UNDERWRITING AGREEMENT between BK TECHNOLOGIES CORPORATION and THINKEQUITY, A DIVISION OF FORDHAM FINANCIAL MANAGEMENT, INC., as Representative of the Several Underwriters BK TECHNOLOGIES CORPORATION UNDERWRITING AGREEMENT
Exhibit 1.1
between
BK TECHNOLOGIES CORPORATION
and
THINKEQUITY,
A DIVISION OF FORDHAM FINANCIAL MANAGEMENT, INC.,
as Representative of the Several Underwriters
BK TECHNOLOGIES CORPORATION
June 6,
2021
ThinkEquity,
A
Division of Fordham Financial Management, Inc.
As
Representative of the several Underwriters named on Schedule 1
attached hereto
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Ladies
and Gentlemen:
The
undersigned, BK Technologies Corporation, a corporation formed
under the laws of the State of Nevada (collectively with its
subsidiaries and affiliates, including, without limitation, all
entities disclosed or described in the Registration Statement (as
hereinafter defined) as being subsidiaries or affiliates of BK
Technologies Corporation, the “Company”), hereby confirms its
agreement (this “Agreement”) with ThinkEquity, a
division of Fordham Financial Management, Inc. (hereinafter
referred to as “you” (including its correlatives), or
the “Representative”), and with the
other underwriters named on Schedule 1 hereto for which the
Representative is acting as representative (the Representative and
such other underwriters being collectively called the
“Underwriters”
or, individually, an “Underwriter”) as
follows:
1. Purchase and Sale of
Shares.
1.1 Firm
Shares.
(i) On the basis of the
representations and warranties herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue
and sell to the several Underwriters, an aggregate of 3,695,000
shares (the “Firm
Shares”) of the Company’s common stock, par
value $0.60 per share (the “Common Stock”).
(ii) The
Underwriters, severally and not jointly, agree to purchase from the
Company the number of Firm Shares set forth opposite their
respective names on Schedule 1 attached hereto and
made a part hereof at a purchase price of $2.805 per Firm Share
(93.5% of the per Firm Share offering price). The Firm Shares are
to be offered initially to the public at the offering price set
forth on the cover page of the Prospectus (as defined in Section
2.1.1 hereof).
1.1.2 Shares
Payment and Delivery.
(i) Delivery and
payment for the Firm Shares shall be made at 10:00 a.m., Eastern
time, on the second (2nd) (or if the Firm
Shares are priced, as contemplated by Rule 15c6-1(c) under the
Exchange Act, after 4:30 p.m. Eastern time, the third
(3rd))
full business day following the date hereof, or at such earlier
time as shall be agreed upon by the Representative and the Company,
at the offices of ▇▇▇▇▇▇▇▇ & Worcester LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇ (“Representative Counsel”), or at
such other place (or remotely by facsimile or other electronic
transmission) as shall be agreed upon by the Representative and the
Company. The hour and date of delivery and payment for the Firm
Shares is called the “Closing
Date.”
(ii) Payment
for the Firm Shares shall be made on the Closing Date by wire
transfer in Federal (same day) funds, payable to the order of the
Company upon delivery of the certificates (in form and substance
satisfactory to the Underwriters) representing the Firm Shares (or
through the facilities of the Depository Trust Company
(“DTC”)) for the
account of the Representative. The Firm Shares shall be registered
in such name or names and in such authorized denominations as the
Representative may request in writing at least two (2) full
Business Days prior to the Closing Date. The Company shall not be
obligated to sell or deliver the Firm Shares except upon tender of
payment by the Representative for all of the Firm Shares. The term
“Business Day”
means any day other than a Saturday, a Sunday or a legal holiday or
a day on which banking institutions are authorized or obligated by
law to close in New York, New York.
1.2.1 Option Shares. For the purposes
of covering any over-allotments in connection with the distribution
and sale of the Firm Shares, the Company hereby grants to the
Representative an option to purchase up to 554,250 additional
shares of Common Stock, representing approximately fifteen percent
(15%) of the Firm Shares sold in the offering, from the Company
(the “Over-allotment
Option”). Such 554,250 additional shares of Common Stock, the net
proceeds of which will be deposited with the Company’s
account, are hereinafter referred to as the “Option Shares.” The purchase price
to be paid per Option Share shall be equal to the price per Firm
Share set forth in Section 1.1.1 hereof. The Firm Shares and the
Option Shares are hereinafter referred to together as the
“Public
Securities.” The offering and sale of the Public
Securities is hereinafter referred to as the “Offering.”
1.2.2 Exercise
of Option. The Over-allotment Option granted pursuant to
Section 1.2.1 hereof may be exercised by the Representative as to
all (at any time) or any part (from time to time) of the Option
Shares within 45 days after the date hereof. The Underwriters shall
not be under any obligation to purchase any Option Shares prior to
the exercise of the Over-allotment Option. The Over-allotment
Option granted hereby may be exercised by the giving of oral notice
to the Company from the Representative, which must be confirmed in
writing by overnight mail or facsimile or other electronic
transmission setting forth the number of Option Shares to be
purchased and the date and time for delivery of and payment for the
Option Shares (the “Option
Closing Date”), which shall not be later than two (2)
full Business Days after the date of the notice or such other time
as shall be agreed upon by the Company and the Representative, at
the offices of Representative Counsel or at such other place
(including remotely by facsimile or other electronic transmission)
as shall be agreed upon by the Company and the Representative. If
such delivery and payment for the Option Shares does not occur on
the Closing Date, the Option Closing Date will be as set forth in
the notice. Upon exercise of the Over-allotment Option with respect
to all or any portion of the Option Shares, subject to the terms
and conditions set forth herein, (i) the Company shall become
obligated to sell to the Underwriters the number of Option Shares
specified in such notice and (ii) each of the Underwriters, acting
severally and not jointly, shall purchase that portion of the total
number of Option Shares then being purchased as set forth in
Schedule 1 opposite
the name of such Underwriter bears to the total number of Firm
Shares, subject, in each case, to such adjustments as the
Representative, in its sole discretion, shall
determine.
1.2.3 Payment
and Delivery. Payment for the Option Shares shall be made on
the Option Closing Date by wire transfer in Federal (same day)
funds, payable to the order of the Company upon delivery to you of
certificates (in form and substance satisfactory to the
Underwriters) representing the Option Shares (or through the
facilities of DTC) for the account of the Underwriters. The Option
Shares shall be registered in such name or names and in such
authorized denominations as the Representative may request in
writing at least two (2) full Business Days prior to the Option
Closing Date. The Company shall not be obligated to sell or deliver
the Option Shares except upon tender of payment by the
Representative for applicable Option Shares. The Option Closing
Date may be simultaneous with, but not earlier than, the Closing
Date; and in the event that such time and date are simultaneous
with the Closing Date, the term “Closing Date” shall refer to the
time and date of delivery of the Firm Shares and Option
Shares.
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1.3 Representative
Warrants
1.3.1 Purchase
Warrants. The Company hereby agrees to issue and sell to the
Representative (and/or its designees) on the Closing Date an option
(“Representative’s
Warrant”) for the purchase of an aggregate of 184,750
shares of Common Stock, representing 5% of the Firm Shares, for an
aggregate purchase price of $100.00. The Representative’s
Warrant agreement, in the form attached hereto as Exhibit A (the
“Representative’s
Warrant Agreement”), shall be exercisable, in whole or
in part, commencing on a date which is one hundred eighty (180)
days after the date hereof and expiring on the five-year
anniversary of the date hereof at an initial exercise price per
share of Common Stock of $3.75, which is equal to 125% of the
public offering price of the Firm Shares. The
Representative’s Warrant Agreement and the shares of Common
Stock issuable upon exercise thereof are hereinafter referred to
together as the “Representative’s
Securities.” The Representative understands and agrees
that there are significant restrictions pursuant to FINRA Rule 5110
against transferring the Representative’s Warrant Agreement
and the underlying shares of Common Stock during the one hundred
eighty (180) days after the date hereof and by its acceptance
thereof shall agree that it will not sell, transfer, assign, pledge
or hypothecate the Representative’s Warrant Agreement, or any
portion thereof, or be the subject of any hedging, short sale,
derivative, put or call transaction that would result in the
effective economic disposition of such securities for a period of
one hundred eighty (180) days following the date hereof to anyone
other than (i) an Underwriter or a selected dealer in connection
with the Offering, or (ii) a bona fide officer or partner of the
Representative or of any such Underwriter or selected dealer; and
only if any such transferee agrees to the foregoing lock-up
restrictions.
1.3.2 Delivery. Delivery
of the Representative’s Warrant Agreement shall be made on
the Closing Date and shall be issued in the name or names and in
such authorized denominations as the Representative may
request.
2. Representations and Warranties of the
Company. The Company represents and warrants to the
Underwriters as of the Applicable Time (as defined below), as of
the Closing Date and as of the Option Closing Date, if any, as
follows:
2.1 Filing of Registration
Statement.
2.1.1 Pursuant to the Securities Act.
The Company has filed with the U.S. Securities and Exchange
Commission (the “Commission”) a “shelf”
registration statement on Form S-3 (File No. 333-251307), including
any related prospectus or prospectuses, for the registration of the
Public Securities under the Securities Act of 1933, as amended (the
“Securities
Act”), which registration statement was prepared by
the Company in all material respects in conformity with the
requirements of the Securities Act and the rules and regulations of
the Commission under the Securities Act (the “Securities Act Regulations”) and
contains and will contain all material statements that are required
to be stated therein in accordance with the Securities Act and the
Securities Act Regulations. Except as the context may otherwise
require, such registration statement on file with the Commission at
any given time, including any amendments thereto to such time,
exhibits and schedules thereto at such time, documents filed as a
part thereof or incorporated pursuant to Item 12 of Form S-3 under
the Securities Act at such time and the documents and information
otherwise deemed to be a part thereof or included therein pursuant
to Rule 430B of the Securities Act Regulations (the
“Rule 430B
Information”) or otherwise pursuant to the Securities
Act Regulations at such time, is referred to herein as the
“Registration
Statement.” The Registration Statement at the time it
originally became effective is referred to herein as the
“Initial Registration
Statement.” If the Company files any registration
statement pursuant to Rule 462(b) of the Securities Act
Regulations, then after such filing, the term “Registration
Statement” shall include such registration statement filed
pursuant to Rule 462(b). The Registration Statement was declared
effective by the Commission on December 29, 2020 (the
“Effective
Date”).
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The
prospectus in the form in which it was filed with the Commission in
connection with the Initial Registration Statement is herein called
the “Base
Prospectus.” Each preliminary prospectus supplement to
the Base Prospectus (including the Base Prospectus as so
supplemented) that described the Public Securities and the Offering
and omitted the Rule 430B Information and that was used prior to
the filing of the final prospectus supplement referred to in the
following paragraph is herein called a “Preliminary
Prospectus.”
Promptly after the execution and delivery of this
Agreement, the Company will prepare and file with the Commission a
final prospectus supplement to the Base Prospectus relating to the
Public Securities and the Offering in accordance with the
provisions of Rule 430B and Rule 424(b) of the Securities Act
Regulations. Such final prospectus supplement (including the Base
Prospectus as so supplemented), in the form filed with the
Commission pursuant to Rule 424(b) under the Securities Act is
herein called the “Prospectus.” Any reference herein to the Base
Prospectus, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Securities Act as of
the date of such prospectus.
“Applicable
Time” means 5:23 p.m. Eastern time, on the date of
this Agreement.
“Disclosure Package” means any
Issuer General Use Free Writing Prospectus issued at or prior to
the Applicable Time, the Preliminary Prospectus dated June 3, 2021
and the information included on Schedule 2-A hereto, all
considered together.
“Issuer Free Writing Prospectus”
means any “issuer free writing prospectus,” as defined
in Rule 433 of the Securities Act Regulations (“Rule 433”), including without
limitation any “free writing prospectus” (as defined in
Rule 405 of the Securities Act Regulations) relating to the Public
Securities that is (i) required to be filed with the Commission by
the Company, (ii) a “road show that is a written
communication” within the meaning of Rule 433(d)(8)(i),
whether or not required to be filed with the Commission, or (iii)
exempt from filing with the Commission pursuant to Rule
433(d)(5)(i) because it contains a description of the Public
Securities or of the Offering that does not reflect the final
terms, in each case in the form filed or required to be filed with
the Commission or, if not required to be filed, in the form
retained in the Company’s records pursuant to Rule
433(g).
“Issuer General Use Free Writing
Prospectus” means any Issuer Free Writing Prospectus
that is intended for general distribution to prospective investors
(other than a “bona
fide electronic road show,” as defined in Rule 433),
as evidenced by its being specified in Schedule 2-B
hereto.
“Issuer Limited Use Free Writing
Prospectus” means any Issuer Free Writing Prospectus
that is not an Issuer General Use Free Writing
Prospectus.
2.1.2 Pursuant
to the Exchange Act. The
Company has filed with the Commission a Form 8-A (Registration No.
001-32644) providing for the registration pursuant to Section 12(b)
under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), of the shares of Common Stock. The
registration of the shares of Common Stock and related Form 8-A
have become effective under the Exchange Act on or prior to the
date hereof. The Company has taken no action designed
to, or likely to have the effect of, terminating the registration
of the shares of Common Stock under the Exchange Act, nor has the
Company received any notification that the Commission is
contemplating terminating such registration.
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2.2 Stock Exchange Listing.
The shares of Common Stock have been
approved for listing on the NYSE American (the
“Exchange”), and the Company has taken no action
designed to, or likely to have the effect of, delisting the shares
of Common Stock from the Exchange, nor has the Company received any
notification that the Exchange is contemplating terminating such
listing except as described in the Registration Statement, the
Disclosure Package and the Prospectus. The Company has submitted
the Supplemental Listing Application for the listing of additional
shares with the Exchange with respect to the Offering of the Public
Securities.
2.3 No Stop Orders, etc. Neither
the Commission nor, to the Company’s knowledge, any state
regulatory authority has issued any order preventing or suspending
the use of the Registration Statement, any Preliminary Prospectus
or the Prospectus or has instituted or, to the Company’s
knowledge, threatened to institute, any proceedings with respect to
such an order. The Company has complied with each request (if any)
from the Commission for additional information.
For the purposes of this Agreement
“Knowledge” means, when referring to the
‘knowledge’ of the Company, or any similar phrase or
qualification based on knowledge, the actual knowledge of
Company’s officers and/or employees, and the knowledge that
each such person would have obtained after making due and
appropriate inquiry with respect to the particular matter in
question.
2.4 Disclosures in Registration
Statement.
2.4.1 Compliance
with Securities Act and 10b-5 Representation.
(i) Each of the Registration Statement and any
post-effective amendment thereto, at the time it became effective
(including each deemed effective date with respect to the
Underwriters pursuant to Rule 430B or otherwise under the
Securities Act) complied and will comply in all material respects
with the requirements of the Securities Act and the Securities Act
Regulations. The conditions for use of Form S-3, set forth in the
General Instructions thereto, including, but not limited to,
General Instruction I.B.6 and other conditions related to the offer
and sale of the Public Securities, have been satisfied. Each
Preliminary Prospectus and the Prospectus, at the time each was or
will be filed with the Commission, complied and will comply in all
material respects with the requirements of the Securities Act and
the Securities Act Regulations. Each Preliminary Prospectus
delivered to the Underwriters for use in connection with this
Offering and the Prospectus was or will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
(ii) Neither
the Registration Statement nor any amendment thereto, at its
effective time, as of the Applicable Time, at the Closing Date
contained, contains or will contain an untrue statement of a
material fact or omitted, omits or will omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading.
(iii) The
Disclosure Package, as of the Applicable Time, at the Closing Date
or at any Option Closing Date (if any), did not, does not and will
not include an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; and any Issuer Limited Use Free Writing Prospectus
hereto does not conflict with the information contained in the
Registration Statement, any Preliminary Prospectus or the
Prospectus, and each such Issuer Limited Use Free Writing
Prospectus, as supplemented by and taken together with the
Prospectus as of the Applicable Time, did not include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not
misleading; provided, however, that this representation and warranty shall not
apply to statements made or statements omitted in reliance upon and
in conformity with written information furnished to the Company
with respect to the Underwriters by the Representative expressly
for use in the Registration Statement, the Disclosure Package or
the Prospectus or any amendment thereof or supplement thereto. The
parties acknowledge and agree that such information provided by or
on behalf of any Underwriter consists solely of the following
statements concerning the Underwriters contained in the
“Underwriting” section of the Prospectus (the
“Underwriters
Information”): (i) the
second sentence of the subsection entitled “Discounts,
Commissions and Reimbursements” related to concessions; (ii)
the first three paragraphs under the subsection entitled
“Stabilization”; and (iii) the subsection entitled
“Electronic Offer, Sale and Distribution of
Securities.”
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(iv) Neither
the Prospectus nor any amendment or supplement thereto (including
any prospectus wrapper), as of its issue date, at the time of any
filing with the Commission pursuant to Rule 424(b), at the Closing
Date or at any Option Closing
Date, included, includes or will include an untrue statement of a
material fact or omitted, omits or will omit to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty shall not
apply to the Underwriters’ Information.
(v) The
documents incorporated by reference in the Registration Statement,
the Disclosure Package and the Prospectus, when they became
effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder and none of such
documents contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and any
further documents so filed and incorporated by reference in the
Registration Statement, the Disclosure Package and the Prospectus,
when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder, and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not
misleading.
2.4.2 Disclosure
of Agreements. The agreements
and documents described in the Registration Statement, the
Disclosure Package and the Prospectus conform in all material
respects to the descriptions thereof contained or incorporated by
reference therein and there are no agreements or other documents
required by the Securities Act and the Securities Act Regulations
to be described in the Registration Statement, the Disclosure
Package or the Prospectus, that have not been so described or filed
or incorporated by reference. Each agreement or other instrument
(however characterized or described) to which the Company is a
party or by which it is or may be bound or affected and (i) that is
referred to or incorporated by reference in the Registration
Statement, the Disclosure Package and the Prospectus, or (ii) is
material to the Company’s business, has been duly authorized
and validly executed by the Company, is in full force and effect in
all material respects and is enforceable against the Company and,
to the Company’s knowledge, the other parties thereto, in
accordance with its terms, except (x) as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors’ rights generally, (y) as enforceability
of any indemnification or contribution provision may be limited
under the federal and state securities laws, and (z) that the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to
the discretion of the court before which any proceeding therefor
may be brought. None of such agreements or instruments has been
assigned by the Company, and neither the Company nor, to the
Company’s knowledge, any other party is in default thereunder
and, to the Company’s knowledge, no event has occurred that,
with the lapse of time or the giving of notice, or both, would
constitute a default thereunder. To the Company’s knowledge,
performance by the Company of the material provisions of such
agreements or instruments will not result in a violation of any
existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign,
having jurisdiction over the Company or any of its assets or
businesses (each, a “Governmental
Entity”), including,
without limitation, those relating to environmental laws and
regulations.
2.4.3 Prior
Securities Transactions. No
securities of the Company have been sold by the Company or by or on
behalf of, or for the benefit of, any person or persons
controlling, controlled by or under common control with the Company
since January 1, 2018, except as disclosed in the Registration
Statement, the Disclosure Package and the Preliminary
Prospectus.
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2.4.4 Regulations.
The disclosures in the Registration
Statement, the Disclosure Package and the Prospectus concerning the
effects of federal, state, local and all foreign regulation on the
Offering and the Company’s business as currently contemplated
are correct in all respects and no other such regulations are
required to be disclosed in the Registration Statement, the
Disclosure Package and the Prospectus which are not so disclosed,
except as which would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse
Change.
2.4.5 No
Other Distribution of Offering Materials. The Company has not, directly or indirectly,
distributed and will not distribute any offering material in
connection with the Offering other than any Preliminary Prospectus,
the Disclosure Package, the Prospectus and other materials, if any,
permitted under the Securities Act and consistent with
Section 3.2 below.
