3,125,000 Shares of Common Stock and Warrants to Purchase up to 2,343,750 Shares of Common Stock CEREPLAST, INC. Common Stock (par value $0.001) PLACEMENT AGENT AGREEMENT
Exhibit 1.1
3,125,000 Shares of Common Stock
and
Warrants to Purchase up to 2,343,750 Shares of Common Stock
CEREPLAST, INC.
Common Stock (par value $0.001)
Common Stock (par value $0.001)
PLACEMENT AGENT AGREEMENT
November 10, 2011
LAZARD CAPITAL MARKETS LLC
ARDOUR CAPITAL INVESTMENTS, LLC
c/o Lazard Capital Markets LLC
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
ARDOUR CAPITAL INVESTMENTS, LLC
c/o Lazard Capital Markets LLC
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. Introduction. Cereplast, Inc., a Nevada corporation (the “Company”),
proposes to issue and sell to the purchasers, pursuant to the terms and conditions of this
Placement Agent Agreement (this “Agreement”) and the Subscription Agreements in the form of
Exhibit A attached hereto (the “Subscription Agreements”) entered into with the purchasers
identified therein (each a “Purchaser” and, collectively, the “Purchasers”), up to an aggregate of
3,125,000 units (the “Units”), with each Unit consisting of (i) one share of common stock (each a
"Share”), $0.001 par value per share (the “Common Stock”) of the Company and (ii) one warrant to
purchase 0.75 of a share of Common Stock (each a “Warrant,” and collectively, the “Warrants”).
Units will not be issued or certificated. The Shares and Warrants are immediately separable and
will be issued separately. The terms and conditions of the Warrants are set forth in Exhibit
B attached hereto. The Company hereby confirms that Lazard Capital Markets LLC (“LCM” or the
"Representative”) and Ardour Capital Investments, LLC (“Ardour”, and, together with LCM, “Placement
Agents”) acted as the Placement Agents for the offering and sale of the Units in accordance with
the terms and conditions hereof.
The shares of Common Stock issuable upon exercise of the Warrants are referred to herein as
the “Warrant Shares” and, together with the Units, the Shares and the Warrants are collectively
referred to herein as the “Securities.”
2. Agreement to Act as Placement Agents; Placement of Securities. 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:
2.1
The Company has authorized and hereby acknowledges that the Placement Agents have acted
as its exclusive agents to solicit offers for the purchase of all or part of the Units from
the Company in connection with the proposed offering of the Units (the “Offering”). Until
the Closing Date (as defined in Section 4 hereof), the Company shall not, without
the prior written consent of the Representative, solicit or accept offers to purchase any
Securities otherwise than through the Placement Agents. LCM may utilize
the expertise of Lazard Frères & Co. LLC in connection with its placement agent
activities.
2.2 The Company hereby acknowledges that the Placement Agents, as agents of the
Company, used their reasonable best efforts to solicit offers to purchase the Units from the
Company on the terms and subject to the conditions set forth in the Prospectus (as defined
below). The Placement Agents shall use commercially reasonable efforts to assist the Company
in obtaining performance by each Purchaser whose offer to purchase Units was solicited by
the Placement Agents and accepted by the Company, but the Placement Agents shall not, except
as otherwise provided in this Agreement, be obligated to disclose the identity of any
potential purchaser or have any liability to the Company in the event any such purchase is
not consummated for any reason. Under no circumstances will the Placement Agents be
obligated to underwrite or purchase any Units for their respective accounts and, in
soliciting purchases of Units, each Placement Agent acted solely as the Company’s agent and
not as a principal. Notwithstanding the foregoing and except as otherwise provided in
Section 2.3, it is understood and agreed that the Placement Agents (or their
affiliates) may, solely at their discretion and without any obligation to do so, purchase
Units from the Company as principals.
2.3 Subject to the provisions of this Section 2, offers for the purchase of
Units were solicited by the Placement Agents as agents for the Company at such times and in
such amounts as the Placement Agents deemed advisable. Each Placement Agent communicated to
the Company, orally or in writing, each reasonable offer to purchase the Units received by
it as agent of the Company. The Company shall have the sole right to accept offers to
purchase the Units and may reject any such offer, in whole or in part. Each Placement Agent
has the right, in its discretion reasonably exercised, without notice to the Company, to
reject any offer to purchase any of the Units received by it, in whole or in part, and any
such rejection shall not be deemed a breach of this Agreement.
2.4 The
Units are being sold to the Purchasers at a purchase price of $1.60 per Unit.
The purchases of the Units by the Purchasers shall be evidenced by the execution of the
Subscription Agreements by each of the Purchasers and the Company.
2.5 As compensation for services rendered, on the Closing Date (as defined in
Section 4 hereof), the Company shall pay to the Representative on behalf of the
Placement Agents, by wire transfer of immediately available funds to an account or accounts
designated by the Representative, an aggregate amount (the “Placement Fee”) equal to seven
and one-half percent (7.5%) of the gross proceeds received by the Company from the sale of
the Units on the Closing Date.
2.6 No Units which the Company has agreed to sell pursuant to this Agreement and the
Subscription Agreements shall be deemed to have been purchased and paid for, or sold by the
Company, until the Securities included in each Unit shall have been delivered to the
Purchaser thereof against payment by such Purchaser. If the Company shall default in its
obligations to deliver any Securities included in the Units to a Purchaser whose offer it
has accepted, the Company shall indemnify and hold the Placement Agents harmless against any
loss, claim, damage or expense arising from or as
a result of such default by the Company in accordance with the procedures set forth in
Section 8(c) herein.
3. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the Placement Agents and the Purchasers that:
(a) The Company has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and published rules and
regulations thereunder (the “Rules and Regulations”) adopted by the Securities and Exchange
Commission (the “Commission”) a “shelf” Registration Statement (as hereinafter defined) on
Form S-3 (File No. 333-166307), which became effective as of May 26, 2010 (the “Effective
Date”), including a base prospectus relating to the securities registered pursuant to the
Registration Statement (the “Base Prospectus”), and such amendments and supplements thereto
as may have been required to the date of this Agreement. The term “Registration Statement”
as used in this Agreement means the registration statement (including all exhibits,
financial schedules and all documents and information deemed to be a part of the
Registration Statement pursuant to Rule 430A of the Rules and Regulations), as amended
and/or supplemented to the date of this Agreement, including the Base Prospectus. The
Registration Statement is effective under the Securities Act and no stop order preventing or
suspending the effectiveness of the Registration Statement or suspending or preventing the
use of the Prospectus has been issued by the Commission and no proceedings for that purpose
have been instituted or, to the knowledge of the Company, are threatened by the Commission.
The Company, if required by the Rules and Regulations of the Commission, will file the
Prospectus (as defined below), with the Commission pursuant to Rule 424(b) of the Rules and
Regulations. The term “Prospectus” as used in this Agreement means the prospectus, in the
form in which it is to be filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations, or, if the prospectus is not to be filed with the Commission pursuant to Rule
424(b), the prospectus in the form included as part of the Registration Statement as of the
Effective Date, except that if any revised prospectus or prospectus supplement shall be
provided to the Placement Agents by the Company for use in connection with the Offering
which differs from the Prospectus (whether or not such revised prospectus or prospectus
supplement is required to be filed by the Company pursuant to Rule 424(b) of the Rules and
Regulations), the term “Prospectus” shall refer to such revised prospectus or prospectus
supplement, as the case may be, from and after the time it is first provided to the
Placement Agents for such use. Any preliminary prospectus or prospectus subject to
completion included in the Registration Statement or filed with the Commission pursuant to
Rule 424 of the Rules and Regulations is hereafter called a “Preliminary Prospectus.” Any
reference herein to the Registration Statement, any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), on or before the last to occur of the Effective Date, the
date of the Preliminary Prospectus, or the date of the Prospectus, and any reference herein
to the terms “amend,” “amendment,” or “supplement” with respect to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include (i) the filing of any document under the Exchange Act after the Effective Date, the
date of such Preliminary Prospectus
or the date of the Prospectus, as the case may be, which is incorporated by reference
and (ii) any such document so filed. If the Company has filed an abbreviated registration
statement to register additional securities pursuant to Rule 462(b) under the Rules (the
“462(b) Registration Statement”), then any reference herein to the Registration Statement
shall also be deemed to include such 462(b) Registration Statement.
(b) As of the Applicable Time (as defined below) and as of the Closing Date, neither
(i) any General Use Free Writing Prospectus (as defined below) issued at or prior to the
Applicable Time, and the Pricing Prospectus (as defined below) and the information included
on Schedule A hereto, all considered together (collectively, the “General Disclosure
Package”), (ii) any individual Limited Use Free Writing Prospectus (as defined below) nor
(iii) the bona fide electronic road show (as defined in Rule 433(h)(5) of the Rules and
Regulations), if any, that has been made available without restriction to any person, when
considered together with the General Disclosure Package, included or will include, any
untrue statement of a material fact or omitted or as of the Closing Date will omit, to state
a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however, that the
Company makes no representations or warranties as to information contained in or omitted
from any Issuer Free Writing Prospectus, in reliance upon, and in conformity with, written
information furnished to the Company by the Placement Agents specifically for inclusion
therein, which information the parties hereto agree is limited to the Placement Agents’
Information (as defined in Section 18). As used in this paragraph (b) and
elsewhere in this Agreement:
"Applicable Time” means [5:00] P.M., New York time, on the date of this Agreement.
"General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is
identified on Schedule A to this Agreement.
"Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in
Rule 433 of the Rules and Regulations relating to the Securities in the form filed or
required to be filed with the Commission or, if not required to be filed, in the form
retained in the Company’s records pursuant to Rule 433(g) of the Rules and Regulations.
"Limited Use Free Writing Prospectuses” means any Issuer Free Writing Prospectus that is not
a General Use Free Writing Prospectus.
"Pricing Prospectus” means the Preliminary Prospectus, if any, and the Base Prospectus, each
as amended and supplemented immediately prior to the Applicable Time, including any document
incorporated by reference therein and any prospectus supplement deemed to be a part thereof.
(c) No order preventing or suspending the use of any Preliminary Prospectus, any Issuer
Free Writing Prospectus or the Prospectus relating to the Offering has been issued by the
Commission, and no proceeding for that purpose or pursuant to Section 8A of the Securities
Act has been instituted or threatened by the Commission, and each
Preliminary Prospectus (if any), at the time of filing thereof, conformed in all
material respects to the requirements of the Securities Act and the Rules and Regulations,
and did not contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however, that the
Company makes no representations or warranties as to information contained in or omitted
from any Preliminary Prospectus, in reliance upon, and in conformity with, written
information furnished to the Company by the Placement Agents specifically for inclusion
therein, which information the parties hereto agree is limited to the Placement Agents’
Information (as defined in Section 18).
(d) At the time the Registration Statement became or becomes effective, at the date of
this Agreement and at the Closing Date, the Registration Statement conformed and will
conform in all material respects to the requirements of the Securities Act and the Rules and
Regulations and did not and will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make the statements
therein not misleading; the Prospectus, at the time the Prospectus was issued and at the
Closing Date, conformed and will conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and did not and will not contain an untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the foregoing representations and warranties in this
paragraph (d) shall not apply to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Placement Agents specifically for inclusion
therein, which information the parties hereto agree is limited to the Placement Agents’
Information (as defined in Section 18).
(e) Each Issuer Free Writing Prospectus, if any, as of its issue date and at all
subsequent times through the completion of the public offer and sale of the Units or until
any earlier date that the Company notified or notifies the Representative as described in
Section 5(e), did not, does not and will not include any information that
conflicted, conflicts or will conflict with the information contained in the Registration
Statement, Pricing Prospectus or the Prospectus, including any document incorporated by
reference therein and any prospectus supplement deemed to be a part thereof that has not
been superseded or modified, or includes an untrue statement of a material fact or omitted
or would omit to state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing sentence does not apply to statements in or omissions
from any Issuer Free Writing Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Placement Agents specifically for inclusion
therein, which information the parties hereto agree is limited to the Placement Agents’
Information (as defined in Section 18).
(f) The documents incorporated by reference in the Prospectus, when they became
effective or were filed with the Commission, as the case may be, conformed in
all material respects to the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder and none of such
documents contained any untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and any further documents so
filed and incorporated by reference in the Prospectus, when such documents become effective
or are filed with the Commission, as the case may be, will conform in all material respects
to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they were made,
not misleading.
(g) The Company has not, directly or indirectly, distributed and will not distribute
any offering material in connection with the Offering other than any Preliminary Prospectus,
the Prospectus and other materials, if any, permitted under the Securities Act and
consistent with Section 5(b) below. The Company is not an “ineligible issuer” in
connection with the offering pursuant to Rules 164, 405 and 433 under the Securities Act.
The Company will file with the Commission all Issuer Free Writing Prospectuses (other than a
“road show,” as defined in Rule 433(d)(8) of the Rules and Regulations), if any, in the time
and manner required under Rules 163(b)(2) and 433(d) of the Rules and Regulations.
(h) The Company and each of its subsidiaries (as defined in Section 16) has
been duly organized and are validly existing as corporations or other legal entities in good
standing (or the foreign equivalent thereof) under the laws of their respective
jurisdictions of organization. The Company and each of its subsidiaries are duly qualified
to do business and are in good standing as foreign corporations or other legal entities in
each jurisdiction in which their respective ownership or lease of property or the conduct of
their respective businesses requires such qualification and have all power and authority
(corporate or other) necessary to own or hold their respective properties and to conduct the
businesses in which they are engaged, except where the failure to so qualify or have such
power or authority (i) would not have, singly or in the aggregate, a material adverse effect
on the condition (financial or otherwise), results of operations, assets, business or
prospects of the Company and its subsidiaries taken as a whole, or (ii) impair in any
material respect the ability of the Company to perform its obligations under this Agreement
or to consummate any transactions contemplated by the Agreement, the General Disclosure
Package or the Prospectus (any such effect as described in clauses (i) or (ii), a “Material
Adverse Effect”). The Company owns or controls, directly or indirectly, only the following
corporations, partnerships, limited partnerships, limited liability companies, associations
or other entities: Cereplast International, S.A., a Luxembourg company, Cereplast Europe
SAS, a French company, and Cereplast Italia, SpA, an Italian company.
(i) The Company has the full right, power and authority to enter into this Agreement,
each of the Subscription Agreements and the Warrant, and to perform and to discharge its
obligations hereunder and thereunder, including, without limitation, the full
right, power and authority to issue, sell and deliver the Shares, the Warrants and the
Warrant Shares; and each of this Agreement, the Warrants and each of the Subscription
Agreements has been duly authorized, executed and delivered by the Company, and constitutes
a valid and binding obligation of the Company enforceable in accordance with its terms.
(j) The Shares and the Warrants to be issued and sold by the Company to the Purchasers
hereunder and under the Subscription Agreements have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein and in the
Subscription Agreements, and the Warrant Shares, when issued and delivered against payment
therefor as provided in the Warrants, will be duly and validly issued, fully paid and
nonassessable.
(k) The Company has an authorized capitalization as set forth in the Pricing
Prospectus, and all of the issued shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable, have been issued in
compliance with federal and state securities laws, and conform to the description thereof
contained in the General Disclosure Package and the Prospectus. As of October 31, 2011,
there were 15,797,553 shares of Common Stock issued and outstanding and no shares of
Preferred Stock, par value $0.001 per share of the Company issued and outstanding and
4,413,502 shares of Common Stock were issuable upon the exercise of all options, warrants
and convertible securities outstanding as of such date. Since such date, the Company has not
issued any securities, other than Common Stock of the Company issued pursuant to the
exercise of stock options previously outstanding under the Company’s stock option plans or
the issuance of restricted Common Stock pursuant to employee stock purchase plans. All of
the Company’s options, warrants and other rights to purchase or exchange any securities for
shares of the Company’s capital stock have been duly authorized and validly issued and were
issued in compliance with US federal and state securities laws. The Shares, Warrants and
Warrant Shares to be issued and sold by the Company under this Agreement, the Warrant and
the Subscription Agreements have been duly authorized and, when issued, delivered and paid
for in accordance with the terms of this Agreement, the Warrant and the Subscription
Agreements, will have been validly issued and will be fully paid and nonassessable and will
conform to the description thereof in the General Disclosure Package and the Prospectus, and
will be free of statutory and contractual preemptive rights, registration rights, resale
rights, rights of first refusal and similar rights, other than as described in the General
Disclosure Package and the Prospectus. None of the outstanding shares of Common Stock was
issued in violation of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities of the Company. There are no authorized or
outstanding shares of capital stock, options, warrants, preemptive rights, rights of first
refusal or other rights to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or any of its subsidiaries
other than those described above or accurately described in the General Disclosure Package.
The description of the Company’s stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted thereunder, as described in the
General Disclosure Package and the Prospectus, accurately and fairly
present the information required to be shown with respect to such plans, arrangements,
options and rights.
(l) All the outstanding shares of capital stock of each subsidiary of the Company have
been duly authorized and validly issued, are fully paid and nonassessable and, except to the
extent set forth in the General Disclosure Package or the Prospectus, are owned by the
Company directly or indirectly through one or more wholly-owned subsidiaries, free and clear
of any claim, lien, encumbrance, security interest, restriction upon voting or transfer or
any other claim of any third party.
(m) The execution, delivery and performance of this Agreement, the Subscription
Agreements and the Warrants by the Company, and the issuance and sale of the Securities by
the Company and the consummation of the transactions contemplated hereby and thereby will
not (with or without notice or lapse of time or both) conflict with or result in a breach or
violation of any of the terms or provisions of, constitute a default or Debt Repayment
Triggering Event (as defined below) under, give rise to any right of termination or other
right or the cancellation or acceleration of any right or obligation or loss of a benefit
under, or give rise to the creation or imposition of any lien, encumbrance, security
interest, claim or charge upon any property or assets of the Company or any subsidiary
pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such actions result in any violation
of the provisions of the charter or by-laws (or analogous governing instruments, as
applicable) of the Company or any of its subsidiaries or any law, statute, rule, regulation,
judgment, order or decree of any court or governmental agency or body, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of their properties
or assets. A “Debt Repayment Triggering Event” means any event or condition that gives, or
with the giving of notice or lapse of time would give the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder’s behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such indebtedness by
the Company or any of its subsidiaries.
(n) Except for the registration of the Shares, the Warrants and the Warrant Shares
under the Securities Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable state or foreign
securities laws, the Financial Industry Regulatory Authority (“FINRA”) and the Nasdaq
Capital Market (“Nasdaq CM”) in connection with the offering and sale of the Units, the
Shares, the Warrants and the Warrant Shares by the Company, no consent, approval,
authorization or order of, or filing, qualification or registration with, any court or
governmental agency or body, foreign or domestic, which has not been made, obtained or taken
and is not in full force and effect, is required for the execution, delivery and performance
of this Agreement, the Subscription Agreements and the Warrants by the Company, the offer or
sale of the Securities or the consummation of the transactions contemplated hereby or
thereby.
(o) HJ Associates & Consultants, LLP, who have certified certain financial statements
and related schedules included or incorporated by reference in the Registration Statement,
the General Disclosure Package and the Prospectus, is an independent registered public
accounting firm as required by the Securities Act and the Rules and Regulations and the
Public Company Accounting Oversight Board (United States) (the “PCAOB”). Except as
pre-approved in accordance with the requirements set forth in Section 10A of the Exchange
Act, HJ Associates & Consultants, LLP has not been engaged by the Company to perform any
“prohibited activities” (as defined in Section 10A of the Exchange Act).
(p) The financial statements, together with the related notes and schedules, included
or incorporated by reference in the General Disclosure Package, the Prospectus and in the
Registration Statement fairly present the financial position and the results of operations
and changes in financial position of the Company and its consolidated subsidiaries and other
consolidated entities at the respective dates or for the respective periods therein
specified. Such statements and related notes and schedules have been prepared in accordance
with the generally accepted accounting principles in the United States (“GAAP”) applied on a
consistent basis throughout the periods involved except as may be set forth in the related
notes included or incorporated by reference in the General Disclosure Package. The
financial statements, together with the related notes and schedules, included or
incorporated by reference in the General Disclosure Package and the Prospectus comply in all
material respects with the Securities Act, the Exchange Act, and the Rules and Regulations
and the rules and regulations under the Exchange Act. No other financial statements or
supporting schedules or exhibits are required by the Securities Act or the Rules and
Regulations to be described, or included or incorporated by reference in the Registration
Statement, the General Disclosure Package or the Prospectus. There is no pro forma or as
adjusted financial information which is required to be included in the Registration
Statement, the General Disclosure Package, or and the Prospectus or a document incorporated
by reference therein in accordance with the Securities Act and the Rules and Regulations
which has not been included or incorporated as so required.
(q) Neither the Company nor any of its subsidiaries has sustained, since the date of
the latest audited financial statements included or incorporated by reference in the General
Disclosure Package, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set forth or
contemplated in the General Disclosure Package; and, since such date, there has not been any
change in the capital stock or long-term debt of the Company or any of its subsidiaries, or
any material adverse changes, or any development involving a prospective material adverse
change, in or affecting the business, assets, general affairs, management, financial
position, prospects, stockholders’ equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or contemplated in the General
Disclosure Package.
(r) Except as set forth in the General Disclosure Package, there is no legal or
governmental action, suit, claim or proceeding pending to which the Company or any of
its subsidiaries is a party or of which any property or assets of the Company or any of
its subsidiaries is the subject which is required to be described in the Registration
Statement, the General Disclosure Package or the Prospectus or a document incorporated by
reference therein and is not described therein, or which, singly or in the aggregate, if
determined adversely to the Company or any of its subsidiaries, could have a Material
Adverse Effect or prevent the consummation of the transactions contemplated hereby; and to
the Company’s knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(s) Neither the Company nor any of its subsidiaries is in (i) violation of its charter
or by-laws (or analogous governing instrument, as applicable), (ii) default in any respect,
and no event has occurred which, with notice or lapse of time or both, would constitute such
a default, in the due performance or observance of any term, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which it is a party or by which it is bound or to which any of its property or
assets is subject or (iii) violation in any respect of any law, ordinance, governmental
rule, regulation or court order, decree or judgment to which it or its property or assets
may be subject except, in the case of clauses (ii) and (iii) of this paragraph (s),
for any violations or defaults which, singly or in the aggregate, would not have a Material
Adverse Effect.
(t) The Company and each of its subsidiaries possess all licenses, certificates,
authorizations and permits issued by, and have made all declarations and filings with, the
appropriate local, state, federal or foreign regulatory agencies or bodies which are
necessary or desirable for the ownership of their respective properties or the conduct of
their respective businesses as described in the General Disclosure Package and the
Prospectus (collectively, the “Governmental Permits”) except where any failures to possess
or make the same, singly or in the aggregate, would not have a Material Adverse Effect. The
Company and its subsidiaries are in compliance with all such Governmental Permits; all such
Governmental Permits are valid and in full force and effect, except where the validity or
failure to be in full force and effect would not, singly or in the aggregate, have a
Material Adverse Effect. All such Governmental Permits are free and clear of any
restriction or condition that are in addition to, or materially different from those
normally applicable to similar licenses, certificates, authorizations and permits. Neither
the Company nor any subsidiary has not received notification of any revocation or
modification (or proceedings related thereto) of any such Governmental Permit and the
Company has no reason to believe that any such Governmental Permit will not be renewed.
(u) Neither the Company nor any of its subsidiaries is or, after giving effect to the
Offering and the application of the proceeds thereof as described in the General Disclosure
Package and the Prospectus, will become an “investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations of the Commission
thereunder.
(v) Neither the Company, its subsidiaries nor, to the Company’s knowledge, any of the
Company’s or its subsidiaries’ officers, directors or affiliates has taken or will
take, directly or indirectly, any action designed or intended to stabilize or
manipulate the price of any security of the Company, or which caused or resulted in, or
which might in the future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company.
(w) The Company and its subsidiaries own or possesses the right to use all patents,
trademarks, trademark registrations, service marks, service xxxx registrations, trade names,
copyrights, licenses, inventions, software, databases, know-how, Internet domain names,
trade secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures, and other intellectual property (collectively,
“Intellectual Property”) necessary to carry on their respective businesses as currently
conducted, and as proposed to be conducted and described in the General Disclosure Package
and the Prospectus, and the Company is not aware of any claim to the contrary or any
challenge by any other person to the rights of the Company and its subsidiaries with respect
to the foregoing except for those that could not have a Material Adverse Effect. The
Intellectual Property licenses described in the General Disclosure Package and the
Prospectus are valid, binding upon, and enforceable by or against the parties thereto in
accordance to its terms. The Company and each of its subsidiaries has complied in all
material respects with, and is not in breach nor has received any asserted or threatened
claim of breach of, any Intellectual Property license, and the Company has no knowledge of
any breach or anticipated breach by any other person to any Intellectual Property license.
The Company’s and each of its subsidiaries’ businesses as now conducted and as proposed to
be conducted does not and will not infringe or conflict with any patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses or other Intellectual
Property or franchise right of any person. No claim has been made against the Company or
any of its subsidiaries alleging the infringement by the Company or any of its subsidiaries
of any patent, trademark, service xxxx, trade name, copyright, trade secret, license in or
other intellectual property right or franchise right of any person. The Company and each of
its subsidiaries has taken all reasonable steps to protect, maintain and safeguard its
rights in all Intellectual Property, including the execution of appropriate nondisclosure
and confidentiality agreements. The consummation of the transactions contemplated by this
Agreement will not result in the loss or impairment of or payment of any additional amounts
with respect to, nor require the consent of any other person in respect of, the Company’s or
any of its subsidiaries’ right to own, use, or hold for use any of the Intellectual Property
as owned, used or held for use in the conduct of the businesses as currently conducted.
With respect to the use of the software in the Company’s or any of its subsidiaries’
businesses as they are currently conducted, the Company nor any of its subsidiaries has
experienced any material defects in such software including any material error or omission
in the processing of any transactions other than defects which have been corrected, and to
the knowledge of the Company, no such software contains any device or feature designed to
disrupt, disable, or otherwise impair the functioning of any software or is subject to the
terms of any “open source” or other similar license that provides for the source code of the
software to be publicly distributed or dedicated to the public. The Company and each of its
subsidiaries has at all times complied with all applicable laws relating to privacy, data
protection, and the collection and use of personal information collected, used, or
held for
use by the Company and any of its subsidiaries in the conduct of the Company’s and its
subsidiaries businesses. No claims have been asserted or threatened against the Company or any of
its subsidiaries alleging a violation of any person’s privacy or personal information or
data rights and the consummation of the transactions contemplated hereby will not breach or
otherwise cause any violation of any law related to privacy, data protection, or the
collection and use of personal information collected, used, or held for use by the Company
or any of its subsidiaries in the conduct of the Company’s or any of its subsidiaries’
businesses. The Company and each of its subsidiaries takes reasonable measures to ensure
that such information is protected against unauthorized access, use, modification, or other
misuse.
(x) The Company and each of its subsidiaries have good and marketable title in fee
simple to, or have valid rights to lease or otherwise use, all items of real or personal
property, which are material to the business of the Company and its subsidiaries taken as a
whole, in each case free and clear of all liens, encumbrances, security interests, claims
and defects that do not, singly or in the aggregate, materially affect the value of such
property and do not interfere with the use made and proposed to be made of such property by
the Company or any of its subsidiaries; and all of the leases and subleases material to the
business of the Company and its subsidiaries, considered as one enterprise, and under which
the Company or any of its subsidiaries holds properties described in the General Disclosure
Package and the Prospectus, are in full force and effect, and neither the Company nor any
subsidiary has received any notice of any material claim of any sort that has been asserted
by anyone adverse to the rights of the Company or any subsidiary under any of the leases or
subleases mentioned above, or affecting or questioning the rights of the Company or such
subsidiary to the continued possession of the leased or subleased premises under any such
lease or sublease.
(y) No labor disturbance by the employees of the Company or any of its subsidiaries
exists or, to the best of the Company’s knowledge, is imminent, and the Company is not aware
of any existing or imminent labor disturbance by the employees of any of its or its
subsidiaries’ principal suppliers, manufacturers, customers or contractors, that could
reasonably be expected, singly or in the aggregate, to have a Material Adverse Effect. The
Company is not aware that any key employee or significant group of employees of the Company
or any subsidiary plans to terminate employment with the Company or any such subsidiary.
(z) No “prohibited transaction” (as defined in Section 406 of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (“ERISA”), or Section 4975 of the Internal Revenue Code of 1986,
as amended from time to time (the “Code”)) or “accumulated funding deficiency” (as defined
in Section 302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA (other
than events with respect to which the thirty (30)-day notice requirement under Section 4043
of ERISA has been waived) has occurred or could reasonably be expected to occur with respect
to any employee benefit plan of the Company or any of its subsidiaries which could, singly
or in the aggregate, have a Material Adverse Effect. Each employee benefit plan of the
Company or any of its subsidiaries is in compliance in all material respects with applicable
law, including ERISA and the Code. The Company and its subsidiaries have not incurred and
could not
reasonably be expected to incur liability under Title IV of ERISA with respect to the
termination of, or withdrawal from, any pension plan (as defined in ERISA). Each pension
plan for which the Company or any of its subsidiaries would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified, and nothing has
occurred, whether by action or by failure to act, which could, singly or in the aggregate,
cause the loss of such qualification.
(aa) The Company and its subsidiaries are in compliance with all foreign, federal,
state and local statutes, rules, laws (including the common law), regulations, codes,
ordinances, orders, judgments, decrees and Governmental Permits relating to the use,
treatment, storage and disposal of hazardous or toxic substances, materials or wastes and
the protection of health and safety or the environment, including, without limitation,
natural resources, which are applicable to their properties, assets, businesses and
operations (“Environmental Laws”), except where the failure to comply would not, singularly
or in the aggregate, have a Material Adverse Effect. There has been no use, storage,
generation, transportation, handling, treatment, disposal, discharge, emission, or other
release of any kind of hazardous or toxic substances, materials or wastes by, due to, or
caused by the Company or any of its subsidiaries (or, to the Company’s knowledge, any other
entity for whose acts or omissions the Company or any of its subsidiaries is or may
otherwise be liable) under, upon, at or from any of the property now or previously owned,
leased, or operated by the Company or any of its subsidiaries, or under, upon, at or from
any other property, in violation of, or which would give rise to any liability under, any
Environmental Law, except for any violation or liability which would not have, singularly or
in the aggregate with all such violations and liabilities, a Material Adverse Effect; and
there has been no disposal, discharge, emission or other release of any kind onto, under, at
or from such property or into the environment of any hazardous or toxic substances,
materials or wastes with respect to which the Company has knowledge, except for any such
disposal, discharge, emission, or other release of any kind which would not have, singularly
or in the aggregate with all such disposals, discharges, emissions and other releases, a
Material Adverse Effect. In the ordinary course of business, the Company and its
subsidiaries conduct periodic reviews of the effect of Environmental Laws on their business
and assets, as part of which they identify and evaluate associated costs and liabilities
(including, without limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws and Governmental Permits issued
thereunder, any related constraints on operating activities and any potential liabilities to
third parties). On the basis of such reviews, the Company and its subsidiaries have
reasonably concluded that such associated costs and liabilities would not have, singularly
or in the aggregate, a Material Adverse Effect.
(bb) The Company and its subsidiaries, each (i) has timely filed all necessary federal,
state, local and foreign tax returns, and all such returns were true, complete and correct,
(ii) has paid all federal, state, local and foreign taxes, assessments, governmental or
other charges due and payable for which it is liable, including, without limitation, all
sales and use taxes and all taxes which the Company or any of its subsidiaries is obligated
to withhold from amounts owing to employees, creditors and third parties, and (iii) does not
have any tax deficiency or claims outstanding or assessed or, to the best of its
knowledge, proposed against any of them, except those, in each of the cases described
in clauses (i), (ii) and (iii) of this paragraph (bb), that would not, singly or in
the aggregate, have a Material Adverse Effect. The Company and its subsidiaries, each has
not engaged in any transaction which is a corporate tax shelter or which could be
characterized as such by the Internal Revenue Service or any other taxing authority. The
accruals and reserves on the books and records of the Company and its subsidiaries in
respect of tax liabilities for any taxable period not yet finally determined are adequate to
meet any assessments and related liabilities for any such period, and since December 31,
2010 the Company and its subsidiaries each has not incurred any liability for taxes other
than in the ordinary course.
(cc) 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 respective businesses in which the Company and its 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.
(dd) The Company and its subsidiaries each maintains a system of internal accounting
and other controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management’s general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or specific authorization; and (iv)
the recorded accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. Except as
described in the General Disclosure Package, since the end of the Company’s most recent
audited fiscal year, there has been (A) no material weakness in the Company’s internal
control over financial reporting (whether or not remediated) and (B) no change in the
Company’s internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over financial
reporting.
(ee) The minute books of the Company and each of its subsidiaries that would be a
“significant subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X under the
Exchange Act (such a significant subsidiary of the Company, a “Significant Subsidiary”) have
been made available to the Placement Agents and counsel for the Placement Agents, and such
books (i) contain a complete summary of all meetings and actions of the board of directors
(including each board committee) and shareholders of the Company (or analogous governing
bodies and interest holders, as applicable), and each of its Significant Subsidiaries since
the time of its respective incorporation or organization through the date of the latest
meeting and action, and (ii) accurately in all material respects reflect all transactions
referred to in such minutes.
(ff) There is no franchise, lease, contract, agreement or document required by the
Securities Act or by the Rules and Regulations to be described in the General Disclosure
Package and in the Prospectus or a document incorporated by reference therein or to be filed
as an exhibit to the Registration Statement or a document incorporated by reference therein
which is not described or filed therein as required; and all descriptions of any such
franchises, leases, contracts, agreements or documents contained in the Registration
Statement or in a document incorporated by reference therein are accurate and complete
descriptions of such documents in all material respects. Other than as described in the
General Disclosure Package, no such franchise, lease, contract or agreement has been
suspended or terminated for convenience or default by the Company or any of its subsidiaries
or any of the other parties thereto, and neither the Company nor any of its subsidiaries has
received notice nor does the Company have any other knowledge of any such pending or
threatened suspension or termination, except for such pending or threatened suspensions or
terminations that would not reasonably be expected to, singly or in the aggregate, have a
Material Adverse Effect.
(gg) No relationship, direct or indirect, exists between or among the Company and any
of its subsidiaries on the one hand, and the directors, officers, stockholders (or analogous
interest holders), customers or suppliers of the Company or any of its subsidiaries or any
of their affiliates on the other hand, which is required to be described in the General
Disclosure Package and the Prospectus or a document incorporated by reference therein and
which is not so described.
(hh) No person or entity has the right to require registration of shares of Common
Stock or other securities of the Company or any of its subsidiaries because of the filing or
effectiveness of the Registration Statement or otherwise, except for persons and entities
who have expressly waived such right in writing or who have been given timely and proper
written notice and have failed to exercise such right within the time or times required
under the terms and conditions of such right. Except as described in the General Disclosure
Package, there are no persons with registration rights or similar rights to have any
securities registered by the Company or any of its subsidiaries under the Securities Act.
(ii) Neither the Company nor any of its subsidiaries own any “margin securities” as
that term is defined in Regulation U of the Board of Governors of the Federal Reserve System
(the “Federal Reserve Board”), and none of the proceeds of the sale of the Units will be
used, directly or indirectly, for the purpose of purchasing or carrying any margin security,
for the purpose of reducing or retiring any indebtedness which was originally incurred to
purchase or carry any margin security or for any other purpose which might cause any of the
Securities included in the Units to be considered a “purpose credit” within the meanings of
Regulation T, U or X of the Federal Reserve Board.
(jj) Neither the Company nor any of its subsidiaries is a party to any contract,
agreement or understanding with any person that would give rise to a valid claim against the
Company or any Placement Agents for a brokerage commission, finder’s fee or like payment in
connection with the Offering or any transaction contemplated by this
Agreement, the Subscription Agreements, the Warrants, the Registration Statement, the
General Disclosure Package or the Prospectus.
(kk) 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 General Disclosure Package
or the Prospectus has been made or reaffirmed without a reasonable basis or has been
disclosed other than in good faith.
(ll) The Company is subject to and in compliance in all material respects with the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act. The Common Stock
is registered pursuant to Section 12(b) of the Exchange Act and is listed on the Nasdaq CM,
and the Company has taken no action designed to, or reasonably likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or delisting the
Common Stock from the Nasdaq CM, nor has the Company received any notification that the
Commission or FINRA is contemplating terminating such registration or listing. No consent,
approval, authorization or order of, or filing, notification or registration with, the
Nadsaq CM is required for the listing and trading of the Common Stock on the Nasdaq CM,
except for (i) a Notification Form: Listing of Additional Shares, and (ii) a Notification
Form: Change in the Number of Shares Outstanding.
(mm) The Company is in compliance with all applicable provisions of the Xxxxxxxx-Xxxxx
Act of 2002 and all rules and regulations promulgated thereunder or implementing the
provisions thereof (the “Xxxxxxxx-Xxxxx Act”).
(nn) The Company is in compliance with all applicable corporate governance requirements
set forth in the Nasdaq Marketplace Rules.
(oo) 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 or contribution to foreign or
domestic government officials or employees or to any foreign or domestic political parties
or campaigns from corporate funds, or otherwise, or which are of the character required to
be disclosed in the Registration Statement, the General Disclosure Package or the Prospectus
or a document incorporated by reference therein (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.
(pp) There are no transactions, arrangements or other relationships between and/or
among the Company, any of its affiliates (as such term is defined in Rule 405 of the
Securities Act) and any unconsolidated entity, including, but not limited to, any structured
finance, special purpose or limited purpose entity that could reasonably be expected to
materially affect the Company’s or any of its subsidiaries’ liquidity or the availability of
or requirements for their capital resources required to be described in the
General Disclosure Package and the Prospectus or a document incorporated by reference
therein which have not been described as required.
(qq) There are no outstanding loans, advances (except normal advances for business
expenses in the ordinary course of business) or guarantees or indebtedness by the Company or
any of its subsidiaries to or for the benefit of any of the officers or directors of the
Company, any of its subsidiaries or any of their respective family members, except as
disclosed in the Registration Statement, the General Disclosure Package and the Prospectus.
(rr) The statistical and market related data included in the Registration Statement,
the General Disclosure Package and the Prospectus are based on or derived from sources that
the Company believes to be reliable and accurate, and such data agree with the sources from
which they are derived.
(ss) The operations of the Company and its subsidiaries are and have been conducted at
all times in compliance with applicable financial recordkeeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money
laundering statutes and applicable rules and regulations thereunder (collectively, the
“Money Laundering Laws”), and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company or any of its
subsidiaries with respect to the Money Laundering Laws is pending, or to the best knowledge
of the Company, threatened.
(tt) Neither the Company nor any of its subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee or affiliate of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the Offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture partner or other person or
entity, for the purpose of financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.
(uu) Neither the Company nor any subsidiary nor any of their affiliates (within the
meaning of FINRA’s NASD Conduct Rule 5121(f)(1)) directly or indirectly controls, are
controlled by, or is under common control with, or is an associated person (within the
meaning of Article I, Section 1(ee) of the By-laws of FINRA) of, any member firm of FINRA.
(vv) The conditions to the use of Form S-3 in connection with the Offering as
contemplated hereby have been satisfied. The Registration Statement meets, and the offering
and sale of the Securities as contemplated hereby complies with, the requirements of Rule
415 under the Securities Act (including, without limitation, Rule 415(a)(4) and (a)(5) of
the Rules and Regulations).
(ww) No approval of the shareholders of the Company under the rules and regulations of
Nasdaq (including Rule 5635 of the Nasdaq Global Marketplace Rules) is
required for the Company to issue and deliver to the Purchasers the Securities included
in the Units.
Any certificate signed by or on behalf of the Company and delivered to the
Representative or to counsel for the Placement Agents shall be deemed to be a representation
and warranty by the Company to the Placement Agents and the Purchasers as to the matters
covered thereby.
4. The Closing. The time and date of closing and delivery of the documents
required to be delivered to the Representative pursuant to Sections 5 and 7 hereof
shall be at 10:00 A.M., New York time, on November 16, 2011 (the “Closing Date”) at the office of
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP, 00 Xxxxxxxx, Xxx Xxxx, XX 00000.
5. Further Agreements of the Company. The Company agrees with the Placement
Agents and the Purchasers:
(a) To prepare the Rule 462(b) Registration Statement, if necessary, in a form approved
by the Representative and file such Rule 462(b) Registration Statement with the Commission
on the date hereof; to prepare the Prospectus in a form approved by the Representative
containing information previously omitted at the time of effectiveness of the Registration
Statement in reliance on rules 430A, 430B and 430C and to file such Prospectus pursuant to
Rule 424(b) of the Rules and Regulations not later than the second (2nd)
business day following the execution and delivery of this Agreement or, if applicable, such
earlier time as may be required by Rule 430A of the Rules and Regulations; to notify the
Representative immediately of the Company’s intention to file or prepare any supplement or
amendment to any Registration Statement or to the Prospectus and to make no amendment or
supplement to the Registration Statement, the General Disclosure Package or to the
Prospectus to which the Representative shall reasonably object by notice to the Company
after a reasonable period to review; to advise the Representative, promptly after it
receives notice thereof, of the time when any amendment to any Registration Statement has
been filed or becomes effective or any supplement to the General Disclosure Package or the
Prospectus or any amended Prospectus has been filed and to furnish the Representative copies
thereof; to file promptly all material required to be filed by the Company with the
Commission pursuant to Rule 433(d) or 163(b)(2), as the case may be; to file promptly all
reports and any definitive proxy or information statements required to be filed by the
Company with the Commission pursuant to Sections 13(a), 13(c), 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
(or in lieu thereof, the notice referred to in Rule 173(a) of the Rules and Regulations) is
required in connection with the offering or sale of the Units; to advise the Representative,
promptly after it receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any Preliminary Prospectus, any
Issuer Free Writing Prospectus or the Prospectus, of the suspension of the qualification of
the Securities included in the Units for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement, the General
Disclosure Package or the Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus or
suspending any such qualification, and promptly to use its best efforts to obtain the
withdrawal of such order.
(b) The Company represents and agrees that, unless it obtains the prior consent of the
Representative, it has not made and will not, make any offer relating to the Units that
would constitute a “free writing prospectus” as defined in Rule 405 of the Rules and
Regulations (each, a “Permitted Free Writing Prospectus”); provided that the prior written
consent of the Representative hereto shall be deemed to have been given in respect of the
Issuer Free Writing Prospectuses set forth in Schedule A hereto. The Company
represents that it has treated and agrees that it will treat each Permitted Free Writing
Prospectus as an Issuer Free Writing Prospectus, comply with the requirements of Rules 164
and 433 of the Rules and Regulations applicable to any Issuer Free Writing Prospectus,
including the requirements relating to timely filing with the Commission, legending and
record keeping and will not take any action that would result in any Placement Agent or the
Company being required to file with the Commission pursuant to Rule 433(d) of the Rules and
Regulations a free writing prospectus prepared by or on behalf of such Placement Agent that
such Placement Agent otherwise would not have been required to file thereunder.
(c) If at any time when a Prospectus relating to the Securities is required to be
delivered under the Securities Act, any event occurs or condition exists as a result of
which the Prospectus, as then amended or supplemented, would include 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, or the
Registration Statement, as then amended or supplemented, would include any untrue statement
of a material fact or omit to state a material fact necessary to make the statements therein
not misleading, or if for any other reason it is necessary at any time to amend or
supplement any Registration Statement or the Prospectus to comply with the Securities Act or
the Exchange Act, the Company will promptly notify the Representative, and upon the
Representative’s request, the Company will promptly prepare and file with the Commission, at
the Company’s expense, an amendment to the Registration Statement or an amendment or
supplement to the Prospectus that corrects such statement or omission or effects such
compliance and will deliver to the Placement Agents, without charge, such number of copies
thereof as the Placement Agents may reasonably request. The Company consents to the use of
the Prospectus or any amendment or supplement thereto by the Placement Agents.
(d) If the General Disclosure Package is being used to solicit offers to buy any
Securities at a time when the Prospectus is not yet available to prospective purchasers and
any event shall occur as a result of which, in the judgment of the Company or in the
reasonable opinion of the Representative, it becomes necessary to amend or supplement the
General Disclosure Package in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or to make the statements therein
not conflict with the information contained or incorporated by reference in the Registration
Statement then on file and not superseded or modified, or if it is necessary at
any time to amend or supplement the General Disclosure Package to comply with any law,
the Company promptly will either (i) prepare, file with the Commission (if required) and
furnish to the Placement Agents and any dealers an appropriate amendment or supplement to
the General Disclosure Package or (ii) prepare and file with the Commission an appropriate
filing under the Exchange Act which shall be incorporated by reference in the General
Disclosure Package so that the General Disclosure Package as so amended or supplemented will
not, in the light of the circumstances under which they were made, be misleading or conflict
with the Registration Statement then on file, or so that the General Disclosure Package will
comply with law.
(e) If at any time following issuance of an Issuer Free Writing Prospectus in
connection with the Offering there occurred or occurs an event or development as a result of
which such Issuer Free Writing Prospectus conflicted or will conflict with the information
contained in the Registration Statement, Pricing Prospectus or Prospectus, including any
document incorporated by reference therein and any prospectus supplement deemed to be a part
thereof and not superseded or modified or included or would include an untrue statement of a
material fact or omitted or would omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, the Company has promptly notified
or will promptly notify the Representative so that any use of the Issuer Free Writing
Prospectus may cease until it is amended or supplemented and has promptly amended or will
promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to
eliminate or correct such conflict, untrue statement or omission. The foregoing sentence
does not apply to statements in or omissions from any Issuer Free Writing Prospectus in
reliance upon, and in conformity with, written information furnished to the Company by any
Placement Agent specifically for inclusion therein, which information the parties hereto
agree is limited to the Placement Agents’ Information (as defined in Section 18).
(f) To the extent not available on the Commission’s XXXXX system, to furnish promptly
to the Placement Agents and to counsel for the Placement Agents a signed copy of the
Registration Statement as originally filed with the Commission, and of each amendment
thereto filed with the Commission, including all consents and exhibits filed therewith.
(g) To the extent not available on the Commission’s XXXXX system, to deliver promptly
to the Representative in New York City such number of the following documents as the
Representative shall reasonably request: (i) conformed copies of the Registration Statement
as originally filed with the Commission (in each case excluding exhibits), (ii) each
Preliminary Prospectus, (iii) any Issuer Free Writing Prospectus, (iv) the Prospectus (the
delivery of the documents referred to in clauses (i), (ii), (iii) and (iv) of this
paragraph (g) to be made not later than 10:00 A.M., New York time, on the business
day following the execution and delivery of this Agreement), (v) conformed copies of any
amendment to the Registration Statement (excluding exhibits), (vi) any amendment or
supplement to the General Disclosure Package or the Prospectus (the delivery of the
documents referred to in clauses (v) and (vi) of this paragraph (g) to be made not
later than 10:00 A.M., New York City time, on the business day following the
date of such amendment or supplement) and (vii) any document incorporated by reference
in the General Disclosure Package or the Prospectus (excluding exhibits thereto) (the
delivery of the documents referred to in clause (vi) of this paragraph (g) to be
made not later than 10:00 A.M., New York City time, on the business day following the date
of such document).
(h) To make generally available to its shareholders as soon as practicable, but in any
event not later than eighteen (18) months after the effective date of each Registration
Statement (as defined in Rule 158(c) of the Rules and Regulations), an earnings statement of
the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of
the Securities Act and the Rules and Regulations (including, at the option of the Company,
Rule 158); and to furnish to its shareholders as soon as practicable after the end of each
fiscal year an annual report (including a balance sheet and statements of income,
shareholders’ equity and cash flows of the Company and its consolidated subsidiaries
certified by independent public accountants) and as soon as possible after each of the first
three fiscal quarters of each fiscal year (beginning with the first fiscal quarter after the
effective date of such Registration Statement), consolidated summary financial information
of the Company and its subsidiaries for such quarter in reasonable detail.
(i) To take promptly from time to time such actions as the Representative may
reasonably request to qualify the Shares, Warrants and Warrant Shares for the offering and
sale under the securities or Blue Sky laws of such jurisdictions (domestic or foreign) as
the Representative may designate and to continue such qualifications in effect, and to
comply with such laws, for so long as required to permit the offer and sale of Units in such
jurisdictions; provided that the Company shall not be obligated to qualify as foreign
corporations in any jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction.
(j) To the extent not available on the Commission’s XXXXX system, upon request, during
the period of five (5) years from the date hereof, to deliver to the Placement Agents, (i)
as soon as they are available, copies of all reports or other communications furnished to
shareholders, and (ii) as soon as they are available, copies of any reports and financial
statements furnished or filed with the Commission or any national securities exchange or
automatic quotation system on which the Common Stock is listed or quoted.
(k) That the Company will not, for a period of ninety (90) days from the date of the
Prospectus, (the “Lock-Up Period”) without the prior written consent of the Representative,
directly or indirectly offer, sell, assign, transfer, pledge, contract to sell, or otherwise
dispose of, any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, other than the Company’s sale of the Units hereunder and the
issuance of restricted Common Stock or options to acquire Common Stock pursuant to the
Company’s employee benefit plans, qualified stock option plans or other employee
compensation plans as such plans are in existence on the date hereof and described in the
Prospectus and the issuance of
Common Stock pursuant to the valid exercises of options,
warrants or rights outstanding on the date hereof, or the issuance shares of Common Stock to employees, officers or directors of the Company in
lieu of cash compensation for services rendered to the Company. The Company will cause each
executive officer and director listed in Schedule B to furnish to the
Representative, on or prior to the date of this agreement, a letter, substantially in the
form of Exhibit C hereto, pursuant to which each such person shall agree, among
other things, not to directly or indirectly offer, sell, assign, transfer, pledge, contract
to sell, or otherwise dispose of, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, not to engage in any swap or other
agreement or arrangement that transfers, in whole or in part, directly or indirectly, the
economic risk of ownership of Common Stock or any such securities and not to engage in any
short selling of any Common Stock or any such securities, during the Lock-Up Period, without
the prior written consent of the Representative. The Company also agrees that during such
period, the Company will not file any registration statement, preliminary prospectus or
prospectus, or any amendment or supplement thereto, under the Securities Act for any such
transaction or which registers, or offers for sale, Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, except for a registration
statement on Form S-8 relating to employee benefit plans. The Company hereby agrees that
(i) if it issues an earnings release or material news, or if a material event relating to
the Company occurs, during the last seventeen (17) days of the Lock-Up Period, or (ii) if
prior to the expiration of the Lock-Up Period, the Company announces that it will release
earnings results during the sixteen (16)-day period beginning on the last day of the Lock-Up
Period, the restrictions imposed by this paragraph (k) or the letter shall continue
to apply until the expiration of the eighteen (18)-day period beginning on the issuance of
the earnings release or the occurrence of the material news or material event.
(l) To supply the Representative with copies of all correspondence to and from, and all
documents issued to and by, the Commission in connection with the registration of the Shares
and Warrants included in the Units under the Securities Act or the Registration Statement,
any Preliminary Prospectus or the Prospectus, or any amendment or supplement thereto or
document incorporated by reference therein.
(m) The Company will reserve and keep available at all times, free of pre-emptive or
other similar rights, a sufficient number of shares of Common Stock, for the purposes of
enabling the Company to satisfy any obligations to issue the Warrant Shares upon exercise of
the Warrants.
(n) Prior to the Closing Date, to furnish to the Representative, as soon as they have
been prepared, copies of any unaudited interim consolidated financial statements of the
Company for any periods subsequent to the periods covered by the financial statements
appearing in the Registration Statement and the Prospectus.
(o) Prior to the Closing Date, not to issue any press release or other communication
directly or indirectly or hold any press conference with respect to the Company, its
condition, financial or otherwise, or earnings, business affairs or business prospects
(except for routine oral marketing communications in the ordinary course of business and
consistent with the past practices of the Company and of which the
Representative is notified), without the prior written consent of the Representative,
unless in the judgment of the Company and its counsel, and after notification to the
Placement Agents, such press release or communication is required by law.
(p) Until the Representative shall have notified the Company of the completion of the
Offering, that the Company will not, and will cause its affiliated purchasers (as defined in
Regulation M under the Exchange Act) not to, either alone or with one or more other persons,
bid for or purchase, for any account in which it or any of its affiliated purchasers has a
beneficial interest, any Securities, or attempt to induce any person to purchase any
Securities; and not to, and to cause its affiliated purchasers not to, make bids or purchase
for the purpose of creating actual, or apparent, active trading in or of raising the price
of the Securities.
(q) Not to take any action prior to the Closing Date which would require the Prospectus
to be amended or supplemented pursuant to Section 5.
(r) To at all times comply with all applicable provisions of the Xxxxxxxx-Xxxxx Act in
effect from time to time.
(s) To apply the net proceeds from the sale of the Units as set forth in the
Registration Statement, the General Disclosure Package and the Prospectus under the heading
“Use of Proceeds.”
(t) To use its best efforts to list, effect and maintain, subject to notice of
issuance, the Shares and Warrant Shares on the Nasdaq CM.
(u) To use its best efforts to assist the Placement Agents with any filings with FINRA
and obtaining clearance from FINRA as to the amount of compensation allowable or payable to
the Placement Agents.
(v) To use its best efforts to do and perform all things required to be done or
performed under this Agreement and the Subscription Agreements by the Company prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the Shares and
Warrants included in the Units.
6. Payment of Expenses. The Company agrees to pay, or reimburse if paid by
the Placement Agents, whether or not the transactions contemplated hereby are consummated or this
Agreement is terminated: (a) the costs incident to the authorization, issuance, sale, preparation
and delivery of the Securities to the Purchasers and any taxes payable in that connection; (b) the
costs incident to the registration of the Securities under the Securities Act; (c) the costs
incident to the preparation, printing and distribution of the Registration Statement, the Base
Prospectus, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the General Disclosure
Package, the Prospectus, any amendments, supplements and exhibits thereto or any document
incorporated by reference therein and the costs of printing, reproducing and distributing any
transaction document by mail, telex or other means of communications; (d) if applicable, the fees
and expenses (including related fees and expenses of counsel for the Placement Agents) incurred in
connection with securing any required review by FINRA of the terms of the sale of the Securities
and any filings made
with
FINRA; (e) any applicable listing, quotation or other fees; (f) the fees and expenses (including related fees and expenses of counsel to the Placement
Agents) of qualifying the Securities under the securities laws of the several jurisdictions as
provided in Section 5(i) and of preparing, printing and distributing wrappers, Blue Sky
Memoranda and Legal Investment Surveys; (g) the cost of preparing and printing stock certificates;
(h) all fees and expenses of the registrar and transfer agent of the Securities; (i) the fees,
disbursements and expenses of counsel to the Placement Agents, not to exceed $125,000, and (k) all
other costs and expenses incident to the offering of the Securities or the performance of the
obligations of the Company under this Agreement and the Subscription Agreements (including, without
limitation, the fees and expenses of the Company’s counsel and the Company’s independent
accountants and the travel and other expenses incurred by the Company, the Placement Agents and
each of their respective personnel in connection with any “road show” including, without
limitation, any expenses advanced by the Placement Agents on the Company’s behalf (which will be
promptly reimbursed on the Closing Date)).
7. Conditions to the Obligations of the Placement Agents and the Purchasers, and
the Sale of the Units. The respective obligations of the Placement Agents hereunder and the
Purchasers under the Subscription Agreements, and the Closing of the sale of the Units, are subject
to the accuracy, when made and as of the Applicable Time and on the Closing Date, of the
representations and warranties of the Company contained herein, to the accuracy of the statements
of the Company made in any certificates pursuant to the provisions hereof, to the performance by
the Company of its obligations hereunder, and to each of the following additional terms and
conditions:
(a) No stop order suspending the effectiveness of the Registration Statement or any
part thereof, preventing or suspending the use of any Base Prospectus, any Preliminary
Prospectus, the Prospectus or any Permitted Free Writing Prospectus or any part thereof
shall have been issued and no proceedings for that purpose or pursuant to Section 8A under
the Securities Act shall have been initiated or threatened by the Commission, and all
requests for additional information on the part of the Commission (to be included or
incorporated by reference in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to the reasonable satisfaction of the Representative; the Rule
462(b) Registration Statement, if any, each Issuer Free Writing Prospectus, if any, and the
Prospectus shall have been filed with the Commission within the applicable time period
prescribed for such filing by, and in compliance with, the Rules and Regulations and in
accordance with Section 5(a), and the Rule 462(b) Registration Statement, if any,
shall have become effective immediately upon its filing with the Commission; and FINRA shall
have raised no objection to the fairness and reasonableness of the terms of this Agreement
or the transactions contemplated hereby.
(b) Neither Placement Agent shall have discovered and disclosed to the Company on or
prior to the Closing Date that the Registration Statement or any amendment or supplement
thereto contains an untrue statement of a fact which, in the opinion of counsel for the
Placement Agents, is material or omits to state any fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to make the
statements therein not misleading, or that the General Disclosure Package, any Issuer Free
Writing Prospectus or the Prospectus or any amendment or supplement thereto contains an
untrue statement of fact which, in the opinion of such
counsel, is material or omits to state any fact which, in the opinion of such counsel,
is material and is necessary in order to make the statements, in the light of the
circumstances in which they were made, not misleading.
(c) All corporate proceedings and other legal matters incident to the authorization,
form and validity of each of this Agreement, the Subscription Agreements, the Warrants, the
Warrant Shares, the Shares, the Registration Statement, the General Disclosure Package, each
Issuer Free Writing Prospectus, if any, and the Prospectus and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Placement Agents, and the Company
shall have furnished to such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
(d) Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP shall have furnished to the Representative such
counsel’s written opinion and negative assurances statement, as counsel to the Company,
addressed to the Placement Agents and the Purchasers and dated the Closing Date, in form and
substance reasonably satisfactory to the Representative.
(e) The Representative shall have received from Proskauer Rose LLP, counsel for the
Placement Agents, such counsel’s written opinion and negative assurances statement, dated
the Closing Date, with respect to such matters as the Representative may reasonably require,
and the Company shall have furnished to such counsel such documents as they request for
enabling them to pass upon such matters.
(f) At the time of the execution of this Agreement, the Representative shall have
received from HJ Associates & Consultants, LLP a letter, addressed to the Placement Agents,
executed and dated such date, in form and substance satisfactory to the Representative (i)
confirming that they are an independent registered accounting firm with respect to the
Company and its subsidiaries within the meaning of the Securities Act and the Rules and
Regulations and PCAOB and (ii) stating the conclusions and findings of such firm, of the
type ordinarily included in accountants’ “comfort letters” to underwriters, with respect to
the financial statements and certain financial information contained or incorporated by
reference in the Registration Statement, the General Disclosure Package and the Prospectus.
(g) On the effective date of any post-effective amendment to any Registration Statement
and on the Closing Date, the Representative shall have received a letter (the “Bring-Down
Letter”) from HJ Associates & Consultants, LLP addressed to the Placement Agents and dated
the Closing Date confirming, as of the date of the Bring-Down Letter (or, with respect to
matters involving changes or developments since the respective dates as of which specified
financial information is given in the General Disclosure Package and the Prospectus, as the
case may be, as of a date not more than three (3) business days prior to the date of the
Bring-Down Letter), the conclusions and findings of such firm, of the type ordinarily
included in accountants’ “comfort letters” to underwriters, with respect to the financial
information and other matters covered by its
letter delivered to the Representative concurrently with the execution of this
Agreement pursuant to paragraph (f) of this Section 7.
(h) The Company shall have furnished to the Placement Agents and the Purchasers a
certificate, dated the Closing Date, of its Chairman of the Board, its President or a Vice
President and its chief financial officer stating that (i) such officers have carefully
examined the Registration Statement, the General Disclosure Package, any Permitted Free
Writing Prospectus and the Prospectus and, in their opinion, the Registration Statement and
each amendment thereto, at the Applicable Time and as of the date of this Agreement and as
of the Closing Date did not include any untrue statement of a material fact and did not omit
to state a material fact required to be stated therein or necessary to make the statements
therein not misleading, and the General Disclosure Package, as of the Applicable Time and as
of the Closing Date, any Permitted Free Writing Prospectus as of its date and as of the
Closing Date, the Prospectus and each amendment or supplement thereto, as of the respective
date thereof and as of the Closing Date, did not include any untrue statement of a material
fact and did not omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances in which they were made, not misleading, (ii)
since the effective date of the Registration Statement, no event has occurred which should
have been set forth in a supplement or amendment to the Registration Statement, the General
Disclosure Package or the Prospectus that has not been so set forth therein, (iii) to the
best of their knowledge after reasonable investigation, as of the Closing Date, the
representations and warranties of the Company in this Agreement are true and correct and the
Company has complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date, and (iv) there has not
been, subsequent to the date of the most recent audited financial statements included or
incorporated by reference in the General Disclosure Package, any material adverse change in
the financial position or results of operations of the Company and its subsidiaries, or any
change or development that, singly or in the aggregate, would involve a material adverse
change or a prospective material adverse change, in or affecting the condition (financial or
otherwise), results of operations, business, assets or prospects of the Company and its
subsidiaries taken as a whole, except as set forth in the Prospectus.
(i) Since the date of the latest audited financial statements included in the General
Disclosure Package or incorporated by reference in the General Disclosure Package as of the
date hereof, (i) neither the Company nor any of its subsidiaries shall have sustained any
loss or interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth in the General Disclosure Package, and
(ii) there shall not have been any change in the capital stock or long-term debt of the
Company nor any of its subsidiaries, or any change, or any development involving a
prospective change, in or affecting the business, general affairs, management, financial
position, stockholders’ equity or results of operations of the Company and its subsidiaries,
otherwise than as set forth in the General Disclosure Package, the effect of which, in any
such case described in clause (i) or (ii) of this paragraph (i), is, in the judgment
of the Representative, so material and adverse as to make it impracticable or inadvisable to
proceed with the sale or delivery of the Shares
and Warrants included in the Units on the terms and in the manner contemplated in the
General Disclosure Package.
(j) No action shall have been taken and no law, statute, rule, regulation or order
shall have been enacted, adopted or issued by any governmental agency or body which would
prevent the issuance or sale of any of the Securities or materially and adversely affect or
potentially materially and adversely affect the business or operations of the Company or its
subsidiaries; and no injunction, restraining order or order of any other nature by any
federal or state court of competent jurisdiction shall have been issued which would prevent
the issuance or sale of any of the Shares and Warrants included in the Units or materially
and adversely affect or potentially materially and adversely affect the business or
operations of the Company or its subsidiaries.
(k) Subsequent to the execution and delivery of this Agreement there shall not have
occurred any of the following: (i) trading in securities generally on the New York Stock
Exchange, Nasdaq CM or the NYSE Arca or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter market, shall have been
suspended or materially limited, or minimum or maximum prices or maximum range for prices
shall have been established on any such exchange or such market by the Commission, by such
exchange or market or by any other regulatory body or governmental authority having
jurisdiction, (ii) 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, (iii) the United States shall have
become engaged in hostilities, or the subject of an act of terrorism, or there shall have
been an outbreak of or 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 (iv) there
shall have occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial markets in
the United States shall be such) as to make it, in the judgment of the Representative,
impracticable or inadvisable to proceed with the sale or delivery of the Shares and Warrants
included in the Units on the terms and in the manner contemplated in the General Disclosure
Package and the Prospectus.
(l) The Company shall have filed a Notification Form: Listing of Additional Shares with
the Nasdaq CM and shall have received no objection thereto from the Nasdaq CM.
(m) The Placement Agents shall have received the written agreements, substantially in
the form of Exhibit C hereto, of the executive officers and directors of the Company
listed in Schedule B to this Agreement.
(n) The Company shall have entered into Subscription Agreements with each of the
Purchasers and such agreements shall be in full force and effect.
(o) The Company shall have entered into the Warrant Agreements with each Purchaser and
such agreements shall be in full force and effect.
(p) The Placement Agents shall have received clearance from FINRA as to the amount of
compensation allowable or payable to the Placement Agents as described in the Pricing
Prospectus.
(q) Prior to the Closing Date, the Company shall have furnished to the Placement Agents
such further information, opinions, certificates (including a Secretary’s Certificate),
letters or documents as the Representative shall have reasonably requested.
All opinions, letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Placement Agents.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Placement Agent, each of its
affiliates and each of its and their respective directors, officers, members, employees,
representatives and agents (including, without limitation Lazard Frères & Co. LLC, (which
will provide services to LCM) and its affiliates, and each of its and their respective
directors, officers, members, employees, representatives and agents and each person, if any,
who controls Lazard Frères & Co. LLC within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) and each person, if any, who controls such Placement
Agent within the meaning of Section 15 of the Securities Act of or Section 20 of the
Exchange Act (collectively, the “Placement Agent Indemnified Parties,” and each a “Placement
Agent Indemnified Party”) against any loss, claim, damage, expense or liability whatsoever
(or any action, investigation or proceeding in respect thereof), joint or several, to which
such Placement Agent Indemnified Party may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, expense, liability, action, investigation or
proceeding arises out of or is based upon (A) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, any Issuer Free
Writing Prospectus, any “issuer information” filed or required to be filed pursuant to Rule
433(d) of the Rules and Regulations, any Registration Statement or the Prospectus, or in any
amendment or supplement thereto or document incorporated by reference therein, (B) the
omission or alleged omission to state in any Preliminary Prospectus, any Issuer Free Writing
Prospectus, any “issuer information” filed or required to be filed pursuant to Rule 433(d)
of the Rules and Regulations, any Registration Statement or the Prospectus, or in any
amendment or supplement thereto or document incorporated by reference therein, a material
fact required to be stated therein or necessary to make the statements therein not
misleading or (C) any breach of the representations and warranties of the Company contained
herein, or the failure of the Company to perform its obligations hereunder, under the
Subscription Agreements or pursuant to any law, and shall reimburse the Placement Agent
Indemnified Party promptly upon demand for any legal fees or other expenses reasonably
incurred by that Placement Agent Indemnified Party in connection with investigating, or
preparing to defend, or defending against, or appearing as a third party witness in respect
of, or otherwise incurred in connection with, any such loss, claim, damage, expense,
liability, action, investigation or proceeding, as such fees and expenses are incurred;
provided, however, that
the
Company shall not be liable in any such case to the extent that any such loss, claim, damage, expense or liability arises out of or is
based upon an untrue statement or alleged untrue statement in, or omission or alleged
omission from any Preliminary Prospectus, any Registration Statement or the Prospectus, or
any such amendment or supplement thereto, or any Issuer Free Writing Prospectus made in
reliance upon and in conformity with written information furnished to the Company by the
Placement Agents specifically for use therein, which information the parties hereto agree is
limited to the Placement Agents’ Information (as defined in Section 18). This
indemnity agreement is not exclusive and will be in addition to any liability, which the
Company might otherwise have and shall not limit any rights or remedies which may otherwise
be available at law or in equity to each Placement Agent Indemnified Party.
(b) Each Placement Agent shall, severally and not jointly, indemnify and hold harmless
the Company and its directors, its officers who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (collectively, the “Company Indemnified Parties,” and
each a “Company Indemnified Party”) against any loss, claim, damage, expense or liability
whatsoever (or any action, investigation or proceeding in respect thereof), joint or
several, to which such Company Indemnified Party may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, expense, liability, action,
investigation or proceeding arises out of or is based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary Prospectus, any
Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed
pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the
Prospectus, or in any amendment or supplement thereto, or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any
“issuer information” filed or required to be filed pursuant to Rule 433(d) of the Rules and
Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement
thereto, a material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by the Placement Agents
specifically for use therein, which information the parties hereto agree is limited to the
Placement Agents’ Information as defined in Section18, and shall reimburse the
Company Indemnified Party for any legal or other expenses reasonably incurred by such party
in connection with investigating or preparing to defend or defending against or appearing as
third party witness in connection with any such loss, claim, damage, liability, action,
investigation or proceeding, as such fees and expenses are incurred. Notwithstanding the
provisions of this Section 8(b), in no event shall any indemnity by any Placement
Agent under this Section 8(b) exceed the total Placement Fee received by such
Placement Agent in accordance with Section 2.5.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
such indemnifying party in writing of the commencement of that action; provided, however,
that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure; and, provided, further, that the failure to
notify an indemnifying party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 8. If any such action shall be
brought against an indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume the defense
of such action with counsel reasonably satisfactory to the indemnified party (which counsel
shall not, except with the written consent of the indemnified party, be counsel to the
indemnifying party). After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such action, except as provided herein, the
indemnifying party shall not be liable to the indemnified party under Section 8 for
any legal or other expenses subsequently incurred by the indemnified party in connection
with the defense of such action other than reasonable costs of investigation; provided,
however, that any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense of such action but the fees and expenses of
such counsel (other than reasonable costs of investigation) shall be at the expense of such
indemnified party unless (i) the employment thereof has been specifically authorized in
writing by the Company in the case of a claim for indemnification under Section 8(a)
or Section 2.1 or the Placement Agents in the case of a claim for indemnification
under Section 8(b), (ii) such indemnified party shall have been advised by its
counsel that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party, or (iii) the indemnifying
party has failed to assume the defense of such action and employ counsel reasonably
satisfactory to the indemnified party within a reasonable period of time after notice of the
commencement of the action or the indemnifying party does not diligently defend the action
after assumption of the defense, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the expense of
the indemnifying party, the indemnifying party shall not have the right to assume the
defense of (or, in the case of a failure to diligently defend the action after assumption of
the defense, to continue to defend) such action on behalf of such indemnified party and the
indemnifying party shall be responsible for legal or other expenses subsequently incurred by
such indemnified party in connection with the defense of such action; provided, however,
that the indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified parties (in
addition to any local counsel), which firm shall be designated in writing by LCM if the
indemnified parties under this Section 8 consist of any Placement Agent Indemnified
Party or by the Company if the indemnified parties under this Section 8 consist of
any Company Indemnified Parties. Subject to this Section 8(c), the amount payable
by an indemnifying party under
Section 8 shall include, but not be limited to, (x)
reasonable legal fees and expenses of counsel to the indemnified
party and any other expenses in investigating, or preparing to defend or defending against, or appearing as a
third party witness in respect of, or otherwise incurred in connection with, any action,
investigation, proceeding or claim, and (y) all amounts paid in settlement of
any of the foregoing. No indemnifying party shall, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry of judgment with
respect to any pending or threatened action or any claim whatsoever, in respect of which
indemnification or contribution could be sought under this Section 8 (whether or not
the indemnified parties are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified party in
form and substance reasonably satisfactory to such indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any indemnified
party. Subject to the provisions of the following sentence, no indemnifying party shall be
liable for settlement of any pending or threatened action or any claim whatsoever that is
effected without its written consent (which consent shall not be unreasonably withheld or
delayed), but if settled with its written consent, if its consent has been unreasonably
withheld or delayed or if there be a judgment for the plaintiff in any such matter, the
indemnifying party agrees to indemnify and hold harmless any indemnified party from and
against any loss or liability by reason of such settlement or judgment. In addition, if at
any time an indemnified party shall have requested that an indemnifying party reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party agrees that it
shall be liable for any settlement of the nature contemplated herein effected without its
written consent if (i) such settlement is entered into more than forty-five (45) days after
receipt by such indemnifying party of the request for reimbursement, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least thirty (30) days
prior to such settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the date of such
settlement.
(d) If the indemnification provided for in this Section 8 is unavailable or
insufficient to hold harmless an indemnified party under Section 8(a) or Section
8(b), then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid, payable or otherwise incurred by such indemnified
party as a result of such loss, claim, damage, expense or liability (or any action,
investigation or proceeding in respect thereof), as incurred, (i) in such proportion as
shall be appropriate to reflect the relative benefits received by the Company on the one
hand and the Placement Agents on the other hand from the Offering, or (ii) if the allocation
provided by clause (i) of this Section 8(d) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits referred to in
clause (i) of this Section 8(d) but also the relative fault of the Company on the
one hand and the Placement Agents on the other with respect to the statements, omissions,
acts or failures to act which resulted in such loss, claim, damage, expense or liability (or
any action, investigation or proceeding in respect thereof) as well as any other relevant
equitable considerations. The relative benefits received by the Company on the one hand and
the Placement Agents on the other with respect to such offering shall be deemed to be in the
same proportion as the total net proceeds from the offering of the Securities purchased
under this Agreement (before deducting expenses) received by the Company bear to the total
Placement Fee received by each Placement Agent in connection with the Offering, in each case
as set forth in the table on the cover page of the Prospectus. The relative fault of the
Company on the one hand and the Placement
Agents on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or such Placement Agent on the other, the intent of
the parties and their relative knowledge, access to information and opportunity to correct
or prevent such untrue statement, omission, act or failure to act; provided that the parties
hereto agree that the written information furnished to the Company by the Placement Agents
for use in any Preliminary Prospectus, any Registration Statement or the Prospectus, or in
any amendment or supplement thereto, consists solely of the Placement Agents’ Information as
defined in Section 18. The Company and the Placement Agents agree that it would not
be just and equitable if contributions pursuant to this Section 8(d) were to be
determined by pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage, expense, liability, action,
investigation or proceeding referred to above in this Section 8(d) shall be deemed
to include, for purposes of this Section 8(d), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating, preparing to
defend or defending against or appearing as a third party witness in respect of, or
otherwise incurred in connection with, any such loss, claim, damage, expense, liability,
action, investigation or proceeding. Notwithstanding the provisions of this Section
8(d), no Placement Agent shall be required to contribute any amount in excess of the
total Placement Fee received by such Placement Agent in accordance with Section 2.5
less the amount of any damages which such Placement Agent has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement, omission or alleged
omission, act or alleged act or failure to act or alleged failure to act. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Placement Agents’ obligations to contribute as provided in this
Section 8(d) are several in proportion to the amount of the Placement Fee received
by each of them and not joint.
9. Termination. The obligations of the Placement Agents and the Purchasers
hereunder and under the Subscription Agreements may be terminated by the Representative, in its
absolute discretion by notice given to the Company prior to delivery of and payment for the Units
if, prior to that time, any of the events described in Sections 7(i), 7(j) or
7(k) have occurred or if the Purchasers shall decline to purchase the Units for any reason
permitted under this Agreement or the Subscription Agreements.
10. Reimbursement of Placement Agents’ Expenses. Notwithstanding anything
to the contrary in this Agreement, if (a) this Agreement shall have been terminated pursuant to
Section 9, (b) the Company shall fail to tender any of the Shares and/or Warrants for
delivery to the Purchasers for any reason not permitted under this Agreement, (c) the Purchasers
shall decline to purchase the Units for any reason permitted under this Agreement or (d) the sale
of the Units is not consummated because any condition to the obligations of the Purchasers or the
Placement Agents set forth herein is not satisfied or because of the refusal, inability or failure
on the part of the Company to perform any agreement herein or to satisfy any condition or to comply
with the provisions hereof, then, in addition to the payment of any amounts in accordance with
Section 6, the Company shall reimburse the Placement Agents for the fees and
expenses of the Placement Agents’ counsel and for such other out-of-pocket expenses as shall
have been reasonably incurred by them in connection with this Agreement and the proposed Offering,
and upon demand the Company shall pay the full amount thereof to the Representative on behalf of
the Placement Agents.
11. Authority of the Representative. Ardour consents and agree that LCM
will act as Representative of the Placement Agents under this Agreement and with respect to the
sale of the Units. Accordingly, Ardour authorizes LCM to manage the Offering and the sale of the
Units and to take such action in connection therewith as LCM in its sole discretion deems
appropriate or desirable, consistent with the provisions of the Agreement Among Underwriters
previously entered into between LCM and Ardour, and LCM and Ardour, respectively, taking into
account that the Offering of the Units will be in the form of a best efforts placement and not a
firm commitment underwriting. Ardour agrees to comply with such Agreement Among Underwriters and
that any action taken under this Agreement by the Representative shall be binding upon all of the
Placement Agents.
12. Absence of Fiduciary Relationship. The Company acknowledges and agrees
that:
(a) Each of the Placement Agent’s responsibility to the Company is several and solely
contractual in nature, the Placement Agents have been retained solely to act as a placement
agent in connection with the Offering and no fiduciary, advisory or agency relationship
between the Company and any Placement Agent has been created in respect of any of the
transactions contemplated by this Agreement, irrespective of whether any Placement Agent or
Lazard Frères & Co. LLC has advised or is advising the Company on other matters;
(b) the price of the Units set forth in this Agreement was established by the Company
following discussions and arms-length negotiations with the Placement Agents, and the
Company is capable of evaluating and understanding, and understands and accepts, the terms,
risks and conditions of the transactions contemplated by this Agreement;
(c) it has been advised that the Placement Agents and Lazard Frères & Co. LLC and each
of their affiliates are engaged in a broad range of transactions which may involve interests
that differ from those of the Company and that no Placement Agent has any obligation to
disclose such interests and transactions to the Company by virtue of any fiduciary, advisory
or agency relationship; and
(d) it waives, to the fullest extent permitted by law, any claims it may have against
the Placement Agents for breach of fiduciary duty or alleged breach of fiduciary duty and
agrees that the Placement Agents shall have no liability (whether direct or indirect) to the
Company in respect of such a fiduciary duty claim or to any person asserting a fiduciary
duty claim on behalf of or in right of the Company, including stockholders, employees or
creditors of the Company.
13. Successors; Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Placement Agents, the Company, and their
respective successors and assigns. This Agreement shall also inure to the benefit of Lazard Frères
& Co. LLC, the Purchasers, and each of their respective successors and assigns, which shall be
third party beneficiaries hereof. Notwithstanding the foregoing, as provided in the Subscription
Agreements, the determination as to whether any condition in Section 7 hereof shall have
been satisfied, and the waiver of any condition in Section 7 hereof, may be made by the
Representative in its sole discretion, and any such determination or waiver shall be binding on
each of the Purchasers and shall not require the consent of any Purchaser. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person, other than the
persons mentioned in the preceding sentences, any legal or equitable right, remedy or claim under
or in respect of this Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and exclusive benefit
of such persons and for the benefit of no other person; except that the representations,
warranties, covenants, agreements and indemnities of the Company contained in this Agreement shall
also be for the benefit of the Placement Agent Indemnified Parties and the several indemnities of
each Placement Agent shall be for the benefit of the Company Indemnified Parties. It is understood
that each Placement Agent’s responsibility to the Company is solely contractual in nature and no
Placement Agent owes the Company, or any other party, any fiduciary duty as a result of this
Agreement.
14. Survival of Indemnities, Representations, Warranties, etc. The
respective indemnities, covenants, agreements, representations, warranties and other statements of
the Company and each Placement Agent, as set forth in this Agreement or made by them respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation
made by or on behalf of the Placement Agents, the Company, the Purchasers or any person controlling
any of them and shall survive delivery of and payment for the Units. Notwithstanding any
termination of this Agreement, including without limitation any termination pursuant to Section
9, the indemnity, contribution and reimbursement agreements contained in Sections 8 and
10, respectively, and the covenants, representations, warranties set forth in this
Agreement shall not terminate and shall remain in full force and effect at all times.
15. Notices. All statements, requests, notices and agreements hereunder
shall be in writing, and:
(a) if to the Placement Agents, shall be delivered or sent by mail, telex, facsimile
transmission or email to Lazard Capital Markets LLC, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, XX
00000, Attention: General Counsel, Fax: 000-000-0000; and
(b) if to the Company, shall be delivered or sent by mail, telex, facsimile
transmission or email to Cereplast, Inc., 000 X. Xxxxxxxxxxx Xxxx., Xxxxx 000, Xx Xxxxxxx,
XX 00000, Attention: Xxxxxxx Xxxxxxx, CFO, Fax: 000-000-0000; with a copy to
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP, 00 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000,
Attention: Xxxxxxx Xxxxxxxxx, Esq., Fax: 000-000-0000
provided, however, that any notice to the Placement Agents pursuant to Section 8 shall be
delivered or sent by mail, email, overnight mail or facsimile transmission to the Representative at
its address set forth in its acceptance communication to the Placement Agents, which address will
be supplied to any other party hereto by the Placement Agents upon request. Any such statements,
requests, notices or agreements shall take effect at the time of receipt thereof, except that any
such statement, request, notice or agreement delivered or sent by email shall take effect at the
time of confirmation of receipt thereof by the recipient thereof.
16. Definition of Certain Terms. For purposes of this Agreement, (a)
"business day” means any day on which the New York Stock Exchange, Inc. is open for trading, (b)
"subsidiary” has the meaning set forth in Rule 405 of the Rules and Regulations and (c) “knowledge”
means the knowledge of the directors and officers of the Company after reasonable inquiry.
17. Governing Law, Agent for Service and Jurisdiction. This Agreement shall
be governed by and construed in accordance with the laws of the State of New York, including
without limitation Section 5-1401 of the New York General Obligations Law. No legal proceeding may
be commenced, prosecuted or continued in any court other than the courts of the State of New York
located in the City and County of New York or in the United States District Court for the Southern
District of New York, which courts shall have jurisdiction over the adjudication of such matters,
and the Company and the Placement Agents each hereby consent to the jurisdiction of such courts and
personal service with respect thereto. The Company and the Placement Agents each hereby waive all
right to trial by jury in any legal proceeding (whether based upon contract, tort or otherwise) in
any way arising out of or relating to this Agreement. The Company agrees that a final judgment in
any such legal proceeding brought in any such court shall be conclusive and binding upon the
Company and the Placement Agents and may be enforced in any other courts in the jurisdiction of
which the Company is or may be subject, by suit upon such judgment.
18. Placement Agents’ Information. The parties hereto acknowledge and agree
that, for all purposes of this Agreement, the Placement Agents’ Information consists solely of the
following information in the Prospectus: (i) the last paragraph on the front cover page concerning
the terms of the Offering; and (ii) the statements concerning the Placement Agents contained in the
[first] paragraph, and concerning the Placement Agents and Lazard Frères & Co. LLC in the [sixth]
paragraph, in each case under the heading “Plan of Distribution.”
19. Partial Unenforceability. The invalidity or unenforceability of any
section, paragraph, clause or provision of this Agreement shall not affect the validity or
enforceability of any other section, paragraph, clause or provision hereof. If any section,
paragraph, clause or provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as
are necessary to make it valid and enforceable.
20. General. 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. In this Agreement, the
masculine, feminine and neuter genders and the singular and the plural include one another. The
section headings in this Agreement are for the convenience of the parties only and will not affect
the construction or interpretation of this Agreement. This Agreement may be amended or
modified, and the observance of any term of this Agreement may be waived, only by a writing
signed by the Company and the Representative.
21. Research Analyst Independence. The Company acknowledges that each of
the Placement Agent’s research analysts and research departments are required to be independent
from its investment banking division and are subject to certain regulations and internal policies,
and that each of the Placement Agent’s research analysts may hold views and make statements or
investment recommendations and/or publish research reports with respect to the Company and/or the
offering that differ from the views of their investment banking division. The Company hereby
waives and releases, to the fullest extent permitted by law, any claims that the Company may have
against any Placement Agent with respect to any conflict of interest that may arise from the fact
that the views expressed by its independent research analysts and research departments may be
different from or inconsistent with the views or advice communicated to the Company by such
Placement Agent’s investment banking division. The Company acknowledges that each of the Placement
Agents is a full service securities firm and as such from time to time, subject to applicable
securities laws, rules and regulations, may effect transactions for its own account or the account
of its customers and hold long or short positions in debt or equity securities of the Company;
provided, however, that nothing in this Section 21 shall relieve any of the Placement
Agents of any responsibility or liability it may otherwise bear in connection with activities in
violation of applicable securities laws, rules or regulations.
22. Effectiveness of this Agreement; Counterparts. This Agreement shall become
effective upon the execution and delivery of this Agreement by the parties hereto. This Agreement
may be signed in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument and such signatures
may be delivered by facsimile or PDF format via email.
If the foregoing is in accordance with your understanding of the agreement among the Company
and the Placement Agents, kindly indicate your acceptance in the space provided for that purpose
below.
| Very truly yours, CEREPLAST, INC. |
||||
| By: | /s/ Xxxxxxxx Xxxxxx | |||
| Name: | Xxxxxxxx Xxxxxx | |||
| Title: | Chief Executive Officer | |||
| Accepted as of the date first above written: |
||||
| LAZARD CAPITAL MARKETS LLC | ||||
By: |
/s/ Xxxx Xxxxxx | |||
| Title: Managing Director | ||||
| ARDOUR CAPITAL INVESTMENTS, LLC | ||||
By: |
/s/ Xxxxx X. Xxxxxxxxxx | |||
| Name: Xxxxx X. Xxxxxxxxxx | ||||
| Title: Managing Partner | ||||
SCHEDULE A
General Use Free Writing Prospectuses
None.
SCHEDULE B
List of officers and directors subject to Section 5
| Name | Title | |
Xxxxxxxx Xxxxxx
|
Chief Executive Officer | |
Xxxxxxx Xxxxxxx
|
Senior Vice President & Chief Financial Officer | |
Xxxxxx Xxxxxxx
|
Senior Vice President, Research & Development | |
Xxxx Xxxxxx
|
Senior Vice President Operations | |
Xxxxxx Xxxxxx
|
Director | |
Xxxxxxx Xxxxxxx
|
Director | |
Xxxxx Xxxx
|
Director | |
Xxxxxxxx Xxxx
|
Director |
EXHIBIT A
Form of Subscription Agreement
EXHIBIT B
Form of Warrant
EXHIBIT C
Form of Lock-Up Agreement
November 10, 2011
LAZARD CAPITAL MARKETS LLC
ARDOUR CAPITAL INVESTMENTS, LLC
c/o Lazard Capital Markets LLC
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
ARDOUR CAPITAL INVESTMENTS, LLC
c/o Lazard Capital Markets LLC
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
| Re: | Cereplast, Inc. Offering of Common Stock and Warrants |
Dear Sirs:
In order to induce Lazard Capital Markets LLC (“Lazard”) and Ardour Capital Investments, LLC
(“Ardour”, and together with Lazard, the “Placement Agents”) to enter in to a certain placement
agent agreement with Cereplast, Inc., a Nevada corporation (the “Company”), with respect to the
offering of up to an aggregate of 3,125,000 units (the “Units”), with each Unit consisting of (i)
one share of common stock (each a “Share”), $0.001 par value per share (the “Common Stock”) of the
Company and (ii) one warrant to purchase 0.75 of a share of Common Stock (each a “Warrant”, and
collectively, the “Warrants”), the undersigned hereby agrees that for a period of ninety (90) days
(the “Lock-up Period”) following the date of the final prospectus filed by the Company with the
Securities and Exchange Commission in connection with such public offering, the undersigned will
not, without the prior written consent of Lazard, directly or indirectly, (i) offer, sell, assign,
transfer, pledge, contract to sell, or otherwise dispose of, or announce the intention to otherwise
dispose of, any shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock (including, without limitation, shares of Common Stock or any such
securities which may be deemed to be beneficially owned by the undersigned in accordance with the
rules and regulations promulgated under the Securities Act of 1933, as the same may be amended or
supplemented from time to time (such shares or securities, the “Beneficially Owned Shares”)), (ii)
enter into any swap, hedge or other agreement or arrangement that transfers in whole or in part,
the economic risk of ownership of any Beneficially Owned Shares, Common Stock or securities
convertible into or exercisable or exchangeable for Common Stock, or (iii) engage in any short
selling of any Beneficially Owned Shares, Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock.
If (i) the Company issues an earnings release or material news or a material event relating to
the Company occurs during the last seventeen (17) days of the Lock-up Period, or (ii) prior to the
expiration of the Lock-up Period, the Company announces that it will release earnings results
during the sixteen (16)-day period beginning on the last day of the Lock-up Period, the
restrictions imposed by this Agreement shall continue to apply until the expiration of the eighteen
(18)-day period beginning on the issuance of the earnings release or the occurrence of the material
news or material event.
Anything contained herein to the contrary notwithstanding, any person to whom shares of Common
Stock, securities convertible into or exercisable or exchangeable for Common Stock or Beneficially
Owned Shares are transferred from the undersigned shall be bound by the terms of this Agreement.
In addition, the undersigned hereby waives, from the date hereof until the expiration of the
Lock-up Period following the date of the Company’s final prospectus, any and all rights, if any, to
request or demand registration pursuant to the Securities Act of 1933, as amended, of any shares of
Common Stock or securities convertible into or exercisable or exchangeable for Common Stock that
are registered in the name of the undersigned or that are Beneficially Owned Shares. In order to
enable the aforesaid covenants to be enforced, the undersigned hereby consents to the placing of
legends and/or stop transfer orders with the transfer agent of the Common Stock with respect to any
shares of Common Stock, securities convertible into or exercisable or exchangeable for Common Stock
or Beneficially Owned Shares.
| [Signatory] |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
