Exhibit 10.1
Shares of Common Stock and Warrants
as Units, each Unit consisting of One
Share and One Warrant
to be sold in a Rights Offering and Best
Efforts Public Offering
2,594,082 Units
CLEARSIGN COMBUSTION CORPORATION
DEALER MANAGER AND PLACEMENT AGENT
AGREEMENT
December 7, 2016
MDB Capital Group, LLC
2425 Cedar Springs Road
Dallas, Texas 75201
Ladies and Gentlemen:
ClearSign Combustion
Corporation, a Washington corporation (the “Company”), proposes to conduct a rights offering (the “Rights
Offering”), pursuant to which the Company will distribute to holders of record of its common stock, $0.0001 par value
per share (“Common Stock”), as of December 19, 2016, subscription rights (the “Rights”) to
subscribe for up to an aggregate of 2,594,082 units (the “Units”), each Unit consisting of one share of Common
Stock (“Shares”) and a two-year warrant representing the right to purchase one share of Common Stock at an exercise
price of $4.00 per share (“Warrants”), at a subscription price of $4.00 per Unit in cash (the “Subscription
Price”) for up to an aggregate of approximately $10,376,328 in gross proceeds. Pursuant to this agreement (“Agreement”),
the Company appoints MDB Capital Group, LLC (“MDB”) as exclusive dealer manager and as exclusive placement agent,
as provided herein and subject to the terms and conditions thereof.
1. The
Rights Offering.
(a) The
Company proposes to undertake the Rights Offering pursuant to which each holder of Common Stock shall receive .20 Rights for each
share of Common Stock held of record (the “Record Holders”) at the close of business on December 19, 2016 (the
“Record Date”). Record Holders will be entitled to subscribe for and purchase, at the Subscription Price, one
Unit for each 5 Rights held. The Shares and Warrants comprising the Units will be separated at Closing and will be issued
as separate securities. Record Holders will only be entitled to purchase the number of Units representing a whole number
of Shares and Warrants, rounded down to the nearest whole number of Units a Record Holder would otherwise be entitled to purchase.
(b) The
Rights will not trade or be listed for quotation on any exchange or service, and shall not be transferrable by the shareholders
or otherwise tradable in a private or public market.
(c) The
Rights will expire at 5:00 p.m., Eastern time, on January 13, 2017 (the “Expiration Date”), which date may not
be changed by the Company without the consent of MDB, which consent may be withheld in its discretion. Any Rights not exercised
on or before the Expiration Date will expire worthless without any payment to the Record Holders of unexercised Rights. There will
be no oversubscription right or standby purchaser other than MDB acting as the Placement Agent as provided herein.
2. Appointment
as Dealer Manager and Placement Agent
(a) The
Company hereby appoints MDB as the exclusive dealer-manager (“Dealer Manager”) for the Rights Offering and authorizes
the Dealer Manager to act as such in connection with the Rights Offering.
(b) The
services of the Dealer Manager will consist of the following: (i) providing market assistance in connection with the conduct of
the Rights Offering by the Company; (ii) providing financial advice to the Company in connection with the Rights Offering (including
advice regarding the structure, pricing, timing and other terms and conditions of the Rights Offering); and (iii) responding to
requests for information and materials in connection with the Rights Offering in coordination with the information agent, if any,
who will be the primary source of information to the holders of Rights for information about the Rights Offering, and the transfer
agent for the Company regarding the Rights Offering; and (iv) in accordance with customary practice, to solicit the exercise of
the Rights and subscriptions for the Units (the foregoing services being referred to as the “Solicitation Services”).
The Solicitation Services shall commence upon the execution and delivery of this Agreement and end on the Expiration Date. The
Company hereby authorizes the Dealer Manager, or one or more registered broker-dealers chosen exclusively by the Dealer Manager,
to act as the Company’s agent in making the Rights Offering to residents of such states as to which such agent designation
may be necessary to comply with applicable law. The Company hereby acknowledges that the Dealer Manager is acting only as a dealer-manager
in connection with the Rights Offering. The Dealer Manager shall not (and shall not be obligated to) underwrite or place any Rights
or any Units, Shares or Warrants offered or sold in the Rights Offering, and the Company acknowledges and agrees that the Dealer
Manager’s participation as Dealer Manager does not ensure or guarantee that the Company will raise any funds through the
Rights Offering.
(c) The
Company and MDB acknowledge that MDB and its affiliates beneficially own approximately 7.6% shares of the Company’s common
stock and may, although they are not required to, participate in the Rights Offering.
(d) The
Company also hereby appoints MDB as exclusive placement agent (“Placement Agent”), and subject to the terms
and conditions stated in this Agreement, the Placement Agent agrees to sell, on a best efforts, no minimum basis, those Units not
subscribed for by Record Holders in the Rights Offering (“Offered Units”). The Offered Units will be the same
as the Units offered and sold in the Rights Offering. The Company and MDB acknowledge that MDB and its affiliates and employees
may acquire Offered Units.
(e) The
Company further acknowledges that MDB, in each of its capacities, is acting as an independent contractor pursuant to a contractual
relationship created by this Agreement, which was entered into on an arm’s length basis, and in no event do the parties intend
that MDB, in whatever capacity it is acting under this Agreement be responsible as a fiduciary to the Company, its management,
shareholders, creditors or any other natural person, partnership, limited liability partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association, joint venture, or other entity or organization
(each, a “Person”) in connection with any activity that MDB may undertake or has undertaken in furtherance of
the Rights Offering or Placement Agent, either before or after the date hereof. The Company and MDB agree that they are each responsible
for making their own independent judgments with respect to any such transactions, and that any opinions or views expressed by MDB
to the Company, including but not limited to any opinions or views with respect to the price or market for the Company’s
securities, do not constitute advice or recommendations to the Company. The Company hereby waives and releases, to the fullest
extent permitted by law, any claims that the Company may have against MDB and each Person associated therewith with respect to
any breach or alleged breach of any fiduciary or similar duty to the Company in connection with the transactions contemplated by
this Agreement or any matters leading up to such transactions.
3. Agreement
to Sell; Compensation.
(a) Sale
of the Offered Units. On the basis of the representations, warranties and agreements of the Company herein contained and subject
to all the terms and conditions of this Agreement, the Company agrees to issue and sell to public investors through the efforts
of the Placement Agent, acting as the agent of the Company, the Offered Units. The Placement Agent will offer on a best efforts,
no minimum basis the Offered Units on behalf of the Company to both retail and institutional investors. The offering of the Offered
Units shall be completed no later than January 31, 2017, which date may not be extended for any reason, and there will be one closing
for the Offered Units. The Company understands that a “best efforts” offering transaction does not assure that the
offering of the Offered Units will be consummated. It is understood and agreed that the Placement Agent is under no obligation
to purchase any of the Offered Units for its own account, or the account of or by its affiliates, in any amount. This Agreement
does not create any partnership, joint venture or other similar relationship between MDB and the Company.
(b) Compensation
of Dealer Manager and Placement Agent. At the Closing (as herein defined), as compensation, the Company will either (i) pay
a cash fee equal to six percent (6.0%) of the gross proceeds from the sale of Units in the Offering to Record Holders and the Offered
Units, or (ii) with the agreement of MDB, issue to MDB and its designees that number of Units equal to six percent (6.0%) of the
number of Units sold to the Record Holders and of the Offered Units sold to investors (the “Agent Units”).
4. Delivery
and Payment
(a) Escrow
Account. All funds from the exercise of the Rights will be deposited in an escrow account maintained with VStockTransfer LLC,
as escrow agent, pending a final determination of the number of Shares and Warrants to be issued pursuant to the exercise of Rights.
All funds from the sale of the Offered Units will be deposited in an escrow account, which will be maintained in accordance with
Rules 10b-9 and 15c2-4, applicable rules of FINRA and the terms of this Agreement, with the Delaware Trust Company, as escrow agent,
pending a final determination of the number of Shares and Warrants to be issued as the Offered Units. The Company may conduct a
closing of the Rights Offering (the “Rights Closing”) not earlier than three (3) business days after the Expiration
Date and before January 31, 2017, upon the mutual agreement of the Company and the Placement Agent. The closing of the Offered
Units will take place on a date (the “Closing Date”) as mutually agreed by the Company and the Placement Agent
on or before January 31, 2017 (the “Closing”)
(b) Delivery
of Units. Delivery of the securities sold in the Rights Offering will be made in the form of Shares and Warrants, and not as
certificated Units, as instructed by the Company, against payment of the Purchase Price from the escrow account as released from
escrow, in the case of Units issuable upon the exercise of Rights, as directed by the Company, and in the case of issuance of Offered
Units, upon joint instruction of the Company and the Placement Agent, through the facilities of The Depository Trust Company (“DTC”),
delivered to designated accounts or to the purchasers directly, if not deliverable through the DTC.