2.5 Changes After Dates in Registration
Statement.
2.5.1 No
Material Adverse Change. Since
the respective dates as of which information is given in the
Registration Statement, the Disclosure Package and the Prospectus,
except as otherwise specifically stated therein: (i) there has been
no material adverse change in the financial position or results of
operations of the Company, nor any change or development that,
singularly or in the aggregate, would involve a material adverse
change in or affecting the condition (financial or otherwise),
results of operations, business or assets of the Company (a
“Material Adverse
Change”); (ii) there have
been no material transactions entered into by the Company, other
than as contemplated pursuant to this Agreement; and (iii) no
officer (as defined in Rule 16a-1(f) of the Exchange Act) or
director of the Company has resigned from any position with the
Company.
2.5.2 Recent
Securities Transactions, etc. Subsequent to the respective
dates as of which information is given in the Registration
Statement, the Disclosure Package and the Prospectus, and except as
may otherwise be indicated or contemplated herein or disclosed in
the Registration Statement, the Disclosure Package and the
Prospectus, the Company has not: (i) issued any securities or
incurred any liability or obligation, direct or contingent, for
borrowed money; or (ii) declared or paid any dividend or made any
other distribution on or in respect to its capital
stock.
2.6 Disclosures in Commission
Filings. Since January 1, 2018, (i) none of the
Company’s filings with the Commission contained any untrue
statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and
(ii) the Company has made all filings with the Commission required
under the Exchange Act and the rules and regulations of the
Commission promulgated thereunder (the “Exchange Act
Regulations”).
2.7 Independent Accountants.
To the knowledge of the Company,
MSL, P.A. (the “Auditor”), whose reports are filed with the
Commission and included or incorporated by reference in the
Registration Statement, the Disclosure Package and the Prospectus,
is an independent registered public accounting firm as required by
the Securities Act and the Securities Act Regulations and the
Public Company Accounting Oversight Board. The Auditor has not,
during the periods covered by the financial statements included or
incorporated by reference in the Registration Statement, the
Disclosure Package and the Prospectus, provided to the Company any
non-audit services, as such term is used in Section 10A(g) of the
Exchange Act.
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2.8 Financial
Statements, etc. The financial statements, including the
notes thereto and supporting schedules included or incorporated by
reference in the Registration Statement, the Disclosure Package and
the Prospectus, fairly present the financial position and the
results of operations of the Company at the dates and for the
periods to which they apply; and, except as expressly set forth
herein, such financial statements have been prepared in conformity
with U.S. generally accepted accounting principles
(“GAAP”),
consistently applied throughout the periods involved (provided that
unaudited interim financial statements are subject to year-end
audit adjustments that are not expected to be material in the
aggregate and do not contain all footnotes required by GAAP); and
the supporting schedules included or incorporated by reference in
the Registration Statement present fairly the information required
to be stated therein. Except as included therein, no other
historical or pro forma financial statements or supporting
schedules are required to be included in the Registration
Statement, the Disclosure Package or the Prospectus by the
Securities Act or the Securities Act Regulations. The pro forma
financial statements and the related notes, if any, included or
incorporated by reference in the Registration Statement, the
Disclosure Package and the Prospectus have been properly compiled
and prepared in accordance with the applicable requirements of the
Securities Act and the Securities Act Regulations and present
fairly the information shown therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein. All disclosures contained in the
Registration Statement, the Disclosure Package or the Prospectus,
or incorporated or deemed incorporated by reference therein,
regarding “non-GAAP financial measures” (as such term
is defined by the rules and regulations of the Commission), if any,
comply with Regulation G of the Exchange Act and Item 10 of
Regulation S-K of the Securities Act, to the extent applicable.
Each of the Registration Statement, the Disclosure Package and the
Prospectus discloses all material off-balance sheet transactions,
arrangements, obligations (including contingent obligations), and
other relationships of the Company with unconsolidated entities or
other persons that may have a material current or future effect on
the Company’s financial condition, changes in financial
condition, results of operations, liquidity, capital expenditures,
capital resources, or significant components of revenues or
expenses. Except as disclosed in the Registration Statement, the
Disclosure Package and the Prospectus, (a) neither the Company nor
any of its direct and indirect subsidiaries, including each entity
disclosed or described in the Registration Statement, the
Disclosure Package and the Prospectus as being a subsidiary of the
Company (each, a “Subsidiary” and, collectively, the
“Subsidiaries”),
has incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions other than in
the ordinary course of business, (b) the Company has not declared or paid any dividends or made any
distribution of any kind with respect to its capital stock, (c)
there has not been any change in the capital stock of the Company
or any of its Subsidiaries, or, other than in the course of
business or any grants under any stock compensation plan, and (d)
there has not been any Material Adverse Change in the
Company’s long-term or short-term debt.
2.9 Authorized Capital; Options,
etc. The Company had, at the date or dates indicated in the
Registration Statement, the Disclosure Package and the Prospectus,
the duly authorized, issued and outstanding capitalization as set
forth therein. Based on the assumptions stated in the Registration
Statement, the Disclosure Package and the Prospectus, the Company
will have on the Closing Date the adjusted stock capitalization set
forth therein. Except as set forth in, or contemplated by, the
Registration Statement, the Disclosure Package and the Prospectus,
on the Effective Date, as of the Applicable Time and on the Closing
Date, there will be no stock options, warrants, or other rights to
purchase or otherwise acquire any authorized, but unissued shares
of Common Stock of the Company or any security convertible or
exercisable into shares of Common Stock of the Company, or any
contracts or commitments to issue or sell shares of Common Stock or
any such options, warrants, rights or convertible
securities.
-8-
2.10 Valid
Issuance of Securities, etc.
2.10.1 Outstanding
Securities. All issued and outstanding securities of the
Company issued prior to the transactions contemplated by this
Agreement have been duly authorized and validly issued and are
fully paid and non-assessable; the holders thereof have no rights
of rescission or similar rights with respect thereto or put rights,
and are not subject to personal liability by reason of being such
holders; and none of such securities were issued in violation of
the preemptive rights, rights of first refusal or rights of
participation of any holders of any security of the Company or
similar contractual rights granted by the Company. The authorized
shares of Common Stock conform in all material respects to all
statements relating thereto contained in the Registration
Statement, the Disclosure Package and the Prospectus. The offers
and sales of the outstanding shares of Common Stock were at all
relevant times either registered under the Securities Act and the
applicable state securities or “blue sky” laws or,
based in part on the representations and warranties of the
purchasers of such securities, exempt from such registration
requirements.
2.10.2 Securities
Sold Pursuant to this Agreement. The Public Securities have
been duly authorized for issuance and sale and, when issued and
paid for, will be validly issued, fully paid and non-assessable;
the holders thereof are not and will not be subject to personal
liability by reason of being such holders; the Public Securities
are not and will not be subject to the preemptive rights of any
holders of any security of the Company or similar contractual
rights granted by the Company; and all corporate action required to
be taken for the authorization, issuance and sale of the Public
Securities has been duly and validly taken. The Public Securities
conform in all material respects to all statements with respect
thereto contained in the Registration Statement, the Disclosure
Package and the Prospectus.
2.11 Registration
Rights of Third Parties. Except as set forth in the
Registration Statement, Disclosure Package and the Prospectus, no
holders of any securities of the Company or any rights exercisable
for or convertible or exchangeable into securities of the Company
have the right to require the Company to register any such
securities of the Company under the Securities Act or to include
any such securities in a registration statement to be filed by the
Company.
2.12 Validity
and Binding Effect of Agreements. This Agreement has been
duly and validly authorized by the Company, and, when executed and
delivered, will constitute, the valid and binding agreement of the
Company, enforceable against the Company in accordance with their
respective terms, except: (i) as such enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally; (ii) as enforceability of any
indemnification or contribution provision may be limited under the
federal and state securities laws; and (iii) that the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
2.13 No
Conflicts, etc. The execution, delivery and performance by
the Company of this Agreement and all ancillary documents, the
consummation by the Company of the transactions herein and therein
contemplated and the compliance by the Company with the terms
hereof and thereof do not and will not, with or without the giving
of notice or the lapse of time or both: (i) result in a material
breach of, or conflict with any of the terms and provisions of, or
constitute a material default under, or result in the creation,
modification, termination or imposition of any lien, charge,
mortgage, pledge, security interest, claim, equity, trust or other
encumbrance, preferential arrangement, defect or restriction of any
kind whatsoever or encumbrance upon any property or assets of the
Company pursuant to the terms of any indenture, mortgage, deed of
trust, note, lease, loan agreement or any other agreement or
instrument, franchise, license or permit to which the Company is a
party or as to which any property of the Company is a party; (ii)
result in any violation of the provisions of the Company’s
Certificate of Incorporation, as amended (as the same may be
amended or restated from time to time, the “Charter”) or the by-laws of the
Company (as the same may be amended or restated from time to time,
the “Bylaws”);
or (iii) violate any existing applicable law, rule, regulation,
judgment, order or decree of any Governmental Entity as of the date
hereof; except in the cases of clauses (i) and (iii) above, for
such breaches or conflicts which would not reasonably be expected
to have a Material Adverse Change.
-9-
2.14 No
Defaults; Violations. No
default exists in the due performance and observance of any term,
covenant or condition of any license, contract, indenture,
mortgage, deed of trust, note, loan or credit agreement, or any
other agreement or instrument evidencing an obligation for borrowed
money, or any other agreement or instrument to which the Company is
a party or by which the Company may be bound or to which any of the
properties or assets of the Company is subject, except for defaults
that would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Change. The Company is not
in violation of any term or provision of its Charter or Bylaws, or
in violation of any franchise, license, permit, applicable law,
rule, regulation, judgment or decree of any Governmental Entity,
except for violations that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse
Change.
2.15 Corporate
Power; Licenses; Consents.
2.15.1 Conduct
of Business. Except as
described in the Registration Statement, the Disclosure Package and
the Prospectus, the Company has all requisite corporate power and
authority, and has all necessary authorizations, approvals, orders,
licenses, certificates and permits of and from all governmental
regulatory officials and bodies that it needs as of the date hereof
to conduct its business purpose as described in the Registration
Statement, the Disclosure Package and the Prospectus, except for
any of the foregoing that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse
Change.
2.15.2 Transactions
Contemplated Herein. The
Company has all corporate power and authority to enter into this
Agreement and to carry out the provisions and conditions hereof,
and all consents, authorizations, approvals and orders required in
connection therewith have been obtained. No consent, authorization
or order of, and no filing with, any court, government agency or
other body is required for the valid issuance, sale and delivery of
the Public Securities and the consummation of the transactions and
agreements contemplated by this Agreement and the
Representative’s Warrant Agreement and as contemplated by the
Registration Statement, the Disclosure Package and the Prospectus,
except with respect to applicable federal, state and/or foreign
securities laws, the rules and regulations of the Exchange and the
rules and regulations of the Financial Industry Regulatory
Authority, Inc. (“FINRA”).
2.16 D&O
Questionnaires. To the Company’s knowledge, all
information contained in the questionnaires (the
“Questionnaires”)
completed by each of the Company’s directors and officers
prior to the Offering (the “Insiders”), as supplemented by all
information concerning the Company’s directors and officers
as described in the Registration Statement, the Disclosure Package
and the Prospectus, as well as in the Lock-Up Agreement (as defined
in Section 2.27 below) provided to the Underwriters, is true and
correct in all material respects and the Company has not become
aware of any information which would cause the information
disclosed in the Questionnaires to become materially inaccurate and
incorrect.
2.17 Litigation;
Governmental Proceedings. There
is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding pending or, to
the Company’s knowledge, threatened against, or involving the
Company or, to the Company’s knowledge, any executive officer
or director which has not been disclosed in the Registration
Statement, the Disclosure Package and the Prospectus, or in
connection with the Company’s listing application for the
listing of the Public Securities on the Exchange, and which is
required to be disclosed.
2.18 Good
Standing. The Company has been
duly incorporated and is validly existing as a corporation and is
in good standing under the laws of the State of Nevada as of the
date hereof, and is duly qualified to do business and is in good
standing in each other jurisdiction in which its ownership or lease
of property or the conduct of business requires such qualification,
except where the failure to be so qualified or in good standing,
singularly or in the aggregate, would not have or reasonably be
expected to result in a Material Adverse
Change.
-10-
2.19 Insurance.
The Company carries or is entitled to the benefits of insurance,
with reputable insurers, in such amounts and covering such risks
which the Company believes are adequate, including, but not limited
to, directors and officers insurance coverage at least equal to
$5,000,000, and all such insurance is in full force and effect. The
Company has no reason to believe that it will not be able (i) to
renew its existing insurance coverage as and when such policies
expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its
business as now conducted and at a cost that would not result in a
Material Adverse Change.
2.20 Transactions
Affecting Disclosure to FINRA.
2.20.1 Finder’s
Fees. Except as described in the Registration Statement, the
Disclosure Package and the Prospectus, there are no claims,
payments, arrangements, agreements or understandings relating to
the payment of a finder’s, consulting or origination fee by
the Company or any Insider with respect to the sale of the Public
Securities hereunder or any other arrangements, agreements or
understandings of the Company or, to the Company’s knowledge,
any of its shareholders that may affect the Underwriters’
compensation, as determined by FINRA.
2.20.2 Payments
Within Twelve Months. Except for payments made to the
Representative and except as described in the Registration
Statement, the Disclosure Package and the Prospectus, the Company
has not made any direct or indirect payments (in cash, securities
or otherwise) to: (i) any person, as a finder’s fee,
consulting fee or otherwise, in consideration of such person
raising capital for the Company or introducing to the Company
persons who raised or provided capital to the Company; (ii) any
FINRA member; or (iii) any person or entity that has any direct or
indirect affiliation or association with any FINRA member, within
the twelve months prior to the date of this Agreement, other than
the payment to the Underwriters as provided hereunder in connection
with the Offering.
2.20.3 Use
of Proceeds. None of the net proceeds of the Offering will
be paid by the Company to any participating FINRA member or its
affiliates, except as specifically authorized herein.
2.20.4 FINRA
Affiliation. To the Company’s knowledge, there is no
(i) officer or director of the Company, (ii) beneficial owner of 5%
or more of any class of the Company's securities or (iii)
beneficial owner of the Company’s unregistered equity
securities which were acquired during the 180-day period
immediately preceding the filing of the Registration Statement,
that is an affiliate or associated person of a FINRA member
participating in the Offering (as determined in accordance with the
rules and regulations of FINRA). Except as disclosed in the
Registration Statement, the Disclosure Package and the Prospectus,
the Company (i) does not, to the Company’s knowledge, have
any material lending or other relationship with any bank or lending
affiliate of any Underwriter and (ii) does not intend to use any of
the proceeds from the sale of the Public Securities to repay any
outstanding debt owed to any affiliate of any
Underwriter.
2.20.5 Information.
All information provided by the Company in its FINRA questionnaire
to Representative Counsel specifically for use by Representative
Counsel in connection with its Public Offering System filings (and
related disclosure) with FINRA is true, correct and complete in all
material respects.
-11-
2.21 Foreign
Corrupt Practices Act. The Company has taken reasonable
steps to ensure that its accounting controls and procedures are
sufficient to cause the Company to comply in all material respects
with the Foreign Corrupt Practices Act of 1977, as amended, and the
rules and regulations thereunder (collectively, the
“FCPA”). None of
the Company and its Subsidiaries or, to the Company’s
knowledge, any director, officer, agent, employee or affiliate of
the Company and its Subsidiaries or any other person acting on
behalf of the Company and its Subsidiaries, has, directly or
indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the
ordinary course of business) to any customer, supplier, employee or
agent of a customer or supplier, or official or employee of any
governmental agency or instrumentality of any government (domestic
or foreign) or any political party or candidate for office
(domestic or foreign) or other person who was, is, or may be in a
position to help or hinder the business of the Company (or assist
it in connection with any actual or proposed transaction) that (i)
might subject the Company to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) if not
given in the past, might have had a Material Adverse Change; (iii) if not
continued in the future, might adversely affect the assets,
business, operations or prospects of the Company; (iv) violated or
is in violation of any provision of the FCPA or any applicable
non-U.S. anti-bribery statute or regulation; (v) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful
payment; or (vi) received notice of any investigation, proceeding
or inquiry by any Governmental Entity regarding any of the matters
in clauses (i)-(v) above; and the Company and, to the knowledge of
the Company, the Company’s affiliates have conducted their
respective businesses in compliance with the FCPA and have
instituted and maintain policies and procedures designed to ensure,
and which are reasonably expected to continue to ensure, continued
compliance therewith.
2.22 Compliance
with OFAC. None of the Company and its Subsidiaries or, to
the Company’s knowledge, any director, officer, agent,
employee or affiliate of the Company and its Subsidiaries or any
other person acting on behalf of the Company and its Subsidiaries,
is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Department of the
Treasury (“OFAC”), and the Company will not,
directly or indirectly, use the proceeds of the Offering hereunder,
or lend, contribute or otherwise make available such proceeds to
any subsidiary, joint venture partner or other person or entity,
for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
2.23 Forward-Looking
Statements. No forward-looking statement (within the meaning
of Section 27A of the Securities Act and Section 21E of the
Exchange Act) contained in either the Registration Statement,
Disclosure Package or Prospectus has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good
faith.
2.24 Money
Laundering Laws. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance
with applicable financial recordkeeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all jurisdictions, the
rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
Governmental Entity (collectively, the “Money Laundering Laws”); and no
action, suit or proceeding by or before any Governmental Entity
involving the Company with respect to the Money Laundering Laws is
pending or, to the best knowledge of the Company,
threatened.
2.25 Reserved
2.26 Officers’
Certificate. Any certificate signed by any duly authorized
officer of the Company and delivered to you or to Representative
Counsel shall be deemed a representation and warranty by the
Company to the Underwriters as to the matters covered
thereby.
-12-
2.27 Lock-Up
Agreements. Schedule 3 hereto contains a complete and accurate list
of the Company’s officers (as defined in Rule 16a-1(f) of the
Exchange Act) and directors (collectively, the
“Lock-Up
Parties”). The Company
has caused each of the Lock-Up Parties to deliver to the
Representative an executed Lock-Up Agreement, in the form attached
hereto as Exhibit
B (the “Lock-Up
Agreement”), prior to the
execution of this Agreement.
2.28 Subsidiaries.
All direct and indirect Subsidiaries
of the Company are duly organized and in good standing under the
laws of the place of organization or incorporation, and each
Subsidiary is in good standing in each jurisdiction in which its
ownership or lease of property or the conduct of business requires
such qualification, except where the failure to qualify would not
have a Material Adverse Change on the assets, business or
operations of the Company taken as a whole. The Company’s
ownership and control of each Subsidiary is as described in the
Registration Statement, the Disclosure Package and the
Prospectus.
2.29 Related
Party Transactions.
2.29.1 Business
Relationships. There are no material business relationships
or related party transactions involving the Company (within the
scope of Item 404 of Regulation S-K) required to be described in
the Registration Statement, the Disclosure Package and the
Prospectus that have not been described as required.
2.29.2 No
Unconsolidated Entities. There are no transactions,
arrangements or other relationships between and/or among the
Company, any of its affiliates (as such term is defined in Rule 405
of the Securities Act) and any unconsolidated entity, including,
but not limited to, any structured finance, special purpose or
limited purpose entity that could reasonably be expected to
materially affect the Company’s liquidity or the availability
of or requirements for its capital resources required to be
described in the Disclosure Package and the Prospectus or a
document incorporated by reference therein which have not been
described as required.
2.29.3 No
Loans or Advances to Affiliates. There are no outstanding
loans, advances (except normal advances for business expenses in
the ordinary course of business) or guarantees or indebtedness by
the Company to or for the benefit of (i) any of the officers or
directors of the Company, (ii) any other affiliates of the Company
or (iii) any of their respective family members, except as
disclosed in the Registration Statement, the Disclosure Package and
the Prospectus, which are, in the case of clauses (ii) and (iii),
required to be disclosed in the Registration Statement, the
Disclosure Package or the Prospectus.
