UNDERWRITING AGREEMENT between ENDRA LIFE SCIENCES INC. and THINKEQUITY, A DIVISION OF FORDHAM FINANCIAL MANAGEMENT, INC., as Representative of the Several Underwriters ENDRA LIFE SCIENCES INC. UNDERWRITING AGREEMENT
Exhibit
1.1
between
and
THINKEQUITY,
A DIVISION OF FORDHAM FINANCIAL MANAGEMENT, INC.,
as Representative of the Several Underwriters
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December
15, 2020
ThinkEquity,
A
Division of Fordham Financial Management, Inc.
As
Representative of the several Underwriters named on Schedule 1
attached hereto
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Ladies
and Gentlemen:
The
undersigned, ENDRA Life Sciences Inc., a corporation formed under
the laws of the State of Delaware (collectively with its
subsidiaries and affiliates, including, without limitation, all
entities disclosed or described in the Registration Statement (as
hereinafter defined) as being subsidiaries or affiliates of ENDRA
Life Sciences Inc., the “Company”), hereby confirms its
agreement (this “Agreement”) with ThinkEquity, a
division of Fordham Financial Management, Inc. (hereinafter
referred to as “you” (including its correlatives) or
the “Representative”), and with the
other underwriters named on Schedule 1 hereto for which the
Representative is acting as representative (the Representative and
such other underwriters being collectively called the
“Underwriters”
or, individually, an “Underwriter”) as
follows:
1.
Purchase and Sale of
Shares.
1.1 Firm
Shares.
1.1.1
Nature and Purchase of
Firm Shares.
(i) On
the basis of the representations and warranties herein contained,
but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to the several Underwriters, an
aggregate of 7,143,000 shares (the “Firm Shares”) of the
Company’s common stock, par value $0.0001 per share (the
“Common
Stock”).
(ii) The
Underwriters, severally and not jointly, agree to purchase from the
Company the number of Firm Shares set forth opposite their
respective names on Schedule 1 attached hereto and
made a part hereof at a purchase price of $0.651 per Firm Share
(93% of the per Firm Share offering price). The Firm Shares are to
be offered initially to the public at the offering price set forth
on the cover page of the Prospectus (as defined in Section 2.1.1
hereof).
1.1.2
Shares Payment and
Delivery.
(i) Delivery
and payment for the Firm Shares shall be made at 10:00 a.m.,
Eastern time, on the second (2nd) Business Day
following the effective date (the “Effective Date”) of the
Registration Statement (as defined in Section 2.1.1 below) pursuant
to Rule 430B(f)(2) of the Securities Act of 1933, as amended (the
“Securities
Act”) (or the third (3rd) Business Day
following the Effective Date if the pricing for the Offering (as
defined in Section 2.1.1 below) occurs after 4:01 p.m., Eastern
time on the Effective Date), or at such earlier time as shall be
agreed upon by the Representative and the Company, at the offices
of Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇ LLP (“Representative Counsel”), ▇▇▇▇
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▇▇▇▇▇, 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.”
(ii) Payment
for the Firm Shares shall be made on the Closing Date by wire
transfer in Federal (same day) funds, payable to the order of the
Company upon delivery of the certificates (in form and substance
satisfactory to the Underwriters) representing the Firm Shares (or
through the facilities of the Depository Trust Company
(“DTC”)) for the
account of the Representative. The Firm Shares shall be registered
in such name or names and in such authorized denominations as the
Representative may request in writing at least two (2) full
Business Days prior to the Closing Date. The Company shall not be
obligated to sell or deliver the Firm Shares except upon tender of
payment by the Representative for all of the Firm Shares. The term
“Business Day”
means any day other than a Saturday, a Sunday or a legal holiday or
a day on which banking institutions are authorized or obligated by
law to close in New York, New York.
1.2
Over-allotment
Option.
1.2.1 Option
Shares. For the purposes of covering any over-allotments in
connection with the distribution and sale of the Firm Shares, the
Company hereby grants to the Representative an option to purchase
up to 714,286 additional shares of Common Stock, representing ten
percent (10%) of the Firm Shares sold in the offering, from the
Company (the “Over-allotment
Option”). Such 714,286 additional shares of Common Stock, the net
proceeds of which will be deposited with the Company’s
account, are hereinafter referred to as the “Option Shares.” The purchase price
to be paid per Option Share shall be equal to the price per Firm
Share set forth in Section 1.1.1 hereof. The Firm Shares and the
Option Shares are hereinafter referred to together as the
“Public
Securities.” The offering and sale of the Public
Securities is hereinafter referred to as the “Offering.”
1.2.2 Exercise
of Option. The Over-allotment Option granted pursuant to
Section 1.2.1 hereof may be exercised by the Representative as to
all (at any time) or any part (from time to time) of the Option
Shares within 45 days after the date of the Prospectus (as defined
below). The Underwriters shall not be under any obligation to
purchase any Option Shares prior to the exercise of the
Over-allotment Option. The Over-allotment Option granted hereby may
be exercised by the giving of oral notice to the Company from the
Representative, which must be confirmed in writing by overnight
mail or facsimile or other electronic transmission setting forth
the number of Option Shares to be purchased and the date and time
for delivery of and payment for the Option Shares (the
“Option Closing
Date”), which shall not be later than two (2) full
Business Days after the date of the notice or such other time as
shall be agreed upon by the Company and the Representative, at the
offices of Representative Counsel or at such other place (including
remotely by facsimile or other electronic transmission) as shall be
agreed upon by the Company and the Representative. If such delivery
and payment for the Option Shares does not occur on the Closing
Date, the Option Closing Date will be as set forth in the notice.
Upon exercise of the Over-allotment Option with respect to all or
any portion of the Option Shares, subject to the terms and
conditions set forth herein, (i) the Company shall become obligated
to sell to the Underwriters the number of Option Shares specified
in such notice and (ii) each of the Underwriters, acting severally
and not jointly, shall purchase that portion of the total number of
Option Shares then being purchased as set forth in Schedule 1 opposite the name of
such Underwriter bears to the total number of Firm Shares, subject,
in each case, to such adjustments as the Representative, in its
sole discretion, shall determine.
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1.2.3 Payment
and Delivery. Payment for the Option Shares shall be made on
the Option Closing Date by wire transfer in Federal (same day)
funds, payable to the order of the Company upon delivery to you of
certificates (in form and substance satisfactory to the
Underwriters) representing the Option Shares (or through the
facilities of DTC) for the account of the Underwriters. The Option
Shares shall be registered in such name or names and in such
authorized denominations as the Representative may request in
writing at least two (2) full Business Days prior to the Option
Closing Date. The Company shall not be obligated to sell or deliver
the Option Shares except upon tender of payment by the
Representative for applicable Option Shares. The Option Closing
Date may be simultaneous with, but not earlier than, the Closing
Date; and in the event that such time and date are simultaneous
with the Closing Date, the term “Closing Date” shall refer to the
time and date of delivery of the Firm Shares and Option
Shares.
1.3 Representative’s
Warrants.
1.3.1 Purchase
Warrants. The Company hereby agrees to issue and sell to the
Representative (and/or its designees) on the Closing Date an option
(“Representative’s
Warrant”) for the purchase of an aggregate of 285,720
shares of Common Stock, representing four percent (4%) of the Firm
Shares, for an aggregate purchase price of $100.00. In the event
that the Representative exercises the Over-allotment Option, the
Company agrees to issue and sell to the Representative (and/or its
designees) on each Option Closing Date a Representative’s
Warrant for the purchase of an aggregate number of shares of Common
Stock equal to four percent (4%) of the Option Shares sold on such
Option Closing Date, for an aggregate purchase price of $100.00.
The Representative’s Warrant agreement, in the form attached
hereto as Exhibit A
(the “Representative’s
Warrant Agreement”), shall be exercisable, in whole or
in part, commencing on a date which is one hundred eighty (180)
days after the Effective Date and expiring on the five-year
anniversary of the Effective Date, at an initial exercise price per
share of Common Stock of $0.875, which is equal to 125% of the
initial public offering price of the Public Securities. The
Representative’s Warrant Agreement and the shares of Common
Stock issuable upon exercise thereof are hereinafter referred to
together as the “Representative’s
Securities.” The Representative understands and agrees
that there are significant restrictions pursuant to FINRA Rule 5110
against transferring the Representative’s Warrant Agreement
and the underlying shares of Common Stock during the one hundred
eighty (180) days after the Effective Date and by its acceptance
thereof shall agree that it will not sell, transfer, assign, pledge
or hypothecate the Representative’s Warrant Agreement, or any
portion thereof, or be the subject of any hedging, short sale,
derivative, put or call transaction that would result in the
effective economic disposition of such securities for a period of
one hundred eighty (180) days following the Effective Date to
anyone other than to (i) an Underwriter or a selected dealer in
connection with the Offering, or (ii) a bona fide officer or
partner of the Representative or of any such Underwriter or
selected dealer; and only if any such transferee agrees to the
foregoing lock-up restrictions.
1.3.2 Delivery.
Delivery of the Representative’s Warrant Agreement shall be
made on the Closing Date and any Option Closing Date and shall be
issued in the name or names and in such authorized denominations as
the Representative may request.
2.
Representations and
Warranties of the Company. The Company represents and
warrants to the Underwriters as of the Applicable Time (as defined
below), as of the Closing Date and as of the Option Closing Date,
if any, as follows:
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2.1
Filing of Registration
Statement.
2.1.1 Pursuant
to the Securities Act. The Company has filed with the U.S.
Securities and Exchange Commission (the “Commission”) a “shelf”
registration statement on Form S-3 (File No. 333- 229090),
including any related prospectus or prospectuses, for the
registration of the Public Securities under the Securities Act,
which registration statement was prepared by the Company in all
material respects in conformity with the requirements of the
Securities Act and the rules and regulations of the Commission
under the Securities Act (the “Securities Act Regulations”) and
contains and will contain all material statements that are required
to be stated therein in accordance with the Securities Act and the
Securities Act Regulations. Except as the context may otherwise
require, such registration statement on file with the Commission at
any given time, including any amendments thereto to such time,
exhibits and schedules thereto at such time, documents filed as a
part thereof or incorporated pursuant to Item 12 of Form S-3 under
the Securities Act at such time and the documents and information
otherwise deemed to be a part thereof or included therein pursuant
to Rule 430B of the Securities Act Regulations (the
“Rule 430B
Information”) or otherwise pursuant to the Securities
Act Regulations at such time, is referred to herein as the
“Registration
Statement.” The Registration Statement at the time it
originally became effective is referred to herein as the
“Initial Registration
Statement.” If the Company files any registration
statement pursuant to Rule 462(b) of the Securities Act
Regulations, then after such filing, the term “Registration
Statement” shall include such registration statement filed
pursuant to Rule 462(b). The Registration Statement became
effective automatically on February 13, 2019.
The
prospectus in the form in which it was filed with the Commission in
connection with the Initial Registration Statement is herein called
the “Base
Prospectus.” Each preliminary prospectus supplement to
the Base Prospectus (including the Base Prospectus as so
supplemented) that described the Public Securities and the Offering
and omitted the Rule 430B Information and that was used prior to
the filing of the final prospectus supplement referred to in the
following paragraph is herein called a “Preliminary
Prospectus.”
Promptly after the
execution and delivery of this Agreement, the Company will prepare
and file with the Commission a final prospectus supplement to the
Base Prospectus relating to the Public Securities and the Offering
in accordance with the provisions of Rule 430B and Rule 424(b) of
the Securities Act Regulations. Such final prospectus supplement
(including the Base Prospectus as so supplemented), in the form
filed with the Commission pursuant to Rule 424(b) under the
Securities Act is herein called the “Prospectus.” Any reference herein
to the Base Prospectus, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act as of the date of such
prospectus.
“Applicable Time” means 9:00 p.m.,
Eastern time, on the date of this Agreement.
“Disclosure Package” means any
Issuer General Use Free Writing Prospectus issued at or prior to
the Applicable Time, the Preliminary Prospectus dated December 15,
2020, and the information included on Schedule 2-A hereto, all
considered together.
“Issuer Free Writing Prospectus”
means any “issuer free writing prospectus,” as defined
in Rule 433 of the Securities Act Regulations (“Rule 433”), including without
limitation any “free writing prospectus” (as defined in
Rule 405 of the Securities Act Regulations) relating to the Public
Securities that is (i) required to be filed with the Commission by
the Company, (ii) a “road show that is a written
communication” within the meaning of Rule 433(d)(8)(i),
whether or not required to be filed with the Commission, or (iii)
exempt from filing with the Commission pursuant to Rule
433(d)(5)(i) because it contains a description of the Public
Securities or of the Offering that does not reflect the final
terms, in each case in the form filed or required to be filed with
the Commission or, if not required to be filed, in the form
retained in the Company’s records pursuant to Rule
433(g).
“Issuer General Use Free Writing
Prospectus” means any Issuer Free Writing Prospectus
that is intended for general distribution to prospective investors
(other than a “bona
fide electronic road show,” as defined in Rule 433),
as evidenced by its being specified in Schedule 2-B
hereto.
“Issuer Limited Use Free Writing
Prospectus” means any Issuer Free Writing Prospectus
that is not an Issuer General Use Free Writing
Prospectus.
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2.1.2 Pursuant
to the Exchange Act. The Company has filed with the
Commission a Form 8-A (File No. 001-37969), as amended, providing
for the registration pursuant to Section 12(b) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), of the shares of
Common Stock. The registration of the shares of Common Stock and
related Form 8-A and amendments thereto have become effective under
the Exchange Act on or prior to the date hereof. The Company has
taken no action designed to, or likely to have the effect of,
terminating the registration of the shares of Common Stock under
the Exchange Act, nor has the Company received any notification
that the Commission is contemplating terminating such
registration.
2.2
Stock Exchange
Listing. The shares of Common Stock have been approved for
listing on The Nasdaq Capital Market (the “Exchange”), and the Company has
taken no action designed to, or likely to have the effect of,
delisting the shares of Common Stock from the Exchange, nor has the
Company received any notification that the Exchange is
contemplating terminating such listing except as described in the
Registration Statement, the Disclosure Package and the Prospectus.
The Company has submitted the Listing of Additional Shares
Notification Form with the Exchange with respect to the Offering of
the Public Securities.
2.3
No Stop Orders,
etc. Neither the Commission nor, to the Company’s
knowledge, any state regulatory authority has issued any order
preventing or suspending the use of the Registration Statement, any
Preliminary Prospectus or the Prospectus or has instituted or, to
the Company’s knowledge, threatened to institute, any
proceedings with respect to such an order. The Company has complied
with each request (if any) from the Commission for additional
information.
2.4
Disclosures in
Registration Statement.
2.4.1
Compliance with Securities
Act and 10b-5 Representation.
(i) Each
of the Registration Statement and any post-effective amendment
thereto, at the time it became effective (including each deemed
effective date with respect to the Underwriters pursuant to Rule
430B or otherwise under the Securities Act) complied and will
comply in all material respects with the requirements of the
Securities Act and the Securities Act Regulations. The conditions
for use of Form S-3, set forth in the General Instructions thereto,
including, but not limited to, General Instruction I.B.6 and other
conditions related to the offer and sale of the Public Securities,
have been satisfied. Each Preliminary Prospectus and the
Prospectus, at the time each was or will be filed with the
Commission, complied and will comply in all material respects with
the requirements of the Securities Act and the Securities Act
Regulations. Each Preliminary Prospectus delivered to the
Underwriters for use in connection with this Offering and the
Prospectus was or will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to
▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
(ii) Neither
the Registration Statement nor any amendment thereto, at its
effective time, as of the Applicable Time, at the Closing Date or
at any Option Closing Date (if any), contained, contains or will
contain an untrue statement of a material fact or omitted, omits or
will omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that the Company makes no representation or warranty with
respect to any statements or omissions made in reliance upon and in
conformity with the Underwriters’ Information (as defined
below).
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(iii) The
Disclosure Package, as of the Applicable Time, at the Closing Date
or at any Option Closing Date (if any), did not, does not and will
not include an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; and any Issuer Limited Use Free Writing Prospectus
hereto does not conflict in any material respect with the
information contained in the Registration Statement, any
Preliminary Prospectus or the Prospectus, and each such Issuer
Limited Use Free Writing Prospectus, as supplemented by and taken
together with the Prospectus as of the Applicable Time, did not
include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading; provided,
however, that this
representation and warranty shall not apply to statements made or
statements omitted in reliance upon and in conformity with written
information furnished to the Company with respect to the
Underwriters by the Representative expressly for use in the
Registration Statement, the Disclosure Package or the Prospectus or
any amendment thereof or supplement thereto. The parties
acknowledge and agree that such information provided by or on
behalf of any Underwriter consists solely of the following
statements concerning the Underwriters contained in the
“Underwriting” section of the Prospectus (the
“Underwriters
Information”): (i) the second sentence of the
subsection entitled “Discounts, Commissions and
Reimbursement” related to concessions; (ii) the subsection
entitled “Electronic Offer, Sale and Distribution of
Securities”; and (iii) the first five paragraphs under the
subsection entitled “Stabilization.”
(iv) Neither
the Prospectus nor any amendment or supplement thereto (including
any prospectus wrapper), as of its issue date, at the time of any
filing with the Commission pursuant to Rule 424(b), at the Closing
Date or at any Option Closing Date, included, includes or will
include an untrue statement of a material fact or omitted, omits or
will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this representation and
warranty shall not apply to the Underwriters’
Information.
(v) The
documents incorporated by reference in the Registration Statement,
the Disclosure Package and the Prospectus, when they became
effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder and none of such
documents contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and any
further documents so filed and incorporated by reference in the
Registration Statement, the Disclosure Package and the Prospectus,
when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder, and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not
misleading.
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2.4.2 Disclosure
of Agreements. The agreements and documents described in the
Registration Statement, the Disclosure Package and the Prospectus
conform in all material respects to the descriptions thereof
contained or incorporated by reference therein and there are no
agreements or other documents required by the Securities Act and
the Securities Act Regulations to be described in the Registration
Statement, the Disclosure Package and the Prospectus or to be filed
with the Commission as exhibits to the Registration Statement or to
be incorporated by reference in the Registration Statement, the
Disclosure Package or the Prospectus, that have not been so
described or filed or incorporated by reference. Each agreement or
other instrument (however characterized or described) to which the
Company is a party or by which it is or may be bound or affected
and (i) that is referred to or incorporated by reference in the
Registration Statement, the Disclosure Package and the Prospectus,
or (ii) is material to the Company’s business, has been duly
authorized and validly executed by the Company, is in full force
and effect in all material respects and is enforceable against the
Company and, to the Company’s knowledge, the other parties
thereto, in accordance with its terms, except (x) as such
enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights
generally, (y) as enforceability of any indemnification or
contribution provision may be limited under the federal and state
securities laws, and (z) that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject
to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought. None of such
agreements or instruments has been assigned by the Company, and
neither the Company nor, to the best of the Company’s
knowledge, any other party is in default thereunder and, to the
best of the Company’s knowledge, no event has occurred that,
with the lapse of time or the giving of notice, or both, would
constitute a default thereunder. To the Company’s knowledge,
performance by the Company of the material provisions of such
agreements or instruments will not result in a violation of any
existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign,
having jurisdiction over the Company or any of its assets or
businesses (each, a “Governmental Entity”), including,
without limitation, those relating to environmental laws and
regulations.
2.4.3 Prior
Securities Transactions. No securities of the Company have
been sold by the Company or by or on behalf of, or for the benefit
of, any person or persons controlling, controlled by or under
common control with the Company, except as disclosed in the
Registration Statement, the Disclosure Package and the Preliminary
Prospectus.
