SELLING AGENCY AGREEMENT between YOUNGEVITY INTERNATIONAL, INC. (the “Company”) and TRIPOINT GLOBAL EQUITIES, LLC (the “Selling Agent”) YOUNGEVITY INTERNATIONAL, INC. Maximum: [ ● ] Shares of Series B Convertible Preferred Stock Convertible into [ ● ]...
Exhibit 1.3
between
YOUNGEVITY INTERNATIONAL, INC. (the
“Company”)
and
TRIPOINT GLOBAL EQUITIES, LLC (the “Selling
Agent”)
Maximum: [ ● ] Shares of Series B Convertible Preferred
Stock
Convertible into [ ● ] Shares of Common Stock
[ ], 2018
Tripoint
Global Equities, LLC
0000
Xxxxxxxx, Xxxxx 00
Xxx
Xxxx, Xxx Xxxx 00000
Ladies
and Gentlemen:
This
agreement (the “Agreement”) constitutes the agreement
between Youngevity International, Inc., a Delaware corporation (the
“Company”), on the one hand, and TriPoint Global
Equities, LLC and its online division, Banq®, as Selling Agent
(collectively, the “Selling Agent”), on the other hand,
pursuant to which the Selling Agent shall serve as agent for the
Company in connection with the proposed Offering (the
“Offering”) on a “best efforts” basis of up
to a maximum offering amount of $10,000,000 of registered shares of
Series B Convertible Preferred Stock (the “Preferred
Stock”), convertible into common stock of the Company, par
value $0.001 per share (the “Common Stock”, together
with the Preferred Stock, the “Securities”) to various
investors (each an “Investor” and collectively, the
“Investors”).
The
Company hereby confirms its agreement with the Selling Agent
concerning the purchase and sale of the Shares, as
follows:
Section
1. Agreement
to Act as Selling Agent.
(a) On
the basis of the representations, warranties and agreements of the
Company herein contained, and subject to all the terms and
conditions of this Agreement, the Selling Agent shall be the
exclusive Selling Agent in connection with the Offering, which
shall be undertaken pursuant to the Company’s Registration
Statement (as defined below), with the terms of such Offering to be
subject to market conditions and negotiations between the Company
and the Selling Agent. The Selling Agent will act on a best efforts
basis and the Company agrees and acknowledges that there is no
guarantee of the successful sale of the Securities, or any portion
thereof, in the prospective Offering. Under no circumstances will
the Selling Agent or any of its respective “Affiliates”
(as defined below) be obligated to financially underwrite or
purchase any of the Securities for its own account or otherwise
provide any financing. The Selling Agent shall act solely as the
Company’s agent and not as principal. The Selling Agent shall
have no authority to bind the Company with respect to any
prospective offer to purchase Securities and the Company shall have
the sole right to accept offers to purchase Securities and may
reject any such offer, in whole or in part. Subject to the
Company’s written consent, which consent shall not be
unreasonably withheld, conditioned, or delayed, the Selling Agent
may (i) create a selling syndicate of additional Selling Agents for
the Offering comprised of broker-dealers who are members of the
Financial Industry Regulatory Authority, Inc. (“FINRA”)
and/or (ii) rely on such soliciting dealers who are FINRA members
to participate in placing a portion of the Offering. The Selling
Agent may also retain other brokers or dealers to act as sub-agents
or selected dealers on their behalf in connection with the
Offering. Subject to the terms and conditions hereof, payment of
the purchase price for, and delivery of, the Securities shall be
made at each closing (the “Closing” and the date on
which each Closing occurs, the “Closing Date”). As
compensation for services rendered, on the Closing Date, the
Company shall pay to the Selling Agent the fees and expenses set
forth below:
(i) Selling
Agent’s Commissions. The Selling Agent’s
commission in cash (the “Cash Fee”) equal to 4% of the
gross proceeds received by the Company from the sale of the
Securities at the Closing, which such Cash Fee will be paid to and
allocated by the Selling Agent among the selling syndicate and
soliciting dealers in its sole discretion, if
applicable.
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(ii) Selling
Agent’s Warrants. On each Closing, the Company will
issue to the Selling Agent (and/or its designee) warrants to
purchase that number of shares of Common Stock equal to five
percent (5%) of the shares of Common Stock underlying the Preferred
Stock issued and sold by the Company on such Closing at Closing and
each Subsequent Closing (adjusted upward to the nearest whole
share) (the “Selling Agent’s Warrants”). The
Selling Agent’s Warrants shall be in the form of Exhibit A
attached hereto. The Selling Agent’s Warrants shall have an
exercise price per share equal to one hundred twenty percent (120%)
of the price per Share as shown on the cover page of the Final
Prospectus (as defined below). The Selling Agent’s Warrants
will be exercisable for a term of five years beginning on the
Effective Date (as defined below). The Selling Agent understands
and agrees that there are significant restrictions pursuant to
Financial Industry Regulatory Authority (“FINRA”) Rule
5110 against transferring the Selling Agent’s Warrants 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 Selling Agent’s Warrants, 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 (i) a
selling agent or Dealer in connection with the offering
contemplated hereby or (ii) a bona fide officer or partner of the
Selling Agent or of any Selling Agent or Dealer; and only if any
such transferee agrees to the foregoing lock-up
restrictions.
Delivery of the
Selling Agent’s Warrant Agreement shall be made on the
Closing Date and shall be issued in the name or names and in such
authorized denominations as the Selling Agent may
request.
(iii) Expenses.
Whether or not the transactions contemplated by this Agreement and
the Registration Statement are consummated or this Agreement is
terminated, the Company hereby agrees to pay all costs and expenses
incident to the Offering, including the following:
A.
all
fees and disbursements of the
Company’s legal counsel, accountants, and other professionals
engaged by the Company;
B.
all fees and expenses incurred in the production of
Offering documents, including design, printing, photograph, and
written material procurement costs;
C.
all
filing fees, including those charged by FINRA;
D.
all reasonable
travel expenses of the Company's officers, directors and employees
and any other expense of the Company or the Selling Agent incurred
in connection with attending or hosting meetings with prospective
purchasers of the Securities (“Road Show Expenses”);
provided,
however, that all
travel and lodging expenses of the Selling Agent should be limited
to $10,000 and shall be pre-approved by the Company;
E.
a $20,000 due diligence
fee payable to the Selling Agent, with $20,000 paid upon the
execution of the engagement agreement, which will be reimburse to
us to the extent not actually incurred by the Selling Agent;
and
F.
Selling Agent's
Counsel's fees up to $45,000 (the “Legal
Fees”).
In the
event that this Agreement is terminated pursuant to Section 9
hereof, or subsequent to a Material Adverse Change, the Company
will pay all documented out-of-pocket expenses of the Selling Agent
(including but not limited to fees and disbursements of Selling
Agent's Counsel, expenses associated with a due diligence report
and reasonable travel) incurred in connection herewith which shall
be limited to expenses which are actually incurred as allowed under
FINRA Rule 5110 and in any event, the aggregate amount of such
expenses to be reimbursed by the Company shall not exceed
$20,000.
(b) The
term of the Selling Agent’s exclusive engagement will be
until the closing of the Offering in accordance with the
Registration Statement (the “Exclusive Term”);
provided,
however, that a
party hereto may terminate the engagement with respect to itself at
any time upon 15 days written notice to the other party, or as
practical as possible. Notwithstanding anything to the contrary
contained herein, the provisions concerning confidentiality,
indemnification and contribution contained herein will survive any
expiration or termination of this Agreement, and the
Company’s obligation to pay fees actually earned and payable
and to reimburse expenses actually incurred and reimbursable
pursuant to Section 1 hereof and which are permitted to be
reimbursed under FINRA Rule 5110(f)(2)(D), will survive any
expiration or termination of this Agreement. Nothing in this
Agreement shall be construed to limit the ability of the Selling
Agent or their respective Affiliates to pursue, investigate,
analyze, invest in, or engage in investment banking, financial
advisory or any other business relationship with Persons (as
defined below) other than the Company. As used herein (i)
“Persons” 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 and (ii) “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 of 1933, as amended (the “Securities
Act”).