2.30 Board
of Directors. The Board of Directors of the Company is
comprised of the persons disclosed in the Registration Statement,
the Disclosure Package and the Prospectus. The qualifications of
the persons serving as board members and the overall composition of
the board comply with the Exchange Act, the Exchange Act
Regulations, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules
promulgated thereunder (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”) applicable to
the Company and the listing rules of the Exchange. At least one
member of the Audit Committee of the Board of Directors of the
Company qualifies as an “audit committee financial
expert,” as such term is defined under Regulation S-K and the
listing rules of the Exchange. In addition, at least a majority of
the persons serving on the Board of Directors qualify as
“independent,” as defined under the listing rules of
the Exchange.
-13-
2.31 ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Compliance.
2.31.1 Disclosure
Controls. The Company has developed and currently maintains
disclosure controls and procedures that will comply with Rule
13a-15 or 15d-15 under the Exchange Act Regulations, and such
controls and procedures are effective to ensure that all material
information concerning the Company will be made known on a timely
basis to the individuals responsible for the preparation of the
Company’s Exchange Act filings and other public disclosure
documents.
2.31.2 Compliance.
The Company is, or at the Applicable Time and on the Closing Date
will be, in material compliance with the provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act applicable to it, and has implemented or will
implement such programs and taken reasonable steps to ensure the
Company’s future compliance (not later than the relevant
statutory and regulatory deadlines therefor) with all of the
material provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
2.32 Accounting
Controls. The Company and its
Subsidiaries maintain systems of “internal control over
financial reporting” (as defined under Rules 13a-15 and
15d-15 under the Exchange Act Regulations) that comply with the
requirements of the Exchange Act and have been designed by, or
under the supervision of, their respective principal executive and
principal financial officers, or persons performing similar
functions, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP,
including, but not limited to, internal accounting controls
sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as disclosed in the Registration
Statement, the Disclosure Package and the Prospectus, the Company
is not aware of any material weaknesses (as defined in Rule 12b-2
of the Exchange Act) in its internal controls. The Company’s
auditors and the Audit Committee of the Board of Directors of the
Company have not been advised of: (i) any significant deficiencies
and material weaknesses (each as defined in Rule 12b-2 of the
Exchange Act) in the design or operation of internal controls over
financial reporting which are known to the Company’s
management and that have adversely affected or are reasonably
likely to adversely affect the Company’ ability to record,
process, summarize and report financial information; and (ii) any
fraud known to the Company’s management, whether or not
material, that involves management or other employees who have a
significant role in the Company’s internal controls over
financial reporting. Since the date of the latest audited financial
statements included in the Disclosure Package, there has been no
change in the Company’s internal control over financial
reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over
financial reporting.
2.33 No
Investment Company Status. The Company is not and, after
giving effect to the Offering and the application of the proceeds
thereof as described in the Registration Statement, the Disclosure
Package and the Prospectus, will not be, required to register as an
“investment company,” as defined in the Investment
Company Act of 1940, as amended.
2.34 No
Labor Disputes. Except as would not reasonably be expected
to result in a Material Adverse Change, no labor dispute with the
employees of the Company or any of its Subsidiaries exists or, to
the knowledge of the Company, is imminent.
-14-
2.35 Intellectual
Property Rights. The Company and each of its Subsidiaries
owns or possesses or has valid rights to use all patents, patent
applications, trademarks, service marks, trade names, trademark
registrations, service ▇▇▇▇ registrations, copyrights, licenses,
inventions, trade secrets and similar rights necessary for the
conduct of the business of the Company (“Intellectual Property Rights”) and
its Subsidiaries as currently carried on and as described in the
Registration Statement, the Disclosure Package and the Prospectus.
To the knowledge of the Company, no action or use by the Company or
any of its Subsidiaries necessary for the conduct of its business
as currently carried on and as described in the Registration
Statement and the Prospectus will involve or give rise to any
infringement of, or license or similar fees (other than license or
similar fees described or contemplated in the Registration
Statement, the Disclosure Package and the Prospectus) for, any
Intellectual Property Rights of others. Neither the Company nor any
of its Subsidiaries has received any notice alleging any such
infringement of, license or similar fees for, or conflict with, any
asserted Intellectual Property Rights of others. Except as would
not reasonably be expected to result, individually or in the
aggregate, in a Material Adverse
Change, (i) to the knowledge of the Company, there is no
infringement, misappropriation or violation by third parties of any
of the Intellectual Property Rights owned by the Company; (ii)
there is no pending or, to the knowledge of the Company, threatened
action, suit, proceeding or claim by others challenging the rights
of the Company in or to any such Intellectual Property Rights, and
the Company is unaware of any facts which would form a reasonable
basis for any such claim, that would, individually or in the
aggregate, together with any other claims in this Section 2.35,
reasonably be expected to result in a Material Adverse Change; (iii) the
Intellectual Property Rights owned by the Company and, to the
knowledge of the Company, the Intellectual Property Rights licensed
to the Company have not been adjudged by a court of competent
jurisdiction invalid or unenforceable, in whole or in part, and
there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging
the validity or scope of any such Intellectual Property Rights, and
the Company is unaware of any facts which would form a reasonable
basis for any such claim that would, individually or in the
aggregate, together with any other claims in this Section 2.35,
reasonably be expected to result in a Material Adverse Change; (iv)
there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others that the
Company infringes, misappropriates or otherwise violates any
Intellectual Property Rights or other proprietary rights of others,
the Company has not received any written notice of such claim and
the Company is unaware of any other facts which would form a
reasonable basis for any such claim that would, individually or in
the aggregate, together with any other claims in this Section 2.35,
reasonably be expected to result in a Material Adverse Change; and
(v) to the Company’s knowledge, no employee of the Company is
in violation in any material respect of any term of any employment
contract, patent disclosure agreement, invention assignment
agreement, non-competition agreement, non-solicitation agreement,
nondisclosure agreement or any restrictive covenant to or with a
former employer where the basis of such violation relates to such
employee’s employment with the Company, or actions undertaken
by the employee while employed with the Company and could
reasonably be expected to result, individually or in the aggregate,
in a Material Adverse Change. To the Company’s knowledge, all
material technical information developed by and belonging to the
Company which has not been disclosed in a filed patent application
has been kept confidential. The Company is not a party to or bound
by any options, licenses or agreements with respect to the
Intellectual Property Rights of any other person or entity that are
required to be set forth in the Registration Statement, the
Disclosure Package and the Prospectus and are not described
therein. The Registration Statement, the Disclosure Package and the
Prospectus contain in all material respects the same description of
the matters set forth in the preceding sentence. None of the
technology employed by the Company has been obtained or is being
used by the Company in violation of any material contractual
obligation binding on the Company or, to the Company’s
knowledge, any of its officers, directors or employees, or
otherwise in material violation of the rights of any
persons.
-15-
All
material licenses for the use of the Intellectual Property
described in the Registration Statement, the Disclosure Package and
the Prospectus are in full force and effect in all material
respects and are enforceable by the Company and, to the
Company’s knowledge, the other parties thereto, in accordance
with their terms, except (x) as such enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally, (y) as enforceability of any
indemnification or contribution provision may be limited under the
federal and state securities laws, and (z) that the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought. None of such agreements or instruments has been assigned
by the Company, and the Company has not, and to the Company’s
knowledge, no other party is in default thereunder and no event has
occurred that, with the lapse of time or the giving of notice, or
both, would constitute a material default thereunder.
2.36 Reserved
2.37 Taxes.
Each of the Company and its Subsidiaries has filed all returns (as
hereinafter defined) required to be filed with taxing authorities
prior to the date hereof or has duly obtained extensions of time
for the filing thereof. Each of the Company and its Subsidiaries
has paid all taxes (as hereinafter defined) shown as due on such
returns that were filed and has paid all taxes imposed on or
assessed against the Company or such respective Subsidiary, except
where the failure to pay would not reasonably be expected to have a
Material Adverse Change. The provisions for taxes payable, if any,
shown on the financial statements filed with or as part of the
Registration Statement are sufficient for all material accrued and
unpaid taxes, whether or not disputed, and for all periods to and
including the dates of such consolidated financial statements.
Except as disclosed in writing to the Underwriters or as would not
reasonably be expected to have a Material Adverse Change, (i) no
issues have been raised (and are currently pending) by any taxing
authority in connection with any of the returns or taxes asserted
as due from the Company or its Subsidiaries, and (ii) no waivers of
statutes of limitation with respect to the returns or collection of
taxes have been given by or requested from the Company or its
Subsidiaries. The term “taxes” means all federal, state,
local, foreign and other net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license,
lease, service, service use, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, windfall
profits, customs, duties or other taxes, fees, assessments or
charges of any kind whatever, together with any interest and any
penalties, additions to tax or additional amounts with respect
thereto. The term “returns” means all returns,
declarations, reports, statements and other documents required to
be filed in respect to taxes.
2.38 ERISA
Compliance. Except as would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse
Change, (i) each “employee benefit plan” (within the
meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, “ERISA”)) (a “Plan”) established or maintained
by the Company or any of its Subsidiaries is in compliance in all
respects with ERISA; (ii) no “reportable event” (within
the meaning of Section 4043(c) of ERISA) has occurred or is
reasonably expected to occur with respect to any Plan subject to
the funding rules of Section 412 of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations
thereunder (the “Code”) or Section 302 of ERISA and
that is established or maintained by the Company or any of its
ERISA Affiliates, as defined below (“Title IV Plan”); (iii) no Title IV
Plan, if such plan were terminated, would have any “amount of
unfunded benefit liabilities” (as defined under ERISA); (iv)
neither the Company nor any of its ERISA Affiliates has incurred or
reasonably expects to incur any material liability under Title IV
of ERISA with respect to termination of, or withdrawal from, any
Title IV Plan; (v) the Company has not incurred and does not
reasonably expect to incur any material liability under Sections
412, 4971, 4975 or 4980B of the Code with respect to any Plan
established or maintained by the Company or its Subsidiaries; and
(vi) each Plan established or maintained by the Company or any of
its Subsidiaries that is intended to be qualified under Section
401(a) of the Code is so qualified and, to the knowledge of the
Company, nothing has occurred, whether by action or failure to act,
which would reasonably be expected to cause the loss of such
qualification. “ERISA
Affiliate” means, with respect to the Company, any
member of any group of organizations described in Sections
414(b),(c),(m), or (o) of the Code that is treated as a single
employer with the Company.
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2.39 Compliance
with Laws. The Company: (i) is and at all times has been in
compliance in all material respects with all statutes, rules, or
regulations applicable to the ownership, testing, development,
manufacture, packaging, processing, use, distribution, marketing,
labeling, promotion, sale, offer for sale, storage, import, export
storage or disposal of any product manufactured or distributed by
the Company (“Applicable
Laws”), except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Change; (ii) has not received from any governmental authority any
notice or other communication alleging or asserting noncompliance
with any Applicable Laws or any licenses, certificates, approvals,
clearances, authorizations, permits and supplements or amendments
thereto required by any such Applicable Laws (“Authorizations”), except as to
noncompliance that would not reasonably be expected to have a
Material Adverse Change; (iii) possesses all material
Authorizations and such Authorizations are valid and in full force
and effect and are not in material violation of any term of any
such Authorizations; (iv) has not received written notice of any
material claim, action, suit, proceeding, hearing, enforcement,
investigation, arbitration or other action from any governmental
authority or third party alleging that any product operation or
activity is in violation of any Applicable Laws or Authorizations
and has no knowledge that any such governmental authority or third
party is considering any such material claim, litigation,
arbitration, action, suit, investigation or proceeding; (v) has not
received written notice that any governmental authority has taken,
is taking or intends to take material action to limit, suspend,
modify or revoke any Authorizations and has no knowledge that any
such governmental authority is considering such material action;
(vi) has filed, obtained, maintained or submitted all material
reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments as required by any
Applicable Laws or Authorizations and that all such reports,
documents, forms, notices, applications, records, claims,
submissions and supplements or amendments were complete and correct
in all material respects on the date filed (or were corrected or
supplemented by a subsequent submission); and (vii) has not, either
voluntarily or involuntarily, initiated, conducted, or issued or
caused to be initiated, conducted or issued, any recall, market
withdrawal or replacement, safety alert, post-sale warning, or
other notice or action relating to the alleged lack of safety or
efficacy of any product or any alleged product defect or violation
and, to the Company’s knowledge, no third party has
initiated, conducted or intends to initiate any such notice or
action as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Change.
2.40 Environmental
Laws. The Company and its Subsidiaries are in compliance
with all foreign, federal, state and local legally-binding rules,
laws and regulations relating to the use, treatment, storage and
disposal of hazardous or toxic substances or waste and protection
of health and safety (to the extent relating to exposure to
hazardous or toxic substances) or the environment which are
applicable to their businesses (“Environmental Laws”), except where
the failure to comply would not, singularly or in the aggregate,
reasonably be expected to result in a Material Adverse Change.
There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission, or other release of any
kind of toxic or other wastes or other hazardous substances by, due
to, or caused by the Company or any of its Subsidiaries (or, to the
Company’s knowledge, any other entity for whose acts or
omissions the Company or any of its Subsidiaries is or may
otherwise be liable) upon any of the property now or, to the
Company’s knowledge, previously owned or leased by the
Company or any of its Subsidiaries, or upon any other property, in
violation of any Environmental Law or which would, under any
Environmental Law, give rise to any liability, except for any
violation or liability which would not reasonably be expected to
result, singularly or in the aggregate with all such violations and
liabilities, in a Material Adverse Change; and there has been no
disposal, discharge, emission or other release of any kind onto
such property or into the environment surrounding such property of
any toxic or other wastes or other hazardous substances with
respect to which the Company has knowledge, except for any such
disposal, discharge, emission, or other release of any kind which
would not be expected to result, singularly or in the aggregate,
with all such discharges and other releases, in a Material Adverse
Change. In the ordinary course of business, the Company and its
Subsidiaries conduct periodic reviews of the effect of
Environmental Laws on their business and assets, in the course of
which they identify and evaluate any associated costs and
liabilities (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties
or compliance with Environmental Laws or governmental permits
issued thereunder, any related constraints on operating activities
and any potential liabilities to third parties). On the basis of
such reviews, the Company and its Subsidiaries have reasonably
concluded that such associated costs and liabilities would not
reasonably be expected to result, singularly or in the aggregate,
in a Material Adverse Change.
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2.41 Real
Property. Except as set forth in the Registration Statement,
the Disclosure Package and the Prospectus, the Company and each of
its Subsidiaries have good and marketable title in fee simple to,
or have valid rights to lease or otherwise use, all items of real
or personal property which are material to the business of the
Company and its Subsidiaries taken as a whole, in each case free
and clear of all liens, encumbrances, security interests, claims
and defects that do not, singly or in the aggregate, materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company or any
of its Subsidiaries; and all of the leases and subleases material
to the business of the Company and its Subsidiaries, considered as
one enterprise, and under which the Company or any of its
Subsidiaries holds properties described in the Registration
Statement, the Disclosure Package and the Prospectus, are in full
force and effect, and neither the Company nor any Subsidiary has
received any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any
Subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such
Subsidiary to the continued possession of the leased or subleased
premises under any such lease or sublease.
2.42 Ineligible
Issuer. At the time of filing the Registration Statement and
any post-effective amendment thereto, at the time of effectiveness
of the Registration Statement and any amendment thereto, at the
earliest time thereafter that the Company or another offering
participant made a bona fide offer (within the meaning of Rule
164(h)(2) of the Securities Act Regulations) of the Public
Securities and at the date hereof, the Company was not and is not
an “ineligible issuer,” as defined in Rule 405, without
taking account of any determination by the Commission pursuant to
Rule 405 that it is not necessary that the Company be considered an
ineligible issuer.
2.43 Industry
Data. The statistical and market-related data included in
each of the Registration Statement, the Disclosure Package and the
Prospectus are based on or derived from sources that the Company
reasonably and in good faith believes are reliable and accurate or
represent the Company’s good faith estimates that are made on
the basis of data derived from such sources.
2.44 Margin
Securities. The Company owns no “margin
securities” as that term is defined in Regulation U of the
Board of Governors of the Federal Reserve System (the
“Federal Reserve
Board”), and none of the proceeds of Offering will be
used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might
cause any of the shares of Common Stock to be considered a
“purpose credit” within the meanings of Regulation T, U
or X of the Federal Reserve Board.
2.45 Exchange
Act Reports. The Company has filed in a timely manner all
reports required to be filed pursuant to Sections 13(a), 13(e), 14
and 15(d) of the Exchange Act during the preceding 12 months
(except to the extent that Section 15(d) requires reports to be
filed pursuant to Sections 13(d) and 13(g) of the Exchange Act,
which shall be governed by the next clause of this sentence); and
the Company has filed in a timely manner all reports required to be
filed pursuant to Sections 13(d) and 13(g) of the Exchange Act
during the preceding 12 months, except where the failure to timely
file could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Change.
2.46 Minute
Books. The minute books of the Company have been made
available to the Underwriters and counsel for the Underwriters, and
such books (i) contain a materially complete summary of all
meetings and actions of the board of directors (including each
board committee) and stockholders of the Company (or analogous
governing bodies and interest holders, as applicable), and each of
its Subsidiaries from January 1, 2019 through the date of the
latest meeting and action, and (ii) accurately in all material
respects reflect all transactions referred to in such minutes.
There are no material transactions, agreements, dispositions or
other actions of the Company within the period referred to in the
prior sentence that are not properly approved and/or accurately and
fairly recorded in the minute books of the Company, as
applicable.
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2.47 Integration.
Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any
security, under circumstances that would cause the Offering to be
integrated with prior offerings by the Company for purposes of the
Securities Act that would require the registration of any such
securities under the Securities Act.
2.48 Stabilization.
Neither the Company nor, to its knowledge, any of its employees,
directors or stockholders (without the consent of the
Representative) has taken or shall take, directly or indirectly,
any action designed to or that has constituted or that might
reasonably be expected to cause or result in, under Regulation M of
the Exchange Act, or otherwise, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of the Public Securities.
2.49 Confidentiality
and Non-Competition. To the Company’s knowledge, no
director, officer, key employee or consultant of the Company is
subject to any confidentiality, non-disclosure, non-competition
agreement or non-solicitation agreement with any employer or prior
employer that could reasonably be expected to materially affect his
ability to be and act in his respective capacity of the Company or
be expected to result in a Material Adverse Change.
2.50 Testing-the-Waters
Communications. The Company has not (i) alone engaged in any
Testing-the-Waters Communications, other than Testing-the-Waters
Communications with the written consent of the Representative and
with entities that are qualified institutional buyers within the
meaning of Rule 144A under the Securities Act or institutions that
are accredited investors within the meaning of Rule 501 under the
Securities Act and (ii) authorized anyone other than the
Representative to engage in Testing-the-Waters Communications. The
Company confirms that the Representative has been authorized to act
on its behalf in undertaking Testing-the-Waters Communications. The
Company has not distributed any Written Testing-the-Waters
Communications other than those listed on Schedule 2-C hereto.
“Testing-the-Waters
Communication” means any oral or written communication
with potential investors undertaken in reliance on Section 5(d) of
the Securities Act. “Written
Testing-the-Waters Communication” means any
Testing-the-Waters Communication that is a written communication
within the meaning of Rule 405 under the Securities
Act.
3. Covenants of the Company. The
Company covenants and agrees as follows:
3.1 Amendments to Registration
Statement. The Company shall
deliver to the Representative, prior to filing, any amendment or
supplement to the Registration Statement, Preliminary Prospectus,
Disclosure Package or Prospectus proposed to be filed after the
Effective Date and not file any such amendment or supplement to
which the Representative shall reasonably object in
writing.
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3.2 Federal Securities
Laws.