(c) Payment
of Purchase Price. The Purchase Price will be made by wire transfer or bank certified check payable in same-day funds to the
order of the Company, less any commission, fees and expenses of MDB and others as provided herein, which will be paid directly
to MDB or such persons.
(d) Transfer
Taxes. The cost of original issue tax stamps and other transfer taxes, if any, in connection with the issuance and delivery
of any the Shares, the Warrants, the shares of Common Stock underlying the Warrants and the Agent Units, if any, shall be borne
by the Company.
5. Representations
and Warranties of the Company. The Company represents, warrants and covenants to MDB that:
(a) Filing
and Effectiveness of Registration Statement. The Company has prepared and filed with the Securities and Exchange Commission
(the “Commission”) a registration statement on Form S-3 (File No. 333-208784) under the Securities Act of 1933,
as amended (the “Securities Act”), and the rules and regulations (the “Rules and Regulations”)
of the Commission thereunder, and such amendments to such registration statement as may have been required to the date of this
Agreement. The registration statement has been declared effective by the Commission. The registration statement, at any given time,
including amendments thereto at that time, the exhibits and any schedules thereto at that time, the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities Act at that time and the documents and information otherwise deemed
to be a part thereof or included therein by Rule 430B under the Securities Act or otherwise pursuant to the Rules and Regulations
at that time, is herein called the “Registration Statement.”
(b) Prospectus
Supplement. The Company proposes to file with the Commission pursuant to Rule 424 under the Securities Act a final prospectus
supplement relating to the Units as a form of prospectus included in the Registration Statement in the form heretofore delivered
to MDB. This prospectus in the form in which it appears in the Registration Statement is hereinafter called the “Base
Prospectus.” The supplemental form of prospectus, in the form in which it shall be filed with the Commission pursuant
to Rule 424(b) (including the Base Prospectus as so supplemented) is hereinafter called the “Prospectus.” Any
preliminary form of Prospectus which is filed or used prior to filing the Prospectus is hereinafter called a “Preliminary
Prospectus.” Any reference herein to the Base Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed
to 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. The Preliminary Prospectus and Prospectus will describe the Rights Offering and the offer and sale of the Units,
the Shares, the Warrants and the shares of Common Stock underlying the Warrants to be issued in the Rights Offering and the Agent
Units, all of which are referred to collectively as the “Securities.”
For purposes of this
Agreement, all references to the Registration Statement, the Base Prospectus, any Preliminary Prospectus, the Prospectus or any
amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System (“EDGAR”). All references in this Agreement to amendments or supplements
to the Registration Statement, the Base Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to mean and include
the subsequent filing of any document under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
which is deemed to be incorporated by reference therein or otherwise deemed by the Rules and Regulations to be a part thereof.
(c) No
Stop Order. No order preventing or suspending the use of the Registration Statement, any Preliminary Prospectus or the Prospectus
has been issued by the Commission and each such document, at the time of filing or the time of first use within the meaning of
the Rules and Regulations, complied in all material respects with the requirements of the Securities Act and the Rules and Regulations
and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which they were made, not misleading; except that the foregoing
shall not apply to statements in or omissions from the Registration Statement, any Preliminary Prospectus or the Prospectus made
in reliance upon and in conformity with written information furnished to the Company by MDB specifically for use in the preparation
thereof (“MDB Information”).
6. SEC
Comments. The Company has complied to the Commission’s satisfaction with all requests of the Commission for additional
or supplemental information, if any. The Registration Statement has become and remains effective as provided in Section 8 of the
Securities Act. No stop order suspending the effectiveness of the Registration Statement is in effect and no proceedings for such
purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated or threatened by the Commission.
Each part of the Registration
Statement and any post-effective amendment thereto, at the time such part became effective (including each deemed effective date
with respect to MDB pursuant to Rule 430B under the Securities Act), at all other subsequent times until the expiration of the
Prospectus Delivery Period (as defined below), and at the Closing Date (as hereinafter defined), and the Prospectus (or any amendment
or supplement to the Prospectus), at the time of filing or the time of first use within the meaning of the Rules and Regulations,
at all subsequent times until expiration of the Prospectus Delivery Period, and at the Closing Date complied and will comply in
all material respects with the applicable requirements and provisions of the Securities Act, the Rules and Regulations and the
Exchange Act and did not and will not contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading. The Prospectus, as amended or supplemented, as
of its date, or the time of first use within the meaning of the Rules and Regulations, at all subsequent times until the expiration
of the Prospectus Delivery Period, and at the Closing Date, did not and will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The interactive data in eXtensible Business Reporting Language included or incorporated by reference
in the Registration Statement and the Prospectus fairly presents the information called for in all material respects and is prepared
in accordance with the rules and regulations of the Commission applicable thereto. The representations and warranties set forth
in the two immediately preceding sentences do not apply to statements in or omissions from the Registration Statement or any post-effective
amendment thereto, or the Prospectus, or any amendments or supplements thereto, made in reliance upon and in conformity with written
information relating to MDB furnished to the Company by MDB specifically for use in the preparation thereof.
7. Free
Writing Prospectus.
(a) Neither
(A) the Issuer Free Writing Prospectus(es) issued at or prior to the Time of Sale, the Statutory Prospectus and the information
set forth in Schedule I to this Agreement, all considered together (collectively, the “General Disclosure Package”),
and together with the price to the public, the number of Securities to be included on the cover page of the Prospectus nor (B)
any individual Issuer Limited-Use Free Writing Prospectus, when considered together with the General Disclosure Package, includes
or included as of the Time of Sale any untrue statement of a material fact or omits or omitted as of the Time of Sale 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. The preceding sentence does not apply to statements in or omissions from any Statutory Prospectus included in the
Registration Statement or any Issuer Free Writing Prospectus made in reliance upon and in conformity with written information furnished
to the Company by MDB specifically for use in the preparation thereof. As used in this paragraph and elsewhere in this Agreement:
“Time of Sale” means 8:30 a.m. (Eastern time) on the date of this Agreement.
“Statutory
Prospectus” as of any time means the Preliminary Prospectus that is included in the Registration Statement immediately
prior to that time. For purposes of this definition, information contained in a form of prospectus that is deemed retroactively
to be a part of the Registration Statement pursuant to Rule 430B under the Securities Act shall be considered to be included in
the Statutory Prospectus as of the actual time that form of prospectus is filed with the Commission pursuant to Rule 424(b) under
the Securities Act.
“Issuer
Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433 under the
Securities Act, relating to the Securities that (A) is required to be filed with the Commission by the Company, or (B) is exempt
from filing pursuant to Rule 433(d)(5)(i) under the Securities Act because it contains a description of the Shares 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) under the Securities Act.
“Issuer
Limited-Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is not an Issuer Free Writing
Prospectus.
(b) Each
Issuer Free Writing Prospectus, as of its date and at all subsequent times through the Prospectus Delivery Period or until any
earlier date that the Company notified or notifies MDB, did not, does not and will not include any information that conflicted,
conflicts or will conflict with the information contained in the Registration Statement, any Statutory Prospectus or the Prospectus.
The foregoing sentence does not apply to statements in or omissions from any Issuer Free Writing Prospectus made in reliance upon
and in conformity with written information furnished to the Company by MDB specifically for use in the preparation thereof.
(c) At
the earliest time after the filing of the Registration Statement that the Company made a bona fide offer (within the meaning of
Rule 164(h)(2) under the Securities Act) of the Units and at the date hereof, the Company was not and is not an “ineligible
issuer,” as defined in Rule 405 under the Securities Act, including the Company or any subsidiary in the preceding three
years not having been convicted of a felony or misdemeanor or having been made the subject of a judicial or administrative decree
or order as described 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), nor an “excluded issuer” as defined in Rule 164
under the Securities Act.
(d) Each
Issuer Free Writing Prospectus satisfied, as of its issue date and at all subsequent times through the Prospectus Delivery Period,
all other conditions to use thereof as set forth in Rules 164 and 433 under the Securities Act.
8. Company
Representations.
(a) Good
Standing. The Company has been duly incorporated and is existing and in good standing under the laws of the State of Washington,
with power and authority (corporate and other) to own its properties and conduct its business as described in the General Disclosure
Package; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions
in which its ownership or lease of property or the conduct of its business requires such qualification, except to the extent that
the failure to be so qualified or be in good standing (i) would not have, singly or in the aggregate, a material adverse effect
on the Company or its businesses, properties, business prospects, condition (financial or other) or results of operations or (ii) impair
in any material respect the ability of the Company to perform its obligations under this Agreement or to consummate any transactions
contemplated by this Agreement or the General Disclosure Package (any such effect as described in clauses (i) or (ii), is
referred to herein as a “Material Adverse Effect”).
(b) Subsidiaries.
The Company has no subsidiary that is a “significant subsidiary” of the Company within the meaning of Rule 1.01
of Regulation S-X under the Securities Act.