2.4.4 Regulations.
The disclosures in the Registration Statement, the Disclosure
Package and the Prospectus concerning the effects of federal,
state, local and all foreign regulation on the Offering and the
Company’s business as currently contemplated are correct in
all material respects and no other such regulations are required to
be disclosed in the Registration Statement, the Disclosure Package
and the Prospectus which are not so disclosed.
2.4.5 No
Other Distribution of Offering Materials. The Company has
not, directly or indirectly, distributed and will not distribute
any offering material in connection with the Offering other than
any Preliminary Prospectus, the Disclosure Package, the Prospectus
and other materials, if any, permitted under the Securities Act and
consistent with Section 3.2 below.
2.5 Changes
After Dates in Registration Statement.
2.5.1 No
Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement, the
Disclosure Package and the Prospectus, except as otherwise
specifically stated therein: (i) there has been no material adverse
change in the financial position or results of operations of the
Company, nor any change or development that, singularly or in the
aggregate, would involve a material adverse change or a prospective
material adverse change, in or affecting the condition (financial
or otherwise), results of operations, business, assets or prospects
of the Company (a “Material
Adverse Change”); (ii) there have been no material
transactions entered into by the Company, other than as
contemplated pursuant to this Agreement; and (iii) no officer or
director of the Company has resigned from any position with the
Company.
2.5.2 Recent
Securities Transactions, etc. Subsequent to the respective
dates as of which information is given in the Registration
Statement, the Disclosure Package and the Prospectus, and except as
may otherwise be indicated or contemplated herein or disclosed in
the Registration Statement, the Disclosure Package and the
Prospectus, the Company has not: (i) issued any securities or
incurred any liability or obligation, direct or contingent, for
borrowed money; or (ii) declared or paid any dividend or made any
other distribution on or in respect to its capital
stock.
2.6 Disclosures
in Commission Filings. Since January 1, 2018, (i) none of
the Company’s filings with the Commission contained any
untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and (ii) the Company has made all filings with the
Commission required under the Exchange Act and the rules and
regulations of the Commission promulgated thereunder (the
“Exchange Act
Regulations”).
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2.7 Independent
Accountants. To the knowledge of the Company, RBSM LLP (the
“Auditor”),
whose report is filed with the Commission and included or
incorporated by reference in the Registration Statement, the
Disclosure Package and the Prospectus, is an independent registered
public accounting firm as required by the Securities Act and the
Securities Act Regulations and the Public Company Accounting
Oversight Board. The Auditor has not, during the periods covered by
the financial statements included or incorporated by reference in
the Registration Statement, the Disclosure Package and the
Prospectus, provided to the Company any non-audit services, as such
term is used in Section 10A(g) of the Exchange Act.
2.8 Financial
Statements, etc. The financial statements, including the
notes thereto and supporting schedules included or incorporated by
reference in the Registration Statement, the Disclosure Package and
the Prospectus, fairly present in all material respects the
financial position and the results of operations of the Company at
the dates and for the periods to which they apply; and such
financial statements have been prepared in conformity with U.S.
generally accepted accounting principles (“GAAP”), consistently applied
throughout the periods involved (provided that unaudited interim
financial statements are subject to year-end audit adjustments that
are not expected to be material in the aggregate and do not contain
all footnotes required by GAAP); and the supporting schedules
included or incorporated by reference in the Registration Statement
present fairly in all material respects the information required to
be stated therein. No other historical or pro forma financial
statements or supporting schedules are required to be included in
the Registration Statement, the Disclosure Package or the
Prospectus by the Securities Act or the Securities Act Regulations.
The pro forma financial statements and the related notes, if any,
included or incorporated by reference in the Registration
Statement, the Disclosure Package and the Prospectus have been
properly compiled and prepared in accordance with the applicable
requirements of the Securities Act, the Securities Act Regulations,
the Exchange Act or the Exchange Act Regulations and present fairly
in all material respects the information shown therein, and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein. All disclosures
contained in the Registration Statement, the Disclosure Package or
the Prospectus, or incorporated or deemed incorporated by reference
therein, regarding “non-GAAP financial measures” (as
such term is defined by the rules and regulations of the
Commission), if any, comply with Regulation G of the Exchange Act
and Item 10 of Regulation S-K of the Securities Act, to the extent
applicable. Each of the Registration Statement, the Disclosure
Package and the Prospectus discloses all material off-balance sheet
transactions, arrangements, obligations (including contingent
obligations), and other relationships of the Company with
unconsolidated entities or other persons that may have a material
current or future effect on the Company’s financial
condition, changes in financial condition, results of operations,
liquidity, capital expenditures, capital resources, or significant
components of revenues or expenses. Except as disclosed in the
Registration Statement, the Disclosure Package and the Prospectus,
(a) neither the Company nor any of its direct and indirect
subsidiaries, including each entity disclosed or described in the
Registration Statement, the Disclosure Package and the Prospectus
as being a subsidiary of the Company (each, a “Subsidiary” and, collectively, the
“Subsidiaries”),
has incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions other than in
the ordinary course of business, (b) the Company has not declared
or paid any dividends or made any distribution of any kind with
respect to its capital stock, (c) there has not been any change in
the capital stock of the Company or any of its Subsidiaries, or,
other than in the course of business or any grants under any stock
compensation plan, and (d) there has not been any Material Adverse
Change in the Company’s long-term or short-term
debt.
- 8 -
2.9 Authorized
Capital; Options, etc. The Company had, at the date or dates
indicated in the Registration Statement, the Disclosure Package and
the Prospectus, the duly authorized, issued and outstanding
capitalization as set forth therein. Based on the assumptions
stated in the Registration Statement, the Disclosure Package and
the Prospectus, the Company will have on the Closing Date the
adjusted stock capitalization set forth therein. Except as set
forth in, or contemplated by, the Registration Statement, the
Disclosure Package and the Prospectus, on the Effective Date, as of
the Applicable Time and on the Closing Date and any Option Closing
Date, there will be no stock options, warrants, or other rights to
purchase or otherwise acquire any authorized, but unissued shares
of Common Stock of the Company or any security convertible or
exercisable into shares of Common Stock of the Company, or any
contracts or commitments to issue or sell shares of Common Stock or
any such options, warrants, rights or convertible
securities.
2.10 Valid
Issuance of Securities, etc.
2.10.1 Outstanding
Securities. All issued and outstanding securities of the
Company issued prior to the transactions contemplated by this
Agreement have been duly authorized and validly issued and are
fully paid and non-assessable; the holders thereof have no rights
of rescission or similar rights with respect thereto or put rights,
and are not subject to personal liability by reason of being such
holders; and none of such securities were issued in violation of
the preemptive rights, rights of first refusal or rights of
participation of any holders of any security of the Company or
similar contractual rights granted by the Company. The authorized
shares of Common Stock conform in all material respects to all
statements relating thereto contained in the Registration
Statement, the Disclosure Package and the Prospectus. The offers
and sales of the outstanding shares of Common Stock were at all
relevant times either registered under the Securities Act and the
applicable state securities or “blue sky” laws or,
based in part on the representations and warranties of the
purchasers of such Shares, exempt from such registration
requirements.
2.10.2 Securities
Sold Pursuant to this Agreement. The Public Securities have
been duly authorized for issuance and sale and, when issued and
paid for, will be validly issued, fully paid and non-assessable;
the holders thereof are not and will not be subject to personal
liability by reason of being such holders; the Public Securities
are not and will not be subject to the preemptive rights of any
holders of any security of the Company or similar contractual
rights granted by the Company; and all corporate action required to
be taken for the authorization, issuance and sale of the Public
Securities has been duly and validly taken. The Public Securities
conform in all material respects to all statements with respect
thereto contained in the Registration Statement, the Disclosure
Package and the Prospectus.
2.11 Registration
Rights of Third Parties. Except as set forth in the
Registration Statement, the Disclosure Package and the Prospectus,
no holders of any securities of the Company or any rights
exercisable for or convertible or exchangeable into securities of
the Company have the right to require the Company to register any
such securities of the Company under the Securities Act or to
include any such securities in a registration statement to be filed
by the Company.
2.12 Validity
and Binding Effect of Agreements. This Agreement has been
duly and validly authorized by the Company, and, when executed and
delivered, will constitute, the valid and binding agreement of the
Company, enforceable against the Company in accordance with
its terms, except: (i)
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights
generally; (ii) as enforceability of any indemnification or
contribution provision may be limited under the federal and state
securities laws; and (iii) that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject
to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
- 9 -
2.13 No
Conflicts, etc. The execution, delivery and performance by
the Company of this Agreement and all ancillary documents, the
consummation by the Company of the transactions herein and therein
contemplated and the compliance by the Company with the terms
hereof and thereof do not and will not, with or without the giving
of notice or the lapse of time or both: (i) result in a material
breach of, or conflict with any of the terms and provisions of, or
constitute a material default under, or result in the creation,
modification, termination or imposition of any lien, charge,
mortgage, pledge, security interest, claim, equity, trust or other
encumbrance, preferential arrangement, defect or restriction of any
kind whatsoever or encumbrance upon any property or assets of the
Company pursuant to the terms of any indenture, mortgage, deed of
trust, note, lease, loan agreement or any other agreement or
instrument, franchise, license or permit to which the Company is a
party or as to which any property of the Company is a party; (ii)
result in any violation of the provisions of the Company’s
Certificate of Incorporation (as the same may be amended or
restated from time to time, the “Charter”) or the by-laws of the
Company (as the same may be amended or restated from time to time);
or (iii) violate any existing applicable law, rule, regulation,
judgment, order or decree of any Governmental Entity as of the date
hereof (including, without limitation, those promulgated by the
Food and Drug Administration of the U.S. Department of Health and
Human Services (the “FDA”) or by any foreign, federal,
state or local regulatory authority performing functions similar to
those performed by the FDA).
2.14 No
Defaults; Violations. No material default exists in the due
performance and observance of any term, covenant or condition of
any material license, contract, indenture, mortgage, deed of trust,
note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any
other material agreement or instrument to which the Company is a
party or by which the Company may be bound or to which any of the
properties or assets of the Company is subject. The Company is not
in violation of any term or provision of its Charter or by-laws, or
in violation of any franchise, license, permit, applicable law,
rule, regulation, judgment or decree of any Governmental
Entity.
2.15 Corporate
Power; Licenses; Consents.
2.15.1 Conduct
of Business. Except as described in the Registration
Statement, the Disclosure Package and the Prospectus, the Company
has all requisite corporate power and authority, and has all
necessary authorizations, approvals, orders, licenses, certificates
and permits of and from all governmental regulatory officials and
bodies that it needs as of the date hereof to conduct its business
purpose as described in the Registration Statement, the Disclosure
Package and the Prospectus.
2.15.2 Transactions
Contemplated Herein. The Company has all corporate power and
authority to enter into this Agreement and to carry out the
provisions and conditions hereof, and all consents, authorizations,
approvals and orders required in connection therewith have been
obtained. No consent, authorization or order of, and no filing
with, any court, government agency or other body is required for
the valid issuance, sale and delivery of the Public Securities and
the consummation of the transactions and agreements contemplated by
this Agreement and as contemplated by the Registration Statement,
the Disclosure Package and the Prospectus, except with respect to
applicable federal and state securities laws and the rules and
regulations of the Exchange and the Financial Industry Regulatory
Authority, Inc. (“FINRA”).
2.16 D&O
Questionnaires. To the Company’s knowledge, all
information contained in the questionnaires (the
“Questionnaires”)
completed by each of the Company’s directors and officers
immediately prior to the Offering (the “Insiders”), as supplemented by all
information concerning the Company’s directors, officers and
principal shareholders as described in the Registration Statement,
the Disclosure Package and the Prospectus, as well as in the
Lock-Up Agreement (as defined in Section 2.27 below) provided to the Underwriters, is
true and correct in all material respects and the Company has not
become aware of any information which would cause the information
disclosed in the Questionnaires to become materially inaccurate and
incorrect.
- 10 -
2.17 Litigation;
Governmental Proceedings. There is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or
governmental proceeding pending or, to the Company’s
knowledge, threatened against, or involving the Company or, to the
Company’s knowledge, any executive officer or director which
has not been disclosed in the Registration Statement, the
Disclosure Package and the Prospectus, or in connection with the
Company’s listing application for the listing of the Public
Securities on the Exchange, and which is required to be
disclosed.
2.18 Good
Standing. The Company has been duly incorporated and is
validly existing as a corporation and is in good standing under the
laws of the State of Delaware as of the date hereof, and is duly
qualified to do business and is in good standing in each other
jurisdiction in which its ownership or lease of property or the
conduct of business requires such qualification, except where the
failure to be so qualified or in good standing, singularly or in
the aggregate, would not have or reasonably be expected to result
in a Material Adverse Change.
2.19 Insurance.
The Company carries or is entitled to the benefits of insurance,
with reputable insurers, in such amounts and covering such risks
which the Company believes are adequate, including, but not limited
to, directors and officers insurance coverage at least equal to
$5,000,000, and all such insurance is in full force and effect. The
Company has no reason to believe that it will not be able (i) to
renew its existing insurance coverage as and when such policies
expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its
business as now conducted and at a cost that would not result in a
Material Adverse Change.
2.20 Transactions
Affecting Disclosure to FINRA.
2.20.1 Finder’s
Fees. Except as described in the Registration Statement, the
Disclosure Package and the Prospectus, there are no claims,
payments, arrangements, agreements or understandings relating to
the payment of a finder’s, consulting or origination fee by
the Company or any Insider with respect to the sale of the Public
Securities hereunder or any other arrangements, agreements or
understandings of the Company or, to the Company’s knowledge,
any of its shareholders that may affect the Underwriters’
compensation, as determined by FINRA.
2.20.2 Payments
Within Twelve Months. Except as described in the
Registration Statement, the 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 months prior to the date of this Agreement, other than
the payment to the Underwriters as provided hereunder in connection
with the Offering.
2.20.3 Use
of Proceeds. None of the net proceeds of the Offering will
be paid by the Company to any participating FINRA member or its
affiliates, except as specifically authorized herein.
2.20.4 FINRA
Affiliation. To the Company’s knowledge, there is no
(i) officer or director of the Company, (ii) beneficial owner of 5%
or more of any class of the Company's securities or (iii)
beneficial owner of the Company’s unregistered equity
securities which were acquired during the 180-day period
immediately preceding the filing of the Registration Statement that
is an affiliate or associated person of a FINRA member
participating in the Offering (as determined in accordance with the
rules and regulations of FINRA). Except as disclosed in the
Registration Statement, the Disclosure Package and the Prospectus,
the Company (i) does not have any material lending or other
relationship with any bank or lending affiliate of any Underwriter
and (ii) does not intend to use any of the proceeds from the sale
of the Public Securities to repay any outstanding debt owed to any
affiliate of any Underwriter.
- 11 -
2.20.5 Information.
All information provided by the Company in its FINRA questionnaire
to Representative Counsel specifically for use by Representative
Counsel in connection with its Public Offering System filings (and
related disclosure) with FINRA is true, correct and complete in all
material respects.
2.21 Foreign
Corrupt Practices Act. None of the Company and its
Subsidiaries or, to the Company’s knowledge, any director,
officer, agent, employee or affiliate of the Company and its
Subsidiaries or any other person acting on behalf of the Company
and its Subsidiaries, has, directly or indirectly, given or agreed
to give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or
official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was,
is, or may be in a position to help or hinder the business of the
Company (or assist it in connection with any actual or proposed
transaction) that (i) might subject the Company to any damage or
penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, might have had a
Material Adverse Change; (iii) if not continued in the future,
might adversely affect the assets, business, operations or
prospects of the Company. The Company has taken reasonable steps to
ensure that its accounting controls and procedures are sufficient
to cause the Company to comply in all material respects with the
Foreign Corrupt Practices Act of 1977, as amended, and the rules
and regulations thereunder (collectively, the “FCPA”). The Company has not (i)
violated nor is in violation of any provision of the FCPA or any
applicable non-U.S. anti-bribery statute or regulation; (ii) made
any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment; or (iii) received notice of any investigation,
proceeding or inquiry by any Governmental Entity regarding any of
the matters in clauses (i)-(iii) above; and the Company and, to the
knowledge of the Company, the Company’s affiliates have
conducted their respective businesses in compliance with the FCPA
and have instituted and maintain policies and procedures designed
to ensure, and which are reasonably expected to continue to ensure,
continued compliance therewith.
2.22 Compliance
with OFAC. None of the Company and its Subsidiaries or, to
the Company’s knowledge, any director, officer, agent,
employee or affiliate of the Company and its Subsidiaries or any
other person acting on behalf of the Company and its Subsidiaries,
is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Department of the
Treasury (“OFAC”), and the Company will not,
directly or indirectly, use the proceeds of the Offering hereunder,
or lend, contribute or otherwise make available such proceeds to
any subsidiary, joint venture partner or other person or entity,
for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
2.23 Forward-Looking
Statements. No forward-looking statement (within the meaning
of Section 27A of the Securities Act and Section 21E of the
Exchange Act) contained in either the Registration Statement,
Disclosure Package or Prospectus has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good
faith.
- 12 -
2.24 Money
Laundering Laws. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance
with applicable financial recordkeeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all jurisdictions, the
rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
Governmental Entity (collectively, the “Money Laundering Laws”); and no
action, suit or proceeding by or before any Governmental Entity
involving the Company with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company,
threatened.
2.25 Regulatory.
(a) All preclinical studies and clinical trials conducted by or on
behalf of the Company that are material to the Company and its
Subsidiaries, taken as a whole, are or have been adequately
described in the Registration Statement, the Disclosure Package and
the Prospectus in all material respects. The preclinical studies
and clinical trials conducted by or on behalf of the Company and
its Subsidiaries that are described in the Registration Statement,
the Disclosure Package and the Prospectus or the results of which
are referred to in the Registration Statement, the Disclosure
Package and the Prospectus were and, if still ongoing, are being
conducted in material compliance with all laws and regulations
applicable thereto in the jurisdictions in which they are being
conducted and with all laws and regulations applicable to
preclinical studies and clinical trials from which data will be
submitted to support marketing approval. The descriptions in the
Registration Statement, the Disclosure Package and the Prospectus
of the results of such studies are accurate and complete in all
material respects and fairly present in all material respects the
data derived from such studies, and the Company has no knowledge
of, or reason to believe that, any large well-controlled clinical
study the aggregate results of which are inconsistent with or
otherwise call into question the results of any clinical study
conducted by or on behalf of the Company that are described in the
Registration Statement, the Disclosure Package and the Prospectus
or the results of which are referred to in the Registration
Statement, the Disclosure Package and the Prospectus. Except as
disclosed in the Registration Statement, the Disclosure Package and
the Prospectus, the Company has not received any written notices or
statements from the FDA, the European Medicines Agency
(“EMA”) or any
other governmental agency or authority imposing, requiring,
requesting or suggesting a clinical hold, termination, suspension
or material modification for or of any preclinical studies and
clinical trials that are described in the Registration Statement,
the Disclosure Package and the Prospectus or the results of which
are referred to in the Registration Statement, the Disclosure
Package and the Prospectus. Except as disclosed in the Registration
Statement, the Disclosure Package and the Prospectus, the Company
has not received any written notices or statements from the FDA,
the EMA or any other governmental agency, and otherwise has no
knowledge of, or reason to believe that, (i) any premarket
notification or application for any potential product of the
Company is or has been rejected or placed on clinical hold; and
(ii) any license, approval, permit or authorization to conduct any
clinical trial of any potential product of the Company has been,
will be or may be suspended, revoked, modified or limited. Neither
the Company nor any of its subsidiaries has failed to file with the
FDA, EMA or any other foreign, federal, state or local governmental
or regulatory authority performing functions similar to those
performed by the FDA or EMA, any filing, declaration, listing,
registration, report or submission that is required to be so filed.