3.2.1 Compliance.
The Company, subject to Section
3.2.2, shall comply with the requirements of
Rule 424(b) and Rule 430B of the Securities Act Regulations, and
will notify the Representative promptly, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration
Statement relating to the Offering or any amendment or supplement
to any Preliminary Prospectus, the Disclosure Package or the
Prospectus shall have been filed and when any post-effective
amendment to the Registration Statement relating to the Offering
shall become effective; (ii) of the receipt of any comments from
the Commission relating to the Offering on the Registration
Statement, Preliminary Prospectus, the Disclosure Package or the
Prospectus; (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or
supplement to any Preliminary Prospectus, the Disclosure Package or
the Prospectus or for additional information, in each case,
relating to the Offering; (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment or of any order
preventing or suspending the use of any Preliminary Prospectus, the
Disclosure Package or the Prospectus, or of the suspension of the
qualification of the Public Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes or of any examination pursuant
to Section 8(d) or 8(e) of the Securities Act concerning the
Registration Statement; and (v) if the Company becomes the subject
of a proceeding under Section 8A of the Securities Act in
connection with the Offering of the Public Securities. The Company
shall effect all filings relating to the Offering required under
Rule 424(b) of the Securities Act Regulations, in the manner and
within the time period required by Rule 424(b) (without reliance on
Rule 424(b)(8)), and shall take such steps as it deems necessary to
ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission
and, in the event that it was not, it will promptly file such
prospectus. The Company shall use its commercially reasonable
efforts to prevent the issuance of any stop order, prevention or
suspension and, if any such order is issued, to obtain the lifting
thereof at the earliest possible moment.
3.2.2 Continued Compliance.
The Company shall comply with
the Securities Act, the Securities Act Regulations, the Exchange
Act and the Exchange Act Regulations so as to permit the completion
of the distribution of the Public Securities as contemplated in
this Agreement and in the Registration Statement, the Disclosure
Package and the Prospectus. If at any time when a prospectus
relating to the Public Securities is (or, but for the exception
afforded by Rule 172 of the Securities Act Regulations
(“Rule
172”), would be) required
by the Securities Act to be delivered in connection with sales of
the Public Securities, any event shall occur or condition shall
exist as a result of which it is necessary, in the reasonable
opinion of counsel for the Underwriters or for the Company, to (i)
amend the Registration Statement in order that the Registration
Statement will not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) amend
or supplement the Disclosure Package or the Prospectus in order
that the Disclosure Package or the Prospectus, as the case may be,
will not include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser or (iii) amend the
Registration Statement or amend or supplement the Disclosure
Package or the Prospectus, as the case may be, in order to comply
with the requirements of the Securities Act or the Securities Act
Regulations, the Company will promptly (A) give the Representative
notice of such event; (B) prepare any amendment or supplement as
may be necessary to correct such statement or omission or to make
the Registration Statement, the Disclosure Package or the
Prospectus comply with such requirements and, a reasonable amount
of time prior to any proposed filing or use, furnish the
Representative with copies of any such amendment or supplement and
(C) file with the Commission any such amendment or
supplement; provided, however, that the Company shall not file or use any
such amendment or supplement to which the Representative or counsel
for the Underwriters shall reasonably object. The Company will
furnish to the Underwriters such number of copies of such amendment
or supplement as the Underwriters may reasonably request. The
Company has given the Representative notice of any filings made
pursuant to the Exchange Act or the Exchange Act Regulations within
48 hours prior to the Applicable Time. The Company shall give the
Representative notice of its intention to make any such filing from
the Applicable Time until the later of the Closing Date and the
exercise in full or expiration of the Over-allotment Option
specified in Section 1.2
hereof and will furnish the
Representative with copies of the related document(s) a reasonable
amount of time prior to such proposed filing, as the case may be,
and will not file or use any such document to which the
Representative or counsel for the Underwriters shall reasonably
object.
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3.2.3 Exchange
Act Registration. For a period
of three (3) years after the date of this Agreement, the Company
shall use its commercially reasonable efforts to maintain the registration of the shares
of Common Stock under the Exchange Act. The Company shall not
deregister the shares of Common Stock under the Exchange Act
without the prior written consent of the Representative, which
consent shall not be unreasonably withheld or delayed; provided
that such provision shall not prevent a sale, merger or similar
transaction involving the Company.
3.2.4 Free
Writing Prospectuses. The
Company agrees that, unless it obtains the prior written consent of
the Representative, it shall not make any offer relating to the
Public Securities that would constitute an Issuer Free Writing
Prospectus or that would otherwise constitute a “free writing
prospectus,” or a portion thereof, required to be filed by
the Company with the Commission or retained by the Company under
Rule 433; provided, however, that the Representative shall be deemed to have
consented to each Issuer General Use Free Writing Prospectus hereto
and any “road show that is a written communication”
within the meaning of Rule 433(d)(8)(i) that has been reviewed by the
Representative. The Company represents that it has treated or
agrees that it will treat each such free writing prospectus
consented to, or deemed consented to, by the Underwriters as an
“issuer free writing prospectus,” as defined in Rule
433, and that it has complied and will comply with the applicable
requirements of Rule 433 with respect thereto, including timely
filing with the Commission where required, legending and record
keeping. If at any time following issuance of an Issuer Free
Writing Prospectus there occurred or occurs an event or development
as a result of which such Issuer Free Writing Prospectus conflicted
or would conflict with the information contained in the
Registration Statement or included or would include an untrue
statement of a material fact or omitted or would omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances existing at that subsequent time,
not misleading, the Company will promptly notify the Underwriters
and will promptly amend or supplement, at its own expense, such
Issuer Free Writing Prospectus to eliminate or correct such
conflict, untrue statement or omission.
3.2.5 Testing-the-Waters
Communications. If at any time following the distribution of
any Written Testing-the-Waters Communication there occurred or
occurs an event or development as a result of which such Written
Testing-the-Waters Communication included or would include an
untrue statement of a material fact or omitted or would omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at that
subsequent time, not misleading, the Company shall promptly notify
the Representative and shall promptly amend or supplement, at its
own expense, such Written Testing-the-Waters Communication to
eliminate or correct such untrue statement or
omission.
3.3 Delivery to the Underwriters of
Registration Statements. The Company has delivered or made
available or shall deliver or make available to the Representative
and counsel for the Representative, without charge, signed copies
of the Registration Statement as originally filed and each
amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated or
deemed to be incorporated by reference therein) and signed copies
of all consents and certificates of experts, and will also deliver
to the Underwriters, without charge, a conformed copy of the
Registration Statement as originally filed and each amendment
thereto (without exhibits) for each of the Underwriters. The copies
of the Registration Statement and each amendment thereto furnished
to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to
▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
3.4 Delivery to the Underwriters of
Prospectuses. The Company has delivered or made available or
will deliver or make available to each Underwriter, without charge,
as many copies of each Preliminary Prospectus as such Underwriter
reasonably requested, and the Company hereby consents to the use of
such copies for purposes permitted by the Securities Act. The
Company will furnish to each Underwriter, without charge, during
the period when a prospectus relating to the Public Securities is
(or, but for the exception afforded by Rule 172, would be) required
to be delivered under the Securities Act, such number of copies of
the Prospectus (as amended or supplemented) as such Underwriter may
reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
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3.5 Events Requiring Notice to the
Representative. The Company
shall use its commercially reasonable efforts to cause the Registration Statement to
remain effective with a current prospectus for at least nine (9)
months after the Applicable Time, and shall notify the
Representative immediately and confirm the notice in writing: (i)
of the issuance by the Commission of any stop order or of the
initiation, or the threatening, of any proceeding for that purpose;
(ii) of the issuance by any state securities commission of any
proceedings for the suspension of the qualification of the Public
Securities for offering or sale in any jurisdiction or of the
initiation, or the threatening, of any proceeding for that purpose;
(iii) of the mailing and delivery to the Commission for filing of
any amendment or supplement to the Registration Statement or
Prospectus; (iv) of the receipt of any comments or request for any
additional information from the Commission; and (v) of the
happening of any event during the period described in this Section
3.5 that, in the judgment of the Company, makes any statement of a
material fact made in the Registration Statement, the Disclosure
Package or the Prospectus untrue or that requires the making of any
changes in (a) the Registration Statement in order to make the
statements therein not misleading, or (b) in the Disclosure Package
or the Prospectus in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. If
the Commission or any state securities commission shall enter a
stop order or suspend such qualification at any time, the Company
shall make every reasonable effort to obtain promptly the lifting
of such order.
3.6 Review of Financial Statements.
For a period of three (3) years after
the date of this Agreement, the Company, at its expense, shall
cause its regularly engaged independent registered public
accounting firm to review (but not audit) the Company’s
financial statements for each of the three fiscal quarters
immediately preceding the announcement of any quarterly financial
information.
3.7 Listing. The Company shall use its commercially
reasonable efforts to maintain the
listing of the shares of Common Stock (including the Public
Securities) on the Exchange for at least three (3) years from the
date of this Agreement, provided that such provision shall not
prevent a sale, merger or similar transaction involving the
Company.
3.8.1 Periodic
Reports, etc. For a period of two (2) years after the date
of this Agreement, the Company shall furnish or make available to
the Representative copies of such financial statements and other
periodic and special reports as the Company from time to time
furnishes generally to holders of any class of its securities and
also promptly furnish to the Representative: (i) a copy of each
periodic report the Company shall be required to file with the
Commission under the Exchange Act and the Exchange Act Regulations;
(ii) a copy of every press release and every news item and article
with respect to the Company or its affairs which was released by
the Company; (iii) a copy of each Form 8-K prepared and furnished
or filed by the Company; (iv) five copies of each registration
statement filed by the Company under the Securities Act; (v) a copy of each report or other
communication furnished to stockholders and (vi) such additional
documents and information with respect to the Company and the
affairs of any future subsidiaries of the Company as the
Representative may from time to time reasonably request; provided,
however, the Representative shall sign, if requested by the
Company, a Regulation FD compliant confidentiality agreement which
is reasonably acceptable to the Representative and Representative
Counsel in connection with the Representative’s receipt of
such information. Documents filed with the Commission pursuant to
its ▇▇▇▇▇ system or posted on the Company’s investor
relations website and press releases released through customary
channels shall be deemed to have been delivered to the
Representative pursuant to this Section 3.8.1.
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3.8.2 Transfer
Agent; Transfer Sheets. For a
period of three (3) years after the date of this Agreement, the
Company shall retain a transfer agent and registrar reasonably
acceptable to the Representative (the “Transfer
Agent”) and shall furnish
to the Representative at the Company’s sole cost and expense
such transfer sheets of the Company’s securities as the
Representative may reasonably request, including the daily and
monthly consolidated transfer sheets of the Transfer Agent and DTC.
American Stock Transfer & Trust Company, LLC is acceptable to
the Representative to act as Transfer Agent for the shares of
Common Stock.
3.8.3 Trading
Reports. During such time as the Public
Securities are listed
on the Exchange, the
Company shall provide to the Representative, at the Company’s
expense, such reports published by Exchange relating to price
trading of the Public Securities, as the Representative shall
reasonably request.
3.9 Payment of Expenses. The
Company hereby agrees to pay on each of the Closing Date and the
Option Closing Date, if any, to the extent not paid at the Closing
Date, all expenses incident to the performance of the obligations
of the Company under this Agreement, including, but not limited to:
(i) all filing fees and communication expenses relating to the
registration of Public Securities to be issued and sold in the
Offering with the Commission; (ii) all filing fees associated with
the review of the Offering by FINRA; (iii) all fees and expenses
relating to the listing of such Common Stock on the Exchange,
including any fees charged by DTC for new securities; (iv) all
reasonable documented fees, expenses and disbursements relating to
background checks of the Company’s officers and directors in
an amount not to exceed $7,000 in the aggregate; (v) all fees,
expenses and disbursements relating to the registration or
qualification of the Public Securities under the “blue
sky” securities laws of such states, if applicable, and other
jurisdictions as the Representative may reasonably designate
(including, without limitation, all filing and registration fees
and fees to counsel); (vi) all fees, expenses and disbursements
relating to the registration, qualification or exemption of the
Public Securities under the securities laws of such foreign
jurisdictions as the Representative may reasonably designate; (vii)
the costs of all mailing and printing of the underwriting documents
(including, without limitation, this Agreement, any blue sky
surveys and, if appropriate, any agreement among underwriters,
selected dealers’ agreement, underwriters’
questionnaire and power of attorney), Registration Statements,
Prospectuses and all amendments, supplements and exhibits thereto
and as many preliminary and final Prospectuses as the
Representative may reasonably deem necessary; (viii) the costs and
expenses of the public relations firm referred to in Section 3.8
hereof; (ix) the costs of preparing, printing and delivering
certificates representing the Public Securities; (x) fees and
expenses of the Transfer Agent for the Common Stock; (xi) stock
transfer and/or stamp taxes, if any, payable upon the transfer of
securities from the Company to the Underwriters; (xii) to the
extent approved by the Company in writing, the costs associated
with post-Closing advertising of the Offering in the national
editions of The Wall Street Journal and The New York Times; (xiii)
the costs associated with bound volumes of the public offering
materials as well as commemorative mementos and lucite tombstones,
each of which the Company or its designee will provide within a
reasonable time after the Closing in such quantities as the
Representative may reasonably request, in an amount not to exceed
$3,000 in aggregate; (xiv) the fees and expenses of the
Company’s accountants; (xv) the fees and expenses of the
Company’s legal counsel and other agents and representatives;
(xvi) the reasonable and documented fees and expenses of
Underwriter’s legal counsel not to exceed $100,000; (xvii)
the $29,500 cost associated with the Underwriters’ use of
Ipreo’s book building, prospectus tracking and compliance
software for the Offering; (xviii) the $10,000 cost for data
services and communications expenses; and (xix) up to $10,000 of
the Underwriters’ actual accountable “road show”
expenses for the Offering. For the sake of clarity, the aggregate
reimbursement to the Representative for the foregoing expenses
shall not exceed $159,500 in aggregate. The Representative may
deduct from the net proceeds of the Offering payable to the Company
on the Closing Date, or the Option Closing Date, if any, the
expenses set forth herein to be paid by the Company to the
Underwriters, provided, however, that in the event that the
Offering is terminated, the Company agrees to reimburse the
Underwriters pursuant to Section 8.3 hereof.
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3.10 Application
of Net Proceeds. The Company shall apply the net proceeds
from the Offering received by it in a manner consistent with the
application thereof described under the caption “Use of
Proceeds” in the Registration Statement, the Disclosure
Package and the Prospectus.
3.11 Delivery
of Earnings Statements to Security Holders. The Company
shall make generally available to its security holders as soon as
practicable, but not later than the first day of the fifteenth
(15th)
full calendar month following the date of this Agreement, an
earnings statement (which need not be certified by independent
registered public accounting firm unless required by the Securities
Act or the Securities Act Regulations, but which shall satisfy the
provisions of Rule 158(a) under Section 11(a) of the Securities
Act) covering a period of at least twelve (12) consecutive months
beginning after the date of this Agreement.
3.12 Stabilization.
Neither the Company nor, to its knowledge, any of its employees,
directors or shareholders (without the consent of the
Representative) has taken or shall take, directly or indirectly,
any action designed to or that has constituted or that might
reasonably be expected to cause or result in, under Regulation M of
the Exchange Act, or otherwise, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of the Public Securities.
3.13 Internal
Controls. For a period ending on the earlier of (i) three
(3) years after the date of this Agreement and (ii) the effective
date of the Company’s deregistration of the Common Stock
under the Exchange Act and the suspension of the Company’s
reporting obligations under Section 15(d) thereunder, the Company shall maintain a system of internal
accounting controls sufficient to provide reasonable assurances
that: (i) transactions are executed in accordance with
management’s general or specific authorization; (ii)
transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with GAAP and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
3.14 Accountants.
As of the date of this Agreement, the Company shall continue to
retain a nationally recognized independent registered public
accounting firm for a period ending on the earlier of (i) three (3)
years after the date of this Agreement and (ii) the effective date
of the Company’s deregistration of the Common Stock under the
Exchange Act and the suspension of the Company’s reporting
obligations under Section 15(d) thereunder. The Representative
acknowledges that the Auditors are acceptable to the
Representative.
3.15 FINRA.
The Company shall advise the Representative (who shall make an
appropriate filing with FINRA) if prior to the Closing Date it is
or becomes aware that (i) any officer or director of the Company,
(ii) any beneficial owner of 5% or more of any class of the
Company's securities or (iii) any beneficial owner of the Company's
unregistered equity securities which were acquired during the 180
days immediately preceding the filing of the Registration Statement
is or becomes an affiliate or associated person of a FINRA member
participating in the Offering (as determined in accordance with the
rules and regulations of FINRA).
3.16 No
Fiduciary Duties. The Company acknowledges and agrees that
the Underwriters’ responsibility to the Company is solely
contractual in nature and that none of the Underwriters or their
affiliates or any selling agent shall be deemed to be acting in a
fiduciary capacity, or otherwise owes any fiduciary duty to the
Company or any of its affiliates in connection with the Offering
and the other transactions contemplated by this
Agreement.
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3.17 Restriction
on Continuous Offerings. Notwithstanding the restrictions
contained in Section 3.18, the Company, on behalf of itself and any
successor entity, agrees that, without the prior written consent of
the Representative, it will not, for a period of 12 months after
the date of this Agreement, directly or indirectly in any
“at-the-market” or continuous equity transaction, offer
to sell, sell, contract to sell, grant any option to sell or
otherwise dispose of shares of capital stock of the Company or any
securities convertible into or exercisable or exchangeable for
shares of capital stock of the Company.
3.18 Company Lock-Up Agreements.
The Company, on behalf of itself and any successor entity,
agrees that, without the prior written consent of the
Representative, it will not for a period of ninety (90) days after
the date of this Agreement (the “Lock-Up
Period”), (i) offer,
pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer
or dispose of, directly or indirectly, any shares of capital stock
of the Company or any securities convertible into or exercisable or
exchangeable for shares of capital stock of the Company; (ii) file
or cause to be filed any registration statement with the Commission
relating to the offering of any shares of capital stock of the
Company or any securities convertible into or exercisable or
exchangeable for shares of capital stock of the Company; or (iii)
complete any offering of debt securities of the Company, other than
entering into a line of credit with a traditional bank or (iv)
enter into any swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership
of capital stock of the Company, whether any such transaction
described in clause (i), (ii), (iii) or (iv) above is to be settled
by delivery of shares of capital stock of the Company or such other
securities, in cash or otherwise.
The
restrictions contained in this Section 3.18 shall not apply to (i)
the shares of Common Stock to be sold hereunder, (ii) the issuance
by the Company of shares of Common Stock upon the exercise of a
stock option or warrant or the conversion of a security outstanding
on the date hereof, which is disclosed in the Registration
Statement, Disclosure Package and Prospectus, provided that such
options, warrants, and securities have not been amended since the
date of this Agreement to increase the number of such securities or
to decrease the exercise price, exchange price or conversion price
of such securities or to extend the term of such securities, (iii)
the issuance by the Company of stock options, shares of capital
stock of the Company or other awards under any equity compensation
plan of the Company and (iv) the issuance
of securities pursuant to a bona fide merger, consolidation,
acquisition of securities, businesses, property or other assets,
joint venture, collaboration, licensing or strategic alliances or
other similar transactions, not primarily for the purposes of
raising capital, and providing that the aggregate number of shares
of securities shall not exceed 5% of the total number of Public
Securities issued and outstanding immediately following the
completion of the transactions contemplated by this
Agreement.
3.19 [RESERVED]
3.20 Blue
Sky Qualifications. The Company shall use its commercially
reasonable efforts, in cooperation with the Underwriters, if
necessary, to qualify the Public Securities for offering and sale
under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as the Representative may
designate and to maintain such qualifications in effect so long as
required to complete the distribution of the Public Securities;
provided, however, that the Company shall not be
obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in
any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject.