(c) Capital
Stock. The Shares (including those Shares included in the Agent Units) to be issued and sold under this Agreement and the Common
Stock to be issued and sold upon exercise of the Warrants and all other outstanding shares of capital stock of the Company have
been duly authorized; all outstanding shares of capital stock of the Company are, and, when the Shares (including those included
in the Agent Units) and Common Stock underlying the Warrants have been delivered and paid for in accordance with this Agreement
or the Warrant Agreement, as the case may be, will have been, validly issued, fully paid and nonassessable, will conform to the
information in the Registration Statement, General Disclosure Package and Prospectus and to the description of the Securities contained
in the Prospectus; the stockholders of the Company have no statutory or contractual preemptive rights with respect to its Common
Stock; none of the outstanding shares of capital stock of the Company are or will have been issued in violation of any statutory
or contractual preemptive rights of any security holder; and the authorized equity capitalization of the Company is as set forth
in the Registration Statement, General Disclosure Package and Prospectus. There are no authorized or outstanding shares of capital
stock, options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the Company other than those described above or accurately
described in the Registration Statement, General Disclosure Package and Prospectus. The description of the Company’s stock
option, stock bonus and other stock plans or arrangements, and the options or other rights granted thereunder, as described in
the Registration Statement, General Disclosure Package and Prospectus, accurately and fairly present the information required to
be shown with respect to such plans, arrangements, options and rights.
(d) No
Finder’s Fee. There are no contracts, agreements or understandings between the Company and any person, other than with
MDB, that would give rise to a valid claim against the Company or MDB for a brokerage commission, finder’s fee or other like
payment.
(e) Financial
Statements. The financial statements and schedules included or incorporated by reference in the Registration Statement, General
Disclosure Package and Prospectus present fairly in all material respects the financial condition of the Company as of the respective
dates thereof and the results of operations and cash flows of the Company for the respective periods covered thereby, all in conformity
with generally accepted accounting principles applied on a consistent basis throughout the entire period involved. The financial
statements, together with the related notes and schedules, included or incorporated by reference in the Registration Statement,
General Disclosure Package and Prospectus comply in all material respects with the Securities Act and the Exchange Act. No other
financial statements or schedules of the Company are required by the Securities Act or the Exchange Act to be included in the Registration
Statement, General Disclosure Package or Prospectus. Gumbiner Savett Inc. (the “Accountants”), who have reported
on such financial statements and schedules, are independent accountants with respect to the Company as required by the Securities
Act and Rule 3600T of the PCAOB. The summary and selected financial data included in the Registration Statement and the General
Disclosure Package present fairly in all material respects the information shown therein and have been compiled on a basis consistent
with the audited financial statements presented in the Registration Statement and the General Disclosure Package.
(f) Absence
of Material Changes. Subsequent to the respective dates as of which information is given in the Registration Statement, General
Disclosure Package and Prospectus and prior to or on the Closing Date, except as set forth in or contemplated by the Registration
Statement, General Disclosure Package and Prospectus, (i) the Company has not sustained, since the date of the latest audited financial
statements included or incorporated by reference in the Registration Statement, General Disclosure Package and Prospectus, any
material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the
Registration Statement, General Disclosure Package and Prospectus; (ii) there has not been and will not have been any change in
the capitalization or long-term debt of the Company (other than in connection with the exercise of outstanding warrants or the
grant or exercise of options to purchase the Common Stock granted pursuant to the Company’s existing equity incentive plans
from the shares reserved therefor, or the issuance of shares under the Company’s existing equity incentive plans as described
in the Registration Statement, General Disclosure Package and Prospectus), or any Material Adverse Effect arising for any reason
whatsoever, (iii) the Company has not incurred and will not incur, except in the ordinary course of business as described
in the Registration Statement, General Disclosure Package and Prospectus, any material liabilities or obligations, direct or contingent,
the Company has not entered into and will not enter into, except in the ordinary course of business as described in the Registration
Statement, General Disclosure Package and Prospectus, any material transactions other than pursuant to this Agreement and the transactions
referred to herein and (iv) the Company has not and will not have paid or declared any dividends or other distributions of
any kind on any class of its capital stock.
(g) Not
an Investment Company. The Company is not, will not become as a result of the transactions contemplated hereby, an “investment
company” or an “affiliated person” of, or “promoter” or “principal placement agent” for,
an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended, and the rules
and regulations issued thereunder (collectively, the “Investment Company Act”).
(h) Litigation.
Except as set forth in the Registration Statement, General Disclosure Package and Prospectus, there are no actions, suits or proceedings
pending or, to the knowledge of the Company, threatened against or affecting the Company or against any of its officers in their
capacity as such, before or by any federal or state court, commission, regulatory body, administrative agency or other governmental
body, domestic or foreign, wherein an unfavorable ruling, decision or finding would reasonably be expected to have a Material Adverse
Effect.
(i) Absence
of Existing Defaults and Conflicts. The Company is not, and at the Closing Date, will not be, (i) in violation of any
provision of its certificate of incorporation or bylaws, (ii) in default in any respect, and no event has occurred which,
with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument
to which it is a party or by which it is bound or to which any of its property or assets is subject, or (iii), to its knowledge,
in violation in any respect of any statute, law, rule, regulation, ordinance, judgment, order or decree of any court, regulatory
body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or any of its
properties, as applicable, except, with respect to clauses (ii) and (iii), any violations or defaults which, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
(j) Absence
of Further Requirements. No consent, approval, authorization or order of, or any filing or declaration with, any court or governmental
agency or body is required for the consummation by the Company of the transactions on its part contemplated herein, including the
offering and sale of the Securities, except such as have been obtained under the Securities Act and such as may be required under
state securities or Blue Sky laws or the bylaws and rules of the Financial Industry Regulatory Authority, Inc. (“FINRA”)
or the rules of The NASDAQ Stock Market in connection with the offering of the Securities.
(k) Authorization;
Absence of Defaults and Conflicts Resulting from Transaction. The Company has full corporate power and authority to enter into
this Agreement and the agreements relating to the Rights Offering, including the Warrants, warrant agreement with the transfer
agent of the Warrants, and the escrow agreement entered into in connection with the offering of the Units (collectively the “Transaction
Documents”) and to perform and to discharge its obligations hereunder and thereunder. The Transaction Documents have been
duly authorized, executed and delivered by the Company. The Transaction Documents are each a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of
equity. The performance of the Transaction Documents and the consummation of the transactions contemplated thereby will not (i) result
in the creation or imposition of any lien, charge or encumbrance upon any of the assets of the Company pursuant to the terms or
provisions of, or result in a breach or violation of any of the terms or provisions of, or conflict with or constitute a default
under, or give any party a right to terminate any of its obligations under, or result in the acceleration of any obligation under,
(A) the certificate of incorporation or bylaws of the Company, or (B) any indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond, debenture, note agreement or other evidence of indebtedness, lease, contract or other agreement or instrument
to which the Company is a party or by which the Company or any of its properties is bound or affected, except, in the case of clause
(i)(B), any lien, breach, violation, conflict, default or acceleration that, would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, or (ii) to the knowledge of the Company, violate or conflict with any judgment,
ruling, decree, order, statute, rule or regulation of any court or other governmental agency or body applicable to the business
or properties of the Company.
(l) Consent
and Approvals. Except for the registration of the Securities under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange Act and applicable state or foreign securities laws, FINRA
and NASDAQ in connection with the offering and sale of the Securities by the Company, no consent, approval, authorization or order
of, or filing, qualification or registration with, any court or governmental agency or body, foreign or domestic, which has not
been made, obtained or taken and is not in full force and effect, is required for the execution, delivery and performance of the
Transaction Documents by the Company, the offer or sale of the Securities or the consummation of the transactions contemplated
hereby or thereby.
(m) Title
to Property. The Company has good and marketable title to all properties and assets described in the Registration Statement,
General Disclosure Package and Prospectus as owned by it, free and clear of all liens, charges, encumbrances or restrictions, except
such as are not material to the business of the Company. The Company has valid, subsisting and enforceable leases for the properties
described in the Registration Statement, General Disclosure Package and Prospectus as leased by it. The Company owns or leases
all such properties as are necessary to its operations as now conducted or as proposed to be conducted, except where the failure
to so own or lease would not reasonably be expected to have a Material Adverse Effect.
(n) Off
Balance Sheet Interests and Contracts. There is no document, contract, permit or instrument, affiliate transaction or off-balance
sheet transaction (including, without limitation, any “variable interests” in “variable interest entities,”
as such terms are defined in Financial Accounting Standards Board Interpretation No. 46) of a character required to be described
in the Registration Statement, General Disclosure Package or the Prospectus or to be filed as an exhibit to the Registration Statement
that is not described or filed as required. All such contracts that would be required to be described or filed as set forth in
the immediately preceding sentence to which the Company is a party have been duly authorized, executed and delivered by the Company,
constitute valid and binding agreements of the Company and are enforceable against and by the Company in accordance with the terms
thereof, except to the extent enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ rights generally and by general principles of equity.