-2-
Section
2. Representations,
Warranties and Covenants of the Company. The Company hereby
represents, warrants and covenants to the Selling Agent, as of the
date hereof, and as of the Closing Date, except as set out in the
Registration Statement as follows:
(a) Securities
Law Filings. On December 1, 2017, the Company filed with the
Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-1 (Registration File No.
333-221847) under the Securities Act and the rules and regulations
(the “Rules and Regulations”) of the Commission
promulgated thereunder. At the time of the Effective Date, the
registration statement and amendments will materially meet the
requirements of Form S-1 under the Securities Act. The Company will
file with the Commission pursuant to Rules 430A and 424(b) under
the Securities Act, a final prospectus included in such
registration statement relating to the Offering and the plan of
distribution thereof and has advised the Selling Agent of all
further information (financial and other) with respect to the
Company required to be set forth therein. Such registration
statement, including the exhibits thereto, as amended at the date
of this Agreement, is hereinafter called the “Registration
Statement”; such prospectus in the form in which it appears
in the Registration Statement as amended at the date of this
Agreement is hereinafter called the “Prospectus.” All
references in this Agreement to financial statements and schedules
and other information that is “contained,”
“included,” “described,”
“referenced,” “set forth” or
“stated” in the Registration Statement or the
Prospectus (and all other references of like import) shall be
deemed to mean and include all such financial statements and
schedules and other information that is or is deemed to be
incorporated by reference in the Registration Statement or the
Prospectus, as the case may be. The Registration Statement has been
declared effective by the Commission on the date hereof. The
Company shall, prior to the Closing, file with the Commission a
Form 8-A providing for the registration under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”),
of the Securities.
(b) Assurances.
The Registration Statement (and any further documents to be filed
with the Commission) contains all exhibits and schedules as
required by the Securities Act. Each of the Registration Statement
and any post-effective amendment thereto, at the time it became
effective, at all other subsequent times until the Closing and at
the Closing Date, complied in all material respects with the
Securities Act and the applicable Rules and Regulations and did not
and, as amended or supplemented, if applicable, will not, contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading (provided, however, that the preceding
representations and warranties contained in this sentence shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by
the Selling Agent expressly for use therein (the “Selling
Agent Information”)). The Prospectus, as of its date,
complies in all material respects with the Securities Act and the
applicable Rules and Regulations. As of its date, the Prospectus
did not and will not contain as of the date thereof any 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 the
preceding representations and warranties contained in this sentence
shall not apply to any Selling Agent Information). All
post-effective amendments to the Registration Statement reflecting
facts or events arising after the date thereof which represent,
individually or in the aggregate, a fundamental change in the
information set forth therein have been so filed with the
Commission. There are no documents required to be filed with the
Commission in connection with the transaction contemplated hereby
that (x) have not been filed as required pursuant to the Securities
Act or (y) will not be filed within the requisite time period.
There are no contracts or other documents required to be described
in the Prospectus or filed as exhibits or schedules to the
Registration Statement that have not been described or filed as
required.
(c) Offering
Materials. The Company has delivered, or will as promptly as
practicable deliver, to the Selling Agent complete conformed copies
of the Registration Statement and of each consent and certificate
of experts, as applicable, filed as a part thereof, and conformed
copies of the Registration Statement (without exhibits) and the
Prospectus, as amended or supplemented, in such quantities and at
such places as the Selling Agent reasonably request. Neither the
Company nor any of its directors and officers has distributed and
none of them will distribute, prior to the Closing Date, any
offering material in connection with the offering and sale of the
Securities other than the Prospectus, the Registration Statement,
and any other materials permitted by the Securities
Act.
(d) Subsidiaries.
All of the direct and indirect subsidiaries of the Company (the
“Subsidiaries”) are described in the Registration
Statement to the extent necessary. Except as described in the
Registration Statement and the Prospectus, the Company owns,
directly or indirectly, all of its capital stock or other equity
interests of each Subsidiary free and clear of any liens, charges,
security interests, encumbrances, rights of first refusal,
preemptive rights or other restrictions (collectively,
“Liens”), and all of the issued and outstanding shares
of capital stock of each Subsidiary are validly issued and are
fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities.
-3-
(e) Organization
and Qualification. The Company and each of the Subsidiaries
is an entity duly incorporated or otherwise organized, validly
existing and in good standing (where applicable) under the laws of
the jurisdiction of its incorporation or organization, with the
requisite power and authority to own and use its properties and
assets and to carry on its business as currently conducted. Neither
the Company nor any Subsidiary is in violation or default of any of
the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.
Each of the Company and the Subsidiaries is duly qualified to
conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not reasonably be expected to
result in: (i) a material adverse effect on the legality, validity
or enforceability of this Agreement or any other agreement entered
into between the Company and the Investors, (ii) a material adverse
effect on the results of operations, assets, business, prospects
(as such prospects are described in the Prospectus) or condition
(financial or otherwise) of the Company and the Subsidiaries, taken
as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a
timely basis its obligations under this Agreement or the Offering
(any of (i), (ii) or (iii), a “Material Adverse
Effect”) and to the best knowledge of the Company, no action,
claim, suit, investigation or proceeding (including, without
limitation, an informal investigation or partial proceeding, such
as a deposition), whether commenced or threatened
(“Proceeding”) has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke,
limit or curtail such power and authority or
qualification.
(f) Authorization;
Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions
contemplated by this Agreement and the Offering and otherwise to
carry out its obligations hereunder and thereunder. The execution
and delivery of this Agreement by the Company and the consummation
by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Company and
no further action is required by the Company, the Company’s
Board of Directors (the “Board of Directors”) or the
Company’s shareholders in connection therewith other than in
connection with the Required Approvals (as defined below). This
Agreement has been duly executed by the Company and, when delivered
in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company
in accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(g) No
Conflicts. The execution, delivery and performance by the
Company of this Agreement and the transactions contemplated hereby
do not and will not (i) conflict with or violate any provision of
the Company’s or any Subsidiary’s certificate or
articles of incorporation, bylaws or other organizational or
charter documents, or (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become
a default) under, result in the creation of any Lien upon any of
the properties or assets of the Company or any Subsidiary, or give
to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or
by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the
case of each of clauses (ii) and (iii), such conflict, default or
violation could not reasonably be expected to result in a Material
Adverse Effect.
(h) Filings,
Consents and Approvals. The Company is not required to
obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or
other Person in connection with the execution, delivery and
performance by the Company of this Agreement and the transactions
contemplated hereby, other than: (i) the filing with the Commission
of the final Prospectus as required by Rule 424 under the
Securities Act, (ii) any filing required to be filed with, or
consent to be provided by, the Nasdaq Capital Market (the
“Trading Market”) for the listing of the Securities for
trading thereon in the time and manner required thereby and (iii)
such filings as are required to be made under applicable state
securities laws (collectively, the “Required
Approvals”).
-4-
(i) Issuance
of the Securities; Registration. The Securities are duly
authorized and, when issued and paid for in accordance with this
Agreement and the terms of the Offering as described in the
Prospectus, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company.
The Company has sufficient authorized Common Stock for the issuance
of the maximum number of Securities issuable pursuant to the
Offering as described in the Prospectus.
(j) Capitalization.
The capitalization of the Company is as set forth in the
Prospectus. Except for those disclosed in the Registration
Statement, the Company has not issued any capital stock since the
date of filing of its latest periodic report pursuant to Section
13(a) or 15(d) of the Exchange Act. No Person has any right of
first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by
this Agreement and the transactions contemplated pursuant to the
Prospectus. Except as disclosed in the Registration Statement and
the Prospectus, if applicable, there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares
of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock or Common
Stock Equivalents. Except as set forth in the Registration
Statement and the Prospectus, the issuance and sale of the
Securities will not obligate the Company to issue shares of Common
Stock or other securities to any Person (other than the Investors
and the Selling Agent) and will not result in a right of any holder
of Company securities to adjust the exercise, conversion, exchange
or reset price under any of such securities. All of the outstanding
Common Stock of the Company are validly issued, fully paid and
nonassessable, have been issued in compliance with the laws of the
State of Delaware, and none of such outstanding shares was issued
in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. No further approval or
authorization of any shareholder or the Board of Directors of the
Company or others is required for the issuance and sale of the
Securities. Except as disclosed in the Registration Statement,
there are no shareholders agreements, voting agreements or other
similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the
Company, between or among any of the Company’s
shareholders.
(k) Material
Changes; Undisclosed Events, Liabilities or Developments.
Since the date of the latest financial statements included within
the Registration Statement, except as specifically disclosed in the
Registration Statement and the Prospectus, (i) there has been no
event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the
Company’s financial statements pursuant to GAAP or disclosed
in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared
or made any dividend or distribution of cash or other property to
its shareholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its Common Stock and (v) the
Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the
Commission any request for confidential treatment of information.
Except for the issuance of the Securities contemplated by the
Prospectus or disclosed in the Registration Statement or the
Prospectus, no event, liability, fact, circumstance, occurrence or
development has occurred or exists or is reasonably expected to
occur or exist with respect to the Company or its Subsidiaries or
their respective business, prospects (as such prospects are
described in the Prospectus), properties, operations, assets or
financial condition that would be required to be disclosed by the
Company under applicable securities laws at the time this
representation is made or deemed made that has not been publicly
disclosed at least 1 trading day prior to the date that this
representation is made.
(l) Litigation.
Except as disclosed in the Registration Statement, there is no
action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an
“Action”) which (i) adversely affects or challenges the
legality, validity or enforceability of any of this Agreement and
the Offering or the Securities or (ii) could, if there were an
unfavorable decision, reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any Subsidiary,
nor any director or officer thereof, is or has within the last 10
years been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim
of breach of fiduciary duty. There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any
current or former director or officer of the Company. To the
Company’s knowledge, the Commission has not issued any stop
order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under
the Exchange Act or the Securities Act.
-5-
(m) Labor
Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the
employees of the Company, which could reasonably be expected to
result in a Material Adverse Effect. None of the Company’s or
its Subsidiaries’ employees is a member of a union that
relates to such employee’s relationship with the Company or
such Subsidiary, and neither the Company nor any of its
Subsidiaries is a party to a collective bargaining agreement, and
the Company and its Subsidiaries believe that their relationships
with their employees are good. No executive officer, to the
knowledge of the Company, is, or is now expected to be, in
violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or
any restrictive covenant in favor of any third party, and the
continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability
with respect to any of the foregoing matters. The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local
and foreign laws and regulations relating to employment and
employment practices, terms and conditions of employment and wages
and hours, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(n) Compliance.
Except as set forth in the Registration Statement or the
Prospectus, neither the Company nor any Subsidiary: (i) is in
default under or in violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both,
would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim
that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has
been waived), (ii) is in violation of any judgment, decree or order
of any court, arbitrator or governmental body or (iii) is or has
been in violation of any statute, rule, ordinance or regulation of
any governmental authority, including without limitation all
foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product
quality and safety and employment and labor matters, except in each
case as could not reasonably be expected to result in a Material
Adverse Effect.
(o) Regulatory
Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary
to conduct their respective businesses as described in the
Prospectus, except where the failure to possess such permits could
not reasonably be expected to result in a Material Adverse Effect
(“Material Permits”), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit.
(p) Title
to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by
them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for
Liens disclosed in the Prospectus, Liens as do not materially
affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the
Company and the Subsidiaries and Liens for the payment of federal,
state or other taxes, the payment of which is neither delinquent
nor subject to penalties. Any real property and facilities held
under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases with which the
Company and the Subsidiaries are in compliance.
(q) Patents
and Trademarks. The Company and the Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets,
inventions, copyrights, licenses and other intellectual property
rights and similar rights necessary or material for use in
connection with their respective businesses as described in the
Prospectus and which the failure to so have could have a Material
Adverse Effect (collectively, the “Intellectual Property
Rights”). Except for those disclosed in the Registration
Statement, neither the Company nor any Subsidiary has received a
notice (written or otherwise) that any of, the Intellectual
Property Rights has expired, terminated or been abandoned, or is
expected to expire or terminate or be abandoned, within two (2)
years from the date of this Agreement. Neither the Company nor any
Subsidiary has received, since the date of the latest audited
financial statements included within the Registration Statement, a
notice (written or otherwise) of a claim or otherwise has any
knowledge that the Intellectual Property Rights violate or infringe
upon the rights of any Person, except as would not have a Material
Adverse Effect. To the knowledge of the Company, all such
Intellectual Property Rights are enforceable and there is no
existing infringement by another Person of any of the Intellectual
Property Rights. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties,
except where failure to do so could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
-6-
(r) Insurance.
The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses
in which the Company and the Subsidiaries are engaged, including,
but not limited to, directors and officers insurance coverage.
Neither the Company nor any Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business
without a significant increase in cost.
(s) Transactions
with Affiliates and Employees. Except as set forth in the
Registration Statement and the Prospectus, none of the officers or
directors of the Company and, to the knowledge of the Company, none
of the employees of the Company is presently a party to any
transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of
the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director,
trustee or partner, in each case in excess of $120,000 other than
for (i) payment of salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company
and (iii) other employee benefits, including stock option
agreements under any stock option plan of the Company.
(t) Xxxxxxxx-Xxxxx;
Internal Accounting Controls. Except as set forth in the
Prospectus: (i) the Company is in compliance in all material
respects with any and all applicable requirements of the
Xxxxxxxx-Xxxxx Act of 2002 that are effective as of the date
hereof, and any and all applicable rules and regulations
promulgated by the Commission thereunder that are effective as of
the date hereof and as of the Closing Date; (ii) the Company and
the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that: (A) transactions
are executed in accordance with management’s general or
specific authorizations, (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (C) access to assets is
permitted only in accordance with management’s general or
specific authorization, and (D) the recorded accountability for
assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences;
and (iii) the Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls
and procedures to ensure that information required to be disclosed
by the Company in the reports it files or submits under the
Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission’s rules
and forms.
(u) Certain
Fees. Except as set forth herein and in the Prospectus,
contemplated by this Agreement, or a separate agreement regarding
the Offering with a soliciting dealer in the sole discretion of the
Selling Agent, no brokerage or finder’s fees or commissions
are or will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker,
bank or other Person with respect to the transactions contemplated
by this Agreement and the Offering. The Investors shall have no
obligation with respect to any fees or with respect to any claims
made by or on behalf of other Persons for fees of a type
contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement and the
Offering.
(v) Investment
Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not
be or be an Affiliate of, an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that
it will not become an “investment company” subject to
registration under the Investment Company Act of 1940, as
amended.
(w) Registration
Rights. Except as set forth in the Registration Statement or
the Prospectus, no Person has any right to cause the Company to
effect the registration under the Securities Act of any securities
of the Company.
(x) Listing
and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(b) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such
registration. The Company has not, in the 12 months preceding the
date hereof, received notice from any Trading Market on which the
Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance
requirements of such Trading Market.
-7-
(y) [Intentionally
Omitted].
(z) Disclosure.
All of the disclosure furnished by or on behalf of the Company to
the Investors regarding the Company, its business and the
transactions contemplated hereby is true and correct and does not
contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made,
not misleading. The press releases disseminated by the Company
during the twelve months preceding the date of this Agreement taken
as a whole do not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made and when made, not
misleading.
(aa) No
Integrated Offering. 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 this Offering of the Securities to be integrated with
prior offerings by the Company for purposes of any applicable
shareholder approval provisions of any Trading Market on which any
of the securities of the Company are listed or
designated.
(bb) Solvency.
The Company has no knowledge of any facts or circumstances which
lead it to believe that it will file for reorganization or
liquidation under the bankruptcy or reorganization laws of any
jurisdiction within one year from the Closing Date. The Prospectus
sets forth as of December 31, 2016 and September 30, 2017 all
outstanding secured and unsecured Indebtedness of the Company or
any Subsidiary, or for which the Company or any Subsidiary has
commitments. For the purposes of this Agreement,
“Indebtedness” means (x) any liabilities for borrowed
money or amounts owed in excess of $50,000 (other than trade
accounts payable incurred in the ordinary course of business), (y)
all guaranties, endorsements and other contingent obligations in
respect of indebtedness of others, whether or not the same are or
should be reflected in the Company’s balance sheet (or the
notes thereto), except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in
the ordinary course of business; and (z) the present value of any
lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP. Except as described in the
Prospectus, neither the Company nor any Subsidiary is in default
with respect to any Indebtedness.
(cc) Tax
Status. Except for matters that would not, individually or
in the aggregate, reasonably be expected to result in a Material
Adverse Effect, the Company and each Subsidiary (i) has made or
filed all United States federal and state income and all foreign
income and franchise tax returns, reports and declarations required
by any jurisdiction to which it is subject, (ii) has paid all taxes
and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and
declarations (other than those being contested) and (iii) has set
aside on its books provision reasonably adequate for the payment of
all material taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company or
of any Subsidiary know of no basis for any such claim.
(dd) Foreign
Corrupt Practices. Neither the Company, nor to the knowledge
of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii)
made any unlawful payment to foreign or domestic government
officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose
fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in
violation of law, or (iv) violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as
amended.
(ee) Accountants.
Xxxxx Xxxxxxx XxXxxx P.C., who have reported on the financial
statements and schedules described in Section 3(ee), are registered
independent public accountants with respect to the Company as
required by the Act and the Rules and Regulations and by the rules
of the Public Company Accounting Oversight Board. The financial
statements of the Company and the related notes and schedules
included in the Registration Statement, the Base Prospectus or the
Prospectus Supplement comply as to form in all material respects
with the requirements of the Act and the Rules and Regulations and
present fairly the information shown therein.
-8-
(ff) Regulation
M Compliance. The Company has not, and to its knowledge no
one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold,
bid for, purchased, or, paid any compensation for soliciting
purchases of, any of the Securities, or (iii) paid or agreed to pay
to any Person any compensation for soliciting another to purchase
any other securities of the Company, other than, in the case of
clauses (ii) and (iii), compensation paid to the Company’s
Selling Agent in connection with the placement of the
Securities.
(gg) Office
of Foreign Assets Control. Neither the Company nor, to the
Company’s knowledge, any director, officer, agent, employee
or affiliate of the Company is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of
the U.S. Treasury Department (“OFAC”).
(hh) U.S.
Real Property Holding Corporation. The Company is not and
has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company shall so certify upon Investor’s
request.
(ii) Bank
Holding Company Act. Neither the Company nor any of its
Subsidiaries is subject to the Bank Holding Company Act of 1956, as
amended (the “BHCA”) and to regulation by the Board of
Governors of the Federal Reserve System (the “Federal
Reserve”). Neither the Company nor any of its Subsidiaries
owns or controls, directly or indirectly, five percent (5%) or more
of the outstanding shares of any class of voting securities or
twenty-five percent (25%) or more of the total equity of a bank or
any entity that is subject to the BHCA and to regulation by the
Federal Reserve. Neither the Company nor any of its Subsidiaries
exercises a controlling influence over the management or policies
of a bank or any entity that is subject to the BHCA and to
regulation by the Federal Reserve.
(jj) Certificates.
Any certificate signed by an officer of the Company and delivered
to any of the Selling Agent or to counsel for any of the Selling
Agent shall be deemed to be a representation and warranty by the
Company to the Selling Agent as to the matters set forth
therein.
(kk) Reliance.
The Company acknowledges that the Selling Agent will rely upon the
accuracy and truthfulness of the foregoing representations and
warranties and hereby consents to such reliance.
(ll) 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 or the
Prospectus has been made or reaffirmed without a reasonable basis
or has been disclosed other than in good faith.
(mm) Statistical
or Market-Related Data. Any statistical, industry-related
and market-related data included or incorporated by reference in
the Registration Statement or the Prospectus, are based on or
derived from sources that the Company reasonably and in good faith
believes to be reliable and accurate, and such data agree with the
sources from which they are derived.
(nn) FINRA
Affiliations. Except as disclosed in the Prospectus, there
are no affiliations with any FINRA member firm among the
Company’s officers, directors or, to the knowledge of the
Company, any five percent (5%) or greater shareholder of the
Company.
(oo) No
Incorporation by Reference. No documents are incorporated by
reference in the Base Prospectus or the Prospectus Supplement
pursuant to Item 12 of Form S-1 which were filed under the Exchange
Act.
Section
3.
Delivery and
Payment.
(a)
On or after the
date of this Agreement, the Company, the Selling Agent and
Wilmington Trust (the “Escrow Agent”) will enter into
an Escrow Agreement substantially in the form included as an
exhibit to the Prospectus (the “Escrow Agreement”),
pursuant to which escrow accounts will be established, at the
Company’s expense, for the benefit of those Investors who do
not choose to invest through the Banq® online platform (the
“Escrow Accounts”).
-9-
(b)
Prior to the
initial Closing (as hereinafter defined) of the Offering and any
subsequent Closing, (i) each Investor will execute and deliver a
Purchaser Questionnaire and Subscription Agreement (each, an
“Investor Subscription Agreement”) to the Company and
the Company will make available to the Selling Agent and the Escrow
Agent copies of each such Investor Subscription Agreement; (ii)
each Investor will transfer to the Escrow Account funds in an
amount equal to the price per Share as shown on the cover page of
the Final Prospectus (as hereinafter defined multiplied by the
number of Securities subscribed by such Investor; (iii)
subscription funds received from any Investor will be promptly
transmitted to the Escrow Accounts in compliance with Rule 15c2-4
of the Exchange Act, and (iv) the Escrow Agent will notify the
Company and the Selling Agent in writing as to the balance of the
collected funds in the Escrow Accounts.
(c)
Notwithstanding the
foregoing Section 3(b), Investors that maintain an account with
Banq®, a division of the Selling Agent, may participate in the
Offering without depositing funds with the Escrow Agent, provided
such Investors maintain sufficient funds in their account with
Banq®. Investors who wish to participate in the Offering
through their account with Banq® will be asked to confirm
their respective investment immediately prior to Closing, at which
time each Investor will be required to have funds in its account
sufficient to fund the purchase of any Shares for which it
subscribes in the Offering. At Closing, any amounts subscribed for
will be removed from such Investor’s account and sent
immediately to the account of the Company less any Fees due to the
Selling Agent. Such funds will not be held in a separate escrow
account or otherwise segregated until such time as the Offering is
closed. In addition, selected dealers with clearing agreements
shall provide the Selling Agent with executed indications and
delivery sheets from their customers and shall settle the
transaction with the Selling Agent through DTC on
closing.
(d)
If the Escrow Agent
shall have received written notice from the Company and the Selling
Agent on or before [ ]:00 a.m., New York City time, on [_____],
2018, or at such other time(s) on such other date(s), not more than
thirty (30) days thereafter, as may be agreed upon by the Company
and the Selling Agent (each such date, a “Closing”),
the Escrow Agent will release the balance of the Escrow Accounts
for collection by the Company and the Selling Agent as provided in
the Escrow Agreement and the Company shall deliver the Shares
purchased on such Closing to the Investors, which delivery may be
made through the facilities of the Depository Trust Company
(“DTC”) or via book entry with the Company’s
securities registrar and transfer agent, Pacific Stock Transfer
Company (the “Transfer Agent”). The initial Closing and
any subsequent closing (each, a “Subsequent Closing”)
shall take place at the office of the Selling Agent or such other
location as the Selling Agent and the Company shall mutually agree.
All actions taken at the Closing shall be deemed to have occurred
simultaneously on the date of the Closing and all actions taken at
any Subsequent Closing shall be deemed to have occurred
simultaneously on the date of any such Subsequent
Closing.
(e)
If the Company and
the Selling Agent determine that the offering will not proceed,
then the Escrow Agent will promptly return the funds to the
investors without interest.
-10-
Section
4. Covenants
and Agreements of the Company. The Company further covenants
and agrees with the Selling Agent as follows:
(a) Registration
Statement Matters. The Registration Statement and any
amendments thereto have been declared effective, and if Rule 430A
is used or the filing of the Prospectus is otherwise required under
Rule 424(b), the Company will file the Prospectus (properly
completed if Rule 430A has been used) pursuant to Rule 424(b)
within the prescribed time period and will provide evidence
satisfactory to the Selling Agent of such timely filing. The
Company will advise the Selling Agent promptly after they receive
notice thereof of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement or
amendment to the Prospectus has been filed and will furnish the
Selling Agent with copies thereof. The Company will file promptly
all reports and any definitive proxy or information statements
required to be filed by the Company with the Commission pursuant to
Section 13(a), 14 or 15(d) of the Exchange Act subsequent to the
date of the Prospectus and for so long as the delivery of a
prospectus is required in connection with the Offering. The Company
will advise the Selling Agent, promptly after it receives notice
thereof (i) of any request by the Commission to amend the
Registration Statement or to amend or supplement the Prospectus or
for additional information, and (ii) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or
any order preventing or suspending the use of the Prospectus or any
amendment or supplement thereto or any post-effective amendment to
the Registration Statement, of the suspension of the qualification
of the Securities for offering or sale in any jurisdiction, of the
institution or threatened institution of any proceeding for any
such purpose, or of any request by the Commission for the amending
or supplementing of the Registration Statement or the Prospectus or
for additional information. The Company shall use its commercially
reasonable efforts to prevent the issuance of any such stop order
or prevention or suspension of such use. If the Commission shall
enter any such stop order or order or notice of prevention or
suspension at any time, the Company will use its commercially
reasonable efforts to obtain the lifting of such order at the
earliest possible moment, or will file a new registration statement
and use its best efforts to have such new registration statement
declared effective as soon as practicable. Additionally, the
Company agrees that it shall comply with the provisions of Rules
424(b), 430A, 430B and 430C, as applicable, under the Securities
Act, including with respect to the timely filing of documents
thereunder, and will use its reasonable efforts to confirm that any
filings made by the Company under such Rule 424(b) are received in
a timely manner by the Commission.
(b) [Intentionally
Omitted].
(c) Amendments
and Supplements to the Prospectus and Other Matters. The
Company will comply with the Securities Act and the Exchange Act,
and the rules and regulations of the Commission thereunder, so as
to permit the completion of the distribution of the Securities as
contemplated in this Agreement and the Prospectus. If during the
period in which a prospectus is required by law to be delivered in
connection with the distribution of Securities contemplated by the
Prospectus (the “Prospectus Delivery Period”), any
event shall occur as a result of which, in the judgment of the
Company or in the opinion of any of the Selling Agent or counsel
for any of the Selling Agent, it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein,
in the light of the circumstances under which they were made, as
the case may be, not misleading, or if it is necessary at any time
to amend or supplement the Prospectus to comply with any law, the
Company will promptly prepare and file with the Commission, and
furnish at its own expense to the Selling Agent and to dealers, an
appropriate amendment to the Registration Statement or supplement
to the Registration Statement or the Prospectus that is necessary
in order to make the statements in the Prospectus as so amended or
supplemented, in the light of the circumstances under which they
were made, as the case may be, not misleading, or so that the
Registration Statement or the Prospectus, as so amended or
supplemented, will comply with law. Before amending the
Registration Statement or supplementing the Prospectus in
connection with the Offering, the Company will furnish the Selling
Agent with a copy of such proposed amendment or supplement and will
not file any such amendment or supplement to which the Selling
Agent reasonably object.
(d) Copies
of any Amendments and Supplements to the Prospectus. The
Company will furnish the Selling Agent, without charge, during the
period beginning on the date hereof and ending on the Closing Date
of the Offering, as many copies of the Prospectus and any
amendments and supplements thereto as the Selling Agent may
reasonably request.
-11-
(e) Free
Writing Prospectus. The Company covenants that it will not,
unless it obtains the prior consent of the Selling Agent, make any
offer relating to the Securities that would constitute a Company
Free Writing Prospectus or that would otherwise constitute a
“free writing prospectus” (as defined in Rule 405 of
the Securities Act) required to be filed by the Company with the
Commission or retained by the Company under Rule 433 of the
Securities Act. In the event that the Selling Agent expressly
consent in writing to any such free writing prospectus (a
“Permitted Free Writing Prospectus”), the Company
covenants that it shall (i) treat each Permitted Free Writing
Prospectus as a Company Free Writing Prospectus, and (ii) comply
with the requirements of Rule 164 and 433 of the Securities Act
applicable to such Permitted Free Writing Prospectus, including in
respect of timely filing with the Commission, legending and record
keeping.
(f) Transfer
Agent. The Company will maintain, at its expense, a
registrar and transfer agent for the Common Stock for so long as
the Common Stock is publicly-traded.
(g) Earnings
Statement. As soon as practicable and in accordance with
applicable requirements under the Securities Act, but in any event
not later than 18 months after the last Closing Date, the Company
will make generally available to its security holders and to the
Selling Agent an earnings statement, covering a period of at least
12 consecutive months beginning after the last Closing Date, that
satisfies the provisions of Section 11(a) and Rule 158 under the
Securities Act.
(h) Periodic
Reporting Obligations. During the Prospectus Delivery
Period, the Company will duly file, on a timely basis, with the
Commission all reports and documents required to be filed under the
Exchange Act within the time periods and in the manner required by
the Exchange Act.
(i) Additional
Documents. The Company will enter into any subscription,
purchase or other customary agreements as the Selling Agent deem
necessary or appropriate to consummate the Offering, all of which
will be in form and substance reasonably acceptable to the Company
and the Selling Agent. The Company agrees that the Selling Agent
may rely upon, and each is a third party beneficiary of, the
representations and warranties set forth in any such purchase,
subscription or other agreement with Investors in the
Offering.
(j) No
Manipulation of Price. The Company will not take, directly
or indirectly, any action designed to cause or result in, or that
has constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any securities of the
Company.
(k) Acknowledgment.
The Company acknowledges that any advice given by any of the
Selling Agents to the Company is solely for the benefit and use of
the Board of Directors of the Company and may not be used,
reproduced, disseminated, quoted or referred to, without such
Selling Agent’s prior written consent.
Section
5. Conditions
of the Obligations of the Selling Agent. The obligations of
the Selling Agent hereunder shall be subject to the accuracy of the
representations and warranties on the part of the Company set forth
in Section 2 hereof, in each case as of the date hereof and as of
the Closing Date as though then made, to the timely performance by
each of the Company of its covenants and other obligations
hereunder on and as of such dates, and to each of the following
additional conditions:
-12-
(a) Accountants’
Comfort Letter. On the date hereof, the Selling Agent shall
have received, and the Company shall have caused to be delivered to
the Selling Agent, a letter from Xxxxx Xxxxxxx XxXxxx P.C., the
independent registered public accounting firm of the Company
(“Xxxxx”), addressed to the Selling Agent, dated as of
the date hereof, in form and substance satisfactory to the Selling
Agent. The letter shall not disclose any change in the condition
(financial or other), earnings, operations, business or prospects
of the Company from that set forth in the Prospectus, which, in the
Selling Agent’s sole judgment, is material and adverse and
that makes it, in the Selling Agent’s sole judgment,
impracticable or inadvisable to proceed with the Offering of the
Securities as contemplated by the Prospectus.
(b) Compliance
with Registration Requirements; No Stop Order; No Objection from
the FINRA. The Registration Statement shall have become
effective and all necessary regulatory and listing approvals shall
have been received not later than 5:30 P.M., New York City time, on
the date of this Agreement, or at such later time and date as shall
have been consented to in writing by the Selling Agent. The
Prospectus (in accordance with Rule 424(b)) and “free writing
prospectus” (as defined in Rule 405 of the Securities Act),
if any, shall have been duly filed with the Commission in a timely
fashion in accordance with the terms thereof. At or prior to the
Closing Date and the actual time of the Closing, no stop order
suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission;
no order preventing or suspending the use of the Prospectus shall
have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; no order having the
effect of ceasing or suspending the distribution of the Securities
or any other securities of the Company shall have been issued by
any securities commission, securities regulatory authority or stock
exchange and no proceedings for that purpose shall have been
instituted or shall be pending or, to the knowledge of the Company,
contemplated by any securities commission, securities regulatory
authority or stock exchange; all requests for additional
information on the part of the Commission shall have been complied
with; and the FINRA shall have raised no objection to the fairness
and reasonableness of the placement terms and
arrangements.
(c) Corporate
Proceedings. All corporate proceedings and other legal
matters in connection with this Agreement, the Registration
Statement and the Prospectus, and the registration, sale and
delivery of the Securities, shall have been completed or resolved
in a manner reasonably satisfactory to the Selling Agent’s
respective counsels, and such counsel shall have been furnished
with such papers and information as it may reasonably have
requested to enable such counsels to pass upon the matters referred
to in this Section 5.
(d) No
Material Adverse Effect. Subsequent to the execution and
delivery of this Agreement and prior to the Closing Date, in the
Selling Agent’s sole judgment after consultation with the
Company, there shall not have occurred any Material Adverse
Effect.
(e) Opinion
of Counsel for the Company. The Selling Agent shall have
received on the Closing Date the favorable opinions of Gracin &
Xxxxxx, LLP dated as of such Closing Date, including, without
limitation, a customary negative assurance letter, addressed to the
Selling Agent, in a form reasonably satisfactory to the Selling
Agent.
(f) Officers’
Certificate. The Selling Agent shall have received on the
Closing Date a certificate of the Company, dated as of such Closing
Date, signed by the Chief Executive Officer and Chief Financial
Officer of the Company, to the effect that, and the Selling Agent
shall be satisfied that, the signers of such certificate have
reviewed the Registration Statement and the Prospectus, and this
Agreement and to the further effect that:
(i) The
representations and warranties of the Company in this Agreement are
true and correct, as if made on and as of such Closing Date, and
the Company has in all material respects complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing
Date;
(ii) No
stop order suspending the effectiveness of the Registration
Statement or the use of the Prospectus has been issued and no
proceedings for that purpose have been instituted or are pending
or, to the Company’s knowledge, threatened under the
Securities Act; no order having the effect of ceasing or suspending
the distribution of the Securities or any other securities of the
Company has been issued by any securities commission, securities
regulatory authority or stock exchange in the United States and no
proceedings for that purpose have been instituted or are pending
or, to the knowledge of the Company, contemplated by any securities
commission, securities regulatory authority or stock exchange in
the United States;
-13-
(iii) When
the Registration Statement became effective, at the time of sale,
and at all times subsequent thereto up to the delivery of such
certificate, the Registration Statement, when it became effective,
contained all material information required to be included therein
by the Securities Act and the applicable rules and regulations of
the Commission thereunder, as the case may be, and in all material
respects conformed to the requirements of the Securities Act and
the applicable rules and regulations of the Commission thereunder,
as the case may be, and the Registration Statement, did not and
does not include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading (provided, however, that the preceding
representations and warranties contained in this paragraph (iii)
shall not apply to any statements or omissions made in reliance
upon and in conformity with the Selling Agent Information) and,
since the effective date of the Registration Statement, there has
occurred no event required by the Securities Act and the rules and
regulations of the Commission thereunder to be set forth in the
Registration Statement which has not been so set forth;
and
(iv) Subsequent
to the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been: (a)
any Material Adverse Effect; (b) any transaction that is material
to the Company and the Subsidiaries taken as a whole, except
transactions entered into in the ordinary course of business; (c)
any obligation, direct or contingent, that is material to the
Company and the Subsidiaries taken as a whole, incurred by the
Company or any Subsidiary, except obligations incurred in the
ordinary course of business; (d) any material change in the capital
stock (except changes thereto resulting from the exercise of
outstanding stock options or warrants or conversion of outstanding
indebtedness into shares of Common Stock) or outstanding
indebtedness of the Company or any Subsidiary (except for the
conversion of such indebtedness into shares of Common Stock); (e)
any dividend or distribution of any kind declared, paid or made on
the Common Stock of the Company; or (f) any loss or damage (whether
or not insured) to the property of the Company or any Subsidiary
which has been sustained or will have been sustained which has a
Material Adverse Effect.
(g) Bring-down
Comfort Letter. On the Closing Date, the Selling Agent shall
have received from Xxxxx, or such other independent registered
public accounting firm engaged by the Company at such time, a
letter dated as of such Closing Date, in form and substance
satisfactory to the Selling Agent, to the effect that they reaffirm
the statements made in the letter furnished pursuant to subsection
(a) of this Section 5, except that the specified date referred to
therein for the carrying out of procedures shall be no more than
three business days prior to such Closing Date.
(h) Stock
Exchange Listing. The Common Stock shall be registered under
the Exchange Act and shall be approved to be listed on the Trading
Market, and the Company shall not have taken any action designed to
terminate, or likely to have the effect of terminating, the
registration of the Common Stock under the Exchange Act or
delisting or suspending from trading the Common Stock from the
principal Trading Market, nor shall the Company have received any
information suggesting that the Commission or the principal Trading
Market is contemplating terminating such registration or
listing.
(i) Additional
Documents. On or before the Closing Date, the Selling Agent
and counsel for the Selling Agent shall have received such
customary information and documents as they may reasonably require
for the purposes of enabling them to pass upon the issuance and
sale of the Securities as contemplated herein, or in order to
evidence the accuracy of any of the representations and warranties,
or the satisfaction of any of the conditions or agreements, herein
contained. If any condition specified in this Section 5 is not
satisfied when and as required to be satisfied, this Agreement may
be terminated by the Selling Agent by notice to the Company at any
time on or prior to the Closing Date, which termination shall be
without liability on the part of any party to any other party,
except that Section 6 (Payment of Expenses), Section 7
(Indemnification and Contribution) and Section 8 (Representations
and Indemnities to Survive Delivery) shall at all times be
effective and shall survive such termination.
(j) Subsequent
to the execution and delivery of this Agreement or, if earlier, the
dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Prospectus
(exclusive of any supplement thereto), there shall not have been
any change in the capital stock or long-term debt of the Company
(other than as described in the Registration Statement or the
Prospectus) or any change or development involving a change,
whether or not arising from transactions in the ordinary course of
business, in the business, condition (financial or otherwise),
results of operations, shareholders' equity, properties or
prospects of the Company, taken as a whole, including but not
limited to the occurrence of any fire, flood, storm, explosion,
accident, act of war or terrorism or other calamity, the effect of
which, in any such case described above, is, in the sole reasonable
judgment of the Selling Agent, so material and adverse as to make
it impracticable or inadvisable to proceed with the sale of
Securities or Offering as contemplated hereby.
-14-
(k) Subsequent
to the execution and delivery of this Agreement and up to the
Closing Date, there shall not have occurred any of the following:
(i) a banking moratorium shall have been declared by federal or
state authorities or a material disruption has occurred in
commercial banking or securities settlement or clearance services
in the United States, (ii) the United States shall have become
engaged in hostilities in which it is not currently engaged, the
subject of an act of terrorism, there shall have been an escalation
in hostilities involving the United States, or there shall have
been a declaration of a national emergency or war by the United
States, or (iii) there shall have occurred any other calamity or
crisis or any change in general economic, political or financial
conditions in the United States or elsewhere, if the effect of any
such event in clause (ii) or (iii) makes it, in the sole judgment
of the Selling Agent, impracticable or inadvisable to proceed with
the sale or delivery of the Securities on the terms and in the
manner contemplated by the Prospectus.
(l) The
Selling Agent shall have received a lock-up agreement from each of
the Company's officers, directors, and greater than 5% holders of
Common Stock (each, a "Lock-Up Party"), duly executed by the
applicable Lock-Up Party, in each case in a form reasonably
acceptable to the Company and the Selling Agent.
(j) FINRA
shall have confirmed that it has not raised any objection with
respect to the fairness and reasonableness of the placement terms
and arrangements. In addition, the Company shall, if requested by
the Selling Agent, make or authorize the Selling Agent's Counsel to
make on the Company's behalf an Issuer Filing with the FINRA
Corporate Financing Department pursuant to FINRA Rule 5110 with
respect to the Registration Statement and pay all filing fees
required in connection therewith.
(k) No
action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any federal,
state or foreign governmental or regulatory authority that would,
as of the Closing Date, prevent the issuance or sale of the
Securities; and no injunction or order of any federal, state or
foreign court shall have been issued that would, as of the Closing
Date, prevent the issuance or sale of the Securities or materially
and adversely affect or potentially materially and adversely affect
the business or operations of the Company.
(l) The
Company and the Selling Agent shall have entered into an escrow
agreement with the Escrow Agent pursuant to which the Investors
shall deposit their subscription funds in an Escrow Account and the
Company and the Selling Agent shall authorize the disbursement of
the funds from the Escrow Account. The Company shall pay the
reasonable fees of the Escrow Agent.
(o) The
Company will enter into a customary subscription agreement with
Investors and will deliver any additional customary certificates or
documents as the Selling Agent deems necessary or appropriate to
consummate the Offering, all of which will be in form and substance
reasonably acceptable to the Selling Agent. The Company agrees that
the Selling Agent may rely upon, and is a third party beneficiary
of, the representations and warranties and applicable covenants set
forth in the purchase agreement with Investors.
If any
of the conditions specified in this Section 5 shall not have been
fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to
the Selling Agent or to Selling Agent's Counsel, pursuant to this
Section 5, shall not be reasonably satisfactory in form and
substance to the Selling Agent and to Selling Agent's counsel, all
obligations of the Selling Agent hereunder may be cancelled by the
Selling Agent at, or at any time prior to, the consummation of the
Offering. Notice of such cancellation shall be given to the Company
in writing or orally. Any such oral notice shall be confirmed
promptly thereafter in writing.
Section
6. [Intentionally
Omitted].
Section
7. Indemnification
and Contribution. The Company agrees to indemnify the
Selling Agent in accordance with the provisions of Schedule A
hereto, which is incorporated by reference herein and made a part
hereof.
Section
8. Representations
and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations, warranties and other
statements of the Company or any person controlling the Company, of
its officers, and of the Selling Agent set forth in or made
pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Selling
Agent, the Company, or any of its or their partners, officers or
directors or any controlling person, as the case may be, and will
survive delivery of and payment for the Securities sold hereunder
and any termination of this Agreement. A successor to the Selling
Agent, or to the Company, its directors or officers or any person
controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in
this Agreement.
-15-
Section
9. Termination.
(a)
This Agreement shall become effective upon the later of: (i)
receipt by the Selling Agent and the Company of notification of the
effectiveness of the Registration Statement or (ii) the execution
of this Agreement. The Selling Agent shall have the right to
terminate this Agreement at any time upon 15 days written notice to
the Company, or as practical as possible prior to the consummation
of the Closing if: (i) any domestic or international event or act
or occurrence has materially disrupted, or in the opinion of the
Selling Agent will in the immediate future materially disrupt, the
market for the Company's securities or securities in general; or
(ii) trading on the NASDAQ Capital Market has been suspended or
made subject to material limitations, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices for
securities have been required, on the NASDAQ Capital Market or by
order of the Commission, FINRA or any other governmental authority
having jurisdiction; or (iii) a banking moratorium has been
declared by any state or federal authority or any material
disruption in commercial banking or securities settlement or
clearance services has occurred; or (iv) (A) there has occurred any
outbreak or escalation of hostilities or acts of terrorism
involving the United States or there is a declaration of a national
emergency or war by the United States or (B) there has been any
other calamity or crisis or any change in political, financial or
economic conditions, if the effect of any such event in (A) or (B),
in the reasonable judgment of the Selling Agent, is so material and
adverse that such event makes it impracticable or inadvisable to
proceed with the offering, sale and delivery of the Firm Shares on
the terms and in the manner contemplated by the Prospectus. In
addition, this Agreement shall terminate on the earlier of (x) the
date at which $10,000,000 of Series B Preferred Stock has been
sold, or (y) March 31, 2018.
(b) Any
notice of termination pursuant to this Section 9 shall be in
writing.
(c) If
this Agreement shall be terminated pursuant to any of the
provisions hereof, or if the sale of the Securities provided for
herein is not consummated because any condition to the obligations
of the Selling Agent set forth herein is not satisfied or because
of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof,
the Company will, subject to demand by the Selling Agent, reimburse
the Selling Agent for only those out-of-pocket expenses (including
the reasonable fees and expenses of their counsel, and expenses
associated with a due diligence report), actually incurred by the
Selling Agent in connection herewith as allowed under FINRA Rule
5110, less any amounts previously paid by the
Company; provided,
however, that all such expenses, including the costs
and expenses set forth in Section 1(a)(iii) which were actually
paid, shall not exceed $20,000 in the aggregate.
Section
10. Notices.
All communications hereunder shall be in writing and shall be
mailed, hand delivered, delivered by reputable overnight courier
(i.e., Federal Express) or delivered by facsimile or e-mail
transmission to the parties hereto as follows:
If
to the Selling Agent, then to:
TriPoint Global
Equities, LLC
0000
Xxxxxxxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxx Xxxxxxxxx
With
a copy (which shall not constitute notice) to:
Xxxxxx
Xxxxxxx Xxxxxxx & Li LLC
0000
Xxxxxxxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxxx Xxxxxxx, Esq.
Fax
No.: (000) 000-0000
If
to the Company:
0000
Xxxxxxx Xxxx
Xxxxx
Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx
Xxxxxxx
With
a copy (which shall not constitute notice) to:
Gracin
& Xxxxxx, LLP
000
Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx
Xxxxxx, Esq.
Fax
No.: (000) 000-0000
Any
party hereto may change the address for receipt of communications
by giving written notice to the others.
-16-
Section
11. Successors.
This Agreement will inure to the benefit of and be binding upon the
parties hereto, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 7 hereof,
and to their respective successors, and personal Selling Agent, and
no other person will have any right or obligation
hereunder.
Section
12. Severability.
The provisions of this Agreement are severable and, in the event
that any court of competent jurisdiction shall determine that any
one or more of the provisions or part of the provisions contained
in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision
or part of a provision of this Agreement and such provision shall
be reformed and construed as if such invalid or illegal or
unenforceable provision, or part of such provision, had never been
contained herein, so that such provisions would be valid, legal and
enforceable to the maximum extent possible.
Section
13. Governing
Law Provisions. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York,
without giving effect to any of the conflicts of law principles
which would result in the application of the substantive law of
another jurisdiction. This Agreement shall not be interpreted or
construed with any presumption against the party causing this
Agreement and the other Transaction Documents to be
drafted.
Section
14. General
Provisions.
(a) This
Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be
executed in two or more counterparts, each one of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement may not be
amended or modified unless in writing by all of the parties hereto,
and no condition herein (express or implied) may be waived unless
waived in writing by each party whom the condition is meant to
benefit. Section headings herein are for the convenience of the
parties only and shall not affect the construction or
interpretation of this Agreement.
(b) The
Company acknowledges that in connection with the Offering of the
Securities: (i) the Selling Agent has acted at arm’s length,
are not agents of, and owe no fiduciary duties to the Company or
any other person, (ii) the Selling Agent owe the Company only those
duties and obligations set forth in this Agreement and (iii) the
Selling Agent may have interests that differ from those of the
Company. The Company waives to the full extent permitted by
applicable law any claims it may have against any of the Selling
Agent arising from an alleged breach of fiduciary duty in
connection with the offering of the Securities.
[The
remainder of this page has been intentionally left
blank.]
-17-
If the
foregoing is in accordance with your understanding of our
agreement, please sign below whereupon this instrument, along with
all counterparts hereof, shall become a binding agreement in
accordance with its terms.
|
|
Very
truly yours,
By:
Name:
Title:
|
The
foregoing Selling Agency Agreement is hereby confirmed and accepted
as of the date first above written.
|
|
TRIPOINT GLOBAL EQUITIES, LLC
By:
Name:
Xxxx Xxxxxxxxx
Title:
Chief Executive Officer
|
|
|
|
-18-
EXHIBIT A
Form of Selling Agent’s Warrant Agreement
Reference
is made to Exhibit 4.23 to the Registration Statement on Form S-1,
as amended (File Number 333-221847), of the Company, which is
incorporated by reference.
-19-
SCHEDULE
A – INDEMNIFICATION
The
Company hereby agrees to indemnify and hold the Selling Agent, any
selected dealers, sub-agents or other members of a syndicate formed
pursuant to Section 1(a) of the Agreement, each of their respective
officers, directors, principals, employees, affiliates, and
shareholders, and their respective successors and assigns, harmless
from and against any and all loss, claim, damage, liability,
deficiencies, actions, suits, proceedings and costs (including, but
not limited to, reasonable legal fees and other expenses and
reasonable disbursements incurred in connection with investigating,
preparing to defend or defending any action, suit or proceeding,
including any inquiry or investigation, commenced or threatened, or
any claim whatsoever, or in appearing or preparing for appearance
as witness in any proceeding, including any pretrial proceeding
such as a deposition) (collectively, “Losses”) arising
out of, based upon, or in any way related or attributed to, any
breach of a representation, warranty or covenant by the Company
contained in this Agreement. The Company will not, however, be
responsible for any Losses that have resulted from the Selling
Agent Information or the gross negligence or willful misconduct of
any Selling Agent individual or entity seeking indemnification or
contribution hereunder.
The
Selling Agent hereby agrees to indemnify and hold the Company, its
officers, directors, principals, employees, affiliates, and
shareholders, and their respective successors and assigns, harmless
from and against any and all Losses arising out of, based upon, or
in any way related or attributed to, any breach of a
representation, warranty or covenant by the Selling Agent contained
in this Agreement or based upon any Selling Agent Information. The
Selling Agent will not, however, be responsible for any Losses that
have resulted from the gross negligence or willful misconduct of
any individual or entity representing the Company seeking
indemnification or contribution hereunder. In no event shall the
Selling Agent indemnify the Company for any amount in excess of the
fees actually received by such Selling Agent pursuant to the terms
of this Agreement.
If the
Selling Agent or the Company receives written notice of the
commencement of any legal action, suit or proceeding with respect
to which the Selling Agent or the Company is or may be obligated to
provide indemnification pursuant to this Schedule A, the Selling
Agent or the Company, as applicable, shall, within thirty (30) days
of the receipt of such written notice, give the Selling Agent or
the Company, as the case may be, written notice thereof (a
“Claim Notice”). Failure to give such Claim Notice
within such thirty (30) day period shall not constitute a waiver by
the party seeking indemnification (the “Indemnified
Party”), as applicable, of its respective right to indemnity
hereunder with respect to such action, suit or proceeding. Upon
receipt of a Claim Notice from the Indemnified Party with respect
to any claim for indemnification which is based upon a claim made
by a third party (“Third Party Claim”), the Selling
Agent or Company may assume the defense of the Third Party Claim
with counsel of its own choosing, as described below. The Selling
Agent or the Company, as applicable, shall cooperate in the defense
of the Third Party Claim and shall furnish such records,
information and testimony and attend all such conferences,
discovery proceedings, hearings, trial and appeals as may be
reasonably required in connection therewith. The Selling Agent or
the Company, as applicable, shall have the right to employ its own
counsel in any such action, which shall be at the Selling
Agent’s or Company’s expense and which will be for one
counsel only if: (i) the Company and the Selling Agent, as
applicable, shall have mutually agreed in writing to the retention
of such counsel, (ii) the Selling Agent or the Company, as the case
may be, shall have failed in a timely manner to assume the defense
and employ counsel or experts reasonably satisfactory to the
Selling Agent or the Company, as applicable, in such litigation or
proceeding or (iii) the named parties to any such litigation or
proceeding (including any impleaded parties) include the Company
and the Selling Agent, as applicable, and representation of the
Company and the Selling Agent, as applicable, by the same counsel
or experts would, in the reasonable opinion of the Selling Agent or
the Company, as applicable, be inappropriate due to actual or
potential differing interests between the Company and the Selling
Agent, as applicable. The Selling Agent and the Company, as the
case may be, shall not satisfy or settle any Third Party Claim for
which indemnification has been sought and is available hereunder,
without the prior written consent of the other party, which consent
shall not be delayed and which shall not be required if the Selling
Agent, is granted a general release in connection therewith. The
indemnification provisions hereunder shall survive the termination
or expiration of this Agreement.
The
Selling Agent or Company, as applicable, further agrees, upon
demand by the Indemnified Party, to promptly reimburse the
Indemnified Party for, or pay, any reasonable fees, expenses or
disbursements as to which the Indemnified Party has been
indemnified herein with such reimbursement to be made currently as
such fees, expenses or disbursements are incurred by the
Indemnified Party, as applicable. Notwithstanding the provisions of
the aforementioned indemnification, any such reimbursement or
payment by the Selling Agent or the Company of fees, expenses, or
disbursements incurred by the Indemnified Party shall be repaid by
the Indemnified Party, as applicable, in the event of any
proceeding in which a final judgment (after all appeals or the
expiration of time to appeal) is entered in a court of competent
jurisdiction against the Indemnified Party based solely upon their
respective gross negligence or intentional misconduct in the
performance of their respective duties hereunder, and provided further, that the Selling Agent
or the Company, as applicable, shall not be required to make
reimbursement or payment for any settlement effected without the
other party’s prior written consent (which consent shall not
be unreasonably withheld or delayed).
If for
any reason the foregoing indemnification is unavailable or is
insufficient to hold any of the Indemnified Party’s harmless,
the Selling Agent or Company, as the case may be, agrees to
contribute the amount paid or payable by any Selling Agent or the
Company, as the case may be, in such proportion as to reflect not
only the relative benefits received by the Company, on the one
hand, and the applicable Selling Agent, on the other hand, but also
the relative fault of the Company and any of the Selling Agent as
well as any relevant equitable considerations. In no event shall
any Selling Agent contribute in excess of the fees actually
received by it pursuant to the terms of this
Agreement.
For
purposes of this Agreement, each officer, director, shareholder,
and employee or affiliate of any Selling Agent or the Company and
each person, if any, who controls a Selling Agent or the Company
(or any affiliate) within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, shall have the
same rights as a Selling Agent or the Company with respect to
matters of indemnification by the Selling Agent or Company, as the
case may be, hereunder
-20-