3.21 Reporting
Requirements. The Company, during the period when a
prospectus relating to the Public Securities is (or, but for the
exception afforded by Rule 172, would be) required to be delivered
under the Securities Act, will file all documents required to be
filed with the Commission pursuant to the Exchange Act within the
time periods required by the Exchange Act and Exchange Act
Regulations. Additionally, the Company shall report the use of
proceeds from the issuance of the Public Securities as may be
required under Rule 463 under the Securities Act
Regulations.
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3.22 Press
Releases. Prior to the Closing Date and any Option Closing
Date, the Company shall not issue any press release or other
communication directly or indirectly or hold any press conference
with respect to the Company, its condition, financial or otherwise,
or earnings, business affairs or business prospects (except for
routine oral marketing communications in the ordinary course of
business and consistent with the past practices of the Company and
of which the Representative is notified), without the prior written
consent of the Representative, which consent shall not be
unreasonably withheld, unless in the judgment of the Company and
its counsel, and after notification to the Representative, such
press release or communication is required by law.
3.23 ▇▇▇▇▇▇▇▇-▇▇▇▇▇.
Except as disclosed in the Registration Statement, the Disclosure
Package and the Prospectus, for a
period of three (3) years after the date of this Agreement,
the Company shall at all times use
its commercially reasonable efforts to comply with all applicable
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act in effect from time to
time.
4. Conditions of Underwriters’
Obligations. The obligations of the Underwriters to purchase
and pay for the Public Securities, as provided herein, shall be
subject to (i) the continuing accuracy of the representations and
warranties of the Company as of the date hereof and as of each of
the Closing Date and the Option Closing Date, if any; (ii) the
accuracy of the statements of officers of the Company made pursuant
to the provisions hereof; (iii) the performance by the Company of
its obligations hereunder; and (iv) the following
conditions:
4.1 Regulatory
Matters.
4.1.1 Commission
Actions; Required Filings. At each of the Closing Date and
any Option Closing Date, no stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment
thereto shall have been issued under the Securities Act, no order
preventing or suspending the use of any Preliminary Prospectus or
the Prospectus shall have been issued and no proceedings for any of
those purposes shall have been instituted or are pending or, to the
Company’s knowledge, contemplated by the Commission. The
Company has complied with each request (if any) from the Commission
for additional information. A prospectus containing the Rule 430B
Information shall have been filed with the Commission in the manner
and within the time frame required by Rule 424(b) under the
Securities Act Regulations (without reliance on Rule 424(b)(8)) or
a post-effective amendment providing such information shall have
been filed with, and declared effective by, the Commission in
accordance with the requirements of Rule 430B under the Securities
Act Regulations.
4.1.2 FINRA
Clearance. On or before the
date of this Agreement, the Representative shall have received
clearance from FINRA as to the amount of compensation allowable or
payable to the Underwriters as described in the Registration
Statement.
4.1.3 Exchange Stock
Market Clearance. On the Closing Date, the Company’s
shares of Common Stock, including the Firm Shares and the Option
Shares, shall have been approved for listing on the Exchange,
subject only to official notice of issuance. On the first Option
Closing Date (if any), the Company’s shares of Common Stock,
including the Option Shares, shall have been approved for listing
on the Exchange, subject only to official notice of
issuance.
4.2 Company Counsel
Matters.
4.2.1 Closing Date Opinion of
Counsel. On the Closing Date, the Representative shall have
received the favorable opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ PC, counsel to
the Company, and a statement providing certain “10b-5”
negative assurances, dated the Closing Date and addressed to the
Representative, in a form reasonably acceptable to the
Representative.
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4.2.2 Option
Closing Date Opinions of Counsel. On the Option Closing
Date, if any, the Representative shall have received the favorable
opinion of the counsel listed in Section 4.2.1, dated the Option
Closing Date, addressed to the Representative and in form and
substance reasonably satisfactory to the Representative, confirming
as of the Option Closing Date, the statements made by such counsel
in its respective opinion delivered on the Closing
Date.
4.2.3 Reliance.
In rendering such opinions, such
counsel may rely: (i) as to matters involving the application of
laws other than the laws of the United States and jurisdictions in
which they are admitted, to the extent such counsel deems proper
and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance reasonably satisfactory
to the Representative) of other counsel reasonably acceptable to
the Representative, familiar with the applicable laws; and (ii) as
to matters of fact, to the extent they deem proper, on certificates
or other written statements of officers of the Company and officers
of departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the
Company; provided that copies of any such statements or
certificates shall be delivered to Representative Counsel if
requested.
4.3 Comfort Letters.
4.3.1 Cold Comfort Letter. At the
time this Agreement is executed you shall have received a cold
comfort letter from each of the Auditors containing statements and
information of the type customarily included in accountants’
comfort letters with respect to the financial statements and
certain financial information contained or incorporated or deemed
incorporated by reference in the Registration Statement, the
Disclosure Package and the Prospectus, addressed to the
Representative and in form and substance satisfactory in all
respects to you and to the Auditors, dated as of the date of this
Agreement.
4.3.2 Bring-down
Comfort Letter. At each of the Closing Date and the Option
Closing Date, if any, the Representative shall have received from
the Auditors letters, dated as of the Closing Date or the Option
Closing Date, as applicable, to the effect that each of the
Auditors reaffirm the statements made in their respective letters
furnished pursuant to Section 4.3.1, except that the specified date
referred to shall be a date not more than three (3) business days
prior to the Closing Date or the Option Closing Date, as
applicable.
4.4 Officers’
Certificates.
4.4.1 Officers’
Certificate. The Company shall have furnished to the
Representative a certificate, dated the Closing Date and any Option
Closing Date (if such date is other than the Closing Date), of its
Chief Executive Officer and its Chief Financial Officer stating
that (i) such officers have carefully examined the Registration
Statement, the Disclosure Package, any Issuer Free Writing
Prospectus and the Prospectus and, in their opinion, the
Registration Statement and each amendment thereto, as of the
Applicable Time and as of the Closing Date (or any Option Closing
Date if such date is other than the Closing Date) did not include
any untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and the Disclosure Package,
as of the Applicable Time and as of the Closing Date (or any Option
Closing Date if such date is other than the Closing Date), any
Issuer Free Writing Prospectus as of its date and as of the Closing
Date (or any Option Closing Date if such date is other than the
Closing Date), and the Prospectus and each amendment or supplement
thereto, as of the respective date thereof and as of the Closing
Date, did not include any untrue statement of a material fact and
did not omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances in which
they were made, not misleading, (ii) since the effective date of
the Registration Statement, no event has occurred which should have
been set forth in a supplement or amendment to the Registration
Statement, the Disclosure Package or the Prospectus, (iii) to the
best of their knowledge after reasonable investigation, as of the
Closing Date (or any Option Closing Date if such date is other than
the Closing Date), the representations and warranties of the
Company in this Agreement are true and correct in all material
respects (or for those already qualified by materiality, in all
respects) and the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date (or any Option Closing
Date if such date is other than the Closing Date), and (iv) there
has not been, subsequent to the date of the most recent audited
financial statements included or incorporated by reference in the
Disclosure Package, any Material Adverse Change in the financial
position or results of operations of the Company, or any change or
development that, singularly or in the aggregate, would involve a
Material Adverse Change, in or affecting the condition (financial
or otherwise), results of operations, business or assets of the
Company, except as set forth in the Prospectus.
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4.4.2 Secretary’s
Certificate. At each of the Closing Date and the Option
Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Secretary of the Company,
dated the Closing Date or the Option Date, as the case may be,
respectively, certifying: (i) that each of the Charter and
Bylaws is true and
complete, has not been modified and is in full force and effect;
(ii) that the resolutions of the Company’s Board of Directors
relating to the Offering are in full force and effect and have not
been modified; (iii) as to the accuracy and completeness of all
correspondence between the Company or its counsel and the
Commission; and (iv) as to the incumbency of the officers of the
Company. The documents referred to in such certificate shall be
attached to such certificate.
4.4.3 Chief
Financial Officer’s Certificate. At the time this
Agreement is executed, and at each of the Closing Date and the
Option Closing Date, if any, the Representative shall have received
a certificate of the Company signed by the Chief Financial Officer
of the Company, dated as of the date of this Agreement, the Closing
Date or the Option Date, respectively, certifying as to the
accuracy of certain financial information contained in the
financial information set forth in or incorporated by reference
into the Prospectus.
4.5 No Material Changes. Prior to
and on each of the Closing Date and each Option Closing Date, if
any: (i) there shall have been no material adverse change or
development involving a prospective material adverse change in the
condition or the business activities, financial or otherwise, of
the Company from the latest dates as of which such condition is set
forth in the Registration Statement and no change in the capital
stock or debt of the Company, the Disclosure Package and the
Prospectus; (ii) no action, suit or proceeding, at law or in
equity, shall have been pending or threatened against the Company
or any Insider before or by any court or federal or state
commission, board or other administrative agency wherein an
unfavorable decision, ruling or finding may materially adversely
affect the business, operations, prospects or financial condition
or income of the Company, except as set forth in the Registration
Statement, the Disclosure Package and the Prospectus; (iii) no stop
order shall have been issued under the Securities Act and no
proceedings therefor shall have been initiated or threatened by the
Commission; (iv) no action shall have been taken and no law,
statute, rule, regulation or order shall have been enacted, adopted
or issued by any Governmental Entity which would prevent the
issuance or sale of the Public Securities or materially and
adversely affect or potentially materially and adversely affect the
business or operations of the Company; (v) no injunction,
restraining order or order of any other nature by any federal or
state court of competent jurisdiction shall have been issued which
would prevent the issuance or sale of the Public Securities or
materially and adversely affect or potentially materially and
adversely affect the business or operations of the Company and (vi)
the Registration Statement, the Disclosure Package and the
Prospectus and any amendments or supplements thereto shall contain
all material statements which are required to be stated therein in
accordance with the Securities Act and the Securities Act
Regulations and shall conform in all material respects to the
requirements of the Securities Act and the Securities Act
Regulations, and neither the Registration Statement, the Disclosure
Package, the Prospectus nor any amendment or supplement thereto
shall contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
4.6 Corporate Proceedings. All
corporate proceedings and other legal matters incident to the
authorization, form and validity of each of this Agreement, the
Public Securities, the Registration Statement, the Disclosure
Package and the Prospectus and all other legal matters relating to
this Agreement and the transactions contemplated hereby and thereby
shall be reasonably satisfactory in all material respects to
counsel for the Underwriters, and the Company shall have furnished
to such counsel all documents and information that they may
reasonably request to enable them to pass upon such
matters.
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4.7 Delivery of
Agreements.
4.7.1 Lock-Up
Agreements. On or before the date of this Agreement, the
Company shall have delivered to the Representative executed copies
of the Lock-Up Agreements from each of the persons listed in
Schedule 3
hereto.
4.8 Additional Documents. At the
Closing Date and at each Option Closing Date (if any)
Representative Counsel shall have been furnished with such
documents and opinions as they may reasonably require, in its sole
discretion, for the purpose of enabling Representative Counsel to
deliver an opinion to the Underwriters, or in order to evidence the
accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance
and sale of the Public Securities as herein contemplated shall be
reasonably satisfactory in form and substance to the Representative
and Representative Counsel.
5. Indemnification.
5.1.1 General.
Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Underwriter, its affiliates and
each of its and their respective directors, officers, members,
employees, representatives, partners, shareholders, affiliates,
counsel and agents and each person, if any, who controls any such
Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act (collectively the
“Underwriter Indemnified
Parties,” and each an “Underwriter Indemnified Party”),
against any and all loss, liability, claim, damage and expense
whatsoever (including but not limited to any and all legal or other
expenses reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any
claim whatsoever, whether arising out of any action between any of
the Underwriter Indemnified Parties and the Company or between any
of the Underwriter Indemnified Parties and any third party, or
otherwise) to which they or any of them may become subject under
the Securities Act, the Exchange Act or any other statute or at
common law or otherwise or under the laws of foreign countries (a
“Claim”), arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained
in (i) the Registration Statement, the Disclosure Package, the
Preliminary Prospectus, the Prospectus or any Issuer Free Writing
Prospectus or in any Written Testing-the-Waters Communication (as
from time to time each may be amended and supplemented); (ii) any
materials or information provided to investors by, or with the
approval of, the Company in connection with the marketing of the
Offering, including any “road show” or investor
presentations made to investors by the Company (whether in person
or electronically); (iii) any application or other document or
written communication (in this Section 5, collectively called
“application”)
executed by the Company or based upon written information furnished
by the Company in any jurisdiction in order to qualify the Public
Securities under the securities laws thereof or filed with the
Commission, any state securities commission or agency, the Exchange
or any other national securities exchange; or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading,
unless such statement or omission was made in reliance upon, and in
conformity with, the Underwriters’ Information; or (iv)
otherwise arising in connection with or allegedly in connection
with the Offering. The Company also agrees that it will reimburse
each Underwriter Indemnified Party for all fees and expenses
(including but not limited to any and all legal or other expenses
reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim
whatsoever, whether arising out of any action between any of the
Underwriter Indemnified Parties and the Company or between any of
the Underwriter Indemnified Parties and any third party, or
otherwise) (collectively, the “Expenses”), and further
agrees wherever and whenever possible to advance payment of
Expenses as they are incurred by an Underwriter Indemnified Party
in investigating, preparing, pursuing or defending any
Claim.
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5.1.2 Procedure.
If any action is brought against an Underwriter Indemnified Party
in respect of which indemnity may be sought against the Company
pursuant to Section 5.1.1, such Underwriter Indemnified Party shall
promptly notify the Company in writing of the institution of such
action and the Company shall assume the defense of such action,
including the employment and fees of counsel (subject to the
reasonable approval of such Underwriter Indemnified Party) and
payment of actual expenses if an Underwriter Indemnified Party
requests that the Company do so. Such Underwriter Indemnified Party
shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the
expense of the Company, and shall be advanced by the Company. The
Company shall not be liable for any settlement of any action
effected without its consent (which shall not be unreasonably
withheld). In addition, the Company shall not, without the prior
written consent of the Underwriters, settle, compromise or consent
to the entry of any judgment in or otherwise seek to terminate any
pending or threatened action in respect of which advancement,
reimbursement, indemnification or contribution may be sought
hereunder (whether or not such Underwriter Indemnified Party is a
party thereto) unless such settlement, compromise, consent or
termination (i) includes an unconditional release of each
Underwriter Indemnified Party, acceptable to such Underwriter
Indemnified Party, from all liabilities, expenses and claims
arising out of such action for which indemnification or
contribution may be sought and (ii) does not include a statement as
to or an admission of fault, culpability or a failure to act, by or
on behalf of any Underwriter Indemnified Party.
5.2 Indemnification of the Company.
Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company, its directors, its officers who
signed the Registration Statement and persons who control the
Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act against any and all loss, liability,
claim, damage and expense described in the foregoing indemnity from
the Company to the several Underwriters, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue
statements or omissions made in the Registration Statement, any
Preliminary Prospectus, the Disclosure Package or Prospectus or any
amendment or supplement thereto or in any application, in reliance
upon, and in strict conformity with, the Underwriters’
Information. In case any action shall be brought against the
Company or any other person so indemnified based on any Preliminary
Prospectus, the Registration Statement, the Disclosure Package or
Prospectus or any amendment or supplement thereto or any
application, and in respect of which indemnity may be sought
against any Underwriter, such Underwriter shall have the rights and
duties given to the Company, and the Company and each other person
so indemnified shall have the rights and duties given to the
several Underwriters by the provisions of Section 5.1.2. The
Company agrees promptly to notify the Representative of the
commencement of any litigation or proceedings against the Company
or any of its officers, directors or any person, if any, who
controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, in connection
with the issuance and sale of the Public Securities or in
connection with the Registration Statement, the Disclosure Package,
the Prospectus or any Issuer Free Writing Prospectus or any Written
Testing-the-Waters Communication.
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5.3 Contribution.
5.3.1 Contribution
Rights. If the indemnification provided for in this Section
5 shall for any reason be unavailable to or insufficient to hold
harmless an indemnified party under Section 5.1 or 5.2 in respect
of any loss, claim, damage or liability, or any action in respect
thereof, referred to therein, then each indemnifying party shall,
in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of
such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect
the relative benefits received by the Company, on the one hand, and
the Underwriters, on the other, from the Offering of the Public
Securities, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to
in clause (i) above but also the relative fault of the Company, on
the one hand, and the Underwriters, on the other, with respect to
the statements or omissions that resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits
received by the Company, on the one hand, and the Underwriters, on
the other, with respect to such Offering shall be deemed to be in
the same proportion as the total net proceeds from the Offering of
the Public Securities purchased under this Agreement (before
deducting expenses) received by the Company, as set forth in the
table on the cover page of the Prospectus, on the one hand, and the
total underwriting discounts and commissions received by the
Underwriters with respect to the shares of Common Stock purchased
under this Agreement, as set forth in the table on the cover page
of the Prospectus, on the other hand. The relative fault shall be
determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the
Company or the Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 5.3.1 were to be determined
by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation
that does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 5.3.1
shall be deemed to include, for purposes of this Section 5.3.1, any
legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 5.3.1 in
no event shall an Underwriter be required to contribute any amount
in excess of the amount by which the total underwriting discounts
and commissions received by such Underwriter with respect to the
Offering of the Public Securities exceeds the amount of any damages
that such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
5.3.2 Contribution
Procedure. Within fifteen (15) days after receipt by any
party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if
a claim for contribution in respect thereof is to be made against
another party (“contributing party”), notify the
contributing party of the commencement thereof, but the failure to
so notify the contributing party will not relieve it from any
liability which it may have to any other party other than for
contribution hereunder. In case any such action, suit or proceeding
is brought against any party, and such party notifies a
contributing party or its representative of the commencement
thereof within the aforesaid 15 days, the contributing party will
be entitled to participate therein with the notifying party and any
other contributing party similarly notified. Any such contributing
party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding
affected by such party seeking contribution without the written
consent of such contributing party. The contribution provisions
contained in this Section 5.3.2 are intended to supersede, to the
extent permitted by law, any right to contribution under the
Securities Act, the Exchange Act or otherwise available. Each
Underwriter’s obligations to contribute pursuant to this
Section 5.3 are several and not joint.
-31-
6. Default by an
Underwriter.
6.1 Default Not Exceeding 10% of Firm
Shares or Option Shares. If any Underwriter or Underwriters
shall default in its or their obligations to purchase the Firm
Shares or the Option Shares, if the Over-allotment Option is
exercised hereunder, and if the number of the Firm Shares or Option
Shares with respect to which such default relates does not exceed
in the aggregate 10% of the number of Firm Shares or Option Shares
that all Underwriters have agreed to purchase hereunder, then such
Firm Shares or Option Shares to which the default relates shall be
purchased by the non-defaulting Underwriters in proportion to their
respective commitments hereunder.
6.2 Default Exceeding 10% of Firm Shares
or Option Shares. In the event that the default addressed in
Section 6.1 relates to more than 10% of the Firm Shares or Option
Shares, you may in your discretion arrange for yourself or for
another party or parties to purchase such Firm Shares or Option
Shares to which such default relates on the terms contained herein.
If, within one (1) Business Day after such default relating to more
than 10% of the Firm Shares or Option Shares, you do not arrange
for the purchase of such Firm Shares or Option Shares, then the
Company shall be entitled to a further period of one (1) Business
Day within which to procure another party or parties satisfactory
to you to purchase said Firm Shares or Option Shares on such terms.
In the event that neither you nor the Company arrange for the
purchase of the Firm Shares or Option Shares to which a default
relates as provided in this Section 6, this Agreement will
automatically be terminated by you or the Company without liability
on the part of the Company (except as provided in Sections 3.9 and
5 hereof) or the several Underwriters (except as provided in
Section 5 hereof); provided, however, that if such default occurs
with respect to the Option Shares, this Agreement will not
terminate as to the Firm Shares; and provided, further, that nothing herein shall
relieve a defaulting Underwriter of its liability, if any, to the
other Underwriters and to the Company for damages occasioned by its
default hereunder.