All such filings were in material compliance with applicable
laws when filed and no deficiencies have been asserted by any
applicable regulatory authority (including, without limitation, the
FDA, EMA or any foreign, federal, state or local governmental or
regulatory authority performing functions similar to those
performed by the FDA or EMA) with respect to any such filings,
declarations, listings, registrations, reports or submissions. To
the knowledge of the Company, there are no facts that would be
reasonably likely to result in any warning, untitled or notice of
violation letter from the FDA (including Form FDA-483), EMA or any
other foreign, federal, state or local governmental or regulatory
authority performing functions similar to those performed by the
FDA or EMA. The Company is not aware of any studies, tests or
trials the results of which the Company believes reasonably call
into question (i) the study, test or trial results of any of its
products, (ii) the efficacy or safety of any of its products or
(iii) any of the Company’s filings with any Governmental
Entity.
- 13 -
(b)
Regulatory Filings and
Permits. The Company and its Subsidiaries have such permits,
licenses, clearances, registrations, exemptions, patents,
franchises, certificates of need and other approvals, consents and
other authorizations (“Permits”) issued by the
appropriate domestic or foreign national, regional, federal, state,
or local regulatory agencies or bodies or any other Permits issued
by domestic or foreign national, regional, federal, state, or local
agencies or bodies engaged in the regulation of medical devices or
imaging systems such as those being marketed or developed by the
Company and its Subsidiaries, in each case necessary to conduct the
business of the Company as currently conducted (collectively, the
“Regulatory
Permits”), except for any of the foregoing that would
not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect; the Company is in compliance in all
material respects with the requirements of the Regulatory Permits,
and all of such Regulatory Permits are valid and in full force and
effect; the Company has not received any notice of proceedings
relating to the revocation, termination, modification or impairment
of rights of any of the Regulatory Permits that, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would reasonably be expected to result in a Material
Adverse Effect; the Company has not failed to submit to the FDA,
EMA or any foreign, federal, state or local governmental or
regulatory authority performing functions similar to those
performed by the FDA or EMA any notification or application
necessary to conduct the business of the Company as currently
conducted, any such filings that were required to be made were in
material compliance with applicable laws when filed, and no
material deficiencies have been asserted by the FDA with respect to
any such filings or submissions that were made.
(c)
Compliance with Health
Care Laws. Each of the Company and its Subsidiaries is, and
at all times has been, in compliance in all material respects with
all applicable Health Care Laws, and has not engaged in activities
which are, as applicable, cause for false claims liability, civil
penalties, or mandatory or permissive exclusion from Medicare,
Medicaid, or any other state or federal health care program. For
purposes of this Agreement, “Health Care Laws” means: (i) the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. §§ 301 et
seq.), the Public Health Service Act (42 U.S.C. §§ 201 et
seq.), and the regulations promulgated thereunder; (ii) all
applicable federal, state, local and all applicable foreign health
care related fraud and abuse laws, including, without limitation,
the U.S. Anti-Kickback Statute (42 U.S.C. Section 1320a-7b(b)), the
U.S. Physician Payment Sunshine Act (42 U.S.C. § 1320a-7h),
the U.S. Civil False Claims Act (31 U.S.C. Section 3729 et seq.),
the criminal False Claims Law (42 U.S.C. § 1320a-7b(a)), all
criminal laws relating to health care fraud and abuse, including
but not limited to 18 U.S.C. Sections 286 and 287, and the health
care fraud criminal provisions under the U.S. Health Insurance
Portability and Accountability Act of 1996 (“HIPAA”) (42 U.S.C. Section 1320d
et seq.), the exclusion laws (42 U.S.C. § 1320a-7), the civil
monetary penalties law (42 U.S.C. § 1320a-7a), HIPAA, as
amended by the Health Information Technology for Economic and
Clinical Health Act (42 U.S.C. Section 17921 et seq.), and the
regulations promulgated pursuant to such statutes; (iii) Medicare
(Title XVIII of the Social Security Act); (iv) Medicaid (Title XIX
of the Social Security Act); (v) the Controlled Substances Act (21
U.S.C. §§ 801 et seq.) and the regulations promulgated
thereunder; and (vi) any and all other applicable health care laws
and regulations. Neither the Company nor, to the knowledge of the
Company, any subsidiary has received notice of any claim, action,
suit, proceeding, hearing, enforcement, investigation, arbitration
or other action from any court or arbitrator or governmental or
regulatory authority or third party alleging that any product
operation or activity is in material violation of any Health Care
Laws, and, to the Company’s knowledge, no such claim, action,
suit, proceeding, hearing, enforcement, investigation, arbitration
or other action is threatened. Neither the Company nor, to the
knowledge of the Company, any subsidiary is a party to or has any
ongoing reporting obligations pursuant to any corporate integrity
agreements, deferred prosecution agreements, monitoring agreements,
consent decrees, settlement orders, plans of correction or similar
agreements with or imposed by any governmental or regulatory
authority. Additionally, neither the Company, its Subsidiaries nor
any of its respective employees, officers or directors has been
excluded, suspended or debarred from participation in any U.S.
federal health care program or human clinical research or, to the
knowledge of the Company, is subject to a governmental inquiry,
investigation, proceeding, or other similar action that could
reasonably be expected to result in debarment, suspension, or
exclusion.
- 14 -
2.26 Officers’
Certificate. Any certificate signed by any duly authorized
officer of the Company and delivered to you or to Representative
Counsel shall be deemed a representation and warranty by the
Company to the Underwriters as to the matters covered
thereby.
2.27 Lock-Up
Agreements. Schedule 3 hereto contains a
complete and accurate list of the Company’s officers and
directors (collectively, the “Lock-Up Parties”). The Company has
caused each of the Lock-Up Parties to deliver to the Representative
an executed Lock-Up Agreement, in the form attached hereto as
Exhibit
B (the “Lock-Up Agreement”), prior to the
execution of this Agreement. The maximum aggregate number of shares
of Common Stock that may be sold by all Lock-Up Parties pursuant to
any “10b5-1” plan in effect at the Applicable Time is
150,000.
2.28 Subsidiaries.
All direct and indirect Subsidiaries of the Company are duly
organized and in good standing under the laws of the place of
organization or incorporation, and each Subsidiary is in good
standing in each jurisdiction in which its ownership or lease of
property or the conduct of business requires such qualification,
except where the failure to qualify would not have a Material
Adverse Change. Except as described in the Registration Statement,
the Disclosure Package and the Prospectus, the Company owns
beneficially and of record 100% of the outstanding stock or other
equity securities of each Subsidiary.
2.29 Related
Party Transactions.
2.29.1
Business
Relationships. There are no business relationships or
related party transactions involving the Company or any other
person required to be described in the Registration Statement, the
Disclosure Package and the Prospectus that have not been described
as required.
2.29.2 No
Relationships with Customers and Suppliers. No relationship,
direct or indirect, exists between or among the Company on the one
hand, and the directors, officers, 5% or greater stockholders,
customers or suppliers of the Company or any of the Company’s
affiliates on the other hand, which is required to be described in
the Disclosure Package and the Prospectus or a document
incorporated by reference therein and which is not so
described.
2.29.3 No
Unconsolidated Entities. There are no transactions,
arrangements or other relationships between and/or among the
Company, any of its affiliates (as such term is defined in Rule 405
of the Securities Act) and any unconsolidated entity, including,
but not limited to, any structure finance, special purpose or
limited purpose entity that could reasonably be expected to
materially affect the Company’s liquidity or the availability
of or requirements for its capital resources required to be
described in the Disclosure Package and the Prospectus or a
document incorporated by reference therein which have not been
described as required.
2.29.4 No
Loans or Advances to Affiliates. There are no outstanding
loans, advances (except normal advances for business expenses in
the ordinary course of business) or guarantees or indebtedness by
the Company to or for the benefit of any of the officers or
directors of the Company, any other affiliates of the Company or
any of their respective family members, except as disclosed in the
Registration Statement, the Disclosure Package and the
Prospectus.
2.30 Board
of Directors. The Board of Directors of the Company is
comprised of the persons disclosed in the Registration Statement,
the Disclosure Package and the Prospectus. The qualifications of
the persons serving as board members and the overall composition of
the board comply with the Exchange Act, the Exchange Act
Regulations, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules
promulgated thereunder (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”) applicable to
the Company and the listing rules of the Exchange. At least one
member of the Audit Committee of the Board of Directors of the
Company qualifies as an “audit committee financial
expert,” as such term is defined under Regulation S-K and the
listing rules of the Exchange. In addition, at least a majority of
the persons serving on the Board of Directors qualify as
“independent,” as defined under the listing rules of
the Exchange.
- 15 -
2.31 ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Compliance.
2.31.1 Disclosure
Controls. Except as set forth in the Registration Statement,
the Disclosure Package and the Prospectus, the Company has
developed and currently maintains disclosure controls and
procedures that will comply with Rule 13a-15 or 15d-15 under the
Exchange Act Regulations, and such controls and procedures are
effective to ensure that all material information concerning the
Company will be made known on a timely basis to the individuals
responsible for the preparation of the Company’s Exchange Act
filings and other public disclosure documents.
2.31.2 Compliance.
Except as set forth in the Registration Statement, the Disclosure
Package and the Prospectus, the Company is, or at the Applicable
Time and on the Closing Date will be, in material compliance with
the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act applicable to it, and has
implemented or will implement such programs and taken reasonable
steps to ensure the Company’s future compliance (not later
than the relevant statutory and regulatory deadlines therefor) with
all of the material provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act.
2.32 Accounting
Controls. Except as set forth in the Registration Statement,
the Disclosure Package and the Prospectus, the Company and its
Subsidiaries maintain systems of “internal control over
financial reporting” (as defined under Rules 13a-15 and
15d-15 under the Exchange Act Regulations) that comply with the
requirements of the Exchange Act and have been designed by, or
under the supervision of, their respective principal executive and
principal financial officers, or persons performing similar
functions, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP,
including, but not limited to, internal accounting controls
sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as disclosed in the Registration
Statement, the Disclosure Package and the Prospectus, the Company
is not aware of any material weaknesses in its internal controls.
The Company’s auditors and the Audit Committee of the Board
of Directors of the Company have been advised of: (i) all
significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are
known to the Company’s management and that have adversely
affected or are reasonably likely to adversely affect the
Company’ ability to record, process, summarize and report
financial information; and (ii) any fraud known to the
Company’s management, whether or not material, that involves
management or other employees who have a significant role in the
Company’s internal controls over financial reporting. Since
the date of the latest audited financial statements included in the
Disclosure Package, there has been no change in the Company’s
internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the
Company’s internal control over financial
reporting.
2.33 No
Investment Company Status. The Company is not and, after
giving effect to the Offering and the application of the proceeds
thereof as described in the Registration Statement, the Disclosure
Package and the Prospectus, will not be, required to register as an
“investment company,” as defined in the Investment
Company Act of 1940, as amended.
2.34 No
Labor Disputes. No labor dispute with the employees of the
Company or any of its Subsidiaries exists or, to the knowledge of
the Company, is imminent.
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2.35 Intellectual
Property Rights. The Company and each of its Subsidiaries
owns or possesses or has valid rights to use all patents, patent
applications, trademarks, service marks, trade names, trademark
registrations, service ▇▇▇▇ registrations, copyrights, licenses,
inventions, trade secrets and similar rights (“Intellectual Property Rights”)
necessary for the conduct of the business of the Company and its
Subsidiaries as currently carried on and as described in the
Registration Statement, the Disclosure Package and the Prospectus.
To the knowledge of the Company, no action or use by the Company or
any of its Subsidiaries necessary for the conduct of its business
as currently carried on and as described in the Registration
Statement and the Prospectus will involve or give rise to any
infringement of, or license or similar fees (other than license or
similar fees described or contemplated in the Registration
Statement, the Disclosure Package and the Prospectus) for, any
Intellectual Property Rights of others. Neither the Company nor any
of its Subsidiaries has received any notice alleging any such
infringement of, license or similar fees for, or conflict with, any
asserted Intellectual Property Rights of others. Except as would
not reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Change, (i) to the knowledge of
the Company, there is no infringement, misappropriation or
violation by third parties of any of the Intellectual Property
Rights owned by the Company; (ii) there is no pending or, to the
knowledge of the Company, threatened action, suit, proceeding or
claim by others challenging the rights of the Company in or to any
such Intellectual Property Rights, and the Company is unaware of
any facts which would form a reasonable basis for any such claim,
that would, individually or in the aggregate, together with any
other claims in this Section 2.35,
reasonably be expected to result in a Material Adverse Change;
(iii) the Intellectual Property Rights owned by the Company and, to
the knowledge of the Company, the Intellectual Property Rights
licensed to the Company have not been adjudged by a court of
competent jurisdiction invalid or unenforceable, in whole or in
part, and there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging
the validity or scope of any such Intellectual Property Rights, and
the Company is unaware of any facts which would form a reasonable
basis for any such claim that would, individually or in the
aggregate, together with any other claims in this Section 2.35, reasonably be expected to result in a
Material Adverse Change; (iv) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or
claim by others that the Company infringes, misappropriates or
otherwise violates any Intellectual Property Rights or other
proprietary rights of others, the Company has not received any
written notice of such claim and the Company is unaware of any
other facts which would form a reasonable basis for any such claim
that would, individually or in the aggregate, together with any
other claims in this Section 2.35,
reasonably be expected to result in a Material Adverse Change; and
(v) to the Company’s knowledge, no employee of the Company is
in or has ever been in violation in any material respect of any
term of any employment contract, patent disclosure agreement,
invention assignment agreement, non-competition agreement,
non-solicitation agreement, nondisclosure agreement or any
restrictive covenant to or with a former employer where the basis
of such violation relates to such employee’s employment with
the Company, or actions undertaken by the employee while employed
with the Company and could reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Change. To
the Company’s knowledge, all material technical information
developed by and belonging to the Company which has not been
disclosed in a filed patent application has been kept confidential.
The Company is not a party to or bound by any options, licenses or
agreements with respect to the Intellectual Property Rights of any
other person or entity that are required to be set forth in the
Registration Statement, the Disclosure Package and the Prospectus
and are not described therein. The Registration Statement, the
Disclosure Package and the Prospectus contain in all material
respects the same description of the matters set forth in the
preceding sentence. None of the technology employed by the Company
has been obtained or is being used by the Company in violation of
any contractual obligation binding on the Company or, to the
Company’s knowledge, any of its officers, directors or
employees, or otherwise in violation of the rights of any
persons.
- 17 -
All
licenses for the use of the Intellectual Property described in the
Registration Statement, the Disclosure Package and the Prospectus
are in full force and effect in all material respects and are
enforceable by the Company and, to the Company’s knowledge,
the other parties thereto, in accordance with their terms, except
(x) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting
creditors’ rights generally, (y) as enforceability of any
indemnification or contribution provision may be limited under the
federal and state securities laws, and (z) that the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought. None of such agreements or instruments has been assigned
by the Company, and the Company has not, and to the Company’s
knowledge, no other party is in default thereunder and no event has
occurred that, with the lapse of time or the giving of notice, or
both, would constitute a default thereunder.
2.36 [RESERVED]
2.37 Taxes.
Except as would not reasonably be expected to cause a Material
Adverse Change, each of the Company and its Subsidiaries has filed
all returns (as hereinafter defined) required to be filed with
taxing authorities prior to the date hereof or has duly obtained
extensions of time for the filing thereof. Each of the Company and
its Subsidiaries has paid all taxes (as hereinafter defined) shown
as due on such returns that were filed and has paid all taxes
imposed on or assessed against the Company or such respective
Subsidiary. The provisions for taxes payable, if any, shown on the
financial statements filed with or as part of the Registration
Statement are sufficient for all accrued and unpaid taxes, whether
or not disputed, and for all periods to and including the dates of
such consolidated financial statements. Except as disclosed in
writing to the Underwriters, (i) no issues have been raised (and
are currently pending) by any taxing authority in connection with
any of the returns or taxes asserted as due from the Company or its
Subsidiaries, and (ii) no waivers of statutes of limitation with
respect to the returns or collection of taxes have been given by or
requested from the Company or its Subsidiaries. The term
“taxes” means
all federal, state, local, foreign and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties or
other taxes, fees, assessments or charges of any kind whatever,
together with any interest and any penalties, additions to tax or
additional amounts with respect thereto. The term
“returns” means
all returns, declarations, reports, statements and other documents
required to be filed in respect to taxes.
2.38 ERISA
Compliance. The Company and any “employee benefit
plan” (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, “ERISA”)) established or maintained
by the Company or its “ERISA Affiliates” (as defined
below) are in compliance in all material respects with ERISA.
“ERISA
Affiliate” means, with respect to the Company, any
member of any group of organizations described in Sections
414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as
amended, and the regulations and published interpretations
thereunder (the “Code”) of which the Company is a
member. No “reportable event” (as defined under ERISA)
has occurred or is reasonably expected to occur with respect to any
“employee benefit plan” established or maintained by
the Company or any of its ERISA Affiliates. No “employee
benefit plan” established or maintained by the Company or any
of its ERISA Affiliates, if such “employee benefit
plan” were terminated, would have any “amount of
unfunded benefit liabilities” (as defined under ERISA).
Neither the Company nor any of its ERISA Affiliates has incurred or
reasonably expects to incur any material liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any
“employee benefit plan” or (ii) Sections 412, 4971,
4975 or 4980B of the Code. Each “employee benefit plan”
established or maintained by the Company or any of its ERISA
Affiliates that is intended to be qualified under Section 401(a) of
the Code is so qualified and, to the knowledge of the Company,
nothing has occurred, whether by action or failure to act, which
would cause the loss of such qualification.
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2.39 Compliance
with Laws. The Company: (i) is and at all times has been in
compliance with all statutes, rules, or regulations applicable to
the ownership, testing, development, manufacture, packaging,
processing, use, distribution, marketing, labeling, promotion,
sale, offer for sale, storage, import, export storage or disposal
of any product manufactured or distributed by the Company
(“Applicable
Laws”), except as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Change; (ii) has not received any FDA Form 483, notice of adverse
finding, warning letter, untitled letter or other correspondence or
written notice from the FDA or any other governmental authority
alleging or asserting noncompliance with any Applicable Laws or any
licenses, certificates, approvals, clearances, authorizations,
permits and supplements or amendments thereto required by any such
Applicable Laws (“Authorizations”); (iii) possesses
all material Authorizations and such Authorizations are valid and
in full force and effect and are not in material violation of any
term of any such Authorizations; (iv) has not received written
notice of any claim, action, suit, proceeding, hearing,
enforcement, investigation, arbitration or other action from any
governmental authority or third party alleging that any product
operation or activity is in violation of any Applicable Laws or
Authorizations and has no knowledge that any such governmental
authority or third party is considering any such claim, litigation,
arbitration, action, suit, investigation or proceeding; (v) has not
received written notice that any governmental authority has taken,
is taking or intends to take action to limit, suspend, modify or
revoke any Authorizations and has no knowledge that any such
governmental authority is considering such action; (vi) has filed,
obtained, maintained or submitted all material reports, documents,
forms, notices, applications, records, claims, submissions and
supplements or amendments as required by any Applicable Laws or
Authorizations and that all such reports, documents, forms,
notices, applications, records, claims, submissions and supplements
or amendments were complete and correct in all material respects on
the date filed (or were corrected or supplemented by a subsequent
submission); and (vii) has not, either voluntarily or
involuntarily, initiated, conducted, or issued or caused to be
initiated, conducted or issued, any recall, market withdrawal or
replacement, safety alert, post-sale warning, “dear
doctor” letter, or other notice or action relating to the
alleged lack of safety or efficacy of any product or any alleged
product defect or violation and, to the Company’s knowledge,
no third party has initiated, conducted or intends to initiate any
such notice or action.
