4,540,541 Shares Super League Gaming, Inc. Common Stock UNDERWRITING AGREEMENT
Exhibit 1.1
4,540,541 Shares
Common Stock
August
26, 2020
National
Securities Corporation
As
Representative of the several Underwriters
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Ladies
and Gentlemen:
The
undersigned, Super League Gaming, Inc., a corporation formed under
the laws of the State of Delaware (the “Company”), hereby confirms its
agreement (this “Agreement”) with National
Securities Corporation (hereinafter referred to as the
“Representative”) and with the
other underwriters named on Schedule 1-A 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 Nature
and Purchase of 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, severally and not jointly, to the Underwriters, an
aggregate of 4,540,541 shares (the “Firm Shares”) of the
Company’s Common Stock, par value $0.001 per share (the
“Common Stock”),
and, at the election of the Underwriters, upon the terms and
conditions stated herein, up to 681,081 additional shares (the
“Additional
Shares”) of Common Stock solely to cover
over-allotments, if any (the Firm Shares and the Additional Shares
that the Underwriters elect to purchase pursuant to Section 1.2(iii) hereof being
collectively called the “Shares”).
(ii) The
Underwriters, severally and not jointly, agree to purchase from the
Company the Shares at a purchase price of $1.7205 per share (93% of
the per Share offering price). The 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 1.3 The offering and
sale of the Shares is hereinafter referred to as the
“Offering.”
1.2 Payment
and Delivery of Shares.
(i) Delivery and
payment for the Firm Shares shall be made at 10:00 a.m., New York
City time, on the second (2nd) Business Day
following the date of this Agreement (or the third (3rd) Business Day
following the date of this Agreement if the purchase price set
forth in Schedule
1-B is determined after 4:01 p.m., New York City time) or at
such earlier time as shall be agreed upon by the Representative and
the Company, at the offices of McGuireWoods LLP, 1251 Avenue of
the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (“Underwriters’ 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 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 Shares (or
through the facilities of The Depository Trust Company
(“DTC”)) for the
account of the Underwriters. The Shares shall be registered in such
name or names and in such authorized denominations as the
Representative may request in writing. The Company shall not be
obligated to sell or deliver the Shares except upon tender of
payment by the Representative for all of the 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.
(iii) As
referenced in Section
1.1(i) above, the Company hereby grants to the Underwriters
the option to purchase from the Company an aggregate of up to the
total number of Additional Shares, at a purchase price equal to
$1.7205 per share. This option may be exercised by the
Representative at any time and from time to time on or before the
date that is thirty (30) days following the date hereof, by written
notice to the Company. Each notice shall set forth the aggregate
number of Additional Shares as to which the option is being
exercised, and the date and time when the Additional Shares are to
be delivered (each such date and time being herein referred to as
an “Option Closing
Date”); provided, however, that no Option Closing Date
shall be earlier than the Closing Date nor later than one Business
Day after the date on which the option shall have been exercised
unless the Company and the Representative otherwise agree.
Payment of the purchase price and delivery of the Additional Shares
shall be made on each Option Closing Date in the same manner and at
the same place as payment for and delivery of the Firm Shares
occurs pursuant to Section
1.2(ii) above.
1.3 Registration Statement and
Prospectus. A registration
statement on Form S-1 (File No. 333-248248) with respect to the
Shares, including a preliminary form of prospectus, has been
prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and the rules and
regulations (“Securities
Act Regulations”) of the U.S.
Securities and Exchange Commission (the “Commission”) thereunder and has
been filed with the Commission. Such registration statement,
including the amendments, exhibits and schedules thereto, as of the
time it became effective (the “Effective Date”), including the
Rule 430A Information (as defined below), is referred to herein as
the “Registration
Statement.” The Company will prepare and file a
prospectus pursuant to Rule 424(b) of the Securities Act
Regulations that discloses the information previously omitted from
the prospectus in the Registration Statement in reliance upon Rule
430A of the Securities Act Regulations, which information will be
deemed retroactively to be a part of the Registration Statement in
accordance with Rule 430A of the Securities Act Regulations
(“Rule 430A Information”). If the Company has
elected to rely upon Rule 462(b) of the Securities Act Regulations
to increase the size of the offering registered under the
Securities Act, the Company will prepare and file with the
Commission a registration statement with respect to such increase
pursuant to Rule 462(b) of the Securities Act Regulations (such
registration statement, including the contents of the Registration
Statement incorporated by reference therein is the
“Rule 462(b) Registration
Statement”). References herein to the
“Registration Statement” will be deemed to include the
Rule 462(b) Registration Statement at and after the time of filing
of the Rule 462(b) Registration Statement. “Preliminary Prospectus” means any
prospectus included in the Registration Statement prior to the
effective time of the Registration Statement, any prospectus filed
with the Commission pursuant to Rule 424(a) under the Securities
Act Regulations and each prospectus that omits Rule 430A
Information used after the effective time of the Registration
Statement. “Prospectus” means the prospectus
that discloses the public offering price and other final terms of
the Securities and the offering and otherwise satisfies Section
10(a) of the Securities Act. All references in this Agreement to
the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement to any of the foregoing,
is deemed to include the copy filed with the Commission pursuant to
its Electronic Data Gathering, Analysis and Retrieval System or any
successor system thereto (“▇▇▇▇▇”).
All
references herein to the Registration Statement, any Preliminary
Prospectus or a Prospectus shall be deemed as of any time to
include the documents and information incorporated therein by
reference in accordance with the Securities Act
Regulations.
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2. Representations and Warranties of the
Company. The Company represents and warrants to the
Underwriters as of the Time of Sale (as defined below), as of the
Closing Date and as of each Option Closing Date as
follows:
2.1 Registration
Statement and Prospectuses. The Registration Statement and
any post-effective amendment thereto has become effective under the
Securities Act. The Company has complied to the Commission’s
satisfaction with all requests of the Commission for additional or
supplemental information. No stop order suspending the
effectiveness of the Registration Statement or any part thereto or
any post-effective amendment thereto has been issued, and no
proceeding for that purpose has been initiated or, to the
Company’s knowledge, threatened by the Commission. No order
preventing or suspending the use of any Preliminary Prospectus or
the Prospectus (or any supplement thereto) has been issued by the
Commission and no proceeding for that purpose has been initiated or
is pending or, to the Company’s knowledge, threatened by the
Commission. As of the time each part of the Registration Statement
(or any post-effective amendment thereto) became or becomes
effective, such part conformed or will conform in all material
respects to the requirements of the Securities Act and the
Securities Act Regulations. Upon the filing or first use within the
meaning of the Securities Act Regulations, each Preliminary
Prospectus and the Prospectus (or any supplement to either)
conformed or will conform in all material respects to the
requirements of the Securities Act and the Securities Act
Regulations.
2.2 Accurate
Disclosure. Each Preliminary Prospectus, at the time of
filing thereof or the time of first use within the meaning of the
Securities Act Regulations, did not contain an untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading. Neither the Registration Statement nor any amendment
thereto, at the effective time of each part thereof, at the Closing
Date or at any Option Closing Date, contained, contains or will
contain an untrue statement of a material fact or omitted, omits or
will omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. As of the
Time of Sale, neither (A) the Time of Sale Disclosure Package (as
defined below) nor (B) any issuer free writing prospectus (as
defined below), when considered together with the Time of Sale
Disclosure Package, included an untrue statement of a material fact
or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. Neither the Prospectus nor any
supplement thereto, as of its issue date, at the time of any filing
with the Commission pursuant to Rule 424(b) of the Securities Act
Regulations, 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 light of
the circumstances under which they were made, not misleading. The
representations and warranties in this Section 2.2 shall not apply to
statements in or omissions from any Preliminary Prospectus, the
Registration Statement (or any amendment thereto), the Time of Sale
Disclosure Package or the Prospectus (or any supplement thereto)
made in reliance upon, and in conformity with, written information
furnished to the Company by you, or by any Underwriter through you,
specifically for use in the preparation of such document.
The parties acknowledge and agree that
such information provided by or on behalf of any Underwriter
consists solely of the following disclosure contained in the
“Underwriting” section of the Prospectus: the fourth
paragraph under the caption
“Underwriting,” the second sentence of the
first paragraph and the first sentence of the second paragraph
under the caption “Underwriting – Price Stabilization,
Short Positions and Penalty Bids,” and the information in the
caption “Underwriting – Electronic Distribution”
(collectively, the “Underwriter’s
Information”).
“Time of Sale Disclosure
Package” means the
Preliminary Prospectus dated August 21, 2020 and the information
on Schedule
2, all considered
together.
Each reference to
a “free
writing prospectus” herein means a free writing
prospectus as defined in Rule 405 of the Securities Act
Regulations.
“Time of Sale” means 9:00 p.m. (New York City time)
on the date of this Agreement.
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2.3 Listing and Maintenance
Requirements. The Company is subject to and in compliance in
all material respects with the reporting requirements of Section 13
or Section 15(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange
Act”), as applicable. The Common Stock is registered
pursuant to Section 12(b) of the Exchange Act and is listed on the
NASDAQ Capital Market (the “Exchange”), and the Company has
taken no action designed to, or reasonably likely to have the
effect of, terminating the registration of the Common Stock under
the Exchange Act or delisting the Common Stock from the Exchange,
nor has the Company received any notification that the Commission,
FINRA or The NASDAQ Stock Market LLC (“NASDAQ”) is contemplating
terminating such registration or listing, except as described in
the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus. No consent, approval, authorization or order of, or
filing, notification or registration with, the Exchange is required
for the listing and trading of the shares of Common Stock on the
Exchange, except for (i) a Notification Form: Listing of Additional
Shares; and (ii) a Notification Form: Change in the Number of
Shares Outstanding.
2.4 No
Other Offering Materials. The Company has not distributed
and will not distribute any prospectus or other offering material
in connection with the offering and sale of the Shares other than
any Preliminary Prospectus, the Time of Sale Disclosure Package or
the Prospectus or other materials permitted by the Securities Act
to be distributed by the Company; provided, however, that the Company has not made
and will not make any offer relating to the Shares that would
constitute a free writing prospectus and, except as set forth on
Schedule 2, the
Company has not made and will not make any communication relating
to the Shares that would constitute a Testing-the-Waters
Communication (as defined below), except in accordance with the
provisions of Section
2.6 of this Agreement.
2.5 Emerging
Growth Company. From the time of initial confidential
submission of the Registration Statement to the Commission (or, if
earlier, the first date on which the Company engaged directly or
through any person authorized to act on its behalf in any
Testing-the-Waters Communication) through the date hereof, the
Company has been and is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act (an
“Emerging Growth
Company”). “Testing-the-Waters Communication”
means any oral or written communication with potential investors
undertaken in reliance on Section 5(d) of the Securities
Act.
2.6 Testing-the-Waters Materials.
The Company (i) has not alone engaged in any Testing-the-Waters
Communications, other than Testing-the-Waters Communications with
the prior consent of the Representative with entities that are
qualified institutional buyers within the meaning of Rule 144A
under the Securities Act or institutions that are accredited
investors within the meaning of Rule 501 under the Securities Act
and (ii) has not authorized anyone other than the Representative to
engage in Testing-the-Waters Communications. The Company has not
distributed any Written Testing-the-Waters Communications (as
defined below) other than those listed on Schedule 2 hereto.
“Written Testing-the-Waters
Communication” means any Testing-the-Waters
Communication that is a written communication within the meaning of
Rule 405 under the Securities Act. Any individual Written
Testing-the-Waters Communication does not conflict with the
information contained in the Registration Statement, the Time of
Sale Disclosure Package or the Prospectus, complied in all material
respects with the Securities Act, and when taken together with the
Time of Sale Disclosure Package as of the Time of Sale, did not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
2.7 Financial Statements. The
financial statements of the Company, together with the related
notes, set forth in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus comply in all material
respects with the requirements of the Securities Act and the
Securities Act Regulations and fairly present the financial
condition of the Company as of the dates indicated and the results
of operations, cash flows and changes in stockholders’ equity
for the periods therein specified. The financial statements of the
Company, together with the related notes, set forth in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus are in conformity with generally accepted accounting
principles in the United States (“GAAP”) consistently applied
throughout the periods involved. The supporting schedules of the
Company included in the Registration Statement, if any, present
fairly the information required to be stated therein. All non-GAAP
financial information included in the Registration Statement, the
Time of Sale Disclosure Package and the Prospectus complies with
the requirements of Regulation G and Item 10 of Regulation S-K
under the Securities Act. Except as disclosed in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus,
there are no material off-balance sheet arrangements (as defined in
Regulation S-K under the Securities Act, Item 303(a)(4)(ii)) or any
other relationships with unconsolidated entities or other persons,
that may have a material current or, to the Company’s
knowledge, material future effect on the Company’s financial
condition, results of operations, liquidity, capital expenditures,
capital resources or significant components of revenue or expenses.
No other financial statements or schedules are required to be
included in the Registration Statement, the Time of Sale Disclosure
Package or the Prospectus. Squar ▇▇▇▇▇▇ LLP (the
“Auditor”),
which has expressed its opinion with respect to the financial
statements of the Company and related schedules filed as a part of
the Registration Statement and included in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus,
is (x) an independent registered public accounting firm within the
meaning of the Securities Act and the Securities Act Regulations,
(y) a registered public accounting firm (as defined in Section
2(a)(12) of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”)) and (z) not
in violation of the auditor independence requirements of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
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2.8 Organization and Good Standing.
The Company and each of its subsidiaries has been duly organized
and is validly existing as an entity in good standing under the
laws of its jurisdiction of organization. The Company and each of
its subsidiaries has full corporate power and authority to own its
properties and conduct its business as currently being carried on
and as described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, and is duly qualified to do
business as a foreign entity in good standing in each jurisdiction
in which it owns or leases real property or in which the conduct of
its business makes such qualification necessary and in which the
failure to so qualify would have a material adverse effect upon the
business, prospects, management, properties, operations, condition
(financial or otherwise) or results of operations of the Company,
taken as a whole (“Material
Adverse Effect”).
2.9 Absence
of Certain Events. Except as contemplated in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus, subsequent to the respective dates as of which
information is given in the Time of Sale Disclosure Package,
neither the Company nor any of its consolidated subsidiaries has
incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions, or declared
or paid any dividends or made any distribution of any kind with
respect to its capital stock; and there has not been any change in
the capital stock (other than a change in the number of outstanding
shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants or conversion of
convertible securities), or any material change in the short-term
or long-term debt (other than as a result of the conversion of
convertible securities), or any issuance of options, warrants,
convertible securities or other rights to purchase the capital
stock, of the Company or any of its subsidiaries, or any material
adverse change in the general affairs, condition (financial or
otherwise), business, prospects, management, properties, operations
or results of operations of the Company, taken as a whole
(“Material Adverse
Change”) or any development which could reasonably be
expected to result in any Material Adverse Change.
2.10 Absence
of Proceedings. Except as set forth in the Time of Sale
Disclosure Package and the Prospectus, there is no pending or, to
the knowledge of the Company, threatened or contemplated, action,
suit or proceeding (a) to which the Company or any of its
subsidiaries is a party or (b) which has as the subject thereof any
officer or director of the Company or any of its subsidiaries, any
employee benefit plan sponsored by the Company or any of its
subsidiaries or any property or assets owned or leased by the
Company or any of its subsidiaries before or by any court or
Governmental Authority (as defined below), or any arbitrator,
which, individually or in the aggregate, might result in any
Material Adverse Change, or would materially and adversely affect
the ability of the Company to perform its obligations under this
Agreement or which are otherwise material in the context of the
sale of the Shares. There are no current or, to the knowledge of
the Company, pending, legal, governmental or regulatory actions,
suits or proceedings (x) to which the Company or any of its
subsidiaries is subject or (y) which has as the subject thereof any
officer or director of the Company or any of its subsidiaries, any
employee plan sponsored by the Company or any of its subsidiaries
or any property or assets owned or leased by the Company or any of
its subsidiaries, that are required to be described in the
Registration Statement, Time of Sale Disclosure Package and
Prospectus by the Securities Act or by the Securities Act
Regulations and that have not been so described.
2.11 Authorization;
No Conflicts; Authority. This Agreement has been duly
authorized, executed and delivered by the Company. This Agreement
constitutes a valid, legal and binding obligation of the Company,
enforceable in accordance with its terms, except as rights to
indemnity hereunder may be limited by federal or state securities
laws and except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting
the rights of creditors generally and subject to general principles
of equity. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not (A) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, (B) result in any violation of the provisions of the
Company’s charter or bylaws or (C) result in the violation of
any law or statute or any judgment, order, rule, regulation or
decree of any court or arbitrator or federal, state, local or
foreign governmental agency or regulatory authority having
jurisdiction over the Company or any of its properties or assets
(each, a “Governmental
Authority”), except in the case of clause (A) as would not result
in a Material Adverse Effect. No consent, approval, authorization
or order of, or registration or filing with any Governmental
Authority is required for the execution, delivery and performance
of this Agreement or for the consummation of the transactions
contemplated hereby, including the issuance or sale of the Shares
by the Company, except such as may be required under the Securities
Act, the rules of the Financial Industry Regulatory Authority, Inc.
(“FINRA”), the
Exchange or state securities or blue sky laws; and the Company has
full power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby, including the
authorization, issuance and sale of the Shares as contemplated by
this Agreement.
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2.12 Capitalization;
the Shares; Registration Rights. All of the issued and
outstanding shares of capital stock of the Company, including the
outstanding shares of Common Stock, are duly authorized and validly
issued, fully paid and nonassessable, have been issued in
compliance with all federal and state and foreign securities laws,
were not issued in violation of or subject to any preemptive rights
or other rights to subscribe for or purchase securities that have
not been waived in writing (a copy of which has been delivered to
counsel to the Underwriters), and the holders thereof are not
subject to personal liability by reason of being such holders; the
Shares that may be sold hereunder by the Company have been duly
authorized and, when issued, delivered and paid for in accordance
with the terms of this Agreement, will have been validly issued and
will be fully paid and nonassessable, and the holders thereof will
not be subject to personal liability by reason of being such
holders; and the capital stock of the Company, including the Common
Stock, conforms to the description thereof in the Registration
Statement, in the Time of Sale Disclosure Package and in the
Prospectus. Except as otherwise stated in the Registration
Statement, in the Time of Sale Disclosure Package and in the
Prospectus, (A) there are no preemptive rights or other rights to
subscribe for or to purchase, or any restriction upon the voting or
transfer of, any shares of Common Stock pursuant to the
Company’s charter, bylaws or any agreement or other
instrument to which the Company is a party or by which the Company
is bound, (B) none of the filing of the Registration Statement, the
offering or the sale of the Shares contemplated by this Agreement
give rise to any rights for or relating to the registration of any
shares of Common Stock or other securities of the Company
(collectively “Registration
Rights”) and (C) any person to whom the Company has
granted Registration Rights has agreed not to exercise such rights
until after expiration of the Lock-Up Period (as defined below).
The Company has an authorized and outstanding capitalization as set
forth in the Registration Statement, in the Time of Sale Disclosure
Package and in the Prospectus under the caption “Description
of Capital Stock.” The Common Stock (including the Shares)
conforms in all material respects to the description thereof
contained in the Time of Sale Disclosure Package and the
Prospectus.
2.13 Stock
Options. Except as described in the Registration Statement,
in the Time of Sale Disclosure Package and in the Prospectus, there
are no options, warrants, agreements, contracts or other rights in
existence to purchase or acquire from the Company or any of its
subsidiaries any shares of the capital stock of the Company or any
of its subsidiaries. The description of the Company’s stock
option, stock bonus and other stock plans or arrangements (the
“Company Stock
Plans”), and the options (the “Options”) or other rights granted
thereunder, set forth in the Time of Sale Disclosure Package and
the Prospectus accurately and fairly presents the information
required to be shown with respect to such plans, arrangements,
options and rights. Each grant of an Option (A) was duly authorized
no later than the date on which the grant of such Option was by its
terms to be effective by all necessary corporate action, including,
as applicable, approval by the board of directors of the Company
(or a duly constituted and authorized committee thereof) and any
required stockholder approval by the necessary number of votes or
written consents, and the award agreement governing such grant (if
any) was duly executed and delivered by each party thereto and (B)
was made in accordance with the terms of the applicable Company
Stock Plan, and all applicable laws and regulatory rules or
requirements, including all applicable federal securities
laws.
2.14 Compliance
with Laws. The Company and each of its subsidiaries holds,
and is operating in compliance in all material respects with, all
franchises, grants, authorizations, licenses, permits, easements,
consents, certificates and orders of any Governmental Authority or
self-regulatory body required for the conduct of their business and
all such franchises, grants, authorizations, licenses, permits,
easements, consents, certifications and orders are valid and in
full force and effect; and neither the Company nor any of its
subsidiaries has received notice of any revocation or modification
of any such franchise, grant, authorization, license, permit,
easement, consent, certification or order or has reason to believe
that any such franchise, grant, authorization, license, permit,
easement, consent, certification or order will not be renewed in
the ordinary course; and the Company is in compliance in all
material respects with all applicable federal, state, local and
foreign laws, regulations, orders and decrees.
2.15 Ownership
of Assets. The Company and each of its subsidiaries has good
and marketable title to, or has valid rights to lease or otherwise
use, all property (whether real or personal) described in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus as being owned, leased or used by the Company or any of
its subsidiaries, in each case free and clear of all liens, claims,
security interests, other encumbrances or defects except such as
are described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus. The property held under
lease by the Company or any of its subsidiaries is held by it under
valid, subsisting and enforceable leases with only such exceptions
with respect to any particular lease as do not interfere in any
material respect with the conduct of the business of the
Company.
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2.16 Intellectual
Property.
2.16.1. The
Company and each of its subsidiaries owns or has the right to use
pursuant to a valid and enforceable written license or other
legally enforceable right, or can acquire on commercially
reasonable terms, all Intellectual Property (as defined below)
necessary for the conduct of the Company’s business as now
conducted or as described in the Registration Statement, the Time
of Sale Disclosure Package and the Prospectus to be conducted,
except as such failure to own, right to use or acquire such rights
would not result in a Material Adverse Effect (the
“Company IP”).
“Intellectual
Property” means all patents, patent applications,
trade and service marks, trade and service ▇▇▇▇ registrations,
trade names, copyrights, licenses, inventions, trade secrets,
domain names, technology, know-how and other intellectual
property.
2.16.2. To
the knowledge of the Company, there is no infringement,
misappropriation or violation by third parties of any Company IP.
There is no pending or, to the knowledge of the Company,
threatened, action, suit, proceeding or claim by others challenging
the Company’s rights in or to any Company IP, and the Company
is unaware of any facts which would form a reasonable basis for any
such claim. The Intellectual Property owned by the Company, and to
the knowledge of the Company, the Intellectual Property licensed to
the Company, has not been adjudged invalid or unenforceable, in
whole or in part, and there is no pending or, to the knowledge of
the Company, threatened action, suit, proceeding or claim by others
challenging the validity or scope of any Company IP, and the
Company is unaware of any facts which would form a reasonable basis
for any such claim. There is no pending or, to the knowledge of the
Company, threatened action, suit, proceeding or claim by others
that the Company infringes, misappropriates or otherwise violates
any Intellectual Property or other proprietary rights of others,
and the Company has not received any written notice of such claim
and the Company is unaware of any other fact which would form a
reasonable basis for any such claim.
2.16.3. To
the Company’s knowledge, no employee of the Company or any of
its subsidiaries is in or has ever been in material violation of
any term of any employment contract, patent disclosure agreement,
invention assignment agreement, non-competition agreement,
non-solicitation agreement, nondisclosure agreement or any
restrictive covenant to or with a former employer where the basis
of such violation relates to such employee’s employment with
the Company or any of its subsidiaries or actions undertaken by the
employee while employed with the Company or any of its
subsidiaries.
2.16.4. The
Company and each of its subsidiaries have taken commercially
reasonable security measures to protect the secrecy,
confidentiality and value of all of the Company IP.
2.16.5. All
patent applications owned by the Company and
each of its subsidiaries and filed with the U.S. Patent and
Trademark Office (the “PTO”) or any foreign or
international patent authority that have resulted in patents or
currently pending applications that describe inventions necessary
to conduct the business of the Company as now conducted or as
described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus to be conducted
(collectively, the “Company
Patent Applications”) have been or were duly and
properly filed with such authorities.
2.16.6. The
Company and each of its subsidiaries has complied with its duty of
candor and disclosure to the PTO for the Company Patent
Applications. To the Company’s knowledge, there are no facts
required to be disclosed to the PTO that were not disclosed to the
PTO and which would preclude the grant of a patent for the Company
Patent Applications. The Company has no knowledge of any facts that
would preclude it from having clear title, free and clear of any
encumbrances, to the Company Patent Applications that have been
identified by the Company as being exclusively owned by the
Company.
2.17 No
Violations or Defaults. Neither the Company nor any of its
subsidiaries is in violation of its charter, bylaws or other
organizational documents, or in breach of or otherwise in default,
and no event has occurred that, with notice or lapse of time or
both, would constitute such a default in any material respect in
the performance of any obligation, agreement or condition contained
in any bond, debenture, note, indenture, loan agreement or any
other material contract, lease or other instrument to which the
Company or any of its subsidiaries is subject or may be bound, or
to which any of the material property or assets of the Company or
any of its subsidiaries is subject.
-7-
2.18 Payment
of Taxes. The Company and each of its subsidiaries has
timely filed all federal, state, local and foreign income and
franchise tax returns required to be filed and is not in default in
the payment of any taxes which were payable pursuant to said
returns or any assessments with respect thereto, other than any
which the Company is contesting in good faith. There is no pending
dispute with any taxing authority relating to any of such returns,
and the Company has no knowledge of any proposed liability for any
tax to be imposed upon the properties or assets of the Company or
any of its subsidiaries for which there is not an adequate reserve
reflected in the Company’s financial statements included in
the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus.
2.19 Transactions
Affecting Disclosure to FINRA.
2.19.1. 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 of the Company’s officers, directors or
beneficial owners of 5% or more of any class of the Company’s
securities of with respect to the sale of the Shares 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.
2.19.2. Payments Within Twelve (12)
Months. Except as described in the Registration Statement,
the Time of Sale 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
the twelve (12) months prior to the Effective Date, other than the
payment to the Underwriters as provided hereunder in connection
with the Offering.
2.19.3. Use of Proceeds. None of the
net proceeds of the Offering will be paid by the Company or any of
its subsidiaries to any participating FINRA member or its
affiliates, except as specifically authorized herein.
2.19.4. FINRA Affiliation. There is no
(i) officer or director of the Company or any of its subsidiaries,
(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).
2.19.5. Information. All information
provided by the Company in its FINRA questionnaire to
Underwriters’ Counsel specifically for use by
Underwriters’ Counsel in connection with its Public Offering
System filings (and related disclosure) with FINRA is true, correct
and complete in all material respects.
2.20 Ownership
of Other Entities. The Company, directly or indirectly, owns
no capital stock or other equity or ownership or proprietary
interest in any unaffiliated corporation, partnership, association,
trust or other entity.
-8-
2.21 Internal
Controls. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with
management’s general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain
accountability for assets; (iii) access to assets is permitted only
in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. Except
as disclosed in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus, the Company’s
internal control over financial reporting is effective and none of
the Company, its board of directors and its audit committee is
aware of any “significant deficiencies” or
“material weaknesses” (each as defined by the Public
Company Accounting Oversight Board) in its internal control over
financial reporting, or any fraud, whether or not material, that
involves management or other employees of the Company who have a
significant role in the Company’s internal controls; and
since the end of the latest fiscal year, there has been no change
in the Company’s internal control over financial reporting
(whether or not remediated) that has materially affected, or is
reasonably likely to materially affect, the Company’s
internal control over financial reporting. The Company’s
board of directors has validly appointed an audit committee to
oversee internal accounting controls whose composition satisfies
the applicable requirements of the Exchange and the Company’s
board of directors and/or the audit committee has adopted a charter
that satisfies the requirements of the Exchange.
2.22 No
Brokers or Finders. Other than as contemplated by this
Agreement, the Company has not incurred and will not incur any
liability for any finder’s or broker’s fee or
agent’s commission in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
2.23 Insurance.
The Company and each of its subsidiaries carries, or is covered
by, insurance from reputable insurers in such amounts and covering
such risks as is adequate for the conduct of its business and the
value of its properties and as is customary for companies engaged
in similar businesses in similar industries; all policies of
insurance and any fidelity or surety bonds insuring the Company or
its business, assets, employees, officers and directors are in full
force and effect; the Company and each of its
subsidiaries is in compliance with
the terms of such policies and instruments in all material
respects; there are no claims by the Company under any such policy
or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause;
neither the Company nor any of its subsidiaries has been refused
any insurance coverage sought or applied for; and the Company has
no reason to believe that it will not be able to renew its or its
subsdiaries’ existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost
that would not have a Material Adverse Effect.
2.24 Investment
Company Act. The Company is not and, after giving effect to
the offering and sale of the Shares, will not be an
“investment company,” as such term is defined in the
Investment Company Act of 1940, as amended.
2.25 ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act; Board of Directors. The Company is in compliance with
all applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules
and regulations of the Commission thereunder. The qualifications of
the persons serving as board members and the overall composition of
the board comply with the Exchange Act, the rules and regulations
of the Commission under the Exchange Act the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and
the rules promulgated thereunder applicable to the Company and the
listing rules of the Exchange, except as described in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus. 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.
2.26 Disclosure
Controls. The Company has established and maintains
disclosure controls and procedures (as defined in Rules 13a-14 and
15d-14 under the Exchange Act) and such controls and procedures are
effective in ensuring that material information relating to the
Company is made known to the principal executive officer and the
principal financial officer and such controls and procedures are
effective to perform the functions for which they were established.
The Company has utilized such controls and procedures in preparing
and evaluating the disclosures in the Registration Statement, the
Time of Sale Disclosure Package and the Prospectus.
-9-
2.27 Anti-Bribery
and Anti-Money Laundering Laws. The Company, its
subsidiaries, each of their officers, directors, supervisors,
managers and employees, and to the knowledge of the Company, its
affiliates or agents and any of their respective officers,
directors, supervisors, managers, agents and employees, has not
violated, its participation in the offering will not violate, and
the Company has instituted and maintains policies and procedures
designed to ensure continued compliance with, each of the following
laws: (A) anti-bribery laws, including but not limited to, any
applicable law, rule, or regulation of any locality, including but
not limited to any law, rule, or regulation promulgated to
implement the OECD Convention on Combating Bribery of Foreign
Public Officials in International Business Transactions, signed
December 17, 1997, including the U.S. Foreign Corrupt Practices Act
of 1977, as amended, the U.K. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, or any other law,
rule or regulation of similar purposes and scope or (B) anti-money
laundering laws, including but not limited to, applicable federal,
state, international, foreign or other laws, regulations or
government guidance regarding anti-money laundering, including,
without limitation, Title 18 U.S. Code section 1956 and 1957, the
Patriot Act, the Bank Secrecy Act, and international anti-money
laundering principles or procedures by an intergovernmental group
or organization, such as the Financial Action Task Force on Money
Laundering, of which the United States is a member and with which
designation the United States representative to the group or
organization continues to concur, all as amended, and any executive
order, directive, or regulation pursuant to the authority of any of
the foregoing, or any orders or licenses issued
thereunder.
2.28 OFAC.
2.28.1. Neither
the Company, any of its subsidiaries, nor any of their directors,
officers or employees, nor, to the Company’s knowledge, any
agent, affiliate or representative of the Company or any of its
subsidiaries, is an individual or entity that is, or is owned or
controlled by an individual or entity that is:
2.28.1.1. the
subject of any sanctions administered or enforced by the U.S.
Department of Treasury’s Office of Foreign Assets Control,
the United Nations Security Council, the European Union, Her
Majesty’s Treasury, or other relevant sanctions authority
(collectively, “Sanctions”), nor
2.28.1.2. located,
organized or resident in a country or territory that is the subject
of Sanctions (including, without limitation, the Crimea Region of
the Ukraine, Cuba, Iran, North Korea, Sudan and
Syria).
2.28.2. The
Company will not, directly or indirectly, use the proceeds of the
offering, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other
individual or entity:
2.28.2.1. to
fund or facilitate any activities or business of or with any
individual or entity or in any country or territory that, at the
time of such funding or facilitation, is the subject of Sanctions;
or
2.28.2.2. in
any other manner that will result in a violation of Sanctions by
any individual or entity (including any individual or entity
participating in the offering, whether as underwriter, advisor,
investor or otherwise).
2.28.3. For
the past five years, neither the Company nor any of its
subsidiaries, whether or not currently existing, has knowingly
engaged in, and is not now knowingly engaged in, any dealings or
transactions with any individual or entity, or in any country or
territory, that at the time of the dealing or transaction is or was
the subject of Sanctions.
-10-
2.29 Compliance
with Environmental Laws. Except as disclosed in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus, neither the Company nor any of its subsidiaries (A) is
in violation of any statute, rule, regulation, decision or order of
any Governmental Authority or any court, domestic or foreign,
relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the
environment or human exposure to hazardous or toxic substances
(collectively, “Environmental
Laws”), (B) owns or operates any real property
contaminated with any substance that is subject to any
Environmental Laws, (C) is liable for any off-site disposal or
contamination pursuant to any Environmental Laws, and (D) is
subject to any claim relating to any Environmental Laws, which
violation, contamination, liability or claim would individually or
in the aggregate, have a Material Adverse Effect; and the Company
is not aware of any pending investigation which might lead to such
a claim. The Company does not anticipate incurring any material
capital expenditures relating to compliance with Environmental
Laws.
2.30 Compliance
with Occupational Laws. Each of the Company and its subsidiaries
(A) is in compliance, in all material respects, with any and all
applicable foreign, federal, state and local laws, rules,
regulations, treaties, statutes and codes promulgated by any and
all Governmental Authorities (including pursuant to the
Occupational Health and Safety Act) relating to the protection of
human health and safety in the workplace (“Occupational Laws”); (B) has
received all material permits, licenses or other approvals required
of it under applicable Occupational Laws to conduct its business as
currently conducted; and (C) is in compliance, in all material
respects, with all terms and conditions of such permits, licenses
or approvals. No action, proceeding, revocation proceeding, writ,
injunction or claim is pending or, to the Company’s
knowledge, threatened against the Company or any of its
subsidiaries relating to Occupational Laws, and the Company does
not have knowledge of any facts, circumstances or developments
relating to its operations or cost accounting practices that could
reasonably be expected to form the basis for or give rise to such
actions, suits, investigations or proceedings.
2.31 ERISA
and Employee Benefits Matters. (A) To the knowledge of the
Company, no “prohibited transaction” as defined under
Section 406 of ERISA (as defined below) or Section 4975 of the Code
(as defined below) and not exempt under ERISA Section 408 and the
regulations and published interpretations thereunder has occurred
with respect to any Employee Benefit Plan (as defined below). At no
time has the Company or any ERISA Affiliate (as defined below)
maintained, sponsored, participated in, contributed to or has or
had any liability or obligation in respect of any Employee Benefit
Plan subject to Part 3 of Subtitle B of Title I of ERISA, Title IV
of ERISA, or Section 412 of the Code or any “multiemployer
plan” as defined in Section 3(37) of ERISA or any multiple
employer plan for which the Company or any ERISA Affiliate has
incurred or could incur liability under Section 4063 or 4064 of
ERISA. No Employee Benefit Plan provides or promises, or at any
time provided or promised, retiree health, life insurance, or other
retiree welfare benefits except as may be required by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
or similar state law. Each Employee Benefit Plan is and has been
operated in material compliance with its terms and all applicable
laws, including but not limited to ERISA and the Code and, to the
knowledge of the Company, no event has occurred (including a
“reportable event” as such term is defined in Section
4043 of ERISA) and no condition exists that would subject the
Company or any ERISA Affiliate to any material tax, fine, lien,
penalty or liability imposed by ERISA, the Code or other applicable
law. Each Employee Benefit Plan intended to be qualified under Code
Section 401(a) is so qualified and has a favorable determination or
opinion letter from the IRS upon which it can rely, and any such
determination or opinion letter remains in effect and has not been
revoked; to the knowledge of the Company, nothing has occurred
since the date of any such determination or opinion letter that is
reasonably likely to adversely affect such qualification; (B) with
respect to each Foreign Benefit Plan (as defined below), such
Foreign Benefit Plan (1) if intended to qualify for special tax
treatment, meets, in all material respects, the requirements for
such treatment, and (2) if required to be funded, is funded to the
extent required by applicable law, and with respect to all other
Foreign Benefit Plans, adequate reserves therefor have been
established on the accounting statements of the applicable Company
or subsidiary; (C) the Company does not have any obligations under
any collective bargaining agreement with any union and no
organization efforts are underway with respect to employees of the
Company. As used in this Agreement, “Code” means the Internal Revenue
Code of 1986, as amended; “Employee Benefit Plan” means any
“employee benefit plan” within the meaning of Section
3(3) of ERISA, including, without limitation, all stock purchase,
stock option, stock-based severance, employment, change-in-control,
medical, disability, fringe benefit, bonus, incentive, deferred
compensation, employee loan and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or
not subject to ERISA, under which (x) any current or former
employee, director or independent contractor of the Company has any
present or future right to benefits and which are contributed to,
sponsored by or maintained by the Company or (y) the Company has
had or has any present or future obligation or liability;
“ERISA” means
the Employee Retirement Income Security Act of 1974, as amended;
“ERISA
Affiliate” means any member of the Company’s
controlled group as defined in Code Section 414(b), (c), (m) or
(o); and “Foreign Benefit
Plan” means any Employee Benefit Plan established,
maintained or contributed to outside of the United States of
America or which covers any employee working or residing outside of
the United States.
-11-
2.32 Business
Arrangements. Except as disclosed in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus,
neither the Company nor any of its subsidiaries has granted any
material rights to develop, manufacture, produce, assemble,
distribute, license, market or sell its products to any other
person and is not bound by any material agreement that affects the
exclusive right of the Company and its subsidiries to develop,
manufacture, produce, assemble, distribute, license, market or sell
its products.
2.33 Labor
Matters. No labor problem or dispute with the employees of
the Company or any of its subsidiaries exists or is threatened or
imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its principal
suppliers, contractors or customers that could have a Material
Adverse Effect.
2.34 Disclosure
of Legal Matters. There are no statutes, regulations, legal
or governmental proceedings or contracts or other documents
required to be described in the Time of Sale Disclosure Package or
in the Prospectus or included as exhibits to the Registration
Statement that are not described or included as
required.
2.35 Statistical
Information. Any third-party statistical and market-related
data included in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus are based on or derived from
sources that the Company believes to be reliable and accurate in
all material respects.
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 the Registration Statement, the Time of
Sale Disclosure Package or the Prospectus has been made or
reaffirmed without a reasonable basis or has been disclosed other
than in good faith.
2.37 No
Rated Securities. There are no debt securities or preferred
stock of, or guaranteed by, the Company that are rated by a
“nationally recognized statistical rating
organization,” as such term is defined in Section 3(a)(62) of
the Exchange Act.
2.38 Related-Party
Transactions. To the Company’s knowledge, no
transaction has occurred between or among the Company, on the one
hand, and any of the Company’s officers, directors or five
percent or greater stockholders or any affiliate or affiliates of
any such officer, director or five percent or greater stockholders
that is required to be described that is not so described in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus. The Company has not, directly or indirectly, extended
or maintained credit, or arranged for the extension of credit, or
renewed an extension of credit, in the form of a personal loan to
or for any of its directors or executive officers in violation of
applicable laws, including Section 402 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act.
2.39 Cybersecurity;
Data Protection. The information technology assets and
equipment, computers, systems, networks, hardware, software,
websites, applications, and databases of the Company and each of
its subsidiaries (collectively, “IT Systems”) are adequate in all
material respects for, and operate and perform in all material
respects as required in connection with the operation of the
business of the Company as currently conducted, and to the
knowledge of the Company, free and clear of all material bugs,
errors, defects, Trojan horses, time bombs, malware and other
corruptants. The Company and each of its subsidiaries has
implemented and maintains commercially reasonable controls,
policies, procedures and safeguards to maintain and protect its
material confidential information and the integrity, continuous
operation, redundancy and security of all IT Systems and data
(including all personal, personally identifiable, sensitive,
confidential or regulated data (“Personal Data”)) used in
connection with its businesses, and to the knowledge of the
Company, there have been no material breaches, violations, outages
or unauthorized uses of or accesses to the same, except for those
that have been remedied without material cost or liability or the
duty to notify any other person, nor are there any material
incidents under internal review or investigations relating to the
same. The Company and each of its subsidiaries is presently in
compliance in all material respects with all applicable laws or
statutes and all judgments, orders, rules and regulations of any
court or arbitrator or governmental or regulatory authority,
internal policies and contractual obligations relating to the
privacy and security of IT Systems and Personal Data and to the
protection of such IT Systems and Personal Data from unauthorized
use, access, misappropriation or modification.
-12-
2.40 Lock-Up
Agreements. Schedule 3 hereto contains a
complete and accurate list of the Company’s executive
officers and directors as well as any stockholders deemed to be
affiliates through their ownership of the 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 A (the
“Lock-Up
Agreement”), prior to the execution of this
Agreement.
3.
Covenants of the Company. The
Company covenants and agrees as follows:
3.1 Amendments to Registration
Statement. The Company shall deliver to the Representative,
prior to filing, any amendment or supplement to the Registration
Statement or Prospectus proposed to be filed after the Effective
Date and not file any such amendment or supplement to which the
Representative shall reasonably object in writing.
3.2 Federal Securities
Laws.
3.2.1. Compliance.
The Company, subject to Section 3.2.2, shall comply
with the requirements of Rule 430A of the Securities Act
Regulations, and will notify the Representative promptly, and
confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective or
any amendment or supplement to the Prospectus shall have been
filed; (ii) of the receipt of any comments from the
Commission; (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information;
(iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment or of any order preventing or suspending
the use of any Preliminary Prospectus or the Prospectus, or of the
suspension of the qualification of the Shares 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 Shares. The Company shall
effect all filings required under Rule 424(b) of the Securities Act
Regulations, in the manner and within the time period required by
Rule 424(b) (without reliance on Rule 424(b)(8)), and shall take
such steps as it deems necessary to ascertain promptly whether the
form of prospectus transmitted for filing under Rule 424(b) was
received for filing by the Commission and, in the event that it was
not, it will promptly file such prospectus. The Company shall use
its best efforts to prevent the issuance of any stop order,
prevention or suspension and, if any such order is issued, to
obtain the lifting thereof at the earliest possible
moment.
3.2.2. Continued
Compliance. The Company shall comply with the Securities
Act, the Securities Act Regulations, the Exchange Act and the rules
and regulation under the Exchange Act (the “Exchange Act Regulations”) so as
to permit the completion of the distribution of the Shares as
contemplated in this Agreement and in the Registration Statement,
the Time of Sale Disclosure Package and the Prospectus. If at any
time when a prospectus relating to the Shares 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 Shares, any event shall occur or
condition shall exist as a result of which it is necessary, in the
opinion of Underwriters’ Counsel or Company Counsel (as
defined below), 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 Time of
Sale Disclosure Package or the Prospectus in order that the Time of
Sale 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 Time of Sale
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
Time of Sale 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 Underwriters’ Counsel shall reasonably
object. The Company will furnish to the Representative such number
of copies of such amendment or supplement as the Representative may
reasonably request. The Company has given the Representative notice
of all filings made pursuant to the Exchange Act or the Exchange
Act Regulations within forty-eight (48) hours prior to the Time of
Sale. The Company shall give the Representative notice of its
intention to make any such filing from the Time of Sale until the
last Option Closing Date 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
Underwriters’ Counsel shall reasonably object.
-13-
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.
3.3 Delivery to the Representative of
Registration Statements. The Company has delivered or made
available or shall deliver or make available to the Representative
and Underwriters’ Counsel, without charge, signed copies of
the Registration Statement as originally filed and each amendment
thereto (including exhibits filed therewith) and signed copies of
all consents and certificates of experts, and will also deliver to
the Representative, without charge, a conformed copy of the
Registration Statement as originally filed and each amendment
thereto (without exhibits) for the Representative. The copies of
the Registration Statement and each amendment thereto furnished to
the Representative 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 the Underwriters, without charge,
as many copies of each Preliminary Prospectus as the Underwriters
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 the Underwriters, without charge, during
the period when a prospectus relating to the Shares 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 each 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 notify the Representative
immediately and confirm the notice in writing: (i) of the
effectiveness of the Registration Statement and any amendment
thereto; (ii) of the issuance by the Commission of any stop
order or of the initiation, or the threatening, of any proceeding
for that purpose; (iii) of the issuance by any state
securities commission of any proceedings for the suspension of the
qualification of the Shares for offering or sale in any
jurisdiction or of the initiation, or the threatening, of any
proceeding for that purpose; (iv) of the mailing and delivery
to the Commission for filing of any amendment or supplement to the
Registration Statement or Prospectus; (v) of the receipt of
any comments or request for any additional information from the
Commission; and (vi) of the happening of any event during the
period described in this Section 3.5 that, in the
judgment of the Company, makes any statement of a material fact
made in the Registration Statement, the Time of Sale 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 Time of Sale
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 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 Shares) on the Exchange for at least three (3)
years from the date of this Agreement.
3.8 [Reserved.]
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3.9 Reports to the
Representative.
3.9.1. Periodic
Reports, etc. For a period of three (3) years after the date
of this Agreement, the Company shall furnish or make available to
the Representative copies of such financial statements and other
periodic and special reports as the Company from time to time
furnishes generally to holders of any class of its securities and
also promptly furnish to the Representative: (i) a copy of each
periodic report the Company shall be required to file with the
Commission under the Exchange Act and the Exchange Act Regulations;
(ii) a copy of every press release and every news item and article
with respect to the Company or its affairs which was released by
the Company; (iii) a copy of each Form 8-K prepared and filed by
the Company; (iv) five copies of each registration statement filed
by the Company under the Securities Act; and (v) such additional
documents and information with respect to the Company and the
affairs of any future subsidiaries of the Company as the
Representative may from time to time reasonably request; provided
the Representative shall sign, if requested by the Company, a
Regulation FD compliant confidentiality agreement which is
reasonably acceptable to the Representative and Underwriters’
Counsel in connection with the Representative’s receipt of
such information. Documents filed with the Commission pursuant to
its ▇▇▇▇▇ system shall be deemed to have been delivered to the
Representative pursuant to this Section 3.9.1.
3.9.2. Transfer
Agent; Transfer Sheets. For a period of three (3) years
after the date of this Agreement, the Company shall continue to
retain a transfer agent and registrar acceptable to the
Representative (the “Transfer Agent”) and shall furnish
to the Representative at the Company’s sole cost and expense
such transfer sheets of the Company’s securities as the
Representative may reasonably request, including the daily and
monthly consolidated transfer sheets of the Transfer Agent and DTC.
Issuer Direct is acceptable to the Representative to act as
Transfer Agent for the shares of Common Stock.
3.9.3. [Reserved.]
3.9.4. Payment
of Expenses and Advisory Fee. The Company hereby agrees to
pay on the Closing Date and each Option Closing Date all expenses
incident to the performance of the obligations of the Company under
this Agreement, including, but not limited to: (a) all filing fees
and communication expenses relating to the registration of the
Shares to be sold in the Offering (including the Additional Shares)
with the Commission, (b) all filing fees and other expenses
(including the reasonable fees and disbursements of counsel to the
Underwriters) incurred in connection with qualification of the
Shares for sale under the laws of such jurisdictions as the
Representative designates, (c) costs and expenses related to the
review of the Offering by FINRA, including all filing fees and the
reasonable fees and disbursements of counsel to the Underwriters
relating to such review, (d) costs and reasonable expenses relating
to investor presentations or any “road show” in
connection with the Offering, including, without limitation, the
costs of recording and hosting on the Internet of the
Company’s road show presentation and any reasonable travel
expenses of the Company’s officers and employees and any
other expenses of the Company, (e) fees and expenses incident to
listing or continued listing of the Shares on the Exchange and on
such other stock exchanges as the Company and the Representative
together determine, (f) the fees, disbursements and expenses of the
Company’s counsel, accountants and other advisors in
connection with the Offering, (g) expenses incurred in preparing,
printing and distributing each Preliminary Prospectus and the
Prospectus (including any amendments and supplements thereto) to
the Underwriters and for expenses incurred for preparing, printing
and distributing any issuer free writing prospectuses to investors
or prospective investors, (h) reasonable fees, disbursements and
expenses of the Underwriters’ counsel, (i) the costs and
expenses of a public relations firm selected by the Company in its
sole discretion, if any, (i) the costs of preparing, printing and
delivering certificates representing the Shares, (k) fees and
expenses of the transfer agent for the delivery of the shares of
Shares, (l) stock transfer and/or stamp taxes, if any, payable upon
the transfer of securities from the Company to the Underwriters,
(m) to the extent approved by the Company in writing, the costs
associated with post-closing advertising of the Offering in the
national editions of the Wall Street Journal and New York Times,
(n) fees, expenses and disbursements relating to background checks
of the Company’s officers and directors in connection with
the Offering; provided,
however, that the maximum
amount of fees, costs and expenses incurred by the Underwriters
with respect to subparagraphs (a) through (n) above that the Company
shall be required to pay under this Section 3.9.4 shall be $70,000.
The Representative may deduct from the net proceeds of the Offering
payable to the Company on the Closing Date or any Option Closing
Date, the expenses set forth herein to be paid by the Company to
the Underwriters.
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3.10 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 Time of Sale
Disclosure Package and the Prospectus.
3.11 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
ending after the date of this Agreement.
3.12 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 Shares.
3.13 Internal
Controls. The Company shall maintain a system of internal
accounting controls sufficient to provide reasonable assurances
that: (i) transactions are executed in accordance with
management’s general or specific authorization;
(ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with GAAP and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any
differences.
3.14 Accountants.
The Company shall retain an independent registered public
accounting firm reasonably acceptable to the Representative, and
the Company shall continue to retain a nationally recognized
independent registered public accounting firm for a period of at
least three (3) years after the date of this Agreement. The
Representative acknowledges that the Auditor is acceptable to the
Representative.
3.15 FINRA.
The Company shall advise the Representative (who shall make an
appropriate filing with FINRA) if it is or becomes aware that (i)
any officer or director of the Company, (ii) any beneficial owner
of 5% or more of any class of the Company’s securities, or
(iii) any beneficial owner of the Company’s unregistered
equity securities that were acquired during the 180-day period
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).
3.16 No
Fiduciary Duties. The Company acknowledges and agrees that
the Underwriters’ responsibility to the Company is solely
contractual in nature and that none of the Underwriters or their
affiliates or any selling agent shall be deemed to be acting in a
fiduciary capacity, or otherwise owes any fiduciary duty to the
Company or any of its affiliates in connection with the Offering
and the other transactions contemplated by this
Agreement.
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3.17 Company
Lock-Up Agreements.
3.17.1. Restriction
on Sales of Capital Stock. The Company, on behalf of itself
and any successor entity, agrees that, without the prior written
consent of the Representative, it will not, for a period of thirty
(30) days after the date of this Agreement (the “Lock-Up Period”), (a) 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, (b) file
or cause to be filed any registration statement with the Commission
relating to the offering of any shares of capital stock of the
Company or any securities convertible into or exercisable or
exchangeable for shares of capital stock of the Company (except for
registration statements on Form S-4 or Form S-8) or (c) 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
(a), (b) or
(c) above is to be
settled by delivery of shares of capital stock of the Company or
such other securities, in cash or otherwise. The restrictions
contained in this Section
3.17.1 shall not apply to (i) the Shares to be sold
hereunder, (ii) the issuance by the Company of shares of capital
stock of the Company upon the exercise of a stock option or warrant
or the conversion or vesting of a security outstanding on the date
hereof, (iii) the issuance by the Company of equity awards of the
Company under any equity compensation plan of the Company, (iv) the
issuance by the Company of shares of capital stock of the Company
or securities convertible into, exchangeable for or that represent
the right to receive shares of capital stock of the Company in
connection with the acquisition by the Company of the securities,
business, technology, property or other assets of another person or
entity, or in connection with a strategic transaction approved by a
majority of the disinterested directors of the Company, (v) the
sale of shares of capital stock of the Company to cover the payment
of exercise prices or the payment of taxes associated with the
exercise or vesting of equity awards under any equity compensation
plan of the Company or (ix) the filing of a post-effective
amendment to the Company’s registration statements on Form
S-3 (Reg. No. 333-237626) and Form S-8 (Reg. Nos. 333-238143) with
the Commission to maintain effectiveness of such registration
statements, provided that in each of
(ii) and
(iii) above, the
underlying shares of capital stock of the Company shall be
restricted from sale during the entire Lock-Up Period (each such
issuance referred to herein as an “Exempt Issuance”).
3.17.2. Restriction
on Continuous Offerings. Notwithstanding the restrictions
contained in Section
3.17.1, the Company, on behalf of itself and any successor
entity, agrees that, without the prior written consent of the
Representative, it will not, (A) for a period of three (3) months
after the date of this Agreement, directly or indirectly in any
“at-the-market” or continuous equity transaction, offer
to sell, sell, contract to sell, grant any option to sell or
otherwise dispose of shares of capital stock of the Company or any
securities convertible into or exercisable or exchangeable for
shares of capital stock of the Company or (B) for a period of
twelve (12) months after the date of this Agreement, effect or enter into an agreement to effect any
issuance by the Company or any of its subsidiaries of Common Stock
or any securities convertible into or exercisable or
exchangeable for shares of capital stock of the Company
(or a combination of units thereof)
involving a Variable Rate Transaction. “Variable Rate
Transaction” means a
transaction in which the Company issues or sells any debt or equity
securities that are convertible into, exchangeable or exercisable
for, or include the right to receive, additional shares of Common
Stock either (x) at a conversion price, exercise price or exchange
rate or other price that is based upon, and/or varies with, the
trading prices of or quotations for the shares of Common Stock at
any time after the initial issuance of such debt or equity
securities or (y) with a conversion, exercise or exchange price
that is subject to being reset at some future date after the
initial issuance of such debt or equity security or upon the
occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common
Stock. The parties agree and acknowledge that the provisions
of this Section 3.17.2 will not apply to any Exempt
Issuance.
3.18 Release
of 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 2.40 for an officer or
director of the Company and provide the Company with notice of the
impending release or waiver at least three (3) Business Days before
the effective date of the release or waiver, the Company agrees to
announce the impending release or waiver by a press release
substantially in the form of Exhibit B hereto through a
major news service at least two (2) Business Days before the
effective date of the release or waiver.
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3.19 Blue
Sky Qualifications. The Company shall use its best efforts,
in cooperation with the Representative, if necessary, to qualify
the Shares 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 Shares; 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.
3.20 Reporting
Requirements. The Company, during the period when a
prospectus relating to the Shares 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 Shares as may be required under Rule 463 under the
Securities Act Regulations.
4. Conditions of Underwriters’
Obligations. The obligations of the Underwriters to purchase
and pay for the Shares, as provided herein, shall be subject to (i)
the continuing accuracy of the representations and warranties of
the Company as of the date hereof, as of the Closing Date and each
Option Closing Date, as applicable; (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 is effective under the Securities Act, 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, the Prospectus or any part thereof
shall have been issued and no proceedings for that purpose or
pursuant to Section 8A under the Securities Act shall have been
initiated or threatened by the Commission, and all requests for
additional information on the part of the Commission (to be
included or incorporated by reference in the Registration Statement
or the Prospectus or otherwise) shall have been complied with to
the reasonable satisfaction of the Representative; and the Rule
462(b) Registration Statement, if any, and the Prospectus shall
have been filed with the Commission within the applicable time
period prescribed for such filing by, and in compliance with, the
Securities Act Regulations and in accordance with Section 3.2 and the Rule 462(b)
Registration Statement, if any, shall have become effective
immediately upon its filing with the Commission. 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 and each Option
Closing Date, the Company’s shares of Common Stock, including
the Shares, 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 Company Counsel. On the Closing Date and
each Option Closing Date, the Representative shall have received
the favorable opinion and negative assurance letter of Disclosure
Law Group, counsel to the Company (“Company Counsel”), dated the
Closing Date and each Option Closing Date, as applicable, and
addressed to the Representative in form and substance reasonably
satisfactory to the Representative.
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4.2.2. Reliance.
In rendering its opinion, Company Counsel may rely: (i) as to
matters involving the application of laws other than the laws of
the United States and jurisdictions in which it is admitted, to the
extent Company 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
Underwriters’ Counsel if requested.
4.3 Comfort Letters.
4.3.1. Cold
Comfort Letter. At the time this Agreement is executed the
Representative shall have received from the Auditor a cold comfort
letter containing statements and information of the type
customarily included in accountants’ comfort letters with
respect to the financial statements and certain financial
information contained in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus, addressed to the
Representative and in form and substance satisfactory in all
respects to the Representative and to the Auditor, dated as of the
date of this Agreement.
4.3.2. Bring-down
Comfort Letter. At the Closing Date and each Option Closing
Date, the Representative shall have received from the Auditor a
letter, dated as of the Closing Date or such Option Closing Date,
as applicable, to the effect that the Auditor reaffirms the
statements made in the letter furnished pursuant to Section 4.3.1, except that the
specified date referred to shall be a date not more than three (3)
Business Days prior to the Closing Date or 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 each
Option Closing Date, as applicable, of its Chief Executive Officer
and Chairman and its Chief Financial Officer stating that (i) such
officers have carefully examined the Registration Statement, the
Time of Sale Disclosure Package and the Prospectus and, in their
opinion, the Registration Statement and each amendment thereto, as
of the Time of Sale and as of the Closing Date or such Option
Closing Date, as applicable, 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 Time of Sale Disclosure Package, as
of the Time of Sale and as of the Closing Date and such Option
Closing Date, as applicable, the Prospectus and each amendment or
supplement thereto, as of the respective date thereof and as of the
Closing Date or Option Closing Date, as applicable, did not include
any untrue statement of a material fact and did not omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances in which they were made, not
misleading, (ii) since the effective date of the Registration
Statement, no event has occurred which should have been set forth
in a supplement or amendment to the Registration Statement, the
Time of Sale Disclosure Package or the Prospectus, (iii) as of the
Closing Date or such Option Closing Date, as applicable, the
representations and warranties of the Company in this Agreement are
true and correct in all material respects 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 such Option Closing Date, as applicable, and (iv)
there has not been, subsequent to the date of the most recent
audited financial statements included or incorporated by reference
in the Time of Sale 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.
4.4.2. Secretary’s
Certificate. At the Closing Date and each Option Closing
Date, the Representative shall have received a certificate of the
Company signed by the Secretary of the Company, dated the Closing
Date or such Option Closing Date, as applicable, certifying:
(i) that each of the certificate of incorporation and the
bylaws of the Company 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 Company 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.
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4.5 No Material Changes. Prior to
and on the Closing Date and each Option Closing Date:
(i) there shall have been no Material Adverse Change or
development involving a prospective material adverse change in the
condition or prospects or the business activities, financial or
otherwise, of the Company from the latest dates as of which such
condition is set forth in the Registration Statement, the Time of
Sale 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 officer, director or
beneficial owner of 10% or more of any class of the Company’s
securities 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
Time of Sale Disclosure Package and the Prospectus; (iii) no
stop order shall have been issued under the Securities Act and no
proceedings therefor shall have been initiated or threatened by the
Commission; and (iv) the Registration Statement, the Time of
Sale 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 Time of Sale Disclosure Package nor the Prospectus nor any
amendment or supplement thereto shall contain any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
4.6 Delivery of
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 Additional Documents. At the
Closing Date and each Option Closing Date, Underwriters’
Counsel shall have been furnished with such documents and opinions
as they may require for the purpose of enabling Underwriters’
Counsel to deliver an opinion to the Representative, 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 Shares as herein contemplated shall be
satisfactory in form and substance to the Representative and
Underwriters’ 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 the Representative, the Underwriters,
their affiliates and each of their respective directors, officers,
members, employees, representatives, partners, shareholders,
affiliates, counsel, and agents and each person, if any, who
controls each Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively the
“Underwriter Indemnified
Parties,” and each an “Underwriter Indemnified Party”),
against any and all loss, liability, claim, damage and expense
whatsoever (including but not limited to any and all legal or other
expenses reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any
claim whatsoever, whether arising out of any action between any of
the Underwriter Indemnified Parties and the Company or between any
of the Underwriter Indemnified Parties and any third party, or
otherwise) to which they or any of them may become subject under
the Securities Act, the Exchange Act or any other statute or at
common law or otherwise or under the laws of foreign countries (a
“Claim”), (i)
arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in (A) the Registration
Statement, the Time of Sale Disclosure Package, any Preliminary
Prospectus, the Prospectus, or in any Written Testing-the-Waters
Communication (as from time to time each may be amended and
supplemented); (B) any materials or information provided to
investors by, or with the approval of, the Company in connection
with the marketing of the Offering, including any “road
show” or investor presentations made to investors by the
Company; or (C) any application or other document or written
communication (in this Section 5, collectively called
“application”)
executed by the Company or based upon written information furnished
by the Company in any jurisdiction in order to qualify the Shares
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 Underwriter’s Information, or (ii)
otherwise arising in connection with or allegedly in connection
with the Offering. The Company also agrees that it will reimburse
each Underwriter Indemnified Party for all fees and expenses
(including but not limited to any and all legal or other expenses
reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim
whatsoever, whether arising out of any action between any of the
Underwriter Indemnified Parties and the Company or between any of
the Underwriter Indemnified Parties and any third party, or
otherwise) (collectively, the “Expenses”), and further agrees
wherever and whenever possible to advance payment of Expenses as
they are incurred by an Underwriter Indemnified Party in
investigating, preparing, pursuing or defending any
Claim.
-20-
5.1.2. Procedure. If
any action is brought against an Underwriter Indemnified Party in
respect of which indemnity may be sought against the Company
pursuant to Section
5.1.1, such Underwriter Indemnified Party shall promptly
notify the Company in writing of the institution of such action and
the Company shall assume the defense of such action, including the
employment and fees of counsel (subject to the approval of such
Underwriter Indemnified Party) and payment of actual expenses if an
Underwriter Indemnified Party requests that the Company do so. Such
Underwriter Indemnified Party shall have the right to employ its or
their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of the Company, and shall be
advanced by the Company. The Company shall not be liable for any
settlement of any action effected without its consent (which shall
not be unreasonably withheld). In addition, the Company shall not,
without the prior written consent of the Representative, 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.
The Underwriters, severally and not jointly, agree 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 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 Time of Sale Disclosure Package or the Prospectus
or any amendment or supplement thereto or in any application, in
reliance upon, and in strict conformity with, the
Underwriter’s 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 Time of Sale Disclosure Package or Prospectus or any amendment
or supplement thereto or any application, and in respect of which
indemnity may be sought against the Underwriters, the Underwriters
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 Underwriters by the provisions of
Section 5.1.2. The
Company agrees promptly to notify the Underwriters 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 Shares or in connection with the
Registration Statement, the Time of Sale Disclosure Package, the
Prospectus, or any Written Testing-the-Waters
Communication.
-21-
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 Shares, or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in
clause (i) above
but also the relative fault of the Company, on the one hand, and
the 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
Shares 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
Representative, 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 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
any 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 Shares 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 fifteen (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.
6.
Additional
Covenants.
6.1 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 of Directors
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 its Shares listed on another exchange or quoted on an
automated quotation system, subject to any applicable cure period,
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.
-22-
6.2 Prohibition on Press Releases and
Public Announcements. Prior to the last Option Closing Date,
the Company shall not issue any press release or other
communication directly or indirectly or hold any press conference
with respect to the Company, its condition, financial or otherwise,
or earnings, business affairs or business prospects (except for
routine oral marketing communications in the ordinary course of
business and consistent with the past practices of the Company and
of which the Representative is notified), without the prior written
consent of the Representative, unless in the judgment of the
Company and its counsel, and after notification to the
Representative, such press release or communication is required by
law or applicable Exchange rules.
7.
Effective Date of this Agreement and
Termination Thereof.
7.1 Effective Date. This Agreement
shall become effective when both the Company and the Representative
have executed the same and delivered counterparts of such
signatures to the other party.
7.2 Termination. The Representative
shall have the right to terminate this Agreement at any time prior
to the Closing Date, (i) if any domestic or international
event or act or occurrence has materially disrupted, or in the
Representative’s 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
NASDAQ 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 the Representative’s
opinion, make it inadvisable to proceed with the delivery of the
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 Shares or to enforce contracts made by the
Underwriters for the sale of the Shares.
7.3 Expenses. Notwithstanding
anything to the contrary in this Agreement, 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 its reasonable accountable out-of-pocket expenses
related to the transactions contemplated herein then due and
payable (including the fees and disbursements of
Underwriters’ Counsel) up to $70,000 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).
7.4 Indemnification.
Notwithstanding any contrary provision contained in this Agreement,
any election hereunder or any termination of this Agreement, and
whether or not this Agreement is otherwise carried out, the
provisions of Section
5 shall remain in full force and effect and shall not be in
any way affected by, such election or termination or failure to
carry out the terms of this Agreement or any part
hereof.
7.5 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
Shares.
-23-
8.
Miscellaneous.
8.1 Notices. All communications
hereunder, except as herein otherwise specifically provided, shall
be in writing and shall be mailed (registered or certified mail,
return receipt requested), personally delivered or sent by
facsimile transmission and confirmed and shall be deemed given when
so delivered or faxed and confirmed or if mailed, two (2) days
after such mailing.
If to
the Representative:
National Securities
Corporation
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Email:
▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Fax No:
(▇▇▇) ▇▇▇-▇▇▇▇
with a
copy (which shall not constitute notice) to:
McGuireWoods
LLP
▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
Older, Esq. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Email:
▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
If to
the Company:
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇
▇▇▇▇, Chief Executive Officer
Email:
▇▇▇.▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Fax
No.
:
with a
copy (which shall not constitute notice) to:
Dislcosure Law
Group, a professional corporation
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, Esq.
Email:
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Fax No:
(▇▇▇) ▇▇▇-▇▇▇▇
8.2 Headings. The headings
contained herein are for the sole purpose of convenience of
reference, and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this
Agreement.
8.3 Amendment. This Agreement may
only be amended by a written instrument executed by each of the
parties hereto.
8.4 Entire Agreement. This
Agreement (together with the other agreements and documents being
delivered pursuant to or in connection with this Agreement)
constitutes the entire agreement of the parties hereto with respect
to the subject matter hereof and thereof, and supersedes all prior
agreements and understandings of the parties, oral and written,
with respect to the subject matter hereof.
8.5 Binding Effect. This Agreement
shall inure solely to the benefit of and shall be binding upon the
Representative, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 5, and their respective
successors, legal representative, 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 the
Underwriters.
-24-
8.6 Governing Law; Consent to
Jurisdiction; Trial by Jury. This Agreement shall be
governed by and construed and enforced in accordance with the laws
of the State of New York, without giving effect to conflict of laws
principles thereof. The Company hereby agrees that any action,
proceeding or claim against it arising out of, or relating in any
way to this Agreement shall be brought and enforced in state and
federal courts located in the Borough of Manhattan in the City 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. 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 the Underwriters hereby irrevocably waive, 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.
8.7 Execution in Counterparts. This
Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which
shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement, and shall become
effective when one or more counterparts has been signed by each of
the parties hereto and delivered to each of the other parties
hereto. Delivery of a signed counterpart of this Agreement by
facsimile or email/pdf transmission shall constitute valid and
sufficient delivery thereof.
8.8 Waiver, etc. The failure of any
of the parties hereto to at any time enforce any of the provisions
of this Agreement shall not be deemed or construed to be a waiver
of any such provision, nor to in any way effect the validity of
this Agreement or any provision hereof or the right of any of the
parties hereto to thereafter enforce each and every provision of
this Agreement. No waiver of any breach, non-compliance or
non-fulfillment of any of the provisions of this Agreement shall be
effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver
is sought; and no waiver of any such breach, non-compliance or
non-fulfillment shall be construed or deemed to be a waiver of any
other or subsequent breach, non-compliance or
non-fulfillment.
[Signature
Page Follows]
-25-
If the
foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space
provided below for that purpose, whereupon this letter shall
constitute a binding agreement between us.
Very
truly yours,
By:
/s/ ▇▇▇
▇▇▇▇
Name:
▇▇▇ ▇▇▇▇
Title: CEO and
President
Confirmed as of the
date first written above mentioned:
NATIONAL SECURITIES CORPORATION
as Representative of the several Underwriters
By:
/s/ ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇
Name:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title:
Executive Vice President
Head
of Investment Banking
SCHEDULE 1-A
Underwriters
|
Name of Underwriter
|
|
Number of Firm Shares
|
|
National
Securities Corporation
|
|
4,540,541
|
|
|
|
|
Schedule
1-A-1
SCHEDULE 1-B
Pricing Information
Number
of Shares: 4,540,541
Public
Offering Price per Share: $1.85
Underwriting
Discount per Share: $0.1295
Proceeds
to Company per Share (before expenses): $1.7205
Schedule
1-B-1
SCHEDULE 2
Written Testing-the-Waters Communications
None.
Schedule
2-1
SCHEDULE 3
List of Lock-Up Parties
1.
▇▇▇
▇▇▇▇
2.
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
3.
▇▇▇▇
▇▇▇▇
4.
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
5.
▇▇▇▇▇▇▇
▇▇▇▇▇▇
6.
▇▇▇▇
▇▇▇▇
7.
▇▇▇▇▇▇▇
▇▇▇▇▇▇
8.
▇▇▇▇
▇▇▇▇▇▇▇
Schedule
3-1
EXHIBIT A
Form of Lock-Up Agreement
August
__, 2020
National
Securities Corporation
As
Representative of the Several Underwriters
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
The
undersigned understands that National Securities Corporation
(hereinafter referred to as the “Representative”) and with the
other underwriters named on Schedule 1-A to the
Underwriting Agreement (as defined below) for which the
Representative is acting as representative (the Representative and
such other underwriters being collectively called the
“Underwriters”
or, individually, an “Underwriter”) proposes to enter
into an Underwriting Agreement (the “Underwriting Agreement”) with
Super League Gaming, Inc., a Delaware corporation (the
“Company”),
providing for the public offering (the “Public Offering”) of shares of
Common Stock, par value $0.001 per share, of the Company (the
“Shares”).
To
induce the Underwriters to continue their efforts in connection
with the Public Offering, the undersigned hereby agrees that,
without the prior written consent of the Representative, the
undersigned will not, during the period commencing on the date
hereof and ending ninety (90) days after the date of the final
prospectus (the “Prospectus”) relating to the
Public Offering (the “Lock-Up
Period”), (1) offer, pledge, sell, contract to sell,
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, whether now owned or hereafter
acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition
(collectively, the “Lock-Up
Securities”); (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of Lock-Up Securities,
whether any such transaction is to be settled by delivery of shares
of Lock-Up Securities, in cash or otherwise; (3) make any demand
for or exercise any right with respect to the registration of any
Lock-Up Securities; or (4) publicly disclose the intention to make
any offer, sale, pledge or disposition, or to enter into any
transaction, swap, hedge or other arrangement relating to any
Lock-Up Securities. Notwithstanding the foregoing, and subject to
the conditions below, the undersigned may transfer Lock-Up
Securities without the prior written consent of the Representative
in connection with (a) transactions relating to Lock-Up Securities
acquired in open market transactions after the completion of the
Public Offering; provided
that no filing under Section 16(a) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), shall be required
or shall be voluntarily made in connection with subsequent sales of
Lock-Up Securities acquired in such open market transactions; (b)
transfers of Lock-Up Securities as a bona fide gift, by will or intestacy or
to a family member or trust for the benefit of a family member (for
purposes of this lock-up agreement, “family member”
means any relationship by blood, marriage or adoption, not more
remote than first cousin); (c) transfers of Lock-Up Securities to a
charity or educational institution; (d) if the undersigned,
directly or indirectly, controls a corporation, partnership,
limited liability company or other business entity, any transfers
of Lock-Up Securities to any shareholder, partner or member of, or
owner of similar equity interests in, the undersigned, as the case
may be, or (e) the sales of Shares to cover the payment of the
exercise prices or the payment of taxes associated with the
exercise or vesting of equity awards under any equity compensation
plan of the Company; provided that in the case of any
transfer pursuant to the foregoing clauses (b), (c) or (d), (i) any such transfer
shall not involve a disposition for value, (ii) each transferee
shall sign and deliver to the Representative a lock-up agreement
substantially in the form of this lock-up agreement and (iii) no
filing under Section 16(a) of the Exchange Act shall be
required or shall be voluntarily made, except for a Form 5. The
undersigned also agrees and consents to the entry of stop transfer
instructions with the Company’s transfer agent and registrar
against the transfer of the undersigned’s Lock-Up Securities
except in compliance with this lock-up agreement.
Ex.
A-2
If the
undersigned is an officer or director of the Company, (i) the
undersigned agrees that the foregoing restrictions shall be equally
applicable to any issuer-directed or “friends and
family” Shares that the undersigned may purchase in the
Public Offering; (ii) the Representative agrees that, at least
three (3) Business Days (as that term is defined in the
Underwriting Agreement) before the effective date of any release or
waiver of the foregoing restrictions in connection with a transfer
of Lock-Up Securities, the Representative will notify the Company
of the impending release or waiver; and (iii) the Company has
agreed in the Underwriting Agreement to announce the impending
release or waiver by press release through a major news service at
least two (2) Business Days before the effective date of the
release or waiver. Any release or waiver granted by the
Representative hereunder to any such officer or director shall only
be effective two (2) Business Days after the publication date of
such press release. The provisions of this paragraph will not apply
if (a) the release or waiver is effected solely to permit a
transfer of Lock-Up Securities not for consideration and (b) the
transferee has agreed in writing to be bound by the same terms
described in this lock-up agreement to the extent and for the
duration that such terms remain in effect at the time of such
transfer.
No
provision in this agreement shall be deemed to restrict or prohibit
the exercise, exchange or conversion by the undersigned of any
securities exercisable or exchangeable for or convertible into
Shares, as applicable; provided that the undersigned does not
transfer the Shares acquired on such exercise, exchange or
conversion during the Lock-Up Period, unless otherwise permitted
pursuant to the terms of this lock-up agreement. In addition, no
provision herein shall be deemed to restrict or prohibit the entry
into or modification of a so-called “10b5-1” plan at
any time (other than the entry into or modification of such a plan
in such a manner as to cause the sale of any Lock-Up Securities
within the Lock-Up Period).
The
undersigned understands that the Company and the Underwriters are
relying upon this lock-up agreement in proceeding toward
consummation of the Public Offering. The undersigned further
understands that this lock-up agreement is irrevocable and shall be
binding upon the undersigned’s heirs, legal representative,
successors and assigns.
The
undersigned understands that, if the Underwriting Agreement is not
executed by October 31, 2020, or if the Underwriting Agreement
(other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the
Shares to be sold thereunder, then this lock-up agreement shall be
void and of no further force or effect.
Whether
or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only
be made pursuant to an Underwriting Agreement, the terms of which
are subject to negotiation between the Company and the
Underwriters.
Very
truly yours,
(Name -
Please Print)
(Signature)
(Name
of Signatory, in the case of entities - Please Print)
(Title
of Signatory, in the case of entities - Please Print)
Address:
Ex.
A-2
EXHIBIT B
Form of Press Release
[Date]
Super
League Gaming, Inc. (the “Company”) announced today
that National Securities Corporation acting as representative of
the Underwriters for the Company’s recent public offering
of 4,540,541 shares
of the Company’s Common Stock, is [waiving] [releasing] a
lock-up restriction with respect to _________ shares of the
Company’s Common Stock [and _________ shares of the
Company’s Common Stock] held by [certain officers or
directors] [an officer or director] of the Company. The
[waiver] [release] will take effect on _________, 20___, and
the shares may be sold on or after such
date.
This press release is not an offer or sale of the securities in the
United States or in any other jurisdiction where such offer or sale
is prohibited, and such securities may not be offered or sold in
the United States absent registration or an exemption from
registration under the Securities Act of 1933, as
amended.
Ex.
B-1