UNDERWRITING AGREEMENT between LEVEL BRANDS, INC. and THINKEQUITY, A DIVISION OF FORDHAM FINANCIAL MANAGEMENT, INC., as Representative of the Several Underwriters LEVEL BRANDS, INC. UNDERWRITING AGREEMENT
Exhibit 1.1
between
and
THINKEQUITY,
A DIVISION OF FORDHAM FINANCIAL MANAGEMENT, INC.,
as Representative of the Several Underwriters
1
[●], 2018
ThinkEquity,
A
Division of Fordham Financial Management, Inc.
As Representative of the several Underwriters named on Schedule 1
attached hereto
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The
undersigned, Level Brands, Inc., a corporation formed under the
laws of the State of North Carolina (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 Level
Brands, Inc., the “Company”), hereby confirms its
agreement (this “Agreement”) with ThinkEquity, a
division of Fordham Financial Management, Inc. (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
Shares.
1.1 Firm Shares.
1.1.1 Nature
and Purchase of Firm Shares.
(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 [●] shares (the “Firm Shares”) of the
Company’s common stock, par value $0.001 per share (the
“Common
Stock”).
(ii) The
Underwriters, severally and not jointly, agree to purchase from the
Company the number of Firm Shares set forth opposite their
respective names on Schedule 1 attached hereto and
made a part hereof at a purchase price of $[●] per Firm Share (93% of the per
Firm Share offering price). The Firm Shares are to be offered
initially to the public at the offering price set forth on the
cover page of the Prospectus (as defined in Section 2.1.1
hereof).
1.1.2 Shares
Payment and Delivery.
(i) Delivery and payment for the Firm Shares shall be
made at 10:00 a.m., Eastern time, on the second (2nd) Business Day
following the effective date (the “Effective
Date”) of the
Registration Statement (as defined in Section 2.1.1 below) under
the Securities Act of 1933, as amended (the
“Securities
Act”) (or the third (3rd)
Business Day following the Effective Date if the pricing for the
Offering (as defined in Section 2.1.1 below) occurs after 4:01
p.m., Eastern time on the Effective Date), or at such
earlier time as shall be agreed upon by the Representative and the
Company, at the offices of Gracin & ▇▇▇▇▇▇, LLP, The Chrysler
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
Shares is called the “Closing
Date.”
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(ii) Payment
for the Firm Shares 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 Shares (or
through the facilities of the Depository Trust Company
(“DTC”)) for the
account of the Representative. The Firm Shares 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 Shares except upon tender of
payment by the Representative for all of the Firm Shares. 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
Shares. For the purposes of covering any over-allotments in
connection with the distribution and sale of the Firm Shares, the
Company hereby grants to the Representative an option to purchase
up to [●] additional
shares of Common Stock, representing fifteen percent (15%) of the
Firm Shares sold in the offering, from the Company (the
“Over-allotment
Option”). The purchase price to be paid per Option
Share shall be equal to the price per Firm Share set forth in
Section 1.1.1 hereof. The Firm Shares and the Option Shares are
hereinafter referred to together as the “Public Securities.” The offering
and sale of the Public Securities is hereinafter referred to as the
“Offering.”
1.2.2 Exercise
of Over-allotment 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 Shares within 45 days after the date of the
Prospectus (as defined below). The Underwriters shall not be under
any obligation to purchase any Option Shares 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 Shares to be purchased and the
date and time for delivery of and payment for the Option Shares
(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 Shares 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 Shares, subject to the terms and
conditions set forth herein, (i) the Company shall become obligated
to sell to the Underwriters the number of Option Shares specified
in such notice and (ii) each of the Underwriters, acting severally
and not jointly, shall purchase that portion of the total number of
Option Shares then being purchased as set forth in Schedule 1 opposite the name of
such Underwriter bears to the total number of Firm Shares, subject,
in each case, to such adjustments as the Representative, in its
sole discretion, shall determine.
1.2.3 Payment
and Delivery. Payment for the Option Shares 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 to you of
certificates (in form and substance satisfactory to the
Underwriters) representing the Option Shares (or through the
facilities of DTC) for the account of the Underwriters. The Option
Shares 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 Shares except upon tender of payment by the
Representative for applicable Option Shares. 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 Shares and Option
Shares.
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1.3
Representative’s
Warrants.
1.3.1.
Purchase Warrants.
The Company hereby agrees to issue and sell to the Representative
(and/or its designees) on the Closing Date an option (the
“Representative’s
Warrant”) for the purchase of an aggregate of
[●] shares of Common Stock, representing 3.0% of the Firm
Shares, for an aggregate purchase price of $100.00. The
Representative’s Warrant agreement, in the form attached
hereto as Exhibit A
(the “Representative’s
Warrant Agreement”), shall be exercisable, in whole or
in part, commencing on a date which is one hundred and eighty (180)
days after the Effective Date and expiring on the five-year
anniversary of the Effective Date at an initial exercise price per
share of Common Stock of $[●], which is equal to 125.0% of
the public offering price of per share of Common Stock sold in the
Offering. The Representative’s Warrant Agreement and the
shares of Common Stock issuable upon exercise thereof are
hereinafter referred to together as the “Representative’s
Securities.” The Representative understands and agrees
that there are significant restrictions pursuant to FINRA Rule 5110
against transferring the Representative’s Warrant and the
underlying shares of Common Stock during the one hundred eighty
(180) days immediately following the Effective Date and by its
acceptance thereof shall agree that the Representative’s
Warrant and the underlying shares of Common Stock shall not be sold
during the Offering, or sold, transferred, assigned, pledged, or
hypothecated, or be the subject of any hedging, short sale,
derivative, put, or call transaction that would result in the
effective economic disposition of the Representative’s
Warrant or the underlying shares of Common Stock by any person for
a period of one hundred eighty (180) days immediately following the
Effective Date, except as provided for in FINRA Rule
5110(g)(2).
1.3.2.
Delivery. Delivery
of the Representative’s Warrant Agreement shall be made on
the Closing Date and shall be issued in the name or names and in
such authorized denominations as the Representative may
request.
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.
2.0.1 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-[ ]),
including any related prospectus or prospectuses, for the
registration of the Public Securities and the
Representative’s Securities under 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.
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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 [●],
2018, 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.
“Applicable
Time” means [ ]:00
[a.m.][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 Pursuant to the Exchange Act.
The shares of Common Stock are
registered pursuant to Section 12(b) under 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 shares of Common Stock under the Exchange Act, nor has the
Company received any notification that the Commission is
contemplating terminating such registration.
2.2 Stock Exchange Listing. The
shares of Common Stock are listed on the NYSE American Stock
Exchange (the “Exchange”) under the symbol
“LEVB”, and the Company
has taken no action designed to, or likely to have the effect of,
delisting the shares of Common Stock from the Exchange, nor has the
Company received any notification that the Exchange is
contemplating terminating such listing. The Company has submitted
the Additional Listing Application with the Exchange with respect
to the Offering of the Public Securities and the shares of
Common Stock underlying the Representative’s
Warrants, which application has been
approved by the Exchange, subject to official notice of
issuance.
2.3 No
Stop Orders. 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.
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2.4 Disclosures in Registration
Statement.
2.4.1 Compliance
with the Securities Act and 10b-5 Representation.
(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.
(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 any 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 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 written information furnished to the Company
with respect to the Underwriters by the Representative expressly
for use in the Registration Statement, the Pricing Prospectus, the
Pricing Disclosure Package 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 statements concerning the
Underwriters (the “Underwriters
Information”) contained
in “Underwriting” section of the Prospectus: (i) the
first paragraph of the section entitled “Discount and
Commissions”; and (ii) the section entitled “Price
Stabilization, Short Positions and Penalty
Bids.”
(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.
(v) The
documents incorporated by reference in the Registration Statement,
the Pricing Prospectus, the Pricing Disclosure Package and the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects
to the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder and none of such documents contained any untrue
statement of a material fact or omitted to state any 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; and any further documents so filed and
incorporated by reference in the Registration Statement, the
Pricing Prospectus, the Pricing Disclosure Package and the
Prospectus, when such documents become effective or are filed with
the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder, and will not 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 the light
of the circumstances under which they were made, not
misleading.
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2.5 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 or incorporated by reference 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 or to be incorporated by reference in the
Registration Statement, the Pricing Disclosure Package or the
Prospectus, that have not been so described or filed or
incorporated by reference. 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 or incorporated by reference 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 except for a default or event which would not reasonably
be expected to result in a Material Adverse Change (as such term is
defined in Section 2.10
below). To 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.
2.6 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 Prospectus.
2.7 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 that are not so
disclosed.
2.8 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 Pricing Prospectus, the
Pricing Disclosure Package, the Prospectus, Issuer General Use Free
Writing Prospectus and other materials, if any, permitted under the
Securities Act and consistent with Section 3.2
below.
2.9 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.
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2.10 Transactions
and Agreement. Since the date as of which information is
given in the most recent Preliminary Prospectus, neither the
Company nor any Subsidiary has entered or will before the Closing
Date or any Option Closing Date enter into any transaction or
agreement, not in the ordinary course of business, that is material
to the Company and its Subsidiaries taken as a whole or incurred or
will incur any liability or obligation, direct or contingent, not
in the ordinary course of business, that is material to the Company
and its Subsidiaries taken as a whole, and neither the Company nor
any Subsidiary has any plans to do any of the
foregoing.
2.11 Disclosures
in Commission Filings. (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 of the Commission promulgated thereunder (the
“Exchange Act
Regulations”).
2.12 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.
2.13 Independent
Accountants. To the knowledge of the Company, Cherry Bekaert
LLP (the “Auditor”), whose report is filed with the Commission and
included or incorporated by reference in 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 or incorporated by reference 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.
2.14 Financial
Statements, etc. The financial
statements, including the notes thereto and supporting schedules
included or incorporated by reference 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
or incorporated by reference in the Registration Statement present
fairly the information required to be stated therein. The pro forma
financial statements and the related notes, if any, included or
incorporated by reference 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, the Securities Act Regulations,
the Exchange Act or the Exchange 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. 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, the Securities Act
Regulations, the Exchange Act or the Exchange Act Regulations. The
pro forma and pro forma as adjusted financial information and the
related notes, if any, included or incorporated by reference 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, the
Securities Act Regulations, the Exchange Act or the Exchange 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, or incorporated or deemed incorporated
by reference therein, 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 or any grants under any stock compensation plan, and (d)
there has not been any Material Adverse Change in the
Company’s long-term or short-term debt.
8
2.15 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.
2.16 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 Public
Securities, exempt from such registration
requirements.
2.17 Securities
Sold Pursuant to this Agreement. The Public Securities have
been duly authorized for issuance and sale and, when issued and
paid for, will be validly issued, fully paid and non-assessable,
free and clear of all liens; the holders thereof are not and will
not be subject to personal liability by reason of being such
holders; Public 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 Public Securities has been duly and
validly taken. 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 Representative’s
Warrant has been duly and validly taken; the shares of Common Stock
issuable upon exercise of the Representative’s Warrant 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 Representative’s Warrant and
the Representative’s Warrant Agreement, such shares of Common
Stock will be validly issued, fully paid and non-assessable, free
and clear of all liens; 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.
2.18 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 an Registration Statement
to be filed by the Company.
2.19 Validity
and Binding Effect of Agreements. This Agreement and the
Representative’s Warrant Agreement have been duly and validly
authorized by the Company, and, 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.
9
2.20 No
Conflicts, etc. The execution, delivery and performance by
the Company of this Agreement, the Representative’s 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 Articles of
Incorporation (as the same may be amended or restated from time to
time, the “Charter”) or the Company’s
bylaws (as the same may be amended or restated from time to time,
the “Bylaws”);
or (iii) violates any existing applicable law, rule,
regulation, judgment, order or decree of any Governmental Entity as
of the date hereof.
2.21 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 Bylaws, or
in violation of any franchise, license, permit, applicable law,
rule, regulation, judgment or decree of any Governmental Entity,
except for any violation which would not reasonably be expected to
result in a Material Adverse Change.
2.22 Conduct
of Business. 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 as described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, except for the absence of which would not reasonably be
expected to result in a Material Adverse Change.
2.23 Transactions
Contemplated Herein. The Company has all corporate power and
authority to enter into this Agreement and the
Representative’s Warrant Agreement and to carry out the
provisions and conditions hereof and thereof, 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 Public
Securities and the consummation of the transactions and agreements
contemplated by this Agreement and the Representative’s
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, the rules and regulations of Exchange and the
regulations of the Financial Industry Regulatory Authority, Inc.
(“FINRA”).
2.24 D&O
Questionnaires. To the Company’s knowledge, without
investigation, all information contained in the questionnaires,
including information included in bring-down questionnaires (the
“Questionnaires”), completed by
each of the Company’s directors and officers in connection
with the Offering (each an “Insider”) 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 below), provided to the
Representative, 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.
2.25 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 or in connection with the
Company’s listing application for the listing of the Public
Securities on the Exchange.
10
2.26 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 North Carolina 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.
2.27 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.
2.28 Finder’s
Fees. 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 Company’s 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.
2.29 Payments
Within 180 Days. Except as
described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, 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 180 days prior to the date of this
Agreement, other than the payment to the Underwriters as provided
hereunder in connection with the Offering.
2.30 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.
2.31 FINRA
Affiliation. Except as disclosed in the Company’s
definitive Proxy Statement on Schedule 14A as filed with the
Commission on January 29, 2018, 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).
2.32 Information.
All information provided by the Company in its FINRA questionnaire
to Representative Counsel specifically for use by the
Representative Counsel in connection with its Public Offering
System filings (and related disclosure) with FINRA is true, correct
and complete in all material respects.
2.33 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.
11
2.34 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.
2.35 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.
2.36 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 either the
Registration Statement, Pricing Disclosure Package or Prospectus
has been made or reaffirmed without a reasonable basis or has been
disclosed other than in good faith.
2.37 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.
2.38 Lock-Up
Agreements. Schedule 3 hereto contains a
complete and accurate list of the Company’s officers and
directors who own shares of Common Stock (or securities convertible
or exercisable into shares of Common Stock) (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 B (the
“Lock-Up
Agreement”), prior to the execution of this
Agreement.
2.39 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 Change 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.
2.40 Related
Party Transactions.
2.40.1 Business
Relationships. There are no business relationships or
related party transactions involving the Company 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.
2.40.2 No
Relationships with Customers and Suppliers. Except as
disclosed in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, no relationship, direct or indirect,
exists between or among the Company on the one hand, and the
directors, officers, 5% or greater stockholders, customers,
licensors of the Company or any of the Company’s affiliates
on the other hand, which is required to be described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus or a document incorporated by reference therein and
which is not so described.
12
2.40.3 No
Unconsolidated Entities. 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) and any unconsolidated entity, including,
but not limited to, any structure 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.
2.40.4 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.
2.41 Board
of Directors. The Board of Directors of the Company is
comprised of the persons disclosed in the Registration Statement,
the Pricing Disclosure Package and the Prospectus. 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.
2.42 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.
2.43 Compliance.
The Company is, and on the Closing Date will be, in 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.
2.44 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
Company’s Form 10-K Annual Report for the year ended
September 31, 2017, 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
Auditor 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.
13
2.45 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 (the “Investment Company Act”). The
Company is not a development stage company or a “business
development company” as defined in Section 2(a)(48) of the
Investment Company Act. The Company is not a blank check company
and is not an issuer of fractional undivided interests in oil or
gas rights or similar interests in other mineral rights. The
Company is not an issuer of asset-backed securities as defined in
Item 1101(c) of Regulation AB.
2.46 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.
2.47 Market
Manipulation. The Company and its directors, officers or
controlling persons have not taken, directly or indirectly, any
action intended, or which might reasonably be expected, to cause or
result, under the Securities Act or otherwise, in, or which has
constituted, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Company’s Common Stock.
2.48 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 Final 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 (i) 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; (ii)
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 2.49, reasonably be
expected to result in a Material Adverse Change; (iii) 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 clause (iii),
reasonably be expected to result in a Material Adverse Change; (iv)
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 clause (iv),
reasonably be expected to result in a Material Adverse Change; and
(v) 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.
14
2.49 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. 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.
2.50 ERISA
Compliance. Except in each case that would not reasonably be
expected to result in a Material Adverse Change, 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.
2.51 Compliance
with Laws. The Company: (i) 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; (ii) has not received any warning letter, untitled letter
or other correspondence or notice from any other 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”); (iii) 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; (iv) 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; (v) 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; (vi) 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); and (vii) has not, either
voluntarily or involuntarily, initiated, conducted, or issued or
caused to be initiated, conducted or issued, any recall, market
withdrawal or replacement, safety alert, post-sale warning,
“dear doctor” letter, or other notice or action
relating to the alleged lack of safety or efficacy of any product
or any alleged product defect or violation and, to the
Company’s knowledge, no third party has initiated, conducted
or intends to initiate any such notice or action.
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2.52 Ineligible
Issuer. At the time of filing the Registration
Statement and any post-effective amendment thereto, at the time of
qualification of the Registration Statement and any amendment
thereto, at the earliest time thereafter that the Company or
another offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) of the Securities Act Rules and
Regulations) of the Public Securities and at the date hereof, the
Company was not and is not an “ineligible issuer,” as
defined in Rule 405, without taking account of any determination by
the Commission pursuant to Rule 405 that it is not necessary that
the Company be considered an ineligible issuer.
2.53 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.
2.54 Real
Property. Except as set forth in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, the Company and
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 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.
2.55 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 its Subsidiaries to or for the benefit of any of the
officers or directors of the Company, its Subsidiaries or any of
their respective family members, except as disclosed in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus.
2.56 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.
2.57 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.
2.58 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 five (5) issued
and outstanding shares thereof (the “Reverse Stock Split”), which such
Reverse Stock Split was effective on December 5, 2016.
2.59 Emerging
Growth Company. The Company is an “emerging growth
company,” as defined in Section 2(a) of the Securities Act
(an “Emerging Growth
Company”) and is eligible to submit the Registration
Statement to the Commission on a confidential basis.
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2.60 Exchange
Act Reports. The Company has
filed in a timely manner all reports required to be filed pursuant
to Sections 13(a), 13(e), 14 and 15(d) of the Exchange Act during
the preceding 12 months (or such shorter period as time as required
by the Exchange Act, except to the extent that Section 15(d)
requires reports to be filed pursuant to Sections 13(d) and 13(g)
of the Exchange Act, which shall be governed by the next clause of
this sentence); and the Company has filed in a timely manner all
reports required to be filed pursuant to Sections 13(d) and 13(g)
of the Exchange Act since November 15, 2017.
2.61 Electronic
Road Show. The Company has made available a Bona Fide
Electronic Road Show in compliance with Rule 433(d)(8)(ii) of
the Securities Act Rules and Regulations such that no filing of any
“road show” (as defined in Rule 433(h) of the
Securities Act Rules and Regulations) is required in connection
with the Offering.
2.62 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.
2.63 XBRL.
The interactive data in eXtensible Business Reporting Language
included in the Registration Statement fairly presents the
information called for in all material respects and has been
prepared in accordance with the Commission’s rules and
guidelines applicable thereto.
2.64 No
Registration Rights. No person or entity has the right
to require registration of shares of Common Stock or other
securities of the Company or any of its subsidiaries because of the
filing or effectiveness of the Registration Statement or otherwise,
except for persons and entities who have expressly waived such
right in writing or who have been given timely and proper written
notice and have failed to exercise such right within the time or
times required under the terms and conditions of such right. Except
as described in the Registration Statement, the Pricing Disclosure
Package and Prospectus, there are no persons with registration
rights or similar rights to have any securities registered by the
Company or any of its subsidiaries under the Securities
Act.
2.65 Governing
Law; Consent to Jurisdiction. The Company has the power to
submit, and pursuant to Section 13 of this Agreement,
has legally, validly, effectively and irrevocably submitted, to the
personal jurisdiction of each United States federal court and New
York state court located in the Borough of Manhattan, in the City
of New York, New York, U.S.A. (each, a “New York Court”), and the Company
has the power to designate, appoint and authorize, and pursuant to
Section 13 of this
Agreement, has legally, validly, effectively and irrevocably
designated, appointed and authorized an agent for service of
process in any action arising out of or relating to this Agreement
or the Public Securities in any New York Court, and service of
process effected on such authorized agent will be effective to
confer valid personal jurisdiction over the Company as provided in
Section 13
hereof.
2.66 Insolvency.
The Company and its subsidiaries, individually and on a
consolidated basis, are not as of the date hereof, and after giving
effect to the transactions contemplated hereby to occur on the
Closing Date, will not be Insolvent (as defined below). For
purposes of this Section 2.67,
“Insolvent” means, with respect to any person,
(i) the present fair saleable value of such person’s
assets is less than the amount required to pay such person’s
total Indebtedness, (ii) such person is unable to pay its
debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured,
(iii) such person intends to incur or believes that it will
incur debts that would be beyond its ability to pay as such debts
mature or (iv) such person has unreasonably small capital with
which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be
conducted.
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2.67 Minute
Books. The minute books of the
Company have been made available to the Underwriters and
Representative Counsel, 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.
2.68 Confidentiality
and Non-Competition. 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.
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, Preliminary Prospectus, Disclosure Package 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 424(b) and 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 or any amendment or
supplement to any Preliminary Prospectus, the Pricing Disclosure
Package or the Prospectus shall have been filed and when any
post-effective amendment to the Registration Statement shall become
effective; (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 any
Preliminary Prospectus, the Pricing Disclosure Package or 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, the Pricing Disclosure Package 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.
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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
Representative Counsel or counsel 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, however, that the Company shall not file or use any such
amendment or supplement to which the Representative or
Representative Counsel 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
Representative Counsel shall reasonably object.
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 the shares of Common Stock under the
Exchange Act. The Company shall not deregister the shares of Common
Stock 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, however, 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.
19
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 the Representative Counsel, without
charge, signed copies of the Registration Statement as originally
filed and each amendment thereto
(including exhibits filed therewith or incorporated by reference
therein and documents incorporated or deemed to be incorporated by
reference therein) 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 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 notify the Representative
immediately and confirm the notice in writing: (i) of the issuance
by the Commission of any stop order or of the initiation, or the
threatening, of any proceeding for that purpose; (ii) of the
issuance by any state securities commission of any proceedings for
the suspension of the qualification of the Public Securities for
offering or sale in any jurisdiction or of the initiation, or the
threatening, of any proceeding for that purpose; (iii) of the
mailing and delivery to the Commission for filing of any amendment
or supplement to the Registration Statement or Prospectus; (iv) of
the receipt of any comments or request for any additional
information from the Commission; and (v) 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 best efforts to maintain the listing of
the shares of Common Stock (including the Public Securities and the
shares of Common Stock underlying the Representative’s
Warrants) on the Exchange for at least three years from the date of
this Agreement.
3.8 Undertakings. The Company will
comply with any undertakings contained in the Registration
Statement.
20
3.9 Financial
Public Relations Firm. The Company has retained a financial
public relations firm reasonably acceptable to the Representative
and the Company, which firm is experienced in assisting issuers in
their relations with their security holders, and shall retain such
firm or another firm reasonably comparably experienced for a period
of not less than two (2) years after the Effective
Date.
3.10 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 material
press release and every material 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; (v) a copy of each report or
other communication furnished to stockholders and (vi) 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, however, 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
3.10.
3.11 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 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. V Stock Transfer,
LLC is acceptable to the Representative to act as Transfer
Agent for the shares of Common Stock.
3.12 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 the Exchange relating to price trading of the Public
Securities, as the Representative shall reasonably
request.
3.13 Payment
of Expenses. 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; provided,
that such expenses do not exceed $80,000 in the aggregate. Such
expenses include, but are not limited to: (i) all filing fees and
communication expenses relating to the registration of the Public
Securities with the Commission; (ii) all Public Filing System
filing fees associated with the review of the Offering by FINRA;
(iii) all fees and expenses relating to the listing of such Public
Securities on the Exchange, including any fees charged by the
Depositary Trust Company for new securities; (iv) all fees,
expenses and disbursements relating to the registration,
qualification or exemption 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;
(v) 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; (vi) the costs of all
mailing and printing of the underwriting documents (including,
without limitation, this 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; (vii) the costs of preparing, printing
and delivering certificates representing the Public Securities;
(viii) fees and expenses of the Transfer Agent; (ix) stock transfer
and/or stamp taxes, if any, payable upon the transfer of securities
from the Company to the Underwriters; (x) 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 will provide within a reasonable time after
the Closing Date in such quantities as the Representative may
reasonably request; (xi) the fees and expenses of the
Company’s accountants; (xii) the fees and expenses of the
Company’s legal counsel and other agents and representatives;
and (xiii) the fees and expenses of Representative’s Counsel.
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 Representative, less the Advance (as such term is
defined in Section 8.3 hereof); provided, however, that in the event
that the Offering is terminated, the Company agrees to reimburse
the Representative pursuant to Section 8.3 hereof, which states,
among other things, that in addition to the payments set forth
herein, any advance received by the Representative for
out-of-pocket accountable expenses will be reimbursed to the
Company to the extent not actually incurred in compliance with
FINRA Rule 5110(f)(2)(C).
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3.14 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.
3.15 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 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, subject to the
Company’s periodic filings with the Commission.
3.16 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.
3.17 Internal
Controls. Except as to the extent disclosed in the
Registration Statement, 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.
3.18 Accountants.
The Company shall continue to retain a nationally recognized
independent registered public accounting firm reasonably acceptable
to the Representative 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.
3.19 FINRA.
For a period of 180 days from the later of the Closing Date or the
Option Closing Date, 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).
3.20 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 Underwriter 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.
3.21 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 90 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 caused 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.
22
The
restrictions contained in this Section 3.21 shall not apply to
(i) the shares of Common Stock to be sold hereunder, (ii) the
issuance by the Company of shares of Common Stock upon the exercise
of a stock option or warrant or the conversion of other convertible
securities outstanding on the date hereof, of which the
Representative has been advised in writing, (iii) securities issued
pursuant to acquisitions or strategic transactions approved by a
majority of the disinterested directors of the Company, provided
that any such issuance shall only be to a person or company or an
owner of an asset in a business synergistic with the business of
the Company, or (iv) the issuance by the Company of stock options,
grants of restricted stock awards or restricted stock units or
shares of common stock of the Company under any equity compensation
plan of the Company.
3.22 [INTENTIONALLY
OMITTED]
3.23 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 2.39 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 C hereto through a
major news service at least two (2) Business Days before the
effective date of the release or waiver.
3.24 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.
3.25 Emerging
Growth Company Status. The Company shall promptly notify the
Underwriters if the Company ceases to be an Emerging Growth Company
at any time prior to the later of (i) completion of the
distribution of the Public Securities within the meaning of the
Securities Act and (ii) fifteen (15) days following the completion
of the Lock-Up Period.
3.26 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.
3.27 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 fortieth (40th) day after the Closing
Date, other than normal and customary releases issued in the
ordinary course of the Company’s business.
3.28 ▇▇▇▇▇▇▇▇-▇▇▇▇▇.
Except as disclosed in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, the Company shall at all
times comply with all applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act in effect from time to time.
23
4. Conditions of Underwriters’
Obligations. The obligations of the Underwriters to purchase
and pay for the Public 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 5:00
p.m., Eastern time, on the Effective Date or such later date and
time as shall be consented to in writing by the Representative,
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, the Company’s
shares of Common Stock, including the Firm Shares, the shares of
Common Stock underlying the Option Shares and the shares of Common
Stock underlying the Representative’s Warrants) shall have
been approved for listing on the Exchange, subject only to official
notice of issuance.
4.2 Company Counsel
Matters.
4.2.1 Closing
Date Opinion of Counsel. On the Closing Date, the
Representative shall have received the favorable opinion of
▇▇▇▇▇▇▇▇ Law Group, LLP, counsel to the Company, and a written
statement providing certain “10b-5” negative
assurances, dated the Closing Date and addressed to the
Representative, substantially in the form of Exhibit D attached
hereto.
4.2.2 Closing
Date Opinion of Counsel. On the Closing Date, the
Representative shall have received the favorable opinion of ▇▇▇▇▇▇,
▇▇▇▇▇ & Bockius LLP, as special Investment Company Act counsel
to the Company, and a written statement providing certain
“10b-5” negative assurances, dated the Closing Date and
addressed to the Representative, reasonably acceptable to the
Representative.
4.2.3 [INTENTIONALLY
OMITTED]
4.2.4 Option
Closing Date Opinions of Counsel. On the Option Closing
Date, if any, the Representative shall have received the favorable
opinions and “10b-5” negative assurances of counsel
listed in Sections 4.2.1 and 4.2.2, dated such 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 counsel in its
opinion and “10b-5” negative assurances delivered on
the Closing Date.
24
4.2.5 Reliance.
In rendering such opinion, 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 ▇▇▇▇▇▇▇▇ Law Group, LLP and
any opinion relied upon by ▇▇▇▇▇▇▇▇ Law Group, 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
Underwriters shall have received cold comfort letters from the
Auditor containing statements and information of the type
customarily included in accountants’ comfort letters with
respect to the financial statements and certain financial
information contained or incorporated or deemed incorporated by
reference 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 you 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 letters, dated as of the Closing Date or the Option
Closing Date, as applicable, to the effect that the Auditor each
reaffirm the statements made in their letters 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 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), and 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 initial 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.
25
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.
4.4.3 Chief
Financial Officer’s Certificate. At each of the
Closing Date and the Option Closing Date, if any, the
Representative shall have received a certificate of the Chief
Financial Officer of the Company, dated the Closing Date or the
Option Date, as the case may be, respectively, with respect to the
accuracy of certain information contained in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, in a form reasonably acceptable
to the Representative.
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 and no change
in the capital stock or debt of the Company, 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; (iv) no action shall have been taken and no law,
statute, rule, regulation or order shall have been enacted, adopted
or issued by any Governmental Entity which would prevent the
issuance or sale of the Public Securities or materially and
adversely affect or potentially materially and adversely affect the
business or operations of the Company; (v) no injunction,
restraining order or order of any other nature by any federal or
state court of competent jurisdiction shall have been issued which
would prevent the issuance or sale of the Public Securities or
materially and adversely affect or potentially materially and
adversely affect the business or operations of the Company and (vi)
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, 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 the 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 Representative Counsel, 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, Pricing Disclosure Package 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.
26
4.7 Corporate Proceedings. All
corporate proceedings and other legal matters incident to the
authorization, form and validity of each of this Agreement, the
Public Securities, the Representative’s Warrant Agreement,
the Registration Statement, the Pricing Disclosure Package and the
Prospectus and all other legal matters relating to this Agreement
and the transactions contemplated hereby and thereby shall be
reasonably satisfactory in all material respects to Representative
Counsel, 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.
4.7.2
Closing Date
Deliveries. On the Closing Date, the Company shall have
delivered to the Representative executed copies of the
Representative’s 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.
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”),
arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in (i) the Registration
Statement, the Pricing Disclosure Package, the Preliminary
Prospectus, the Prospectus or any Issuer Free Writing Prospectus
(as from time to time each may be amended and supplemented); (ii)
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);
(iii) 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 (iv) otherwise arising in
connection with or allegedly in connection with the
Offering. With respect to any untrue statement or omission
or alleged untrue statement or omission made in the Registration
Statement, Pricing Disclosure Package or Prospectus, the indemnity
agreement contained in this Section 5.1.1 shall not inure to the
benefit of any Underwriter Indemnified Party to the extent that any
loss, liability, claim, damage or expense of such Underwriter
Indemnified Party results from the fact that a copy of the
Prospectus was not given or sent to the person asserting any such
loss, liability, claim or damage at or prior to the written
confirmation of sale of the Public Securities to such person as
required by the Securities Act and the Securities Act Regulations,
and if the untrue statement or omission has been corrected in the
Prospectus, unless such failure to deliver the Prospectus was a
result of non-compliance by the Company with its obligations under
Section 3.3 hereof. 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.
27
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, provided
however, that the Company shall not be obligated to bear the
reasonable fees and expenses of more than one firm of attorneys
selected by the Underwriter Indemnified Party (in addition to local
counsel). 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.
28
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 of the Public
Securities, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to
in clause (i) above but also the relative fault of the Company, on
the one hand, and the Underwriters, on the other, 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 Public 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 with respect to the shares of the Common Stock
purchased under this Agreement, 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 with respect to the
Offering of the Public Securities exceeds the amount of any damages
that such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 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.
29
6. Default by an
Underwriter.
6.1 Default Not Exceeding 10% of Firm
Shares or Option Shares. If any Underwriter or Underwriters
shall default in its or their obligations to purchase the Firm
Shares or the Option Shares, if the Over-allotment Option is
exercised hereunder, and if the number of the Firm Shares or Option
Shares with respect to which such default relates does not exceed
in the aggregate 10% of the number of Firm Shares or Option Shares
that all Underwriters have agreed to purchase hereunder, then such
Firm Shares or Option Shares 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 Shares
or Option Shares. In the event that the default addressed in
Section 6.1 relates to more than 10% of the Firm Shares or Option
Shares, you may in your discretion arrange for yourself or for
another party or parties to purchase such Firm Shares or Option
Shares 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 Shares or Option Shares, you do not arrange
for the purchase of such Firm Shares or Option Shares, 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 Shares or Option Shares on such terms.
In the event that neither you nor the Company arrange for the
purchase of the Firm Shares or Option Shares 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 Section 3.9 and Section 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 Shares, this Agreement will not
terminate as to the Firm Shares; 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 Shares or Option Shares 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 shares of Common Stock.
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.
30
7.2 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 six (6) months after the Closing Date (i.e., after the
Offering of the Firm Shares is completed), to act as sole
investment banker, sole book-runner, sole underwriter and/or sole
placement agent, at the Representative’s sole discretion, for
each and every future public equity and debt offering, including
all equity linked financings (each, a “Subject Transaction”), during such
six (6) 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
Representative shall have the sole right to determine whether or
not any other broker dealer shall have the right to participate in
any Subject Transaction in which it exercises its right of first
refusal and the economic terms of any such
participation.
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 six (6) month period agreed to
above.
8. Effective Date of this Agreement and
Termination Thereof.
8.1 Effective Date of this
Agreement. 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 Shares
or Option Shares; 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.
31
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 Representative the fees set forth in Section 3.13 (including the
fees and disbursements of Representative Counsel) and to reimburse
the Representative for its actual and accountable out-of-pocket
expenses related to the transactions contemplated herein then due
and payable up to a maximum of $40,000 (inclusive of the $20,000 advance for out-of-pocket
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 Survival of 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 e-mail
or facsimile transmission and confirmed and shall be deemed given
when so delivered, e-mailed or faxed and confirmed or if mailed,
two (2) days after such mailing.
If to
the Representative:
ThinkEquity, a
division of Fordham Financial Management, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇
▇▇▇▇, Head of Investment Banking
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail:
▇▇@▇▇▇▇▇-▇▇▇▇▇▇.▇▇▇
with a
copy (which shall not constitute notice) to:
Gracin
& ▇▇▇▇▇▇, LLP
The
Chrysler Building
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇▇▇▇▇▇, Esq. or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax No:
(▇▇▇) ▇▇▇-▇▇▇▇
32
E-mail:
lmarlow@▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
or
▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
If to
the Company:
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, Chief Executive Officer or
▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Chief Financial Officer and Chief Operating
Officer
Telephone No: (▇▇▇)
▇▇▇-▇▇▇▇
E-mail
address: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
or ▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
with a
copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇ Law Group,
LLP
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Esq.
Fax No:
(▇▇▇) ▇▇▇-▇▇▇▇
E-mail
address: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
9.2 Research Analyst Independence.
The Company acknowledges that each Underwriter’s research
analysts and research departments, if any, are required to be
independent from its investment banking division and are subject to
certain regulations and internal policies, and that such
Underwriter’s research analysts may hold views and make
statements or investment recommendations and/or publish research
reports with respect to the Company and/or the Offering that differ
from the views of their investment banking division. The Company
acknowledges that each Underwriter is a full service securities
firm and as such from time to time, subject to applicable
securities laws, rules and regulations, may effect transactions for
its own account or the account of its customers and hold long or
short positions in debt or equity securities of the Company;
provided, however, that nothing in this Section
9.2 shall relieve the Underwriter of any responsibility or
liability it may otherwise bear in connection with activities in
violation of applicable securities laws, rules or
regulations.
9.3 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.
9.4 Amendment.
This Agreement may only be amended by a written instrument executed
by each of the parties hereto.
9.5 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 ThinkEquity, a
division of Fordham Financial Management, Inc., dated September 4,
2018, shall remain in full force and effect.
33
9.6 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.
9.7 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.
9.8 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.
9.9 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]
34
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:
__________________________
Name:
Title:
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:
THINKEQUITY,
A Division of Fordham Financial Management, Inc.
By:
______________________________
Name:
▇▇▇▇ ▇▇▇▇
Title:
Head of Investment Banking
[Signature Page]
35
SCHEDULE 1
|
Underwriter
|
Total Number ofFirm Shares to be Purchased
|
Number of Option Shares to be Purchased if the Over-Allotment
Option is Fully Exercised by the Representative
|
|
ThinkEquity, a division of Fordham
Financial Management, Inc.
|
|
|
|
|
|
|
|
TOTAL
|
|
|
36
SCHEDULE 2-A
Pricing
Information
Number
of Firm Shares: [●]
Number
of Option Shares: [●]
Public
Offering Price per Share: $[●]
Underwriting
Discount per Share: $[●]
Proceeds
to Company per Share (before expenses): $[●]
37
SCHEDULE 2-B
Issuer General Use Free Writing Prospectuses
Free
writing prospectus filed with the SEC on [●],
2018
38
SCHEDULE 3
List of Lock-Up Parties
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇ (Chairman of the Board of Directors and Chief
Executive Officer)
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Chief Financial Officer and Chief Operating
Officer)
▇▇▇▇
▇▇▇▇▇▇▇▇ (Director)
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ (Director)
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ (Director)
▇▇▇▇▇▇
▇▇▇▇▇▇▇ (Director)
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ (Director)
39
EXHIBIT A
Form of Representative’s Warrant Agreement
Reference
is made to Exhibit 4.10 to the Registration Statement on Form S-1
of the Company, which is incorporated by reference
herein.
40
EXHIBIT B
Form of Lock-Up Agreement
41
EXHIBIT C
Form of Press Release
[Date]
Level
Brands, Inc., a North Carolina corporation (the
“Company”), announced today that ThinkEquity,
a division of Fordham Financial Management, Inc., acting as representative for the underwriters in
the Company’s recent public offering 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, directors or other security holders] [an
officer, director or security holder] 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.
42
EXHIBIT D
Form of Opinion and Negative Assurance Letter of Company
Counsel
43