2.40 Environmental
Laws. The Company and its Subsidiaries are in compliance
with all foreign, federal, state and local rules, laws and
regulations relating to the use, treatment, storage and disposal of
hazardous or toxic substances or waste and protection of health and
safety or the environment which are applicable to their businesses
(“Environmental
Laws”), except where the failure to comply would not,
singularly or in the aggregate, result in a Material Adverse
Change. There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission, or other
release of any kind of toxic or other wastes or other hazardous
substances by, due to, or caused by the Company or any of its
Subsidiaries (or, to the Company’s knowledge, any other
entity for whose acts or omissions the Company or any of its
Subsidiaries is or may otherwise be liable) upon any of the
property now or previously owned or leased by the Company or any of
its Subsidiaries, or upon any other property, in violation of any
law, statute, ordinance, rule, regulation, order, judgment, decree
or permit or which would, under any law, statute, ordinance, rule
(including rule of common law), regulation, order, judgment, decree
or permit, give rise to any liability; and there has been no
disposal, discharge, emission or other release of any kind onto
such property or into the environment surrounding such property of
any toxic or other wastes or other hazardous substances with
respect to which the Company has knowledge. In the ordinary course
of business, the Company and its Subsidiaries conduct periodic
reviews of the effect of Environmental Laws on their business and
assets, in the course of which they identify and evaluate
associated costs and liabilities (including, without limitation,
any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or
governmental permits issued thereunder, any related constraints on
operating activities and any potential liabilities to third
parties). On the basis of such reviews, the Company and its
Subsidiaries have reasonably concluded that such associated costs
and liabilities would not have, singularly or in the aggregate, a
Material Adverse Change.
- 19 -
2.41 Real
Property. Except as set forth in the Registration Statement,
the Disclosure Package and the Prospectus, the Company and each of
its Subsidiaries have good and marketable title in fee simple to,
or have valid rights to lease or otherwise use, all items of real
or personal property which are material to the business of the
Company and its Subsidiaries taken as a whole, in each case free
and clear of all liens, encumbrances, security interests, claims
and defects that do not, singly or in the aggregate, materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company or any
of its Subsidiaries; and all of the leases and subleases material
to the business of the Company and its subsidiaries, considered as
one enterprise, and under which the Company or any of its
subsidiaries holds properties described in the Registration
Statement, the Disclosure Package and the Prospectus, are in full
force and effect, and neither the Company nor any Subsidiary has
received any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any
Subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such
Subsidiary to the continued possession of the leased or subleased
premises under any such lease or sublease.
2.42 Contracts
Affecting Capital. There are no transactions, arrangements
or other relationships between and/or among the Company, any of its
affiliates (as such term is defined in Rule 405 of the Securities
Act Regulations) and any unconsolidated entity, including, but not
limited to, any structured finance, special purpose or limited
purpose entity that could reasonably be expected to materially
affect the Company’s or any of its Subsidiaries’
liquidity or the availability of or requirements for their capital
resources required to be described or incorporated by reference in
the Registration Statement, the Disclosure Package and the
Prospectus which have not been described or incorporated by
reference as required.
2.43 Industry
Data. The statistical and market-related data included in
each of the Registration Statement, the Disclosure Package and the
Prospectus are based on or derived from sources that the Company
reasonably and in good faith believes are reliable and accurate or
represent the Company’s good faith estimates that are made on
the basis of data derived from such sources.
2.44 Margin
Securities. The Company owns no “margin
securities” as that term is defined in Regulation U of the
Board of Governors of the Federal Reserve System (the
“Federal Reserve
Board”), and none of the proceeds of Offering will be
used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might
cause any of the shares of Common Stock to be considered a
“purpose credit” within the meanings of Regulation T, U
or X of the Federal Reserve Board.
2.45 Exchange
Act Reports. The Company has filed in a timely manner all
reports required to be filed pursuant to Sections 13(a), 13(e), 14
and 15(d) of the Exchange Act during the preceding 12 months
(except to the extent that Section 15(d) requires reports to be
filed pursuant to Sections 13(d) and 13(g) of the Exchange Act,
which shall be governed by the next clause of this sentence); and
the Company has filed in a timely manner all reports required to be
filed pursuant to Sections 13(d) and 13(g) of the Exchange Act
since January 1, 2016, except where the failure to timely file
could not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Change.
2.46 Minute
Books. The minute books of the Company have been made
available to the Underwriters and counsel for the Underwriters, and
such books (i) contain a complete summary of all meetings and
actions of the board of directors (including each board committee)
and stockholders of the Company (or analogous governing bodies and
interest holders, as applicable), and each of its Subsidiaries
since the time of its respective incorporation or organization
through the date of the latest meeting and action, and (ii)
accurately in all material respects reflect all transactions
referred to in such minutes. There are no material transactions,
agreements, dispositions or other actions of the Company that are
not properly approved and/or accurately and fairly recorded in the
minute books of the Company, as applicable.
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2.47 Integration.
Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any
security, under circumstances that would cause the Offering to be
integrated with prior offerings by the Company for purposes of the
Securities Act that would require the registration of any such
securities under the Securities Act.
2.48 No
Stabilization. Neither the Company nor, to its knowledge,
any of its employees, directors or stockholders (without the
consent of the Representative) has taken or shall take, directly or
indirectly, any action designed to or that has constituted or that
might reasonably be expected to cause or result in, under
Regulation M of the Exchange Act, or otherwise, stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Public
Securities.
2.49 Confidentiality
and Non-Competition. To the Company’s knowledge, no
director, officer, key employee or consultant of the Company is
subject to any confidentiality, non-disclosure, non-competition
agreement or non-solicitation agreement with any employer or prior
employer that could reasonably be expected to materially affect his
ability to be and act in his respective capacity of the Company or
be expected to result in a Material Adverse Change.
2.50 Testing-the-Waters
Communications. The Company has not (i) alone engaged in any
Testing-the-Waters Communications, other than Testing-the-Waters
Communications with the written consent of the Representative and
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) authorized anyone other than the
Representative to engage in Testing-the-Waters Communications.
“Testing-the-Waters
Communication” means any oral or written communication
with potential investors undertaken in reliance on Section 5(d) of
the Securities Act. The Company confirms that the Representative
has been authorized to act on its behalf in undertaking
Testing-the-Waters Communications. The Company has not distributed
any Written Testing-the-Waters Communications other than those
listed on Schedule
2-C 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.
3.
Covenants of the Company. The
Company covenants and agrees as follows:
3.1 Amendments
to Registration Statement. During the Prospectus Delivery
Period, (as defined below) the Company shall deliver to the
Representative, prior to filing, any amendment or supplement to the
Registration Statement, Preliminary Prospectus, Disclosure Package
or Prospectus proposed to be filed after the Effective Date and not
file any such amendment or supplement to which the Representative
shall reasonably object in writing.
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3.2 Federal
Securities Laws.
3.2.1 Compliance.
The Company, subject to Section 3.2.2, shall comply with the
requirements of Rule 424(b) and Rule 430B of the Securities Act
Regulations, and will notify the Representative promptly, and
confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement or any amendment or
supplement to any Preliminary Prospectus, the Disclosure Package or
the Prospectus shall have been filed and when any post-effective
amendment to the Registration Statement shall become effective;
(ii) of the receipt of any comments from the Commission; (iii) of
any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to any Preliminary
Prospectus, the Disclosure Package or the Prospectus or for
additional information; (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment or of any order
preventing or suspending the use of any Preliminary Prospectus, the
Disclosure Package or the Prospectus, or of the suspension of the
qualification of the Public Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes or of any examination pursuant
to Section 8(d) or 8(e) of the Securities Act concerning the
Registration Statement; and (v) if the Company becomes the subject
of a proceeding under Section 8A of the Securities Act in
connection with the Offering of the Public Securities. The Company
shall effect all filings required under Rule 424(b) of the
Securities Act Regulations, in the manner and within the time
period required by Rule 424(b) (without reliance on Rule
424(b)(8)), and shall take such steps as it deems necessary to
ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission
and, in the event that it was not, it will promptly file such
prospectus. The Company shall use its best efforts to prevent the
issuance of any stop order, prevention or suspension and, if any
such order is issued, to obtain the lifting thereof at the earliest
possible moment.
3.2.2 Continued
Compliance. The Company shall comply with the Securities
Act, the Securities Act Regulations, the Exchange Act and the
Exchange Act Regulations so as to permit the completion of the
distribution of the Public Securities as contemplated in this
Agreement and in the Registration Statement, the Disclosure Package
and the Prospectus. If at any time when a prospectus relating to
the Public Securities is (or, but for the exception afforded by
Rule 172 of the Securities Act Regulations (“Rule 172”), would be) required by
the Securities Act to be delivered in connection with sales of the
Public Securities (the “Prospectus Delivery Period”), any
event shall occur or condition shall exist as a result of which it
is necessary, in the opinion of counsel for the Underwriters or for
the Company, to (i) amend the Registration Statement in order that
the Registration Statement will not include an untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; (ii) amend or supplement the Disclosure Package or the
Prospectus in order that the 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 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 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 counsel for the Underwriters shall reasonably
object. The Company will furnish to the Underwriters such number of
copies of such amendment or supplement as the Underwriters may
reasonably request. The Company has given the Representative notice
of any filings made pursuant to the Exchange Act or the Exchange
Act Regulations within 48 hours prior to the Applicable Time. The
Company shall give the Representative notice of its intention to
make any such filing from the Applicable Time until the later of
the Closing Date and the exercise in full or expiration of the
Over-allotment Option specified in Section 1.2 hereof and will
furnish the Representative with copies of the related document(s) a
reasonable amount of time prior to such proposed filing, as the
case may be, and will not file or use any such document to which
the Representative or counsel for the Underwriters shall reasonably
object.
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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 voluntarily deregister the
shares of Common Stock under the Exchange Act without the prior
written consent of the Representative; provided, that the foregoing
requirement shall automatically terminate upon the consummation of
a Fundamental Transaction. “Fundamental Transaction” means
that the Company shall, directly or indirectly, in one or more
related transactions, (i) sell, lease, license, assign, transfer,
convey or otherwise dispose of all or substantially all of its
respective properties or assets to any other person that is not an
affiliate of the Company, or (ii) consummate a stock or share
purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with any other person that is not filing
reports under Section 13 or 15(d) of the Exchange Act whereby such
other person acquires more than 50% of the outstanding shares of
the Company’s voting stock (not including any shares of
Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other
business combination) and such transaction is not primarily for the
purposes of raising capital.
3.2.4 Free
Writing Prospectuses. The Company agrees that, unless it
obtains the prior written consent of the Representative, it shall
not make any offer relating to the Public Securities that would
constitute an Issuer Free Writing Prospectus or that would
otherwise constitute a “free writing prospectus,” or a
portion thereof, required to be filed by the Company with the
Commission or retained by the Company under Rule 433; provided, however, that the Representative shall
be deemed to have consented to each Issuer General Use Free Writing
Prospectus hereto and any “road show that is a written
communication” within the meaning of Rule 433(d)(8)(i) that
has been reviewed by the Representative. The Company represents
that it has treated or agrees that it will treat each such free
writing prospectus consented to, or deemed consented to, by the
Underwriters as an “issuer free writing prospectus,” as
defined in Rule 433, and that it has complied and will comply with
the applicable requirements of Rule 433 with respect thereto,
including timely filing with the Commission where required,
legending and record keeping. If at any time following issuance of
an Issuer Free Writing Prospectus there occurred or occurs an event
or development as a result of which such Issuer Free Writing
Prospectus conflicted or would conflict with the information
contained in the Registration Statement or included or would
include an untrue statement of a material fact or omitted or would
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at
that subsequent time, not misleading, the Company will promptly
notify the Underwriters and will promptly amend or supplement, at
its own expense, such Issuer Free Writing Prospectus to eliminate
or correct such conflict, untrue statement or
omission.
3.2.5 Testing-the-Waters
Communications. If at any time following the distribution of
any Written Testing-the-Waters Communication there occurred or
occurs an event or development as a result of which such Written
Testing-the-Waters Communication included or would include an
untrue statement of a material fact or omitted or would omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at that
subsequent time, not misleading, the Company shall promptly notify
the Representative and shall promptly amend or supplement, at its
own expense, such Written Testing-the-Waters Communication to
eliminate or correct such untrue statement or
omission.
3.3 Delivery
to the Underwriters of Registration Statements. The Company
has delivered or made available or shall deliver or make available
to the Representative and counsel for the Representative, without
charge upon request, signed copies of the Registration Statement as
originally filed and each amendment thereto (including exhibits
filed therewith or incorporated by reference therein and documents
incorporated or deemed to be incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will
also deliver to the Underwriters, without charge, a conformed copy
of the Registration Statement as originally filed and each
amendment thereto (without exhibits) for each of the Underwriters.
The copies of the Registration Statement and each amendment thereto
furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
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3.4 Delivery
to the Underwriters of Prospectuses. The Company has
delivered or made available or will deliver or make available to
each Underwriter, without charge, as many copies of each
Preliminary Prospectus as such Underwriter reasonably requested,
and the Company hereby consents to the use of such copies for
purposes permitted by the Securities Act. The Company will furnish
to each Underwriter, without charge, during the period when a
prospectus relating to the Public Securities is (or, but for the
exception afforded by Rule 172, would be) required to be delivered
under the Securities Act, such number of copies of the Prospectus
(as amended or supplemented) as such Underwriter may reasonably
request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
3.5 Events
Requiring Notice to the Representative. The Company shall
use its best efforts to cause the Registration Statement to remain
effective with a current prospectus for at least nine (9) months
after the Applicable Time, and shall notify the Representative
immediately and confirm the notice in writing: (i) of the issuance
by the Commission of any stop order or of the initiation, or, to
the Company’s knowledge, the threatening, of any proceeding
for that purpose; (ii) of the issuance by any state securities
commission of any proceedings for the suspension of the
qualification of the Public Securities for offering or sale in any
jurisdiction or of the initiation, or, to the Company’s
knowledge, the threatening, of any proceeding for that purpose;
(iii) of the mailing and delivery to the Commission for filing of
any amendment or supplement to the Registration Statement or
Prospectus; (iv) of the receipt of any comments or request for any
additional information from the Commission; and (v) of the
happening of any event during the period described in this Section
3.5 that, in the judgment of the
Company, makes any statement of a material fact made in the
Registration Statement, the 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 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 three (3) years
after the date of this Agreement, the Company, at its expense,
shall cause its regularly engaged independent registered public
accounting firm to review (but not audit) the Company’s
financial statements for each of the three fiscal quarters
immediately preceding the announcement of any quarterly financial
information, provided that the foregoing requirement shall
automatically terminate upon the consummation of a Fundamental
Transaction.
3.7 Listing.
The Company shall use its reasonable best efforts to maintain the
listing of the shares of Common Stock (including the Public
Securities) on the Exchange for at least three years from the date
of this Agreement, provided that the foregoing requirement shall
automatically terminate upon the consummation of a Fundamental
Transaction.
3.8 Reports
to the Representative.
3.8.1 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; (v) a copy of each report
or other communication furnished to stockholders and (vi) such
additional documents and information with respect to the Company
and the affairs of any future subsidiaries of the Company as the
Representative may from time to time reasonably request;
provided, however, the Representative shall sign,
if requested by the Company, a Regulation FD compliant
confidentiality agreement which is reasonably acceptable to the
Representative and Representative Counsel in connection with the
Representative’s receipt of such information. Documents filed
with the Commission pursuant to its ▇▇▇▇▇ system or disseminated as
described in Rule 101(e)(2) of Regulation FD shall be deemed to
have been delivered to the Representative pursuant to this Section
3.8.1.
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3.8.2 Transfer
Agent; Transfer Sheets. For a period of three (3) years
after the date of this Agreement, the Company shall retain a
transfer agent and registrar acceptable to the Representative (the
“Transfer
Agent”) and shall furnish to the Representative at the
Company’s sole cost and expense such transfer sheets of the
Company’s securities as the Representative may reasonably
request, including the daily and monthly consolidated transfer
sheets of the Transfer Agent and DTC. VStock Transfer, LLC is
acceptable to the Representative to act as Transfer Agent for the
shares of Common Stock.
3.8.3 Trading
Reports. During such time as the Public
Securities are listed
on the Exchange, the
Company shall provide, if available and upon the
Representative’s request, to the Representative, at the
Company’s expense, such reports published by the Exchange
relating to price trading of the Public Securities, as the
Representative shall reasonably request.
3.9 Payment
of Expenses. The Company hereby agrees to pay on each of the
Closing Date and the Option Closing Date, if any, to the extent not
paid at the Closing Date, all expenses incident to the performance
of the obligations of the Company under this Agreement, including,
but not limited to: (i) all filing fees and communication expenses
relating to the registration of Public Securities to be issued and
sold in the Offering with the Commission and, if required, any
state securities commission; (ii) all filing fees associated with
the review of the Offering by FINRA; (iii) all fees and expenses
relating to the listing of such Common Stock on the Exchange,
including any fees charged by The Depository Trust Company (DTC)
for new securities; (iv) the costs of all mailing and printing of
the underwriting documents (including, without limitation, this
Agreement, any blue sky surveys and, if appropriate, any agreement
among underwriters, selected dealers’ agreement,
underwriters’ questionnaire and power of attorney),
Registration Statements, Prospectuses and all amendments,
supplements and exhibits thereto and as many preliminary and final
Prospectuses as the Representative may reasonably deem necessary;
(v) the costs of preparing, printing and delivering certificates
representing the Public Securities; (vi) fees and expenses of the
Transfer Agent for the shares of Common Stock; (vii) stock transfer
and/or stamp taxes, if any, payable upon the transfer of securities
from the Company to the Underwriters; (viii) the fees and expenses
of the Company’s accountants; (ix) the fees and expenses of
the Company’s legal counsel and other agents and
representatives; and (x) the fees and expenses of the Underwriters
up to an aggregate of $100,000 (including, without limitation, fees
and expenses of Underwriter’s legal counsel, the cost
associated with the Underwriters’ use of Ipreo’s book
building, prospectus tracking and compliance software for the
Offering, and the Underwriters’ actual accountable
“road show,” market making and trading, and clearing
firm settlement expenses for the Offering). The Representative may
deduct from the net proceeds of the Offering payable to the Company
on the Closing Date, or the Option Closing Date, if any, the
expenses set forth herein to be paid by the Company to the
Underwriters, provided, however, that in the event that the
Offering is terminated, the Company agrees to reimburse the
Underwriters pursuant to Section 8.3 hereof.
3.10 Non-accountable
Expenses. The Company further agrees that, in addition to
the expenses payable pursuant to Section 3.9, on the Closing Date it shall pay to the
Representative, by deduction from the net proceeds of the Offering
contemplated herein, a non-accountable expense allowance equal to
one percent (1.0%) of the gross proceeds received by the Company
from the sale of the Public Securities), less the Advance (as such
term is defined in Section 8.3 hereof), provided, however, that in
the event that the Offering is terminated, the Company agrees to
reimburse the Underwriters pursuant to Section 8.3
hereof.
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3.11 Application
of Net Proceeds. The Company shall apply the net proceeds
from the Offering received by it in a manner consistent with the
application thereof described under the caption “Use of
Proceeds” in the Registration Statement, the Disclosure
Package and the Prospectus.
3.12 Delivery
of Earnings Statements to Security Holders. The Company
shall make generally available to its security holders, including
by filing with the Commission via ▇▇▇▇▇, as soon as practicable,
but not later than the first day of the fifteenth (15th) full calendar
month following the date of this Agreement, an earnings statement
(which need not be certified by independent registered public
accounting firm unless required by the Securities Act or the
Securities Act Regulations, but which shall satisfy the provisions
of Rule 158(a) under Section 11(a) of the Securities Act) covering
a period of at least twelve (12) consecutive months beginning after
the date of this Agreement.
3.13 Stabilization.
Neither the Company nor, to its knowledge, any of its employees,
directors or shareholders (without the consent of the
Representative) has taken or shall take, directly or indirectly,
any action designed to or that has constituted or that might
reasonably be expected to cause or result in, under Regulation M of
the Exchange Act, or otherwise, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of the Public Securities.
3.14 Internal
Controls. The Company shall maintain a system of internal
accounting controls in a manner designed to provide reasonable
assurances that: (i) transactions are executed in accordance with
management’s general or specific authorization; (ii)
transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with GAAP and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
3.15 Accountants.
As of the date of this Agreement, the Company shall 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, provided that the foregoing requirement
shall automatically terminate upon the consummation of a
Fundamental Transaction. The Representative acknowledges that RBSM
LLP is acceptable to the Representative.
3.16 FINRA.
The Company shall advise the Representative (who shall make an
appropriate filing with FINRA) if it is or becomes aware that (i)
any officer or director of the Company, (ii) any beneficial owner
of 5% or more of any class of the Company's securities or (iii) any
beneficial owner of the Company's unregistered equity securities
which were acquired during the 180 days immediately preceding the
filing of the Registration Statement is or becomes an affiliate or
associated person of a FINRA member participating in the Offering
(as determined in accordance with the rules and regulations of
FINRA).
3.17 No
Fiduciary Duties. The Company acknowledges and agrees that
the Underwriters’ responsibility to the Company is solely
contractual in nature and that none of the Underwriters or their
affiliates or any selling agent shall be deemed to be acting in a
fiduciary capacity, or otherwise owes any fiduciary duty to the
Company or any of its affiliates in connection with the Offering
and the other transactions contemplated by this
Agreement.
3.18 Company
Lock-Up Agreements. 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 sixty (60) days
after the date of this Agreement (the “Lock-Up Period”), (i) offer,
pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer
or dispose of, directly or indirectly, any shares of capital stock
of the Company or any securities convertible into or exercisable or
exchangeable for shares of capital stock of the Company; (ii) file
or cause to be filed any registration statement with the Commission
relating to the offering of any shares of capital stock of the
Company or any securities convertible into or exercisable or
exchangeable for shares of capital stock of the Company; or (iii)
complete any offering of debt securities of the Company, other than
entering into a line of credit with a traditional bank or (iv)
enter into any swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership
of capital stock of the Company, whether any such transaction
described in clause (i), (ii), (iii) or (iv) above is to be settled
by delivery of shares of capital stock of the Company or such other
securities, in cash or otherwise.
- 26 -
The
restrictions contained in this Section 3.18 shall not apply to (i) the shares of
Common Stock to be sold hereunder; (ii) the issuance by the Company
of shares of Common Stock upon the exercise of a stock option or
warrant or the conversion of a security outstanding on the date
hereof, which is disclosed in the Registration Statement,
Disclosure Package and Prospectus, provided that such options,
warrants, and securities have not been amended since the date of
this Agreement to increase the number of such securities or to
decrease the exercise price, exchange price or conversion price of
such securities or to extend the term of such securities; (iii) the
issuance by the Company of stock options, shares of capital stock
of the Company or other awards under any equity compensation plan
of the Company, provided that in each of (ii) and (iii) above, the
underlying shares shall be restricted from sale during the entire
Lock-Up Period; or (iv) the issuance of securities in connection
with mergers, acquisitions, joint ventures, licensing arrangements
or any other similar non-capital raising transactions approved by
the independent members of the Company’s Board of
Directors.
3.19 Release
of D&O Lock-up Period. If the Representative, in its
sole discretion, agrees to release or waive the restrictions set
forth in the Lock-Up Agreements described in Section 2.27 hereof
for an officer or director of the Company and provides the Company
with notice of the impending release or waiver at least three (3)
Business Days before the effective date of the release or waiver,
the Company agrees to announce the impending release or waiver by a
press release substantially in the form of Exhibit C hereto through a
major news service at least two (2) Business Days before the
effective date of the release or waiver.
3.20 Blue
Sky Qualifications. The Company shall use its best efforts,
in cooperation with the Underwriters, if necessary, to qualify the
Public Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions (domestic or
foreign) as the Representative may designate and to maintain such
qualifications in effect so long as required to complete the
distribution of the Public Securities; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in
any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject.
3.21 Reporting
Requirements. During the Prospectus Delivery Period, the
Company will file all documents required to be filed with the
Commission pursuant to the Exchange Act within the time periods
required by the Exchange Act and Exchange Act Regulations.
Additionally, the Company shall report the use of proceeds from the
issuance of the Public Securities as may be required under Rule 463
under the Securities Act Regulations.
3.22 Press
Releases. Prior to the Closing Date and any Option Closing
Date, the Company shall not issue any press release or other
communication directly or indirectly or hold any press conference
with respect to the Company, its condition, financial or otherwise,
or earnings, business affairs or business prospects (except for
routine press releases and oral marketing communications in the
ordinary course of business and consistent with the past practices
of the Company and of which the Representative is notified),
without the prior written consent of the Representative, which
consent shall not be unreasonably withheld, unless in the judgment
of the Company and its counsel, and after notification to the
Representative, such press release or communication is required by
law.
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3.23 ▇▇▇▇▇▇▇▇-▇▇▇▇▇.
Except as disclosed in the Registration Statement, the Disclosure
Package and the Prospectus, the Company shall at all times comply
in all material respects with all applicable provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act in effect from time to time.
3.24 Emerging
Growth Company Status. The Company shall promptly notify the
Representative if the Company ceases to be an “emerging
growth company,” as defined in Section 2(a) of the Securities
Act at any time prior to the later of (i) completion of the
distribution of the Public Securities within the meaning of the
Securities Act and (ii) fifteen (15) days following the completion
of the Lock-Up Period.
4.
Conditions of Underwriters’
Obligations. The obligations of the Underwriters to purchase
and pay for the Public Securities, as provided herein, shall be
subject to (i) the continuing accuracy in all material respects
(except for those representations and warranties qualified as to
materiality, which shall be true and correct in all respects, and
except for those representations and warranties which refer to
facts existing at a specific date, which shall be true and correct
as of such date) of the representations and warranties of the
Company as of the date hereof and as of each of the Closing Date
and the Option Closing Date, if any; (ii) the accuracy in all
material respects 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 Commission
Actions; Required Filings. At each of the Closing Date and
any Option Closing Date, no stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment
thereto shall have been issued under the Securities Act, no order
preventing or suspending the use of any Preliminary Prospectus or
the Prospectus shall have been issued and no proceedings for any of
those purposes shall have been instituted or are pending or, to the
Company’s knowledge, contemplated by the Commission. The
Company has complied with each request (if any) from the Commission
for additional information. A prospectus containing the Rule 430B
Information shall have been filed with the Commission in the manner
and within the time frame required by Rule 424(b) under the
Securities Act Regulations (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 430B under the Securities
Act Regulations.
4.1.2 Exchange Stock
Market Clearance. On the Closing Date, the Company’s
shares of Common Stock, including the Firm Shares and the shares of
Common Stock underlying the Option Shares) shall have been approved
for listing on the Exchange, subject only to official notice of
issuance. On the first Option Closing Date (if any), the
Company’s shares of Common Stock (including the shares of
Common Stock underlying the Option 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 Counsel. On the Closing Date, the
Representative shall have received the favorable opinion of K&L
Gates LLP, counsel to the Company, and a written statement
providing certain “10b-5” negative assurances, dated
the Closing Date and addressed to the Representative, in a form
reasonably acceptable to the Representative.
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4.2.2 Opinion
of Special Intellectual Property Counsel for the Company. On
the Closing Date, the Representative shall have received the
opinion of Marks & Clerk Canada, as special intellectual
property counsel for the Company, and a written statement providing
certain “10b-5” negative assurances, dated the Closing
Date and addressed to the Representative, in a form reasonably
acceptable to the Representative.
4.2.3 Option
Closing Date Opinions of Counsel. On the Option Closing
Date, if any, the Representative shall have received the favorable
opinions of each counsel listed in Sections 4.2.1 and 4.2.2, dated
the Option Closing Date, addressed to the Representative and in
form and substance reasonably satisfactory to the Representative,
confirming as of the Option Closing Date, the statements made by
such counsels in their respective opinions delivered on the Closing
Date.
4.2.4 Reliance.
In rendering such opinions, such counsel may rely: (i) as to
matters involving the application of laws other than the laws of
the United States and jurisdictions in which they are admitted, to
the extent such counsel deems proper and to the extent specified in
such opinion, if at all, upon an opinion or opinions (in form and
substance reasonably satisfactory to the Representative) of other
counsel reasonably acceptable to the Representative, familiar with
the applicable laws; and (ii) as to matters of fact, to the extent
they deem proper, on certificates or other written statements of
officers of the Company and officers of departments of various
jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company; provided that copies of any such
statements or certificates shall be delivered to Representative
Counsel if requested.
4.3 Comfort
Letters.
4.3.1 Cold
Comfort Letter. At the time this Agreement is executed you
shall have received a cold comfort letter from the Auditor
containing statements and information of the type customarily
included in accountants’ comfort letters with respect to the
financial statements and certain financial information contained or
incorporated or deemed incorporated by reference in the
Registration Statement, the Disclosure Package and the Prospectus,
addressed to the Representative and in form and substance
satisfactory in all respects to you and to the Auditor, dated as of the date of this
Agreement.
4.3.2 Bring-down
Comfort Letter. At each of the Closing Date and the Option
Closing Date, if any, the Representative shall have received from
the Auditor a letter, dated as of the Closing Date or the Option
Closing Date, as applicable, to the effect that the Auditor
reaffirms the statements made in its letter furnished pursuant to
Section 4.3.1, except that the specified date referred to shall be
a date not more than three (3) business days prior to the Closing
Date or the Option Closing Date, as applicable.
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4.4 Officers’
Certificates.
4.4.1 Officers’
Certificate. The Company shall have furnished to the
Representative a certificate, dated the Closing Date and any Option
Closing Date (if such date is other than the Closing Date), of its
Chief Executive Officer and its Chief Financial Officer stating
that (i) such officers have carefully examined the Registration
Statement, the Disclosure Package, any Issuer Free Writing
Prospectus and the Prospectus and, in their opinion, the
Registration Statement and each amendment thereto, as of the
Applicable Time and as of the Closing Date (or any Option Closing
Date if such date is other than the Closing Date) did not include
any untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Disclosure Package,
as of the Applicable Time and as of the Closing Date (or any Option
Closing Date if such date is other than the Closing Date), any
Issuer Free Writing Prospectus as of its date and as of the Closing
Date (or any Option Closing Date if such date is other than the
Closing Date), and the Prospectus and each amendment or supplement
thereto, as of the respective date thereof and as of the Closing
Date, did not include any untrue statement of a material fact and
did not omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances in which
they were made, not misleading, (ii) since the 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 Disclosure Package or the Prospectus, (iii) to their
knowledge after reasonable investigation, as of the Closing Date
(or any Option Closing Date if such date is other than the Closing
Date), the representations and warranties of the Company in this
Agreement are true and correct in all material respects (except for
those representations and warranties qualified as to materiality,
which shall be true and correct in all respects, and except for
those representations and warranties which refer to facts existing
at a specific date, which shall be true and correct as of such
date) and the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date (or any Option Closing
Date if such date is other than the Closing Date), and (iv) there
has not been, subsequent to the date of the most recent audited
financial statements included or incorporated by reference in the
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 each of the Closing Date and the Option
Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Secretary of the Company,
dated the Closing Date or the Option Date, as the case may be,
respectively, certifying: (i) that each of the Charter and Bylaws is true and complete, has not been
modified and is in full force and effect; (ii) that the resolutions
of the Company’s Board of Directors relating to the Offering
are in full force and effect and have not been modified; (iii) as
to the accuracy and completeness of all correspondence between the
Company or its counsel and the Commission; and (iv) as to the
incumbency of the officers of the Company. The documents referred
to in such certificate shall be attached to such
certificate.
4.4.3 Chief
Financial Officer’s Certificate. At each of the
Closing Date and the Option Closing Date, if any, the
Representative shall have received a certificate of the Chief
Financial Officer of the Company, dated the Closing Date or the
Option Date, as the case may be, respectively, with respect to the
accuracy of certain information contained in the Registration
Statement, the Disclosure Package and the Prospectus, in a form
reasonably acceptable to the Representative.
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4.5 No
Material Changes. Prior to and on each of the Closing Date
and each Option Closing Date, if any: (i) there shall have been no
Material Adverse Change or development involving a prospective
Material Adverse Change of the Company from the latest dates as of
which such condition is set forth in the Registration Statement and
no change in the capital stock or debt of the Company, the
Disclosure Package and the Prospectus; (ii) no action, suit or
proceeding, at law or in equity, shall have been pending or
threatened against the Company or any Insider before or by any
court or federal or state commission, board or other administrative
agency wherein an unfavorable decision, ruling or finding would
result in a Material Adverse Change, except as set forth in the
Registration Statement, the Disclosure Package and the Prospectus;
(iii) no stop order shall have been issued under the Securities Act
and no proceedings therefor shall have been initiated or threatened
by the Commission; (iv) no action shall have been taken and no law,
statute, rule, regulation or order shall have been enacted, adopted
or issued by any Governmental Entity which would prevent the
issuance or sale of the Public Securities or materially and
adversely affect or potentially materially and adversely affect the
business or operations of the Company; (v) no injunction,
restraining order or order of any other nature by any federal or
state court of competent jurisdiction shall have been issued which
would prevent the issuance or sale of the Public Securities or
materially and adversely affect or potentially materially and
adversely affect the business or operations of the Company and (vi)
the Registration Statement, the 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 Disclosure
Package, the Prospectus nor any amendment or supplement thereto
shall contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading.
4.6 Corporate
Proceedings. All corporate proceedings and other legal
matters incident to the authorization, form and validity of each of
this Agreement, the Public Securities, the Registration Statement,
the Disclosure Package and the Prospectus and all other legal
matters relating to this Agreement and the transactions
contemplated hereby and thereby shall be reasonably satisfactory in
all material respects to counsel for the Underwriters, and the
Company shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass
upon such matters.
4.7 Delivery
of Agreements.
4.7.1 Lock-Up
Agreements. On or before the date of this Agreement, the
Company shall have delivered to the Representative executed copies
of the Lock-Up Agreements from each of the persons listed in
Schedule 3
hereto.
4.8 Additional
Documents. At the Closing Date and at each Option Closing
Date (if any) Representative Counsel shall have been furnished with
such documents and opinions as they may require for the purpose of
enabling Representative Counsel to deliver an opinion to the
Underwriters, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the
Company in connection with the issuance and sale of the Public
Securities as herein contemplated shall be satisfactory in form and
substance to the Representative and Representative
Counsel.
- 31 -
5.
Indemnification.
5.1 Indemnification
of the Underwriters.
5.1.1 General.
Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Underwriter, its affiliates and
each of its and their respective directors, officers, members,
employees, representatives, partners, shareholders, affiliates,
counsel and agents and each person, if any, who controls any such
Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act (collectively the
“Underwriter Indemnified
Parties,” and each an “Underwriter Indemnified Party”),
against any and all loss, liability, claim, damage and reasonable
and documented expense whatsoever (including but not limited to any
and all legal or other expenses reasonably incurred in
investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, whether arising
out of any action between any of the Underwriter Indemnified
Parties and the Company or between any of the Underwriter
Indemnified Parties and any third party, or otherwise) to which
they or any of them may become subject under the Securities Act,
the Exchange Act or any other statute or at common law or otherwise
or under the laws of foreign countries (a “Claim”), arising out of or based
upon any untrue statement or alleged untrue statement of a material
fact contained in (i) the Registration Statement, the Disclosure
Package, the Preliminary Prospectus, the Prospectus or any Issuer
Free Writing Prospectus or in any Written Testing-the-Waters
Communication (as from time to time each may be amended and
supplemented); (ii) any materials or information provided to
investors by, or with the approval of, the Company in connection
with the marketing of the Offering, including any “road
show” or investor presentations made to investors by the
Company (whether in person or electronically); (iii) any
application or other document or written communication (in this
Section 5, collectively called “application”) executed by the
Company or based upon written information furnished by the Company
in any jurisdiction in order to qualify the Public Securities under
the securities laws thereof or filed with the Commission, any state
securities commission or agency, the Exchange or any other national
securities exchange; or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, unless such statement
or omission was made in reliance upon, and in conformity with, the
Underwriters’ Information, or (iv) otherwise arising in
connection with or allegedly in connection with the Offering. The
Company also agrees that it will reimburse each Underwriter
Indemnified Party for all reasonable and documented 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.
5.1.2 Procedure.
If any action is brought against an Underwriter Indemnified Party
in respect of which indemnity may be sought against the Company
pursuant to Section 5.1.1, such Underwriter Indemnified Party shall
promptly notify the Company in writing of the institution of such
action and the Company shall assume the defense of such action,
including the employment and fees of counsel (subject to the
approval of such Underwriter Indemnified Party) and payment of
actual expenses if an Underwriter Indemnified Party requests that
the Company do so. Such Underwriter Indemnified Party shall have
the right to employ its or their own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of
the Company, and shall be advanced by the Company. The Company
shall not be liable for any settlement of any action effected
without its consent (which shall not be unreasonably withheld). In
addition, the Company shall not, without the prior written consent
of the Underwriters, settle, compromise or consent to the entry of
any judgment in or otherwise seek to terminate any pending or
threatened action in respect of which advancement, reimbursement,
indemnification or contribution may be sought hereunder (whether or
not such Underwriter Indemnified Party is a party thereto) unless
such settlement, compromise, consent or termination (i) includes an
unconditional release of each Underwriter Indemnified Party,
acceptable to such Underwriter Indemnified Party, from all
liabilities, expenses and claims arising out of such action for
which indemnification or contribution may be sought and (ii) does
not include a statement as to or an admission of fault, culpability
or a failure to act, by or on behalf of any Underwriter Indemnified
Party.
5.2 Indemnification
of the Company. Each Underwriter, severally and not jointly,
agrees to indemnify and hold harmless the Company, its directors,
its officers who signed the Registration Statement and persons who
control the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any and
all loss, liability, claim, damage and expense described in the
foregoing indemnity from the Company to the several Underwriters,
as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Disclosure
Package or Prospectus or any amendment or supplement thereto or in
any application, in reliance upon, and in strict conformity with,
the Underwriters’ Information. In case any action shall be
brought against the Company or any other person so indemnified
based on any Preliminary Prospectus, the Registration Statement,
the Disclosure Package or Prospectus or any amendment or supplement
thereto or any application, and in respect of which indemnity may
be sought against any Underwriter, such Underwriter shall have the
rights and duties given to the Company, and the Company and each
other person so indemnified shall have the rights and duties given
to the several Underwriters by the provisions of Section 5.1.2. The
Company agrees promptly to notify the Representative of the
commencement of any litigation or proceedings against the Company
or any of its officers, directors or any person, if any, who
controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, in connection
with the issuance and sale of the Public Securities or in
connection with the Registration Statement, the Disclosure Package,
the Prospectus or any Issuer Free Writing Prospectus or any Written
Testing-the-Waters Communication.
- 32 -
5.3 Contribution.
5.3.1 Contribution
Rights. If the indemnification provided for in this Section
5 shall for any reason be unavailable to or insufficient to hold
harmless an indemnified party under Section 5.1 or 5.2 in respect
of any loss, claim, damage or liability, or any action in respect
thereof, referred to therein, then each indemnifying party shall,
in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of
such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect
the relative benefits received by the Company, on the one hand, and
the Underwriters, on the other, from the Offering of the Public
Securities, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to
in clause (i) above but also the relative fault of the Company, on
the one hand, and the Underwriters, on the other, with respect to
the statements or omissions that resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits
received by the Company, on the one hand, and the Underwriters, on
the other, with respect to such Offering shall be deemed to be in
the same proportion as the total net proceeds from the Offering of
the Public Securities purchased under this Agreement (before
deducting expenses) received by the Company, as set forth in the
table on the cover page of the Prospectus, on the one hand, and the
total underwriting discounts and commissions received by the
Underwriters with respect to the shares of the Common Stock
purchased under this Agreement, as set forth in the table on the
cover page of the Prospectus, on the other hand. The relative fault
shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by the
Company or the Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 5.3.1 were to be determined
by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation
that does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 5.3.1
shall be deemed to include, for purposes of this Section 5.3.1, any
legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 5.3.1 in
no event shall an Underwriter be required to contribute any amount
in excess of the amount by which the total underwriting discounts
and commissions received by such Underwriter with respect to the
Offering of the Public Securities exceeds the amount of any damages
that such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
5.3.2 Contribution
Procedure. Within fifteen (15) days after receipt by any
party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if
a claim for contribution in respect thereof is to be made against
another party (“contributing party”), notify the
contributing party of the commencement thereof, but the failure to
so notify the contributing party will not relieve it from any
liability which it may have to any other party other than for
contribution hereunder. In case any such action, suit or proceeding
is brought against any party, and such party notifies a
contributing party or its representative of the commencement
thereof within the aforesaid 15 days, the contributing party will
be entitled to participate therein with the notifying party and any
other contributing party similarly notified. Any such contributing
party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding
affected by such party seeking contribution on account of any
settlement of any claim, action or proceeding affected by such
party seeking contribution without the written consent of such
contributing party. The contribution provisions contained in this
Section 5.3.2 are intended to supersede, to the extent permitted by
law, any right to contribution under the Securities Act, the
Exchange Act or otherwise available. Each Underwriter’s
obligations to contribute pursuant to this Section 5.3 are several
and not joint.
- 33 -
6.
Default by an
Underwriter.
6.1 Default
Not Exceeding 10% of Firm Shares or Option Shares. If any
Underwriter or Underwriters shall default in its or their
obligations to purchase the Firm Shares or the Option Shares, if
the Over-allotment Option is exercised hereunder, and if the number
of the Firm Shares or Option Shares with respect to which such
default relates does not exceed in the aggregate 10% of the number
of Firm Shares or Option Shares that all Underwriters have agreed
to purchase hereunder, then such Firm Shares or Option Shares to
which the default relates shall be purchased by the non-defaulting
Underwriters in proportion to their respective commitments
hereunder.
6.2 Default
Exceeding 10% of Firm Shares or Option Shares. In the event
that the default addressed in Section 6.1 relates to more than 10%
of the Firm Shares or Option Shares, you may in your discretion
arrange for yourself or for another party or parties to purchase
such Firm Shares or Option Shares to which such default relates on
the terms contained herein. If, within one (1) Business Day after
such default relating to more than 10% of the Firm Shares or Option
Shares, you do not arrange for the purchase of such Firm Shares or
Option Shares, then the Company shall be entitled to a further
period of one (1) Business Day within which to procure another
party or parties satisfactory to you to purchase said Firm Shares
or Option Shares on such terms. In the event that neither you nor
the Company arrange for the purchase of the Firm Shares or Option
Shares to which a default relates as provided in this Section 6,
this Agreement will automatically be terminated by you or the
Company without liability on the part of the Company (except as
provided in Sections 3.9 and 5 hereof) or the several Underwriters
(except as provided in Section 5 hereof); provided, however, that if such default occurs
with respect to the Option Shares, this Agreement will not
terminate as to the Firm Shares; and provided, further, that nothing herein shall
relieve a defaulting Underwriter of its liability, if any, to the
other Underwriters and to the Company for damages occasioned by its
default hereunder.
6.3 Postponement
of Closing Date. In the event that the Firm Shares or Option
Shares to which the default relates are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another
party or parties as aforesaid, you or the Company shall have the
right to postpone the Closing Date or Option Closing Date for a
reasonable period, but not in any event exceeding five (5) Business
Days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement, the Disclosure Package or
the Prospectus or in any other documents and arrangements, and the
Company agrees to file promptly any amendment to the Registration
Statement, the Disclosure Package or the Prospectus that in the
opinion of counsel for the Underwriter may thereby be made
necessary. The term “Underwriter” as used in this
Agreement shall include any party substituted under this Section 6
with like effect as if it had originally been a party to this
Agreement with respect to such shares of Common Stock.
7.
Additional
Covenants.
7.1 Board
Composition and Board Designations. The Company shall ensure
that: (i) the qualifications of the persons serving as members of
the Board of Directors and the overall composition of the Board
comply with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, with the Exchange Act and with
the listing rules of the Exchange or any other national securities
exchange, as the case may be, in the event the Company seeks to
have any of its securities listed on another exchange or quoted on
an automated quotation system, and (ii) if applicable, at least one
member of the Audit Committee of the Board of Directors qualifies
as an “audit committee financial expert,” as such term
is defined under Regulation S-K and the listing rules of the
Exchange.
- 34 -
7.2 Prohibition
on Press Releases and Public Announcements. The Company
shall not issue press releases or engage in any other publicity,
without the Representative’s prior written consent, for a
period ending at 5:00 p.m., Eastern time, on the first
(1st)
Business Day following the forty-fifth (45th) day after the
Closing Date, other than normal and customary releases issued in
the ordinary course of the Company’s business.
7.1 Right
of First Refusal. Provided that the Firm Shares are sold in
accordance with the terms of this Agreement, the Representative
shall have an irrevocable right of first refusal (the
“Right of First
Refusal”), for a period of five (5) months after the
date the Closing Date, to act as sole and exclusive investment
banker, sole and exclusive book-runner, sole and exclusive
financial advisor, sole and exclusive underwriter and/or sole and
exclusive placement agent, at the Representative’s sole and
exclusive discretion, for each and every future public and private
equity and debt offering, including all equity linked financings
(but excluding any at-the-market offering with Ascendiant Capital
Markets LLC) (each, a “Subject Transaction”), during such
five (5) month period, of the Company, or any successor to or
subsidiary of the Company, on terms and conditions customary to the
Representative for such Subject Transactions. For the avoidance of
any doubt, during the period described above the Company shall not
retain, engage or solicit any additional investment banker,
book-runner, financial advisor, underwriter and/or placement agent
in a Subject Transaction without the express written consent of the
Representative. Notwithstanding the foregoing, the Right of First
Refusal shall be limited to the extent necessary for the Company to
comply with its obligations to National Securities Corporation
(“NSC”) pursuant
to Section 4(p) of the Placement Agent Agreement between the
Company and NSC dated July 9, 2019.
The
Company shall notify the Representative of its intention to pursue
a Subject Transaction, including the material terms thereof, by
providing written notice thereof by registered mail or overnight
courier service addressed to the Representative. If the
Representative fails to exercise its Right of First Refusal with
respect to any Subject Transaction within five (5) Business Days
after the mailing of such written notice, then the Representative
shall have no further claim or right with respect to the Subject
Transaction. The Representative may elect, in its sole and absolute
discretion, not to exercise its Right of First Refusal with respect
to any Subject Transaction; provided that any such election by the
Representative shall not adversely affect the
Representative’s Right of First Refusal with respect to any
other Subject Transaction during the five (5) month period agreed
to above.
8.
Effective Date of this Agreement and
Termination Thereof.
8.1 Effective
Date. This Agreement shall become effective when both the
Company and the Representative have executed the same and delivered
counterparts of such signatures to the other party.
- 35 -
8.2 Termination.
The Representative shall have the right to terminate this Agreement
at any time prior to any Closing Date, (i) if any domestic or
international event or act or occurrence has materially disrupted,
or in your opinion will in the immediate future materially disrupt,
general securities markets in the United States; or (ii) if trading
on the New York Stock Exchange or the Nasdaq Stock Market LLC shall
have been suspended or materially limited, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for
prices for securities shall have been required by FINRA or by order
of the Commission or any other government authority having
jurisdiction; or (iii) if the United States shall have become
involved in a new war or an increase in major hostilities; or (iv)
if a banking moratorium has been declared by a New York State or
federal authority; or (v) if a moratorium on foreign exchange
trading has been declared which materially adversely impacts the
United States securities markets; or (vi) if the Company shall have
sustained a material loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or malicious act
which, whether or not such loss shall have been insured, will, in
your opinion, make it inadvisable to proceed with the delivery of
the Firm Shares or Option Shares; or (vii) if the Company is in
material breach of any of its representations, warranties or
covenants hereunder; or (viii) if the Representative shall have
become aware after the date hereof of such a Material Adverse
Change, or such adverse material change in general market
conditions, as in the Representative’s judgment would make it
impracticable to proceed with the offering, sale and/or delivery of
the Public Securities or to enforce contracts made by the
Underwriters for the sale of the Public Securities.
8.3 Expenses.
Notwithstanding anything to the contrary in this Agreement, except
in the case of a default by the Underwriters, pursuant to Section
6.2 above, in the event that this Agreement shall not be carried
out for any reason whatsoever, within the time specified herein or
any extensions thereof pursuant to the terms herein, the Company
shall be obligated to pay to the Underwriters their actual and
accountable out-of-pocket expenses related to the transactions
contemplated herein then due and payable (including the fees and
disbursements of Representative’s Counsel) up to $100,000
(inclusive of the $35,000 advance for out-of-pocket accountable
expenses previously paid by the Company to the Representative (the
“Advance”)), and
upon demand the Company shall pay the full amount thereof to the
Representative on behalf of the Underwriters; provided, however,
that such expense cap in no way limits or impairs the
indemnification and contribution provisions of this Agreement.
Notwithstanding the foregoing, any advance received by the
Representative will be reimbursed to the Company to the extent not
actually incurred in compliance with FINRA Rule
5110(f)(2)(C).
8.4 Survival
of Indemnification. Notwithstanding any contrary provision
contained in this Agreement, any election hereunder or any
termination of this Agreement, and whether or not this Agreement is
otherwise carried out, the provisions of Section 5 shall remain in
full force and effect and shall not be in any way affected by, such
election or termination or failure to carry out the terms of this
Agreement or any part hereof.
8.5 Representations,
Warranties, Agreements to Survive. All representations,
warranties and agreements contained in this Agreement or in
certificates of officers of the Company submitted pursuant hereto,
shall remain operative and in full force and effect regardless of
(i) any investigation made by or on behalf of any Underwriter or
its Affiliates or selling agents, any person controlling any
Underwriter, its officers or directors or any person controlling
the Company or (ii) delivery of and payment for the Public
Securities.
9.
Miscellaneous.
9.1 Notices.
All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed
(registered or certified mail, return receipt requested),
personally delivered or sent by e-mail or facsimile transmission
and confirmed and shall be deemed given when so delivered, e-mailed
or faxed and confirmed or if mailed, two (2) days after such
mailing.
If to
the Representative:
ThinkEquity, a
division of Fordham Financial Management, Inc.
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇
▇▇▇▇, Head of Investment Banking
E-mail:
▇▇▇▇▇▇▇@▇▇▇▇▇-▇▇▇▇▇▇.▇▇▇
- 36 -
with a
copy (which shall not constitute notice) to:
Sichenzia ▇▇▇▇
▇▇▇▇▇▇▇ LLP
▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax
No.: ▇▇▇-▇▇▇-▇▇▇▇
If to
the Company:
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
Fax
No:
with a
copy (which shall not constitute notice) to:
K&L
Gates LLP
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
Attention: ▇▇▇▇
▇▇▇▇▇
Email:
▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
9.2 Research
Analyst Independence. The Company acknowledges that each
Underwriter’s research analysts and research departments are
required to be independent from its investment banking division and
are subject to certain regulations and internal policies, and that
such Underwriter’s research analysts may hold views and make
statements or investment recommendations and/or publish research
reports with respect to the Company and/or the Offering that differ
from the views of their investment banking division. The Company
acknowledges that each Underwriter is a full service securities
firm and as such from time to time, subject to applicable
securities laws, rules and regulations, may effect transactions for
its own account or the account of its customers and hold long or
short positions in debt or equity securities of the Company;
provided, however, that nothing in this Section
9.2 shall relieve the Underwriter of any responsibility or
liability it may otherwise bear in connection with activities in
violation of applicable securities laws, rules or
regulations.
9.3 Headings.
The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of
this Agreement.
9.4 Amendment.
This Agreement may only be amended by a written instrument executed
by each of the parties hereto.
9.5 Entire
Agreement. This Agreement (together with the other
agreements and documents being delivered pursuant to or in
connection with this Agreement) constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and
thereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter
hereof. Notwithstanding anything to the contrary set forth herein,
it is understood and agreed by the parties hereto that all other
terms and conditions of that certain engagement letter between the
Company and ThinkEquity, a division of Fordham Financial
Management, Inc., dated December 9, 2020, shall remain in full
force and effect.
- 37 -
9.6 Binding
Effect. This Agreement shall inure solely to the benefit of
and shall be binding upon the Representative, the Underwriters, the
Company and the controlling persons, directors and officers
referred to in Section 5 hereof, and their respective successors,
legal representatives, heirs and assigns, and no other person shall
have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or
any provisions herein contained. The term “successors and
assigns” shall not include a purchaser, in its capacity as
such, of securities from any of the Underwriters.
9.7 Governing
Law; Consent to Jurisdiction; Trial by Jury. This Agreement
shall be governed by and construed and enforced in accordance with
the laws of the State of New York, without giving effect to
conflict of laws principles thereof. The Company hereby agrees that
any action, proceeding or claim against it arising out of, or
relating in any way to this Agreement shall be brought and enforced
in the New York Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York, and
irrevocably submits to such jurisdiction, which jurisdiction shall
be exclusive. The Company hereby waives any objection to such
exclusive jurisdiction and that such courts represent an
inconvenient forum. Any such process or summons to be served upon
the Company may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 9.1
hereof. Such mailing shall be deemed personal service and shall be
legal and binding upon the Company in any action, proceeding or
claim. The Company agrees that the prevailing party(ies) in any
such action shall be entitled to recover from the other party(ies)
all of its reasonable attorneys’ fees and expenses relating
to such action or proceeding and/or incurred in connection with the
preparation therefor. The Company (on its behalf and, to the extent
permitted by applicable law, on behalf of its stockholders and
affiliates) and each of the Underwriters hereby irrevocably waives,
to the fullest extent permitted by applicable law, any and all
right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated
hereby.
9.8 Execution
in Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but
all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts
has been signed by each of the parties hereto and delivered to each
of the other parties hereto. Delivery of a signed counterpart of
this Agreement by facsimile or email/pdf transmission shall
constitute valid and sufficient delivery thereof.
9.9 Waiver,
etc. The failure of any of the parties hereto to at any time
enforce any of the provisions of this Agreement shall not be deemed
or construed to be a waiver of any such provision, nor to in any
way effect the validity of this Agreement or any provision hereof
or the right of any of the parties hereto to thereafter enforce
each and every provision of this Agreement. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions
of this Agreement shall be effective unless set forth in a written
instrument executed by the party or parties against whom or which
enforcement of such waiver is sought; and no waiver of any such
breach, non-compliance or non-fulfillment shall be construed or
deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
[Signature Page
Follows]
- 38 -
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
Confirmed as of the
date first written above mentioned, on behalf of itself and as
Representative of the several Underwriters named on Schedule 1 hereto:
THINKEQUITY
A
Division of Fordham Financial Management, Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇
▇▇▇▇
Title:
Head of Investment Banking
SCHEDULE 1
|
Underwriter
|
Total Number
of
Firm Shares to be
Purchased
|
Number of
Additional
Shares to be
Purchased if
the Over-Allotment
Option
is
Fully Exercised by the
Representative
|
|
ThinkEquity, a
division of Fordham Financial Management, Inc.
|
7,143,000
|
714,286
|
|
|
|
|
|
TOTAL
|
7,143,000
|
714,286
|
|
|
|
|
Sch. 1-1
SCHEDULE 2-A
Pricing
Information
Number
of Firm Shares: 7,143,000
Number
of Option Shares: 714,286
Public
Offering Price per Share: $0.70
Underwriting
Discount per Share: $0.049
Underwriting
non-accountable expense allowance per
Share: $0.007
Proceeds
to Company per Share (before expenses): $0.644
SCHEDULE 2-B
Issuer General Use Free Writing Prospectuses
None.
SCHEDULE 2-C
Written Testing-the-Waters Communications
None.
SCHEDULE 3
List of Lock-Up Parties
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EXHIBIT A
Form of Representative’s Warrant Agreement
THE
REGISTERED HOLDER OF THIS PURCHASE WARRANT BY ITS ACCEPTANCE
HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS
PURCHASE WARRANT EXCEPT AS HEREIN PROVIDED AND THE REGISTERED
HOLDER OF THIS PURCHASE WARRANT AGREES THAT IT WILL NOT SELL,
TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE WARRANT FOR A
PERIOD OF ONE HUNDRED EIGHTY DAYS FOLLOWING THE EFFECTIVE DATE
(DEFINED BELOW) TO ANYONE OTHER THAN (I) THINKEQUITY, A DIVISION OF
FORDHAM FINANCIAL MANAGEMENT, INC., OR AN UNDERWRITER OR A SELECTED
DEALER IN CONNECTION WITH THE OFFERING, OR (II) A BONA FIDE OFFICER
OR PARTNER OF THINKEQUITY, A DIVISION OF FORDHAM FINANCIAL
MANAGEMENT, INC., OR OF ANY SUCH UNDERWRITER OR SELECTED
DEALER.
THIS
PURCHASE WARRANT IS NOT EXERCISABLE PRIOR TO [________________],
2021 [DATE THAT IS 180 DAYS FROM
THE EFFECTIVE DATE OF THE OFFERING]. VOID AFTER 5:00 P.M.,
EASTERN TIME, [___________________], 2025 [DATE THAT IS FIVE YEARS FROM THE EFFECTIVE DATE
OF THE OFFERING].
WARRANT TO PURCHASE COMMON STOCK
Warrant
Shares: _______
Initial
Exercise Date: ______, 2021
THIS
WARRANT TO PURCHASE COMMON STOCK (the “Warrant”) certifies that,
for value received, _____________ or its assigns (the
“Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after ____,
2021 (the “Initial
Exercise Date”) and, in accordance with FINRA Rule
5110(f)(2)(G)(i), prior to at 5:00 p.m. (New York time) on the date
that is five (5) years following the Effective Date (the
“Termination
Date”) but not thereafter, to subscribe for and
purchase from ENDRA Life Sciences
Inc., a Delaware corporation (the “Company”), up to ______
shares of Common Stock, par value $0.0001 per share, of the Company
(the “Warrant
Shares”), as subject to adjustment hereunder. The
purchase price of one share of Common Stock under this Warrant
shall be equal to the Exercise Price, as defined in Section
2(b).
Section 1. Definitions. In addition to the
terms defined elsewhere in this Agreement, the following terms have
the meanings indicated in this Section 1:
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 under the Securities Act.
“Business Day” means any
day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
“Commission” means the
United States Securities and Exchange Commission.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Trading Day” means a day
on which the New York Stock Exchange is open for
trading.
“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE MKT,
the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, or the New York Stock Exchange (or any
successors to any of the foregoing).
“VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)),
(b) if OTCQB or OTCQX is not a Trading Market, the volume
weighted average price of a share of Common Stock for such date (or
the nearest preceding date) on the OTCQB or OTCQX as applicable,
(c) if Common Stock is not then listed or quoted for trading on the
OTCQB or OTCQX and if prices for Common Stock are then reported in
the “Pink Sheets” published by OTC Markets Group, Inc.
(or a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of Common
Stock so reported, or (d) in all other cases, the fair market
value of the Common Stock as determined by an independent appraiser
selected in good faith by the Holder and reasonably acceptable to
the Company, the fees and expenses of which shall be paid by the
Company.
Ex.
A-2
Section 2. Exercise.
a)
Exercise of the purchase rights represented by this Warrant may be
made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by
delivery to the Company (or such other office or agency of the
Company as it may designate by notice in writing to the registered
Holder at the address of the Holder appearing on the books of the
Company) of a duly executed facsimile copy (or e-mail attachment)
of the Notice of Exercise Form annexed hereto. Within two (2)
Trading Days following the date of exercise as aforesaid, the
Holder shall deliver the aggregate Exercise Price for the shares
specified in the applicable Notice of Exercise by wire transfer or
cashier’s check drawn on a United States bank unless the
cashless exercise procedure specified in Section 2(c) below is
specified in the applicable Notice of Exercise. No ink-original
Notice of Exercise shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any
Notice of Exercise form be required. Notwithstanding anything
herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within five
(5) Trading Days of the date the final Notice of Exercise is
delivered to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant
Shares available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased.
The Holder and the Company shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise
Form within two (2) Business Days of receipt of such notice.
The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason
of the provisions of this paragraph, following the purchase of a
portion of the Warrant Shares hereunder, the number of Warrant
Shares available for purchase hereunder at any given time may be
less than the amount stated on the face hereof.
b)
Exercise Price. The
exercise price per share of the Common Stock under this Warrant
shall be $0.875, subject to
adjustment hereunder (the “Exercise
Price”).
c)
Cashless Exercise.
If at any time on or after the Initial
Exercise Date, there is no effective registration statement
registering, or the prospectus contained therein is not available
for, the resale of the Warrant Shares by the Holder, then at the
election of the Holder this Warrant may also be exercised, in whole
or in part, at such time by means of a “cashless
exercise” in which the Holder shall be entitled to
receive the number of Warrant Shares equal to the quotient obtained
by dividing [(A-B) (X)] by (A), where:
(A) =
the VWAP on the Trading Day immediately preceding the date on which
Holder elects to exercise this Warrant by means of a
“cashless exercise,” as set forth in the applicable
Notice of Exercise;
(B) =
the Exercise Price of this Warrant, as adjusted hereunder;
and
(X) =
the number of Warrant Shares that would be issuable upon exercise
of this Warrant in accordance with the terms of this Warrant if
such exercise were by means of a cash exercise rather than a
cashless exercise.
If Warrant Shares are issued in such a
“cashless exercise,” the parties acknowledge and agree
that in accordance with Section 3(a)(9) of the Securities Act, the
Warrant Shares shall take on the characteristics with respect to
registration status of the Warrants being exercised, and the
holding period of the Warrants being exercised may be tacked on to
the holding period of the Warrant Shares. The Company
agrees not to take any position contrary to this Section
2(c).
Notwithstanding
anything herein to the contrary, on the Termination Date, this
Warrant shall be automatically exercised via cashless exercise
pursuant to this Section 2(c).
Ex.
A-3
d)
Mechanics of
Exercise.
i.
Delivery of Warrant Shares
Upon Exercise. The Company shall cause the Warrant Shares
purchased hereunder to be transmitted by its transfer agent to the
Holder by crediting the account of the Holder’s or its
designee’s balance account with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system
(“DWAC”) if the Company is
then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by Holder, or (B)
the Warrant Shares are eligible for resale by the Holder without
volume or manner-of-sale limitations pursuant to Rule 144 and, in
either case, the Warrant Shares have been sold by the Holder prior
to the Warrant Share Delivery Date (as defined below), and
otherwise by physical delivery of a certificate, registered in the
Company’s share register in the name of the Holder or its
designee, for the number of Warrant Shares to which the Holder is
entitled pursuant to such exercise to the address specified by the
Holder in the Notice of Exercise by the date that is two
(2) Trading Days after the delivery to the Company of the
Notice of Exercise (such date, the “Warrant Share Delivery
Date”). If the Warrant Shares can be delivered via
DWAC, the transfer agent shall have received from the Company, at
the expense of the Company, any legal opinions or other
documentation required by it to deliver such Warrant Shares without
legend (subject to receipt by the Company of reasonable back up
documentation from the Holder, including with respect to affiliate
status) and, if applicable and requested by the Company prior to
the Warrant Share Delivery Date, the transfer agent shall have
received from the Holder a confirmation of sale of the Warrant
Shares (provided the requirement of the Holder to provide a
confirmation as to the sale of Warrant Shares shall not be
applicable to the issuance of unlegended Warrant Shares upon a
cashless exercise of this Warrant if the Warrant Shares are then
eligible for resale pursuant to Rule 144(b)(1)). The Warrant Shares
shall be deemed to have been issued, and Holder or any other person
so designated to be named therein shall be deemed to have become a
holder of record of such shares for all purposes, as of the date
the Warrant has been exercised, with payment to the Company of the
Exercise Price (or by cashless exercise, if permitted) and all
taxes required to be paid by the Holder, if any, pursuant to
Section 2(d)(vi) prior to the issuance of such shares, having
been paid. If the Company fails for any reason to deliver to the
Holder the Warrant Shares subject to a Notice of Exercise by the
second Trading Day following the Warrant Share Delivery Date, the
Company shall pay to the Holder, in cash, as liquidated damages and
not as a penalty, for each $1,000 of Warrant Shares subject to such
exercise (based on the VWAP of the Common Stock on the date of the
applicable Notice of Exercise), $10 per Trading Day (increasing to
$20 per Trading Day on the fifth Trading Day after such liquidated
damages begin to accrue) for each Trading Day after the second
Trading Day following such Warrant Share Delivery Date until such
Warrant Shares are delivered or Holder rescinds such
exercise.
ii.
Delivery of New Warrants
Upon Exercise. If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of
the Warrant Shares, deliver to the Holder a new Warrant evidencing
the rights of the Holder to purchase the unpurchased Warrant Shares
called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant.
Ex.
A-4
iii.
Rescission Rights.
If the Company fails to cause its transfer agent to deliver to the
Holder the Warrant Shares pursuant to Section 2(d)(i) by the
Warrant Share Delivery Date, then the Holder will have the right to
rescind such exercise; provided, however, that the Holder shall
be required to return any Warrant Shares or Common Stock subject to
any such rescinded exercise notice concurrently with the return to
Holder of the aggregate Exercise Price paid to the Company for such
Warrant Shares and the restoration of Holder’s right to
acquire such Warrant Shares pursuant to this Warrant (including,
issuance of a replacement warrant certificate evidencing such
restored right).
iv.
Compensation for Buy-In on
Failure to Timely Deliver Warrant Shares Upon Exercise. In
addition to any other rights available to the Holder, if the
Company fails to cause its transfer agent to transmit to the Holder
the Warrant Shares pursuant to an exercise on or before the Warrant
Share Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or
otherwise) or the Holder’s brokerage firm otherwise
purchases, shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder the amount, if any, by
which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue times (2)
the price at which the sell order giving rise to such purchase
obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored (in which
case such exercise shall be deemed rescinded) or deliver to the
Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted exercise of shares of
Common Stock with an aggregate sale price giving rise to such
purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the
Buy-In and, upon request of the Company, evidence of the amount of
such loss. Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company’s failure to timely deliver shares of Common Stock
upon exercise of the Warrant as required pursuant to the terms
hereof.
Ex.
A-5
v.
No Fractional Shares or
Scrip. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. As to any
fraction of a share which the Holder would otherwise be entitled to
purchase upon such exercise, the Company shall, at its election,
either pay a cash adjustment in respect of such final fraction in
an amount equal to such fraction multiplied by the Exercise Price
or round up to the next whole share.
vi.
Charges, Taxes and
Expenses. Issuance of Warrant Shares shall be made without
charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such Warrant
Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the
Holder or in such name or names as may be directed by the Holder;
provided,
however, that in
the event that Warrant Shares are to be issued in a name other than
the name of the Holder, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto. The Company shall pay all transfer
agent fees required for same-day processing of any Notice of
Exercise and all fees to the Depository Trust Company (or another
established clearing corporation performing similar functions)
required for same-day electronic delivery of the Warrant
Shares.
vii.
Closing of Books.
The Company will not close its stockholder books or records in any
manner which prevents the timely exercise of this Warrant, pursuant
to the terms hereof.
viii.
Signature.
This Section 2 and the exercise form attached hereto set forth the
totality of the procedures required of the Holder in order to
exercise this Purchase Warrant. Without limiting the
preceding sentences, no ink-original exercise form shall be
required, nor shall any medallion guarantee (or other type of
guarantee or notarization) of any exercise form be required in
order to exercise this Purchase Warrant. No additional legal
opinion, other information or instructions shall be required of the
Holder to exercise this Purchase Warrant. The Company shall
honor exercises of this Purchase Warrant and shall deliver Shares
underlying this Purchase Warrant in accordance with the terms,
conditions and time periods set forth herein.
Ex.
A-6
e)
Holder’s Exercise
Limitations. The Company shall not effect any exercise of
this Warrant, and a Holder shall not have the right to exercise any
portion of this Warrant, pursuant to Section 2 or otherwise, to the
extent that after giving effect to such issuance after exercise as
set forth on the applicable Notice of Exercise, the Holder
(together with the Holder’s Affiliates, and any other Persons
acting as a group together with the Holder or any of the
Holder’s Affiliates), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For
purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by the Holder and its Affiliates shall
include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which
would be issuable upon (i) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of
its Affiliates and (ii) exercise or conversion of the unexercised
or nonconverted portion of any other securities of the Company
(including, without limitation, any other Common Stock Equivalents)
subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any
of its Affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 2(e), beneficial ownership
shall be calculated in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder,
it being acknowledged by the Holder that the Company is not
representing to the Holder that such calculation is in compliance
with Section 13(d) of the Exchange Act and the Holder is solely
responsible for any schedules required to be filed in accordance
therewith. To the extent that the limitation contained in this
Section 2(e) applies, the determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant
is exercisable shall be in the sole discretion of the Holder, and
the submission of a Notice of Exercise shall be deemed to be the
Holder’s determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with
any Affiliates) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership
Limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a
determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. For purposes of
this Section 2(e), in determining the number of outstanding shares
of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (A) the Company’s most
recent periodic or annual report filed with the Commission, as the
case may be, (B) a more recent public announcement by the Company
or (C) a more recent written notice by the Company or the
Company’s transfer agent setting forth the number of shares
of Common Stock outstanding. Upon the written or oral request
of a Holder, the Company shall within two Trading Days confirm
orally and in writing to the Holder the number of shares of Common
Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates since the
date as of which such number of outstanding shares of Common Stock
was reported. The “Beneficial Ownership
Limitation” shall be 9.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon exercise of this
Warrant. The Holder, upon notice to the Company, may increase or
decrease the Beneficial Ownership Limitation provisions of this
Section 2(e), provided that the Beneficial Ownership Limitation in
no event exceeds 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of
shares of Common Stock upon exercise of this Warrant held by the
Holder and the provisions of this Section 2(e) shall continue to
apply. Any increase in the Beneficial Ownership Limitation will not
be effective until the 61st day after such
notice is delivered to the Company. The provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 2(e) to
correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership
Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.
Section 3. Certain
Adjustments.
a)
Stock Dividends and
Splits. If the Company, at any time while this Warrant is
outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions on shares of its Common Stock or any
other equity or equity equivalent securities payable in shares of
Common Stock (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a
larger number of shares, (iii) combines (including by way of
reverse stock split) outstanding shares of Common Stock into a
smaller number of shares, or (iv) issues by reclassification of
shares of the Common Stock any shares of capital stock of the
Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after
such event, and the number of shares issuable upon exercise of this
Warrant shall be proportionately adjusted such that the aggregate
Exercise Price of this Warrant shall remain unchanged. Any
adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in
the case of a subdivision, combination or re-classification. For
the purposes of clarification, the Exercise Price of this Warrant
will not be adjusted in the event that the Company or any
Subsidiary thereof, as applicable, sells or grants any option to
purchase, or sell or grant any right to reprice, or otherwise
dispose of or issue (or announce any offer, sale, grant or any
option to purchase or other disposition) any Common Stock or Common
Stock Equivalents, at an effective price per share less than the
Exercise Price then in effect.
Ex.
A-7
b)
[RESERVED]
c)
Subsequent Rights
Offerings. In addition to any adjustments pursuant to
Section 3(a) above, if at any time the Company grants, issues or
sells any Common Stock Equivalents or rights to purchase stock,
warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the
“Purchase
Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon
complete exercise of this Warrant (without regard to any
limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date on
which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of
which the record holders of shares of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder’s right to
participate in any such Purchase Right would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder
shall not be entitled to participate in such Purchase Right to such
extent (or beneficial ownership of such shares of Common Stock as a
result of such Purchase Right to such extent) and such Purchase
Right to such extent shall be held in abeyance for the Holder until
such time, if ever, as its right thereto would not result in the
Holder exceeding the Beneficial Ownership Limitation).
d)
Pro Rata
Distributions. During such time as this Warrant is
outstanding, if the Company shall declare or make any dividend
(other than cash dividends) or other distribution of its assets (or
rights to acquire its assets) to holders of shares of Common Stock,
by way of return of capital or otherwise (including, without
limitation, any distribution of shares or other securities,
property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or
other similar transaction) (a "Distribution"), at any time
after the issuance of this Warrant, then, in each such case, the
Holder shall be entitled to participate in such Distribution to the
same extent that the Holder would have participated therein if the
Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any
limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date of
which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such
Distribution (provided, however, to the extent that the
Holder's right to participate in any such Distribution would result
in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any
shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation). To the extent that this Warrant
has not been partially or completely exercised at the time of such
Distribution, such portion of the Distribution shall be held in
abeyance for the benefit of the Holder until the Holder has
exercised this Warrant.
Ex.
A-8
e)
Fundamental
Transaction. If, at any time while this Warrant is
outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of
the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii)
any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Company, directly or indirectly,
in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash
or property, or (v) the Company, directly or indirectly, in one or
more related transactions consummates a stock or share purchase
agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with another Person or group of Persons whereby
such other Person or group acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of
Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other
business combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of
this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the exercise of this Warrant), the
number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”)
receivable by holders of Common Stock as a result of such
Fundamental Transaction for each share of Common Stock for which
this Warrant is exercisable immediately prior to such Fundamental
Transaction (without regard to any limitation in Section 2(e) on
the exercise of this Warrant). For purposes of any such exercise,
the determination of the Exercise Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Company
shall apportion the Exercise Price among the Alternate
Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. The Company shall cause any
successor entity in a Fundamental Transaction in which the Company
is not the survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this
Warrant in accordance with the provisions of this Section 3(e)
pursuant to written agreements in form and substance reasonably
satisfactory to the Holder and approved by the Holder (without
unreasonable delay) prior to such Fundamental Transaction and
shall, at the option of the Holder, deliver to the Holder in
exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and
substance to this Warrant which is exercisable for a corresponding
number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies
the exercise price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction and the value of
such shares of capital stock, such number of shares of capital
stock and such exercise price being for the purpose of protecting
the economic value of this Warrant immediately prior to the
consummation of such Fundamental Transaction), and which is
reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of
this Warrant referring to the “Company” shall refer
instead to the Successor Entity), and may exercise every right and
power of the Company and shall assume all of the obligations of the
Company under this Warrant with the same effect as if such
Successor Entity had been named as the Company herein.
Ex.
A-9
f)
Calculations. All
calculations under this Section 3 shall be made to the nearest cent
or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of shares of Common Stock deemed to
be issued and outstanding as of a given date shall be the sum of
the number of shares of Common Stock (excluding treasury shares, if
any) issued and outstanding.
g)
Notice to
Holder.
i.
Adjustment to Exercise
Price. Whenever the Exercise Price is adjusted pursuant to
any provision of this Section 3, the Company shall promptly mail to
the Holder a notice setting forth the Exercise Price after such
adjustment and any resulting adjustment to the number of Warrant
Shares and setting forth a brief statement of the facts requiring
such adjustment.
ii.
Notice to Allow Exercise
by Holder. If (A) the Company shall declare a dividend (or
any other distribution in whatever form) on the Common Stock, (B)
the Company shall declare a special nonrecurring cash dividend on
or a redemption of the Common Stock, (C) the Company shall
authorize the granting to all holders of the Common Stock rights or
warrants to subscribe for or purchase any shares of capital stock
of any class or of any rights, (D) the approval of any stockholders
of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger
to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory
share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize
the voluntary or involuntary dissolution, liquidation or winding up
of the affairs of the Company, then, in each case, the Company
shall cause to be mailed a notice to the Holder at its last address
as it shall appear upon the Warrant Register of the Company, at
least 20 calendar days prior to the applicable record or effective
date hereinafter specified, stating (x) the date on which a record
is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or
warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share
exchange is expected to become effective or close, and the date as
of which it is expected that holders of the Common Stock of record
shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange; provided that the failure to provide such notice or any
defect therein shall not affect the validity of the corporate
action required to be specified in such notice. To the extent that
any notice provided hereunder constitutes, or contains, material,
non-public information regarding the Company or any of the
Subsidiaries, the Company shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form 8-K. The
Holder shall remain entitled to exercise this Warrant during the
period commencing on the date of such notice to the effective date
of the event triggering such notice except as may otherwise be
expressly set forth herein.
Ex.
A-10
Section 4. Transfer of
Warrant.
a)
Transferability.
Pursuant to FINRA Rule 5110(g)(1), neither this Warrant nor any
Warrant Shares issued upon exercise of this Warrant shall be sold,
transferred, assigned, pledged, or hypothecated, or be the subject
of any hedging, short sale, derivative, put, or call transaction
that would result in the effective economic disposition of the
securities by any person for a period of 180 days immediately
following the date of effectiveness or commencement of sales of the
offering pursuant to which this Warrant is being issued, except the
transfer of any security:
i.
by operation of law or by reason of reorganization of the
Company;
ii.
to any FINRA member firm participating in the offering and the
officers or partners thereof, if all securities so transferred
remain subject to the lock-up restriction in this Section 4(a) for
the remainder of the time period;
iii.
if the aggregate amount of securities of the Company held by the
Holder or related person do not exceed 1% of the securities being
offered;
iv.
that is beneficially owned on a pro-rata basis by all equity owners
of an investment fund, provided that no participating member
manages or otherwise directs investments by the fund, and
participating members in the aggregate do not own more than 10% of
the equity in the fund; or
v.
the exercise or conversion of any security, if all securities
received remain subject to the lock-up restriction in this Section
4(a) for the remainder of the time period.
Subject
to the foregoing restriction, any applicable securities laws and
the conditions set forth in Section 4(d), this Warrant and all
rights hereunder (including, without limitation, any registration
rights) are transferable, in whole or in part, upon surrender of
this Warrant at the principal office of the Company or its
designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by
the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee
or assignees, as applicable, and in the denomination or
denominations specified in such instrument of assignment, and shall
issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be
cancelled. Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant
to the Company unless the Holder has assigned this Warrant in full,
in which case, the Holder shall surrender this Warrant to the
Company within three (3) Trading Days of the date the Holder
delivers an assignment form to the Company assigning this Warrant
full. The Warrant, if properly assigned in accordance herewith, may
be exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued.
Ex.
A-11
b)
New Warrants. This
Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by the
Holder or its agent or attorney. Subject to compliance with Section
4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice. All Warrants issued on
transfers or exchanges shall be dated the initial issuance date of
this Warrant and shall be identical with this Warrant except as to
the number of Warrant Shares issuable pursuant
thereto.
c)
Warrant Register.
The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in
the name of the record Holder hereof from time to time. The Company
may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent
actual notice to the contrary.
d)
Representation by the
Holder. The Holder, by the acceptance hereof, represents and
warrants that it is acquiring this Warrant and, upon any exercise
hereof, will acquire the Warrant Shares issuable upon such
exercise, for its own account and not with a view to or for
distributing or reselling such Warrant Shares or any part thereof
in violation of the Securities Act or any applicable state
securities law, except pursuant to sales registered or exempted
under the Securities Act.
Section
5. Registration
Rights.
5.1 Demand
Registration.
5.1.1 Grant
of Right. The Company, upon written demand (a “Demand Notice”) of the Holder(s)
of at least 51% of the Warrants and/or the underlying Warrant
Shares (“Majority
Holders”), agrees to register, on one occasion, all or
any portion of the Warrant Shares underlying the Warrants
(collectively, the “Registrable Securities”). On such
occasion, the Company will file a registration statement with the
Commission covering the Registrable Securities within sixty (60)
days after receipt of a Demand Notice and use its reasonable best
efforts to have the registration statement become effective
promptly thereafter, subject to compliance with review by the
Commission; provided, however, that the Company shall not be
required to comply with a Demand Notice if the Company has filed a
registration statement with respect to which the Holder is entitled
to piggyback registration rights pursuant to Section 5.2 hereof and
either: (i) the Holder has elected to participate in the offering
covered by such registration statement or (ii) if such registration
statement relates to an underwritten primary offering of securities
of the Company, until the offering covered by such registration
statement has been withdrawn or until thirty (30) days after such
offering is consummated. The demand for registration may be made at
any time during a period of four (4) years beginning on the Initial
Exercise Date. The Company covenants and agrees to give written
notice of its receipt of any Demand Notice by any Holder(s) to all
other registered Holders of the Warrants and/or the Registrable
Securities within ten (10) days after the date of the receipt of
any such Demand Notice.
Ex.
A-12
5.1.2
Terms.
The Company shall bear all fees and expenses attendant to the
registration of the Registrable Securities pursuant to Section
5.1.1, but the Holders shall pay any and all underwriting
commissions and the expenses of any legal counsel selected by the
Holders to represent them in connection with the sale of the
Registrable Securities. The Company agrees to use its reasonable
best efforts to cause the filing required herein to become
effective promptly and to qualify or register the Registrable
Securities in such States as are reasonably requested by the
Holder(s); provided, however, that in no event shall the Company be
required to register the Registrable Securities in a State in which
such registration would cause: (i) the Company to be obligated to
register or license to do business in such State or submit to
general service of process in such State, or (ii) the principal
shareholders of the Company to be obligated to escrow their shares
of capital stock of the Company. The Company shall cause any
registration statement filed pursuant to the demand right granted
under Section 5.1.1 to remain effective for a period of at least
twelve (12) consecutive months after the date that the Holders of
the Registrable Securities covered by such registration statement
are first given the opportunity to sell all of such securities. The
Holders shall only use the prospectuses provided by the Company to
sell the Warrant Shares covered by such registration statement, and
will immediately cease to use any prospectus furnished by the
Company if the Company advises the Holder that such prospectus may
no longer be used due to a material misstatement or omission.
Notwithstanding the provisions of this Section 5.1.2, the Holder
shall be entitled to a demand registration under this Section 5.1.2
on only one (1) occasion and such demand registration right shall
terminate on the fifth anniversary of the date of the Underwriting
Agreement (as defined below) in accordance with FINRA Rule
5110(f)(2)(G)(iv).
5.1.3 Limitation.
Notwithstanding the foregoing, the Holder shall not be entitled to
deliver a Demand Notice at any time when all of the Registrable
Securities may be sold by the Holder within a 90 day period without
registration and without volume limitations, current public
information requirements or manner of sale limitations pursuant to
Rule 144 or consistent with applicable SEC interpretive guidance
(including SEC Staff CD&I no. 201.04 (April 2, 2007) or similar
interpretive guidance).
5.2
“Piggy-Back”
Registration.
5.2.1 Grant
of Right. In addition to the demand right of registration described
in Section 5.1 hereof, the Holder shall have the right, for a
period of no more than two (2) years from the Initial Exercise Date
in accordance with FINRA Rule 5110(f)(2)(G)(v), to include the
Registrable Securities as part of any other registration of
securities filed by the Company (other than in connection with a
transaction contemplated by Rule 145(a) promulgated under the
Securities Act, pursuant to Form S-4 or Form S-8 or any equivalent
form, or in connection with a Form S-3 primary shelf registration
statement); provided, however, that if, solely in connection with
any primary underwritten public offering for the account of the
Company, the managing underwriter(s) thereof shall, in its
reasonable discretion, impose a limitation on the number of shares
which may be included in the Registration Statement because, in
such underwriter(s)’ judgment, marketing or other factors
dictate such limitation is necessary to facilitate public
distribution, then the Company shall be obligated to include in
such Registration Statement only such limited portion of the
Registrable Securities with respect to which the Holder requested
inclusion hereunder as the underwriter shall reasonably permit. Any
exclusion of Registrable Securities shall be made pro rata among
the Holders seeking to include Registrable Securities in proportion
to the number of Registrable Securities sought to be included by
such Holders; provided, however, that the Company shall not exclude
any Registrable Securities unless the Company has first excluded
all outstanding securities, the holders of which are not entitled
to inclusion of such securities in such Registration Statement or
are not entitled to pro rata inclusion with the Registrable
Securities.
Ex.
A-13
5.2.2
Terms.
The Company shall bear all fees and expenses attendant to
registering the Registrable Securities pursuant to Section 5.2.1
hereof, but the Holders shall pay any and all underwriting
commissions and the expenses of any legal counsel selected by the
Holders to represent them in connection with the sale of the
Registrable Securities. In the event of such a proposed
registration, the Company shall furnish the then Holders of
outstanding Registrable Securities with not less than thirty (30)
days written notice prior to the proposed date of filing of such
registration statement. Such notice to the Holders shall continue
to be given for each registration statement filed by the Company
during the two (2) year period following the Initial Exercise Date
until such time as all of the Registrable Securities have been sold
by the Holder. The holders of the Registrable Securities shall
exercise the “piggy-back” rights provided for herein by
giving written notice within ten (10) days of the receipt of the
Company’s notice of its intention to file a registration
statement. Except as otherwise provided in this Warrant, there
shall be no limit on the number of times the Holder may request
registration under this Section 5.2.2; provided, however, that such
registration rights shall terminate on the second anniversary of
the Initial Exercise Date.
5.3
General Terms
5.3.1 Indemnification.
The Company shall indemnify the Holder(s) of the Registrable
Securities to be sold pursuant to any registration statement
hereunder and each person, if any, who controls such Holders within
the meaning of Section 15 of the Securities Act or Section 20 (a)
of the Exchange Act against all loss, claim, damage, expense or
liability (including all reasonable attorneys’ fees and other
expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may
become subject under the Securities Act, the Exchange Act or
otherwise, arising from such registration statement but only to the
same extent and with the same effect as the provisions pursuant to
which the Company has agreed to indemnify the Underwriters
contained in Section 5.1 of the Underwriting Agreement between the
Underwriters and the Company, dated as of December [___], 2020. The
Holder(s) of the Registrable Securities to be sold pursuant to such
registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, against all
loss, claim, damage, expense or liability (including all reasonable
attorneys’ fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever)
to which they may become subject under the Securities Act, the
Exchange Act or otherwise, arising from information furnished by or
on behalf of such Holders, or their successors or assigns, in
writing, for specific inclusion in such registration statement to
the same extent and with the same effect as the provisions
contained in Section 5.2 of the Underwriting Agreement pursuant to
which the Underwriters have agreed to indemnify the
Company.
5.3.2
Exercise
of Warrants. Nothing contained in this Warrant shall be construed
as requiring the Holder(s) to exercise their Warrants prior to or
after the initial filing of any registration statement or the
effectiveness thereof.
5.3.3 Termination
of Registration Rights. The registration rights afforded to the
Holder under this Section 5 shall terminate on the earliest date
when all Registrable Securities of the Holder either: (i) have been
publicly sold by the Holder pursuant to a Registration Statement,
or (ii) have been covered by an effective Registration Statement on
Form S-1 or Form S-3 (or successor form) which may be kept
effective as an evergreen Registration Statement.
Ex.
A-14
5.3.4 Documents
to be Delivered by Holder(s). Each of the Holder(s) participating
in any of the foregoing offerings shall furnish to the Company a
completed and executed questionnaire provided by the Company
requesting information customarily sought of selling security
holders.
5.3.6
Damages.
Should the registration or the effectiveness thereof required by
Sections 5.1 and 5.2 hereof be delayed by the Company or the
Company otherwise fails to comply with such provisions, the
Holder(s) shall, in addition to any other legal or other relief
available to the Holder(s), be entitled to obtain specific
performance or other equitable (including injunctive) relief
against the threatened breach of such provisions or the
continuation of any such breach, without the necessity of proving
actual damages and without the necessity of posting bond or other
security.
Section 6. Miscellaneous.
a)
No Rights as Stockholder
Until Exercise. This Warrant does not entitle the Holder to
any voting rights, dividends or other rights as a stockholder of
the Company prior to the exercise hereof as set forth in Section
2(d)(i).
b)
Loss, Theft, Destruction
or Mutilation of Warrant. The Company covenants that upon
receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant or any
certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Warrant, shall not
include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in
lieu of such Warrant or stock certificate.
c)
Saturdays, Sundays,
Holidays, etc. If the last or appointed day for the taking
of any action or the expiration of any right required or granted
herein shall not be a Trading Day, then, such action may be taken
or such right may be exercised on the next succeeding Trading
Day.
d)
Authorized
Shares.
The
Company covenants that, during the period the Warrant is
outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the
issuance of the Warrant Shares upon the exercise of any purchase
rights under this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of issuing the necessary
Warrant Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which
the Common Stock may be listed. The Company covenants that all
Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of
the purchase rights represented by this Warrant and payment for
such Warrant Shares in accordance herewith, be duly authorized,
validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Ex.
A-15
Except
and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will
(i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to
such increase in par value, (ii) take all such action as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the
exercise of this Warrant and (iii) use commercially reasonable
efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may
be, necessary to enable the Company to perform its obligations
under this Warrant.
Before
taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction
thereof.
e)
Jurisdiction. All
questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be determined in accordance
with the provisions of the Underwriting Agreement, dated December
[__], 2020, by and between the Company and ThinkEquity, a division
of Fordham Financial Management, Inc., as representatives of the
underwriters set forth therein (the “Underwriting
Agreement”).
f)
Restrictions. The
Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant, if not registered, and the Holder does
not utilize cashless exercise, will have restrictions upon resale
imposed by state and federal securities laws.
g)
Nonwaiver and
Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as
a waiver of such right or otherwise prejudice the Holder’s
rights, powers or remedies. Without limiting any other provision of
this Warrant or the Underwriting Agreement, if the Company
willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder, the
Company shall pay to the Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to,
reasonable attorneys’ fees, including those of appellate
proceedings, incurred by the Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.
h)
Notices. Any
notice, request or other document required or permitted to be given
or delivered to the Holder by the Company shall be delivered in
accordance with the notice provisions of the Underwriting
Agreement.
i)
Limitation of
Liability. No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to
purchase Warrant Shares, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the
Holder for the purchase price of any Common Stock or as a
stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
Ex.
A-16
j)
Remedies. The
Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company
agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of
this Warrant and hereby agrees to waive and not to assert the
defense in any action for specific performance that a remedy at law
would be adequate.
k)
Successors and
Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors and permitted assigns
of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit
of any Holder from time to time of this Warrant and shall be
enforceable by the Holder or holder of Warrant Shares.
l)
Amendment. This
Warrant may be modified or amended or the provisions hereof waived
with the written consent of the Company and the
Holder.
m)
Severability.
Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be
prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the
remaining provisions of this Warrant.
n)
Headings. The
headings used in this Warrant are for the convenience of reference
only and shall not, for any purpose, be deemed a part of this
Warrant.
********************
(Signature Page Follows)
Ex.
A-17
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized as of the date first above
indicated.
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By:
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Name:
Title:
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Ex.
A-18
NOTICE OF EXERCISE
_________________________
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of
the Company pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the exercise
price in full, together with all applicable transfer taxes, if
any.
(2)
Payment shall take the form of (check applicable box):
[ ] in
lawful money of the United States; or
[ ] if
permitted the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number
of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).
(3)
Please register and issue said Warrant Shares in the name of the
undersigned or in such other name as is specified
below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account
Number or by physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
(4)
Accredited
Investor. If the Warrant is being exercised via cash
exercise, the undersigned is an “accredited investor”
as defined in Regulation D promulgated under the Securities Act of
1933, as amended
[SIGNATURE
OF HOLDER]
Name of
Investing Entity:
_______________________________________________________________
Signature of Authorized Signatory of Investing Entity:
_________________________________________
Name of
Authorized Signatory:
___________________________________________________________
Title
of Authorized Signatory:
____________________________________________________________
Date:
________________________________________________________________________________
Ex.
A-19
ASSIGNMENT FORM
(To
assign the foregoing warrant, execute
this
form and supply required information.
Do not
use this form to exercise the warrant.)
FOR
VALUE RECEIVED, [____] all of or [_______] shares of the foregoing
Warrant and all rights evidenced thereby are hereby assigned
to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated:
______________, _______
Holder’s
Signature: _____________________________
Holder’s
Address: _____________________________
_____________________________
NOTE:
The signature to this Assignment Form must correspond with the name
as it appears on the face of the Warrant, without alteration or
enlargement or any change whatsoever. Officers of corporations and
those acting in a fiduciary or other representative capacity should
file proper evidence of authority to assign the foregoing
Warrant.
Ex.
A-20
EXHIBIT B
Form of Lock-Up Agreement
December __,
2020
ThinkEquity
A
Division of Fordham Financial Management, Inc.
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
The
undersigned understands that ThinkEquity, a division of Fordham
Financial Management, Inc., (the “Representative”) proposes to enter
into an Underwriting Agreement (the “Underwriting Agreement”) with
Endra Life Sciences Inc., a
Delaware corporation (the “Company”), providing for the
public offering (the “Public
Offering”) of shares of common stock, par value
$0.0001 per share, of the Company (the “Shares”).
To
induce the Representative to continue its efforts in connection
with the Public Offering, the undersigned hereby agrees that,
without the prior written consent of the Representative, the
undersigned will not, during the period commencing on the date
hereof and ending 90 days after the date of the final prospectus
(the “Prospectus”) relating to the
Public Offering (the “Lock-Up
Period”), (1) offer, issue, pledge, sell, contract to
sell, grant, encumber, lend, or otherwise transfer or dispose of,
directly or indirectly, any Shares or any securities convertible
into or exercisable or exchangeable for Shares, whether now owned
or hereafter acquired by the undersigned or with respect to which
the undersigned has or hereafter acquires the power of disposition
(collectively, the “Lock-Up
Securities”); (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of the Lock-Up Securities,
whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Lock-Up Securities, in cash or
otherwise; (3) make any demand for or exercise any right with
respect to the registration of any Lock-Up Securities; or (4)
publicly disclose the intention to make any offer, sale, pledge or
disposition, or to enter into any transaction, swap, hedge or other
arrangement relating to any Lock-Up Securities. Notwithstanding the
foregoing, and subject to the conditions below, the undersigned may
transfer Lock-Up Securities without the prior written consent of
the Representative in connection with (a) transactions relating to
Lock-Up Securities acquired in open market transactions after the
completion of the Public Offering; provided that no filing under
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”), shall be required or shall be voluntarily made
in connection with subsequent sales of Lock-Up Securities acquired
in such open market transactions; (b) transfers of Lock-Up
Securities as a bona fide
gift, by will or intestacy or to a family member or trust for the
benefit of a family member (for purposes of this lock-up agreement,
“family member” means any relationship by blood,
marriage or adoption, not more remote than first cousin); (c)
transfers of Lock-Up Securities to a charity or educational
institution; or (d) if the undersigned, directly or indirectly,
controls a corporation, partnership, limited liability company or
other business entity, any transfers of Lock-Up Securities to any
shareholder, partner or member of, or owner of similar equity
interests in, the undersigned, as the case may be; provided that in the case of
any transfer pursuant to the foregoing clauses (b), (c) or
(d), (i) any such transfer shall not involve a disposition for
value, (ii) each transferee shall sign and deliver to the
Representative a lock-up agreement substantially in the form of
this lock-up agreement and (iii) no filing under Section 16(a)
of the Exchange Act shall be required or shall be voluntarily made.
The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company’s transfer agent and
registrar against the transfer of the undersigned’s Lock-Up
Securities except in compliance with this lock-up
agreement.
Ex.
B-1
If the
undersigned is an officer or director of the Company, (i) the
undersigned agrees that the foregoing restrictions shall be equally
applicable to any issuer-directed or “friends and
family” Shares that the undersigned may purchase in the
Public Offering; (ii) the Representative agrees that, at least
three (3) business days before the effective date of any release or
waiver of the foregoing restrictions in connection with a transfer
of Lock-Up Securities, the Representative will notify the Company
of the impending release or waiver; and (iii) the Company has
agreed in the Underwriting Agreement to announce the impending
release or waiver by press release through a major news service at
least two (2) business days before the effective date of the
release or waiver. Any release or waiver granted by the
Representative hereunder to any such officer or director shall only
be effective two (2) business days after the publication date of
such press release. The provisions of this paragraph will not apply
if (a) the release or waiver is effected solely to permit a
transfer of Lock-Up Securities not for consideration and (b) the
transferee has agreed in writing to be bound by the same terms
described in this lock-up agreement to the extent and for the
duration that such terms remain in effect at the time of such
transfer.
Notwithstanding
anything herein to the contrary, no provision in this agreement
shall be deemed to restrict or prohibit (1) 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; (2) 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) [or the transfer of any
Lock-Up Securities pursuant to any such 10b5-1 plan in effect prior
to the undersigned’s entry into this lock-up agreement]; or
(3) the transfer of Lock-Up Securities pursuant to a bona fide
third party tender offer, merger, consolidation or other similar
transaction made to all holders of Shares involving a change of
control (as defined below) of the Company approved by the
Company’s board of directors. For purposes of clause (3)
above, “change of control” shall mean the consummation
of any bona fide third party tender offer, merger, amalgamation,
consolidation or other similar transaction the result of which is
that any “person” (as defined in Section 13(d)(3) of
the Exchange Act), or group of persons, becomes the beneficial
owner (as defined in Rules 13d-3 and 13d-5 of the Exchange Act) of
a majority of total voting power of the voting stock of the
Company.
The
undersigned understands that the Company and the Representative are
relying upon this lock-up agreement in proceeding toward
consummation of the Public Offering. The undersigned further
understands that this lock-up agreement is irrevocable and shall be
binding upon the undersigned’s heirs, legal representatives,
successors and assigns.
The
undersigned understands that, if the Underwriting Agreement is not
executed by December 18, 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
Representative.
Ex.
B-2
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.
B-3
EXHIBIT C
Form of Press Release
ENDRA LIFE SCIENCES INC.
[Date]
ENDRA
Life Sciences Inc. (the “Company”) announced today that
ThinkEquity, a division of Fordham Financial Management, Inc.,
acting as representative for the underwriters in the
Company’s recent public offering of _______ shares of
the Company’s common stock, is [waiving] [releasing] a
lock-up restriction with respect to _________ shares of the
Company’s common stock held by [certain officers or
directors] [an officer or director] of the Company. The
[waiver] [release] will take effect on _________, 20___, and
the shares may be sold on or after such
date.
This press release is not an offer or sale of the securities in the
United States or in any other jurisdiction where such offer or sale
is prohibited, and such securities may not be offered or sold in
the United States absent registration or an exemption from
registration under the Securities Act of 1933, as
amended.
Ex.
C-1