(o) Offering
Material; Stabilization. The Company has not distributed, and will not distribute prior to (i) the later of Closing Date and
(ii) completion of the distribution of the Securities, any offering material in connection with the offering and sale of the Securities,
other than the Registration Statement, Base Prospectus, the General Disclosure Package and the Prospectus and other materials,
if any, permitted by the Securities Act for use in connection with a public offering of the Securities. Neither the Company nor
any of its directors, officers or controlling persons has taken, directly or indirectly, any action designed, or that might reasonably
be expected, to cause or result, under the Securities Act or otherwise, in, or that has constituted, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of the Securities.
(p) Registration
Rights. Except as disclosed in the Registration Statement, General Disclosure Package and Prospectus, no holder of securities
of the Company has rights to the registration of any securities of the Company in connection with this offering of the Securities,
which rights have not been waived by the holder thereof as of the date hereof.
(q) Listing.
The Common Stock and the Common Stock underlying the Warrants are registered under Section 12(b) of the Exchange Act and are traded
on NASDAQ. The Company is in material compliance with all applicable corporate governance requirements set forth in the NASDAQ
Market Place Rules that are currently in effect. No consent, approval, authorization or order of, or filing, notification or registration
with, NASDAQ is required for the listing and trading of the Common Stock and the Common Stock underlying the Warrants on NASDAQ,
except for (i) a Notification Form: Listing of Additional Shares, and (ii) a Notification Form: Change in the Number
of Shares Outstanding.
(r) Possession
of Intellectual Property. Except as specifically disclosed in the Registration Statement, General Disclosure Package and Prospectus,
(i) to the best of its knowledge, the Company owns or has adequate rights to use all trademarks, trade names, domain names,
patents, patent rights, copyrights, technology, know-how (including trade secrets, inventions that are the subject of patent applications,
and other unpatented or unpatentable proprietary or confidential information, inventions, systems or procedures), service marks,
trade dress rights, and other intellectual property (collectively, “Intellectual Property”) and has such other
licenses, approvals and governmental authorizations, in each case sufficient to conduct its business as now conducted and as now
proposed to be conducted, and to the Company’s knowledge, none of the foregoing Intellectual Property rights owned or licensed
by the Company is invalid or unenforceable, (ii) the Company has no actual knowledge of any infringement by it of Intellectual
Property rights of others, where such infringement would reasonably be expected to have a Material Adverse Effect, (iii) the
Company is not aware of any infringement, misappropriation or violation by others of, or conflict by others with rights of the
Company with respect to, any Intellectual Property that would reasonably be expected to have a Material Adverse Effect, (iv) there
is no claim being made against the Company or, to the actual knowledge of the Company, any employee of the Company, regarding Intellectual
Property or other infringement that would reasonably be expected to have a Material Adverse Effect, and (v) the Company has
not received any written notice of infringement with respect to any patent or any notice challenging the validity, scope or enforceability
of any Intellectual Property owned by or licensed to the Company, in each case the loss of which patent or Intellectual Property
(or loss of rights thereto) would have a Material Adverse Effect.
(s) Taxes.
The Company has filed all federal, state, local and foreign income tax returns that have been required to be filed and has paid
all taxes and assessments received by it to the extent that such taxes or assessments have become due. The Company has no tax deficiency
that has been or, to the knowledge of the Company, might reasonably be asserted or threatened against it that would reasonably
be expected to have a Material Adverse Effect.
(t) Permits
and Licenses. Except as set forth in the Registration Statement, General Disclosure Package and Prospectus, the Company owns
or possesses all authorizations, approvals, orders, licenses, registrations, other certificates and permits of and from all governmental
regulatory officials and bodies, necessary to conduct its businesses as contemplated in the Registration Statement, General Disclosure
Package and Prospectus, except where the failure to own or possess all such authorizations, approvals, orders, licenses, registrations,
other certificates and permits would not reasonably be expected to have a Material Adverse Effect. There is no proceeding pending
or, to the Company’s knowledge, threatened (or any basis therefor known to the Company) that may cause any such authorization,
approval, order, license, registration, certificate or permit to be revoked, withdrawn, cancelled, suspended or not renewed; and
the Company is conducting its business in compliance with all laws, rules and regulations applicable thereto, except where such
noncompliance would not reasonably be expected to have a Material Adverse Effect.
(u) FCPA
Compliance. The Company has not and, to the Company’s actual knowledge, none of its employees or agents at any time during
the last five years have (i) made any unlawful contribution to any candidate for foreign office, or failed to disclose fully
any contribution in violation of law, or (ii) made any payment to any federal or state governmental officer or official, or
other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof.
(v) Internal
Controls and Compliance with Sarbanes-Oxley. The books, records and accounts of the Company accurately and fairly reflect in
all material respects, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations
of, the Company. The principal executive officer and principal financial officer of the Company have made all certifications required
by Sections 302 and 906 of Sarbanes-Oxley and the rules and regulations promulgated in connection therewith with respect to all
reports, schedules, forms, statements and other documents required to be filed by it with the Commission, and the statements contained
in any such certification are complete and correct. For purposes of the preceding sentence, “principal executive officer”
and “principal financial officer” shall have the meanings given to such terms in Sarbanes-Oxley. The Company maintains
(x) systems of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of the Company’s consolidated financial statements in accordance with generally accepted accounting principles
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, and (y) disclosure controls and procedures (as defined
in Rule 13a-14(c) under the Exchange Act); such disclosure controls and procedures have been designed to ensure that material
information relating to the Company is made known to the Company’s principal executive officer and principal financial officer
by others within those entities; and such disclosure controls and procedures are effective. Since the date of the latest audited
financial statements incorporated by reference in the Registration Statement, General Disclosure Package and Prospectus, 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.
(w) ERISA
Compliance. The Company has fulfilled in all material respects its obligations, if any, under the minimum funding standards
of Section 302 of the United States Employee Retirement Income Security Act of 1974 (“ERISA”) and the regulations
and published interpretations thereunder with respect to each “plan” (as defined in Section 3(3) of ERISA and
such regulations and published interpretations) in which employees of the Company are eligible to participate and each such plan
is in compliance in all material respects with the presently applicable provisions of ERISA and such regulations and published
interpretations. No “prohibited transaction” (as defined in Section 406 of ERISA, or Section 4975 of the
Internal Revenue Code of 1986, as amended from time to time) has occurred with respect to any employee benefit plan which would
reasonably be expected to result in a Material Adverse Effect.
(x) Labor
Issues. No labor problem or dispute with the employees of the Company exists or, to the Company’s actual knowledge, is
threatened or imminent, which would reasonably be expected to result in a Material Adverse Effect. The Company is not aware that
any key employee or significant group of employees of the Company plans to terminate employment with the Company.
(y) Statistical
and Market-Related Data. Any third-party statistical and market-related data included or incorporated by reference in the Registration
Statement, General Disclosure Package and Prospectus are based on or derived from sources that the Company believes to be reliable
and accurate.
(z) 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 Registration Statement, General Disclosure Package and Prospectus has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good faith.
(aa) Environmental
Laws. The Company (i) is in compliance with any and all applicable federal, state, local and foreign laws, rules, regulations,
decisions and orders relating to the protection of human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants (collectively, “Environmental Laws”); (ii) has received and is in compliance
with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct its business; and
(iii) has not received notice of any actual or potential liability for the investigation or remediation of any disposal or
release of hazardous or toxic substances or wastes, pollutants or contaminants, except in the case of subsections (i), (ii) and
(iii) of this subsection (aa) as would not, individually or in the aggregate, have a Material Adverse Effect.
(bb) FINRA.
The Company nor any of its affiliates (within the meaning of FINRA Conduct Rule 2720(b)(1)(a)) directly or indirectly
controls, are controlled by, or is under common control with, or is an associated person (within the meaning of Article I, Section 1(ee)
of the By-laws of FINRA) of, any member firm of FINRA.
(cc) NASDAQ
Approval. No approval of the shareholders of the Company under the rules and regulations of NASDAQ (including Rule 5635
of the Nasdaq Listing Rules) is required for the Company to complete the Rights Offering and the offering and sale of the Units
and to sell and deliver the Agent Units, or otherwise complete the transactions in any of the Securities as contemplated by this
Agreement and the Registration Statement, General Disclosure Package and Prospectus.
Any
certificate signed by or on behalf of the Company and delivered to MDB or to counsel thereof
shall be deemed to be a representation and warranty by the Company to MDB as to the matters
covered thereby.
9. Certain
Agreements of the Company. The Company covenants and agrees with MDB as follows:
(a) Filing
of Prospectuses. The Company will prepare each part of the General Disclosure Package and the Prospectus in a form approved
by MDB containing information previously omitted at the time of effectiveness of the Registration Statement in reliance on rules
430A, 430B and 430C and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than the second
(2nd) business day following the execution and delivery of this Agreement, if required, or if applicable, such earlier
time as may be required by Rule 430A under the Securities Act; to notify MDB immediately of the Company’s intention
to file or prepare any supplement or amendment to the Registration Statement, Base Prospectus, any Preliminary Prospectus or to
the Prospectus and to make no amendment or supplement to the Registration Statement, Base Prospectus, General Disclosure Package
any Preliminary Prospectus or Prospectus to which MDB shall reasonably object by notice to the Company after a reasonable period
to review; to advise MDB, promptly after it receives notice thereof, of the time when any amendment to any Registration Statement
has been filed or becomes effective or any supplement to the General Disclosure Package or any amended Issuer Free Writing Prospectus
or amended Preliminary Prospectus or Prospectus has been filed and to furnish MDB copies thereof; to file promptly all material
required to be filed by the Company with the Commission pursuant to Rule 433(d); to file promptly all reports and any definitive
proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus (or in
lieu thereof, the notice referred to in Rule 173(a) under the Securities Act) is required in connection with the offering
or sale of the Securities; to advise MDB, promptly after it receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of the Registration Statement, any Preliminary Prospectus, the General Disclosure
Package, or the Prospectus of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, of
the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement, any Preliminary Prospectus, the General Disclosure Package or the Prospectus or for additional information;
and, in the event of the issuance of any stop order or of any order preventing or suspending the use of the Registration Statement,
any Preliminary Prospectus, the General Disclosure Package or Prospectus or suspending any such qualification, and promptly to
use its best efforts to obtain the withdrawal of such order.
(b) The
Company represents and agrees that, unless it obtains the prior written consent of MDB, it has not made and will not, make any
offer relating to the Securities that would constitute a “free writing prospectus” as defined in Rule 405 under
the Securities Act (each, a “Permitted Free Writing Prospectus”); provided that the prior written consent
hereto shall be deemed to have been given in respect of the Issuer Free Writing Prospectus(es) included in Schedule I
hereto, if any. The Company represents that it has treated and agrees that it will treat each Permitted Free Writing Prospectus
as an Issuer Free Writing Prospectus, comply with the requirements of Rules 164 and 433 under the Securities Act applicable to
any Issuer Free Writing Prospectus, including the requirements relating to timely filing with the Commission, legending and record
keeping and will not take any action that would result in MDB or the Company being required to file with the Commission pursuant
to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of MDB that MDB otherwise would
not have been required to file thereunder.
(c) If
at any time when a Prospectus relating to the Securities is required to be delivered under the Securities Act, any event occurs
or condition exists as a result of which the Prospectus, as then amended or supplemented, would include any untrue statement of
a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, or the Registration Statement, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading, or if for
any other reason it is necessary at any time to amend or supplement any Registration Statement or the Prospectus to comply with
the Securities Act or the Exchange Act, the Company will promptly notify MDB, and upon MDB’s request, the Company will promptly
prepare and file with the Commission, at the Company’s expense, an amendment to the Registration Statement or an amendment
or supplement to the Prospectus that corrects such statement or omission or effects such compliance and will deliver to MDB, without
charge, such number of copies thereof as MDB may reasonably request. The Company consents to the use of the Prospectus or any amendment
or supplement thereto by MDB.
(d) If
the General Disclosure Package is being used to solicit offers to buy the Securities at a time when the Prospectus is not yet available
to prospective purchasers and any event shall occur as a result of which, in the judgment of the Company or in the reasonable opinion
of MDB, it becomes necessary to amend or supplement the General Disclosure Package in order to make the statements therein, in
the light of the circumstances then prevailing, not misleading, or to make the statements therein not conflict with the information
contained or incorporated by reference in the Registration Statement then on file and not superseded or modified, or if it is necessary
at any time to amend or supplement the General Disclosure Package to comply with any law, the Company promptly will either (i) prepare,
file with the Commission (if required) and furnish to MDB an appropriate amendment or supplement to the General Disclosure Package
or (ii) prepare and file with the Commission an appropriate filing under the Exchange Act which shall be incorporated by reference
in the General Disclosure Package so that the General Disclosure Package as so amended or supplemented will not, in the light of
the circumstances then prevailing, be misleading or conflict with the Registration Statement then on file, or so that the General
Disclosure Package will comply with law.
(e) If
at any time following issuance of an Permitted Issuer Free Writing Prospectus there occurred or occurs an event or development
as a result of which such Permitted Issuer Free Writing Prospectus conflicted or will conflict with the information contained in
the Registration Statement, Statutory Prospectus, any Preliminary Prospectus or Prospectus, including any document incorporated
by reference therein and any prospectus supplement deemed to be a part thereof and not superseded or modified or included or would
include an untrue statement of a material fact or omitted or would omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances prevailing at the subsequent time, not
misleading, the Company has promptly notified or will promptly notify MDB so that any use of the Permitted Issuer Free Writing
Prospectus may cease until it is amended or supplemented and has promptly amended or will promptly amend or supplement, at its
own expense, such Permitted Issuer Free Writing Prospectus.
(f) Filing
of Amendments; Response to Commission Requests. The Company will promptly advise MDB of any proposal to amend or supplement
the Registration Statement, any Preliminary Prospectus, General Disclosure Package or Prospectus until the completion of the purchase
and sale of the Securities contemplated herein and the Prospectus Delivery Period and will afford MDB a reasonable opportunity
to comment on any such proposed amendment or supplement; and the Company will also advise MDB promptly of (i) the filing of
any such amendment or supplement, (ii) any request by the Commission or its staff for any amendment to the Registration Statement,
any Preliminary Prospectus, General Disclosure Package, and Prospectus or for any additional information, (iii) the institution
by the Commission of any stop order proceedings in respect of the Registration Statement, any Preliminary Prospectus, the General
Disclosure Package or Prospectus or the threatening of any proceeding for that purpose, and (iv) the receipt by the Company
of any notification with respect to the suspension of the qualification of the Securities in any jurisdiction or the institution
or threatening of any proceedings for such purpose. The Company will use its reasonable best efforts to prevent the issuance of
any such stop order or the suspension of any such qualification and, if issued, to obtain as soon as possible the withdrawal thereof.
(g) Continued
Compliance with Securities Laws. If, at any time when a prospectus relating to the Securities is (or but for the exemption
in Rule 172 under the Securities Act would be) required to be delivered under the Securities Act in connection with sales
by the Company (the “Prospectus Delivery Period”), any event occurs as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary to make
the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at
any time to amend the Registration Statement, the General Disclosure Package or supplement the Prospectus to comply with the Securities
Act, the Company will promptly notify MDB of such event and will promptly prepare and file with the Commission and furnish, at
its own expense, to MDB and, to the extent applicable, the dealers and any other dealers upon request of MDB, an amendment or supplement
which will correct such statement or omission or an amendment which will effect such compliance. Neither MDB’s consent to,
nor the delivery of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section
9 hereof. During the Prospectus Delivery Period, the Company will file all documents required to be filed with the Commission
pursuant to Sections 13, 14 or 15 of the Exchange Act in the manner and within the time periods required by the Exchange Act.
(h) Furnishing
of Prospectuses. The Company will deliver promptly to MDB such number of the following documents as MDB shall reasonably request:
(i) conformed copies of the Registration Statement as originally filed with the Commission (in each case excluding exhibits),
(ii) any Preliminary Prospectus, (iii) any General Disclosure Package and Permitted Issuer Free Writing Prospectus, (iv) the
Prospectus (the delivery of the documents referred to in clauses (i), (ii), (iii) and (iv) of this paragraph (h)
to be made not later than 10:00 A.M., New York time, on the business day following the distribution of the subscription rights
by the Company’s transfer agent), (v) conformed copies of any amendment to the Registration Statement (excluding exhibits),
(vi) any amendment or supplement to the General Disclosure Package, Permitted Issuer Free Writing Prospectus or the Prospectus
(the delivery of the documents referred to in clauses (v) and (vi) of this paragraph (h) to be made not later than
10:00 A.M., New York City time, on the business day following the date of such amendment or supplement) and (vii) any document
incorporated by reference in the Registration Statement, General Disclosure Package, Permitted Issuer Free Writing Prospectus or
the Prospectus (excluding exhibits thereto) (the delivery of the documents referred to in clause (vi) of this paragraph (h)
to be made not later than 10:00 A.M., New York City time, on the business day following the date of such document).
(i) Blue
Sky Qualifications. The Company, at its expense, will cause its counsel to provide to MDB a Final Blue Sky Memorandum, in such
quantities as MDB reasonably request, for its use and the use of the selling members in connection with the offer and sale of the
Securities.
(j) Securities
Act Rule 158. The Company will make generally available to holders of its securities (including without limitation by
publicly filing the same with the Commission) as soon as may be practicable, but in no event later than the Availability Date (as
defined below), an earnings statement (which need not be audited but shall be in reasonable detail) covering a period of 12 months
commencing after the Effective Date that will satisfy the provisions of Section 11(a) of the Securities Act (including Rule 158
thereunder). For the purpose of the preceding sentence, “Availability Date” means the 45th day after
the end of the fourth fiscal quarter following the fiscal quarter that includes such Effective Date, except that if such fourth
fiscal quarter is the last quarter of the Company’s fiscal year, “Availability Date” means the 90th day after
the end of such fourth fiscal quarter.
(k) Absence
of Manipulation. The Company will not take, directly or indirectly, any action designed to or that would constitute or that
might reasonably be expected to cause or result in, stabilization or manipulation of the price of any securities of the Company
to facilitate the sale or resale of the Shares.
(l) Intentionally
deleted.
(m) Compliance
with Sarbanes-Oxley Act. The Company will comply in all material respects with all applicable securities and other laws, rules
and regulations, including, without limitation, the Sarbanes-Oxley Act, and use its best efforts to cause the Company’s directors
and officers, in their capacities as such, to comply in all material respects with such laws, rules and regulations.
(n) Correspondence
with the Commission. The Company will supply MDB with copies of all correspondence to and from, and all documents issued to
and by, the Commission in connection with the registration of the Securities under the Securities Act or the Registration Statement,
any Preliminary Prospectus, General Disclosure Package or Prospectus, or any amendment or supplement thereto or document incorporated
by reference therein.
(o) Publicity.
Prior to the Closing Date, the Company will 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 marketing communications in the ordinary course of business and consistent with the past practices
of the Company and of which MDB is notified beforehand), without the prior written consent of MDB, unless in the judgment of the
Company and its counsel, and after notification to MDB, such press release or communication is required by law.
(p) Further
Actions. The Company will use its commercially reasonable efforts to do and perform all things required to be done or performed
under this Agreement by the Company prior to the Closing Date, and to satisfy all conditions precedent to the delivery of the Units.
(q) Registration
of the Agent Units. Provided the Company, with MDB’s consent, pays the compensation owed to MDB for the dealer manager
and placement agent services with Units, including the shares of Common Stock and Warrants in the Units and the shares of Common
stock underlying the Warrants, will be included in the Registration Statement as registered securities thereunder.
(r) Escrow
Agreement. As of the date of this Agreement, the Company has entered into an escrow agreement in connection with the Subscription
Rights with VStock Transfer LLC, and the Company and MDB, as Placement Agent, will have entered into an escrow agreement with Delaware
Trust Company, for the purpose of establishing an escrow account to hold the Purchase Price of the Offered Units until the Closing.
10. Payment
of Expenses; FINRA Restriction on Transfer. The Company agrees to pay, or reimburse if paid by MDB and pre-approved in advance
by the Company, whether or not the transactions contemplated hereby are consummated or this Agreement is terminated: (a) the costs
incident to the authorization, issuance, sale, preparation and delivery of the Shares, Warrants and Agent Units pursuant to this
Agreement and any taxes payable in that connection; (b) the costs incident to the Registration of the Securities under the Securities
Act; (c) the costs incident to the preparation, printing, filing and distribution of the Registration Statement, any Preliminary
Prospectus, the General Disclosure Package, Prospectus, any amendments, supplements and exhibits thereto or any document incorporated
by reference therein and the costs of printing, reproducing and distributing any transaction document by mail, telex or other means
of communications; (d) any applicable listing, quotation or other fees; (e) the fees and expenses of qualifying the Securities
under the securities laws of the several jurisdictions as provided
in Section 9(i) and of preparing, printing and distributing wrappers, blue sky memoranda and legal investment
surveys (if any); (f) the cost of preparing and printing stock certificates; (g) all fees and expenses of the registrar and transfer
agent of the Shares and Warrants; (h) a non-accountable expense allowance with respect to the expenses and fees of MDB’s
counsel, in an amount of $60,000 of which $10,000 shall be credited to the Company at closing in connection with the advance that
was previously paid to MDB or its counsel pursuant to that certain engagement agreement, dated December 1, 2016 by and between
the Company and MDB; and (i) all other costs and expenses of the Company incident to the offering of the Securities or the performance
of the obligations of the Company under this Agreement (including, without limitation, the fees and expenses of the Company’s
counsel and the Company’s independent accountants and the travel and other expenses incurred by Company personnel in connection
with any “road show” including, without limitation, any expenses advanced by MDB on the Company’s behalf (which
will be promptly reimbursed.); provided that, except to the extent otherwise provided in this Section 10 and
Sections 12 and 13, MDB shall pay its own costs and expenses, including the fees and expenses of its counsel.
If MDB or its affiliates
are issued any Agent Units, then pursuant to FINRA Rule 5110(g), any Agent Units, including the underlying Shares or Warrants issued
to MDB or its affiliates shall not be sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging,
short sale, derivative, put or call transaction that would result in the effective economic disposition of the securities by any
person for a period of 180 days immediately following the date of effectiveness or commencement of sales of the Offered Units,
except the transfer of any such security may be made: (i) by operation of law or by reason of our reorganization; (ii) to any FINRA
member firm participating in the Rights Offering or offering of the Offered Units and the officers or partners thereof, if all
securities so transferred remain subject to the lock-up restriction set forth above for the remainder of the time period. In addition,
notwithstanding such restrictions, the exercise or conversion of any security will not be prohibited, if all securities remain
subject to the lock-up restriction set forth above for the remainder of the time period.
11. Conditions
of the Obligations of MDB. The obligations of MDB hereunder, and the Closing of the sale of the Units, will be subject to the
accuracy of the representations and warranties of the Company herein (as though made on the Closing Date), to the accuracy of the
statements of Company officers made pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder
and to the following additional conditions precedent:
(a) Accountants’
Comfort Letter. MDB shall have received the letter, dated the date hereof, of Gumbiner Savett Inc., in substantially in the
form and substance reasonably satisfactory to MDB, attached as Exhibit B hereto and a “bring down” comfort letter dated
as of the Closing Date, in form and substance reasonably satisfactory to MDB, in each case addressed to MDB, to the effect that
they reaffirm the statements made in the letter furnished as of the date hereof, except that the specified date referred to therein
for carrying out of the procedures shall be no more no more than three days prior to the Closing Date.
(b) Filing
of Prospectus; No Stop Order; No Objection from FINRA. No stop order suspending the effectiveness of the Registration
Statement or any part thereof, preventing or suspending the use of any Preliminary Prospectus, the General Disclosure Package or
Prospectus or any part thereof shall have been issued and no proceedings for that purpose or pursuant to Section 8A under
the Securities Act shall have been initiated or threatened by the Commission, and all requests for additional information on the
part of the Commission (to be included or incorporated by reference in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to the reasonable satisfaction of MDB; the General Disclosure Package shall have been filed with
the Commission within the applicable time period prescribed for such filing by, and in compliance with, the Securities Act and
in accordance with Section 3(a); and FINRA shall have raised no objection to the fairness and reasonableness of the
terms of this Agreement or the transactions contemplated hereby.
(c) No
Material Misstatement or Omission. MDB shall not have discovered and disclosed to the Company on or prior to the Closing Date
that the Registration Statement or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion
of counsel for MDB, is material or omits to state any fact which, in the opinion of such counsel, is material and is required to
be stated therein or is necessary to make the statements therein not misleading, or that any Preliminary Prospectus, the General
Disclosure Package, or any amendment or supplement thereto contains an untrue statement of fact which, in the opinion of such counsel,
is material or omits to state any fact which, in the opinion of such counsel, is material and is necessary in order to make the
statements, in the light of the circumstances in which they were made, not misleading.
(d) Corporate
Proceedings. All corporate proceedings and other legal matters incident to the authorization, form and validity of each of
the Transaction Documents, the Securities, the Registration Statement, any Preliminary Prospectus, and the General Disclosure Package
and the Prospectus and all other legal matters relating to the Transaction Documents and the transactions contemplated thereby
shall be reasonably satisfactory in all material respects to counsel for MDB, 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.
(e) No
Material Adverse Change. Since the date of the latest audited financial statements included in the General Disclosure Package
and Prospectus or incorporated by reference in the General Disclosure Package and Prospectus as of the date hereof, (i) the Company
has not sustained any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth in the Registration
Statement, General Disclosure Package and Prospectus, and (ii) there shall not have been any change in the capital stock or
long-term debt of the Company, or any change, or any development involving a prospective change, in or affecting the business,
general affairs, management, financial position, stockholders’ equity or results of operations of the Company, any litigation
or other proceeding instituted against the Company, otherwise than as set forth in the Registration Statement and the General Disclosure
Package, the effect of which, in any such case described in clause (i) or (ii) of this paragraph (e), is, in the
judgment of MDB, so material and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery of the
Securities on the terms and in the manner contemplated in the General Disclosure Package.
(f) No
Legal Action. No action shall have been taken and no law, statute, rule, regulation or order shall have been enacted, adopted
or issued by any governmental agency or body which would prevent the issuance or sale of the Securities or materially and adversely
affect or potentially materially and adversely affect the business or operations of the Company; and no injunction, restraining
order or order of any other nature by any federal or state court of competent jurisdiction shall have been issued which would prevent
the issuance or sale of the Shares or materially and adversely affect or potentially materially and adversely affect the business
or operations of the Company.
(g) Opinion
of Counsel for the Company; Blue Sky Memorandum. MDB shall have received an opinion and negative assurance (10b-5) statement,
addressed to MDB, dated as of the Closing Date, of Mitchell Silberberg & Knupp LLP, counsel for the Company, in substantially
the form agreed to with counsel to MDB prior to the date hereof. MDB also will have received a standard form of Blue Sky Memorandum,
addressed to MDB, dated as of the Closing Date, of Mitchell Silberberg & Knupp LLP, or other law firm acceptable to MDB.
(h) Officer’s
Certificate. The Company shall have furnished to MDB a certificate, dated the Closing Date, of its Chairman of the Board, Chief
Executive Officer, its President or a Vice President and its chief financial officer stating that (i) such officers have carefully
examined the Registration Statement, any Preliminary Prospectus, the General Disclosure Package, any Permitted Issuer Free Writing
Prospectus and the Prospectus and, in their opinion, the Registration Statement and each part thereof from time to time and each
amendment thereto, as of the Closing Date, did not include any untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make the statements therein not misleading, and the Registration Statement,
the General Disclosure Package and Prospectus 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, General Disclosure Package or Prospectus that was
not so set forth, (iii) to the best of their knowledge, as of the Closing Date, the representations and warranties of the
Company in this Agreement and any other Transaction Document are true and correct, except that any such representation or warranty
shall be true and correct in all respects where such representation or warranty is qualified with respect to materiality, and the
Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date, and (iv) there has not been, subsequent to the date of the most recent audited financial statements
included or incorporated by reference in the Registration Statement, General Disclosure Package and Prospectus, any material adverse
change in the financial position or results of operations of the Company, or any change or development that, singularly or in the
aggregate, would involve a material adverse change or a prospective material adverse change, in or affecting the condition (financial
or otherwise), results of operations, business, assets or prospects of the Company, except as set forth in the Registration Statement,
General Disclosure Package and Prospectus.
(i) Intentionally
deleted.
(j) Additional
Certificates. The Company shall have furnished to MDB such certificates (including a Secretary’s Certificate), in addition
to those specifically mentioned herein, as MDB may have reasonably requested as to the accuracy and completeness at the Closing
Date of any statement in the Registration Statement, General Disclosure Package and Prospectus, as to the accuracy at the Closing
Date of the representations and warranties of the Company herein, as to the performance by the Company of its obligations hereunder,
or as to the fulfillment of the conditions concurrent and precedent to the obligations hereunder of MDB. MDB may, in its sole discretion,
waive compliance with any conditions to the obligations of MDB under this Agreement.
(k) Listing
of Common Stock. NASDAQ has received the notice of issuance of the Securities and as of the Closing Date NASDAQ has not raised
any objection to the Rights Offering or the offering, issuance and sale of the Units in the Rights Offering or the Agent Units
by the Company, and the Common Stock is admitted for listing on NASDAQ.
12. Indemnification
and Contribution.
(a) The
Company will indemnify and hold harmless the MDB, as Dealer Manager and Placement Agent, and each of its respective, affiliates,
partners, members, directors, officers, managers, employees and agents and each person, if any, who controls MDB within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “MDB Indemnified Parties”),
from and against any and all losses, claims, liabilities, expenses and damages (including any and all investigative, legal and
other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they, or any of them, may become subject under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, liabilities, expenses or damages
arise out of or are based on (A) any untrue statement or alleged untrue statement of a material fact contained in the Registration
Statement, any Preliminary Prospectus, General Disclosure Package, Permitted Issuer Free Writing Prospectus, the Prospectus or
any amendment or supplement thereto, or any “issuer information” filed or required to be filed pursuant to Rule 433(d)
under the Securities Act, or (B) the omission or alleged omission to state in such document a material fact required to be stated
in it or necessary to make the statements in it not misleading in the light of the circumstances in which they were made, or arise
out of or are based in whole or in part, on any inaccuracy in the representations and warranties of the Company contained herein,
or any failure of the Company to perform its obligations hereunder or under law in connection with the transactions contemplated
hereby; provided, however, that the Company will not be liable to the extent that such loss, claim, liability, expense or
damage arises from the sale of the Securities in the public offering to any person by MDB and is based on an untrue statement or
omission or alleged untrue statement or omission made in reliance on and in conformity with information relating to MDB furnished
in writing to the Company by or on behalf of MDB, expressly for inclusion in the Registration Statement, any Preliminary Prospectus,
General Disclosure Package, the Prospectus, or any Permitted Issuer Free Writing Prospectus. The Company acknowledges that the
MDB Information constitutes the only information furnished in writing to the Company by or on behalf of MDB, expressly for inclusion
in the Registration Statement, any Preliminary Prospectus, General Disclosure Package or Prospectus, or any Permitted Issuer Free
Writing Prospectus. This indemnity agreement will be in addition to any liability that the Company might otherwise have.
(b) MDB
will indemnify and hold harmless the Company, each director of the Company, each officer of the Company who signs the Registration
Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act (collectively, the “Company Indemnified Parties”), to the same extent as the foregoing indemnity
from the Company to MDB, as set forth in Section 12(a), but only insofar as losses, claims, liabilities, expenses or damages
arise out of or are based on any untrue statement or omission or alleged untrue statement or omission made in reliance on and in
conformity with MDB Information, provided expressly for use in the Registration Statement, any Preliminary Prospectus, General
Disclosure Package, the Prospectus, or any Permitted Issuer Free Writing Prospectus. The Company acknowledges that the MDB Information
in the Prospectus constitutes the only information relating to MDB furnished in writing to the Company by or on behalf of MDB.
This indemnity will be in addition to any liability that MDB might otherwise have.
(c) Any
party that proposes to assert the right to be indemnified under this Section 12 shall, promptly after receipt of notice
of commencement of any action against such party in respect of which a claim is to be made against an indemnifying party or parties
under this Section 12, notify each such indemnifying party in writing of the commencement of such action, enclosing with
such notice a copy of all papers served, but the omission so to notify such indemnifying party will not relieve it from any liability
that it may have to any indemnified party under the foregoing provisions of this Section 12 unless, and only to the extent
that, such omission results in the loss of substantive rights or defenses by the indemnifying party. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its commencement, the indemnifying party will be entitled
to participate in and, to the extent that it elects by delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party to assume the defense of the action, with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume
the defense, the indemnifying party will not be liable to the indemnified party for any legal or other expenses except as provided
below and except for the reasonable costs of investigation incurred by the indemnified party in connection with the defense. The
indemnified party will have the right to employ its own counsel in any such action, but the fees, expenses and other charges of
such counsel will be at the expense of such indemnified party, unless (i) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (ii) the indemnified party has reasonably concluded (based on advice
of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition
to those available to the indemnifying party, (iii) a conflict or potential conflict exists (based on advice of counsel to
the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the indemnified party) or (iv) the indemnifying party has
not in fact employed counsel reasonably satisfactory to the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party. It is understood that the indemnifying party shall not, in
connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements
and other charges of more than one separate firm admitted to practice in such jurisdiction at any one time for all such indemnified
party or parties. Subject to Section 12(f) hereof, all such fees, disbursements and other charges will be reimbursed by the indemnifying
party promptly as they are incurred. No indemnifying party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional
release of such indemnified party from all liability on any claims that are the subject matter of such action 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 an indemnified party.
An indemnifying party will not be liable for any settlement of any action or claim effected without its written consent (which
consent will not be unreasonably withheld or delayed).
(d) If
the indemnification provided for in this Section 12 is applicable in accordance with its terms but for any reason is held to be
unavailable to or insufficient to hold harmless an indemnified party under paragraphs (a), (b) and (c) of this Section 12 in respect
of any losses, claims, liabilities, expenses and damages referred to therein, then the indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted, but after
deducting any contribution received by the Company from persons other than MDB, such as persons who control the Company within
the meaning of the Securities Act, officers of the Company who signed the Registration Statement and directors of the Company,
who also may be liable for contribution) by such indemnified party as a result of such losses, claims, liabilities, expenses and
damages in such proportion as shall be appropriate to reflect the relative benefits received by the Company, on the one hand, and
MDB, on the other hand. The relative benefits received by the Company, on the one hand, and MDB, on the other hand, shall be deemed
to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear
to the total commissions received by MDB, in each case as set forth in the table on the cover page of the Prospectus or otherwise
disclosed in the Prospectus. If, but only if, the allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not only the relative benefits
referred to in the foregoing sentence but also the relative fault of the Company, on the one hand, and MDB, on the other hand,
with respect to the statements or omissions that resulted in such loss, claim, liability, expense or damage, or action in respect
thereof, as well as any other relevant equitable considerations with respect to such offering. Such 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 MDB, 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 MDB agree that it would not be just and equitable
if contributions pursuant to this Section 12(d) were to be determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party
as a result of the loss claim, liability, expense or damage, or action in respect thereof, referred to above in this Section
12(d) shall be deemed to include, for purposes of this Section 12(d), 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 12(d), MDB shall not be required to contribute any amount in excess of the commission received by it pursuant
to this Agreement. No person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities
Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 12(d), any person who controls a party to this Agreement within the meaning of the Securities Act will have
the same rights to contribution as that party, and each officer of the Company who signed the Registration Statement will have
the same rights to contribution as the Company, subject in each case to the provisions hereof. Any party entitled to contribution,
promptly after receipt of notice of commencement of any action against any such party in respect of which a claim for contribution
may be made under this Section 12(d), will notify any such party or parties from whom contribution may be sought, but the
omission so to notify will not relieve the party or parties from whom contribution may be sought from any other obligation it or
they may have under this Section 12(d). No party will be liable for contribution with respect to any action or claim settled
without its written consent (which consent will not be unreasonably withheld).
(e) The
indemnity and contribution agreements contained in this Section 12 and the representations and warranties of the Company contained
in this Agreement shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf
of MDB, (ii) acceptance of any of the Shares and payment therefor, or (iii) any termination of this Agreement.
(f) In
addition to its other obligations under Section 12(a) of this Agreement, the Company hereby agrees to reimburse MDB on a
monthly basis for all reasonable legal and other expenses incurred in connection with investigating or defending any claim, action,
investigation, inquiry or other proceeding arising out of or based upon, in whole or in part, any statement or omission or alleged
statement or omission, or any inaccuracy in the representations and warranties of the Company contained herein or failure of the
Company to perform its obligations hereunder or under law, all as described in Section 12(a), notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the obligations under this Section 12(f) and the possibility
that such payment might later be held to be improper; provided, however, that, to the extent any such payment is ultimately
held to be improper, the persons receiving such payments shall promptly refund them.
13. Survival
of Certain Representations and Obligations. The respective indemnities, contribution agreements, agreements, representations,
warranties and other statements of the Company or its officers and of MDB set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf
of MDB, the Company or any of their respective officers or directors or any controlling person, and will survive delivery of and
payment for the Securities or any termination of this Agreement. If the sale and issuance of the Securities by the Company hereunder
are not consummated for any reason, the Company will promptly reimburse MDB for all out of pocket expenses reasonably incurred
in connection with the offering of the Securities in accordance with Section 10 hereof, and the respective obligations of
the Company and MDB pursuant to Section 12 hereof shall remain in effect. In addition, if any Securities have been sold
pursuant to the terms of this Agreement, the representations and warranties in Section 8 hereof and all obligations
under Sections 9 and 11 hereof shall also remain in effect.
14. Notices.
All communications hereunder will be in writing and, if sent to MDB, will be mailed, delivered or telegraphed and confirmed to
MDB Capital Group, LLC, 2425 Cedar Springs Road, Dallas, Texas 75201, or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at 12870 Interurban Avenue South, Seattle, Washington 98168.
15. Successors.
This Agreement will inure to the benefit of and be binding upon parties hereto and their respective successors, assigns and the
officers and directors and controlling persons referred to in Section 12, and no other person will have any right or obligation
hereunder. This Agreement shall also inure to the benefit of MDB and its successors and assigns, which shall be third party beneficiaries
hereof. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, other than the persons
mentioned in the preceding sentences, any legal or equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of such persons and for the benefit of no other person; except that the representations, warranties, covenants,
agreements and indemnities of the Company contained in this Agreement shall also be for the benefit of each of the MDB Indemnified
Parties and the indemnities of MDB shall be for the benefit of the Company Indemnified Parties
16. Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts
shall together constitute one and the same Agreement.
17. Termination
of this Agreement. The obligations of MDB under this Agreement may be terminated by MDB at any time on or prior to the Closing
Date by notice to the Company from MDB, without liability on its part to the Company if, in their respective sole judgment, (i) trading
in any of the equity securities of the Company shall have been suspended or limited by the Commission or by NASDAQ, (ii) trading
in securities generally on the New York Stock Exchange or NASDAQ shall have been suspended or limited or minimum or maximum prices
shall have been generally established on such exchange, or additional material governmental restrictions, not in force on the date
of this Agreement, shall have been imposed upon trading in securities generally by such exchange, by order of the Commission or
any court or other governmental authority, or by NASDAQ, (iii) a general banking moratorium shall have been declared by either
federal or New York State authorities or any material disruption of the securities settlement or clearance services in the United
States shall have occurred, or (iv) any material adverse change in the financial or securities markets in the United States
or in political, financial or economic conditions in the United States, any outbreak or escalation of hostilities involving the
United States, a declaration of a national emergency or war by the United States, or other calamity or crisis, either within or
outside the United States, shall have occurred, the effect of which is such as to make it, in the sole judgment of MDB, impracticable
or inadvisable to proceed with completion of the offering of the Securities on the terms and in the manner contemplated in the
Registration Statement, any Preliminary Prospectus, General Disclosure Package and the Prospectus. In addition, the obligations
of MDB hereunder may be terminated by MDB in the absolute discretion of MDB by notice given to the Company prior to delivery of
and payment for the Units, if, prior to that time, any of the events described in Sections 6(e) and (f) have
occurred.
18. Absence
of Fiduciary Relationship. Notwithstanding any preexisting relationship, advisory or otherwise, between the parties or any
oral representations or assurances previously or subsequently made by MDB, the Company acknowledges and agrees that (i) the
services and purchase and sale of the Securities pursuant to this Agreement (including the determination of the terms of the offering
of the Securities) is an arm’s-length commercial transaction between the Company and MDB, as the case may be (ii) MDB
has not assumed any advisory or fiduciary responsibility in favor of the Company with respect to the transactions and offerings
contemplated hereby or the process leading thereto (irrespective of whether MDB has advised or is currently advising the Company
on other matters) or any other obligation to the Company except the obligations expressly set forth in this Agreement, (iii) MDB
and its respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of
the Company and have no obligation to disclose or account to the Company for any of such differing interests, and (iv) the
Company has consulted its own legal, tax, accounting and financial advisors to the extent it deemed appropriate. The Company
hereby agrees that it will not claim that MDB has rendered advisory services of any nature or respect, or owes a fiduciary or similar
duty to the Company, in connection with such transaction or the process leading thereto.
19. Prior
Agreements. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company
and MDB, with respect to the subject matter of the offering contemplated by this Agreement, except for any provisions that specifically
are intended to survive of any prior agreements.
20. Partial
Unenforceability. The invalidity or unenforceability of any section, paragraph, clause or provision of this Agreement shall
not affect the validity or enforceability of any other section, paragraph, clause or provision hereof. If any section, paragraph,
clause or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be
made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.
21. Governing
Law. This Agreement shall be deemed to have been made and delivered in the City of Seattle and shall be governed as to validity,
interpretation, construction, effect and in all other respects by the internal laws of the State of Washington. The Company (1)
agrees that any legal suit, action or proceeding arising out of or relating to this Agreement shall be instituted exclusively in
the Superior Court of the State of Washington, County of King or in the United States District Court for the District of Western
Washington, (2) waives any objection to the venue of any such suit, action or proceeding and the right to assert that such forum
is not a convenient forum, and (3) irrevocably consents to the jurisdiction of the Superior Court of the State of , County of King,
and the United States District Court for the District of Western Washington in any such suit, action or proceeding. The Company
further agrees to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding
in the Superior Court of the State of Washington, County of King, or in the United States District Court for the District of Western
Washington and agrees that service of process upon it mailed by certified mail to its address shall be deemed in every respect
effective service of process upon it in any such suit, action or proceeding. 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 therefore.
[The remainder of this page
is intentionally left blank.]
If the foregoing is
in accordance with your understanding of the agreement between the Company and MDB, kindly sign one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and MDB in accordance with its terms.
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Very truly yours, |
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CLEARSIGN COMBUSTION CORPORATION |
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By: |
/s/ Stephen E. Pirnat |
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Name: Stephen E. Pirnat |
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Title: Chief Executive Officer |
Signature Page to Dealer Manager/Placement
Agent Agreement
The foregoing Agreement
is hereby confirmed and accepted as of the date first above written.
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MDB CAPITAL GROUP, LLC
as Dealer Manager and as Placement Agent |
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By: |
/s/ Anthony DiGiandomenico |
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Name: Anthony DiGiandomenico |
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Title: Authorized Signatory – Head of Investment Banking |
Signature Page to Dealer Manager/Placement
Agent Agreement
SCHEDULE I
Issuer Free Writing Prospectus:
Additional Documents included in the
General Disclosure Package:
Permitted Issuer Free Writing Prospectus:
