal suppliers,
manufacturers, customers or contractors, that could reasonably be
expected, singularly or in the aggregate, to have a Material
Adverse Effect. The Company is not aware that any key employee or
significant group of employees of the Company or any subsidiary
plans to terminate employment with the Company or any such
subsidiary.
7
(xiv)
ERISA Compliance. No
“prohibited transaction” (as defined in Section 406 of
the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
(“ERISA”), or Section 4975
of the Internal Revenue Code of 1986, as amended from time to time
(the “Code”)) or
“accumulated funding deficiency” (as defined in Section
302 of ERISA) or any of the events set forth in Section 4043(b) of
ERISA (other than events with respect to which the thirty (30)-day
notice requirement under Section 4043 of ERISA has been waived) has
occurred or could reasonably be expected to occur with respect to
any employee benefit plan of the Company or any of its subsidiaries
which would reasonably be expected to, singularly or in the
aggregate, have a Material Adverse Effect. Each employee benefit
plan of the Company or any of its subsidiaries is in compliance in
all material respects with applicable law, including ERISA and the
Code. The Company and its subsidiaries have not incurred and could
not reasonably be expected to incur liability under Title IV of
ERISA with respect to the termination of, or withdrawal from, any
pension plan (as defined in ERISA). Each pension plan for which the
Company or any of its subsidiaries would have any liability that is
intended to be qualified under Section 401(a) of the Code is so
qualified, and to the Company’s knowledge nothing has
occurred, whether by action or by failure to act, which could,
singularly or in the aggregate, cause the loss of such
qualification.
(xv)
Environmental
Matters. The Company and its subsidiaries are in compliance
with all foreign, federal, state and local rules, laws and
regulations relating to the use, treatment, storage and disposal of
hazardous or toxic substances or waste and protection of health and
safety or the environment which are applicable to their businesses
(“Environmental
Laws”), except where the failure to comply has not had
and would not reasonably be expected to have, singularly or in the
aggregate, a Material Adverse Effect. There has been no storage,
generation, transportation, handling, treatment, disposal,
discharge, emission, or other release of any kind of toxic or other
wastes or other hazardous substances by, due to, or caused by the
Company or any of its subsidiaries (or, to the Company’s
knowledge, any other entity for whose acts or omissions the Company
or any of its subsidiaries is or may otherwise be liable) upon any
of the property now or previously owned or leased by the Company or
any of its subsidiaries, or upon any other property, in violation
of any law, statute, ordinance, rule, regulation, order, judgment,
decree or permit or which would, under any law, statute, ordinance,
rule (including rule of common law), regulation, order, judgment,
decree or permit, give rise to any liability, except for any
violation or liability which has not had and would not reasonably
be expected to have, singularly or in the aggregate, a Material
Adverse Effect; and there has been no disposal, discharge, emission
or other release of any kind onto such property or into the
environment surrounding such property of any toxic or other wastes
or other hazardous substances with respect to which the Company or
any of its subsidiaries has knowledge.
(xvi)
SOX
Compliance. The Company is in
compliance in all material respects with all applicable provisions
of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended, and all rules and
regulations promulgated thereunder or implementing the provisions
thereof.
(xvii) Intentionally
Omitted.
(xviii)
Money Laundering
Laws. The operations of
the Company and its subsidiaries are and have been conducted at all
times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions
Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued,
administered or enforced by any Governmental Entity (collectively,
the “Money
Laundering Laws”); and no action, suit or proceeding
by or before any Governmental Entity involving the Company or any
of its subsidiaries with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company, threatened.
“Governmental
Entity” shall be defined as any arbitrator, court, governmental body,
regulatory body, administrative agency or other authority, body or
agency (whether foreign or domestic) having jurisdiction over the
Company or any of its subsidiaries or any of their respective
properties, assets or operations.
(xix)
Foreign Corrupt Practices
Act. Neither the Company nor, any of its subsidiaries, or
any director or officer of the Company or any subsidiary, nor, to
the knowledge of the Company, any employee, representative, agent,
affiliate of the Company or any of its subsidiaries or any other
person acting on behalf of the Company or any of its subsidiaries,
is aware of or has taken any action, directly or indirectly, that
would result in a violation by such persons of the Foreign Corrupt
Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “FCPA”), including,
without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of
an offer, payment, promise to pay or authorization of the payment
of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any
candidate for foreign political office, in contravention of the
FCPA and the Company and, to the knowledge of the Company, its
affiliates have conducted their businesses in compliance with the
FCPA and have instituted and maintain policies and procedures
designed to ensure, and which are reasonably expected to continue
to ensure, continued compliance therewith.
8
(xx) OFAC.
Neither the Company nor any of its subsidiaries or any director or
officer of the Company or any subsidiary, nor, to the knowledge of
the Company, any employee, representative, agent or affiliate of
the Company or any of its subsidiaries or any other person acting
on behalf 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 of
the Shares contemplated hereby, or lend, contribute or otherwise
make available such proceeds to any person or entity, for the
purpose of financing the activities of any person currently subject
to any U.S. sanctions administered by OFAC.
(xxi)
Insurance. The Company and each of its subsidiaries
carries, or is covered by, 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.
(xxii)
Books and Records. The
minute books of the Company and each of its subsidiaries have been
made available to the Underwriter and counsel for the Underwriter,
and such books (i) contain a complete summary of all meetings and
actions of the board of directors (including each board committee)
and stockholders of the Company (or analogous governing bodies and
interest holders, as applicable), and each of its subsidiaries
since the time of its respective incorporation or organization
through the date of the latest meeting and action, and (ii)
accurately in all material respects reflect all transactions
referred to in such minutes.
(xxiii)
No
Undisclosed Contracts. There is
no Contract or document required by the Securities Act or by the
Rules and Regulations to be described in the Registration
Statement, the Time of Sale Disclosure Package or in the Final
Prospectus or to be filed as an exhibit to the Registration
Statements which is not so described or filed therein as required;
and all descriptions of any such Contracts or documents contained
in the Registration Statement, the Time of Sale Disclosure Package
and in the Final Prospectus are accurate and complete descriptions
of such documents in all material respects. Other than as described
in the Registration Statement, the Time of Sale Disclosure Package
and the Final Prospectus, no such Contract has been suspended or
terminated for convenience or default by the Company or any
subsidiary party thereto or any of the other parties thereto, and
neither the Company nor any of its subsidiaries has received
notice, and the Company has no knowledge, of any such pending or
threatened suspension or termination.
(xxiv)
No
Undisclosed Relationships. No
relationship, direct or indirect, exists between or among the
Company or any of its subsidiaries on the one hand, and the
directors, officers, stockholders (or analogous interest holders),
customers or suppliers of the Company or any of its subsidiaries on
the other hand, which is required to be described in the
Registration Statement, the Time of Sale Disclosure Package or the
Final Prospectus and which is not so described.
(xxv)
Insider
Transactions. All transactions
by the Company with office holders or control persons of the
Company have been duly approved by the board of directors of the
Company, or duly appointed committees or officers thereof, if and
to the extent required under applicable law.
(xxvi)
No Registration
Rights. No person or entity has
the right to require registration of Common Stock or other
securities of the Company or any of its subsidiaries within 180
days of the date hereof because of the filing or effectiveness of
the Registration Statement or otherwise, except for persons and
entities who have expressly waived such right in writing or who
have been given timely and proper written notice and have failed to
exercise such right within the time or times required under the
terms and conditions of such right. Except as described in the
Registration Statement, the Time of Sale Disclosure Package and the
Final Prospectus, there are no persons with registration rights or
similar rights to have any securities registered by the Company or
any of its subsidiaries under the Securities
Act.
9
(xxvii)
Continued Business. No
supplier, customer, distributor or sales agent of the Company
or any subsidiary has notified the Company or any subsidiary
that it intends to discontinue or decrease the rate of
business done with the Company or any subsidiary, except
where such discontinuation or decrease has not resulted in and
could not reasonably be expected to result in a Material Adverse
Effect.
(xxviii) No
Finder’s Fee. There are no claims, payments,
issuances, arrangements or understandings for services in the
nature of a finder’s, consulting or origination fee with
respect to the introduction of the Company to the Underwriter or
the sale of the Shares hereunder or any other arrangements,
agreements, understandings, payments or issuances with respect to
the Company that may affect the Underwriter’s compensation,
as determined by FINRA.
(xxix)
No Fees. Except as
disclosed to the Underwriter in writing, the Company has not made
any direct or indirect payments (in cash, securities or otherwise)
to (i) any person, as a finder’s fee, investing fee or
otherwise, in consideration of such person raising capital for the
Company or introducing to the Company persons who provided capital
to the Company, (ii) any FINRA member, or (iii) any person or
entity that has any direct or indirect affiliation or association
with any FINRA member within the twelve (12)-month period prior to
the date on which the Registration Statement was filed with the
Commission (“Filing
Date”) or thereafter.
(xxx)
Proceeds. None
of the net proceeds of the offering will be paid by the Company to
any participating FINRA member or any affiliate or associate of any
participating FINRA member, except as specifically authorized
herein.
(xxxi)
No FINRA
Affiliations. To the Company’s knowledge, no (i)
officer or director of the Company or its subsidiaries, (ii) owner
of 5% or more of any class of the Company’s securities or
(iii) owner of any amount of the Company’s unregistered
securities acquired within the 180-day period prior to the Filing
Date, has any direct or indirect affiliation or association with
any FINRA member. The Company will advise the Underwriter
and counsel to the Underwriter
if it becomes aware that any officer, director of the Company or
its subsidiaries or any owner of 5% or more of any class of the
Company’s securities is or becomes an affiliate or associated
person of a FINRA member participating in the
offering.
(xxxii)
No Financial Advisor. Other
than the Underwriter, no person has the right to act as an
underwriter or as a financial advisor to the Company in connection
with the transactions contemplated hereby.
(xxxiii)
Certain Statements. The
statements set forth in the Registration Statement, the Time of
Sale Disclosure Package and the Final Prospectus insofar as they
purport to describe the provisions of the laws and documents
referred to therein, are accurate, complete and fair, and under the
caption “Description of Securities We Are Offering”
insofar as they purport to constitute a summary of (i) the terms of
the Company’s outstanding securities, (ii) the terms of the
Shares, and (iii) the terms of the documents referred to therein,
are accurate, complete and fair.
(xxxiv)
Prior Sales of Securities.
Except as set forth in the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus, the Company has not
sold or issued any shares of Common Stock during the six (6)-month
period preceding the date hereof, including any sales pursuant to
Rule 144A under, or Regulations D or S of, the Securities Act,
other than shares issued pursuant to employee benefit plans, stock
option plans or other employee compensation plans or pursuant to
outstanding preferred stock, options, rights or warrants or other
outstanding convertible securities.
10
(b) Any
certificate signed by any officer of the Company and delivered to
the Underwriter or to counsel for the Underwriter shall be deemed a
representation and warranty by the Company to the Underwriter as to
the matters covered thereby.
4. Purchase,
Sale and Delivery of Shares.
(a) On
the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set
forth, the Company agrees to issue and sell the Firm Shares to the
Underwriter, and the Underwriter agrees to purchase the Firm Shares
set forth opposite the name of the Underwriter in
Schedule I
hereto. The purchase price for
each Firm Share shall be $0.30 per share. The
purchase price to be paid
by the Underwriter to the Company for each Firm Share shall be
$0.282 per share.
(b) The
Company hereby grants to the Underwriter the option to
purchase some or all of the Option Shares and, upon the
basis of the warranties and
representations and subject to the terms and conditions herein set
forth, the Underwriter shall have the right to purchase at the
purchase price set forth in Section 4(a) all or any portion of the
Option Shares as may be necessary to cover over-allotments made in
connection with the transactions contemplated hereby. The purchase
price to be paid by the Underwriter for the Option Shares shall be
$0.282
per share. This option may be
exercised by the Underwriter at any time and from time to time on
or before the thirtieth (30th) day following the date hereof, by written notice
to the Company (the “Option
Notice”).
The Option Notice shall set forth the
aggregate number of Option Shares as to which the option is being
exercised, and the date and time when the Option Shares are to be
delivered (such date and time being herein referred to as the
“Option Closing
Date”);
provided, however, that the Option Closing Date shall not be
earlier than the Closing Date (as defined below) nor earlier than
the first (1st) business day after the date on which the option
shall have been exercised nor later than the fifth
(5th) business day after the date on which the option
shall have been exercised unless the Company and the Underwriter
otherwise agree. If the Underwriter elects to purchase less than
all of the Option Shares, the Company agree to sell to the
Underwriter the number of Option Shares obtained by multiplying the
number of Option Shares
specified in such notice by a fraction, the numerator of which is
the number of Option Shares and the denominator of which is the
total number of Option
Shares.
(c) Payment
of the purchase price for and delivery of the Option Shares shall
be made on an Option Closing Date in the same manner and at the
same office as the payment for the Firm Shares as set forth in
subparagraph (d) below.
(d) The
Firm Shares will be delivered by the Company to the Underwriter, against payment of the
purchase price therefor by wire transfer of same day funds payable
to the order of the Company at the offices of ▇▇▇▇ Capital
Partners, LLC, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇, or such other location as may be mutually acceptable, at
6:00 a.m. Pacific Time, on the second (2nd) (or if the Firm Shares are priced,
as contemplated by Rule 15c6-1(c)
under the Exchange Act, after 4:30 p.m. Eastern time, the third
(3rd)) full business day following the date hereof, or
at such other time and date as the Underwriter and the Company
determine pursuant to Rule 15c6-1(a) under the Exchange Act, or, in
the case of the Option Shares, at such date and time set forth in
the Option Notice. The time and date of delivery of the Firm Shares
is referred to herein as the “Closing
Date.” On the
Closing Date, the Company shall deliver the Firm Shares, which
shall be registered in the name or names and shall be in such
denominations as the Underwriter may request before the Closing
Date, to the accounts of the Underwriter, which delivery shall with
respect to the Firm Shares, be made through the facilities of the
Depository Trust Company’s DWAC system.
5.
Covenants.
(a) The
Company covenants and agrees with the Underwriter as
follows:
(i) The
Company shall prepare the Final Prospectus in a form approved by
the Underwriter and file such Final Prospectus pursuant to Rule
424(b) under the Securities Act not later than the Commission's
close of business on the second (2nd) business day following the execution
and delivery of this Agreement, or, if applicable, such earlier
time as may be required by the Rules and Regulations.
11
(ii) During
the period beginning on the date hereof and ending on the later of
the Closing Date or such date as determined by the Underwriter the
Final Prospectus is no longer required by law to be delivered in
connection with sales by an underwriter or dealer (the
“Prospectus
Delivery Period”), prior to amending or
supplementing the Registration Statement, including any Rule 462
Registration Statement, the Time of Sale Disclosure Package or the
Final Prospectus, the Company shall furnish to the Underwriter for
review and comment a copy of each such proposed amendment or
supplement, and the Company shall not file any such proposed
amendment or supplement to which the Underwriter reasonably
objects.
(iii) From
the date of this Agreement until the end of the Prospectus Delivery
Period, the Company shall promptly advise the Underwriter in
writing (A) of the receipt of any comments of, or requests for
additional or supplemental information from, the Commission, (B) of
the time and date of any filing of any post-effective amendment to
the Registration Statement or any amendment or supplement to the
Time of Sale Disclosure Package, the Final Prospectus or any Issuer
Free Writing Prospectus, (C) of the time and date that any
post-effective amendment to the Registration Statement becomes
effective and (D) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or
of any order preventing or suspending its use or the use of the
Time of Sale Disclosure Package, the Final Prospectus or any Issuer
Free Writing Prospectus, or of any proceedings to remove, suspend
or terminate from listing or quotation the Common Stock from any
securities exchange upon which it is listed for trading or included
or designated for quotation, or of the threatening or initiation of
any proceedings for any of such purposes. If the Commission shall
enter any such stop order at any time during the Prospectus
Delivery Period, the Company will use its reasonable efforts to
obtain the lifting of such order at the earliest possible moment.
Additionally, the Company agrees that it shall comply with the
provisions of Rules 424(b), 430A, 430B or
430C as applicable, under the
Securities Act and will use its reasonable efforts to confirm that
any filings made by the Company under Rule 424(b) or Rule 433 were
received in a timely manner by the Commission (without reliance on
Rule 424(b)(8) or 164(b) of the Securities
Act).
(iv)
(A)
During the Prospectus Delivery Period, the Company will comply with
all requirements imposed upon it by the Securities Act, as now and
hereafter amended, and by the Rules and Regulations, as from time
to time in force, and by the Exchange Act, as now and hereafter
amended, so far as necessary to permit the continuance of sales of
or dealings in the Shares as contemplated by the provisions hereof,
the Time of Sale Disclosure Package, the Registration Statement and
the Final Prospectus. If during the Prospectus Delivery Period any
event occurs the result of which would cause the Final Prospectus
(or if the Final Prospectus is not yet available to prospective
purchasers, the Time of Sale Disclosure Package) to include an
untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances then existing, not misleading, or if during such
period it is necessary or appropriate in the opinion of the Company
or its counsel or the Underwriter or counsel to the Underwriter to
amend the Registration Statement or supplement the Final Prospectus
(or if the Final Prospectus is not yet available to prospective
purchasers, the Time of Sale Disclosure Package) to comply
with the Securities Act or to file under the Exchange Act any
document that would be deemed to be incorporated by reference in
the Final Prospectus in order to comply with the Securities Act or
the Exchange Act, the Company will promptly notify the Underwriter, allow the Underwriter the opportunity to provide
reasonable comments on such amendment, prospectus supplement or
document, and will amend the Registration Statement or supplement
the Final Prospectus (or if the Final
Prospectus is not yet available to prospective purchasers, the Time
of Sale Disclosure Package) or file such document (at the expense
of the Company) so as to correct such statement or omission or
effect such compliance.
(B) If
at any time during the Prospectus Delivery Period there occurred or
occurs an event or development the result of which such Issuer Free
Writing Prospectus conflicted or would conflict with the
information contained in the Registration Statement or any
Prospectus or included or would include, when taken together with
the Time of Sale Disclosure Package, 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 will promptly notify the Underwriter 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.
12
(v) The
Company shall take or cause to be taken all necessary action to
qualify the Shares for sale under the securities laws of such
jurisdictions as the Underwriter reasonably designates and to
continue such qualifications in effect so long as required for the
distribution of the Shares, except that the Company shall not be
required in connection therewith to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified, to execute a general consent to
service of process in any state or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not
otherwise subject.
(vi)
The Company will furnish to the Underwriter and
counsel to the Underwriter copies of the Registration Statement,
each Prospectus, any Issuer Free Writing Prospectus, and all
amendments and supplements to such documents, in each case as soon
as available and in such quantities as the Underwriter may from
time to time reasonably request.
(vii) Intentionally
Omitted.
(viii)
The Company, whether or not the transactions contemplated hereunder
are consummated or this Agreement is terminated, will pay or cause
to be paid (A) all expenses (including transfer taxes allocated to
the respective transferees) incurred in connection with the
delivery to the Underwriter of the Shares (including all fees and
expenses of the registrar and transfer agent of the Shares (if
other than the Company), and the cost of preparing and printing
stock certificates, (B) all expenses and fees (including, without
limitation, fees and expenses of the Company’s counsel) in
connection with the preparation, printing, filing, delivery, and
shipping of the Registration Statement (including the financial
statements therein and all amendments, schedules, and exhibits
thereto), the Shares, the Time of Sale Disclosure Package, any
Prospectus, the Final Prospectus, any Issuer Free Writing
Prospectus and any amendment thereof or supplement thereto, (C) all
reasonable filing fees and reasonable fees and disbursements of the
Underwriter’s counsel incurred in connection with the
qualification of the Shares for offering and sale by the
Underwriter or by dealers under the securities or blue sky laws of
the states and other jurisdictions that the Underwriter shall designate, (D) the
reasonable filing fees and reasonable fees and disbursements of
counsel to the Underwriter incident to any required review and
approval by FINRA, of the terms of the sale of the Shares, (F)
listing fees, if any, and (G) all other costs and expenses incident
to the performance of its obligations hereunder that are not
otherwise specifically provided for herein. The Company will
reimburse the Underwriter’s reasonable out-of-pocket
expenses, including legal fees and disbursements, in connection
with the purchase and sale of the Shares contemplated hereby up to
an aggregate of $45,000 (including amounts payable pursuant to
clauses (C) and (D) above). If this Agreement is terminated by the
Underwriter in accordance with the provisions of Section 6 or
Section 9, the Company will reimburse the Underwriter for all
out-of-pocket disbursements (including, but not limited to,
reasonable fees and disbursements of counsel, travel expenses,
postage, facsimile and telephone charges) incurred by the
Underwriter in connection with its investigation, preparing to
market and marketing the Shares or in contemplation of performing
its obligations hereunder up to an aggregate of
$45,000.
(ix) The
Company intends to apply the net proceeds from the sale of the
Shares to be sold by it hereunder for the purposes set forth in the
Registration Statement, the Time of Sale Disclosure Package and the
Final Prospectus under the heading “Use of
Proceeds”.
(x)
The
Company has not taken and will not take, directly or indirectly,
during the Prospectus Delivery Period, any action designed to or
which might reasonably be expected to cause or result in, or that
has constituted, the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the
Shares.
13
(xi) The
Company represents and agrees that, unless it obtains the prior
written consent of the Underwriter and the Underwriter represents
and agrees that, unless it obtains the prior written consent of the
Company, it has not made and will not make any offer relating to
the Shares that would constitute an Issuer Free Writing Prospectus;
provided that the prior written consent of the parties hereto shall
be deemed to have been given in respect of the free writing
prospectuses included in Schedule II Any such free writing prospectus consented to by
the Company and the Underwriter is hereinafter referred to as a
“Permitted Free Writing
Prospectus.” The Company
represents that it has treated or agrees that it will treat each
Permitted Free Writing Prospectus as an “issuer free writing
prospectus,” as defined in Rule 433, and has complied or will
comply with the requirements of Rule 433 applicable to any
Permitted Free Writing Prospectus, including timely Commission
filing where required, legending and
record-keeping.
(xii) The
Company hereby agrees that, without the prior written consent of
the Underwriter, it will not,
during the period ending ninety (90) days after the date hereof
(“Lock-Up
Period”), (i) offer, pledge, issue, sell, contract to
sell, purchase, contract to purchase, lend, or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock
or any securities convertible into or exercisable or exchangeable
for Common Stock; or (ii) enter into
any swap or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of the
Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise; or
(iii) file any registration statement with the Commission relating
to the offering of any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock.
The restrictions contained in the preceding sentence shall not
apply to (1) the Shares to be sold hereunder, (2) the issuance of
Common Stock upon the exercise of options or warrants or the
conversion of outstanding preferred stock or other outstanding
convertible securities disclosed as outstanding in the Registration
Statement (excluding exhibits thereto), the Time of Sale Disclosure
Package, and the Final Prospectus, or (3) the issuance of employee
stock options not exercisable during the Lock-Up Period and the
grant of restricted stock awards or restricted stock units or
shares of Common Stock pursuant to equity incentive plans described
in the Registration Statement (excluding exhibits thereto), the
Time of Sale Disclosure Package, and the Final
Prospectus.
(xiii)
The Company hereby
agrees, during a period of three years from the effective date of
the Registration Statement, to furnish to the Underwriter copies of
all reports or other communications (financial or other) furnished
to shareholders, and to deliver to the Underwriter as soon as
reasonably practicable upon availability, copies of any reports and
financial statements furnished to or filed with the Commission or
any national securities exchange on which any class of securities
of the Company is listed; provided, that any information or
documents available on the Commission’s Electronic Data
Gathering, Analysis and Retrieval System shall be considered
furnished for purposes of this Section
5(a)(xiii).
(xiv)
The Company hereby agrees to engage and maintain,
at its expense, a registrar and transfer agent for the Common
Stock (if other than the Company).
(xv) The
Company hereby agrees to use its reasonable best efforts to obtain
approval to list and include the Shares on the NYSE.
(xvi)
The Company hereby agrees not to take, directly or indirectly, any
action designed to cause or result in, or that has constituted or
might reasonably be expected to constitute, under the Exchange Act
or otherwise, the stabilization or manipulation of the price of any
securities of the Company to facilitate the sale or resale of the
Shares.
(b)
Intentionally Omitted.
6. Conditions
of the Underwriter’s Obligations. The obligations of the Underwriter hereunder to
purchase the Shares are subject
to the accuracy, as of the date hereof and at all times
through the Closing Date, and on each Option Closing Date
(as if made on the Closing Date or such Option Closing Date, as
applicable), of and compliance with
all representations, warranties and agreements of the
Company contained herein, the performance by the
Company of its obligations hereunder and the following
additional conditions:
14
(a) If
filing of the Final Prospectus, or any amendment or supplement
thereto, or any Issuer Free Writing Prospectus, is required under
the Securities Act or the Rules and Regulations, the Company shall
have filed the Final Prospectus (or such amendment or supplement)
or such Issuer Free Writing Prospectus with the Commission in the
manner and within the time period so required (without reliance on
Rule 424(b)(8) or 164(b) under the Securities Act); the
Registration Statement shall remain effective; no stop order
suspending the effectiveness of the Registration Statement or any
part thereof, any Rule 462 Registration Statement, or any amendment
thereof, nor suspending or preventing the use of the Time of Sale
Disclosure Package, any Prospectus, the Final Prospectus or any
Issuer Free Writing Prospectus shall have been issued; no
proceedings for the issuance of such an order shall have been
initiated or threatened by the Commission; any request of the
Commission or the Underwriter for additional information (to be
included in the Registration Statement, the Time of Sale Disclosure
Package, any Prospectus, the Final Prospectus, any Issuer Free
Writing Prospectus or otherwise) shall have been complied with to
the satisfaction of the Underwriter.
(b)
The Shares shall be approved for listing on the NYSE, subject to
official notice of issuance.
(c) FINRA
shall have raised no objection to the fairness and reasonableness
of the underwriting terms and arrangements.
(d)
The Underwriter shall not
have reasonably determined,
and advised the Company, that
the Registration Statement, the Time of Sale Disclosure Package,
any Prospectus, the Final Prospectus, or any amendment thereof or
supplement thereto, or any Issuer Free Writing Prospectus, contains
an untrue statement of fact which, in the reasonable opinion of the
Underwriter, is material, or
omits to state a fact which, in the reasonable opinion of the
Underwriter, is material and is
required to be stated therein or necessary to make the statements
therein not misleading.
(e) On or
after the date hereof (i) no downgrading shall have occurred in the
rating accorded any of the Company’s securities by any
“nationally recognized statistical organization,” as
that term is defined by the Commission for purposes of Rule
436(g)(2) under the Securities Act, and (ii) no such organization
shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of
the Company’s securities.
(f) On
the Closing Date and on each Option Closing Date, there shall have
been furnished to the Underwriter the opinion and negative
assurance letters of ▇▇▇▇▇▇
▇▇▇▇▇▇, counsel to the Company, each
dated the Closing Date or the Option Closing Date, as
applicable, and addressed to the Underwriter, in form and substance
reasonably satisfactory to the Underwriter.
(g) On
the Closing Date and on each Option Closing Date, there shall have
been furnished to the Underwriter the opinion and negative
assurance letters of ▇▇▇▇▇▇▇▇
Law Group LLP, Nevada corporate
counsel to the Company, each dated the Closing Date or the Option
Closing Date, as applicable, and addressed to the
Underwriter, in form and substance reasonably satisfactory to the
Underwriter.
(h) Intentionally
Omitted.
(i) On
the Closing Date and on each Option Closing Date, there shall have
been furnished to the Underwriter the negative assurance letter of
▇▇▇▇▇▇▇▇ & Worcester LLP, counsel to the Underwriter, dated the
Closing Date or the Option Closing Date, as applicable, and
addressed to the Underwriter, in form
and substance reasonably satisfactory to
Underwriter.
(j) The
Underwriter shall have received a letter
of ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
P.C., on the
Closing Date and on each Option Closing Date, addressed to the
Underwriter, confirming that they are independent public
accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the
qualifications of accountants under Rule 2-01 of Regulation S-X of
the Commission, and confirming, as of the date of each such letter
(or, with respect to matters involving changes or developments
since the respective dates as of which specified financial
information is given in the Registration Statement, the Time of
Sale Disclosure Package and the Final Prospectus, as of a date not
prior to the date hereof or more than five days prior to the date
of such letter), the conclusions and findings of said firm with
respect to the financial information and other matters required by
the Underwriter.
15
(k) On
the Closing Date and on each Option Closing Date, there shall have
been furnished to the Underwriter a certificate, dated the Closing Date and on each
Option Closing Date and addressed to the Underwriter, signed by the
chief executive officer and the chief financial officer of the
Company, in their capacity as officers of the Company, to the
effect that:
(i)
The representations and
warranties of the Company in this Agreement that are qualified by
materiality or by reference to any Material Adverse Effect are true
and correct in all respects, and all other representations and
warranties of the Company in this Agreement are true and correct,
in all material respects, as if made at and as of the Closing Date
and on the Option Closing Date, and the Company has complied with
all the agreements and satisfied all the conditions on its part
required to be performed or satisfied at or prior to the Closing
Date or on the Option Closing Date, as
applicable;
(ii) No
stop order or other order (A) suspending the effectiveness of the
Registration Statement or any part thereof or any amendment
thereof, (B) suspending the qualification of the Shares for offering or sale, or (C)
suspending or preventing the use of the Time of Sale Disclosure
Package, any Prospectus, the Final Prospectus or any Issuer Free
Writing Prospectus, has been issued, and no proceeding for that
purpose has been instituted or, to their knowledge, is contemplated
by the Commission or any state or regulatory body;
(iii) There
has been no occurrence of any event resulting or reasonably likely
to result in a Material Adverse Effect during the period from and
after the date of this Agreement and prior to the Closing Date
or on the Option Closing Date, as
applicable; and
(iv) Each
of the Company and the Subsidiaries is duly qualified to conduct
business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good
standing could not have or reasonably be expected to result in: (a)
a Material Adverse Effect on the legality, validity or
enforceability of this Agreement and any related transaction
documents, (ii) a Material Adverse Effect on the result of
operations, assets, business, prospects or condition (financial or
otherwise) of the Company and the subsidiaries, taken as a whole,
or (iii) a Material Adverse Effect on the Company’s ability
to perform in any material respect on a timely basis its
obligations under this Agreement and any related transaction
documents and no proceeding has been instituted in any jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or
qualification.
(l)
Intentionally Omitted.
(m)
On or before the Closing Date,
the Underwriter shall have received a duly executed lock-up
agreement (each a “Lock-Up Agreement”)
in the form set forth on
Exhibit A
hereto, by and between the Underwriter
and each of the parties specified in Schedule
III.
(n) The
Company shall
have furnished to the Underwriter and its counsel such additional
documents, certificates and evidence as the Underwriter or its
counsel may have requested, including without limitation, a
secretary’s certificate.
If any
condition specified in this Section 6 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be
terminated by the Underwriter by notice to the Company at any time at or prior to the
Closing Date or on the Option Closing
Date, as applicable, and such termination shall be without
liability of any party to any other party, except that Section 7
and Section 8 shall survive any such termination and remain in full
force and effect.
16
7. Indemnification
and Contribution.
(a) The
Company agrees to indemnify, defend and hold harmless the
Underwriter, its affiliates, directors, officers, managers,
members, employees, representatives, Underwriter’s counsel,
and agents, and each person, if any, who controls the Underwriter
within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any losses, claims,
damages or liabilities to which such party may become subject,
under the Securities Act or otherwise (including in settlement of
any litigation if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon (i) an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including
the information deemed to be a part of the Registration Statement
at the time of effectiveness and at any subsequent time pursuant to
Rules 430A and 430B of the Rules and Regulations, or arise out of
or are based upon the omission from the Registration Statement, or
alleged omission to state therein, a material fact required to be
stated therein or necessary to make the statements therein not
misleading (ii) an untrue statement or alleged untrue statement of
a material fact contained in the Time of Sale Disclosure Package,
any Written Testing-the-Waters Communications, any Prospectus, the
Final Prospectus, or any amendment or supplement thereto, any
Issuer Free Writing Prospectus, or the Marketing Materials or in
any other materials used in connection with the offering of
the Shares, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading, (iii) in whole or in part, any
inaccuracy in the representations and warranties of the Company
contained herein, or (iv) in whole or in part, any failure of the
Company to perform its obligations hereunder or under law, and will
reimburse such party for any legal or other expenses reasonably
incurred by such party in connection with evaluating, investigating
or defending against such loss, claim, damage, liability or
action; provided,
however, that such indemnity
shall not inure to the benefit of the Underwriter (or any person
controlling the Underwriter) in any such case to the extent that
any such loss, claim, damage, liability or action arises out of or
is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement,
the Time of Sale Disclosure Package, any Written Testing-the-Waters
Communications, any Prospectus, the Final Prospectus, or any
amendment or supplement thereto or any Issuer Free Writing
Prospectus, in reliance upon and in conformity with written
information furnished to the Company by the Underwriter
specifically for use in the preparation thereof, which written
information is described in Section 7(g).
(b)
Intentionally Omitted.
(c) The
Underwriter will indemnify, defend and hold harmless the Company,
its directors and each officer of the Company who signs the
Registration Statement and each
person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any losses, claims, damages or liabilities to
which such party may become subject, under the Securities Act or
otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the
Underwriter), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, the Time of
Sale Disclosure Package, any Prospectus, the Final Prospectus, or
any amendment or supplement thereto or any Issuer Free Writing
Prospectus, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, the
Time of Sale Disclosure Package, any Prospectus, the Final
Prospectus, or any amendment or supplement thereto or any Issuer
Free Writing Prospectus in reliance upon and in conformity with
written information furnished to the Company by the Underwriter
specifically for use in the preparation thereof, which written
information is described in Section 7(g) and will reimburse such
party for any legal or other expenses reasonably incurred by such
party in connection with evaluating, investigating, and defending
against any such loss, claim, damage, liability or action.
The obligation of the Underwriter to
indemnify the Company (including any controlling person, director
or officer thereof) shall be limited to the amount of the
underwriting discount applicable to the Shares to be purchased by
the Underwriter hereunder actually received by the
Underwriter.
17
(d) Promptly
after receipt by an indemnified party under subsection (a) or (b)
above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the
failure to notify the indemnifying party shall not relieve the
indemnifying party from any liability that it may have to any
indemnified party except to the extent such indemnifying party has
been materially prejudiced by such failure. In case any such action
shall be brought against any indemnified party, and it shall notify
the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the
extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of the
indemnifying party’s election so to assume the defense
thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof; provided, however, that if (i) the indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal
defenses available to it or other indemnified parties that are
different from or in addition to those available to the
indemnifying party, (ii) a conflict or potential conflict exists
(based on advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of
such action on behalf of the indemnified party), or (iii) the
indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such
action within a reasonable time after receiving notice of the
commencement of the action, the indemnified party shall have the
right to employ a single counsel to represent it in any claim in
respect of which indemnity may be sought under subsection (a) or
(b) of this Section 7, in which event the reasonable fees and
expenses of such separate counsel shall be borne by the
indemnifying party or parties and reimbursed to the indemnified
party as incurred.
The
indemnifying party under this Section 7 shall not be liable for any
settlement of any proceeding effected without its written consent,
but if settled with such consent or if there be a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or
expense by reason of such settlement or judgment. 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 action, suit or proceeding in
respect of which any indemnified party is a party or could be named
and indemnity was or would be sought hereunder by such indemnified
party, unless such settlement, compromise or consent (a) includes
an unconditional release of such indemnified party from all
liability for claims that are the subject matter of such action,
suit or proceeding and (b) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf
of any indemnified party.
(e) If
the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party
as a result of the losses, claims, damages or liabilities referred
to in subsection (a) or (b) above, (i) in such proportion as is
appropriate to reflect the relative benefits received by The
Company on the one hand and the Underwriter on the other
from the offering and sale of the Shares or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the Underwriter on the other
in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriter on the other
shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by
the Company bear to the total underwriting discount received
by the Underwriter, in each case as set forth in the table on the
cover page of the Final Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
supplied by the Company or the Underwriter and the parties’
relevant intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The
Company and the Underwriter agree that it would not be just and
equitable if contributions pursuant to this subsection (e) were to
be determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable
considerations referred to in the first sentence of this subsection
(e). The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first
sentence of this subsection (e) 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 that is the subject of this subsection (e).
Notwithstanding the provisions of this subsection
(e), the Underwriter shall not be required to
contribute any amount in excess of the amount of the of the
underwriting discount applicable to the Shares to be purchased by
the Underwriter hereunder actually received by the Underwriter. 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.
18
(f)
The obligations of the Company under this Section 7 shall be in addition to any
liability that the Company may otherwise have and the benefits of such
obligations shall extend, upon the same terms and conditions, to
the Underwriter and its officers, directors, managers, and members
and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act; and the obligations of the Underwriter under this
Section 7 shall be in addition to any liability that the
Underwriter may otherwise have and the benefits of such obligations
shall extend, upon the same terms and conditions, to the Company
and its officers, directors and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act.
(g) For
purposes of this Agreement, the Underwriter confirms, and the
Company acknowledges, that there is no information
concerning the Underwriter furnished in writing to the
Company by the Underwriter specifically for preparation of
or inclusion in the Registration Statement, the Time of Sale
Disclosure Package, any Prospectus, the Final Prospectus or any
Issuer Free Writing Prospectus, other than the statement set forth
in the last paragraph on the cover page of the Prospectus, the
marketing and legal names of the Underwriter, and the statements
set forth in the “Underwriting” section of the
Registration Statement, the Time of Sale Disclosure Package, and
the Final Prospectus only insofar as such statements relate to the
amount of selling concession and re-allowance, if any, or to
over-allotment, stabilization and related activities that may be
undertaken by the Underwriter.
8.
Representations
and Agreements to Survive Delivery. All representations, warranties, and agreements
of the Company contained herein or in certificates delivered pursuant
hereto, including, but not limited to, the agreements of the
Underwriter and the Company contained in Section 4 hereof, shall
remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Underwriter or any
controlling person thereof, or the Company or any of its officers, directors, or controlling
persons, and shall survive delivery of, and payment for, the
Shares to and by the
Underwriter hereunder.
9.
Termination
of this Agreement.
(a) The
Underwriter shall have the right to terminate this Agreement
by giving notice to the Company as hereinafter specified at any
time at or prior to the Closing Date or any Option Closing Date (as
to the Option Shares to be purchased on such Option Closing Date
only), if in the discretion of the Underwriter, (i) there has occurred any material adverse
change in the securities markets or any event, act or occurrence
that has materially disrupted, or in the opinion of the
Underwriter, will in the future
materially disrupt, the securities markets or there shall be such a
material adverse change in general financial, political or economic
conditions or the effect of international conditions on the
financial markets in the United States is such as to make it, in
the judgment of the Underwriter, inadvisable or impracticable to market
the Shares or enforce contracts
for the sale of the Shares (ii)
trading in the Company’s Common Stock shall have been
suspended by the Commission or the NYSE or trading in securities
generally on the NYSE, the NYSE MKT or the Nasdaq Stock Market,
shall have been suspended, (iii) minimum or maximum prices for
trading shall have been fixed, or maximum ranges for prices for
securities shall have been required, on the NYSE, the NYSE MKT or
the Nasdaq Stock Market, by such exchange or by order of the
Commission or any other governmental authority having jurisdiction,
(iv) a banking moratorium shall have been declared by federal or
state authorities, (v) there shall have occurred any attack on,
outbreak or escalation of hostilities or act of terrorism involving
the United States, any declaration by the United States of a
national emergency or war, any substantial change or development
involving a prospective substantial change in United States or
international political, financial or economic conditions or any
other calamity or crisis, or (vi) the Company suffers any loss by
strike, fire, flood, earthquake, accident or other calamity,
whether or not covered by insurance, or (vii) in the judgment of
the Underwriter, there has
been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the
Registration Statement, the Time of Sale Disclosure Package or the
Final Prospectus, any material adverse change in the assets,
properties, condition, financial or otherwise, or in the results of
operations, business affairs or business prospects of the Company
and its subsidiaries considered as a whole, whether or not arising
in the ordinary course of business. Any such termination shall be
without liability of any party to any other party except that the
provisions of Section 7 and Section 8 hereof shall at all times be
effective and shall survive such termination.
(b)
If
the Underwriter elects to
terminate this Agreement as provided in this Section, the Company
shall be notified promptly by the Underwriter by telephone, confirmed by
letter.
19
10. Underwriter
Cash Fee; Right of First Refusal.
(a)
As compensation for services rendered, on the Closing
Date and the Option Closing Date (if any), the Company shall pay to
the Underwriter a cash fee equal to six percent (6%) of the gross
proceeds received by the Company from the sale of the
Shares.
(b) From
the date hereof until August 3, 2019, if the Company or any of its
subsidiaries raises funds by means of a public offering or a
private placement of equity securities using an underwriter or
placement agent, then the Underwriter shall have an irrevocable
right of first refusal to participate as sole book running and/or
sole placement agent with respect to any such transaction with
underwriting fees or placement agent fees equivalent to at least
thirty-five percent (35%) of the aggregate fees paid to the
underwriter or placement agent for such transaction.
11. Notices.
Except as otherwise provided herein, all communications hereunder
shall be in writing and, if to the Underwriter, shall be mailed,
delivered or telecopied to ▇▇▇▇ Capital Partners, LLC, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, telecopy
number: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Managing Director; and if to the
Company, shall be mailed, delivered or telecopied to it at ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, telecopy
number: (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇; or in each case to such other address as
the person to be notified may have requested in writing. Any party
to this Agreement may change such address for notices by sending to
the parties to this Agreement written notice of a new address for
such purpose.
12. Persons
Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors
and assigns and the controlling persons, officers and directors and
other persons referred to in Section 7. Nothing in this Agreement
is intended or shall be construed to give to any other person, firm
or corporation any legal or equitable remedy or claim under or in
respect of this Agreement or any provision herein contained. The
term “successors and assigns” as herein used shall not
include any purchaser, as such purchaser, of any of the Shares from
the Underwriter.
13. Absence
of Fiduciary Relationship. The
Company acknowledges and agrees that: (a) the Underwriter has been
retained solely to act as underwriter in connection with the sale
of the Shares and that no fiduciary, advisory or agency
relationship between the Company and the Underwriter has been created in respect of
any of the transactions contemplated by this Agreement,
irrespective of whether the Underwriter has advised or is advising
the Company on other matters; (b) the price and other terms of the
Shares set forth in this Agreement were established by the
Company following discussions and arms-length negotiations
with the Underwriter and the Company is capable of evaluating and understanding and
understands and accepts the terms, risks and conditions of the
transactions contemplated by this Agreement; (c) it has been
advised that the Underwriter and its affiliates are engaged in a
broad range of transactions that may involve interests that differ
from those of the Company and that no Underwriter has any obligation to
disclose such interest and transactions to the
Company by virtue of any fiduciary, advisory or agency
relationship; and (d) it has been advised that the Underwriter is
acting, in respect of the transactions contemplated by this
Agreement, solely for the benefit of the Underwriter, and not on
behalf of the Company.
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 be
deemed or constitute a continuing waiver unless otherwise expressly
provided.
15. Partial
Unenforceability. The
invalidity or unenforceability of any section, paragraph, clause or
provision of this Agreement shall not affect the validity or
enforceability of any other section, paragraph, clause or
provision.
16. Governing
Law. This Agreement shall be
governed by and construed in accordance with the laws of the State
of New York.
17. Submission
to Jurisdiction. The Company
irrevocably (a) submits to the jurisdiction of the Supreme Court of
the State of New York, Borough of Manhattan or the United States
District Court for the Southern District of New York for the
purpose of any suit, action, or other proceeding arising out of
this Agreement, or any of the agreements or transactions
contemplated by this Agreement, the Registration Statement, the
Time of Sale Disclosure Package, any Prospectus and the Final
Prospectus (each a “Proceeding”),
(b) agrees that all claims in respect of any Proceeding may be
heard and determined in any such court, (c) waives, to the fullest
extent permitted by law, any immunity from jurisdiction of any such
court or from any legal process therein, (d) agrees not to commence
any Proceeding other than in such courts, and (e) waives, to the
fullest extent permitted by law, any claim that such Proceeding is
brought in an inconvenient forum. THE COMPANY (ON BEHALF OF ITSELF
AND, TO THE FULLEST EXTENT PERMITTED BY LAW, ON BEHALF OF ITS
RESPECTIVE EQUITY HOLDERS AND CREDITORS) HEREBY WAIVES ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON,
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION
STATEMENT, THE TIME OF SALE DISCLOSURE PACKAGE, ANY PROSPECTUS AND
THE FINAL PROSPECTUS.
18. Counterparts.
This Agreement may be executed and
delivered (including by facsimile transmission or electronic mail)
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.
[Signature
Page Follows]
20
Please sign and return to the Company the enclosed
duplicates of this letter whereupon this letter will become a
binding agreement between the Company and
the Underwriter in accordance with its terms.
|
|
Very truly yours,
By:
/s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer and
Chairman
of the
Board
|
Confirmed as of the date first above-mentioned
by the Underwriter.
▇▇▇▇ CAPITAL PARTNERS, LLC
By:
/s/ ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Head of Equity Capital
Markets
[Signature
page to Underwriting Agreement]
21
SCHEDULE I
|
Name
|
Number of Firm
Shares
to be Purchased
|
Number of Option
Shares
to be Purchased
|
|
▇▇▇▇
Capital Partners, LLC
|
13,750,000
|
2,062,500
|
|
|
|
|
22
SCHEDULE II
Free Writing Prospectus
1. None.
23
SCHEDULE III
List of officers, directors and stockholders executing lock-up
agreements
▇▇▇▇▇▇▇
▇. ▇▇▇▇
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
G. ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇
▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq.
▇▇▇
▇▇▇▇▇▇ “Trey” ▇▇▇▇▇▇▇ III
24
EXHIBIT A
Form of Lock-Up Agreement
LOCK-UP AGREEMENT
July
11, 2019
▇▇▇▇
Capital Partners, LLC
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re:
Inuvo, Inc. (the “Company”)
Ladies
and Gentlemen:
The
undersigned is an owner of record or beneficially of certain shares
of the Company’s common stock of the Company, $0.001 par
value per share (“Common
Stock”), and/or securities convertible into,
exchangeable, or exercisable for Common Stock (“Securities”). The Company proposes
to enter into an underwriting agreement (the “Underwriting Agreement”) with you
as the underwriter, with respect to a public offering of the
Company’s Common Stock (the “Offering”). The undersigned
acknowledges that the Offering will be of benefit to the
undersigned. The undersigned also acknowledges that you will rely
on the representations and agreements of the undersigned contained
in this letter in connection with entering into the Underwriting
Agreement and performing your and their obligations
thereunder.
In
consideration of the foregoing and as an inducement to you as
underwriter, the undersigned hereby agrees that the undersigned
will not, without your prior written consent (which consent may be
withheld in your sole discretion), directly or indirectly, sell,
offer to sell, contract or agree to sell, or grant any option for
the sale (including without limitation any short sale), grant any
security interest in, pledge, hypothecate, hedge, establish an open
“put equivalent position” within the meaning of Rule
16a-1(h) under the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder (collectively, the
“Exchange Act”)
or otherwise dispose of or enter into any transaction which is
designed to, or could be expected to, result in the disposition
(whether by actual disposition or effective economic disposition
due to cash settlement or otherwise by the Company or any affiliate
of the Company or any person in privity with the Company or any
affiliate of the Company) (collectively, a “Disposition”) of any shares of
Common Stock or any Securities currently or hereafter owned either
of record or beneficially (as defined in Rule 13d-3 under the
Exchange Act) by the undersigned, or publicly announce the
undersigned’s intention to do any of the foregoing
(provided, however, that
the undersigned may (i) complete one or more gift transfers of
Securities to immediate family member(s) (as defined in Item 404(a)
of Regulation S-K under the Exchange Act) who agree in writing to
be similarly bound for the remainder of the Lock-up Period (as
defined below) or (ii) transfer Securities to one or more trusts
for bona fide estate planning purposes, in each case without prior
written consent and upon three (3) business days’ written
notice to you), for a period commencing on the date hereof and
continuing through the close of trading on the date ninety (90)
days following the Closing Date, as defined in the Underwriting
Agreement, subject to adjustment as discussed below (the
“Lock-up
Period”).
The
foregoing restrictions have been expressly agreed to preclude the
holder of shares of Common Stock and/or the Securities from
engaging in any hedging or other transaction which is designed to
or reasonably expected to lead to or result in a Disposition of
shares of Common Stock or Securities during the Lock-up Period,
even if such shares of Common Stock or Securities would be disposed
of by someone other than such holder. Such prohibited hedging or
other transactions would include, without limitation, any short
sale (whether or not against the box) or any purchase, sale, or
grant of any right (including, without limitation, any put or call
option) with respect to any shares of Common Stock or Securities or
with respect to any security (other than a broad-based market
basket or index) that includes, relates to, or derives any
significant part of its value from shares of Common Stock or
Securities.
The
undersigned also agrees and consents to the entry of stop transfer
instructions with the Company’s transfer agent and registrar
against the transfer of shares of Common Stock or Securities held
by the undersigned except in compliance with the foregoing
restrictions.
The
undersigned understands that the underwriter is entering into the
Underwriting Agreement and proceeding with the Offering in reliance
upon this Lock-Up Agreement.
This
agreement is irrevocable and will be binding on the undersigned and
the respective successors, heirs, personal representatives, and
assigns of the undersigned.
This
Lock-Up Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
Nothing
in this Lock-up Agreement shall constitute an obligation to
purchase shares of Common Stock or Securities of the Company.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be
made pursuant to the Underwriting Agreement, the terms of which are
subject to negotiation among the parties thereto.
[Signature Page Follows]
25
The
undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Agreement and
that, upon request, the undersigned will execute any additional
documents necessary in connection with the enforcement hereof. All
authority herein conferred or agreed to be conferred and any
obligations of the undersigned shall be binding upon the
successors, assigns, heirs or personal representatives of the
undersigned.
Very
truly yours,
Printed
Name of Holder
By:
Signature
Printed
Name of Person Signing
(and
indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
26