Blueprint
[●] Units1
ENDRA LIFE SCIENCES INC.
UNDERWRITING AGREEMENT
[●], 2017
National
Securities Corporation
As
Representative of the several Underwriters
Named
in Schedule I hereto
c/o
National Securities Corporation
410
Park Avenue, 14th Floor
New
York, New York 10022
Ladies
and Gentlemen:
ENDRA
Life Sciences Inc., a Delaware corporation (the “Company”),
proposes to sell to the several Underwriters named in Schedule I
hereto (the “Underwriters”)
an aggregate of [●] units (the “Firm
Units”), with each Firm Unit consisting of (i) one
(1) authorized but
unissued share (each, a
“Firm
Share”) of Common Stock, par value $0.0001 per share
(the “Common
Stock”), of the Company, and (ii) one (1) warrant of
the Company, to be issued pursuant to a warrant agreement to be
entered into by and between the Company and Corporate Stock
Transfer, Inc., as warrant agent, in the form set forth in
Exhibit A hereto
(the “Warrant
Agreement”), to purchase one (1) share of Common Stock
at an exercise price of $[●] per share (each, a “Firm
Warrant”). The Company also has granted to the
Representative (as defined below) an option to purchase up to
[●] additional
units (the “Option
Units” and, together with the Firm Units, the
“Units”),
with each Option Unit consisting of (i) one (1) authorized but
unissued share of Common Stock (each, an “Option
Share” and, together with the Firm Shares, the
“Shares”),
and (ii) one (1) warrant of the Company, to be issued pursuant to
the Warrant Agreement, to purchase one (1) share of Common Stock at an exercise price
of $[●] per share (each an “Option
Warrant” and, together with the Firm Warrants, the
“Warrants”),
in each case on the terms and for the purposes set forth in Section
3 hereof. The Units, the Shares, the Warrants and the shares of
Common Stock issuable upon exercise of the Warrants purchased
pursuant to this Underwriting Agreement (the “Agreement”)
are herein collectively called the “Securities.”
The Securities numbers set forth in this Agreement reflect a one
for 3.50 reverse stock split (the “Reverse Stock
Split”) to be
effected by the Company following the effectiveness of the
Registration Statement (as defined below) and prior to the First
Closing Date (as defined below). Failure to complete the Reverse
Stock Split will be grounds for termination of this Agreement by
the Representative.
Plus an option to purchase up to
[●] additional units to cover over-allotments, if
any, as set forth herein.
The
Company hereby confirms its agreement with respect to the sale of
the Securities to the several Underwriters, for whom National
Securities Corporation is acting as representative (the
“Representative” or “you”).
The Company also hereby confirms its engagement of Dougherty &
Company LLC as, and Dougherty & Company LLC hereby confirms its
agreement with the Company to render services as, the "qualified
independent underwriter" within the meaning of Rule 512(f)(12) of
the Financial Industry Regulatory Authority Inc. ("FINRA") with respect to the
offer and sale of the Securities. Dougherty & Company LLC,
solely in its capacity as the qualified independent underwriter and
not otherwise, is referred to herein as the "Independent
Underwriter."
1. Registration
Statement and Prospectus. A registration statement on
Form S-1 (File No. 333-214724) with respect to the
Securities, including a preliminary form of prospectus, has been
prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the “Act”),
and the rules and regulations (“Rules and
Regulations”) of the Securities and Exchange
Commission (the “Commission”)
thereunder and has been filed with the Commission. Such
registration statement, including the amendments, exhibits and
schedules thereto, as of the time it became effective, including
the Rule 430A Information (as defined below), is referred to herein
as the “Registration
Statement.” The Company will prepare and file a
prospectus pursuant to Rule 424(b) of the Rules and
Regulations that discloses the information previously omitted from
the prospectus in the Registration Statement in reliance upon
Rule 430A of the Rules and Regulations, which information will
be deemed retroactively to be a part of the Registration Statement
in accordance with Rule 430A of the Rules and Regulations
(“Rule
430A Information”). If the Company has elected to rely
upon Rule 462(b) of the Rules and Regulations to increase the
size of the offering registered under the Act, the Company will
prepare and file with the Commission a registration statement with
respect to such increase pursuant to Rule 462(b) of the Rules
and Regulations (such registration statement, including the
contents of the Registration Statement incorporated by reference
therein is the “Rule 462(b)
Registration Statement”). References herein to the
“Registration
Statement” will be deemed to include the Rule 462(b)
Registration Statement at and after the time of filing of the Rule
462(b) Registration Statement. “Preliminary
Prospectus” means any prospectus included in the
Registration Statement prior to the effective time of the
Registration Statement, any prospectus filed with the Commission
pursuant to Rule 424(a) under the Rules and Regulations and each
prospectus that omits Rule 430A Information used after the
effective time of the Registration Statement. “Prospectus”
means the prospectus that discloses the public offering price and
other final terms of the Securities and the offering and otherwise
satisfies Section 10(a) of the Act. All references
in this Agreement to the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement to any of
the foregoing, is deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval System or any successor system thereto (“EDGAR”).
All
references herein to the Registration Statement, any Preliminary
Prospectus or a Prospectus shall be deemed as of any time to
include the documents and information incorporated therein by
reference in accordance with the Rules and
Regulations.
2. Representations
and Warranties of the Company.
(a) Representations
and Warranties of the Company. The Company represents and
warrants to, and agrees with, the several Underwriters as
follows:
(i) Registration
Statement and Prospectuses. The Registration Statement and
any post-effective amendment thereto has become effective under the
Act. No stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto has been issued,
and no proceeding for that purpose has been initiated or, to the
Company’s knowledge, threatened by the Commission. No order
preventing or suspending the use of any Preliminary Prospectus or
the Prospectus (or any supplement thereto) has been issued by the
Commission and no proceeding for that purpose has been initiated
or, to the Company’s knowledge, threatened by the Commission.
As of the time each part of the Registration Statement (or any
post-effective amendment thereto) became or becomes effective, such
Registration Statement (or any post-effective amendment thereto)
conformed or will conform in all material respects to the
requirements of the Act and the Rules and Regulations. Upon the
filing or first use within the meaning of the Rules and
Regulations, each Preliminary Prospectus and the Prospectus (or any
supplement to either) conformed or will conform in all material
respects to the requirements of the Act and the Rules and
Regulations.
(ii) Accurate
Disclosure. Each Preliminary Prospectus, at the time of
filing thereof or the time of first use within the meaning of the
Rules and Regulations, 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
light of the circumstances under which they were made, not
misleading. Neither the Registration Statement nor any amendment
thereto, at the effective time of each part thereof, at the First
Closing Date (as defined below) or at the Second Closing Date (as
defined below), contained, contains or will contain an untrue
statement of a material fact or omitted, omits or will omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading. As of the Time of Sale
(as defined below), neither (A) the Time of Sale Disclosure Package
(as defined below) nor (B) any issuer free writing prospectus (as
defined below), when considered together with the Time of Sale
Disclosure Package, included an untrue statement of a material fact
or omitted 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. Neither the Prospectus nor any
supplement thereto, as of its issue date, at the time of any filing
with the Commission pursuant to Rule 424(b) of the Rules and
Regulations, at the First Closing Date or at the Second Closing
Date, included, includes or will include an untrue statement of a
material fact or omitted, omits or will omit to state a material
fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
representations and warranties in this Section 2(a)(ii) shall
not apply to statements in or omissions from any Preliminary
Prospectus, the Registration Statement (or any amendment thereto),
the Time of Sale Disclosure Package or the Prospectus (or any
supplement thereto) made in reliance upon, and in conformity with,
written information furnished to the Company by you, or by any
Underwriter through you, specifically for use in the preparation of
such document, it being understood and agreed that the only such
information furnished by any Underwriter consists of the
information described as such in Section 6(f).
“Time of Sale
Disclosure Package” means the Preliminary Prospectus
dated [●], 2017 and the information on Schedule III, all
considered together.
Each
reference to a “free writing
prospectus” herein means a free writing prospectus as
defined in Rule 405 of the Rules and Regulations.
“Time of
Sale” means [●] [a/p]m (Eastern time) on the
date of this Agreement.
(iii) No
Other Offering Materials. The Company has not distributed
and will not distribute any prospectus or other offering material
in connection with the offering and sale of the Securities other
than any Preliminary Prospectus, the Time of Sale Disclosure
Package or the Prospectus or other materials permitted by the Act
to be distributed by the Company;
provided, further, that the Company has not made and will not make
any offer relating to the Securities that would constitute a free
writing prospectus.