6.3 Postponement of Closing Date.
In the event that the Firm Shares or Option Shares to which the
default relates are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as
aforesaid, you or the Company shall have the right to postpone the
Closing Date or Option Closing Date for a reasonable period, but
not in any event exceeding five (5) Business Days, in order to
effect whatever changes may thereby be made necessary in the
Registration Statement, the Disclosure Package or the Prospectus or
in any other documents and arrangements, and the Company agrees to
file promptly any amendment to the Registration Statement, the
Disclosure Package or the Prospectus that in the opinion of counsel
for the Underwriter may thereby be made necessary. The term
“Underwriter” as
used in this Agreement shall include any party substituted under
this Section 6 with like effect as if it had originally been a
party to this Agreement with respect to such shares of Common
Stock.
7. Additional
Covenants.
7.1 Board Composition and Board
Designations. For a period ending on the earlier of (i)
three (3) years after the date of this Agreement and (ii) the
effective date of the Company’s deregistration of the Common
Stock under the Exchange Act and the suspension of the
Company’s reporting obligations under Section 15(d)
thereunder, the Company shall ensure that, in the event the Company
seeks to have its Public Securities listed on another exchange or
quoted on an automated quotation system: (i) the qualifications of
the persons serving as members of the Board of Directors and the
overall composition of the Board comply with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act, with the Exchange Act and with the listing rules of the
Exchange or any other national securities exchange, as the case may
be, and (ii) if applicable, at least one member of the Audit
Committee of the Board of Directors qualifies as an “audit
committee financial expert,” or, absent meeting such
qualification, has “accounting or related financial
management expertise” or “financial
sophistication” as such term, as applicable, is defined under
Regulation S-K or the listing rules of the Exchange, as
applicable.
-32-
7.2 Prohibition on Press Releases and
Public Announcements. The Company shall not issue press
releases or engage in any other publicity, without the
Representative’s prior written consent, for a period ending
at 5:00 p.m., Eastern time, on the first (1st) Business Day
following the forty fifth (45th) day after the
Closing Date, other than normal and customary releases issued in
the ordinary course of the Company’s business and any other
press release that may be necessary to comply with the Securities
Act or the rules of the Exchange.
7.3 Right of First
Refusal. Provided that the Firm Shares are sold in
accordance with the terms of this Agreement, the Representative
shall have an irrevocable right of first refusal (the
“Right of First
Refusal”), for a period of twelve (12) months after
the date the Offering is completed, to act as sole and exclusive
investment banker, sole and exclusive book-runner, sole and
exclusive financial advisor, sole and exclusive underwriter and/or
sole and exclusive placement agent, at the Representative’s
sole and exclusive discretion, for each and every future public and
private equity and debt offering, including all equity linked
financings (each, a “Subject
Transaction”), during such twelve (12) month period,
of the Company, or any successor to or subsidiary of the Company,
on terms and conditions customary to the Representative for such
Subject Transactions. For the avoidance of any doubt,
the Company shall not retain, engage or solicit any additional
investment banker, book-runner, financial advisor, underwriter
and/or placement agent in a Subject Transaction during such twelve
(12) month period without the express written consent of the
Representative. The Company shall notify the Representative of its
intention to pursue a Subject Transaction, including the material
terms thereof, by providing written notice thereof by registered
mail or overnight courier service addressed to the
Representative. If the Representative fails to exercise its
Right of First Refusal with respect to any Subject Transaction
within ten (10) Business Days after the mailing of such written
notice, then the Representative shall have no further claim or
right with respect to the Subject Transaction. The Representative
may elect, in its sole and absolute discretion, not to exercise its
Right of First Refusal with respect to any Subject Transaction;
provided that any such election by the Representative shall not
adversely affect the Representative’s Right of First Refusal
with respect to any other Subject Transaction during the twelve
(12) month period agreed to
above.
8. Effective Date of this Agreement and
Termination Thereof.
8.1 Effective Date. This Agreement
shall become effective when both the Company and the Representative
have executed the same and delivered counterparts of such
signatures to the other party.
8.2 Termination. The Representative
shall have the right to terminate this Agreement at any time prior
to any Closing Date, (i) if any domestic or international event or
act or occurrence has materially disrupted, or in your opinion will
in the immediate future materially disrupt, general securities
markets in the United States; or (ii) if trading on the New York
Stock Exchange or the Nasdaq Stock Market LLC shall have been
suspended or materially limited, or minimum or maximum prices for
trading shall have been fixed, or maximum ranges for prices for
securities shall have been required by FINRA or by order of the
Commission or any other government authority having jurisdiction;
or (iii) if the United States shall have become involved in a new
war or an increase in major hostilities; or (iv) if a banking
moratorium has been declared by a New York State or federal
authority; or (v) if a moratorium on foreign exchange trading has
been declared which materially adversely impacts the United States
securities markets; or (vi) if the Company shall have sustained a
material loss by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether
or not such loss shall have been insured, will, in your opinion,
make it inadvisable to proceed with the delivery of the Firm Shares
or Option Shares; or (vii) if the Company is in material breach of
any of its representations, warranties or covenants hereunder; or
(viii) if the Representative shall have become aware after the date
hereof of such a Material Adverse Change in the conditions or
prospects of the Company, or such adverse material change in
general market conditions as in the Representative’s judgment
would make it impracticable to proceed with the offering, sale
and/or delivery of the Public Securities or to enforce contracts
made by the Underwriters for the sale of the Public
Securities.
-33-
8.3 Expenses. Notwithstanding
anything to the contrary in this Agreement, except in the case of a
default by the Underwriters, pursuant to Section 6.2 above, in the
event that this Agreement shall not be carried out for any reason
whatsoever, within the time specified herein or any extensions
thereof pursuant to the terms herein, the Company shall be
obligated to pay to the Underwriters their actual and accountable
out-of-pocket expenses related to the transactions contemplated
herein then due and payable (including the fees and disbursements
of Representative Counsel) up to $100,000 (inclusive of the $35,000
advance for out-of-pocket accountable expenses previously paid by
the Company to the Representative (the “Advance”)), and upon demand the
Company shall pay the full amount thereof to the Representative on
behalf of the Underwriters; provided, however, that such expense
cap in no way limits or impairs the indemnification and
contribution provisions of this Agreement. Notwithstanding the
foregoing, any advance received by the Representative will be
reimbursed to the Company to the extent not actually incurred in
compliance with FINRA Rule 5110(f)(2)(C).
8.4 Survival of Indemnification.
Notwithstanding any contrary provision contained in this Agreement,
any election hereunder or any termination of this Agreement, and
whether or not this Agreement is otherwise carried out, the
provisions of Section 5 shall remain in full force and effect and
shall not be in any way affected by, such election or termination
or failure to carry out the terms of this Agreement or any part
hereof.
8.5 Representations, Warranties,
Agreements to Survive. All representations, warranties and
agreements contained in this Agreement or in certificates of
officers of the Company submitted pursuant hereto, shall remain
operative and in full force and effect regardless of (i) any
investigation made by or on behalf of any Underwriter or its
Affiliates or selling agents, any person controlling any
Underwriter, its officers or directors or any person controlling
the Company or (ii) delivery of and payment for the Public
Securities.
9. Miscellaneous.
9.1 Notices. All communications
hereunder, except as herein otherwise specifically provided, shall
be in writing and shall be mailed (registered or certified mail,
return receipt requested), personally delivered or sent by e-mail
or facsimile transmission and confirmed and shall be deemed given
when so delivered, e-mailed or faxed and confirmed or if mailed,
two (2) days after such mailing.
If to
the Representative:
ThinkEquity, a
division of Fordham Financial Management, Inc.
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇
▇▇▇▇, Head of Investment Banking
Fax
No.: ▇▇▇-▇▇▇-▇▇▇▇
E-mail:
▇▇▇▇▇▇▇@▇▇▇▇▇-▇▇▇▇▇▇.▇▇▇
with a
copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇ &
Worcester LLP
▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Oded
Har-Even, Esq.
Fax No:
(▇▇▇) ▇▇▇-▇▇▇▇
Email:
▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
-34-
If to
the Company:
BK
Technologies Corporation
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇▇▇▇▇, President
E-mail:
▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
with a
copy (which shall not constitute notice) to:
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ PC
▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax No:
(▇▇▇)▇▇▇-▇▇▇▇
Email:
▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
9.2 Research Analyst Independence.
The Company acknowledges that each Underwriter’s research
analysts and research departments are required to be independent
from its investment banking division and are subject to certain
regulations and internal policies, and that such
Underwriter’s research analysts may hold views and make
statements or investment recommendations and/or publish research
reports with respect to the Company and/or the Offering that differ
from the views of their investment banking division. The Company
acknowledges that each Underwriter is a full service securities
firm and as such from time to time, subject to applicable
securities laws, rules and regulations, may effect transactions for
its own account or the account of its customers and hold long or
short positions in debt or equity securities of the Company;
provided, however, that nothing in this Section
9.2 shall relieve the Underwriter of any responsibility or
liability it may otherwise bear in connection with activities in
violation of applicable securities laws, rules or
regulations.
9.3 Headings. The headings
contained herein are for the sole purpose of convenience of
reference, and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this
Agreement.
9.4 Amendment. This Agreement may
only be amended by a written instrument executed by each of the
parties hereto.
9.5 Entire Agreement. This
Agreement (together with the other agreements and documents being
delivered pursuant to or in connection with this Agreement)
constitutes the entire agreement of the parties hereto with respect
to the subject matter hereof and thereof, and supersedes all prior
agreements and understandings of the parties, oral and written,
with respect to the subject matter hereof. Notwithstanding anything
to the contrary set forth herein, it is understood and agreed by
the parties hereto that all other terms and conditions of that
certain engagement letter between the Company and ThinkEquity, a
division of Fordham Financial Management, Inc., dated February 25,
2021, shall remain in full force and effect.
9.6 Binding Effect. This Agreement
shall inure solely to the benefit of and shall be binding upon the
Representative, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 5 hereof,
and their respective successors, legal representatives, heirs and
assigns, and no other person shall have or be construed to have any
legal or equitable right, remedy or claim under or in respect of or
by virtue of this Agreement or any provisions herein contained. The
term “successors and assigns” shall not include a
purchaser, in its capacity as such, of securities from any of the
Underwriters.
-35-
9.7 Governing Law; Consent to
Jurisdiction; Trial by Jury. This Agreement shall be
governed by and construed and enforced in accordance with the laws
of the State of New York, without giving effect to conflict of laws
principles thereof. The Company hereby agrees that any action,
proceeding or claim against it arising out of, or relating in any
way to this Agreement shall be brought and enforced in the New York
Supreme Court, County of New York, or in the United States District
Court for the Southern District of New York, and irrevocably
submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company hereby waives any objection to such
exclusive jurisdiction and that such courts represent an
inconvenient forum. Any such process or summons to be served upon
the Company may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 9.1
hereof. Such mailing shall be deemed personal service and shall be
legal and binding upon the Company in any action, proceeding or
claim. The Company agrees that the prevailing party(ies) in any
such action shall be entitled to recover from the other party(ies)
all of its reasonable attorneys’ fees and expenses relating
to such action or proceeding and/or incurred in connection with the
preparation therefor. The Company (on its behalf and, to the extent
permitted by applicable law, on behalf of its stockholders and
affiliates) and each of the Underwriters hereby irrevocably waives,
to the fullest extent permitted by applicable law, any and all
right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated
hereby.
9.8 Execution in Counterparts. This
Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which
shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement, and shall become
effective when one or more counterparts has been signed by each of
the parties hereto and delivered to each of the other parties
hereto. Delivery of a signed counterpart of this Agreement by
facsimile or email/pdf transmission shall constitute valid and
sufficient delivery thereof.
9.9 Waiver, etc. The failure of any
of the parties hereto to at any time enforce any of the provisions
of this Agreement shall not be deemed or construed to be a waiver
of any such provision, nor to in any way effect the validity of
this Agreement or any provision hereof or the right of any of the
parties hereto to thereafter enforce each and every provision of
this Agreement. No waiver of any breach, non-compliance or
non-fulfillment of any of the provisions of this Agreement shall be
effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver
is sought; and no waiver of any such breach, non-compliance or
non-fulfillment shall be construed or deemed to be a waiver of any
other or subsequent breach, non-compliance or
non-fulfillment.
[Signature Page
Follows]
-36-
If the
foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space
provided below for that purpose, whereupon this letter shall
constitute a binding agreement between us.
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By:
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/s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇
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Name:
|
▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇
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Tilte:
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President
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Confirmed as of the
date first written above mentioned, on behalf of itself and as
Representative of the several Underwriters named on Schedule 1 hereto:
THINKEQUITY
A
Division of Fordham Financial Management, Inc.
By: /s/ ▇▇▇▇▇
▇▇▇▇▇▇
Name: ▇▇▇▇▇
▇▇▇▇▇▇
Title:
Managing Director, Head of Equity Syndicate
SCHEDULE 1
|
Underwriter
|
Total
Number of Firm Shares to be Purchased
|
Number
of Additional Shares to be Purchased if the Over-Allotment Option
is Fully Exercised by the Representative
|
|
ThinkEquity, a
division of Fordham Financial Management, Inc.
|
3,695,000
|
554,250
|
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SCHEDULE 2-A
Pricing
Information
Number
of Firm Shares: 3,695,000
Number
of Option Shares: 554,250
Public
Offering Price per Share: $3.00
Underwriting
Discount per Share: $0.1950
Proceeds
to Company per Share (before expenses): $2.805
SCHEDULE 2-B
Issuer General Use Free Writing Prospectuses
1.
BK Technologies
Investor Presentation dated June 2021 filed with the Commission
June 4, 2021
SCHEDULE 2-C
Written Testing-the-Waters Communications
None.
SCHEDULE 3
List of Lock-Up Parties
1.
▇▇▇▇
▇▇▇▇▇
2.
▇▇▇▇▇▇
▇▇▇▇▇▇
3.
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
4.
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇
5.
▇▇▇▇
▇▇▇▇▇▇▇
6.
▇▇▇▇
▇▇▇▇▇▇▇▇▇
7.
▇▇▇▇▇▇▇
▇▇▇▇
8.
▇▇▇▇▇
▇▇▇▇▇▇
9.
▇▇▇▇▇▇▇
▇▇▇▇▇
Sch.
3-1
EXHIBIT A
Form of Representative’s Warrant Agreement
See
Attached
EXHIBIT A
Form of Representative’s Warrant Agreement
ISSUANCE DATE: JUNE 9, 2021
THE REGISTERED HOLDER OF THIS PURCHASE WARRANT BY ITS ACCEPTANCE
HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS
PURCHASE WARRANT EXCEPT AS HEREIN PROVIDED AND THE REGISTERED
HOLDER OF THIS PURCHASE WARRANT AGREES THAT IT WILL NOT SELL,
TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE WARRANT FOR A
PERIOD OF ONE HUNDRED EIGHTY DAYS FOLLOWING THE EFFECTIVE DATE
(DEFINED BELOW) TO ANYONE OTHER THAN (I) THINKEQUITY, A DIVISION OF
FORDHAM FINANCIAL MANAGEMENT, INC., OR AN UNDERWRITER OR A SELECTED
DEALER IN CONNECTION WITH THE OFFERING, OR (II) A BONA FIDE OFFICER
OR PARTNER OF THINKEQUITY, A DIVISION OF FORDHAM FINANCIAL
MANAGEMENT, INC., OR OF ANY SUCH UNDERWRITER OR SELECTED
DEALER.
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY
AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION
THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH
SECURITIES.
THIS PURCHASE WARRANT IS NOT EXERCISABLE PRIOR TO DECEMBER 3, 2021.
VOID AFTER 5:00 P.M., EASTERN TIME, JUNE 6, 2026.
FORM OF WARRANT TO PURCHASE COMMON STOCK
BK TECHNOLOGIES CORPORATION
Warrant
Shares:
Initial Exercise
Date: December 3, 2021
THIS
WARRANT TO PURCHASE COMMON STOCK (the “Warrant”) certifies that,
for value received, _____________ or its assigns (the
“Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after December
3, 2021 (the “Initial Exercise Date”)
and, in accordance with FINRA Rule 5110(g)(8)(A), prior to at 5:00
p.m. (New York time) on the date that is five (5) years following
the date of the Underwriting Agreement (as defined below) (the
“Termination
Date”) but not thereafter, to subscribe for and
purchase from BK Technologies Corporation, a Nevada corporation
(the “Company”), up to
______shares of Common Stock, par value $0.60 per share, of the
Company (the “Warrant Shares”), as
subject to adjustment hereunder. The purchase price of one share of
Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b). This Warrant is being issued
pursuant to that certain Underwriting Agreement, dated as of June
6, 2021 between the Company and ThinkEquity, a division of Fordham
Financial Management Inc., as representative of the underwriter(s)
named therein (the “Underwriting
Agreement”).
Section 1. Definitions. In addition to the
terms defined elsewhere in this Agreement, the following terms have
the meanings indicated in this Section 1:
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 under the Securities Act.
“Business Day” means any
day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
“Commission” means the
United States Securities and Exchange Commission.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Trading Day” means a day
on which the New York Stock Exchange is open for
trading.
“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, or the New York Stock Exchange (or any
successors to any of the foregoing).
“VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)
if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of a share of Common Stock for such date (or the
nearest preceding date) on the OTCQB or OTCQX as applicable, (c) if
Common Stock is not then listed or quoted for trading on the OTCQB
or OTCQX and if prices for Common Stock are then reported in the
“Pink Sheets” published by OTC Markets Group, Inc. (or
a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of Common
Stock so reported, or (d) in all other cases, the fair market
value of the Common Stock as determined by an independent appraiser
selected in good faith by the Holder and reasonably acceptable to
the Company, the fees and expenses of which shall be paid by the
Company.
Section
2. Exercise.
a) Exercise of the
purchase rights represented by this Warrant may be made, in whole
or in part, at any time or times on or after the Initial Exercise
Date and on or before the Termination Date by delivery to the
Company (or such other office or agency of the Company as it may
designate by notice in writing to the registered Holder at the
address of the Holder appearing on the books of the Company) of a
duly executed facsimile copy (or pdf copy via e-mail attachment) of
the Notice of Exercise Form annexed hereto. Within two (2) Trading
Days following the date of exercise as aforesaid, the Holder shall
deliver the aggregate Exercise Price for the shares specified in
the applicable Notice of Exercise by wire transfer or
cashier’s check drawn on a United States bank unless the
cashless exercise procedure specified in Section 2(c) below is
specified in the applicable Notice of Exercise. No ink-original
Notice of Exercise shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any
Notice of Exercise form be required. Notwithstanding anything
herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within five
(5) Trading Days of the date the final Notice of Exercise is
delivered to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant
Shares available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased.
The Holder and the Company shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise
Form within two (2) Business Days of receipt of such notice.
The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason
of the provisions of this paragraph, following the purchase of a
portion of the Warrant Shares hereunder, the number of Warrant
Shares available for purchase hereunder at any given time may be
less than the amount stated on the face hereof.
b) Exercise Price. The exercise
price per share of the Common Stock under this Warrant shall be
$3.75, subject to adjustment
hereunder (the “Exercise
Price”).
c) Cashless Exercise. In lieu of
exercising this Warrant by delivering the aggregate Exercise Price
by wire transfer or cashier’s check, at the election of the
Holder this Warrant may also be exercised, in whole or in part, at
such time by means of a “cashless exercise” in which
the Holder shall be entitled to receive the number of Warrant
Shares equal to the quotient obtained by dividing [(A-B) (X)] by
(A), where:
(A) =
the VWAP on the Trading Day immediately preceding the date on which
Holder elects to exercise this Warrant by means of a
“cashless exercise,” as set forth in the applicable
Notice of Exercise;
(B) =
the Exercise Price of this Warrant, as adjusted hereunder;
and
(X) =
the number of Warrant Shares that would be issuable upon exercise
of this Warrant in accordance with the terms of this Warrant if
such exercise were by means of a cash exercise rather than a
cashless exercise.
If Warrant Shares are issued in such a “cashless
exercise,” the parties acknowledge and agree that in
accordance with Section 3(a)(9) of the Securities Act, the Warrant
Shares shall take on the registered characteristics of the Warrants
being exercised, and the holding period of the Warrants being
exercised may be tacked on to the holding period of the Warrant
Shares. The Company agrees not to take any position
contrary to this Section 2(c).
Notwithstanding
anything herein to the contrary, on the Termination Date, this
Warrant shall be automatically exercised via cashless exercise
pursuant to this Section 2(c).
d)
Mechanics of
Exercise.
i. Delivery of Warrant Shares Upon
Exercise. The Company shall cause the Warrant Shares
purchased hereunder to be transmitted by its transfer agent to the
Holder by crediting the account of the Holder’s or its
designee’s balance account with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system
(“DWAC”) if the Company is
then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by Holder, or (B)
the Warrant Shares are eligible for resale by the Holder without
volume or manner-of-sale limitations pursuant to Rule 144 and, in
either case, the Warrant Shares have been sold by the Holder prior
to the Warrant Share Delivery Date (as defined below), and
otherwise by physical delivery of a certificate, registered in the
Company’s share register in the name of the Holder or its
designee, for the number of Warrant Shares to which the Holder is
entitled pursuant to such exercise to the address specified by the
Holder in the Notice of Exercise by the date that is two
(2) Trading Days after the delivery to the Company of the
Notice of Exercise (such date, the “Warrant Share Delivery
Date”). If the Warrant Shares can be delivered via
DWAC, the transfer agent shall have received from the Company, at
the expense of the Company, any legal opinions or other
documentation reasonably required by it to deliver such Warrant
Shares without legend (subject to receipt by the Company of
reasonable back up documentation from the Holder, including with
respect to affiliate status) and, if applicable and requested by
the Company prior to the Warrant Share Delivery Date, the transfer
agent shall have received from the Holder a confirmation of sale of
the Warrant Shares (provided the requirement of the Holder to
provide a confirmation as to the sale of Warrant Shares shall not
be applicable to the issuance of unlegended Warrant Shares upon a
cashless exercise of this Warrant if the Warrant Shares are then
eligible for resale pursuant to Rule 144(b)(1)). The Warrant Shares
shall be deemed to have been issued, and Holder or any other person
so designated to be named therein shall be deemed to have become a
holder of record of such shares for all purposes, as of the date
the Warrant has been exercised, with payment to the Company of the
Exercise Price (or by cashless exercise, if permitted) and all
taxes required to be paid by the Holder, if any, pursuant to
Section 2(d)(vi) prior to the issuance of such shares, having
been paid. If the Company fails for any reason to deliver to the
Holder the Warrant Shares subject to a Notice of Exercise by the
second Trading Day following the Warrant Share Delivery Date, the
Company shall pay to the Holder, in cash, as liquidated damages and
not as a penalty, for each $1,000 of Warrant Shares subject to such
exercise (based on the VWAP of the Common Stock on the date of the
applicable Notice of Exercise), $10 per Trading Day (increasing to
$20 per Trading Day on the fifth Trading Day after such liquidated
damages begin to accrue) for each Trading Day after the second
Trading Day following such Warrant Share Delivery Date until such
Warrant Shares are delivered or Holder rescinds such
exercise.
ii. Delivery
of New Warrants Upon Exercise. If this Warrant shall have
been exercised in part, the Company shall, at the request of a
Holder and upon surrender of this Warrant certificate, at the time
of delivery of the Warrant Shares, deliver to the Holder a new
Warrant evidencing the rights of the Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this
Warrant.
iii. Rescission
Rights. If the Company fails to cause its transfer agent to
deliver to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will
have the right to rescind such exercise; provided, however, that the Holder shall
be required to return any Warrant Shares or Common Stock subject to
any such rescinded exercise notice concurrently with the return to
Holder of the aggregate Exercise Price paid to the Company for such
Warrant Shares and the restoration of Holder’s right to
acquire such Warrant Shares pursuant to this Warrant (including,
issuance of a replacement warrant certificate evidencing such
restored right).
iv. Compensation for Buy-In on Failure to
Timely Deliver Warrant Shares Upon Exercise. In addition to
any other rights available to the Holder, if the Company fails to
cause its transfer agent to transmit to the Holder the Warrant
Shares pursuant to an exercise on or before the Warrant Share
Delivery Date, and if after such date the Holder is required by its
broker to purchase (in an open market transaction or otherwise) or
the Holder’s brokerage firm otherwise purchases, shares of
Common Stock to deliver in satisfaction of a sale by the Holder of
the Warrant Shares which the Holder anticipated receiving upon such
exercise (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder the amount, if any, by
which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue times (2)
the price at which the sell order giving rise to such purchase
obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored (in which
case such exercise shall be deemed rescinded) or deliver to the
Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted exercise of shares of
Common Stock with an aggregate sale price giving rise to such
purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the
Buy-In and, upon request of the Company, evidence of the amount of
such loss. Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company’s failure to timely deliver shares of Common Stock
upon exercise of the Warrant as required pursuant to the terms
hereof.
v. No Fractional Shares or Scrip.
No fractional shares or scrip representing fractional shares shall
be issued upon the exercise of this Warrant. As to any fraction of
a share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay
a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Exercise Price or round up
to the next whole share.
vi. Charges, Taxes and Expenses.
Issuance of Warrant Shares shall be made without charge to the
Holder for any issue or transfer tax or other incidental expense in
respect of the issuance of such Warrant Shares, all of which taxes
and expenses shall be paid by the Company, and such Warrant Shares
shall be issued in the name of the Holder or in such name or names
as may be directed by the Holder; provided, however, that in the event that
Warrant Shares are to be issued in a name other than the name of
the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by
the Holder and the Company may require, as a condition thereto, the
payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto. The Company shall pay all transfer agent fees
required for same-day processing of any Notice of Exercise and all
fees to the Depository Trust Company (or another established
clearing corporation performing similar functions) required for
same-day electronic delivery of the Warrant Shares.
vii. Closing
of Books. The Company will not close its stockholder books
or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.
viii. Signature.
This Section 2 and the exercise form attached hereto set forth the
totality of the procedures required of the Holder in order to
exercise this Purchase Warrant. Without limiting the
preceding sentences, no ink-original exercise form shall be
required, nor shall any medallion guarantee (or other type of
guarantee or notarization) of any exercise form be required in
order to exercise this Purchase Warrant. No additional legal
opinion, other information or instructions shall be required of the
Holder to exercise this Purchase Warrant. The Company shall
honor exercises of this Purchase Warrant and shall deliver Shares
underlying this Purchase Warrant in accordance with the terms,
conditions and time periods set forth herein.
e) Holder’s Exercise
Limitations. The Company shall not effect any exercise of
this Warrant, and a Holder shall not have the right to exercise any
portion of this Warrant, pursuant to Section 2 or otherwise, to the
extent that after giving effect to such issuance after exercise as
set forth on the applicable Notice of Exercise, the Holder
(together with the Holder’s Affiliates, and any other Persons
acting as a group together with the Holder or any of the
Holder’s Affiliates), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For
purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by the Holder and its Affiliates shall
include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which
would be issuable upon (i) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of
its Affiliates and (ii) exercise or conversion of the unexercised
or nonconverted portion of any other securities of the Company
(including, without limitation, any other Common Stock Equivalents)
subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any
of its Affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 2(e), beneficial ownership
shall be calculated in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder,
it being acknowledged by the Holder that the Company is not
representing to the Holder that such calculation is in compliance
with Section 13(d) of the Exchange Act and the Holder is solely
responsible for any schedules required to be filed in accordance
therewith. To the extent that the limitation contained in this
Section 2(e) applies, the determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant
is exercisable shall be in the sole discretion of the Holder, and
the submission of a Notice of Exercise shall be deemed to be the
Holder’s determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with
any Affiliates) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership
Limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination and shall have no
liability for exercise of the Warrant that are not in compliance
with the Beneficial Ownership Limitation, except to the extent that
the Holder relies on the number of outstanding shares of Common
Stock that was provided by the Company. In addition, a
determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder, and the Company
shall have no obligation to verify or confirm the accuracy of such
determination and shall have no liability for exercises of the
Warrant that are not in compliance with the Beneficial Ownership
Limitation, except to the extent the Holder relies on the number of
outstanding shares of Common Stock that was provided by the
Company. For purposes of this Section 2(e), in determining the
number of outstanding shares of Common Stock, a Holder may rely on
the number of outstanding shares of Common Stock as reflected in
(A) the Company’s most recent periodic or annual report filed
with the Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by
the Company or the Company’s transfer agent setting forth the
number of shares of Common Stock outstanding. Upon the
written or oral request of a Holder, the Company shall within two
Trading Days confirm orally and in writing to the Holder the number
of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined
after giving effect to the conversion or exercise of securities of
the Company, including this Warrant, by the Holder or its
Affiliates since the date as of which such number of outstanding
shares of Common Stock was reported. The “Beneficial Ownership
Limitation” shall be 9.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon exercise of this
Warrant. The Holder, upon notice to the Company, may increase or
decrease the Beneficial Ownership Limitation provisions of this
Section 2(e), provided that the Beneficial Ownership Limitation in
no event exceeds 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of
shares of Common Stock upon exercise of this Warrant held by the
Holder and the provisions of this Section 2(e) shall continue to
apply. Any increase in the Beneficial Ownership Limitation will not
be effective until the 61st day after such
notice is delivered to the Company. The provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 2(e) to
correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership
Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.
Section
3. Certain
Adjustments.
a) Stock Dividends and Splits. If
the Company, at any time while this Warrant is outstanding: (i)
pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or
equity equivalent securities payable in shares of Common Stock
(which, for avoidance of doubt, shall not include any shares of
Common Stock issued by the Company upon exercise of this Warrant),
(ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock
split) outstanding shares of Common Stock into a smaller number of
shares, or (iv) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Company, then in each case
the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of
Common Stock outstanding immediately after such event, and the
number of shares issuable upon exercise of this Warrant shall be
proportionately adjusted such that the aggregate Exercise Price of
this Warrant shall remain unchanged. Any adjustment made pursuant
to this Section 3(a) shall become effective immediately after the
record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision,
combination or re-classification. For the purposes of
clarification, the Exercise Price of this Warrant will not be
adjusted in the event that the Company or any Subsidiary thereof,
as applicable, sells or grants any option to purchase, or sell or
grant any right to reprice, or otherwise dispose of or issue (or
announce any offer, sale, grant or any option to purchase or other
disposition) any Common Stock or Common Stock Equivalents, at an
effective price per share less than the Exercise Price then in
effect
b)
[RESERVED]
c) Subsequent Rights Offerings. In
addition to any adjustments pursuant to Section 3(a) above, if at
any time the Company grants, issues or sells any Common Stock
Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of
shares of Common Stock (the “Purchase Rights”), then
the Holder will be entitled to acquire, upon the terms applicable
to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of
shares of Common Stock acquirable upon complete exercise of this
Warrant (without regard to any limitations on exercise hereof,
including without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights (provided, however, to the extent that the
Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in
abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).
d) Pro Rata Distributions. During
such time as this Warrant is outstanding, if the Company shall
declare or make any dividend (other than cash dividends) or other
distribution of its assets (or rights to acquire its assets) to
holders of shares of Common Stock, by way of return of capital or
otherwise (including, without limitation, any distribution of
shares or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a
"Distribution"), at
any time after the Initial Exercise Date of this Warrant, then, in
each such case, the Holder shall be entitled to participate in such
Distribution to the same extent that the Holder would have
participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation)
immediately before the date of which a record is taken for such
Distribution, or, if no such record is taken, the date as of which
the record holders of shares of Common Stock are to be determined
for the participation in such Distribution (provided, however, to the extent that the
Holder's right to participate in any such Distribution would result
in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any
shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation). To the extent that this Warrant
has not been partially or completely exercised at the time of such
Distribution, such portion of the Distribution shall be held in
abeyance for the benefit of the Holder until the Holder has
exercised this Warrant.
e) Fundamental Transaction. If, at
any time while this Warrant is outstanding, (i) the Company,
directly or indirectly, in one or more related transactions effects
any merger or consolidation of the Company with or into another
Person, (ii) the Company, directly or indirectly, effects any sale,
lease, license, assignment, transfer, conveyance or other
disposition of all or substantially all of its assets in one or a
series of related transactions, (iii) any, direct or indirect,
purchase offer, tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders
of Common Stock are permitted to sell, tender or exchange their
shares for other securities, cash or property and has been accepted
by the holders of 50% or more of the outstanding Common Stock, (iv)
the Company, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property,
or (v) the Company, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or
other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of
arrangement) with another Person or group of Persons whereby such
other Person or group acquires more than 50% of the outstanding
shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or
associated or affiliated with the other Persons making or party to,
such stock or share purchase agreement or other business
combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of
this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the exercise of this Warrant), the
number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”)
receivable by holders of Common Stock as a result of such
Fundamental Transaction for each share of Common Stock for which
this Warrant is exercisable immediately prior to such Fundamental
Transaction (without regard to any limitation in Section 2(e) on
the exercise of this Warrant). For purposes of any such exercise,
the determination of the Exercise Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Company
shall apportion the Exercise Price among the Alternate
Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. The Company shall cause any
successor entity in a Fundamental Transaction in which the Company
is not the survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this
Warrant in accordance with the provisions of this Section 3(e)
pursuant to written agreements in form and substance reasonably
satisfactory to the Holder and approved by the Holder (without
unreasonable delay) prior to such Fundamental Transaction and
shall, at the option of the Holder, deliver to the Holder in
exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and
substance to this Warrant which is exercisable for a corresponding
number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies
the exercise price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction and the value of
such shares of capital stock, such number of shares of capital
stock and such exercise price being for the purpose of protecting
the economic value of this Warrant immediately prior to the
consummation of such Fundamental Transaction), and which is
reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of
this Warrant referring to the “Company” shall refer
instead to the Successor Entity), and may exercise every right and
power of the Company and shall assume all of the obligations of the
Company under this Warrant with the same effect as if such
Successor Entity had been named as the Company herein.
f) Calculations. All calculations
under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of
this Section 3, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if
any) issued and outstanding.
g) Notice to Holder.
i. Adjustment to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to any provision
of this Section 3, the Company shall promptly deliver to the Holder
by facsimile or email a notice setting forth the Exercise Price
after such adjustment and any resulting adjustment to the number of
Warrant Shares and setting forth a brief statement of the facts
requiring such adjustment.
ii. Notice
to Allow Exercise by Holder. If while the Warrant is
outstanding, (A) the Company shall declare a dividend (or any other
distribution in whatever form) on the Common Stock, (B) the Company
shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the
granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class
or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially
all of the assets of the Company, or any compulsory share exchange
whereby the Common Stock is converted into other securities, cash
or property, or (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs
of the Company, then, in each case, the Company shall cause to be
delivered by facsimile or email to the Holder at its last facsimile
number or email address as it shall appear upon the Warrant
Register of the Company, at least 10 calendar days prior to the
applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which
the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected
to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be
entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange; provided that the failure to provide such notice or any
defect therein shall not affect the validity of the corporate
action required to be specified in such notice. To the extent that
any notice provided hereunder constitutes, or contains, material,
non-public information regarding the Company or any of the
Subsidiaries, the Company shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form 8-K. The
Holder shall remain entitled to exercise this Warrant during the
period commencing on the date of such notice to the effective date
of the event triggering such notice except as may otherwise be
expressly set forth herein.
Section
4. Transfer
of Warrant.
a) Transferability.
Pursuant to FINRA Rule 5110(e)(1), neither this Warrant nor any
Warrant Shares issued upon exercise of this Warrant shall be sold,
transferred, assigned, pledged, or hypothecated, or be the subject
of any hedging, short sale, derivative, put, or call transaction
that would result in the effective economic disposition of the
securities by any person for a period of one hundred and eighty
(180) days immediately following the Effective Date pursuant to
which this Warrant is being issued, except for the transfer of any
security as provided in FINRA Rule 5110(e)(2).
b) New Warrants. This Warrant may
be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written
notice specifying the names and denominations in which new Warrants
are to be issued, signed by the Holder or its agent or attorney.
Subject to compliance with Section 4(a), as to any transfer which
may be involved in such division or combination, the Company shall
execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with
such notice. All Warrants issued on transfers or exchanges shall be
dated the initial issuance date of this Warrant and shall be
identical with this Warrant except as to the number of Warrant
Shares issuable pursuant thereto.
c) Warrant Register. The Company
shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant Register”), in
the name of the record Holder hereof from time to time. The Company
may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent
actual notice to the contrary.
d) Representation by the Holder.
The Holder, by the acceptance hereof, represents and warrants that
it is acquiring this Warrant and, upon any exercise hereof, will
acquire the Warrant Shares issuable upon such exercise, for its own
account and not with a view to or for distributing or reselling
such Warrant Shares or any part thereof in violation of the
Securities Act or any applicable state securities law, except
pursuant to sales registered or exempted under the Securities
Act.
e) Transfer Restrictions. If, at
the time of the surrender of this Warrant in connection with any
transfer of this Warrant, either (i) the transfer of this Warrant
is not registered pursuant to an effective registration statement
under the Securities Act and under applicable state securities or
blue sky laws, (ii) the prospectus contained in an effective
registration statement is not available for the transfer of this
Warrant or (iii) the transfer of this Warrant is not eligible for
resale without volume or manner-of-sale restrictions or current
public information requirements pursuant to Rule 144, the Company
may require, as a condition of allowing such transfer, that the
Holder or transferee of this Warrant, as the case may be, provide
to the Company an opinion of counsel, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to
the effect that the transfer of this Warrant does not require
registration under the Securities Act.
Section
5. Registration
Rights.
5.1 Reserved.
5.2 “Piggy-Back”
Registration.
5.2.1 Grant
of Right. The Holder shall have the right, for a period of
no more than four and a half (4.5) years from the Initial Exercise
Date in accordance with FINRA Rule 5110(g)(8)(C), to register, on
one occasion, all or any portion of the shares of Common Stock
underlying the Warrants (the “Registrable Securities”)
as part of any other registration of securities filed by the
Company (other than in connection with a transaction contemplated
by Rule 145(a) promulgated under the Securities Act or pursuant to
Form S-8 or any equivalent form); provided, however, that if,
solely in connection with any primary underwritten public offering
for the account of the Company, the managing underwriter(s) thereof
shall, in its reasonable discretion, impose a limitation on the
number of shares of Common Stock which may be included in the
registration statement because, in such underwriter(s)’
judgment, marketing or other factors dictate such limitation is
necessary to facilitate public distribution, then the Company shall
be obligated to include in such registration statement only such
limited portion of the Registrable Securities with respect to which
the Holder requested inclusion hereunder as the underwriter shall
reasonably permit. Any exclusion of Registrable Securities shall be
made pro rata among the Holders seeking to include Registrable
Securities in proportion to the number of Registrable Securities
sought to be included by such Holders; provided, however, that the
Company shall not exclude any Registrable Securities unless the
Company has first excluded all outstanding securities, the holders
of which are not entitled to inclusion of such securities in such
registration statement or are not entitled to pro rata inclusion
with the Registrable Securities.
5.2.2 Terms.
The Company shall bear all fees and expenses attendant to
registering the Registrable Securities pursuant to Section 5.2.1
hereof, but the Holders shall pay any and all underwriting
commissions and the expenses of any legal counsel selected by the
Holders to represent them in connection with the sale of the
Registrable Securities. In the event of a proposed filing of a
registration statement, the Company shall furnish the then Holders
of outstanding Registrable Securities with not less than twenty
(20) days written notice prior to the proposed date of filing of
such registration statement. Such notice to the Holders shall
continue to be given for each registration statement filed by the
Company during the four and a half (4.5) years following the
Initial Exercise Date until such time as all of the Registrable
Securities have been sold by the Holder. The holders of the
Registrable Securities shall exercise the “piggy-back”
rights provided for herein by giving written notice within ten (10)
days of the receipt of the Company’s notice of its intention
to file a registration statement. Except as otherwise provided in
this Warrant, there shall be no limit on the number of times the
Holder may request registration under this Section 5.2.2; provided,
however, that such registration rights shall terminate four and a
half (4.5) years from the Initial Exercise Date.
5.3
General Terms.
5.3.1. Indemnification.
The Company shall indemnify the Holder(s) of the Registrable
Securities to be sold pursuant to any registration statement
hereunder and each person, if any, who controls such Holders within
the meaning of Section 15 of the Securities Act or Section 20 (a)
of the Exchange Act against all loss, claim, damage, expense or
liability (including all reasonable attorneys’ fees and other
expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may
become subject under the Securities Act, the Exchange Act or
otherwise, arising from such registration statement but only to the
same extent and with the same effect as the provisions pursuant to
which the Company has agreed to indemnify the Underwriters
contained in Section 5.1 of the Underwriting Agreement. The
Holder(s) of the Registrable Securities to be sold pursuant to such
registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, against all
loss, claim, damage, expense or liability (including all reasonable
attorneys’ fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever)
to which they may become subject under the Securities Act, the
Exchange Act or otherwise, arising from information furnished by or
on behalf of such Holders, or their successors or assigns, in
writing, for specific inclusion in such registration statement to
the same extent and with the same effect as the provisions
contained in Section 5.2 of the Underwriting Agreement pursuant to
which the Underwriters have agreed to indemnify the
Company.
5.3.2 Exercise
of Warrants. Nothing contained in this Warrant shall be
construed as requiring the Holder(s) to exercise their Warrants
prior to or after the initial filing of any registration statement
or the effectiveness thereof.
5.3.3 Documents
Delivered to Holders. The Company shall furnish to each
Holder participating in any of the foregoing offerings and to each
underwriter of any such offering, if any, a signed counterpart,
addressed to such Holder or underwriter, of: (i) an opinion of
counsel to the Company, dated the effective date of the final
prospectus or prospectus supplement under such registration
statement (or, if such registration includes an underwritten public
offering, an opinion dated the date of the closing under any
underwriting agreement related thereto), and (ii) a “cold
comfort” letter dated the effective date of the final
prospectus or prospectus supplement under such registration
statement (or, if such registration includes an underwritten public
offering, a letter dated the date of the closing under the
underwriting agreement) signed by the independent registered public
accounting firm which has issued a report on the Company’s
financial statements included in such registration statement, in
each case covering substantially the same matters with respect to
such registration statement (and the prospectus included therein)
and, in the case of such accountants’ letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer’s counsel and in
accountants’ letters delivered to underwriters in
underwritten public offerings of securities. The Company shall also
deliver promptly to each Holder participating in the offering
requesting the correspondence and memoranda described below and to
the managing underwriter, if any, copies of all correspondence
between the Commission and the Company, its counsel or auditors and
all memoranda relating to discussions with the Commission or its
staff with respect to the registration statement and permit each
Holder and underwriter to do such investigation, upon reasonable
advance notice, with respect to information contained in or omitted
from the registration statement as it deems reasonably necessary to
comply with applicable securities laws or rules of FINRA. Such
investigation shall include access to books, records and properties
and opportunities to discuss the business of the Company with its
officers and independent auditors, all to such reasonable extent
and at such reasonable times as any such Holder shall reasonably
request.
5.3.4. Underwriting
Agreement. To the extent that the registration statement
containing the Holder’s Registrable Securities contemplates
an underwritten offering, the Company shall enter into an
underwriting agreement with the managing underwriter(s), if any,
selected by the Company. Such agreement shall be reasonably
satisfactory in form and substance to the Company, each Holder and
such managing underwriters, and shall contain such representations,
warranties and covenants by the Company and such other terms as are
customarily contained in agreements of that type used by the
managing underwriter. The Holders shall be parties to any
underwriting agreement relating to an underwritten sale of their
Registrable Securities and may, at their option, require that any
or all the representations, warranties and covenants of the Company
to or for the benefit of such underwriters shall also be made to
and for the benefit of such Holders. Such Holders shall not be
required to make any representations or warranties to or agreements
with the Company or the underwriters except as they may relate to
such Holders, their Warrant Shares and their intended methods of
distribution.
5.3.5 Documents
to be Delivered by Holder(s). Each of the Holder(s)
participating in any of the foregoing offerings shall furnish to
the Company a completed and executed questionnaire provided by the
Company requesting information customarily sought of selling
security holders.
5.3.6 Damages.
Should the registration or the effectiveness thereof required by
Sections 5.1 and 5.2 hereof be delayed by the Company or the
Company otherwise fails to comply with such provisions, the
Holder(s) shall, in addition to any other legal or other relief
available to the Holder(s), be entitled to obtain specific
performance or other equitable (including injunctive) relief
against the threatened breach of such provisions or the
continuation of any such breach, without the necessity of proving
actual damages and without the necessity of posting bond or other
security.
Section
6. Miscellaneous.
a) No Rights as Stockholder Until
Exercise. This Warrant does not entitle the Holder to any
voting rights, dividends or other rights as a stockholder of the
Company prior to the exercise hereof as set forth in Section
2(d)(i).
b) Loss, Theft, Destruction or Mutilation
of Warrant. The Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant or any certificate
relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it
(which, in the case of the Warrant, shall not include the posting
of any bond), and upon surrender and cancellation of such Warrant
or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of such Warrant or stock
certificate.
c) Saturdays, Sundays, Holidays,
etc. If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein
shall not be a Trading Day, then, such action may be taken or such
right may be exercised on the next succeeding Trading
Day.
d) Authorized Shares.
The
Company covenants that, during the period the Warrant is
outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the
issuance of the Warrant Shares upon the exercise of any purchase
rights under this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of issuing the necessary
Warrant Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which
the Common Stock may be listed. The Company covenants that all
Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of
the purchase rights represented by this Warrant and payment for
such Warrant Shares in accordance herewith, be duly authorized,
validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will
(i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to
such increase in par value, (ii) take all such action as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the
exercise of this Warrant and (iii) use commercially reasonable
efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may
be, necessary to enable the Company to perform its obligations
under this Warrant.
Before
taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction
thereof.
e) Jurisdiction. All questions
concerning the construction, validity, enforcement and
interpretation of this Warrant shall be determined in accordance
with the provisions of the Underwriting Agreement.
f) Restrictions. The Holder
acknowledges that the Warrant Shares acquired upon the exercise of
this Warrant, if not registered, and the Holder does not utilize
cashless exercise, will have restrictions upon resale imposed by
state and federal securities laws.
g) Nonwaiver and Expenses. No
course of dealing or any delay or failure to exercise any right
hereunder on the part of Holder shall operate as a waiver of such
right or otherwise prejudice the Holder’s rights, powers or
remedies. Without limiting any other provision of this Warrant or
the Underwriting Agreement, if the Company willfully and knowingly
fails to comply with any provision of this Warrant, which results
in any material damages to the Holder, the Company shall pay to the
Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys’
fees, including those of appellate proceedings, incurred by the
Holder in collecting any amounts due pursuant hereto or in
otherwise enforcing any of its rights, powers or remedies
hereunder.
h) Notices. Any notice, request or
other document required or permitted to be given or delivered to
the Holder by the Company shall be delivered in accordance with the
notice provisions of the Underwriting Agreement.
i) Limitation of Liability. No
provision hereof, in the absence of any affirmative action by the
Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder, shall
give rise to any liability of the Holder for the purchase price of
any Common Stock or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the
Company.
j) Remedies. The Holder, in
addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees
that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this
Warrant and hereby agrees to waive and not to assert the defense in
any action for specific performance that a remedy at law would be
adequate.
k) Successors and Assigns. Subject
to applicable securities laws, this Warrant and the rights and
obligations evidenced hereby shall inure to the benefit of and be
binding upon the successors and permitted assigns of the Company
and the successors and permitted assigns of Holder. The provisions
of this Warrant are intended to be for the benefit of any Holder
from time to time of this Warrant and shall be enforceable by the
Holder or holder of Warrant Shares.
l) Amendment. This Warrant may be
modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.
m) Severability. Wherever
possible, each provision of this Warrant shall be interpreted in
such manner as to be effective and valid under applicable law, but
if any provision of this Warrant shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this
Warrant.
n) Headings. The headings used in
this Warrant are for the convenience of reference only and shall
not, for any purpose, be deemed a part of this
Warrant.
********************
(Signature Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized as of the date first above
indicated.
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BK TECHNOLOGIES CORPORATION
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By:__________________________________________
Name:
Title:
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NOTICE OF EXERCISE
TO: BK
TECHNOLOGIES CORPORATION
_________________________
(1) The undersigned
hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2) Payment shall take
the form of (check applicable box):
[ ] in
lawful money of the United States; or
[ ] if
permitted the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number
of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).
(3) Please register and
issue said Warrant Shares in the name of the undersigned or in such
other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account
Number or by physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
(4) Accredited
Investor. If the
Warrant is being exercised via cash exercise, the undersigned is an
“accredited investor” as defined in Regulation D
promulgated under the Securities Act of 1933, as
amended
[SIGNATURE
OF HOLDER]
Name of
Investing Entity:
_______________________________________________________________
Signature of Authorized Signatory of Investing Entity:
_________________________________________
Name of
Authorized Signatory:
___________________________________________________________
Title
of Authorized Signatory:
____________________________________________________________
Date:
________________________________________________________________________________
ASSIGNMENT FORM
(To
assign the foregoing warrant, execute
this
form and supply required information.
Do not
use this form to exercise the warrant.)
FOR
VALUE RECEIVED, [____] all of or [_______] shares of the foregoing
Warrant and all rights evidenced thereby are hereby assigned
to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated:
______________, _______
Holder’s
Signature: _____________________________
Holder’s
Address: _____________________________
_____________________________
NOTE:
The signature to this Assignment Form must correspond with the name
as it appears on the face of the Warrant, without alteration or
enlargement or any change whatsoever. Officers of corporations and
those acting in a fiduciary or other representative capacity should
file proper evidence of authority to assign the foregoing
Warrant.
EXHIBIT B
Form of Lock-Up Agreement
See
Attached
Lock-Up Agreement
________,
2021
ThinkEquity
A
Division of Fordham Financial Management, Inc.
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
As
Representative of the several Underwriters named on Schedule 1 to
the Underwriting Agreement referenced below
Ladies
and Gentlemen:
The
undersigned understands that ThinkEquity, a Division of Fordham
Financial Management, Inc. (the “Representative”), proposes to
enter into an Underwriting Agreement (the “Underwriting Agreement”) with BK
Technologies Corporation, a Nevada corporation (the
“Company”),
providing for the public offering (the “Public Offering”) of shares of
common stock, $0.60 par value per share, of the Company (the
“Common
Stock”).
To
induce the Representative to continue its efforts in connection
with the Public Offering, the undersigned hereby agrees that,
without the prior written consent of the Representative, the
undersigned will not, during the period commencing on the date
hereof and ending 90 days after the date of the Underwriting
Agreement relating to the Public Offering (the “Lock-Up Period”), (1) offer,
pledge, sell, contract to sell, grant, lend, or otherwise transfer
or dispose of, directly or indirectly, any Common Stock or any
securities convertible into or exercisable or exchangeable for
Common Stock, whether now owned or hereafter acquired by the
undersigned or with respect to which the undersigned has or
hereafter acquires the power of disposition (collectively, the
“Lock-Up
Securities”); (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of the Lock-Up Securities,
whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Lock-Up Securities, in cash or
otherwise; (3) make any demand for or exercise any right with
respect to the registration of any Lock-Up Securities; or (4)
publicly disclose the intention to make any offer, sale, pledge or
disposition, or to enter into any transaction, swap, hedge or other
arrangement relating to any Lock-Up Securities. Notwithstanding the
foregoing, and subject to the conditions below, the undersigned may
transfer Lock-Up Securities without the prior written consent of
the Representative in connection with (a) transactions relating to
Lock-Up Securities acquired in open market transactions after the
completion of the Public Offering; provided that no filing under
Section 13 or Section 16(a) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), or other public
announcement shall be required or shall be voluntarily made during
the Lock-up Period in connection with subsequent sales of Lock-Up
Securities acquired in such open market transactions; (b) transfers
of Lock-Up Securities as a bona
fide gift, by will or intestacy or to a family member or
trust for the benefit of the undersigned or a family member (for
purposes of this lock-up agreement, “family member”
means any relationship by blood, marriage or adoption, not more
remote than first cousin); (c) transfers of Lock-Up Securities to a
charity or educational institution; (d) if the undersigned is a
corporation, partnership, limited liability company or other
business entity, (i) any transfers of Lock-Up Securities to another
corporation, partnership or other business entity that controls, is
controlled by or is under common control with the undersigned or
(ii) distributions of Lock-Up Securities to members, partners,
stockholders, other equity-holders, subsidiaries or affiliates (as
defined in Rule 405 promulgated under the Securities Act of 1933,
as amended) of the undersigned; (e) if the undersigned is a trust,
to a trustee or beneficiary of the trust; (f) to a nominee or
custodian of a person or entity to whom a disposition or transfer
would be permissible under clauses (b), (c), (d) or (e),
provided that in
the case of any transfer pursuant to the foregoing
clauses (b), (c) (d), (e) or
(f),
(i) any such transfer shall not involve a disposition for value,
(ii) each transferee shall sign and deliver to the Representative a
lock-up agreement substantially in the form of this lock-up
agreement and (iii) no filing under Section 13 or
Section 16(a) of the Exchange Act or other public announcement
shall be required or shall be voluntarily made during the Lock-up
Period; (g) the receipt by the undersigned from the Company of
Common Stock upon the vesting of restricted stock awards or stock
units or upon the exercise of options to purchase the
Company’s Common Stock (the “Plan Shares”), which are issued
under an equity incentive plan of the Company or an employment
arrangement, described in the Pricing Prospectus (as defined in the
Underwriting Agreement), or the transfer of Common Stock or any
securities convertible into Common Stock to the Company upon a
vesting event of the Company’s securities or upon the
exercise of options to purchase the Company’s securities, in
each case on a “cashless” or “net exercise”
basis or to cover tax obligations of the undersigned in connection
with such vesting or exercise, but only to the extent such right
expires during the Lock-up Period, provided that that no filing
under Section 13 or Section 16(a) of the Exchange Act or other
public announcement shall be required or shall be voluntarily made
during the Lock-Up Period and, provided further, that the Plan Shares
shall be subject to the terms of this lock-up agreement; (h) the
transfer of Lock-Up Securities pursuant to agreements described in
the Pricing Prospectus under which the Company has the option to
repurchase such securities or a right of first refusal with respect
to the transfer of such securities, provided that if the
undersigned is required to file a report under Section 13 or
Section 16(a) of the Exchange Act reporting a reduction in
beneficial ownership of Common Stock during the Lock-Up Period, the
undersigned shall include a statement in such schedule or report
describing the purpose of the transaction; (i) the establishment of
a trading plan pursuant to Rule 10b5-1 under the Exchange Act for
the transfer of Lock-Up Securities, provided that (i) such plan
does not provide for the transfer of Lock-Up Securities during the
Lock-Up Period and (ii) to the extent a public announcement or
filing under the Exchange Act, if any, is required of or
voluntarily made by or on behalf of the undersigned or the Company
regarding the establishment of such plan, such public announcement
or filing shall include a statement to the effect that no transfer
of Lock-Up Securities may be made under such plan during the
Lock-Up Period; (j) the transfer of Lock-Up Securities that occurs
by operation of law, such as pursuant to a qualified domestic order
or in connection with a divorce settlement, provided that the transferee
agrees to sign and deliver a lock-up agreement substantially in the
form of this lock-up agreement for the balance of the Lock-Up
Period, and provided further, that any filing under
Section 13 or Section 16(a) of the Exchange Act that is required to
be made during the Lock-Up Period as a result of such transfer
shall include a statement that such transfer has occurred by
operation of law; (k) the transfer of Lock-Up Securities to the
Company from an employee or director of the Company upon death,
disability or termination of employment, in each case, of such
employee or director; and (l) the transfer of Lock-Up Securities
pursuant to a bona fide third party tender offer, merger,
consolidation or other similar transaction made to all holders of
the Common Stock involving a change of control (as defined below)
of the Company after the closing of the Public Offering and
approved by the Company’s board of directors; provided that in the event that
the tender offer, merger, consolidation or other such transaction
is not completed, the Lock-Up Securities owned by the undersigned
shall remain subject to the restrictions contained in this lock-up
agreement. For purposes of clause (l) above, “change of
control” shall mean the consummation of any bona fide third
party tender offer, merger, amalgamation, consolidation or other
similar transaction the result of which is that any
“person” (as defined in Section 13(d)(3) of the
Exchange Act), or group of persons, becomes the beneficial owner
(as defined in Rules 13d-3 and 13d-5 of the Exchange Act) of a
majority of total voting power of the voting stock of the Company.
The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company’s transfer agent and
registrar against the transfer of the undersigned’s Lock-Up
Securities except in compliance with this lock-up
agreement.
The
undersigned agrees that, prior to engaging in any transaction or
taking any other action that is subject to the terms of this
lock-up agreement during the period from the date hereof to and
including the 34th day following the
expiration of the Lock-Up Period, the undersigned will give notice
thereof to the Company and will not consummate any such transaction
or take any such action unless it has received written confirmation
from the Company that the Lock-Up Period has expired.
If the
undersigned is an officer or director of the Company, (i) the
undersigned agrees that the foregoing restrictions shall be equally
applicable to any issuer-directed or “friends and
family” Securities that the undersigned may purchase in the
Public Offering; and (ii) the Representative agrees that, at least
three (3) business days before the effective date of any release or
waiver of the foregoing restrictions in connection with a transfer
of Lock-Up Securities, the Representative will notify the Company
of the impending release or waiver. The provisions of this
paragraph will not apply if (a) the release or waiver is effected
solely to permit a transfer of Lock-Up Securities not for
consideration and (b) the transferee has agreed in writing to be
bound by the same terms described in this lock-up agreement to the
extent and for the duration that such terms remain in effect at the
time of such transfer.
The
undersigned understands that the Company and the Representative are
relying upon this lock-up agreement in proceeding toward
consummation of the Public Offering. The undersigned further
understands that this lock-up agreement is irrevocable and shall be
binding upon the undersigned’s heirs, legal representatives,
successors and assigns.
The
undersigned understands that, (i) if the Underwriting Agreement is
not executed by July 15, 2021, (ii) if the Underwriting Agreement
(other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the
Common Stock to be sold thereunder, (iii) if the Representative, on
behalf of the Underwriters, advises the Company, or the Company
advises the Representative, in writing, prior to the execution of
the Underwriting Agreement, that they have determined not to
proceed with the Public Offering or (iv) upon the withdrawal of or
stop order related to the registration statement filed with the
Securities and Exchange Commission with respect to the Public
Offering, then this lock-up agreement shall be void and of no
further force or effect.
Whether
or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only
be made pursuant to an Underwriting Agreement, the terms of which
are subject to negotiation between the Company and the
Representative.
Very
truly yours,
____________________________________
(Name -
Please Print)
____________________________________
(Signature)
____________________________________
(Name of
Signatory, in the case of entities - Please Print)
____________________________________
(Title
of Signatory, in the case of entities - Please Print)
Address:
____________________________________
____________________________________