UNDERWRITING AGREEMENT between MERIDIAN WASTE SOLUTIONS, INC. and JOSEPH GUNNAR & CO., LLC as Representative of the Several Underwriters MERIDIAN WASTE SOLUTIONS, INC. UNDERWRITING AGREEMENT
Exhibit 1.1
between
and
▇▇▇▇▇▇
▇▇▇▇▇▇ & CO., LLC
as
Representative of the Several Underwriters
January
24, 2017
▇▇▇▇▇▇
▇▇▇▇▇▇ & Co., LLC
As
Representative of the several Underwriters named on Schedule 1
attached hereto
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
The
undersigned, Meridian Waste Solutions, Inc., a corporation formed
under the laws of the State of New York (collectively with its
subsidiaries and affiliates, including, without limitation, all
entities disclosed or described in the Registration Statement (as
hereinafter defined) as being subsidiaries or affiliates of
Meridian Waste Solutions, Inc., the “Company”), hereby confirms its
agreement (this “Agreement”) with ▇▇▇▇▇▇ ▇▇▇▇▇▇
& Co., LLC. (hereinafter referred to as “you”
(including its correlatives) or the “Representative”) and with the
other underwriters named on Schedule 1 hereto for which the
Representative is acting as representative (the Representative and
such other underwriters being collectively called the
“Underwriters”
or, individually, an “Underwriter”) as
follows:
1.
Purchase and Sale of
Securities.
1.1 Firm Securities.
1.1.1. Nature
and Purchase of Firm Securities.
(i) On the basis of the
representations and warranties herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue
and sell to the several Underwriters, an aggregate of 3,000,000
shares (each, a “Firm
Share” and collectively, the “Firm Shares”) of the
Company’s common stock, par value $0.025 per share (the
“Common Stock”).
For every one Firm Share issued and sold by the Company, the
Company shall issue and sell to the several Underwriters one
warrant to purchase one share of Common Stock at an exercise price
of $5.16 per share (125.0% of the public offering price per Firm
Security in the Offering) (each, a “Warrant” and collectively, the
“Warrants”), or
an aggregate of 3,000,000 Warrants to purchase an aggregate of
3,000,000 shares of Common Stock (the “Firm Warrants” and together with
the Firm Shares, the “Firm
Securities”). The Firm Shares and the Firm Warrants
will be separated immediately upon issuance.
(ii) The
Underwriters, severally and not jointly, agree to purchase from the
Company the number of Firm Shares and Firm Warrants set forth
opposite their respective names on Schedule 1 attached hereto and
made a part hereof at a purchase price of $3.8409 per combined Firm
Share and Firm Warrant (93% of the per Firm Security public
offering price). The Firm Securities are to be offered initially to
the public at the offering prices set forth on the cover page of
the Prospectus (as defined in Section 2.1.1 hereof).
1.1.2. Firm
Securities Payment and Delivery.
(i) Delivery and
payment for the Firm Securities shall be made at 10:00 a.m.,
Eastern time, on the fourth (4th) Business Day
following the effective date (the “Effective Date”) of the
Registration Statement (as defined in Section 2.1.1 below) or at
such earlier time as shall be agreed upon by the Representative and
the Company, at the offices of ▇▇▇▇▇▇▇▇▇ Traurig, LLP, The MetLife
Building, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (“Representative Counsel”), or at
such other place (or remotely by facsimile or other electronic
transmission) as shall be agreed upon by the Representative and the
Company. The hour and date of delivery and payment for the Firm
Securities is called the “Closing Date.”
(ii) Payment
for the Firm Securities shall be made on the Closing Date by wire
transfer in Federal (same day) funds, payable to the order of the
Company upon delivery of the certificates (in form and substance
satisfactory to the Underwriters) representing the Firm Securities
(or through the facilities of the Depository Trust Company
(“DTC”)) for the
account of the Underwriters. The Firm Securities shall be
registered in such name or names and in such authorized
denominations as the Representative may request in writing at least
two (2) full Business Days prior to the Closing Date. The Company
shall not be obligated to sell or deliver the Firm Securities
except upon tender of payment by the Representative for all of the
Firm Securities. The term “Business Day” means any day other
than a Saturday, a Sunday or a legal holiday or a day on which
banking institutions are authorized or obligated by law to close in
New York, New York.
1.2 Over-allotment
Option.
1.2.1. Option
Securities. The Company hereby grants to the Underwriters an
option (the “Over-allotment
Option”) to purchase up to an additional 450,000
shares of Common Stock, representing up to fifteen percent (15%) of
the Firm Shares sold in the offering (the “Option Shares”), and/or 450,000
Warrants to purchase an additional 450,000 shares of Common Stock,
representing up to 15% of the Firm Warrants sold in the Offering
(the “Option
Warrants”), in each case for the purpose of covering
over-allotments of such securities, if any. The Over-allotment
Option is, at the Underwriters’ sole discretion, for Option
Shares and Option Warrants together, solely Option Shares, solely
Option Warrants, or any combination thereof (each, an
“Option
Security” and collectively, the “Option Securities”). The Firm
Securities and the Option Securities are collectively referred to
as the “Securities.” The Securities, the
shares of Common Stock underlying the Firm Warrants, and the shares
of Common Stock underlying the Option Warrants are referred to
herein collectively as the “Public Securities.” The Firm
Securities shall be issued directly by the Company and shall have
the rights and privileges described in the Registration Statement,
the Pricing Disclosure Package and the Prospectus referred to
below. The Firm Warrants shall be issued pursuant to, and shall
have the rights and privileges set forth in, a warrant agreement,
dated on or before the Closing Date, between the Company and Issuer
Direct Corporation, as warrant agent (the “Warrant Agreement”). The offering
and sale of the Public Securities is herein referred to as the
“Offering.”
1.2.2. Exercise
of Option. The Over-allotment Option granted pursuant to
Section 1.2.1 hereof may be exercised by the Representative as to
all (at any time) or any part (from time to time) of the Option
Securities within 45 days after the Effective Date. The purchase
price to be paid per Option Share shall be equal to $3.8316 per
Option Share. The purchase price to be paid per Option Warrant
shall be equal to $0.0093 per Option Warrant. The Underwriters
shall not be under any obligation to purchase any Option Securities
prior to the exercise of the Over-allotment Option. The
Over-allotment Option granted hereby may be exercised by the giving
of oral notice to the Company from the Representative, which must
be confirmed in writing by overnight mail or facsimile or other
electronic transmission setting forth the number of Option
Securities to be purchased and the date and time for delivery of
and payment for the Option Securities (the “Option Closing Date”), which shall
not be later than two (2) full Business Days after the date of the
notice or such other time as shall be agreed upon by the Company
and the Representative, at the offices of Representative Counsel or
at such other place (including remotely by facsimile or other
electronic transmission) as shall be agreed upon by the Company and
the Representative. If such delivery and payment for the Option
Securities does not occur on the Closing Date, the Option Closing
Date will be as set forth in the notice. Upon exercise of the
Over-allotment Option with respect to all or any portion of the
Option Securities, subject to the terms and conditions set forth
herein, (i) the Company shall become obligated to sell to the
Underwriters the number of Option Securities specified in such
notice, (ii) each of the Underwriters, acting severally and not
jointly, shall purchase that portion of the total number of Option
Shares then being purchased that the number of Option Shares as set
forth in Schedule 1
opposite the name of such Underwriter bears to the total number of
Option Shares and (iii) each of the Underwriters, acting severally
and not jointly, shall purchase that portion of the total number of
Option Warrants then being purchased that the number of Option
Warrants as set forth in Schedule 1 opposite the name of
such Underwriter bears to the total number of Option Warrants,
subject, in each case, to such adjustments as the Representative,
in its sole discretion, shall determine.
1
1.2.3. Payment
and Delivery. Payment for the Option Securities shall be
made on the Option Closing Date by wire transfer in Federal (same
day) funds, payable to the order of the Company upon delivery of
the certificates (in form and substance satisfactory to the
Underwriters) representing the Option Securities (or through the
facilities of DTC) for the account of the Underwriters. The Option
Securities shall be registered in such name or names and in such
authorized denominations as the Representative may request in
writing at least two (2) full Business Days prior to the Option
Closing Date. The Company shall not be obligated to sell or deliver
the Option Securities except upon tender of payment by the
Representative for applicable Option Securities. The Option Closing
Date may be simultaneous with, but not earlier than, the Closing
Date; and in the event that such time and date are simultaneous
with the Closing Date, the term “Closing Date” shall refer to the
time and date of delivery of the Firm Securities and Option
Securities.
2. Representations and Warranties of the
Company. The Company represents and warrants to the
Underwriters as of the Applicable Time (as defined below), as of
the Closing Date and as of the Option Closing Date, if any, as
follows:
2.1 Filing
of Registration Statement.
2.1.1. Pursuant
to the Securities Act. The Company has filed with the U.S.
Securities and Exchange Commission (the “Commission”) a registration
statement, and an amendment or amendments thereto, on Form S-1
(File No. 333-213579), including any related prospectus or
prospectuses, for the registration of the Public Securities under
the Securities Act of 1933, as amended (the “Securities Act”), which
registration statement and amendment or amendments have been
prepared by the Company in all material respects in conformity with
the requirements of the Securities Act and the rules and
regulations of the Commission under the Securities Act (the
“Securities Act
Regulations”) and will contain all material statements
that are required to be stated therein in accordance with the
Securities Act and the Securities Act Regulations. Except as the
context may otherwise require, such registration statement, as
amended, on file with the Commission at the time the registration
statement became effective (including the Preliminary Prospectus
included in the registration statement, financial statements,
schedules, exhibits and all other documents filed as a part thereof
or incorporated therein and all information deemed to be a part
thereof as of the Effective Date pursuant to paragraph (b) of Rule
430A of the Securities Act Regulations (the “Rule 430A Information”)), is
referred to herein as the “Registration Statement.” If the
Company files any registration statement pursuant to Rule 462(b) of
the Securities Act Regulations, then after such filing, the term
“Registration Statement” shall include such
registration statement filed pursuant to Rule 462(b). The
Registration Statement has been declared effective by the
Commission on the date hereof.
Each
prospectus used prior to the effectiveness of the Registration
Statement, and each prospectus that omitted the Rule 430A
Information that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a
“Preliminary
Prospectus.” The Preliminary Prospectus, subject to
completion, dated January 13, 2017, that was included in the
Registration Statement immediately prior to the Applicable Time is
hereinafter called the “Pricing Prospectus.” The final
prospectus in the form first furnished to the Underwriters for use
in the Offering is hereinafter called the “Prospectus.” Any reference to the
“most recent Preliminary Prospectus” shall be deemed to
refer to the latest Preliminary Prospectus included in the
Registration Statement.
2
“Applicable Time” means 5:15 p.m.,
Eastern time, on the date of this Agreement.
“Issuer Free Writing Prospectus”
means any “issuer free writing prospectus,” as defined
in Rule 433 of the Securities Act Regulations (“Rule 433”), including without
limitation any “free writing prospectus” (as defined in
Rule 405 of the Securities Act Regulations) relating to the Public
Securities that is (i) required to be filed with the
Commission by the Company, (ii) a “road show that is a
written communication” within the meaning of Rule
433(d)(8)(i), whether or not required to be filed with the
Commission, or (iii) exempt from filing with the Commission
pursuant to Rule 433(d)(5)(i) because it contains a description of
the Public Securities or of the Offering that does not reflect the
final terms, in each case in the form filed or required to be filed
with the Commission or, if not required to be filed, in the form
retained in the Company’s records pursuant to Rule
433(g).
“Issuer General Use Free Writing
Prospectus” means any Issuer Free Writing Prospectus
that is intended for general distribution to prospective investors
(other than a “bona
fide electronic road show,” as defined in Rule 433),
as evidenced by its being specified in Schedule 2-B
hereto.
“Issuer Limited Use Free Writing
Prospectus” means any Issuer Free Writing Prospectus
that is not an Issuer General Use Free Writing
Prospectus.
“Pricing Disclosure Package” means
any Issuer General Use Free Writing Prospectus issued at or prior
to the Applicable Time, the Pricing Prospectus and the information
included on Schedule
2-A hereto, all considered together.
2.1.2. Pursuant
to the Exchange Act. The Common Stock and the Warrants are
registered pursuant to Section 12(b) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). The Company has
taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock or the Warrants
under the Exchange Act, nor has the Company received any
notification that the Commission is contemplating terminating
either such registration.
2.2 Stock Exchange Listing. Each of
the Common Stock and the Warrants has been approved for listing on
The NASDAQ Capital Market (the “Exchange”), and the Company has
taken no action designed to, or likely to have the effect of,
delisting either the Common Stock or the Warrants from the
Exchange, nor has the Company received any notification that the
Exchange is contemplating terminating either such listing except as
described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus.
2.3 No Stop Orders, etc. Neither
the Commission nor, to the Company’s knowledge, any state
regulatory authority has issued any order preventing or suspending
the use of the Registration Statement, any Preliminary Prospectus
or the Prospectus or has instituted or, to the Company’s
knowledge, threatened to institute, any proceedings with respect to
such an order. The Company has complied with each request (if any)
from the Commission for additional information.
2.4 Disclosures in Registration
Statement.
2.4.1. Compliance
with Securities Act and 10b-5 Representation.
3
(i) Each of the
Registration Statement and any post-effective amendment thereto, at
the time it became effective, complied in all material respects
with the requirements of the Securities Act and the Securities Act
Regulations. Each Preliminary Prospectus, including the prospectus
filed as part of the Registration Statement as originally filed or
as part of any amendment or supplement thereto, and the Prospectus,
at the time each was filed with the Commission, complied in all
material respects with the requirements of the Securities Act and
the Securities Act Regulations. Each Preliminary Prospectus
delivered to the Underwriters for use in connection with this
Offering and
the Prospectus was or will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to
▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
(ii) Neither
the Registration Statement nor any amendment thereto, at its
effective time, as of the Applicable Time, at the Closing Date or
at any Option Closing Date (if any), contained, contains or will
contain an untrue statement of a material fact or omitted, omits or
will omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to
statements made or statements omitted in reliance upon and in
conformity with written information furnished to the Company with
respect to the Underwriters by the Representative expressly for use
in the Registration Statement, the Pricing Prospectus or the
Prospectus or any amendment thereof or supplement thereto. The
parties acknowledge and agree that such information provided by or
on behalf of any Underwriter consists solely of the following
disclosure contained in the “Underwriting” section of
the Prospectus: (i) the table showing the number of securities to
be purchased by each Underwriter, (ii) the fourth full paragraph
under the caption “Underwriting”, and (iii) the section
titled “Discretionary Accounts” under the caption
“Underwriting” (the “Underwriters’
Information”).
(iii) The
Pricing Disclosure Package, as of the Applicable Time, at the
Closing Date or at any Option Closing Date (if any), did not, does
not and will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; and each Issuer Limited Use Free
Writing Prospectus hereto does not conflict with the information
contained in the Registration Statement, any Preliminary
Prospectus, the Pricing Prospectus or the Prospectus, and each such
Issuer Limited Use Free Writing Prospectus, as supplemented by and
taken together with the Pricing Prospectus as of the Applicable
Time, did not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that this
representation and warranty shall not apply to statements made or
statements omitted in reliance upon and in conformity with the
Underwriters’ Information; and
(iv) Neither
the Prospectus nor any amendment or supplement thereto (including
any prospectus wrapper), as of its issue date, at the time of any
filing with the Commission pursuant to Rule 424(b), at the Closing
Date or at any Option Closing Date, included, includes or will
include an untrue statement of a material fact or omitted, omits or
will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this
representation and warranty shall not apply to
the Underwriters’ Information.
2.4.2. Disclosure
of Agreements. The agreements and documents described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus conform in all material respects to the descriptions
thereof contained therein and there are no agreements or other
documents required by the Securities Act and the Securities Act
Regulations to be described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus or to be filed with
the Commission as exhibits to the Registration Statement, that have
not been so described or filed. Each agreement or other instrument
(however characterized or described) to which the Company is a
party or by which it is or may be bound or affected and
(i) that is referred to in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, or (ii) is
material to the Company’s business, has been duly authorized
and validly executed by the Company, is in full force and effect in
all material respects and is enforceable against the Company and,
to the Company’s knowledge, the other parties thereto, in
accordance with its terms, except (x) as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar
laws affecting creditors’ rights generally, (y) as
enforceability of any indemnification or contribution provision may
be limited under the federal and state securities laws, and
(z) that the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought. None of such agreements or
instruments has been assigned by the Company, and neither the
Company nor, to the Company’s knowledge, any other party is
in default thereunder and, to the Company’s knowledge, no
event has occurred that, with the lapse of time or the giving of
notice, or both, would constitute a default thereunder. To the best
of the Company’s knowledge, performance by the Company of the
material provisions of such agreements or instruments will not
result in a violation of any existing applicable law, rule,
regulation, judgment, order or decree of any governmental agency or
court, domestic or foreign, having jurisdiction over the Company or
any of its assets or businesses (each, a “Governmental Entity”), including,
without limitation, those relating to environmental laws and
regulations.
4
2.4.3. Prior
Securities Transactions. No securities of the Company have
been sold by the Company or by or on behalf of, or for the benefit
of, any person or persons controlling, controlled by or under
common control with the Company, except as disclosed in the
Registration Statement, the Pricing Disclosure Package and the
Preliminary Prospectus.
2.4.4. Regulations.
The disclosures in the Registration Statement, the Pricing
Disclosure Package and the Prospectus concerning the effects of
federal, state, local and all foreign regulation on the Offering
and the Company’s business as currently contemplated are
correct in all material respects and no other such regulations are
required to be disclosed in the Registration Statement, the Pricing
Disclosure Package and the Prospectus which are not so
disclosed.
2.4.5. No
Other Distribution of Offering Materials. The Company has
not, directly or indirectly, distributed and will not distribute
any offering material in connection with the Offering other than
any Preliminary Prospectus, the Prospectus and other materials, if
any, permitted under the Securities Act and consistent with Section
3.2 below.
2.5 Changes After Dates in Registration
Statement.
2.5.1. No
Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, except as otherwise
specifically stated therein: (i) there has been no material
adverse change in the financial position or results of operations
of the Company, nor any change or development that, singularly or
in the aggregate, would involve a material adverse change or a
prospective material adverse change, in or affecting the condition
(financial or otherwise), results of operations, business, assets
or prospects of the Company (a “Material Adverse Change”);
(ii) there have been no material transactions entered into by
the Company, other than as contemplated pursuant to this Agreement;
and (iii) no officer or director of the Company has resigned
from any position with the Company.
2.5.2. Recent
Securities Transactions, etc. Subsequent to the respective
dates as of which information is given in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, and
except as may otherwise be indicated or contemplated herein or
disclosed in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, the Company has not: (i) issued
any securities or incurred any liability or obligation, direct or
contingent, for borrowed money; or (ii) declared or paid any
dividend or made any other distribution on or in respect to its
capital stock.
5
2.6 Independent Accountants. To the
knowledge of the Company, ▇’▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, P.A., Certified
Public Accountants (the “Auditor”), whose report is filed
with the Commission as part of the Registration Statement, the
Pricing Disclosure Package and the Prospectus, is an independent
registered public accounting firm as required by the Securities Act
and the Securities Act Regulations and the Public Company
Accounting Oversight Board. The Auditor has not, during the periods
covered by the financial statements included in the Registration
Statement, the Pricing Disclosure Package and the Prospectus,
provided to the Company any non-audit services, as such term is
used in Section 10A(g) of the Exchange Act.
2.7 Disclosures in Commission
Filings. Since January 1, 2011, to the Company’s
knowledge, (i) none of the Company’s filings with the
Commission contained any untrue statement of a material fact or
omitted 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; and (ii) the Company has made all
filings with the Commission required under the Exchange Act and the
rules and regulations promulgated of the Commission promulgated
thereunder (the “Exchange Act
Regulations”). Since October 22, 2014, (i) none of the
Company’s filings with the Commission contained any untrue
statement of a material fact or omitted 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; and
(ii) the Company has made all filings with the Commission required
under the Exchange Act Regulations.
2.8 Financial Statements, etc. The
financial statements, including the notes thereto and supporting
schedules included in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, fairly present the financial
position and the results of operations of the Company at the dates
and for the periods to which they apply; and such financial
statements have been prepared in conformity with U.S. generally
accepted accounting principles (“GAAP”), consistently applied
throughout the periods involved (provided that unaudited interim
financial statements are subject to year-end audit adjustments that
are not expected to be material in the aggregate and do not contain
all footnotes required by GAAP); and the supporting schedules
included in the Registration Statement present fairly the
information required to be stated therein. Except as included
therein, no historical or pro forma financial statements are
required to be included in the Registration Statement, the Pricing
Disclosure Package or the Prospectus under the Securities Act or
the Securities Act Regulations. The pro forma and pro forma as
adjusted financial information and the related notes, if any,
included in the Registration Statement, the Pricing Disclosure
Package and the Prospectus have been properly compiled and prepared
in accordance with the applicable requirements of the Securities
Act and the Securities Act Regulations and present fairly the
information shown therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and
circumstances referred to therein. All disclosures contained in the
Registration Statement, the Pricing Disclosure Package or the
Prospectus regarding “non-GAAP financial measures” (as
such term is defined by the rules and regulations of the
Commission), if any, comply with Regulation G of the Exchange Act
and Item 10 of Regulation S-K of the Securities Act, to the extent
applicable. Each of the Registration Statement, the Pricing
Disclosure Package and the Prospectus discloses all material
off-balance sheet transactions, arrangements, obligations
(including contingent obligations), and other relationships of the
Company with unconsolidated entities or other persons that may have
a material current or future effect on the Company’s
financial condition, changes in financial condition, results of
operations, liquidity, capital expenditures, capital resources, or
significant components of revenues or expenses. Except as disclosed in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, (a) neither the
Company nor any of its direct and indirect subsidiaries, including
each entity disclosed or described in the Registration Statement,
the Pricing Disclosure Package and the Prospectus as being a
subsidiary of the Company (each, a “Subsidiary” and, collectively, the
“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, or,
other than in the course of business, any grants under any stock
compensation pla
n, and (d) there has
not been any material adverse change in the Company’s
long-term or short-term debt.
6
2.9 Authorized Capital; Options,
etc. The Company had, at the date or dates indicated in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, the duly authorized, issued and outstanding
capitalization as set forth therein. Based on the assumptions
stated in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, the Company will have on the Closing
Date the adjusted stock capitalization set forth therein. Except as
set forth in, or contemplated by, the Registration Statement, the
Pricing Disclosure Package and the Prospectus, on the Effective
Date, as of the Applicable Time and on the Closing Date and any
Option Closing Date, there will be no stock options, warrants, or
other rights to purchase or otherwise acquire any authorized, but
unissued shares of Common Stock of the Company or any security
convertible or exercisable into shares of Common Stock of the
Company, or any contracts or commitments to issue or sell shares of
Common Stock or any such options, warrants, rights or convertible
securities.
2.10 Valid
Issuance of Securities, etc.
2.10.1. Outstanding
Securities. All issued and outstanding securities of the
Company issued prior to the transactions contemplated by this
Agreement have been duly authorized and validly issued and are
fully paid and non-assessable; the holders thereof have no rights
of rescission with respect thereto, and are not subject to personal
liability by reason of being such holders; and none of such
securities were issued in violation of the preemptive rights of any
holders of any security of the Company or similar contractual
rights granted by the Company. The authorized shares of Common
Stock conform in all material respects to all statements relating
thereto contained in the Registration Statement, the Pricing
Disclosure Package and the Prospectus. The offers and sales of the
outstanding shares of Common Stock were at all relevant times
either registered under the Securities Act and the applicable state
securities or “blue sky” laws or, based in part on the
representations and warranties of the purchasers of such shares,
exempt from such registration requirements. The description of the Company’s stock
option, stock bonus and other stock plans or arrangements, and the
options or other rights granted thereunder, as described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, accurately and fairly present, in all material
respects, the information required to be shown with respect to such
plans, arrangements, options and rights.
2.10.2. Securities
Sold Pursuant to this Agreement. The Firm Shares and Option
Shares have been duly authorized for issuance and sale and, when
issued and paid for, will be validly issued, fully paid and
non-assessable; the holders thereof are not and will not be subject
to personal liability by reason of being such holders; the
Securities are not and will not be subject to the preemptive rights
of any holders of any security of the Company or similar
contractual rights granted by the Company; and all corporate action
required to be taken for the authorization, issuance and sale of
the Firm Shares and the Option Shares has been duly and validly
taken. The Public Securities conform in all material respects to
all statements with respect thereto contained in the Registration
Statement, the Pricing Disclosure Package and the Prospectus. All
corporate action required to be taken for the authorization,
issuance and sale of the Warrants has been duly and validly taken;
the shares of Common Stock issuable upon exercise of the Warrants
have been duly authorized and reserved for issuance by all
necessary corporate action on the part of the Company and when paid
for and issued in accordance with the Warrants and the Warrant
Agreement, the underlying shares of Common Stock will be validly
issued, fully paid and non-assessable; the holders thereof are not
and will not be subject to personal liability by reason of being
such holders; and such shares of Common Stock are not and will not
be subject to the preemptive rights of any holders of any security
of the Company or similar contractual rights granted by the
Company.
7
2.11 Registration
Rights of Third Parties. Except as set forth in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, no holders of any securities of the Company or any
rights exercisable for or convertible or exchangeable into
securities of the Company have the right to require the Company to
register any such securities of the Company under the Securities
Act or to include any such securities in a registration statement
to be filed by the Company.
2.12 Validity
and Binding Effect of Agreements. This Agreement, the
Warrant Agreement and the Warrants have been duly and validly
authorized by the Company, and the Warrant Agreement and the
Warrants, when executed and delivered, will constitute, the valid
and binding agreements of the Company, enforceable against the
Company in accordance with their respective terms, except:
(i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting
creditors’ rights generally; (ii) as enforceability of
any indemnification or contribution provision may be limited under
the federal and state securities laws; and (iii) that the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to
the discretion of the court before which any proceeding therefor
may be brought.
2.13 No
Conflicts, etc. The execution, delivery and performance by
the Company of this Agreement and the Warrant Agreement and all
ancillary documents, the consummation by the Company of the
transactions herein and therein contemplated and the compliance by
the Company with the terms hereof and thereof do not and will not,
with or without the giving of notice or the lapse of time or both:
(i) result in a material breach of, or conflict with any of
the terms and provisions of, or constitute a material default
under, or result in the creation, modification, termination or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to the terms of any agreement or
instrument to which the Company is a party; (ii) result in any
violation of the provisions of the Company’s Certificate of
Incorporation (as the same may be amended or restated from time to
time, the “Charter”) or the by-laws of the
Company; or (iii) violate any existing applicable law, rule,
regulation, judgment, order or decree of any Governmental Entity as
of the date hereof.
2.14 No
Defaults; Violations. No material default exists in the due
performance and observance of any term, covenant or condition of
any material license, contract, indenture, mortgage, deed of trust,
note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any
other material agreement or instrument to which the Company is a
party or by which the Company may be bound or to which any of the
properties or assets of the Company is subject. The Company is not
in violation of any term or provision of its Charter or by-laws, or
in violation of any franchise, license, permit, applicable law,
rule, regulation, judgment or decree of any Governmental
Entity.
2.15 Corporate
Power; Licenses; Consents.
2.15.1. Conduct
of Business. Except as described in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, the
Company has all requisite corporate power and authority, and has
all necessary authorizations, approvals, orders, licenses,
certificates and permits of and from all governmental regulatory
officials and bodies that it needs as of the date hereof to conduct
its business purpose in all material respects as described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus.
2.15.2. Transactions
Contemplated Herein. The Company has all corporate power and
authority to enter into this Agreement and to carry out the
provisions and conditions hereof, and all consents, authorizations,
approvals and orders required in connection therewith have been
obtained. No consent, authorization or order of, and no filing
with, any court, government agency or other body is required for
the valid issuance, sale and delivery of the Public Securities and
the consummation of the transactions and agreements contemplated by
this Agreement and the Warrant Agreement and as contemplated by the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, except with respect to applicable federal and state
securities laws and the rules and regulations of the Financial
Industry Regulatory Authority, Inc. (“FINRA”).
8
2.16 D&O
Questionnaires. To the Company’s knowledge, all
information contained in the questionnaires (the
“Questionnaires”)
completed by each of the Company’s directors and officers
immediately prior to the Offering (the “Insiders”) as supplemented by all
information concerning the Company’s directors, officers and
principal shareholders as described in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, as well as in
the Lock-Up Agreement (as defined in Section 2.25 below), provided
to the Underwriters, is true and correct in all material respects
and the Company has not become aware of any information which would
cause the information disclosed in the Questionnaires to become
materially inaccurate and incorrect.
2.17 Litigation;
Governmental Proceedings. There is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or
governmental proceeding pending or, to the Company’s
knowledge, threatened against, or involving the Company or, to the
Company’s knowledge, any executive officer or director which
has not been disclosed in the Registration Statement, the Pricing
Disclosure Package and the Prospectus which is required to be
disclosed.
2.18 Good
Standing. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of
the State of New York as of the date hereof, and is duly qualified
to do business and is in good standing in each other jurisdiction
in which its ownership or lease of property or the conduct of
business requires such qualification, except where the failure to
qualify, singularly or in the aggregate, would not have or
reasonably be expected to result in a Material Adverse
Change.
2.19 Insurance.
The Company carries or is entitled to the benefits of insurance,
with reputable insurers, in such amounts and covering such risks
which the Company believes are adequate, including, but not limited
to, directors and officers insurance coverage at least equal to
$5,000,000 and the Company has included each Underwriter as an
additional insured party to the directors and officers insurance
coverage and all such insurance is in full force and effect. The
Company has no reason to believe that it will not be able (i) to
renew its existing insurance coverage as and when such policies
expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its
business as now conducted and at a cost that would not result in a
Material Adverse Change.
2.20 Transactions
Affecting Disclosure to FINRA.
2.20.1. Finder’s
Fees. Except as described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, there are no claims,
payments, arrangements, agreements or understandings relating to
the payment of a finder’s, consulting or origination fee by
the Company or any Insider with respect to the sale of the Public
Securities hereunder or any other arrangements, agreements or
understandings of the Company or, to the Company’s knowledge,
any of its shareholders that may affect the Underwriters’
compensation, as determined by FINRA.
2.20.2. Payments
Within Twelve (12) Months. Except as described in the
Registration Statement, the Pricing Disclosure Package, the
Prospectus, or the Company’s periodic reports on Forms 8-K
filed with the Securities and Exchange Commission on March 29,
April 12, June 9, June 17 and July 25, 2016, the Company has not
made any direct or indirect payments (in cash, securities or
otherwise) to: (i) any person, as a finder’s fee,
consulting fee or otherwise, in consideration of such person
raising capital for the Company or introducing to the Company
persons who raised or provided capital to the Company; (ii) any
FINRA member; or (iii) any person or entity that has any
direct or indirect affiliation or association with any FINRA
member, within the twelve (12) months prior to the Effective Date,
other than the payment to the Underwriters as provided hereunder in
connection with the Offering.
9
2.20.3. Use
of Proceeds. None of the net proceeds of the Offering will
be paid by the Company to any participating FINRA member or its
affiliates, except as specifically authorized herein.
2.20.4. FINRA
Affiliation. Except as disclosed in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, there
is no (i) officer or director of the Company, (ii) beneficial owner
of 5% or more of any class of the Company's securities or (iii)
beneficial owner of the Company's unregistered equity securities
which were acquired during the 180-day period immediately preceding
the filing of the Registration Statement that is an affiliate or
associated person of a FINRA member participating in the Offering
(as determined in accordance with the rules and regulations of
FINRA).
2.20.5. Information.
All information provided by the Company in its FINRA questionnaire
to Representative Counsel specifically for use by Representative
Counsel in connection with its Public Offering System filings (and
related disclosure) with FINRA is true, correct and complete in all
material respects.
2.21 Foreign
Corrupt Practices Act. None of the Company and its
Subsidiaries or, to the Company’s knowledge, any director,
officer, agent, employee or affiliate of the Company and its
Subsidiaries or any other person acting on behalf of the Company
and its Subsidiaries, has, directly or indirectly, given or agreed
to give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or
official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was,
is, or may be in a position to help or hinder the business of the
Company (or assist it in connection with any actual or proposed
transaction) that (i) might subject the Company to any damage
or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, might have had a
Material Adverse Change or (iii) if not continued in the
future, might adversely affect the assets, business, operations or
prospects of the Company. The Company has taken reasonable steps to
ensure that its accounting controls and procedures are sufficient
to cause the Company to comply in all material respects with the
Foreign Corrupt Practices Act of 1977, as amended.
2.22 Compliance
with OFAC. None of the Company and its Subsidiaries or, to
the Company’s knowledge, any director, officer, agent,
employee or affiliate of the Company and its Subsidiaries or any
other person acting on behalf of the Company and its Subsidiaries,
is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Department of the
Treasury (“OFAC”), and the Company will not,
directly or indirectly, use the proceeds of the Offering hereunder,
or lend, contribute or otherwise make available such proceeds to
any subsidiary, joint venture partner or other person or entity,
for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
2.23 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 with respect to the Money Laundering Laws is
pending or, to the best knowledge of the Company,
threatened.
10
2.24 Officers’
Certificate. Any certificate signed by any duly authorized
officer of the Company and delivered to you or to Representative
Counsel shall be deemed a representation and warranty by the
Company to the Underwriters as to the matters covered
thereby.
2.25 Lock-Up
Agreements. Schedule 3 hereto contains a
complete and accurate list of the Company’s officers,
directors, each owner of at least 5% of the Company’s
outstanding shares of Common Stock (or securities convertible or
exercisable into shares of Common Stock) and such other parties as
mutually agreed upon by the Company and the Representative
(collectively, the “Lock-Up
Parties”). The Company has caused each of the Lock-Up
Parties to deliver to the Representative an executed Lock-Up
Agreement, in the form attached hereto as Exhibit A (the
“Lock-Up
Agreement”), prior to the execution of this
Agreement.
2.26 Subsidiaries.
All direct and indirect Subsidiaries of the Company are duly
organized and in good standing under the laws of the place of
organization or incorporation, and each Subsidiary is in good
standing in each jurisdiction in which its ownership or lease of
property or the conduct of business requires such qualification,
except where the failure to qualify would not have a material
adverse effect on the assets, business or operations of the Company
taken as a whole. The Company’s ownership and control of each
Subsidiary is as described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus.
2.27 Related
Party Transactions.
2.27.1 Business Relationships. There
are no business relationships or related party transactions
involving the Company or any of its Subsidiaries or any other
person required to be described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus that have not been
described as required.
2.27.2 No Relationships with Customers and
Suppliers. 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, customers or
suppliers of the Company, its Subsidiaries or any of the
Company’s affiliates, on the other hand, which is required to
be described in the Pricing Disclosure Package and the Prospectus
or a document incorporated by reference therein and which is not so
described.
2.27.3 No Unconsolidated Entities.
There are no transactions, arrangements or other relationships
between and/or among the Company, any of its Subsidiaries or
affiliates (as such term is defined in Rule 405 of the Securities
Act) and any unconsolidated entity, including, but not limited to,
any structured finance, special purpose or limited purpose entity
that could reasonably be expected to materially affect the
Company’s liquidity or the availability of or requirements
for its capital resources required to be described in the Pricing
Disclosure Package and the Prospectus or a document incorporated by
reference therein which have not been described as
required.
2.27.4 No Loans or Advances to
Affiliates. There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of
business) or guarantees or indebtedness by the Company to or for
the benefit of any of the officers or directors of the Company or
any of their respective family members, except as disclosed in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus.
2.28 Board
of Directors. The Board of Directors of the Company is
comprised of the persons set forth under the heading of the Pricing
Prospectus and the Prospectus captioned “Management.”
The qualifications of the persons serving as board members and the
overall composition of the board comply with the Exchange
Act, the
Exchange Act Regulations, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the
rules promulgated thereunder (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”) applicable to
the Company and the listing rules of the Exchange. At least one
member of the Audit Committee of the Board of Directors of the
Company qualifies as an “audit committee financial
expert,” as such term is defined under Regulation S-K and the
listing rules of the Exchange. In addition, at least a majority of
the persons serving on the Board of Directors qualify as
“independent,” as defined under the listing rules of
the Exchange.
11
2.29 ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Compliance.
2.29.1. Disclosure
Controls. The Company has developed and currently maintains
disclosure controls and procedures that will comply with Rule
13a-15 or 15d-15 under the Exchange Act Regulations, and such
controls and procedures are effective to ensure that all material
information concerning the Company will be made known on a timely
basis to the individuals responsible for the preparation of the
Company’s Exchange Act filings and other public disclosure
documents.
2.29.2. Compliance.
The Company is, or at the Applicable Time and on the Closing Date
will be, in material compliance with the provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act applicable to it, and has implemented or will
implement such programs and taken reasonable steps to ensure the
Company’s future compliance (not later than the relevant
statutory and regulatory deadlines therefor) with all of the
material provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
2.30 Accounting
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
Regulations) that comply with the requirements of the Exchange Act
and have been designed by, or under the supervision of, their
respective principal executive and principal financial officers, or
persons performing similar functions, to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with GAAP, including, but not limited to, internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s
general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as disclosed in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, the
Company is not aware of any material weaknesses in its internal
controls. The Company’s auditors and the Audit Committee of
the Board of Directors of the Company have been advised of: (i) all
significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are
known to the Company’s management and that have adversely
affected or are reasonably likely to adversely affect the
Company’ ability to record, process, summarize and report
financial information; and (ii) any fraud known to the
Company’s management, whether or not material, that involves
management or other employees who have a significant role in the
Company’s internal controls over financial
reporting.
2.31 No
Investment Company Status. The Company is not and, after
giving effect to the Offering and the application of the proceeds
thereof as described in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, will not be, required to
register as an “investment company,” as defined in the
Investment Company Act of 1940, as amended.
2.32 No
Labor Disputes. No labor dispute with the employees of the Company
or any of its Subsidiaries exists or, to the knowledge of the
Company, is imminent. The Company is not aware that any key
employee or significant group of employees of the Company or any of
its Subsidiaries plans to terminate employment with the Company or
any of its Subsidiaries.
12
2.33 Intellectual
Property Rights. The Company and each of its Subsidiaries
owns or possesses or has valid rights 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 Rights”)
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 Pricing Disclosure Package and the
Prospectus. To the knowledge of the Company, no action or use by
the Company or any of its Subsidiaries necessary for the conduct of
its business as currently carried on and as described in the
Registration Statement and the Prospectus will involve or give rise
to any infringement of, or license or similar fees for, any
Intellectual Property Rights of others. Neither the Company nor any
of its Subsidiaries has received any notice alleging any such
infringement, fee or conflict with asserted Intellectual Property
Rights of others. Except as would not reasonably be expected to
result, individually or in the aggregate, in a Material Adverse
Change (A) to the knowledge of the Company, there is no
infringement, misappropriation or violation by third parties of any
of the Intellectual Property Rights owned by the Company; (B) there
is no pending or, to the knowledge of the Company, threatened
action, suit, proceeding or claim by others challenging the rights
of the Company in or to any such Intellectual Property Rights, and
the Company is unaware of any facts which would form a reasonable
basis for any such claim, that would, individually or in the
aggregate, together with any other claims in this Section 2.33,
reasonably be expected to result in a Material Adverse Change; (C)
the Intellectual Property Rights owned by the Company and, to the
knowledge of the Company, the Intellectual Property Rights licensed
to the Company have not been adjudged by a court of competent
jurisdiction invalid or unenforceable, in whole or in part, and
there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging
the validity or scope of any such Intellectual Property Rights, and
the Company is unaware of any facts which would form a reasonable
basis for any such claim that would, individually or in the
aggregate, together with any other claims in this Section 2.33,
reasonably be expected to result in a Material Adverse Change; (D)
there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others that the
Company infringes, misappropriates or otherwise violates any
Intellectual Property Rights or other proprietary rights of others,
the Company has not received any written notice of such claim and
the Company is unaware of any other facts which would form a
reasonable basis for any such claim that would, individually or in
the aggregate, together with any other claims in this Section 2.33,
reasonably be expected to result in a Material Adverse Change; and
(E) to the Company’s knowledge, no employee of the Company is
in or has ever been in violation in any material respect of any
term of any employment contract, patent disclosure agreement,
invention assignment agreement, non-competition agreement,
non-solicitation agreement, nondisclosure agreement or any
restrictive covenant to or with a former employer where the basis
of such violation relates to such employee’s employment with
the Company, or actions undertaken by the employee while employed
with the Company and could reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Change. To
the Company’s knowledge, all material technical information
developed by and belonging to the Company which has not been
patented has been kept confidential. The Company is not a party to
or bound by any options, licenses or agreements with respect to the
Intellectual Property Rights of any other person or entity that are
required to be set forth in the Registration Statement, the Pricing
Disclosure Package and the Prospectus and are not described
therein. The Registration Statement, the Pricing Disclosure Package
and the Prospectus contain in all material respects the same
description of the matters set forth in the preceding sentence.
None of the technology employed by the Company has been obtained or
is being used by the Company in violation of any contractual
obligation binding on the Company or, to the Company’s
knowledge, any of its officers, directors or employees, or
otherwise in violation of the rights of any persons..
2.34 Taxes.
Each of the Company and its Subsidiaries has filed all returns (as
hereinafter defined) required to be filed with taxing authorities
prior to the date hereof or has duly obtained extensions of time
for the filing thereof. Each of the Company and its Subsidiaries
has paid all taxes (as hereinafter defined) shown as due on such
returns that were filed and has paid all taxes imposed on or
assessed against the Company or such respective Subsidiary. The
provisions for taxes payable, if any, shown on the financial
statements filed with or as part of the Registration Statement are
sufficient for all accrued and unpaid taxes, whether or not
disputed, and for all periods to and including the dates of such
consolidated financial statements. Except as disclosed in writing
to the Underwriters, (i) no issues have been raised (and are
currently pending) by any taxing authority in connection with any
of the returns or taxes asserted as due from the Company or its
Subsidiaries, and (ii) no waivers of statutes of limitation with
respect to the returns or collection of taxes have been given by or
requested from the Company or its Subsidiaries. There are no tax
liens against the assets, properties or business of the Company.
The term “taxes” means all federal, state, local,
foreign and other net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits,
customs, duties or other taxes, fees, assessments or charges of any
kind whatever, together with any interest and any penalties,
additions to tax or additional amounts with respect thereto. The
term “returns” means all returns, declarations,
reports, statements and other documents required to be filed in
respect to taxes.
13
2.35 ERISA
Compliance. The Company and any “employee benefit
plan” (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, “ERISA”)) established or maintained
by the Company or its “ERISA Affiliates” (as defined
below) are in compliance in all material respects with ERISA.
“ERISA
Affiliate” means, with respect to the Company, any
member of any group of organizations described in Sections
414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as
amended, and the regulations and published interpretations
thereunder (the “Code”) of which the Company is a
member. No “reportable event” (as defined under ERISA)
has occurred or is reasonably expected to occur with respect to any
“employee benefit plan” established or maintained by
the Company or any of its ERISA Affiliates. No “employee
benefit plan” established or maintained by the Company or any
of its ERISA Affiliates, if such “employee benefit
plan” were terminated, would have any “amount of
unfunded benefit liabilities” (as defined under ERISA).
Neither the Company nor any of its ERISA Affiliates has incurred or
reasonably expects to incur any material liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any
“employee benefit plan” or (ii) Sections 412, 4971,
4975 or 4980B of the Code. Each “employee benefit plan”
established or maintained by the Company or any of its ERISA
Affiliates that is intended to be qualified under Section 401(a) of
the Code is so qualified and, to the knowledge of the Company,
nothing has occurred, whether by action or failure to act, which
would cause the loss of such qualification.
2.36 Compliance
with Laws. The Company: (A) is and at all times has been in
compliance with all statutes, rules, or regulations applicable to
the ownership, testing, development, manufacture, packaging,
processing, use, distribution, marketing, labeling, promotion,
sale, offer for sale, storage, import, export or disposal of any
product manufactured or distributed by the Company
(“Applicable
Laws”), except as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Change; (B) has not received any warning
letter, untitled letter or other correspondence or notice from any
governmental authority alleging or asserting noncompliance with any
Applicable Laws or any licenses, certificates, approvals,
clearances, authorizations, permits and supplements or amendments
thereto required by any such Applicable Laws (“Authorizations”);(C) possesses all
material Authorizations and such Authorizations are valid and in
full force and effect and are not in material violation of any term
of any such Authorizations; (D) has not received notice of any
claim, action, suit, proceeding, hearing, enforcement,
investigation, arbitration or other action from any governmental
authority or third party alleging that any product operation or
activity is in violation of any Applicable Laws or Authorizations
and has no knowledge that any such governmental authority or third
party is considering any such claim, litigation, arbitration,
action, suit, investigation or proceeding; (E) has not received
notice that any governmental authority has taken, is taking or
intends to take action to limit, suspend, modify or revoke any
Authorizations and has no knowledge that any such governmental
authority is considering such action; and (F) has filed, obtained,
maintained or submitted all material reports, documents, forms,
notices, applications, records, claims, submissions and supplements
or amendments as required by any Applicable Laws or Authorizations
and that all such reports, documents, forms, notices, applications,
records, claims, submissions and supplements or amendments were
complete and correct on the date filed (or were corrected or
supplemented by a subsequent submission).
14
2.37 Reserved.
2.38 Environmental
Laws. 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 would not,
singularly or in the aggregate, result in a Material Adverse
Change. 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 would not have, singularly or in the aggregate with
all such violations and liabilities, a Material Adverse Change; 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 has knowledge, except
for any such disposal, discharge, emission, or other release of any
kind which would not have, singularly or in the aggregate with all
such discharges and other releases, a Material Adverse Change.
In the ordinary course of business, the Company and its
Subsidiaries conduct periodic reviews of the effect of
Environmental Laws on their business and assets, in the course of
which they identify and evaluate associated costs and liabilities
(including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or governmental permits issued
thereunder, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such
reviews, the Company and its Subsidiaries have reasonably concluded
that such associated costs and liabilities would not have,
singularly or in the aggregate, a Material Adverse
Change.
2.39 Real
Property. Except as set forth in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, the Company and
each of its Subsidiaries have good and marketable title in fee
simple to, or have valid rights to lease or otherwise use, all
items of real or personal property which are material to the
business of the Company and its Subsidiaries taken as a whole, in
each case free and clear of all liens, encumbrances, security
interests, claims and defects that do not, singly or in the
aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such
property by the Company or any of its Subsidiaries; and all of the
leases and subleases material to the business of the Company and
its Subsidiaries, considered as one enterprise, and under which the
Company or any of its Subsidiaries holds properties described in
the Registration Statement, the Pricing Disclosure Package and the
Prospectus, are in full force and effect, and neither the Company
nor any Subsidiary has received any notice of any material claim of
any sort that has been asserted by anyone adverse to the rights of
the Company or any Subsidiary under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the
Company or such Subsidiary to the continued possession of the
leased or subleased premises under any such lease or
sublease.
2.40 Contracts
Affecting Capital. There are no transactions, arrangements
or other relationships between and/or among the Company, any of its
affiliates (as such term is defined in Rule 405 of the Securities
Act Regulations) and any unconsolidated entity, including, but not
limited to, any structured finance, special purpose or limited
purpose entity that could reasonably be expected to materially
affect the Company’s or any of its Subsidiaries’
liquidity or the availability of or requirements for their capital
resources required to be described or incorporated by reference in
the Registration Statement, the Pricing Disclosure Package and the
Prospectus which have not been described or incorporated by
reference as required.
15
2.41 Loans
to Directors or Officers. There are no outstanding loans,
advances (except normal advances for business expenses in the
ordinary course of business) or guarantees or indebtedness by the
Company or any of its Subsidiaries to or for the benefit of any of
the officers or directors of the Company, any of its Subsidiaries
or any of their respective family members, except as disclosed in
the Registration Statement, the Pricing Disclosure Package and the
Prospectus.
2.42 Smaller
Reporting Company. As of the time of filing of the
Registration Statement, the Company was a “smaller reporting
company,” as defined in Rule 12b-2 of the Exchange Act
Regulations.
2.43 Industry
Data. The statistical and market-related data included
in each of the Registration Statement, the Pricing Disclosure
Package and the Prospectus are based on or derived from sources
that the Company reasonably and in good faith believes are reliable
and accurate or represent the Company’s good faith estimates
that are made on the basis of data derived from such
sources.
2.44 Reverse
Stock Split. The Company has taken all necessary corporate
action to effectuate a reverse stock split of its shares of Common
Stock on the basis of one (1) such share for each twenty (20)
issued and outstanding shares thereof (the “Reverse Stock Split”), which
Reverse Stock Split became effective on November 3,
2016.
2.45 Margin
Securities. The Company owns no “margin
securities” as that term is defined in Regulation U of the
Board of Governors of the Federal Reserve System (the
“Federal Reserve
Board”), and none of the proceeds of Offering will be
used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might
cause any of the shares of Common Stock to be considered a
“purpose credit” within the meanings of Regulation T, U
or X of the Federal Reserve Board.
2.46 Forward-Looking
Statements. No forward-looking statement (within the meaning
of Section 27A of the Securities Act and Section 21E of the
Exchange Act) contained in the Registration Statement, the Pricing
Disclosure Package or the Prospectus has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good
faith.
2.47 Integration.
Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any
security, under circumstances that would cause the Offering to be
integrated with prior offerings by the Company for purposes of the
Securities Act that would require the registration of any such
securities under the Securities Act.
2.48 Confidentiality
and Non-Competitions. To the Company’s knowledge, no
director, officer, key employee or consultant of the Company is
subject to any confidentiality, non-disclosure, non-competition
agreement or non-solicitation agreement with any employer or prior
employer that could reasonably be expected to materially affect his
ability to be and act in his respective capacity of the Company or
be expected to result in a Material Adverse Change.
2.49 Minute
Books. The minute books of the Company have been made
available to the Underwriters and counsel for the Underwriters, 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. There are no material transactions,
agreements, dispositions or other actions of the Company that are
not properly approved and/or accurately and fairly recorded in the
minute books of the Company, as applicable.
16
2.50 Stabilization.
Neither the Company nor, to its knowledge, any of its employees,
directors or stockholders (without the consent of the
Representative) has taken, directly or indirectly, any action
designed to or that has constituted or that might reasonably be
expected to cause or result in, under Regulation M of the Exchange
Act, or otherwise, stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the
Public Securities.
3.
Covenants of the Company. The
Company covenants and agrees as follows:
3.1 Amendments to Registration
Statement. The Company shall deliver to the Representative,
prior to filing, any amendment or supplement to the Registration
Statement or Prospectus proposed to be filed after the Effective
Date and not file any such amendment or supplement to which the
Representative shall reasonably object in writing.
3.2 Federal Securities
Laws.
3.2.1. Compliance.
The Company, subject to Section 3.2.2, shall comply with the
requirements of Rule 430A of the Securities Act Regulations, and
will notify the Representative promptly, and confirm the notice in
writing, (i) when any post-effective amendment to the
Registration Statement shall become effective or any amendment or
supplement to the Prospectus shall have been filed; (ii) of
the receipt of any comments from the Commission; (iii) of any
request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for
additional information; (iv) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment or of any order
preventing or suspending the use of any Preliminary Prospectus or
the Prospectus, or of the suspension of the qualification of the
Public Securities for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such
purposes or of any examination pursuant to Section 8(d) or
8(e) of the Securities Act concerning the Registration Statement
and (v) if the Company becomes the subject of a proceeding
under Section 8A of the Securities Act in connection with the
Offering of the Public Securities. The Company shall effect all
filings required under Rule 424(b) of the Securities Act
Regulations, in the manner and within the time period required by
Rule 424(b) (without reliance on Rule 424(b)(8)), and shall take
such steps as it deems necessary to ascertain promptly whether the
form of prospectus transmitted for filing under Rule 424(b) was
received for filing by the Commission and, in the event that it was
not, it will promptly file such prospectus. The Company shall use
its best efforts to prevent the issuance of any stop order,
prevention or suspension and, if any such order is issued, to
obtain the lifting thereof at the earliest possible
moment.
3.2.2. Continued
Compliance. The Company shall comply with the Securities
Act, the Securities Act Regulations, the Exchange Act and the
Exchange Act Regulations so as to permit the completion of the
distribution of the Public Securities as contemplated in this
Agreement and in the Registration Statement, the Pricing Disclosure
Package and the Prospectus. If at any time when a prospectus
relating to the Public Securities is (or, but for the exception
afforded by Rule 172 of the Securities Act Regulations
(“Rule 172”),
would be) required by the Securities Act to be delivered in
connection with sales of the Public Securities, any event shall
occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel for the Underwriters or for
the Company, to (i) amend the Registration Statement in order
that the Registration Statement will not include an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; (ii) amend or supplement the Pricing
Disclosure Package or the Prospectus in order that the Pricing
Disclosure Package or the Prospectus, as the case may be, will not
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time
it is delivered to a purchaser or (iii) amend the Registration
Statement or amend or supplement the Pricing Disclosure Package or
the Prospectus, as the case may be, in order to comply with the
requirements of the Securities Act or the Securities Act
Regulations, the Company will promptly (A) give the
Representative notice of such event; (B) prepare any amendment
or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement, the Pricing
Disclosure Package or the Prospectus comply with such requirements
and, a reasonable amount of time prior to any proposed filing or
use, furnish the Representative with copies of any such amendment
or supplement and (C) file with the Commission any such
amendment or supplement; provided that the Company shall not file
or use any such amendment or supplement to which the Representative
or counsel for the Underwriters shall reasonably object. The
Company will furnish to the Underwriters such number of copies of
such amendment or supplement as the Underwriters may reasonably
request. The Company has given the Representative notice of any
filings made pursuant to the Exchange Act or the Exchange Act
Regulations within 48 hours prior to the Applicable Time. The
Company shall give the Representative notice of its intention to
make any such filing from the Applicable Time until the later of
the Closing Date and the exercise in full or expiration of the
Over-allotment Option specified in Section 1.2 hereof and will
furnish the Representative with copies of the related document(s) a
reasonable amount of time prior to such proposed filing, as the
case may be, and will not file or use any such document to which
the Representative or counsel for the Underwriters shall reasonably
object.
17
3.2.3. Exchange
Act Registration. For a period of three (3) years after the
date of this Agreement, the Company shall use its best efforts to
maintain the registration of each of the Common Stock and the
Warrants under the Exchange Act. The Company shall not deregister
any of the Common Stock or the Warrants under the Exchange Act
without the prior written consent of the
Representative.
3.2.4. Free
Writing Prospectuses. The Company agrees that, unless it
obtains the prior written consent of the Representative, it shall
not make any offer relating to the Public Securities that would
constitute an Issuer Free Writing Prospectus or that would
otherwise constitute a “free writing prospectus,” or a
portion thereof, required to be filed by the Company with the
Commission or retained by the Company under Rule 433; provided that
the Representative shall be deemed to have consented to each Issuer
General Use Free Writing Prospectus hereto and any “road show
that is a written communication” within the meaning of Rule
433(d)(8)(i) that has been reviewed by the Representative. The
Company represents that it has treated or agrees that it will treat
each such free writing prospectus consented to, or deemed consented
to, by the Underwriters as an “issuer free writing
prospectus,” as defined in Rule 433, and that it has complied
and will comply with the applicable requirements of Rule 433 with
respect thereto, including timely filing with the Commission where
required, legending and record keeping. If at any time following
issuance of an Issuer Free Writing Prospectus there occurred or
occurs an event or development as a result of which such Issuer
Free Writing Prospectus conflicted or would conflict with the
information contained in the Registration Statement or included or
would include an untrue statement of a material fact or omitted or
would omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at
that subsequent time, not misleading, the Company will promptly
notify the Underwriters and will promptly amend or supplement, at
its own expense, such Issuer Free Writing Prospectus to eliminate
or correct such conflict, untrue statement or
omission.
3.3 Delivery to the Underwriters of
Registration Statements. The Company has delivered or made
available or shall deliver or make available to the Representative
and counsel for the Representative, without charge, signed copies
of the Registration Statement as originally filed and each
amendment thereto (including exhibits filed therewith) and signed
copies of all consents and certificates of experts, and will also
deliver to the Underwriters, without charge, a conformed copy of
the Registration Statement as originally filed and each amendment
thereto (without exhibits) for each of the Underwriters. The copies
of the Registration Statement and each amendment thereto furnished
to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to
▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
3.4 Delivery to the Underwriters of
Prospectuses. The Company has delivered or made available or
will deliver or make available to each Underwriter, without charge,
as many copies of each Preliminary Prospectus as such Underwriter
reasonably requested, and the Company hereby consents to the use of
such copies for purposes permitted by the Securities Act. The
Company will furnish to each Underwriter, without charge, during
the period when a prospectus relating to the Public Securities is
(or, but for the exception afforded by Rule 172, would be) required
to be delivered under the Securities Act, such number of copies of
the Prospectus (as amended or supplemented) as such Underwriter may
reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
3.5 Effectiveness and Events Requiring
Notice to the Representative. The Company shall use its best
efforts to cause the Registration Statement to remain effective
with a current prospectus for at least nine (9) months after the
Applicable Time and shall use its commercially reasonable efforts
to cause the Registration Statement to remain effective until such
time as all of the Warrants have been exercised or terminated, and
shall notify the Representative immediately and confirm the notice
in writing: (i) of the effectiveness of the Registration
Statement and any amendment thereto; (ii) of the issuance by
the Commission of any stop order or of the initiation, or the
threatening, of any proceeding for that purpose; (iii) of the
issuance by any state securities commission of any proceedings for
the suspension of the qualification of the Common Stock, Warrants
and Securities for offering or sale in any jurisdiction or of the
initiation, or the threatening, of any proceeding for that purpose;
(iv) of the mailing and delivery to the Commission for filing
of any amendment or supplement to the Registration Statement or
Prospectus; (v) of the receipt of any comments or request for
any additional information from the Commission; and (vi) of
the happening of any event during the period described in this
Section 3.5 that, in the judgment of the Company, makes any
statement of a material fact made in the Registration Statement,
the Pricing Disclosure Package or the Prospectus untrue or that
requires the making of any changes in (a) the Registration
Statement in order to make the statements therein not misleading,
or (b) in the Pricing Disclosure Package or the Prospectus in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading. If the Commission or any
state securities commission shall enter a stop order or suspend
such qualification at any time, the Company shall make every
reasonable effort to obtain promptly the lifting of such
order.
3.6 Review of Financial Statements.
For a period of five (5) years after the date of this Agreement,
the Company, at its expense, shall cause its regularly engaged
independent registered public accounting firm to review (but not
audit) the Company’s financial statements for each of the
three fiscal quarters immediately preceding the announcement of any
quarterly financial information.
3.7 Listing. The Company shall use
its reasonable best efforts to maintain the listing of each of the
Common Stock and the Warrants (including the Public Securities) on
the Exchange for at least three years from the date of this
Agreement.
18
3.8 Financial Public Relations
Firm. As of the Effective Date, the Company shall have
retained a financial public relations firm reasonably acceptable to
the Representative and the Company, which shall initially be
Equisolve, Inc., which firm is experienced in assisting issuers in
initial public offerings of securities and in their relations with
their security holders, and shall retain such firm or another firm
reasonably acceptable to the Representative for a period of not
less than two (2) years after the Effective Date.
3.9 Reports to the
Representative.
3.9.1. Periodic
Reports, etc. For a period of three (3) years after the date
of this Agreement, the Company shall furnish or make available to
the Representative copies of such financial statements and other
periodic and special reports as the Company from time to time
furnishes generally to holders of any class of its securities and
also promptly furnish to the Representative: (i) a copy of each
periodic report the Company shall be required to file with the
Commission under the Exchange Act and the Exchange Act Regulations;
(ii) a copy of every press release and every news item and article
with respect to the Company or its affairs which was released by
the Company; (iii) a copy of each Form 8-K prepared and filed by
the Company; (iv) five copies of each registration statement filed
by the Company under the Securities Act; and (v) such additional
documents and information with respect to the Company and the
affairs of any future subsidiaries of the Company as the
Representative may from time to time reasonably request; provided
the Representative shall sign, if requested by the Company, a
Regulation FD compliant confidentiality agreement which is
reasonably acceptable to the Representative and Representative
Counsel in connection with the Representative’s receipt of
such information. Documents filed with the Commission pursuant to
its ▇▇▇▇▇ system shall be deemed to have been delivered to the
Representative pursuant to this Section 3.9.1.
3.9.2. Transfer
Agent; Transfer Sheets. For a period of three (3) years
after the date of this Agreement, the Company shall retain a
transfer agent and registrar acceptable to the Representative
(the “Transfer
Agent”) and shall furnish to the Representative at the
Company’s sole cost and expense such transfer sheets of the
Company’s securities as the Representative may reasonably
request, including the daily and monthly consolidated transfer
sheets of the Transfer Agent and DTC. Issuer Direct Corporation is
acceptable to the Representative to act as Transfer Agent for the
shares of Common Stock.
3.9.3. Warrant
Agent. For so long as the Warrants are outstanding, the
Company shall retain a warrant agent for the Warrants reasonably
acceptable to the Representative (the “Warrant Agent”). Issuer Direct
Corporation is acceptable to the Representative to act as Warrant
Agent for the Warrants.
3.9.4. Trading
Reports. During such time as the Public Securities are
listed on the Exchange, the Company shall provide to the
Representative, at the Company’s expense, such reports
published by Exchange relating to price trading of the Public
Securities, as the Representative shall reasonably
request.
3.10 Payment
of Expenses
3.10.1. General
Expenses Related to the Offering. The Company hereby agrees
to pay on each of the Closing Date and the Option Closing Date, if
any, to the extent not paid at the Closing Date, all expenses
incident to the performance of the obligations of the Company under
this Agreement, including, but not limited to: (a) all filing fees
and communication expenses relating to the registration of the
Securities with the Commission; (b) all Public Filing System filing
fees associated with the review of the Offering by FINRA; (c) all
fees and expenses relating to the listing of such Common Stock and
Warrants on the Exchange and on such other stock exchanges as the
Company and the Representative together determine; (d) all fees,
expenses and disbursements relating to background checks of the
Company’s officers and directors in an amount not to exceed
$15,000 in the aggregate; (e) all fees, expenses and disbursements
relating to the registration or qualification of the Public
Securities under the “blue sky” securities laws of such
states and other jurisdictions as the Representative may reasonably
designate (including, without limitation, all filing and
registration fees, it being agreed that if the Offering is
commenced on the The NASDAQ Global Market, The NASDAQ Global Select
Market or the New York Stock Exchange, the Company shall make a
payment of $5,000 to such counsel at Closing, or if the Offering is
commenced on The NASDAQ Capital Market, the NYSE MKT or the
Over-The-Counter Bulletin Board, the Company shall make a payment
of $15,000 to such counsel upon the commencement of “blue
sky” work by such counsel and an additional $5,000 at
Closing); (f) all fees, expenses and disbursements relating to the
registration, qualification or exemption of the Public Securities
under the securities laws of such foreign jurisdictions as the
Representative may reasonably designate; (g) the costs of all
mailing and printing of the underwriting documents (including,
without limitation, the Underwriting Agreement, any Blue Sky
Surveys and, if appropriate, any Agreement Among Underwriters,
Selected Dealers’ Agreement, Underwriters’
Questionnaire and Power of Attorney), Registration Statements,
Prospectuses and all amendments, supplements and exhibits thereto
and as many preliminary and final Prospectuses as the
Representative may reasonably deem necessary; (h) the costs and
expenses of a public relations firm; (i) the costs of preparing,
printing and delivering certificates representing the Public
Securities; (j) fees and expenses of the Transfer Agent and the
Warrant Agent; (k) stock transfer and/or stamp taxes, if any,
payable upon the transfer of securities from the Company to the
Underwriters; (l) up to $2,500 for the costs associated with bound
volumes of the public offering materials as well as commemorative
mementos and lucite tombstones, each of which the Company or its
designee shall provide within a reasonable time after the Closing
Date in such quantities as the Representative may reasonably
request; (m) the fees and expenses of the Company’s
accountants; (n) the fees and expenses of the Company’s legal
counsel and other agents and representatives; (o) fees and expenses
of the Representative’s legal counsel not to exceed $75,000;
(p) $29,500 for cost associated with the Underwriter’s use of
Ipreo’s book-building, prospectus tracking and compliance
software for the Offering; and (q) up to $20,000 of the
Underwriters’ actual accountable “road show”
expenses for the Offering. The Representative may deduct from the
net proceeds of the Offering payable to the Company on the Closing
Date, or the Option Closing Date, if any, the expenses set forth
herein to be paid by the Company to the Underwriters, less the
Advance (as such term is defined in Section 8.3
hereof).
19
3.10.2. Non-accountable
Expenses. The Company further agrees that, in addition to
the expenses payable pursuant to Section 3.10.1, on the Closing
Date it shall pay to the Representative, by deduction from the net
proceeds of the Offering contemplated herein, a non-accountable
expense allowance equal to three-fourths of one percent (0.75%) of
the gross proceeds received by the Company from the sale of the
Firm Securities (excluding the Option Securities), provided,
however, that in the event that the Offering is terminated, the
Company agrees to reimburse the Underwriters pursuant to Section
8.3 hereof.
3.11 Application
of Net Proceeds. The Company shall apply the net proceeds
from the Offering received by it in a manner consistent with the
application thereof described under the caption “Use of
Proceeds” in the Registration Statement, the Pricing
Disclosure Package and the Prospectus (the “Use of Proceeds Section”). For the
avoidance of doubt, the Company shall apply the net proceeds from
the Offering to, among the other payments described in the Use of
Proceeds Section, pay off all of its outstanding obligations,
including any principal of and interest on, that certain
Convertible Promissory Note, issued in favor of ▇▇▇▇▇▇▇ ▇▇▇▇▇, in
the principal amount of $1,250,000, dated December 22,
2015.
3.12 Delivery
of Earnings Statements to Security Holders. The Company
shall make generally available to its security holders as soon as
practicable, but not later than the first day of the fifteenth
(15th)
full calendar month following the date of this Agreement, an
earnings statement (which need not be certified by an independent
registered public accounting firm unless required by the Securities
Act or the Securities Act Regulations, but which shall satisfy the
provisions of Rule 158(a) under Section 11(a) of the Securities
Act) covering a period of at least twelve (12) consecutive months
beginning after the date of this Agreement.
20
3.13 Stabilization.
Neither the Company nor, to its knowledge, any of its employees,
directors or shareholders (without the consent of the
Representative) has taken or shall take, directly or indirectly,
any action designed to or that has constituted or that might
reasonably be expected to cause or result in, under Regulation M of
the Exchange Act, or otherwise, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of the Public Securities.
3.14 Internal
Controls. The Company shall maintain a system of internal
accounting controls sufficient to provide reasonable assurances
that: (i) transactions are executed in accordance with
management’s general or specific authorization;
(ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with GAAP and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any
differences.
3.15 Accountants.
As of the date of this Agreement, the Company shall retain an
independent registered public accounting firm reasonably acceptable
to the Representative, and the Company shall continue to retain a
nationally recognized independent registered public accounting firm
for a period of at least three (3) years after the date of this
Agreement. The Representative acknowledges that the Auditor is
acceptable to the Representative.
3.16 FINRA.
The Company shall advise the Representative (who shall make an
appropriate filing with FINRA) if it is or becomes aware that (i)
any officer or director of the Company, (ii) any beneficial owner
of 5% or more of any class of the Company's securities or (iii) any
beneficial owner of the Company's unregistered equity securities
which were acquired during the 180 days immediately preceding the
filing of the Registration Statement is or becomes an affiliate or
associated person of a FINRA member participating in the Offering
(as determined in accordance with the rules and regulations of
FINRA).
3.17 No
Fiduciary Duties. The Company acknowledges and agrees that
the Underwriters’ responsibility to the Company is solely
contractual in nature and that none of the Underwriters or their
affiliates or any selling agent shall be deemed to be acting in a
fiduciary capacity, or otherwise owes any fiduciary duty to the
Company or any of its affiliates in connection with the Offering
and the other transactions contemplated by this
Agreement.
3.18 Company
Lock-Up Agreements.
3.18.1. Restriction
on Sales of Capital Stock. The Company, on behalf of itself
and any successor entity, agrees that, without the prior written
consent of the Representative, it will not, for a period of 180
days after the date of this Agreement (the “Lock-Up Period”), (i) offer,
pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer
or dispose of, directly or indirectly, any shares of capital stock
of the Company or any securities convertible into or exercisable or
exchangeable for shares of capital stock of the Company; (ii) file
or cause to be filed any registration statement with the Commission
relating to the offering of any shares of capital stock of the
Company or any securities convertible into or exercisable or
exchangeable for shares of capital stock of the Company; (iii)
complete any offering of debt securities of the Company, other than
entering into a line of credit with a traditional bank or (iv)
enter into any swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership
of capital stock of the Company, whether any such transaction
described in clause (i), (ii), (iii) or (iv) above is to be settled
by delivery of shares of capital stock of the Company or such other
securities, in cash or otherwise.
21
The
restrictions contained in this Section 3.18.1 shall not apply to
(i) the Public Securities to be sold hereunder (including the
underlying shares of Common Stock and Warrants and the filing of an
amendment to the Registration Statement on Form S-3 (if available)
to register the shares of Common Stock issuable upon exercise of
Warrants), (ii) the issuance by the Company of securities pursuant
to any documents, agreements or securities existing or outstanding
as of the Closing Date, or (iii) the issuance by the Company of
stock options or shares of capital stock of the Company under any
equity compensation plan of the Company, provided that in each of
(ii) and (iii) above, the underlying shares shall be restricted
from sale during the entire Lock-Up Period.
Notwithstanding the
foregoing, if (i) during the last 17 days of the Lock-Up Period,
the Company issues an earnings release or material news or a
material event relating to the Company occurs, or (ii) prior to the
expiration of the Lock-Up Period, the Company announces that it
will release earnings results or becomes aware that material news
or a material event will occur during the 16-day period beginning
on the last day of the Lock-Up Period, the restrictions imposed by
this Section 3.18.1 shall continue to apply until the expiration of
the 18-day period beginning on the issuance of the earnings release
or the occurrence of such material news or material event, as
applicable, unless the Representative waives, in writing, such
extension.
3.18.2. Restriction
on Continuous Offerings. Notwithstanding the restrictions
contained in Section 3.18.1, the Company, on behalf of itself and
any successor entity, agrees that, without the prior written
consent of the Representative, it will not, for a period of 12
months after the date of this Agreement, directly or indirectly in
any “at-the-market” or continuous equity transaction,
offer to sell, sell, contract to sell, grant any option to sell or
otherwise dispose of shares of capital stock of the Company or any
securities convertible into or exercisable or exchangeable for
shares of capital stock of the Company.
3.19 Release
of D&O Lock-up Period. If the Representative, in its
sole discretion, agrees to release or waive the restrictions set
forth in the Lock-Up Agreements described in Section 2.25 hereof
for an officer or director of the Company and provide the Company
with notice of the impending release or waiver at least three (3)
Business Days before the effective date of the release or waiver,
the Company agrees to announce the impending release or waiver by a
press release substantially in the form of Exhibit B hereto through a
major news service at least two (2) Business Days before the
effective date of the release or waiver.
3.20 Blue
Sky Qualifications. The Company shall use its best efforts,
in cooperation with the Underwriters, if necessary, to qualify the
Public Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions (domestic or
foreign) as the Representative may designate and to maintain such
qualifications in effect so long as required to complete the
distribution of the Public Securities; provided, however, that the
Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so
qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so
subject.
3.21 Reporting
Requirements. The Company, during the period when a
prospectus relating to the Public Securities is (or, but for the
exception afforded by Rule 172, would be) required to be delivered
under the Securities Act, will file all documents required to be
filed with the Commission pursuant to the Exchange Act within the
time periods required by the Exchange Act and Exchange Act
Regulations. Additionally, the Company shall report the use of
proceeds from the issuance of the Public Securities as may be
required under Rule 463 under the Securities Act
Regulations.
3.22 Press
Releases. Prior to the Closing Date and any Option Closing
Date, the Company shall not issue any press release or other
communication directly or indirectly or hold any press conference
with respect to the Company, its condition, financial or otherwise,
or earnings, business affairs or business prospects (except for
routine oral marketing communications in the ordinary course of
business and consistent with the past practices of the Company and
of which the Representative is notified), without the prior written
consent of the Representative, which consent shall not be
unreasonably withheld, unless in the judgment of the Company and
its counsel, and after notification to the Representative, such
press release or communication is required by law.
22
3.23 ▇▇▇▇▇▇▇▇-▇▇▇▇▇.
The Company shall at all times comply with all applicable
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act in effect from time to
time.
3.24 IRS
Forms. The Company shall deliver to each Underwriter (or its
agent), prior to or at the Closing Date, a properly completed and
executed Internal Revenue Service (“IRS”) Form W-9 or an IRS Form W-8,
as appropriate, together with all required attachments to such
form.
4. Conditions of Underwriters’
Obligations. The obligations of the Underwriters to purchase
and pay for the Securities, as provided herein, shall be subject to
(i) the continuing accuracy of the representations and warranties
of the Company as of the date hereof and as of each of the Closing
Date and the Option Closing Date, if any; (ii) the accuracy of the
statements of officers of the Company made pursuant to the
provisions hereof; (iii) the performance by the Company of its
obligations hereunder; and (iv) the following
conditions:
4.1 Regulatory
Matters.
4.1.1. Effectiveness
of Registration Statement; Rule 430A Information. The
Registration Statement has become effective not later than 5:15
p.m., Eastern time, on the date of this Agreement or such later
date and time as shall be consented to in writing by you, and, at
each of the Closing Date and any Option Closing Date, no stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto has been issued under the
Securities Act, no order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus has been issued and no
proceedings for any of those purposes have been instituted or are
pending or, to the Company’s knowledge, contemplated by the
Commission. The Company has complied with each request (if any)
from the Commission for additional information. The Prospectus
containing the Rule 430A Information shall have been filed with the
Commission in the manner and within the time frame required by Rule
424(b) (without reliance on Rule 424(b)(8)) or a post-effective
amendment providing such information shall have been filed with,
and declared effective by, the Commission in accordance with the
requirements of Rule 430A.
4.1.2. FINRA
Clearance. On or before the date of this Agreement, the
Representative shall have received clearance from FINRA as to the
amount of compensation allowable or payable to the Underwriters as
described in the Registration Statement.
4.1.3. Exchange
Stock Market Clearance. On the Closing Date, each of the
Company’s Common Stock and the Warrants (including the shares
of Common Stock underlying the Option Securities and the Warrants
underlying the Option Securities) shall have been approved for
listing on the Exchange, subject only to official notice of
issuance. On the first Option Closing Date (if any), each of the
Company’s Common Stock and the Warrants (including the Common
Stock underlying the Option Securities and the Warrants underlying
such Option Securities) shall have been approved for listing on the
Exchange, subject only to official notice of issuance.
4.2 Company Counsel
Matters.
23
4.2.1. Closing
Date Opinion of Counsel. On the Closing Date, the
Representative shall have received the favorable opinion of Lucosky
▇▇▇▇▇▇▇▇ LLP, counsel to the Company, dated the Closing Date and
addressed to the Representative, substantially in the form of
Exhibit C attached
hereto.
4.2.2. Option
Closing Date Opinions of Counsel. On the Option Closing
Date, if any, the Representative shall have received the favorable
opinions of Lucosky ▇▇▇▇▇▇▇▇ LLP, dated the Option Closing Date,
addressed to the Representative and in form and substance
reasonably satisfactory to the Representative, confirming as of the
Option Closing Date, the statements made by such counsels in their
respective opinions delivered on the Closing Date.
4.2.3. Reliance.
In rendering such opinions, such counsel may rely: (i) as to
matters involving the application of laws other than the laws of
the United States and jurisdictions in which they are admitted, to
the extent such counsel deems proper and to the extent specified in
such opinion, if at all, upon an opinion or opinions (in form and
substance reasonably satisfactory to the Representative) of other
counsel reasonably acceptable to the Representative, familiar with
the applicable laws; and (ii) as to matters of fact, to the
extent they deem proper, on certificates or other written
statements of officers of the Company and officers of departments
of various jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company, provided that
copies of any such statements or certificates shall be delivered to
Representative Counsel if requested. The opinion of Lucosky
▇▇▇▇▇▇▇▇ LLP shall include a statement to the effect that it may be
relied upon by Representative Counsel in its opinion delivered to
the Underwriters.
4.3 Comfort Letters.
4.3.1. Cold
Comfort Letter. At the time this Agreement is executed the
Representative shall have received a cold comfort letter containing
statements and information of the type customarily included in
accountants’ comfort letters with respect to the financial
statements and certain financial information contained in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, addressed to the Representative and in form and
substance satisfactory in all respects to the Representative and to
the Auditor, dated as of the date of this Agreement.
4.3.2. Bring-down
Comfort Letter. At each of the Closing Date and the Option
Closing Date, if any, the Representative shall have received from
the Auditor a letter, dated as of the Closing Date or the Option
Closing Date, as applicable, to the effect that the Auditor
reaffirms the statements made in the letter furnished pursuant to
Section 4.3.1, except that the specified date referred to shall be
a date not more than three (3) business days prior to the Closing
Date or the Option Closing Date, as applicable.
4.4 Officers’
Certificates.
4.4.1. Officers’
Certificate. The Company shall have furnished to the
Representative a certificate, dated the Closing Date and any Option
Closing Date (if such date is other than the Closing Date), of its
Chief Executive Officer, its President and its Chief Financial
Officer stating that (i) such officers have carefully examined the
Registration Statement, the Pricing Disclosure Package, any Issuer
Free Writing Prospectus and the Prospectus and, in their opinion,
the Registration Statement and each amendment thereto, as of the
Applicable Time and as of the Closing Date (or any Option Closing
Date if such date is other than the Closing Date) did not include
any untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Pricing Disclosure
Package, as of the Applicable Time and as of the Closing Date (or
any Option Closing Date if such date is other than the Closing
Date), any Issuer Free Writing Prospectus as of its date and as of
the Closing Date (or any Option Closing Date if such date is other
than the Closing Date), the Prospectus and each amendment or
supplement thereto, as of the respective date thereof and as of the
Closing Date, did not include any untrue statement of a material
fact and did not omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
in which they were made, not misleading, (ii) since the effective
date of the Registration Statement, no event has occurred which
should have been set forth in a supplement or amendment to the
Registration Statement, the Pricing Disclosure Package or the
Prospectus, (iii) to the best of their knowledge after reasonable
investigation, as of the Closing Date (or any Option Closing Date
if such date is other than the Closing Date), the representations
and warranties of the Company in this Agreement are true and
correct and the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date (or any Option Closing
Date if such date is other than the Closing Date), and (iv) there
has not been, subsequent to the date of the most recent audited
financial statements included or incorporated by reference in the
Pricing Disclosure Package, any material adverse change in the
financial position or results of operations of the Company, or any
change or development that, singularly or in the aggregate, would
involve a material adverse change or a prospective material adverse
change, in or affecting the condition (financial or otherwise),
results of operations, business, assets or prospects of the
Company, except as set forth in the Prospectus.
24
4.4.2. Secretary’s
Certificate. At each of the Closing Date and the Option
Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Secretary of the Company,
dated the Closing Date or the Option Date, as the case may be,
respectively, certifying: (i) that each of the Charter and
Bylaws is true and complete, has not been modified and is in full
force and effect; (ii) that the resolutions of the
Company’s Board of Directors relating to the Offering are in
full force and effect and have not been modified; (iii) as to the
accuracy and completeness of all correspondence between the Company
or its counsel and the Commission; and (iv) as to the
incumbency of the officers of the Company. The documents referred
to in such certificate shall be attached to such
certificate.
4.5 No Material Changes. Prior to
and on each of the Closing Date and each Option Closing Date, if
any: (i) there shall have been no material adverse change or
development involving a prospective material adverse change in the
condition or prospects or the business activities, financial or
otherwise, of the Company from the latest dates as of which such
condition is set forth in the Registration Statement, the Pricing
Disclosure Package and the Prospectus; (ii) no action, suit or
proceeding, at law or in equity, shall have been pending or
threatened against the Company or any Insider before or by any
court or federal or state commission, board or other administrative
agency wherein an unfavorable decision, ruling or finding may
materially adversely affect the business, operations, prospects or
financial condition or income of the Company, except as set forth
in the Registration Statement, the Pricing Disclosure Package and
the Prospectus; (iii) no stop order shall have been issued
under the Securities Act and no proceedings therefor shall have
been initiated or threatened by the Commission; and (iv) the
Registration Statement, the Pricing Disclosure Package and the
Prospectus and any amendments or supplements thereto shall contain
all material statements which are required to be stated therein in
accordance with the Securities Act and the Securities Act
Regulations and shall conform in all material respects to the
requirements of the Securities Act and the Securities Act
Regulations, and neither the Registration Statement, the Pricing
Disclosure Package nor the Prospectus nor any amendment or
supplement thereto shall contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not
misleading.
4.6 No Material Misstatement or
Omission. The Underwriters shall not have discovered and
disclosed to the Company on or prior to the Closing Date and any
Option Closing Date that the Registration Statement or any
amendment or supplement thereto contains an untrue statement of a
fact which, in the opinion of counsel for the Underwriters, is
material or omits to state any fact which, in the opinion of such
counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading, or that
the Registration Statement, the Pricing Disclosure Package, any
Issuer Free Writing Prospectus or the Prospectus or any amendment
or supplement thereto contains an untrue statement of fact which,
in the opinion of such counsel, is material or omits to state any
fact which, in the opinion of such counsel, is material and is
necessary in order to make the statements, in the light of the
circumstances under which they were made, not
misleading.
25
4.7 Corporate Proceedings. All
corporate proceedings and other legal matters incident to the
authorization, form and validity of each of this Agreement, the
Warrant Agreement, the Public Securities, the Registration
Statement, the Pricing Disclosure Package, each Issuer Free Writing
Prospectus, if any, and the Prospectus and all other legal matters
relating to this Agreement, the Warrant Agreement and the
transactions contemplated hereby and thereby shall be reasonably
satisfactory in all material respects to counsel for the
Underwriters, and the Company shall have furnished to such counsel
all documents and information that they may reasonably request to
enable them to pass upon such matters.
4.8 Delivery of
Agreements.
4.8.1. Lock-Up
Agreements. On or before the date of this Agreement, the
Company shall have delivered to the Representative executed copies
of the Lock-Up Agreements from each of the persons listed in
Schedule 3
hereto.
4.8.2. Warrant
Agreement. On the Closing Date, the Company shall have
delivered to the Representative executed copies of the Warrant
Agreement.
4.9 Additional Documents. At the
Closing Date and at each Option Closing Date (if any)
Representative Counsel shall have been furnished with such
documents and opinions as they may require for the purpose of
enabling Representative Counsel to deliver an opinion to the
Underwriters, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the
Company in connection with the issuance and sale of the Public
Securities as herein contemplated shall be satisfactory in form and
substance to the Representative and Representative
Counsel.
4.10 Reverse
Stock Split. The Reverse Stock Split shall be
effective.
4.11 Warrant
Cancellation Agreement. The Company shall have entered into,
and delivered to the Representative an executed copy of, that
certain Warrant Cancellation Agreement between the Company and
▇▇▇▇▇▇▇, Sachs & Co., dated as of December 9, 2016 (as amended
by an Amended and Restated Warrant Cancellation and Stock Issuance
Agreement on January 9, 2017, and together with all exhibits and
schedules thereto, the “Warrant Cancellation Agreement”)
and such Warrant Cancellation Agreement shall be in full force and
effect as of the date hereof and shall constitute the legally
binding obligation of the parties thereto, enforceable against the
parties thereto in accordance with its terms.
5.
Indemnification.
5.1 Indemnification of the
Underwriters.
5.1.1. General.
Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Underwriter, its affiliates and
each of its and their respective directors, officers, members,
employees, representatives, partners, shareholders, affiliates,
counsel, and agents and each person, if any, who controls any such
Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act (collectively the
“Underwriter Indemnified
Parties,” and each an “Underwriter Indemnified Party”),
against any and all loss, liability, claim, damage and expense
whatsoever (including but not limited to any and all legal or other
expenses reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any
claim whatsoever, whether arising out of any action between any of
the Underwriter Indemnified Parties and the Company or between any
of the Underwriter Indemnified Parties and any third party, or
otherwise) to which they or any of them may become subject under
the Securities Act, the Exchange Act or any other statute or at
common law or otherwise or under the laws of foreign countries (a
“Claim”), (i)
arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in (A) the Registration
Statement, the Pricing Disclosure Package, any Preliminary
Prospectus, the Prospectus, or in any Issuer Free Writing
Prospectus (as from time to time each may be amended and
supplemented); (B) any materials or information provided to
investors by, or with the approval of, the Company in connection
with the marketing of the Offering, including any “road
show” or investor presentations made to investors by the
Company (whether in person or electronically); or (C) any
application or other document or written communication (in this
Section 5, collectively called “application”) executed
by the Company or based upon written information furnished by the
Company in any jurisdiction in order to qualify the Public
Securities under the securities laws thereof or filed with the
Commission, any state securities commission or agency, the Exchange
or any other national securities exchange; or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading,
unless such statement or omission was made in reliance upon, and in
conformity with, the Underwriters’ Information or (ii)
otherwise arising in connection with or allegedly in connection
with the Offering. The Company also agrees that it will reimburse
each Underwriter Indemnified Party for all fees and expenses
(including but not limited to any and all legal or other expenses
reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim
whatsoever, whether arising out of any action between any of the
Underwriter Indemnified Parties and the Company or between any of
the Underwriter Indemnified Parties and any third party, or
otherwise) (collectively, the “Expenses”), and further agrees
wherever and whenever possible to advance payment of Expenses as
they are incurred by an Underwriter Indemnified Party in
investigating, preparing, pursuing or defending any
Claim.
26
5.1.2. Procedure. If
any action is brought against an Underwriter Indemnified Party in
respect of which indemnity may be sought against the Company
pursuant to Section 5.1.1, such Underwriter Indemnified Party shall
promptly notify the Company in writing of the institution of such
action and the Company shall assume the defense of such action,
including the employment and fees of counsel (subject to the
approval of such Underwriter Indemnified Party) and payment of
actual expenses if an Underwriter Indemnified Party requests that
the Company do so. Such Underwriter Indemnified Party shall have
the right to employ its or their own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of
the Company, and shall be advanced by the Company. The Company
shall not be liable for any settlement of any action effected
without its consent (which shall not be unreasonably withheld). In
addition, the Company shall not, without the prior written consent
of the Underwriters, settle, compromise or consent to the entry of
any judgment in or otherwise seek to terminate any pending or
threatened action in respect of which advancement, reimbursement,
indemnification or contribution may be sought hereunder (whether or
not such Underwriter Indemnified Party is a party thereto) unless
such settlement, compromise, consent or termination (i) includes an
unconditional release of each Underwriter Indemnified Party,
acceptable to such Underwriter Indemnified Party, from all
liabilities, expenses and claims arising out of such action for
which indemnification or contribution may be sought and (ii) does
not include a statement as to or an admission of fault, culpability
or a failure to act, by or on behalf of any Underwriter Indemnified
Party.
5.2 Indemnification of the Company.
Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company, its directors, its officers who
signed the Registration Statement and persons who control the
Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act against any and all loss, liability,
claim, damage and expense described in the foregoing indemnity from
the Company to the several Underwriters, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue
statements or omissions made in the Registration Statement, any
Preliminary Prospectus, the Pricing Disclosure Package or
Prospectus or any amendment or supplement thereto or in any
application, in reliance upon, and in strict conformity with, the
Underwriters’ Information. In case any action shall be
brought against the Company or any other person so indemnified
based on any Preliminary Prospectus, the Registration Statement,
the Pricing Disclosure Package or Prospectus or any amendment or
supplement thereto or any application, and in respect of which
indemnity may be sought against any Underwriter, such Underwriter
shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the rights
and duties given to the several Underwriters by the provisions of
Section 5.1.2. The Company agrees promptly to notify the
Representative of the commencement of any litigation or proceedings
against the Company or any of its officers, directors or any
person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act,
in connection with the issuance and sale of the Public Securities
or in connection with the Registration Statement, the Pricing
Disclosure Package, the Prospectus, or any Issuer Free Writing
Prospectus.
27
5.3 Contribution.
5.3.1. Contribution
Rights. If the indemnification provided for in this Section
5 shall for any reason be unavailable to or insufficient to hold
harmless an indemnified party under Section 5.1 or 5.2 in respect
of any loss, claim, damage or liability, or any action in respect
thereof, referred to therein, then each indemnifying party shall,
in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of
such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect
the relative benefits received by the Company, on the one hand, and
the Underwriters, on the other, from the Offering, or (ii) if the
allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also
the relative fault of the Company, on the one hand, and the
Underwriters, on the other, with respect to the statements or
omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the
Company, on the one hand, and the Underwriters, on the other, with
respect to such Offering shall be deemed to be in the same
proportion as the total net proceeds from the Offering of the
Securities purchased under this Agreement (before deducting
expenses) received by the Company, as set forth in the table on the
cover page of the Prospectus, on the one hand, and the total
underwriting discounts and commissions received by the Underwriters
in connection with the Offering, as set forth in the table on the
cover page of the Prospectus, on the other hand. The relative fault
shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by the
Company or the Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 5.3.1 were to be determined
by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation
that does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 5.3.1
shall be deemed to include, for purposes of this Section 5.3.1, any
legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 5.3.1 in
no event shall an Underwriter be required to contribute any amount
in excess of the amount by which the total underwriting discounts
and commissions received by such Underwriter in connection with the
Offering exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
5.3.2. Contribution
Procedure. Within fifteen (15) days after receipt by any
party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if
a claim for contribution in respect thereof is to be made against
another party (“contributing
party”), notify the contributing party of the
commencement thereof, but the failure to so notify the contributing
party will not relieve it from any liability which it may have to
any other party other than for contribution hereunder. In case any
such action, suit or proceeding is brought against any party, and
such party notifies a contributing party or its representative of
the commencement thereof within the aforesaid 15 days, the
contributing party will be entitled to participate therein with the
notifying party and any other contributing party similarly
notified. Any such contributing party shall not be liable to any
party seeking contribution on account of any settlement of any
claim, action or proceeding affected by such party seeking
contribution on account of any settlement of any claim, action or
proceeding affected by such party seeking contribution without the
written consent of such contributing party. The contribution
provisions contained in this Section 5.3.2 are intended to
supersede, to the extent permitted by law, any right to
contribution under the Securities Act, the Exchange Act or
otherwise available. Each Underwriter’s obligations to
contribute pursuant to this Section 5.3 are several and not
joint.
28
6.
Default by an
Underwriter.
6.1 Default Not Exceeding 10% of Firm
Securities or Option Securities. If any Underwriter or
Underwriters shall default in its or their obligations to purchase
the Firm Securities or the Option Securities, if the Over-allotment
Option is exercised hereunder, and if the number of the Firm
Securities or Option Securities with respect to which such default
relates does not exceed in the aggregate 10% of the number of Firm
Securities or Option Securities that all Underwriters have agreed
to purchase hereunder, then such Firm Securities or Option
Securities to which the default relates shall be purchased by the
non-defaulting Underwriters in proportion to their respective
commitments hereunder.
6.2 Default Exceeding 10% of Firm
Securities or Option Securities. In the event that the
default addressed in Section 6.1 relates to more than 10% of the
Firm Securities or Option Securities, you may in your discretion
arrange for yourself or for another party or parties to purchase
such Firm Securities or Option Securities to which such default
relates on the terms contained herein. If, within one (1) Business
Day after such default relating to more than 10% of the Firm
Securities or Option Securities, you do not arrange for the
purchase of such Firm Securities or Option Securities, then the
Company shall be entitled to a further period of one (1) Business
Day within which to procure another party or parties satisfactory
to you to purchase said Firm Securities or Option Securities on
such terms. In the event that neither you nor the Company arrange
for the purchase of the Firm Securities or Option Securities to
which a default relates as provided in this Section 6, this
Agreement will automatically be terminated by you or the Company
without liability on the part of the Company (except as provided in
Sections 3.9 and 5 hereof) or the several Underwriters (except as
provided in Section 5 hereof); provided, however, that if such
default occurs with respect to the Option Securities, this
Agreement will not terminate as to the Firm Securities; and
provided, further, that nothing herein shall relieve a defaulting
Underwriter of its liability, if any, to the other Underwriters and
to the Company for damages occasioned by its default
hereunder.
6.3 Postponement of Closing Date.
In the event that the Firm Securities or Option Securities to which
the default relates are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as
aforesaid, you or the Company shall have the right to postpone the
Closing Date or Option Closing Date for a reasonable period, but
not in any event exceeding five (5) Business Days, in order to
effect whatever changes may thereby be made necessary in the
Registration Statement, the Pricing Disclosure Package or the
Prospectus or in any other documents and arrangements, and the
Company agrees to file promptly any amendment to the Registration
Statement, the Pricing Disclosure Package or the Prospectus that in
the opinion of counsel for the Underwriter may thereby be made
necessary. The term “Underwriter” as used in this
Agreement shall include any party substituted under this Section 6
with like effect as if it had originally been a party to this
Agreement with respect to such Securities.
29
7.
Additional
Covenants.
7.1 Board Composition and Board
Designations. The Company shall ensure that: (i) the
qualifications of the persons serving as members of the Board of
Directors and the overall composition of the Board comply with the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, with the Exchange Act and with the listing
rules of the Exchange or any other national securities exchange, as
the case may be, in the event the Company seeks to have any of its
securities listed on another exchange or quoted on an automated
quotation system, and (ii) if applicable, at least one member
of the Audit Committee of the Board of Directors qualifies as an
“audit committee financial expert,” as such term is
defined under Regulation S-K and the listing rules of the
Exchange.
7.2 Prohibition on Press Releases and
Public Announcements. The Company shall not issue press
releases or engage in any other publicity, without the
Representative’s prior written consent, for a period ending
at 5:00 p.m., Eastern time, on the first (1st) Business Day
following the forty-fifth (45th) day after the
Closing Date, other than normal and customary releases issued in
the ordinary course of the Company’s business.
7.3 Right of First Refusal.
Provided that the Firm Shares are sold in accordance with the terms
of this Agreement, the Representative shall have an irrevocable
right of first refusal (the “Right of First Refusal”), for a
period of twenty-four (24) months after the Effective Date, to act
as sole and exclusive investment banker, sole and exclusive
book-runner, sole and exclusive financial advisor, sole and
exclusive underwriter and/or sole and exclusive placement agent, at
the Representative’s sole and exclusive discretion, for each
and every future public or private equity or debt offering,
including all equity linked financings (each, a “Subject Transaction”), during such
twenty-four (24) month period, of the Company, or any successor to
or subsidiary of the Company, on terms and conditions customary to
the Representative for such Subject Transactions. For the avoidance
of any doubt, the Company shall not retain, engage or solicit any
additional investment banker, book-runner, financial advisor,
underwriter and/or placement agent in a Subject Transaction without
the express written consent of the Representative.
The
Company shall notify the Representative of its intention to pursue
a Subject Transaction, including the material terms thereof, by
providing written notice thereof by registered mail or overnight
courier service addressed to the Representative. If the
Representative fails to exercise its Right of First Refusal with
respect to any Subject Transaction within ten (10) Business Days
after the mailing of such written notice, then the Representative
shall have no further claim or right with respect to the Subject
Transaction. The Representative may elect, in its sole and absolute
discretion, not to exercise its Right of First Refusal with respect
to any Subject Transaction; provided that any such election by the
Representative shall not adversely affect the
Representative’s Right of First Refusal with respect to any
other Subject Transaction during the twenty-four (24) month period
agreed to above.
8.
Effective Date of this Agreement and
Termination Thereof.
8.1 Effective Date. This Agreement
shall become effective when both the Company and the Representative
have executed the same and delivered counterparts of such
signatures to the other party.
8.2 Termination. The Representative
shall have the right to terminate this Agreement at any time prior
to any Closing Date, (i) if any domestic or international
event or act or occurrence has materially disrupted, or in your
opinion will in the immediate future materially disrupt, general
securities markets in the United States; or (ii) if trading on
the New York Stock Exchange or the Nasdaq Stock Market LLC shall
have been suspended or materially limited, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for
prices for securities shall have been required by FINRA or by order
of the Commission or any other government authority having
jurisdiction; or (iii) if the United States shall have become
involved in a new war or an increase in major hostilities; or
(iv) if a banking moratorium has been declared by a New York
State or federal authority; or (v) if a moratorium on foreign
exchange trading has been declared which materially adversely
impacts the United States securities markets; or (vi) if the
Company shall have sustained a material loss by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity
or malicious act which, whether or not such loss shall have been
insured, will, in your opinion, make it inadvisable to proceed with
the delivery of the Firm Securities or Option Securities; or
(vii) if the Company is in material breach of any of its
representations, warranties or covenants hereunder; or
(viii) if the Representative shall have become aware after the
date hereof of such a material adverse change in the conditions or
prospects of the Company, or such adverse material change in
general market conditions as in the Representative’s judgment
would make it impracticable to proceed with the offering, sale
and/or delivery of the Public Securities or to enforce contracts
made by the Underwriters for the sale of the Public
Securities.
30
8.3 Expenses. Notwithstanding
anything to the contrary in this Agreement, except in the case of a
default by the Underwriters, pursuant to Section 6.2 above, in the
event that this Agreement shall not be carried out for any reason
whatsoever, within the time specified herein or any extensions
thereof pursuant to the terms herein, the Company shall be
obligated to pay to the Underwriters their actual and accountable
out-of-pocket expenses related to the transactions contemplated
herein then due and payable (including the fees and disbursements
of Representative Counsel) up to $300,000, inclusive of the $50,000
advance for accountable expenses previously paid by the Company to
the Representative (the “Advance”) and upon demand the
Company shall pay the full amount thereof to the Representative on
behalf of the Underwriters; provided, however, that such expense
cap in no way limits or impairs the indemnification and
contribution provisions of this Agreement. Notwithstanding
the foregoing, any advance received by the Representative will be
reimbursed to the Company to the extent not actually incurred in
compliance with FINRA Rule 5110(f)(2)(C).
8.4 Indemnification.
Notwithstanding any contrary provision contained in this Agreement,
any election hereunder or any termination of this Agreement, and
whether or not this Agreement is otherwise carried out, the
provisions of Section 5 shall remain in full force and effect and
shall not be in any way affected by, such election or termination
or failure to carry out the terms of this Agreement or any part
hereof.
8.5 Representations, Warranties,
Agreements to Survive. All representations, warranties and
agreements contained in this Agreement or in certificates of
officers of the Company submitted pursuant hereto, shall remain
operative and in full force and effect regardless of (i) any
investigation made by or on behalf of any Underwriter or its
Affiliates or selling agents, any person controlling any
Underwriter, its officers or directors or any person controlling
the Company or (ii) delivery of and payment for the Public
Securities.
9.
Miscellaneous.
9.1 Notices. All communications
hereunder, except as herein otherwise specifically provided, shall
be in writing and shall be mailed (registered or certified mail,
return receipt requested), personally delivered or sent by
facsimile transmission and confirmed and shall be deemed given when
so delivered or faxed and confirmed or if mailed, two (2) days
after such mailing.
31
If to
the Representative:
▇▇▇▇▇▇
▇▇▇▇▇▇ & Co., LLC
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
▇▇. ▇▇▇▇ ▇▇▇▇, Head of Investment
Banking/Underwritings
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a
copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
LLP
The
MetLife Building
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to
the Company:
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇▇▇▇▇▇
Fax No:
(▇▇▇) ▇▇▇-▇▇▇▇
with a
copy (which shall not constitute notice) to:
Lucosky
▇▇▇▇▇▇▇▇ LLP
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Esq.
Fax No:
(▇▇▇) ▇▇▇-▇▇▇▇
9.2 Headings. The headings
contained herein are for the sole purpose of convenience of
reference, and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this
Agreement.
9.3 Amendment. This Agreement may
only be amended by a written instrument executed by each of the
parties hereto.
9.4 Entire Agreement. This
Agreement (together with the other agreements and documents being
delivered pursuant to or in connection with this Agreement)
constitutes the entire agreement of the parties hereto with respect
to the subject matter hereof and thereof, and supersedes all prior
agreements and understandings of the parties, oral and written,
with respect to the subject matter hereof. Notwithstanding anything
to the contrary set forth herein, it is understood and agreed by
the parties hereto that all other terms and conditions of that
certain engagement letter between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇
& Co., LLC., dated April 7, 2016, as the same may be amended,
shall remain in full force and effect.
9.5 Binding Effect. This Agreement
shall inure solely to the benefit of and shall be binding upon the
Representative, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 5 hereof,
and their respective successors, legal representatives, heirs and
assigns, and no other person shall have or be construed to have any
legal or equitable right, remedy or claim under or in respect of or
by virtue of this Agreement or any provisions herein contained. The
term “successors and assigns” shall not include a
purchaser, in its capacity as such, of securities from any of the
Underwriters.
32
9.6 Governing Law; Consent to
Jurisdiction; Trial by Jury. This Agreement shall be
governed by and construed and enforced in accordance with the laws
of the State of New York, without giving effect to conflict of laws
principles thereof. The Company hereby agrees that any action,
proceeding or claim against it arising out of, or relating in any
way to this Agreement shall be brought and enforced in the New York
Supreme Court, County of New York, or in the United States District
Court for the Southern District of New York, and irrevocably
submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company hereby waives any objection to such
exclusive jurisdiction and that such courts represent an
inconvenient forum. Any such process or summons to be served upon
the Company may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 9.1
hereof. Such mailing shall be deemed personal service and shall be
legal and binding upon the Company in any action, proceeding or
claim. The Company agrees that the prevailing party(ies) in any
such action shall be entitled to recover from the other party(ies)
all of its reasonable attorneys’ fees and expenses relating
to such action or proceeding and/or incurred in connection with the
preparation therefor. The Company (on its behalf and, to the extent
permitted by applicable law, on behalf of its stockholders and
affiliates) and each of the Underwriters hereby irrevocably waives,
to the fullest extent permitted by applicable law, any and all
right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated
hereby.
9.7 Execution in Counterparts. This
Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which
shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement, and shall become
effective when one or more counterparts has been signed by each of
the parties hereto and delivered to each of the other parties
hereto. Delivery of a signed counterpart of this Agreement by
facsimile or email/pdf transmission shall constitute valid and
sufficient delivery thereof.
9.8 Waiver, etc. The failure of any
of the parties hereto to at any time enforce any of the provisions
of this Agreement shall not be deemed or construed to be a waiver
of any such provision, nor to in any way effect the validity of
this Agreement or any provision hereof or the right of any of the
parties hereto to thereafter enforce each and every provision of
this Agreement. No waiver of any breach, non-compliance or
non-fulfillment of any of the provisions of this Agreement shall be
effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver
is sought; and no waiver of any such breach, non-compliance or
non-fulfillment shall be construed or deemed to be a waiver of any
other or subsequent breach, non-compliance or
non-fulfillment.
[Signature Page
Follows]
33
If the
foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space
provided below for that purpose, whereupon this letter shall
constitute a binding agreement between us.
|
|
Very truly
yours,
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇
▇▇▇▇▇▇
Title:
Chief Executive Officer
|
Confirmed as of the
date first written above mentioned, on behalf of itself and as
Representative of the several Underwriters named on Schedule 1 hereto:
▇▇▇▇▇▇
▇▇▇▇▇▇ & CO., LLC.
By: /s/ ▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇
▇▇▇▇
Title: Head of
Investment Banking/Underwritings
SCHEDULE 1
|
Underwriter
|
Total Number ofFirm Shares to
bePurchased
|
Number of Additional Shares to be Purchased if
Over-Allotment Option is Fully Exercised
|
Number of Firm Warrants to be
Purchased
|
Number of Additional Warrants to be Purchased if
Over-Allotment Option is Fully Exercised
|
|
▇▇▇▇▇▇ ▇▇▇▇▇▇ &
Co., LLC…
|
2,100,000
|
450,000
|
2,100,000
|
450,000
|
|
Axiom Capital
Management, Inc.
|
900,000
|
0
|
900,000
|
0
|
|
TOTAL
|
3,000,000
|
450,000
|
3,000,000
|
450,000
|
Sch
1-1
SCHEDULE 2-A
Pricing Information
Number
of Firm Shares: 3,000,000
Number
of Firm Warrants: 3,000,000
Number
of Option Shares: 450,000
Number
of Option Warrants: 450,000
Warrant
exercise price: $5.16
Public
Offering Price per Firm Security: $4.13
Underwriting
Discount per Firm Security: $0.2891
Proceeds to Company
per Firm Security (before non-accountable expense allowance and
other expenses): $3.8409
Underwriting
Non-accountable expense allowance per Firm Security:
$0.030975
Public
Offering Price per Option Share: $4.12
Public
Offering Price per Option Warrant: $0.01
Underwriting
Discount per Option Share: $0.2884
Underwriting
Discount per Option Warrant: $0.0007
Sch
2-1
SCHEDULE 2-B
Issuer General Use Free Writing Prospectuses
None.
Sch.
2-2
SCHEDULE 3
List of Lock-Up Parties
●
▇▇▇▇▇▇
▇▇▇▇▇▇▇
●
▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
●
CC2G Holdings,
LLC
●
DC AG
Inc.
●
▇▇▇▇▇▇▇
▇▇▇▇▇▇
●
▇▇▇▇▇▇
▇▇▇▇▇
●
▇▇▇▇▇▇▇
▇▇▇▇▇
●
▇▇▇▇▇▇
▇’▇▇▇▇▇▇
●
▇▇▇▇▇
▇▇▇▇▇▇▇▇
●
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
●
▇▇▇▇▇
Trust
●
▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇
●
▇▇▇▇▇▇▇, ▇▇▇▇▇
& Co.
●
▇▇▇▇▇▇ ▇.
▇▇▇▇
●
▇▇▇▇
▇▇▇▇▇▇▇▇
●
MH Sarranow 1992
Living Trust
●
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
●
Praesidian Capital
Opportunity Fund III, LP
●
Praesidian Capital
Opportunity Fund III-A, LP
●
Praesidian Capital
Opportunity Management III, LLC
●
Praesidian Capital
Opportunity Management III-A, LLC
●
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
●
The ▇▇▇▇▇ Family
Trust
●
▇.▇. ▇▇▇▇▇▇▇▇▇▇
Construction, Inc.
●
▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
●
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇
●
▇▇▇▇▇▇ ▇.
▇▇▇▇
●
▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇
Sch.
3-1
EXHIBIT A
Form of Lock-Up Agreement
[●],
201_
▇▇▇▇▇▇
▇▇▇▇▇▇ & Co., LLC
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
The
undersigned understands that ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., LLC (the
“Representative”) proposes to enter
into an Underwriting Agreement (the “Underwriting Agreement”) with
Meridian Waste Solutions, Inc., a New York corporation (the
“Company”),
providing for the public offering (the “Public Offering”) of shares of
common stock, par value $0.025 per share, of the Company (the
“Shares”) and
warrants to purchase Shares.
To
induce the Representative to continue its efforts in connection
with the Public Offering, the undersigned hereby agrees that,
without the prior written consent of the Representative, the
undersigned will not, during the period commencing on the date
hereof and ending [90]1 [180]2 days after the date of the final
prospectus (the “Prospectus”) relating to the
Public Offering (the “Lock-Up
Period”), (1) offer, pledge, sell, contract to sell,
grant, lend, or otherwise transfer or dispose of, directly or
indirectly, any Shares or any securities convertible into or
exercisable or exchangeable for Shares, whether now owned or
hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition
(collectively, the “Lock-Up
Securities”); (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of the Lock-Up Securities,
whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Lock-Up Securities, in cash or
otherwise; (3) make any demand for or exercise any right with
respect to the registration of any Lock-Up Securities; or (4)
publicly disclose the intention to make any offer, sale, pledge or
disposition, or to enter into any transaction, swap, hedge or other
arrangement relating to any Lock-Up Securities. Notwithstanding the
foregoing, and subject to the conditions below, the undersigned may
transfer Lock-Up Securities without the prior written consent of
the Representative in connection with (a) transactions relating to
Lock-Up Securities acquired in open market transactions after the
completion of the Public Offering; provided that no filing under
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”), shall be required or shall be voluntarily made
in connection with subsequent sales of Lock-Up Securities acquired
in such open market transactions; (b) transfers of Lock-Up
Securities as a bona fide
gift, by will or intestacy or to a family member or trust for the
benefit of a family member (for purposes of this lock-up agreement,
“family member” means any relationship by blood,
marriage or adoption, not more remote than first cousin); (c)
transfers of Lock-Up Securities to a charity or educational
institution; or (d) if the undersigned, directly or indirectly,
controls a corporation, partnership, limited liability company or
other business entity, any transfers of Lock-Up Securities to any
shareholder, partner or member of, or owner of similar equity
interests in, the undersigned, as the case may be; provided that in the case of
any transfer pursuant to the foregoing clauses (b), (c) or
(d), (i) any such transfer shall not involve a disposition for
value, (ii) each transferee shall sign and deliver to the
Representative a lock-up agreement substantially in the form of
this lock-up agreement and (iii) no filing under Section 16(a)
of the Exchange Act shall be required or shall be voluntarily made.
The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company’s transfer agent and
registrar against the transfer of the undersigned’s Lock-Up
Securities except in compliance with this lock-up
agreement.
Ex.
A-1
If (i)
during the last 17 days of the Lock-Up Period, the Company issues
an earnings release or material news or a material event relating
to the Company occurs, or (ii) prior to the expiration of the
Lock-Up Period, the Company announces that it will release earnings
results or becomes aware that material news or a material event
will occur during the 16-day period beginning on the last day of
the Lock-Up Period, the restrictions imposed by this lock-up
agreement shall continue to apply until the expiration of the
18-day period beginning on the issuance of the earnings release or
the occurrence of such material news or material event, as
applicable, unless the Representative waives, in writing, such
extension.
The
undersigned agrees that, prior to engaging in any transaction or
taking any other action that is subject to the terms of this
lock-up agreement during the period from the date hereof to and
including the 34th day following the
expiration of the initial Lock-Up Period, the undersigned will give
notice thereof to the Company and will not consummate any such
transaction or take any such action unless it has received written
confirmation from the Company that the Lock-Up Period (as may have
been extended pursuant to the previous paragraph) has
expired.
If the
undersigned is an officer or director of the Company, (i) the
undersigned agrees that the foregoing restrictions shall be equally
applicable to any issuer-directed or “friends and
family” Shares that the undersigned may purchase in the
Public Offering; (ii) the Representative agrees that, at least
three (3) business days before the effective date of any release or
waiver of the foregoing restrictions in connection with a transfer
of Lock-Up Securities, the Representative will notify the Company
of the impending release or waiver; and (iii) the Company has
agreed in the Underwriting Agreement to announce the impending
release or waiver by press release through a major news service at
least two (2) business days before the effective date of the
release or waiver. Any release or waiver granted by the
Representative hereunder to any such officer or director shall only
be effective two (2) business days after the publication date of
such press release. The provisions of this paragraph will not apply
if (a) the release or waiver is effected solely to permit a
transfer of Lock-Up Securities not for consideration and (b) the
transferee has agreed in writing to be bound by the same terms
described in this lock-up agreement to the extent and for the
duration that such terms remain in effect at the time of such
transfer.
No
provision in this agreement shall be deemed to restrict or prohibit
the exercise, exchange or conversion by the undersigned of any
securities exercisable or exchangeable for or convertible into
Shares, as applicable; provided that the undersigned
does not transfer the Shares acquired on such exercise, exchange or
conversion during the Lock-Up Period, unless otherwise permitted
pursuant to the terms of this lock-up agreement. In addition, no
provision herein shall be deemed to restrict or prohibit the entry
into or modification of a so-called “10b5-1” plan at
any time (other than the entry into or modification of such a plan
in such a manner as to cause the sale of any Lock-Up Securities
within the Lock-Up Period).
The
undersigned understands that the Company and the Representative are
relying upon this lock-up agreement in proceeding toward
consummation of the Public Offering. The undersigned further
understands that this lock-up agreement is irrevocable and shall be
binding upon the undersigned’s heirs, legal representatives,
successors and assigns.
Ex.
A-2
The
undersigned understands that, if the Underwriting Agreement is not
executed by December 31, 2016, or if the Underwriting Agreement
(other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the
Shares and warrants to purchase Shares to be sold thereunder, then
this lock-up agreement shall be void and of no further force or
effect.
Whether
or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only
be made pursuant to an Underwriting Agreement, the terms of which
are subject to negotiation between the Company and the
Representative.
|
|
Very
truly yours,
_________________________________________________________
(Name -
Please Print)
_________________________________________________________
(Signature)
_________________________________________________________
(Name
of Signatory, in the case of entities - Please Print)
_________________________________________________________
(Title
of Signatory, in the case of entities - Please Print)
_________________________________________________________
_________________________________________________________
|
Ex.
A-3
EXHIBIT B
Form
of Press Release
[Date]
Meridian
Waste Solutions, Inc. (the “Company”) announced today
that ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., LLC, acting as representative for the
underwriters in the Company’s recent public offering
of _______ shares of the Company’s common stock and
warrants to purchase _______ shares of the Company’s common
stock, is [waiving] [releasing] a lock-up restriction with respect
to _________ shares of the Company’s common stock held
by [certain officers or directors] [an officer or director] of the
Company. The [waiver] [release] will take effect on
_________, 20___, and the shares may be sold on or after such
date.
This
press release is not an offer or sale of the securities in the
United States or in any other jurisdiction where such offer or sale
is prohibited, and such securities may not be offered or sold in
the United States absent registration or an exemption from
registration under the Securities Act of 1933, as
amended.
Ex.
B-1
EXHIBIT C
Form of
Opinion of Counsel
(i) The Company has
been duly organized and is validly existing as a corporation and is
in good standing under the laws of the State of New York
with the requisite corporate power and
authority to own or lease, as the case may be, and operate its
respective properties, and to conduct its business, as described in
the Registration Statement, the Pricing Disclosure Package
and the Prospectus and to enter into and perform its obligations
under the Underwriting Agreement. The Company is duly qualified as
a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or to
be in good standing would not result in a Material Adverse
Change.
(ii) All
issued and outstanding securities of the Company have been duly
authorized and validly issued and are fully paid and non-assessable
and none of such securities were issued in violation of the
preemptive rights of any stockholder of the Company arising by
operation of law or under the Charter, the Bylaws or, to such
counsel’s knowledge, the Material Contracts (as defined
below). The offers and sales of the outstanding securities were at
all relevant times either registered under the Securities Act or
exempt from such registration requirements. The authorized and
outstanding shares of capital stock of the Company is as set forth
in the Prospectus.
(iii) The
Public Securities have been duly authorized for issuance and sale
to the Underwriters pursuant to the Underwriting Agreement and,
when issued and paid for pursuant to the terms of the Underwriting
Agreement, will be validly issued and fully paid and
non-assessable; the holders thereof are not and will not be subject
to personal liability solely by reason of being such holders. The
issuance of the Public Securities is not and will not be subject to
the preemptive or similar rights of any holders of any security of
the Company arising by operation of law or under the Charter, the
Bylaws or the Material Contracts.
(iv) The
Underwriting Agreement has been duly and validly authorized,
executed and delivered by the Company.
(v) The Warrant
Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes the valid and legally
binding obligation of the Company, enforceable against the Company
in accordance with its terms, except (a) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar
laws affecting creditors’ rights generally, (b) as
enforceability of any indemnification or contribution provisions
may be limited under the Federal and state securities laws, and (c)
that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable defenses
and to the discretion of the court before which any proceeding
therefore may be brought. The shares of Common Stock issuable upon
exercise of the Warrant have been duly authorized and reserved for
issuance by all necessary corporate action on the part of the
Company and, when issued in accordance with the terms of the
Warrants, will be validly issued, fully paid and non-assessable and
will not be subject to the preemptive or similar rights of any
holders of any security of the Company arising by operation of law
or under the Charter, the Bylaws or the Material
Contracts.
Ex. C-1
(vi) The
execution, delivery and performance of the Underwriting Agreement,
the Warrant Agreement and the Warrants, and compliance by the
Company with the terms and provisions thereof and the consummation
of the transactions contemplated thereby and the issuance and sale
of the Public Securities, do not and will not, whether with or
without the giving of notice or the lapse of time or both,
(a) violate, conflict with, or result in a breach of, any of
the terms or provisions of, or constitute a default under, or
result in the creation or modification of any lien, security
interest, charge or encumbrance upon any of the properties or
assets of the Company pursuant to the terms of, any mortgage, deed
of trust, note, indenture, loan, contract, commitment or other
agreement or instrument filed or incorporated by reference as an
exhibit to the Registration Statement (collectively, the
“Material Contracts”), (b) result in any violation
of the provisions of the Charter, the By-laws or any other
governing documents of the Company, or (c) violate any law,
statute or any judgment, order or decree, rule or regulation
applicable to the Company of any Governmental Entity.
(vii) The
shares of Common Stock and the Warrants offered pursuant to the
Prospectus conform in all material respects to the description
thereof contained in the Registration Statement, the Pricing
Disclosure Package and the Prospectus. No United States or state
statute or regulation required to be described in the Prospectus is
not described as required (except as to the “blue sky”
laws of the various states, as to which such counsel expresses no
opinions), nor are any contracts or documents of a character
required to be described in the Registration Statement, Pricing
Disclosure Package or the Prospectus or to be filed or incorporated
by reference as exhibits to the Registration Statement not so
described or filed as required.
(viii) The
form of certificate used to evidence the Common Stock complies in
all material respects with all applicable New York law
requirements, with any applicable requirements of the Charter and
By-laws and with the requirements of the Exchange.
(ix) The
statements in the Registration Statement, Pricing Disclosure
Package and the Prospectus under the
heading “Description of Capital Stock,” insofar as such
statements purport to summarize legal matters, legal conclusions,
the Charter, the By-laws, or other agreements or documents
discussed therein, are correct in all material
respects.
(x) The
statements in the Registration Statement, Pricing Disclosure
Package and the Prospectus under the
heading “Material United States Federal Tax Considerations
for Non-U.S. Holders of Common Stock,” insofar as such
statements purport to summarize matters of U.S. federal tax law and
regulations or legal conclusions with respect thereto, are correct
in all material respects.
(xi) The
Registration Statement has been declared effective by the
Commission under the Securities Act and the Securities Act
Regulations. No stop order
suspending the effectiveness of the Registration Statement has been
issued under the Securities Act or any order preventing or
suspending the use of any Preliminary Prospectus, any Issuer Free
Writing Prospectus or the Prospectus has been issued, and no
proceedings for any such purpose have been instituted or, to such
counsel’s knowledge, are pending by the Commission or any
other Governmental Entity. Any
required filing of the Prospectus, and any required supplement
thereto, pursuant to Rule 424(b) under the Securities Act
Regulations, has been made in the
manner and within the time period required by Rule 424(b) (without
reference to Rule 424(b)(8)).
(xii) The
Company is not required and, after giving effect to the Offering
and sale of the Public Securities and the application of the
proceeds thereof as described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, will not be
required, to register as an “investment company,” under
the Investment Company Act of 1940, as amended.
(xiii) No
filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any Governmental Entity
(other than under the Securities Act and the Securities Act
Regulations, which have been obtained, or as may be required under
the securities or blue sky laws of the various states, as to which
we need express no opinion) is necessary or required for the
performance by the Company of its obligations under the
Underwriting Agreement, in connection with the offering, issuance
or sale of the Public Securities thereunder or the consummation of
the transactions contemplated thereby, except such as have been
already made or obtained or as may be required under the rules of
the Exchange, state securities laws or the rules of
FINRA.
Ex.
C-2
(xiv) The
Reverse Stock Split has been authorized by all necessary
corporation action of the Company. The Reverse Stock Split was duly
effected by the Company on November 3, 2016 in accordance with the
New York Business Corporations Act.
(xv) The
Public Securities have been approved for listing on the Exchange
upon official notice of issuance.
(xvi) To
such counsel’s knowledge, there are no persons with
registration rights or other similar rights to have any securities
registered pursuant to the Registrant Statement or otherwise
registered for sale by the Company under the Securities Act, except
as disclosed in the Registration Statement, the Pricing
Disclosure Package and the Prospectus.
(xvii) To
such counsel’s knowledge, there are not (1) any pending legal
proceedings to which the Company is a party or of which the
Company’s property is the subject, or (2) any proceedings
contemplated by any Governmental Authority, in each case, which are
required to be disclosed in the Registration Statement, Pricing
Disclosure Package and the Prospectus and are not so
disclosed.
(xviii) To
such counsel’s knowledge, neither the Company, nor any of its
affiliates, nor any person acting on its behalf has, directly or
indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would
cause the Offering to be integrated with prior offerings by the
Company for purposes of the Securities Act, which would require the
registration of the sales of any such securities under the
Securities Act.
(xix) Each
of (1) the Registration Statement, as of the time it became
effective, (2) the Pricing Disclosure Package, as of the Applicable
Time, and (3) the Prospectus, as of its date (in each case other
than the financial statements and supporting schedules included
therein, as to which no opinion need be rendered), complied as to
form in all material respects with the requirements of the
Securities Act and Securities Act Regulations.
The
opinion shall further include the following:
Nothing
has come to such counsel’s attention that caused such counsel
to believe that (1) the Registration Statement, as of the time it
became effective, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; (2) the
Pricing Disclosure Package, as of the Applicable Time, contained an
untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; or (3) the Prospectus, as of its date and as of the
Closing Date or Option Closing Date, as applicable, contained or
contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading (except that, in each case, such counsel need
express no view, and make no statement, with respect to the
financial statements and schedules and notes thereto and other
financial data derived therefrom that are contained in or omitted
from the Registration Statement, the Pricing Disclosure Package or
the Prospectus).
Ex. C-3