(iv) Financial
Statements. The financial statements of the Company,
together with the related notes, set forth in the Registration
Statement, the Time of Sale Disclosure Package and Prospectus
comply in all material respects with the requirements of the Act
and the Rules and Regulations and fairly present the financial
condition of the Company as of the dates indicated and the results
of operations, cash flows and changes in stockholders’ equity
for the periods therein specified. The financial statements of the
Company, together with the related notes, set forth in the
Registration Statement, the Time of Sale Disclosure Package and
Prospectus are in accordance with generally accepted accounting
principles in the United States (“GAAP”)
consistently applied throughout the periods involved, except in the
case of unaudited interim financial statements, which are subject
to normal year-end adjustments and do not contain certain footnotes
as permitted by the applicable rules of the Commission. The
supporting schedules, if any, of the Company included in the
Registration Statement present fairly the information required to
be stated therein. All non-GAAP financial information included in
the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus complies with the requirements of Regulation G and
Item 10 of Regulation S-K under the Act. Except as disclosed in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus, there are no material off-balance sheet arrangements
(as defined in Regulation S-K under the Act, Item 303(a)(4)(ii)) or
any other relationships with unconsolidated entities or other
persons, that may have a material current or, to the
Company’s knowledge, material future effect on the
Company’s financial condition, results of operations,
liquidity, capital expenditures, capital resources or significant
components of revenue or expenses. No other financial statements or
schedules, if any, are required to be included in the Registration
Statement, the Time of Sale Disclosure Package or the Prospectus.
RBSM LLP, which has expressed its opinion with respect to the
financial statements of the Company and related schedules filed as
a part of the Registration Statement and included in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus, is (x) an independent
registered public accounting firm within the meaning of the Act and
the Rules and Regulations, (y) a registered public accounting firm
(as defined in Section 2(a)(12) of the Sarbanes-Oxley Act of 2002
(the “Sarbanes-Oxley
Act”)) and (z) not in
violation of the auditor independence requirements of the
Sarbanes-Oxley Act.
(v) Organization
and Good Standing. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation. The Company
has full corporate power and authority to own its properties and
conduct its business as currently being carried on and as described
in the Registration Statement, the Time of Sale Disclosure Package
and Prospectus, and is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction in which the
ownership or lease of real property or the conduct of its business
requires such qualification and in which the failure to so qualify
would have a material adverse effect upon the business, prospects,
management, properties, operations, condition (financial or
otherwise) or results of operations of the Company, taken as a
whole (“Material Adverse
Effect”).
(vi) Absence
of Certain Events. Except as contemplated in the
Registration Statement, the Time of Sale Disclosure Package and in
the Prospectus, subsequent to the date of the most recent financial
statements of the Company included in the Time of Sale Disclosure
Package, the Company has not incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock; and
there has not been any change in the capital stock (other than a
change in the number of outstanding shares of Common Stock due to
the issuance of shares upon the exercise of outstanding options or
warrants or conversion of convertible securities), or any material
change in the short-term or long-term debt (other than as a result
of the conversion of convertible securities), or any issuance of
options, warrants, convertible securities or other rights to
purchase the capital stock, of the Company, or any material adverse
change in the business, prospects, management, properties,
operations, condition (financial or otherwise) or results of
operations of the Company, taken as a whole (“Material Adverse
Change”), or any development which would reasonably be
expected to result in any Material Adverse Change.
(vii) Absence
of Proceedings.
Except as set forth in the Time of Sale Disclosure Package and in
the Prospectus, there is not pending or, to the knowledge of the
Company, threatened or contemplated, any action, suit or proceeding
(a) to which the Company is a party or (b) which has as the subject
thereof any officer or director of the Company, any employee
benefit plan sponsored by the Company or any property or assets
owned or leased by the Company before or by any court or
Governmental Authority (as defined below), or any arbitrator,
which, individually or in the aggregate, would reasonably be
expected to result in any Material Adverse Change, or would
materially and adversely affect the ability of the Company to
perform its obligations under this Agreement or the
Underwriters’ Warrants (as defined below) or which are
otherwise material in the context of the sale of the Securities.
There are no current or, to the knowledge of the Company, pending,
legal, governmental or regulatory actions, suits or proceedings (x)
to which the Company is subject or (y) which has as the subject
thereof any officer or director of the Company, any employee plan
sponsored by the Company or any property or assets owned or leased
by the Company, that are required to be described in the
Registration Statement, Time of Sale Disclosure Package and
Prospectus by the Act or by the Rules and Regulations and that have
not been so described.
(viii)
Authorization; No
Conflicts; Authority. This Agreement has been duly
authorized, executed and delivered by the Company. The
Underwriters’ Warrants have been duly authorized and, at the
First Closing Date and, if applicable, the Second Closing Date,
will be duly executed and delivered by the Company. This Agreement
constitutes, and the Underwriters’ Warrants will constitute
at the First Closing Date and, if applicable, the Second Closing
Date, a valid, legal and binding obligation of the Company,
enforceable in accordance with its terms, except as rights to
indemnity hereunder may be limited by federal or state securities
laws and except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting
the rights of creditors generally and subject to general principles
of equity. The execution, delivery and performance of this
Agreement and the Underwriters’ Warrants and the consummation
of the transactions herein contemplated will not (A) conflict with
or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company is a party or by which the Company
is bound or to which any of the property or assets of the Company
is subject, (B) result in any violation of the provisions of the
Company’s charter or by-laws or (C) result in the violation
of any law or statute or any judgment, order, rule, regulation or
decree of any court or arbitrator or federal, state, local or
foreign governmental agency or regulatory authority having
jurisdiction over the Company or any of its properties or assets
(each, a “Governmental
Authority”), except in the case of clauses (A) and (C)
as would not, individually or in the aggregate, reasonably be
likely to result in a Material Adverse Effect. No consent,
approval, authorization or order of, or registration or filing with
any Governmental Authority is required for the execution, delivery
and performance of this Agreement or the Underwriters’
Warrants or for the consummation of the transactions contemplated
hereby, including the issuance or sale of the Securities by the
Company or the issuance of shares of Common Stock upon the exercise
of the Underwriters’ Warrants, except such as may be required
under the Act, the rules of FINRA, The NASDAQ Stock Market Rules or
state securities or blue sky laws; and the Company has full
corporate power and authority to enter into this Agreement and the
Underwriters’ Warrants and to consummate the transactions
contemplated hereby, including the authorization, issuance and sale
of the Securities as contemplated by this Agreement and the
issuance of shares of Common Stock upon the exercise of the
Underwriters’ Warrants.
(ix) Capitalization;
the Securities; Registration Rights. All of the issued and
outstanding shares of capital stock of the Company, including the
outstanding shares of Common Stock, are duly authorized and validly
issued, fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and were not
issued in violation of or subject to any preemptive rights or other
similar rights to subscribe for or purchase securities that have
not been waived in writing (a copy of which has been delivered to
counsel to the Representative), and the holders thereof are not
subject to personal liability by reason of being such holders. The
Securities which may be sold hereunder by the Company (other than
the Units and the shares of Common Stock which may be sold pursuant
to the Warrants and Underwriters’ Warrants) have been duly
authorized and, when issued, delivered and paid for in accordance
with the terms of this Agreement, will have been validly issued and
will be fully paid and nonassessable, and the holders thereof will
not be subject to personal liability by reason of being such
holders. The Units which may be sold hereunder have been authorized
and, when issued, delivered and paid for in accordance with this
Agreement, will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their
terms, to deliver the shares of Common Stock and Warrants
underlying the Units upon the terms and conditions of this
Agreement. The shares of Common Stock which may be sold pursuant to
the Warrants and Underwriters’ Warrants by the Company, when
issued in accordance with the terms of this Agreement, the Warrant
Agreement, the Warrants and the Underwriters’ Warrants
(including, without limitation, payment of the exercise price
therefor), will have been validly issued and will be fully paid and
nonassessable, and the holders thereof will not be subject to
personal liability by reason of being such holders. After giving
effect to the Reverse Stock Split and the filing of the Fourth
Amended and Restated Certificate of Incorporation prior to Closing,
as contemplated in the Time of Sale Disclosure Package and in the
Prospectus (collectively, the “Pre-Closing
Amendments”), the capital stock of the Company,
including the Common Stock, will conform to the description thereof
in the Registration Statement, in the Time of Sale Disclosure
Package and in the Prospectus. Except as otherwise stated in the
Registration Statement, in the Time of Sale Disclosure Package and
in the Prospectus, (A) there are no preemptive rights or other
rights to subscribe for or to purchase, or any restriction upon the
voting or transfer of, any shares of Common Stock pursuant to the
Company’s charter, by-laws or any agreement or other
instrument to which the Company is a party or by which the Company
is bound, (B) none of the filing of the Registration Statement, the
offering, the sale of the Securities or the Underwriters’
Warrants as contemplated by this Agreement, or the issuance of
shares of Common Stock upon exercise of the Underwriters’
Warrants, give rise to any rights (other than rights in favor of
the holders of the Underwriters’ Warrants) for or relating to
the registration of any shares of Common Stock or other securities
of the Company (collectively “Registration
Rights”) and (C) any person to whom the Company
has granted Registration Rights has agreed not to exercise such
rights until after expiration of the Lock-Up Period (as defined
below). After giving effect to the Pre-Closing Amendments, the
Company will have an authorized and outstanding capitalization as
set forth in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus under the caption
“Description of Securities We Are Offering.” The
Securities (including the Units, Shares and Warrants) conform in
all material respects to the descriptions thereof contained in the
Time of Sale Disclosure Package and the Prospectus.
(x) Stock
Options. Except as described in the Registration Statement,
in the Time of Sale Disclosure Package and in the Prospectus, there
are no options, warrants, agreements, contracts or other rights in
existence to purchase or acquire from the Company any shares of the
capital stock of the Company. The description of the
Company’s stock option, stock bonus and other stock plans or
arrangements (the “Company Stock
Plans”), and the options (the “Options”)
or other rights granted thereunder, set forth in the Time of Sale
Disclosure Package and the Prospectus, accurately and fairly
presents in all material respects the information required to be
shown with respect to such plans, arrangements, options and rights.
Each grant of an Option (A) was duly authorized by all necessary
corporate action, including, as applicable, approval by the board
of directors of the Company (or a duly constituted and authorized
committee thereof) and any required stockholder approval by the
necessary number of votes or written consents, and the award
agreement governing such grant (if any) was duly executed and
delivered by each party thereto and (B) was made in accordance
with the terms of the applicable Company Stock Plan, and all
applicable laws and regulatory rules or requirements, including all
applicable federal securities laws.
(xi) Compliance
with Laws. Except as would not, individually or in the
aggregate, reasonably be likely to have a Material Adverse Effect,
the Company holds, and is operating in compliance with, all
franchises, grants, authorizations, licenses, permits, easements,
consents, certificates and orders of any Governmental Authority or
self-regulatory body required for the conduct of its business and
all such franchises, grants, authorizations, licenses, permits,
easements, consents, certifications and orders are valid and in
full force and effect; and except as would, individually or in the
aggregate, reasonably be likely to have a Material Adverse Effect,
the Company has not received notice of any revocation or
modification of any such franchise, grant, authorization, license,
permit, easement, consent, certification or order or has reason to
believe that any such franchise, grant, authorization, license,
permit, easement, consent, certification or order will not be
renewed in the ordinary course; and except as would not,
individually or in the aggregate, reasonably be likely to have a
Material Adverse Effect, the Company is in compliance with all
applicable federal, state, local and foreign laws, regulations,
orders and decrees.
(xii) Ownership
of Assets. The Company has good and marketable title to all
property (whether real or personal) described in the Registration
Statement, in the Time of Sale Disclosure Package and in the
Prospectus as being owned by it, in each case free and clear of all
liens, claims, security interests, other encumbrances or defects
except such as are described in the Registration Statement, in the
Time of Sale Disclosure Package and in the Prospectus. The property
held under lease by the Company is held by it under valid,
subsisting and enforceable leases with only such exceptions with
respect to any particular lease as do not interfere in any material
respect with the conduct of the business of the
Company.
(xiii) Intellectual
Property. The Company owns, possesses, or to the knowledge
of the Company can acquire on reasonable terms, all material
Intellectual Property necessary for the conduct of the
Company’s business as now conducted or as described in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus to be conducted. Furthermore, (A) to the knowledge of
the Company, there is no infringement, misappropriation or
violation by third parties of any such Intellectual Property owned
or licensed by the Company; (B) there is no pending or, to the
knowledge of the Company, threatened, action, suit, proceeding or
claim by others challenging the Company’s rights in or to any
such Intellectual Property owned or licensed by the Company, and to
the knowledge of the Company, there are no facts that would form a
reasonable basis for any such claim; (C) the Intellectual Property
owned by the Company, and to the knowledge of the Company, the
Intellectual Property licensed to the Company, has not been
adjudged invalid or unenforceable, in whole or in part, and there
is no pending or, to the knowledge of the Company, threatened
action, suit, proceeding or claim by others challenging the
validity or scope of any such Intellectual Property, and to the
knowledge of the Company, there are no material facts that would
form a reasonable basis for any such claim; (D) there is no pending
or, to the knowledge of the Company, threatened action, suit,
proceeding or claim by others that the Company infringes,
misappropriates or otherwise violates any Intellectual Property or
other proprietary rights of others, the Company has not received
any written notice of such claim and to the knowledge of the
Company, there are no material facts that would form a reasonable
basis for any such claim; and (E) to the Company’s knowledge,
no employee of the Company is in or has ever been in violation of
any term of any employment contract, patent disclosure agreement,
invention assignment agreement, non-competition agreement,
non-solicitation agreement, nondisclosure agreement or any
restrictive covenant to or with a former employer where the basis
of such violation relates to such employee’s employment with
the Company or actions undertaken by the employee while employed
with the Company, except as such violation would not result in a
Material Adverse Effect. “Intellectual
Property” shall mean all patents, patent applications,
trade and service marks, trade and service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets,
domain names, technology and other intellectual
property.
(xiv) No
Violations or Defaults. The Company is not in violation of
its charter, by-laws or other organizational documents or in breach
of or otherwise in default under any bond, debt, note, indenture,
loan agreement or any other contract, lease or other instrument to
which it is subject or by which it may be bound, or to which any of
the property or assets of the Company is subject, except for any
such violation, breach or default that has been waived by the other
party. No event has occurred which, with notice or lapse of time or
both, would constitute such a default in the performance of any
obligation, agreement or condition contained in any bond,
debenture, note, indenture, loan agreement or any other contract,
lease or other instrument to which it is subject or by which any of
them may be bound, or to which any of the property or assets of the
Company is subject, except for such breach or default as is not,
individually or in the aggregate, reasonably likely to have a
Material Adverse Effect.
(xv) Taxes.
The Company has timely filed all federal, state, local and foreign
income and franchise tax returns required to be filed (taking into
account valid extensions of time to file) and is not in default in
the payment of any taxes which were payable pursuant to said
returns or any assessments with respect thereto, other than any
which the Company is contesting in good faith. There is no pending
dispute with any taxing authority relating to any of such returns,
and the Company has no knowledge of any proposed liability for any
tax to be imposed upon the properties or assets of the Company for
which there is not an adequate reserve reflected in the
Company’s financial statements included in the Registration
Statement, the Time of Sale Disclosure Package and the
Prospectus.
(xvi) Exchange
Listing and Exchange Act Registration. The Securities have
been approved for listing on The NASDAQ Capital Market upon
official notice of issuance and, on the date the Registration
Statement became effective, the Company’s Registration
Statement on Form 8-A or other applicable form under the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”), became effective. Except as previously
disclosed to counsel for the Underwriters or as set forth in the
Time of Sale Disclosure Package and the Prospectus, there are no
affiliations with members of FINRA among the Company’s
officers or directors or, to the knowledge of the Company, any five
percent or greater stockholders of the Company or any beneficial
owner of the Company’s unregistered equity securities that
were acquired during the 180-day period immediately preceding the
initial filing date of the Registration Statement. The
Company’s board of directors has, subject to the exceptions,
cure periods and the phase-in periods specified in the applicable
stock exchange rules (the “Exchange
Rules”), validly appointed an audit committee to
oversee internal accounting controls whose composition satisfies
the applicable requirements of the Exchange Rules and the
Company’s board of directors and/or the audit committee has
adopted a charter that satisfies the requirements of the Exchange
Rules.
(xvii)
Ownership of Other
Entities. The Company, directly or indirectly, owns no
capital stock or other equity or ownership or proprietary interest
in any corporation, partnership, association, trust or other
entity.
(xviii)
Internal
Controls. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with
management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
Except as disclosed in the Registration Statement, in the Time of
Sale Disclosure Package and in the Prospectus, the Company’s
internal control over financial reporting is effective and none of
the Company, its board of directors and audit committee is aware of
any “significant deficiencies” or “material
weaknesses” (each as defined by the Public Company Accounting
Oversight Board) in its internal control over financial reporting,
or any fraud, whether or not material, that involves management or
other employees of the Company who have a significant role in the
Company’s internal controls; and since the end of the latest
audited fiscal year, there has been no change in the
Company’s internal control over financial reporting (whether
or not remediated) that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control
over financial reporting. The Company’s board of directors
has, subject to the exceptions, cure periods and the phase-in
periods specified in the applicable stock exchange rules
(“Exchange
Rules”), validly appointed an audit committee to
oversee internal accounting controls whose composition satisfies
the applicable requirements of the Exchange Rules and the
Company’s board of directors and/or the audit committee has
adopted a charter that satisfies the requirements of the Exchange
Rules.
(xix)
No
Brokers or Finders. Other than as contemplated by this
Agreement, the Company has not incurred and will not incur any
liability for any finder’s or broker’s fee or
agent’s commission in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(xx)
Insurance.
The Company carries, or is covered by, insurance from reputable
insurers in such amounts and covering such risks as is adequate for
the conduct of its business and the value of its properties and as
is customary for companies engaged in similar businesses in similar
industries; all policies of insurance and any fidelity or surety
bonds insuring the Company or its business, assets, employees,
officers and directors are in full force and effect; the Company is
in compliance with the terms of such policies and instruments in
all material respects; there are no claims by the Company under any
such policy or instrument as to which any insurance company is
denying liability or defending under a reservation of rights
clause; the Company has not been refused any insurance coverage
sought or applied for; and the Company has no reason to believe
that it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business
at a cost that would not, individually or in the aggregate, have a
Material Adverse Effect.
(xxi)
Investment Company
Act. The Company is not and, after giving effect to the
offering and sale of the Securities, will not be an
“investment company,” as such term is defined in the
Investment Company Act of 1940, as amended.
(xxii)
Sarbanes-Oxley
Act. The Company is in compliance with all applicable
provisions of the Sarbanes-Oxley Act and the rules and regulations
of the Commission thereunder.
(xxiii)
Disclosure
Controls. The Company has established and maintains
disclosure controls and procedures (as defined in Rules 13a-14 and
15d-14 under the Exchange Act) and such controls and procedures are
effective in ensuring that material information relating to the
Company is made known to the principal executive officer and the
principal financial officer. The Company has utilized such controls
and procedures in preparing and evaluating the disclosures in the
Registration Statement, in the Time of Sale Disclosure Package and
in the Prospectus.
(xxiv)
Anti-Bribery and
Anti-Money Laundering Laws. Each of the Company, its
officers, directors, supervisors, managers and employees, and to
the knowledge of the Company, its affiliates or agents and any of
their respective officers, directors, supervisors, managers, agents
and employees, has not violated, its participation in the offering
will not violate, and the Company has instituted and maintains
policies and procedures designed to ensure continued compliance
with, each of the following laws: (A) anti-bribery laws, including
but not limited to, any applicable law, rule, or regulation of any
locality, including but not limited to any law, rule, or regulation
promulgated to implement the OECD Convention on Combating Bribery
of Foreign Public Officials in International Business Transactions,
signed December 17, 1997, including the U.S. Foreign Corrupt
Practices Act of 1977, as amended, the U.K. Bribery Act 2010, or
any other law, rule or regulation of similar purposes and scope or
(B) anti-money laundering laws, including but not limited to,
applicable federal, state, international, foreign or other laws,
regulations or government guidance regarding anti-money laundering,
including, without limitation, Title 18 US. Code section 1956 and
1957, the Patriot Act, the Bank Secrecy Act, and international
anti-money laundering principles or procedures by an
intergovernmental group or organization, such as the Financial
Action Task Force on Money Laundering, of which the United States
is a member and with which designation the United States
representative to the group or organization continues to concur,
all as amended, and any executive order, directive, or regulation
pursuant to the authority of any of the foregoing, or any orders or
licenses issued thereunder. The Company has instituted, maintains
and enforces policies and procedures designed to ensure compliance
with anti-bribery laws.
(xxv)
OFAC.
(A) Neither
the Company nor any of its directors or officers, nor, to the
Company’s knowledge, any employee, agent, affiliate or
representative of the Company, is an individual or entity that is,
or is owned or controlled by an individual or entity that
is:
(1) the
subject of any sanctions administered or enforced by the U.S.
Department of Treasury’s Office of Foreign Assets Control,
the United Nations Security Council, the European Union, Her
Majesty’s Treasury, or other relevant sanctions authority
(collectively, “Sanctions”),
nor
(2) located,
organized or resident in a country or territory that is the subject
of Sanctions (including, without limitation, the Crimea Region of
the Ukraine, Cuba, Iran, North Korea, Sudan and
Syria).
(B) The
Company will not, directly or indirectly, use the proceeds of the
offering, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other
individual or entity:
(1) to
fund or facilitate any activities or business of or with any
individual or entity or in any country or territory that, at the
time of such funding or facilitation, is the subject of Sanctions;
or
(2) in
any other manner that will result in a violation of Sanctions by
any individual or entity (including any individual or entity
participating in the offering, whether as underwriter, advisor,
investor or otherwise).
(C) For
the past five years, neither the Company nor any of its
subsidiaries, whether or not currently existing, has knowingly
engaged in, and is not now knowingly engaged in, any dealings or
transactions with any individual or entity, or in any country or
territory, that at the time of the dealing or transaction is or was
the subject of Sanctions.
(xxvi) Compliance
with Environmental Laws. Except as disclosed in the
Registration Statement, the Time of Disclosure Package and the
Prospectus, the Company is not in violation of any statute, any
rule, regulation, decision or order of any Governmental Authority
or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, “Environmental
Laws”), owns or operates any real property
contaminated with any substance that is subject to any
Environmental Laws, is liable for any off-site disposal or
contamination pursuant to any Environmental Laws, or is subject to
any claim relating to any Environmental Laws, which violation,
contamination, liability or claim would individually or in the
aggregate, have a Material Adverse Effect; and the Company is not
aware of any pending investigation which would reasonably be
expected to lead to such a claim. The Company does not anticipate
incurring any material capital expenditures relating to compliance
with Environmental Laws.
(xxvii) Compliance
with Occupational Laws. The Company (A) is in compliance
with any and all applicable foreign, federal, state and local laws,
rules, regulations, treaties, statutes and codes promulgated by any
and all Governmental Authorities (including pursuant to the
Occupational Health and Safety Act) relating to the protection of
human health and safety in the workplace (“Occupational
Laws”); (B) has received all permits, licenses or
other approvals required of it under applicable Occupational Laws
to conduct its business as currently conducted; and (C) is in
compliance with all terms and conditions of such permits, licenses
or approvals, except in the case of each of clauses (A), (B) and
(C) above where such noncompliance with Occupational Laws, failure
to receive required permits, licenses or other approvals or failure
to comply with the terms and conditions of such permits, licenses
or other approvals would not have a Material Adverse Effect. No
action, proceeding, revocation proceeding, writ, injunction or
claim is pending or, to the Company’s knowledge, threatened
against the Company relating to Occupational Laws, and the Company
does not have knowledge of any facts, circumstances or developments
relating to its operations or cost accounting practices that would
reasonably be expected to form the basis for or give rise to such
actions, suits, investigations or proceedings.
(xxviii)
ERISA
and Employee Benefits Matters. (A) To the knowledge of the
Company, no “prohibited transaction” as defined under
Section 406 of ERISA or Section 4975 of the Code and not exempt
under ERISA Section 408 or the regulations or published
interpretations thereunder has occurred with respect to any
Employee Benefit Plan. At no time has the Company or any ERISA
Affiliate maintained, sponsored, participated in, contributed to or
has or had any liability or obligation in respect of any Employee
Benefit Plan subject to Part 3 of Subtitle B of Title I of ERISA,
Title IV of ERISA, or Section 412 of the Code or any
“multiemployer plan” as defined in Section 3(37) of
ERISA or any multiple employer plan for which the Company or any
ERISA Affiliate has incurred or could incur liability under Section
4063 or 4064 of ERISA. No Employee Benefit Plan provides or
promises, or at any time provided or promised, retiree health,
retiree life insurance, or other retiree welfare benefits except as
may be required by the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, or similar state law. Each Employee
Benefit Plan is and has been operated in material compliance with
its terms and all applicable laws, including but not limited to
ERISA and the Code and, to the knowledge of the Company, no event
has occurred (including a “reportable event” as such
term is defined in Section 4043 of ERISA) and no condition exists
that would subject the Company or any ERISA Affiliate to any
material tax, fine, lien, penalty or liability imposed by ERISA,
the Code or other applicable law. Each Employee Benefit Plan
intended to be qualified under Code Section 401(a) is so qualified
and has a favorable determination or opinion letter from the IRS
upon which it can rely, and any such determination or opinion
letter remains in effect and has not been revoked; to the knowledge
of the Company, nothing has occurred since the date of any such
determination or opinion letter that is reasonably likely to
adversely affect such qualification; (B) with respect to each
Foreign Benefit Plan (if any), such Foreign Benefit Plan (1) if
intended to qualify for special tax treatment, meets, in all
material respects, the requirements for such treatment, and (2) if
required to be funded, is funded to the extent required by
applicable law, and with respect to all other Foreign Benefit
Plans, adequate reserves therefor have been established on the
accounting statements of the Company; and (C) the Company does not
have any obligations under any collective bargaining agreement with
any union and, to the knowledge of the Company, no organization
efforts are underway with respect to Company employees. As used in
this Agreement, “Code”
means the Internal Revenue Code of 1986, as amended; “Employee Benefit
Plan” means any “employee benefit plan”
within the meaning of Section 3(3) of ERISA, including, without
limitation, all stock purchase, stock option, stock-based
severance, employment, change-in-control, medical, disability,
fringe benefit, bonus, incentive, deferred compensation, employee
loan and all other employee benefit plans, agreements, programs,
policies or other arrangements, whether or not subject to ERISA,
under which (x) any current or former employee, director or
independent contractor of the Company has any present or future
right to benefits and which are contributed to, sponsored by or
maintained by the Company and (y) the Company has had or has any
present or future obligation or liability; “ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended; “ERISA
Affiliate” means any member of the company’s
controlled group as defined in Code Section 414(b), (c), (m) or
(o); and “Foreign Benefit
Plan” means any Employee Benefit Plan established,
maintained or contributed to outside of, and subject to applicable
laws other than those of, the United States of America or any state
thereof, or which covers any employee working or residing outside
of the United States who is subject to applicable laws other than
those of the United States or any state thereof with respect to
such Employee Benefit Plan.
(xxix)
Business
Arrangements. Except as disclosed in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus,
the Company has not granted any rights to develop, manufacture,
produce, assemble, distribute, license, market or sell its products
to any other person and is not bound by any agreement that affects
the exclusive right of the Company to develop, manufacture,
produce, assemble, distribute, license, market or sell its
products.
(xxx)
Labor
Matters. No labor problem or dispute with the employees of
the Company exists or is threatened or imminent, and the Company is
not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, contractors or
customers, that would, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.
(xxxi)
Disclosure of
Legal Matters. There are no statutes, regulations, legal or
governmental proceedings or contracts or other documents required
to be described in the Time of Sale Disclosure Package or in the
Prospectus or included as exhibits to the Registration Statement
that are not described or included as required.
(xxxii)
Statistical
Information. Any third-party statistical and market-related
data included in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus are based on or derived from
sources that the Company believes to be reliable and accurate in
all material respects.
(xxxiii)
Forward-looking
Statements. No forward-looking statement (within the meaning
of Section 27A of the Act and Section 21E of the Exchange
Act) contained in the Registration Statement, the Time of Sale
Disclosure Package or the Prospectus has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good
faith.
(xxxiv)
Emerging Growth
Company. From the time of the initial confidential
submission of the Registration Statement to the Commission through
the date hereof, the Company has been and is an “emerging
growth company,” as such term is defined in Section 2(a) of
the Act (an “Emerging Growth
Company”).
(xxxv)
Related Party
Transactions. To the
Company’s knowledge, no transaction has occurred between or
among the Company, on the one hand, and any of the Company’s
officers, directors or five percent or greater stockholders or any
affiliate or affiliates of any such officer, director or five
percent or greater stockholders that is required to be described
that is not so described in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus. The Company has not,
directly or indirectly, extended or maintained credit, or arranged
for the extension of credit, or renewed an extension of credit, in
the form of a personal loan to or for any of its directors or
executive officers in violation of applicable laws, including
Section 402 of the Sarbanes-Oxley Act.
(xxxvi) Qualified
Small Business Stock.
As of and immediately following the
First Closing Date and the Second Closing Date, as applicable: (i)
the Company will be an eligible corporation as defined in Section
1202(e)(4) of the Code, (ii) the Company will not have made
purchases of its own stock described in Code Section 1202(c)(3)(B)
during the one year period preceding the First Closing Date and the
Second Closing Date, as applicable, except for purchases that are
disregarded for such purposes under Treasury Regulation Section
1.1202-2, and (iii) the Company’s aggregate gross assets, as
defined by Code Section 1202(d)(2), at no time between its
incorporation and through the First Closing Date and the Second
Closing Date, as applicable, have exceeded $50 million, taking into
account the assets of any corporations required to be aggregated
with the Company in accordance with Code Section
1202(d)(3).
(b) Effect
of Certificates. Any certificate signed by any officer of
the Company and delivered to you or to counsel for the Underwriters
shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby.
3. Purchase,
Sale and Delivery of Securities.
(a) Firm
Units. On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell
the Firm Units to the several Underwriters, and each Underwriter
agrees, severally and not jointly, to purchase from the Company the
number of Firm Units set forth opposite the name of such
Underwriter in Schedule I hereto. The purchase price for each Firm
Unit shall be $[●] per Unit. The Shares and Warrants included
in the Firm Units shall be separable as of the first trading day
following the 60th day of the date of
the Prospectus. In making this Agreement, each Underwriter is
contracting severally and not jointly; except as provided in
paragraph (d) of this Section 3, the agreement of each Underwriter
is to purchase only the respective number of Firm Units specified
in Schedule I.
(b) Option
Units. On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants to the
several Underwriters an option to purchase all or any portion of
the Option Units at the same purchase price as the Firm Units, for
use solely in covering any over-allotments made by the Underwriters
in the sale and distribution of the Firm Units. The option granted
hereunder may be exercised in whole or in part at any time within
45 days after the effective date of this Agreement upon notice
(confirmed in writing) by the Representative to the Company setting
forth the aggregate number of Option Units as to which the several
Underwriters are exercising the option and the date and time, as
determined by you, when the Option Units are to be delivered, but
in no event earlier than the First Closing Date (as defined below)
nor earlier than the second business day or later than the tenth
business day after the date on which the option shall have been
exercised. The number of Option Units to be purchased by each
Underwriter shall be the same percentage of the total number of
Option Units to be purchased by the several Underwriters as the
number of Firm Units to be purchased by such Underwriter is of the
total number of Firm Units to be purchased by the several
Underwriters, as adjusted by the Representative in such manner as
the Representative deems advisable to avoid fractional shares. No
Option Units shall be sold and delivered unless the Firm Units
previously have been, or simultaneously are, sold and delivered. In
no event may the option granted pursuant to this Section 3(b) be
exercised after separation of the Firm Units occurs.
(c) Payment
and Delivery.
(i)
The Securities to be purchased by each Underwriter hereunder, in
book-entry form in such authorized denominations and registered in
such names as you may request upon at least forty-eight
hours’ prior notice to the Company, shall be delivered by or
on behalf of the Company to you, through the facilities of the
Depository Trust Company (“DTC”),
for the account of such Underwriter, with any transfer taxes
payable in connection with the transfer of the Securities to the
Underwriters duly paid, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of
Federal (same-day) funds to the account specified by the Company to
you at least forty-eight hours in advance. The time and date of
such delivery and payment shall be, with respect to the Firm Units,
9:30 a.m., New York City time, on [●], 2017, or such
other time and date as you and the Company may agree upon in
writing, and, with respect to the Option Units, 9:30 a.m., New
York City time, on the date specified by you in each written notice
given by you of the election to purchase such Option Units, or such
other time and date as you and the Company may agree upon in
writing. Such time and date for delivery of the Firm Units is
herein called the “First Closing
Date,” each such time and date for delivery of the
Option Units, if not the First Closing Date, is herein called a
“Second
Closing Date,” and each such time and date for
delivery is herein called a “Closing.”
(ii)
The documents to be delivered at each Closing by or on behalf of
the parties hereto pursuant to Section 5 hereof, including the
cross receipt for the Securities and any additional documents
requested by the Underwriters pursuant to Section 5(l) hereof,
will be delivered at the offices of the Company, and the Securities
will be delivered to you, through the facilities of the DTC, for
the account of such Underwriter, all at such Closing.
(d) Purchase
by Representative on Behalf of the Underwriters. It is
understood that you, individually and not as Representative of the
several Underwriters, may (but shall not be obligated to) make
payment to the Company on behalf of any Underwriter for the
Securities to be purchased by such Underwriter. Any such payment by
you shall not relieve any such Underwriter of any of its
obligations hereunder. Nothing herein contained shall constitute
any of the Underwriters an unincorporated association or partner
with the Company.
4. Covenants.
The Company covenants and agrees with the several Underwriters as
follows:
(a)
Required
Filings. The Company will prepare and file a Prospectus with
the Commission containing the Rule 430A Information omitted
from the Preliminary Prospectus within the time period required by,
and otherwise in accordance with the provisions of,
Rules 424(b) and 430A of the Rules and Regulations. If the
Company has elected to rely upon Rule 462(b) of the Rules and
Regulations to increase the size of the offering registered under
the Act and the Rule 462(b) Registration Statement has not yet been
filed and become effective, the Company will prepare and file the
Rule 462(b) Registration Statement with the Commission within the
time period required by, and otherwise in accordance with the
provisions of, Rule 462(b) of the Rules and Regulations and
the Act. The Company will prepare and file with the Commission,
promptly upon your request, any amendments or supplements to the
Registration Statement or Prospectus that, in your opinion, may be
necessary or advisable in connection with the distribution of the
Securities by the Underwriters; and the Company will furnish you
and counsel for the Underwriters a copy of any proposed amendment
or supplement to the Registration Statement or Prospectus and will
not file any amendment or supplement to the Registration Statement
or Prospectus to which you shall reasonably object by notice to the
Company after having been furnished a copy a reasonable time prior
to the filing.
(b)
Notification of
Certain Commission Actions. The Company will advise you,
promptly after it shall receive notice or obtain knowledge thereof,
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, or any post-effective
amendment thereto or preventing or suspending the use of any
Preliminary Prospectus, the Time of Sale Disclosure Package, the
Prospectus or any issuer free writing prospectus, of the suspension
of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding
for any such purpose; and the Company will promptly use its best
efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such a stop order should be issued.
(c) Continued
Compliance with Securities Laws. Within the time during
which a prospectus (assuming the absence of Rule 172) relating to
the Securities is required to be delivered under the Act by any
Underwriter or any dealer, the Company will comply with all
requirements imposed upon it by the Act, as now and hereafter
amended, and by the Rules and Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or
dealings in the Securities as contemplated by the provisions
hereof, the Time of Sale Disclosure Package and the Prospectus. The
Company shall use its commercially reasonable efforts to keep the
Registration Statement continuously effective under the Act, and to
file on a timely basis with the Commission such periodic and
special reports as required by the Rules and Regulations, until the
earliest of (i) such time as all of the Securities (including
the Firm Warrants and the Option Warrants) covered by such
Registration Statement have been sold by the holders of such
Securities; and (ii) the fifth anniversary of the Closing;
provided,
however, that, the
foregoing requirements shall automatically terminate in connection
with the consummation of a Fundamental Transaction.
“Fundamental
Transaction” means for purposes of this Section 4(c)
that the Company shall, directly or indirectly, in one or more
related transactions, sell, transfer, convey or otherwise dispose
of all or substantially all of its respective properties and assets
to any other person that is not an affiliate of the Company. If
during such period any event occurs as a result of which the
Registration Statement or the Prospectus (or if the Prospectus is
not yet available to prospective purchasers, the Time of Sale
Disclosure Package) would include an untrue statement of a material
fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances then
existing, not misleading, or if during such period it is necessary
to amend the Registration Statement or supplement the Prospectus
(or if the Prospectus is not yet available to prospective
investors, the Time of Sale Disclosure Package) to comply with the
Act, the Company promptly will (x) notify you of such untrue
statement or omission, (y) amend the Registration Statement or
supplement the Prospectus (or, if the Prospectus is not yet
available to prospective purchasers, the Time of Sale Disclosure
Package) (at the expense of the Company) so as to correct such
statement or omission or effect such compliance and (z) notify you
when any amendment to the Registration Statement is filed or
becomes effective or when any supplement to the Prospectus (or, if
the Prospectus is not yet available to prospective purchasers, the
Time of Sale Disclosure Package) is filed.
(d)
Blue
Sky Qualifications. The Company shall take or cause to be
taken all necessary action to qualify the Securities for sale under
the securities laws of such domestic United States or foreign
jurisdictions as you reasonably designate and to continue such
qualifications in effect so long as required for the distribution
of the Securities, except that the Company shall not be required in
connection therewith to qualify as a foreign corporation or to
execute a general consent to service of process in any
state.
(e)
Provision of
Documents. The Company will furnish, at its own expense, to
the Underwriters and counsel for the Underwriters copies of the
Registration Statement, and to the Underwriters and any dealer each
Preliminary Prospectus, the Time of Sale Disclosure Package, the
Prospectus, and all amendments and supplements to such documents,
in each case as soon as practicable once available and in such
quantities as you may from time to time reasonably
request.
(f)
Rule
158. The Company will make generally available to its
security holders as soon as practicable, but in no event later than
15 months after the end of the Company’s current fiscal
quarter, an earnings statement (which need not be audited) covering
a 12-month period beginning after the effective date of the
Registration Statement (which, for purposes of this paragraph, will
be deemed to be the effective date of the Rule 462(b)
Registration Statement, if applicable) that shall satisfy the
provisions of Section 11(a) of the Act and Rule 158 of
the Rules and Regulations.
(g)
Payment and
Reimbursement of Expenses. The Company, whether or not the
transactions contemplated hereunder are consummated or this
Agreement is terminated, will pay or cause to be paid (A) all
expenses (including transfer taxes allocated to the respective
transferees) incurred in connection with the delivery to the
Underwriters of the Securities, (B) all expenses and fees
(including, without limitation, fees and expenses of the
Company’s accountants and counsel) in connection with the
preparation, printing, filing, delivery, and shipping of the
Registration Statement (including the financial statements therein
and all amendments, schedules, and exhibits thereto), the
Securities, each Preliminary Prospectus, the Time of Sale
Disclosure Package, the Prospectus, and any amendment thereof or
supplement thereto, and the printing, delivery, and shipping of
this Agreement and other underwriting documents, including Blue Sky
Memoranda (covering the states and other applicable jurisdictions),
(C) all filing fees and fees incurred in connection with the
qualification of the Securities for offering and sale by the
Underwriters or by dealers under the securities or blue sky laws of
the states and other jurisdictions which you shall designate,
including the reasonably incurred fees and disbursements of counsel
for the Underwriters in connection with such qualification (it
being understood that such fees and expenses shall be fixed at
$[●]), (D) all filing fees and the reasonably incurred fees
and disbursements of counsel to the Underwriters in connection with
the review and qualification of the offering of the Securities by
FINRA (it being understood that such fees and expenses shall be
fixed at $[●]), (E) all fees and expenses in connection with
the preparation and filing of the registration statement on Form
8-A related to the Securities and all costs and expenses incident
to listing the Securities on The NASDAQ Capital Market, (F) all
fees and expenses of any transfer agent, warrant agent or
registrar, (G) the reasonable out-of-pocket accountable fees and
disbursements incurred by the Underwriters in connection with the
offer, sale or marketing of the Securities and performance of the
Underwriters’ obligations hereunder, including all reasonable
out-of-pocket accountable fees and disbursements of
Underwriters’ counsel, and for the avoidance of doubt,
excluding any general overhead, salaries, supplies, or similar
expenses of the Underwriters incurred in the normal conduct of
business, (H) all fees, expenses
and disbursements relating to background checks of the
Company’s officers and directors (I) the cost and
expenses of the Company relating to investor presentations or any
“road show” undertaken in connection with marketing of
the Securities, including, without limitation, expenses associated
with the preparation or dissemination of any electronic road show,
expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval
of the Company, travel and lodging expenses of the representatives
and officers of the Company and any such consultants and the cost
of any aircraft chartered in connection with the road show, and (J)
all other costs and expenses of the Company incident to the
performance of its obligations hereunder that are not otherwise
specifically provided for herein. The fees and expenses, which
includes the fees and expenses of the Underwriters’ counsel,
to be paid by the Company and reimbursed to the Underwriters under
this Section 4(g) shall not exceed $[●], which amount shall
include any amounts paid to the Underwriters pursuant to any of the
clauses of this Section 4(g), it being understood that that in
addition to this reimbursement the Company shall also (x) pay the
Underwriters a non-accountable expense allowance equal to 1.0% of
the public offering price of the Securities (excluding any amounts
from the sale of the Option Shares and Option Warrants) and
(y) reimburse the out-of-pocket fees and expenses incurred by the
Independent Underwriter acting in its capacity as such (it being
understood that such fees and expenses shall be fixed as $50,000).
If this Agreement is terminated by you pursuant to Section 8 hereof
or if the sale of the Securities provided for herein is not
consummated by reason of any failure, refusal or inability on the
part of the Company to perform any agreement on its part to be
performed, or because any other condition of the
Underwriters’ obligations hereunder required to be fulfilled
by the Company is not fulfilled, the Company will reimburse the
several Underwriters for all reasonable out-of-pocket accountable
disbursements (including but not limited to fees and disbursements
of counsel, printing expenses, travel expenses, postage, facsimile
and telephone charges) incurred by the Underwriters in connection
with their investigation, preparing to market and marketing the
Securities or in contemplation of performing their obligations
hereunder.
(h)
Use of
Proceeds. The Company will apply the net proceeds from the
sale of the Securities to be sold by it hereunder for the purposes
set forth in the Time of Sale Disclosure Package and in the
Prospectus and will file such reports with the Commission with
respect to the sale of the Securities and the application of the
proceeds therefrom as may be required in accordance with
Rule 463 of the Rules and Regulations.
(i)
Company Lock
Up. The Company will not, without the prior written consent
of the Representative, from the date of execution of this Agreement
and continuing to and including the date 365 days after the date of
the Prospectus (the “Lock-Up
Period”), (A) offer, pledge, announce the intention to
sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for
Common Stock or (B) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction
described in clause (A) or (B) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise,
except to the Underwriters pursuant to this Agreement and
(x) grants of options, shares of Common Stock and other awards
to purchase or receive shares of Common Stock under the Company
Stock Plans that are in effect as of or prior to the date hereof,
(y) issuances of shares of Common Stock upon the exercise of
options or other awards granted under such Company Stock Plans or
the Company’s preferred stock outstanding as of the date
hereof pursuant to the terms thereof as of such date or (z)
issuance of shares of Common Stock upon the conversion of
convertible securities outstanding as of the date hereof. The
Company agrees not to accelerate the vesting of any option or
warrant or the lapse of any repurchase right prior to the
expiration of the Lock-Up Period.
(j)
Stockholder
Lock-Ups. The Company has caused to be delivered to you
prior to the date of this Agreement a letter, in the form of
Exhibit B hereto
(the “Lock-Up
Agreement”), from each individual or entity listed on
Schedule II. The
Company will enforce the terms of each Lock-Up Agreement and issue
stop-transfer instructions to its transfer agent and registrar for
the Common Stock with respect to any transaction or contemplated
transaction that would constitute a breach of or default under the
applicable Lock-Up Agreement and will not release the stop transfer
instructions without the written approval of the
Representative.
(k)
No
Market Stabilization or Manipulation. The Company has not
taken and will not take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or
result in, or which has constituted, the stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities, and has not
effected any sales of Common Stock which are required to be
disclosed in response to Item 701 of Regulation S-K under
the Act which have not been so disclosed in the Registration
Statement.
(l)
SEC
Reports. The Company will file on a timely basis with the
Commission such periodic and special reports as required by the
Rules and Regulations.
(m)
Free
Writing Prospectuses. The Company represents and agrees
that, unless it obtains the prior written consent of the
Representative, and each Underwriter represents and agrees that,
unless it obtains the prior written consent of the Company and the
Representative, it has not made and will not make any offer
relating to the Securities that would constitute an issuer free
writing prospectus or that would otherwise constitute a free
writing prospectus.
(n)
Emerging Growth
Company. The Company will promptly notify the Representative
if the Company ceases to be an Emerging Growth Company at any time
prior to the later of (A) completion of the distribution of the
Securities within the meaning of the Act and (B) completion of the
Lock-Up Period referenced in Section 4(i) hereof.
(o) Underwriters’
Warrants. On each Closing Date, the Company shall sell to
the Underwriters, for an aggregate purchase price of $[●] per
warrant, a warrant in the form attached as Exhibit C hereto (each, an
“Underwriter’s
Warrant” and, together, the “Underwriters’
Warrants”) to purchase the number of shares of the
Company’s common stock equal to 8.0% of the shares issued on
such Closing Date (rounded up to the nearest whole
share).
5. Conditions
of Underwriters’ Obligations. The obligations of the
several Underwriters hereunder are subject to the accuracy, as of
the date hereof and at each of the First Closing Date and the
Second Closing Date (as if made at such Closing Date), of and
compliance with all representations, warranties and agreements of
the Company contained herein, to the performance by the Company of
its obligations hereunder and to the following additional
conditions:
(a) Required
Filings; Absence of Certain Commission Actions. The Registration Statement shall have become
effective not later than 5:30 p.m., Eastern time, on the date of
this Agreement, or such later time and date as you, as
Representative of the several Underwriters, shall approve and
all filings required by Rules 424, 430A and 433 of the
Rules and Regulations shall have been timely made (without reliance
on Rule 424(b)(8) or Rule 164(b)); no stop order suspending the
effectiveness of the Registration Statement or any part thereof or
any amendment thereof, nor suspending or preventing the use of the
Time of Sale Disclosure Package or the Prospectus shall have been
issued; no proceedings for the issuance of such an order shall have
been initiated or threatened; and any request of the Commission for
additional information (to be included in the Registration
Statement, the Time of Sale Disclosure Package, the Prospectus or
otherwise) shall have been complied with to your
satisfaction.
(b) Continued
Compliance with Securities Laws. The Registration Statement,
and any amendment thereof or supplement thereto, shall not contain
any untrue statement of a material fact or omit to state a material
fact which is required to be stated therein, or necessary to make
the statements therein, in light of the circumstances under which
they are made, not misleading. The Time of Sale Disclosure Package
and the Prospectus, and any amendment thereof or supplement
thereto, shall not contain any untrue statement of a material fact
or omit to state a material fact which is required to be stated
therein, or necessary to make the statements therein, in light of
the circumstances under which they are made, not
misleading.
(c) Absence
of Certain Events. Except as contemplated in the Time of
Sale Disclosure Package and in the Prospectus, subsequent to the
date of the most recent financial statements of the Company
included the Time of Sale Disclosure Package and the Prospectus,
the Company shall not have incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock; and
there shall not have been any change in the capital stock (other
than a change in the number of outstanding shares of Common Stock
due to the issuance of shares upon the exercise of outstanding
options or warrants or conversion of convertible securities), or
any material change in the short-term or long-term debt of the
Company (other than as a result of the conversion of convertible
securities), or any issuance of options, warrants, convertible
securities or other rights to purchase the capital stock of the
Company, or any Material Adverse Change or any development
involving a prospective Material Adverse Change (whether or not
arising in the ordinary course of business), that, in your
judgment, makes it impractical or inadvisable to offer or deliver
the Securities on the terms and in the manner contemplated in the
Time of Sale Disclosure Package and in the Prospectus.
(d)
Opinion of Company
Counsel. On each Closing Date, there shall have been
furnished to you, as Representative of the several Underwriters,
the opinion and negative assurance letter of K&L Gates LLP,
counsel for the Company, dated such Closing Date and addressed to
you in substantially the form attached hereto as Exhibit D.
(e)
Opinion of
Underwriters’ Counsel. On each Closing Date, there
shall have been furnished to you, as Representative of the several
Underwriters, such opinion or opinions from Faegre Baker Daniels
LLP, counsel for the Underwriters, dated such Closing Date and
addressed to you, with respect to such matters as you reasonably
may request, and such counsel shall have received such papers and
information as they request to enable them to pass upon such
matters.
(f)
Opinion of Company
Intellectual Property Counsel. On each Closing Date, there
shall have been furnished to you, as Representative of the several
Underwriters, the opinion of Sim & McBurney, special
intellectual property counsel for the Company, dated such Closing
Date and addressed to you in substantially the form attached hereto
as Exhibit
E.
(g)
Comfort
Letters. On the date hereof, on the effective date of any
post-effective amendment to the Registration Statement filed after
the date hereof and on each Closing Date, you, as Representative of
the several Underwriters, shall have received a letter containing
statements and information of the type ordinarily included in
accountants’ “comfort letters” from RBSM LLP,
each dated such date and addressed to you, in form and substance
satisfactory to you.
(h)
Officers’
Certificate. On each Closing Date, there shall have been
furnished to you, as Representative of the several Underwriters, a
certificate, dated such Closing Date and addressed to you, signed
by the chief executive officer and by the chief financial officer
of the Company, to the effect that:
(i) The
representations and warranties of the Company in this Agreement are
true and correct as if made at and as of such Closing Date, and the
Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to
such Closing Date; and
(ii) No
stop order or other order suspending the effectiveness of the
Registration Statement or any part thereof or any amendment thereof
or the qualification of the Securities for offering or sale, nor
suspending or preventing the use of the Time of Sale Disclosure
Package, the Prospectus or any issuer free writing prospectus, has
been issued, and no proceeding for that purpose has been instituted
or, to the best of their knowledge, is contemplated by the
Commission or any state or regulatory body.
(i)
Lock-Up
Agreement. The Representative shall have received all of the
Lock-Up Agreements referenced in Section 4 and the Lock-Up
Agreements shall remain in full force and effect.
(j) Underwriters’
Warrants. The
Representative shall have received the Underwriters’ Warrants
referenced in Section 4(o) with respect to the Securities to be
delivered on such Closing Date.
(k) CFO
Certificate. On the
date hereof and on each Closing Date, as applicable, the Company
shall have furnished to you, as Representative of the several
Underwriters, a certificate, dated as of such date, signed on
behalf of the Company by its chief financial officer, regarding the
accuracy of certain financial information in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus,
in form and substance satisfactory to the
Representative.
(l) Other
Documents. The Company shall have furnished to you, as
Representative of the several Underwriters, and counsel for the
Underwriters such additional documents, certificates and evidence
as you or they may have reasonably
requested.
(m)
FINRA
No Objections. FINRA shall have raised no objection to the
fairness and reasonableness of the underwriting terms and
arrangements.
(n)
Exchange
Listing. The Securities to be delivered on such Closing Date
will have been approved for listing on The NASDAQ Capital
Market.
(o)
Reverse Stock
Split. The Company shall have effected the Reverse Stock
Split prior to the First Closing Date.
All
such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory
in form and substance to you, as Representative of the several
Underwriters, and counsel for the Underwriters. The Company will
furnish you with such conformed copies of such opinions,
certificates, letters and other documents as you shall reasonably
request.
6. Indemnification
and Contribution.
(a) Indemnification
of the Underwriters by the Company. The Company agrees to
indemnify and hold harmless each Underwriter, its affiliates,
directors and officers and each person, if any, who controls such
Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, from and against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter
may become subject, under the Act or otherwise (including in
settlement of any litigation if such settlement is effected with
the written consent of the Company), insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
(i) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, including the 430A Information and any
other information deemed to be a part of the Registration Statement
at the time of effectiveness and at any subsequent time pursuant to
the Rules and Regulations, if applicable, any Preliminary
Prospectus, the Time of Sale Disclosure Package, the Prospectus, or
any amendment or supplement thereto, any issuer free writing
prospectus, any issuer information that the Company has filed or is
required to file pursuant to Rule 433(d) of the Rules and
Regulations, or any road show as defined in Rule 433(h) under
the Act (a “road
show”), or (ii) arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by it in connection
with investigating or defending against such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the Company
will not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with
written information furnished to the Company by you, or by any
Underwriter through you, specifically for use in the preparation
thereof; it being understood and agreed that the only information
furnished by an Underwriter consists of the information described
as such in Section 6(f).
(b)
Indemnification of the Independent Underwriter
by the Company. Without limitation of and in addition
to its obligations under the other paragraphs of this Section 6,
the Company agrees to indemnify and hold harmless the Independent
Underwriter, its directors, officers, employees, affiliates and
agents and each person who controls the Independent Underwriter
within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act against any and all losses, claims, damages
or liabilities to which the Independent Underwriter may become
subject, insofar as such losses, claims, damages or liabilities (or
action in respect thereof) arise out of or are based upon
Independent Underwriter’s acting as a “qualified
independent underwriter” (within the meaning of FINRA Rule
5121) in connection with the offering contemplated by this
Agreement, and agrees to reimburse the Independent Underwriter, for
any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred;
provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability
is finally judicially determined to have resulted primarily from
the gross negligence or willful misconduct of the Independent
Underwriter or any of its directors, officers, employees,
affiliates, agents or controlling
persons.
(c) Indemnification
by the Underwriters. Each Underwriter will, severally and
not jointly, indemnify and hold harmless the Company, its
affiliates, directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Act
and Section 20 of the Exchange Act, from and against any losses,
claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent
of such Underwriter), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) (i) arise out of
or are based upon an untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, any
Preliminary Prospectus, the Time of Sale Disclosure Package, the
Prospectus, or any amendment or supplement thereto, any issuer free
writing prospectus, any issuer information that the Company has
filed or is required to file pursuant to Rule 433(d) of the Rules
and Regulations, or any road show, or (ii) arise out of or are
based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in
conformity with written information furnished to the Company by
you, or by such Underwriter through you, specifically for use in
the preparation thereof (it being understood and agreed that the
only information furnished by an Underwriter consists of the
information described as such in Section 6(f)), and will
reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or
defending against any such loss, claim, damage, liability or action
as such expenses are incurred.
(d) Notice
and Procedures. Promptly after receipt by an indemnified
party under subsection (a), (b) or (c) above of notice of the
commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify
the indemnifying party shall not relieve the indemnifying party
from any liability that it may have to any indemnified party except
to the extent such indemnifying party has been materially
prejudiced by such failure (through the forfeiture of substantive
rights or defenses). In case any such action shall be brought
against any indemnified party, and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to
such indemnified party of the indemnifying party’s election
so to assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party under such subsection for any
legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that if, in your
reasonable judgment, it is advisable for the Underwriters to be
represented as a group by separate counsel, you shall have the
right to employ a single counsel (in addition to local counsel) to
represent all Underwriters who may be subject to liability arising
from any claim in respect of which indemnity may be sought by the
Underwriters under subsection (a) above, in which event the
reasonable fees and expenses of such separate counsel shall be
borne by the indemnifying party or parties and reimbursed to the
Underwriters as incurred. An indemnifying party shall not be
obligated under any settlement agreement relating to any action
under this Section 6 to which it has not agreed in writing. In
addition, no indemnifying party shall, without the prior written
consent of the indemnified party (which consent shall not be
unreasonably withheld or delayed) effect any settlement of any
pending or threatened proceeding unless such settlement includes an
unconditional release of such indemnified party for all liability
on claims that are the subject matter of such proceeding and 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. Notwithstanding the foregoing, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel pursuant to this
Section 6(d), such indemnifying party agrees that it shall be
liable for any settlement effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt
by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such
settlement.
(e) Contribution;
Limitations on Liability; Non-Exclusive Remedy. If the
indemnification provided for in this Section 6 is unavailable
or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified
party as a result of the losses, claims, damages or liabilities
referred to in subsection (a), (b) or (c), (i) in such
proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the
other from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other 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 underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by the Company or the Underwriters and the parties’ relevant
intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this subsection (e) were to be
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable
considerations referred to in the first sentence of this
subsection (e). The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (e) shall be deemed to
include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending
against any action or claim which is the subject of this
subsection (e). Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total underwriting
discounts and commissions received by such Underwriter with respect
to the Securities exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters’ obligations in this
subsection (e) to contribute are several in proportion to their
respective underwriting obligations and not joint. The remedies
provided for in this Section 6 are not exclusive and shall not
limit any rights or remedies that might otherwise be available to
any indemnified party at law or in equity.
(f) Information
Provided by the Underwriters. The Underwriters severally
confirm and the Company acknowledges that the statements with
respect to the public offering of the Securities by the
Underwriters set forth in the first paragraph of text under the
caption “Discount, Commissions and Expenses” in the
section titled “Underwriting,” each of the first five
paragraphs of text under the caption “Price Stabilization,
Short Positions and Penalty Bids,” and the estimate of the
Underwriters’ reasonable out-of-pocket accountable fees and
disbursements in connection with the offering of the Securities in
the Time of Sale Disclosure Package and in the Prospectus are
correct and constitute the only information concerning the
Underwriters furnished in writing to the Company by or on behalf of
the Underwriters specifically for inclusion in the Registration
Statement, any Preliminary Prospectus, the Time of Sale Disclosure
Package, the Prospectus or any issuer free writing
prospectus.
7. Representations
and Agreements to Survive Delivery. All representations,
warranties, and agreements of the Company herein or in certificates
delivered pursuant hereto, and the agreements of the several
Underwriters and the Company contained in Section 6 hereof, shall
remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any
controlling person thereof, or the Company or any of its officers,
directors, or controlling persons, and shall survive delivery of,
and payment for, the Securities to and by the Underwriters
hereunder and any termination of this Agreement.
8. Termination.
(a) Right
to Terminate. You shall have the right to terminate this
Agreement by giving notice to the Company as hereinafter specified
at any time at or prior to the First Closing Date, and the option
referred to in Section 3(b), if exercised, may be cancelled at
any time prior to the Second Closing Date, if (i) the Company shall
have failed, refused or been unable, at or prior to such Closing
Date, to perform any agreement on its part to be performed
hereunder, including, without limitation, effecting the Reverse
Stock Split prior to the First Closing Date, (ii) any other
condition of the Underwriters’ obligations hereunder is not
fulfilled, (iii) trading on The NASDAQ Stock Market or New York
Stock Exchange shall have been wholly suspended, (iv) minimum
or maximum prices for trading shall have been fixed, or maximum
ranges for prices for securities shall have been required, on The
NASDAQ Stock Market or New York Stock Exchange, by such Exchange or
by order of the Commission or any other Governmental Authority,
(v) a banking moratorium shall have been declared by federal
or state authorities, or (vi) there shall have occurred any
outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in your judgment, is
material and adverse and makes it impractical or inadvisable to
proceed with the completion of the sale of and payment for the
Securities in the manner contemplated in the Time of Sale
Disclosure Package or the Prospectus. Any such termination shall be
without liability of any party to any other party except that the
provisions of Section 4(g) and Section 6 hereof shall at
all times be effective.
(b) Notice
of Termination. If you elect to terminate this Agreement as
provided in this Section, the Company shall be notified promptly by
you by telephone, confirmed by letter.
9. Default
by the Company.
(a) Default
by the Company. If the Company shall fail at the First
Closing Date to sell and deliver the Securities which it is
obligated to sell hereunder, then this Agreement shall terminate
without any liability on the part of any Underwriter.
(b) No
Relief from Liability. No action taken pursuant to this
Section shall relieve the Company from liability, if any, in
respect of any default hereunder.
10. Notices.
Except as otherwise provided herein, all communications hereunder
shall be in writing and, (i) if to the Underwriters, shall be
mailed via overnight delivery service or hand delivered via
courier, to the Representative c/o National Securities Corporation,
410 Park Avenue, 14th Floor, New York,
New York 10022, to the attention of Investment Banking; and (ii) if
to the Company, shall be mailed or delivered to it at 3600 Green
Court Suite 350, Ann Arbor, Michigan 48105, Attention: Francois
Michelon. Any party to this Agreement may change such address for
notices by sending to the parties to this Agreement written notice
of a new address for such purpose.
11. Persons
Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their
respective successors and assigns and the controlling persons,
officers and directors referred to in Section 6. Nothing in this
Agreement is intended or shall be construed to give to any other
person, firm or corporation any legal or equitable remedy or claim
under or in respect of this Agreement or any provision herein
contained. The term “successors and assigns” as herein
used shall not include any purchaser, as such purchaser, of any of
the Securities from any of the several Underwriters.
12. Absence
of Fiduciary Relationship. The Company acknowledges and
agrees that: (a) the Representative has been retained solely to act
as an underwriter in connection with the sale of the Securities and
that no fiduciary, advisory or agency relationship between the
Company and the Representative has been created in respect of any
of the transactions contemplated by this Agreement, irrespective of
whether the Representative has advised or is advising the Company
on other matters; (b) the price and other terms of the Securities
set forth in this Agreement were established by the Company
following discussions and arms-length negotiations with the
Representative and the Company is capable of evaluating and
understanding and understands and accepts the terms, risks and
conditions of the transactions contemplated by this Agreement; (c)
it has been advised that the Representative and its affiliates are
engaged in a broad range of transactions which may involve
interests that differ from those of the Company and that the
Representative has no obligation to disclose such interest and
transactions to the Company by virtue of any fiduciary, advisory or
agency relationship; (d) it has been advised that you as
Representative are acting, in respect of the transactions
contemplated by this Agreement, solely for the benefit of the
Underwriters, and not on behalf of the Company; (e) it waives to
the fullest extent permitted by law, any claims it may have against
the Underwriters for breach of fiduciary duty or alleged breach of
fiduciary duty in respect of any of the transactions contemplated
by this Agreement and agrees that the Underwriters shall have no
liability (whether direct or indirect) to the Company in respect of
such a fiduciary duty claim on behalf of or in right of the
Company, including stockholders, employees or creditors of the
Company.
13. Governing
Law; Waiver of Jury Trial. This Agreement shall be governed
by and construed in accordance with the laws of the State of New
York. The Company (on its behalf and, to the extent permitted by
applicable law, on behalf of its stockholders and affiliates) and
each of the Underwriters hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this
Agreement, the Underwriters’ Warrants or the transactions
contemplated hereby.
14. Counterparts.
This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts
shall each be deemed to be an original and all such counterparts
shall together constitute one and the same instrument.
15. General
Provisions. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written
or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof, including
that certain engagement letter (other than Section 12 thereof),
dated April 27, 2017, by and between the Company and the
Representative. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition
herein (express or implied) may be waived unless waived in writing
by each party whom the condition is meant to benefit. The Section
headings herein are for the convenience of the parties only and
shall not affect the construction or interpretation of this
Agreement. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph 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.
[Signature Page
Follows]
Please sign and
return to the Company the enclosed duplicates of this letter
whereupon this letter will become a binding agreement between the
Company and the several Underwriters in accordance with its
terms.
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Very
truly yours,
ENDRA Life Sciences Inc.
By:
Name:
Title:
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Confirmed as of the
date first
above
mentioned, on behalf of
itself
and the other several
Underwriters
named
in
Schedule I hereto.
National Securities Corporation
By:
Name:
Title:
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Confirmed as of the date first
above mentioned, on behalf of
itself in its capacity as the Independent Underwriter.
Dougherty & Company LLC
By:
Name:
Title:
