Underwriting Agreement
Exhibit 1.1
CYTRX CORPORATION
39,200,000 Shares of Common Stock
and
Warrants to Purchase 39,200,000 Shares of Common Stock
UNDERWRITING AGREEMENT
July 27, 2011
COWEN AND COMPANY, LLC
599 Lexington Avenue
New York, New York 10022
ROTH CAPITAL PARTNERS, LLC
24 Corporate Plaza
Newport Beach, California 92660
Dear Sirs:
1.
INTRODUCTORY. CytRx Corporation, a Delaware corporation (the “Company”), proposes to sell, pursuant to the terms of this Agreement, to the several underwriters named in Schedule I hereto
(the “Underwriters,” or, each, an “Underwriter”), an aggregate of (i) 39,200,000 shares (the “Firm Stock”) of the Company’s common stock, par value $0.001 per share (the “Common
Stock”) and (ii) warrants (the “Firm Warrants”) to purchase up to 39,200,000 shares of Common Stock (the “Firm Warrant Shares”). The Company also proposes to sell to the Underwriters, upon the terms
and conditions set forth in Section 3 hereof, up to an additional (i) 5,880,000 shares of Common Stock (the “Optional Stock”) and/or (ii) warrants (the “Optional Warrants”) to purchase up to
5,880,000 shares of Common Stock (the “Optional Warrant Shares” and together with the Firm Warrant Shares, the “Warrant Shares”). The Firm Stock and the Optional Stock are hereinafter collectively referred to as the
“Stock” and the Firm Warrants and the Optional Warrants are collectively referred to as the “Warrants.” The Stock, the Warrants and the Warrant Shares are collectively referred to as the
“Securities.” The Firm Stock and the Firm Warrants shall be sold together as a fixed combination, each consisting of one share of the Common Stock and one Warrant to purchase one share of Common Stock. The Optional Stock and the
Optional Warrants may be sold either together or separately in any combination to be determined by the Underwriters. The Shares and the Warrants shall be immediately separable and transferable upon issuance. The terms of the Warrants are set forth
in the form of Warrant attached as Exhibit A hereto.
2. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY. The Company represents and warrants to the several Underwriters, as of the date hereof and as of each Closing Date (as defined below), and agrees with the several
Underwriters, that:
(a) A registration statement of the Company on Form S-3 (File No. 333-170437) (including such
amendments and supplements thereto as may have been filed before the execution of this Agreement, the “Initial Registration Statement”) in respect of the Securities has been filed with the Securities and Exchange Commission (the
“Commission”) pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”). The Company meets the requirements for use of Form S-3 under the Securities Act and the rules and regulations
of the Commission thereunder (the “Rules and Regulations”). The Initial Registration Statement and any post-effective amendment thereto, excluding exhibits thereto, each in the form heretofore made available to you, have been
declared effective by the Commission in such form and meet the requirements of the Securities Act and the Rules and Regulations. The proposed offering of the Securities may be made pursuant to General Instruction I.B.1. of Form S-3. Other than
(i) a registration statement, if any, increasing the size of the offering filed pursuant to Rule 462(b) under the Securities Act and the Rules and Regulations (a “Rule 462(b) Registration Statement”) and (ii) the
Prospectus (as defined below) contemplated by this Agreement to be filed pursuant to Rule 424(b) of the Rules and Regulations in accordance with Section 4(a) hereof and (iii) any Issuer Free Writing Prospectus
(as defined below), no other document with respect to the offer and sale of the Securities has heretofore been filed with the Commission. No stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto or the Rule 462(b) Registration Statement, if any, has been issued and no proceeding for that purpose or pursuant to Section 8A of the Securities Act has been initiated or threatened
by the Commission (any preliminary prospectus included in the Initial Registration Statement or filed with the Commission pursuant to Rule 424(a) of the Rules and Regulations with respect to the offer and sale of the Securities is hereinafter called
a “Preliminary Prospectus”). The various parts of the Initial Registration Statement and the Rule 462(b) Registration Statement, if any, in each case including all exhibits thereto and including the information contained in the
Prospectus filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations and deemed by virtue of Rules 430A, 430B and 430C under the Securities Act to be part of the Initial Registration Statement at the time it became effective,
are hereinafter collectively called the “Registration Statements.” The base prospectus included in the Initial Registration Statement at the time of effectiveness thereof (the “Base Prospectus”), as supplemented by
the final prospectus supplement relating to the offer and sale of the Securities, in the form to be filed pursuant to and within the time limits described in Rule 424(b) under the Rules and Regulations, is hereinafter called the
“Prospectus.”
Any reference herein to any Registration Statement, Base Prospectus, Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein. Any reference to any amendment or supplement to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any
documents filed after the date of such Preliminary Prospectus or the Prospectus under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and incorporated by reference in such Preliminary Prospectus or Prospectus,
as the case may be. Any reference to any amendment to the Registration Statements shall be deemed to refer to and include any annual report of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the date of this
Agreement that is incorporated by reference in the Registration Statements.
(b) As of the Applicable Time (as defined below)
and as of the Closing Date or the Option Closing Date (as defined below), as the case may be, none of (i) the General Use Free Writing Prospectus(es) (as defined below) issued at or prior to the Applicable Time, the Pricing Prospectus (as
defined below) and the information included on Schedule III hereto, if any, all considered together (collectively, the “General Disclosure Package”), (ii) any individual Limited Use Free Writing Prospectus (as defined
below), or (iii) any bona fide electronic road show (as defined in Rule 433(h)(5) of the Rules and Regulations that has been made available without restriction to any person), when considered together with the General Disclosure Package,
included or will include any untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or warranties as to information contained in or omitted from the Pricing Prospectus or any Issuer Free Writing Prospectus, in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of any Underwriter specifically for inclusion therein, which information the parties hereto agree is limited to the Underwriter’s Information as defined in Section 17. As used in
this paragraph (b) and elsewhere in this Agreement:
“Applicable Time” means 8:00 A.M., New York time,
on the date of this Agreement or such other time as agreed to by the Company and the Underwriters.
“Pricing
Prospectus” means the Preliminary Prospectus, if any, and the Base Prospectus, each as amended and supplemented immediately prior to the Applicable Time, including any document incorporated by reference therein and any prospectus supplement
deemed to be a part thereof.
“Issuer Free Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 of the Rules and Regulations relating to the Securities in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records
pursuant to Rule 433(g) of the Rules and Regulations.
“General Use Free Writing Prospectus” means any Issuer
Free Writing Prospectus that is identified on Schedule II to this Agreement.
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“Limited Use Free Writing Prospectuses” means any Issuer Free Writing
Prospectus that is not a General Use Free Writing Prospectus.
(c) No order preventing or suspending the use of any Preliminary
Prospectus, any Issuer Free Writing Prospectus or the Prospectus relating to the proposed offering of the Securities has been issued by the Commission, and no proceeding for that purpose or pursuant to Section 8A of the Securities Act has been
instituted or, to the Company’s knowledge (as defined below), threatened by the Commission, and each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Securities Act and the
Rules and Regulations, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no representations or warranties as to information contained in or omitted from any Preliminary Prospectus, in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of any Underwriter specifically for inclusion therein, which information the parties hereto agree is limited to the Underwriter’s Information as defined in Section 17. As used in this
Agreement, the term “the Company’s knowledge” means the actual (as opposed to constructive or implied) knowledge after due inquiry of each of the current executive officers (as defined in Rule 405 under the Securities Act) of
the Company. The term “due inquiry” means that each of such executive officers has (i) read the applicable provisions of this Agreement that relate to his or her area of expertise or responsibility and (ii) has made
inquiry of those individuals within the Company or its subsidiaries whom such executive officer reasonably believes would have direct knowledge of the relevant matters.
(d) At the respective time the Registration Statements and any amendments thereto became or become effective as to the Underwriters, at the date of this Agreement and at each Closing Date, each
Registration Statement and any amendments thereto conformed and will conform in all material respects to the requirements of the Securities Act and the Rules and Regulations and did not and will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments or supplements thereto, at the time the Prospectus or any amendment or supplement thereto
was issued and at each Closing Date, conformed and will conform in all material respects to the requirements of the Securities Act and the Rules and Regulations and did not and will not contain an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the foregoing representations and warranties in this paragraph
(d) shall not apply to information contained in or omitted from the Registration Statements or the Prospectus, or any amendment or supplement thereto, in reliance upon, and in conformity with, written information furnished to the Company by or
on behalf of any Underwriter specifically for inclusion therein, which information the parties hereto agree is limited to the Underwriter’s Information (as defined in Section 17).
(e) Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the public offer and
sale of the Securities or until any earlier date that the Company notified or notifies the Underwriters as described in Section 4(f), did not, does not and will not include any information that conflicted, conflicts or will conflict with
the information contained in the Registration Statement, Pricing Prospectus or the Prospectus, including any document incorporated by reference therein and any prospectus supplement deemed to be a part thereof that has not been superseded or
modified, or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The foregoing sentence does not apply to statements contained in or omitted from any Issuer Free Writing Prospectus in reliance upon, and in conformity with, written information furnished to the Company by
or on behalf of the Underwriters specifically for inclusion therein, which information the parties hereto agree is limited to the Underwriter’s Information (as defined in Section 17).
(f) The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case
may be, conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and none of such documents contained any untrue statement of a
material fact or omitted to state
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any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and any further documents so
filed and incorporated by reference in the Prospectus, when such documents are filed with Commission will conform in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of
the Commission thereunder and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading.
(g) The Company has not, directly or indirectly, distributed and will not distribute any offering
material in connection with the proposed offering and sale of the Securities other than any Preliminary Prospectus, the Prospectus and other materials, if any, permitted under the Securities Act and consistent with Section 4(b) below.
The Company will file with the Commission all Issuer Free Writing Prospectuses in the time and manner required under Rules 163(b)(2) and 433(d) of the Rules and Regulations.
(h) At the time of filing the Initial Registration Statement, any 462(b) Registration Statement and any post-effective amendments thereto, and at the date hereof, the Company was not, and the Company
currently is not, an “ineligible issuer,” as defined in Rule 405 of the Rules and Regulations.
(i) The Company and
each of its subsidiaries (as defined in Section 15) have been duly organized and are validly existing as corporations or other legal entities in good standing (or the foreign equivalent thereof) under the laws of their respective
jurisdictions of organization. The Company and each of its subsidiaries are duly qualified to do business and are in good standing as foreign corporations or other legal entities in each jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires such qualification and have all power and authority (corporate or other) necessary to own or hold their respective properties and to conduct the businesses in which they are engaged,
except where the failure to so qualify or have such power or authority would not (i) have, singularly or in the aggregate, a material adverse effect on the condition (financial or otherwise), results of operations, assets, business or prospects
of the Company and its subsidiaries taken as a whole, or (ii) impair in any material respect the ability of the Company to perform its obligations under this Agreement or to consummate any transactions contemplated by this Agreement, the
General Disclosure Package or the Prospectus (any such effect as described in clauses (i) or (ii), a “Material Adverse Effect”). The Company owns or controls, directly or indirectly, only the following corporations,
partnerships, limited liability partnerships, limited liability companies, associations or other entities: None.
(j) This
Agreement has been duly authorized, executed and delivered by the Company.
(k) The Stock to be issued and sold by the Company
to the Underwriters hereunder has been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued, fully paid and nonassessable and free of any preemptive or similar rights
and will conform to the description thereof contained in the General Disclosure Package and the Prospectus. The Warrants have been duly authorized, and when executed and delivered by the Company, will constitute valid and binding obligations of the
Company enforceable in accordance with their terms, except that such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting creditors’ rights
generally. The Warrant Shares have been duly authorized and reserved for issuance pursuant to the terms of the Warrants, and when issued by the Company upon valid exercise of the Warrants and payment of the exercise price, will be duly and validly
issued, fully paid and nonassessable and free of any preemptive or similar rights and will conform to the description thereof and contained in the General Disclosure Package and the Prospectus.
(l) The Company has an authorized capitalization as set forth in the Pricing Prospectus, and all of the issued shares of capital stock of
the Company have been duly and validly authorized and issued, are fully paid and non-assessable, have been issued in compliance with federal and state securities laws, and conform to the description thereof contained in the General Disclosure
Package and the Prospectus. As of June 30, 2011, there were 109,857,885 shares of Common Stock issued and outstanding and no shares of preferred stock, par value $0.01 per share of the Company issued and outstanding and 19,095,664 shares of
Common Stock were issuable upon the exercise of all options, warrants and convertible securities outstanding as of such date. Since such date, the Company has not issued any securities other than
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Common Stock of the Company issued pursuant to the exercise of warrants previously outstanding, the exercise of stock options previously outstanding under the Company’s stock option plans or
the issuance of restricted Common Stock pursuant to employee stock purchase plans. All of the Company’s options, warrants and other rights to purchase or exchange any securities for shares of the Company’s capital stock have been duly
authorized and validly issued and were issued in compliance with federal and state securities laws. None of the outstanding shares of Common Stock was issued in violation of any preemptive rights, rights of first refusal or other similar rights to
subscribe for or purchase securities of the Company. There are no authorized or outstanding shares of capital stock, options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible
into or exchangeable or exercisable for, any capital stock of the Company or any of its subsidiaries other than those described above or accurately described in the General Disclosure Package. The description of the Company’s stock option,
stock bonus and other stock plans or arrangements, and the options or other rights granted thereunder, as described in the General Disclosure Package and the Prospectus, accurately and fairly present the information required to be shown with respect
to such plans, arrangements, options and rights.
(m) All the outstanding shares of capital stock (if any) of each subsidiary
of the Company have been duly authorized and validly issued, are fully paid and nonassessable and, except to the extent set forth in the General Disclosure Package or the Prospectus, are owned by the Company directly or indirectly through one or
more wholly-owned subsidiaries, free and clear of any claim, lien, encumbrance, security interest, restriction upon voting or transfer or any other claim of any third party.
(n) The execution, delivery and performance of this Agreement by the Company, the issue and sale of the Securities by the Company and the consummation of the transactions contemplated hereby will not
(with or without notice or lapse of time or both) conflict with or result in a breach or violation of any of the terms or provisions of, constitute a default or a Debt Repayment Triggering Event (as defined below) under, give rise to any right of
termination or other right or the cancellation or acceleration of any right or obligation or loss of a benefit under, or give rise to the creation or imposition of any lien, encumbrance, security interest, claim or charge upon any property or assets
of the Company or any subsidiary pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter or by-laws (or analogous governing instruments, as applicable) of
the Company or any of its subsidiaries or any law, statute, rule, regulation, judgment, order or decree of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their
properties or assets. A “Debt Repayment Triggering Event” means any event or condition that gives, or with the giving of notice or lapse of time would give the holder of any note, debenture or other evidence of indebtedness (or any
person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company of any of its subsidiaries.
(o) Except for the registration of the Securities under the Securities Act and such consents, approvals, authorizations, registrations or
qualifications as may be required by applicable state and foreign securities laws, the Financial Industry Regulatory Authority, Inc. (“FINRA”) and The NASDAQ Capital Market in connection with the purchase and distribution of the
Securities by the Underwriters and the listing of the Stock and the Warrant Shares on The NASDAQ Capital Market, no consent, approval, authorization or order of, or filing, qualification or registration (each an “Authorization”)
with, any court, governmental or non-governmental agency or body, foreign or domestic, which has not been made, obtained or taken and is not in full force and effect, is required for the execution, delivery and performance of this Agreement by the
Company, the offer or sale of the Securities or the consummation of the transactions contemplated hereby; and no event has occurred that allows or results in, or after notice or lapse of time or both would allow or result in, revocation, suspension,
termination or invalidation of any such Authorization or any other impairment of the rights of the holder or maker of any such Authorization. All approvals by the Company’s board of directors, any committee thereof and the stockholders of the
Company necessary for the Company to consummate the transactions contemplated by this Agreement have been obtained and are in effect.
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(p) BDO USA, LLP, who have certified certain financial statements and the related schedule
included or incorporated by reference in the Registration Statements, the General Disclosure Package and the Prospectus, and have audited the Company’s internal control over financial reporting and management’s assessment thereof, is an
independent registered public accounting firm within the meaning of Article 2-01 of Regulation S-X and the Public Company Accounting Oversight Board (United States) (the “PCAOB”).
(q) The financial statements, together with the related notes and schedule, included or incorporated by reference in the General
Disclosure Package, the Prospectus and in each Registration Statement present fairly, in all material respects, the financial position and the results of operations and changes in financial position of the Company and its consolidated subsidiaries
at the respective dates or for the respective periods therein specified. Such statements and related notes and schedule have been prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”)
applied on a consistent basis throughout the periods involved except as may be set forth in the related notes included or incorporated by reference in the General Disclosure Package. The financial statements, together with the related notes and
schedule, included or incorporated by reference in the General Disclosure Package and the Prospectus comply in all material respects with Regulation S-X. No other financial statements or supporting schedules or exhibits are required by Regulation
S-X to be described, included or incorporated by reference in the Registration Statements, the General Disclosure Package or the Prospectus. There is no pro forma or as adjusted financial information which is required to be included in the
Registration Statements, the General Disclosure Package and the Prospectus or a document incorporated by reference therein in accordance with Regulation S-X which has not been included or incorporated as so required. The summary and selected
financial data included or incorporated by reference in the General Disclosure Package, the Prospectus and each Registration Statement fairly present the information shown therein as at the respective dates and for the respective periods specified
and are derived from the consolidated financial statements included or incorporated by reference in the Registration Statement, the Pricing Prospectus and the Prospectus and other financial information. All information contained in the Registration
Statement, the General Disclosure Package and the Prospectus regarding “non-GAAP financial measures” (as defined in Regulation G) complies with Regulation G and Item 10 of Regulations S-K, to the extent applicable.
(r) Neither the Company nor any of its subsidiaries has sustained, since the date of the latest audited financial statements included or
incorporated by reference in the General Disclosure Package, any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the General Disclosure Package; and, since such date, there has not been any change in the capital stock (other than stock option and warrant exercises and stock repurchases in
the ordinary course of business) or long-term debt of the Company or any of its subsidiaries, or any material adverse changes, or any development involving a prospective material adverse change, in or affecting the business, assets, general affairs,
management, financial position, prospects, stockholders’ equity or results of operations of the Company and its subsidiaries taken as a whole, otherwise than as set forth or contemplated in the General Disclosure Package.
(s) Except as set forth in the General Disclosure Package, there is no legal or governmental proceeding to which the Company or any of its
subsidiaries is a party or of which any property or assets of the Company or any of its subsidiaries is the subject, including any proceeding before the United States Food and Drug Administration of the U.S. Department of Health and Human Services
(“FDA”) or comparable federal, state, local or foreign governmental bodies (it being understood that the interaction between the Company and the FDA and such comparable governmental bodies relating to the clinical development and
product approval process shall not be deemed proceedings for purposes of this representation), which is required to be described in the Registration Statement, the General Disclosure Package or the Prospectus or a document incorporated by reference
therein and is not described therein, or which, singularly or in the aggregate, if determined adversely to the Company or any of its subsidiaries, could reasonably be expected to have a Material Adverse Effect; and to the Company’s knowledge,
no such proceedings are threatened or contemplated by governmental authorities or threatened by others. The Company is in compliance with all applicable federal, state, local and foreign laws, regulations, orders and decrees governing its business
as prescribed by the FDA, or any other federal, state or foreign agencies or bodies engaged in the regulation of pharmaceuticals or biohazardous substances or materials, except where noncompliance would not, singly or in the aggregate, have a
Material Adverse Effect. All preclinical and clinical studies conducted by or on
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behalf of the Company to support approval for commercialization of the Company’s products have been conducted by the Company, or to the Company’s knowledge by third parties, in
compliance with all applicable federal, state or foreign laws, rules, orders and regulations, except for such failure or failures to be in compliance as could not reasonably be expected to have, singly or in the aggregate, a Material Adverse Effect.
(t) Neither the Company nor any of its subsidiaries (i) is in violation of its charter or by-laws (or analogous governing
instrument, as applicable), (ii) is in default in any respect, and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it is bound or to which any of its property or assets is subject (including, without limitation, those
administered by the FDA or by any foreign, federal, state or local governmental or regulatory authority performing functions similar to those performed by the FDA) or (iii) is in violation in any respect of any law, ordinance, governmental
rule, regulation or court order, decree or judgment to which it or its property or assets may be subject except, in the case of clauses (ii) and (iii) of this paragraph (t), for any violations or defaults which, singularly or in the
aggregate, would not have a Material Adverse Effect.
(u) The Company and each of its subsidiaries possess all licenses,
certificates, authorizations and permits issued by, and have made all declarations and filings with, the appropriate local, state, federal or foreign regulatory agencies or bodies (including, without limitation, those administered by the FDA or by
any foreign, federal, state or local governmental or regulatory authority performing functions similar to those performed by the FDA) which are necessary or desirable for the ownership of their respective properties or the conduct of their
respective businesses as described in the General Disclosure Package and the Prospectus (collectively, the “Governmental Permits”) except where any failures to possess or make the same, singularly or in the aggregate, would not have
a Material Adverse Effect. The Company and its subsidiaries are in compliance with all such Governmental Permits except where for such instances of noncompliance as have not had and would not, singularly or in the aggregate, have a Material Adverse
Effect; all such Governmental Permits are valid and in full force and effect, except where the validity or failure to be in full force and effect would not, singularly or in the aggregate, have a Material Adverse Effect. All such Governmental
Permits are free and clear of any restriction or condition that are in addition to, or materially different from those normally applicable to similar licenses, certificates, authorizations and permits, except for such restrictions, conditions or
differences which have not and would not, singly or in the aggregate, have a Material Adverse Effect. Neither the Company nor any subsidiary has received notification of any revocation, modification, suspension, termination or invalidation (or
proceedings related thereto) of any such Governmental Permit and to the Company’s knowledge, no event has occurred that allows or results in, or after notice or lapse of time or both would allow or result in, revocation, modification,
suspension, termination or invalidation (or proceedings related thereto ) of any such Governmental Permit and the Company has no reason to believe that any such Governmental Permit will not be renewed; and the Company and its subsidiaries are
members in good standing of each Federal, state or foreign exchange, board of trade, clearing house or association and self-regulatory or similar organization, in each case as necessary to conduct their respective businesses as described in the
General Disclosure Package and the Prospectus, except where the failure to hold such memberships has not and would not, singly or in the aggregate, have a Material Adverse Effect. The studies, tests and preclinical or clinical trials conducted by or
on behalf of the Company that are described in the General Disclosure Package and the Prospectus (the “Company Studies and Trials”) were and, if still pending, are being, conducted in all material respects in accordance with
experimental protocols, procedures and controls pursuant to, where applicable, accepted professional scientific standards; the descriptions of the results of the Company Studies and Trials contained in the General Disclosure Package and Prospectus
are accurate in all material respects; and the Company has not received any notices or correspondence with the FDA or any foreign, state or local governmental body exercising comparable authority requiring the termination, suspension or material
modification of any Company Studies or Trials, which termination, suspension or material modification would reasonably be expected to have a Material Adverse Effect.
(v) Neither the Company nor any of its subsidiaries is or, after giving effect to the offering of the Securities and the application of the proceeds thereof as described in the General Disclosure Package
and
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the Prospectus, will become an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder.
(w) Neither the Company nor any of its officers, directors or affiliates has taken or will take, directly or indirectly, any
action designed or intended to stabilize or manipulate the price of any security of the Company, or which caused or resulted in, or which might in the future reasonably be expected to cause or result in, stabilization or manipulation of the price of
any security of the Company.
(x) The Company and its subsidiaries own or possess the valid right to use all (i) valid and
enforceable patents, patent applications, trademarks, trademark registrations, service marks, service mark registrations, Internet domain name registrations, copyrights, copyright registrations, licenses, trade secret rights (“Intellectual
Property Rights”) and (ii) inventions, software, works of authorships, trade marks, service marks, trade names, databases, formulae, know how, Internet domain names and other intellectual property (including trade secrets and other
unpatented and/or unpatentable proprietary confidential information, systems, or procedures) (collectively, “Intellectual Property Assets”) necessary to conduct their respective businesses as currently conducted, and as proposed to
be conducted and described in the General Disclosure Package and the Prospectus. The Company and its subsidiaries have not received any opinion from their legal counsel concluding that any activities of their respective businesses as now conducted
and as proposed to be conducted and described in the General Disclosure Package and the Prospectus infringe, misappropriate, or otherwise violate, valid and enforceable Intellectual Property Rights of any other person, and have not received written
notice of any challenge, which is to the Company’s knowledge still pending, by any other person to the rights of the Company and its subsidiaries with respect to any Intellectual Property Rights or Intellectual Property Assets owned or used by
the Company or its subsidiaries. To the Company’s knowledge, the Company and its subsidiaries’ respective businesses as now conducted and as proposed to be conducted and described in the General Disclosure Package and the Prospectus do not
give rise to any infringement of, any misappropriation of, or other violation of, any valid and enforceable Intellectual Property Rights of any other person. All licenses for the use of the Intellectual Property Rights described in the General
Disclosure Package and the Prospectus are valid, binding upon, and enforceable against the Company and, to the Company’s knowledge, the other parties thereto in accordance to its terms. The Company has complied in all material respects with,
and is not in breach nor has received any asserted or threatened claim of breach of any Intellectual Property license, and the Company has no knowledge of any breach or anticipated breach by any other person to any Intellectual Property license.
Except as described in the General Disclosure Package, no claim has been made against the Company alleging the infringement by the Company of any patent, trademark, service mark, trade name, copyright, trade secret, license in or other intellectual
property right or franchise right of any person. The Company has taken all reasonable steps to protect, maintain and safeguard its Intellectual Property Rights, including the execution of appropriate nondisclosure and confidentiality agreements. The
consummation of the transactions contemplated by this Agreement will not result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other person in respect of, the Company’s right to
own, use, or hold for use any of the Intellectual Property Rights as owned, used or held for use in the conduct of the business as currently conducted. With respect to the use of the software in the Company’s business as it is currently
conducted, the Company has not experienced any material defects in such software including any material error or omission in the processing of any transactions other than defects which have been corrected, and to the knowledge of the Company, no
such software contains any device or feature designed to disrupt, disable, or otherwise impair the functioning of any software or is subject to the terms of any “open source” or other similar license that provides for the source code of
the software to be publicly distributed or dedicated to the public. The Company has at all times complied in all material respects with all applicable laws relating to privacy, data protection, and the collection and use of personal information
collected, used, or held for use by the Company in the conduct of the Company’s business. No claims have been asserted or threatened against the Company alleging a violation of any person’s privacy or personal information or data rights
and the consummation of the transactions contemplated hereby will not breach or otherwise cause any violation of any law related to privacy, data protection, or the collection and use of personal information collected, used, or held for use by the
Company in the conduct of the Company’s business. The Company takes reasonable measures to ensure that such information is protected against unauthorized access, use, modification, or other misuse.
8
(y) Neither the Company nor any subsidiary own any real property. The Company and each of
its subsidiaries have valid title to, or have valid rights to lease or otherwise use, all items of real or personal property which are material to the business of the Company and its subsidiaries taken as a whole, in each case free and clear of all
liens, encumbrances, security interests, claims and defects that do not, singularly or in the aggregate, materially affect the value of such property and do not interfere in any material respect with the use made and proposed to be made of such
property by the Company or any of its subsidiaries; and all of the leases and subleases material to the business of the Company and its subsidiaries, considered as one enterprise, and under which the Company or any of its subsidiaries holds
properties described in the General Disclosure Package and the Prospectus, are in full force and effect, and neither the Company nor any subsidiary has received any written notice of any claim of any sort that has been asserted by anyone adverse to
the rights of the Company or any subsidiary under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such subsidiary to the continued possession of the leased or subleased premises under any such
lease or sublease which, if determined adversely to the Company or any subsidiary, would reasonably be expected to result in a Material Adverse Effect.
(z) There is (A) no significant unfair labor practice complaint pending against the Company, or any of its subsidiaries, nor to the Company’s knowledge, threatened against it or any of its
subsidiaries, before the National Labor Relations Board, any state or local labor relation board or any foreign labor relations board, and no significant grievance or significant arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or any of its subsidiaries, or, to the Company’s knowledge, threatened against it and (B) no labor disturbance by the employees of the Company or any of its subsidiaries exists or, to
the Company’s knowledge, is imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its or its subsidiaries principal suppliers, manufacturers, customers or contractors, that could
reasonably be expected, singularly or in the aggregate, to have a Material Adverse Effect. The Company is not aware that any key employee or significant group of employees of the Company or any subsidiary plans to terminate employment with the
Company or any such subsidiary.
(aa) No “prohibited transaction” (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder (“ERISA”), or Section 4975 of the Internal Revenue Code of 1986, as amended from time to time (the
“Code”)) or “accumulated funding deficiency” (as defined in Section 302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA (other than events with respect to which the thirty (30)-day notice
requirement under Section 4043 of ERISA has been waived) has occurred or could reasonably be expected to occur with respect to any employee benefit plan of the Company or any of its subsidiaries which would reasonably be expected to, singularly
or in the aggregate, have a Material Adverse Effect. Each employee benefit plan of the Company or any of its subsidiaries is in compliance in all material respects with applicable law, including ERISA and the Code. The Company and its subsidiaries
have not incurred and could not reasonably be expected to incur liability under Title IV of ERISA with respect to the termination of, or withdrawal from, any pension plan (as defined in ERISA). Each pension plan for which the Company or any of its
subsidiaries would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified, and nothing has occurred, whether by action or by failure to act, which could, singularly or in the aggregate, cause the
loss of such qualification.
(bb) The Company and its subsidiaries are in compliance with all foreign, federal, state and local
rules, laws and regulations relating to the use, treatment, storage and disposal of hazardous or toxic substances or waste and protection of health and safety or the environment which are applicable to their businesses (“Environmental
Laws”), except where the failure to comply has not had and would not reasonably be expected to have, singularly or in the aggregate, a Material Adverse Effect. There has been no storage, generation, transportation, handling, treatment,
disposal, discharge, emission, or other release of any kind of toxic or other wastes or other hazardous substances by, due to, or caused by the Company or any of its subsidiaries (or, to the Company’s knowledge, any other entity for whose acts
or omissions the Company or any of its subsidiaries is or may otherwise be liable) upon any of the property now or previously owned or leased by the Company or any of its subsidiaries, or upon any other property, in violation of any law, statute,
ordinance, rule, regulation, order, judgment, decree or permit or which would, under any law, statute, ordinance, rule (including rule of common law), regulation, order, judgment, decree or permit, give rise to any liability, except for any
violation or liability which has not had and would not reasonably be
9
expected to have, singularly or in the aggregate, a Material Adverse Effect; and there has been no disposal, discharge, emission or other release of any kind onto such property or into the
environment surrounding such property of any toxic or other wastes or other hazardous substances with respect to which the Company or any of its subsidiaries has knowledge. In the ordinary course of business, the Company and its subsidiaries conduct
periodic reviews of the effect of Environmental Laws on their business and assets, in the course of which they identify and evaluate associated costs and liabilities (including, without limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws or Governmental Permits issued thereunder, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such reviews, the
Company has reasonably concluded that such associated costs and liabilities would not have, singularly or in the aggregate, a Material Adverse Effect.
(cc) The Company and its subsidiaries each (i) have timely filed all necessary federal, state, local and foreign tax returns (or timely filed applicable extensions therefor), and all such returns
were true, complete and correct, (ii) have paid all federal, state, local and foreign taxes, assessments, governmental or other charges due and payable for which it is liable, including, without limitation, all sales and use taxes and all taxes
which the Company or any of its subsidiaries is obligated to withhold from amounts owing to employees, creditors and third parties, and (iii) do not have any tax deficiency or claims outstanding or assessed or, to the Company’s knowledge,
proposed against any of them, except those, in each of the cases described in clauses (i), (ii) and (iii) of this paragraph (cc), that would not, singularly or in the aggregate, have a Material Adverse Effect. The Company and its
subsidiaries have not engaged in any transaction which is a corporate tax shelter or which could be characterized as such by the Internal Revenue Service or any other taxing authority. The accruals and reserves on the books and records of the
Company and its subsidiaries in respect of tax liabilities for any taxable period not yet finally determined are adequate to meet any assessments and related liabilities for any such period, and since December 31, 2010 the Company and its
subsidiaries have not incurred any liability for taxes other than in the ordinary course.
(dd) The Company and each of its
subsidiaries carry, or are covered by, insurance in such amounts and covering such risks as is adequate for the conduct of their respective businesses taken as a whole and the value of their respective properties and as is customary for companies
engaged in similar businesses in similar industries. Neither the Company nor any of its subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. All policies of insurance owned by the Company or any of its subsidiaries are, to the Company’s knowledge, in
full force and effect and the Company and its subsidiaries are in compliance with the terms of such policies. Neither the Company nor any of its subsidiaries has received written notice from any insurer, agent of such insurer or the broker of the
Company or any of its subsidiaries that any material capital improvements or any other material expenditures (other than premium payments) are required or necessary to be made in order to continue such insurance. None of the Company or any of its
subsidiaries insures risk of loss through any captive insurance, risk retention group, reciprocal group or by means of any fund or pool of assets specifically set aside for contingent liabilities other than as described in the General Disclosure
Package.
(ee) The Company and each of its subsidiaries maintains a system of internal control over financial reporting (as
such term is defined in Rule 13a-15 of the General Rules and Regulations under the Exchange Act (the “Exchange Act Rules”)) that complies with the requirements of the Exchange Act and has been designed by the Company’s
principal executive officer and principal financial officer, or under their supervision, to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company’s internal control
over financial reporting is effective. Except as described in the General Disclosure Package, since the end of the Company’s most recent audited fiscal year, there has been (A) no material weakness in the Company’s internal control
over financial reporting (whether or not remediated) and (B) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially
10
affect, the Company’s internal control over financial reporting. The Company’s internal control over financial reporting is, or upon consummation of the offering of the Securities will
be, overseen by the Audit Committee of the Board of Directors of the Company (the “Audit Committee”) in accordance with the Exchange Act Rules. The Company has not publicly disclosed or reported to the Audit Committee or to the
Board, and within the next 90 days the Company does not reasonably expect to publicly disclose or report to the Audit Committee or the Board, a significant deficiency, material weakness, change in internal control over financial reporting or fraud
involving management or other employees who have a significant role in the internal control over financial reporting (each an “Internal Control Event”), any violation of, or failure to comply with, the U.S. Securities Laws, or any matter
which if determined adversely, would have a Material Adverse Effect.
(ff) A member of the Audit Committee has confirmed to the
Chief Executive Officer, Chief Financial Officer or General Counsel that, except as set forth in the General Disclosure Package, the Audit Committee is not reviewing or investigating, and neither the Company’s independent auditors nor its
internal auditors have recommended that the Audit Committee review or investigate, (i) adding to, deleting, changing the application of or changing the Company’s disclosure with respect to, any of the Company’s material accounting
policies, (ii) any matter which could result in a restatement of the Company’s financial statements for any annual or interim period during the current or prior three fiscal years, or (iii) any Internal Control Event.
(gg) The Company and each of its subsidiaries have made and keep books, records and accounts, which, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the Company and its subsidiaries in all material respects.
(hh) The Company maintains disclosure controls and procedures (as such is defined in Rule 13a-15 of the Exchange Act Rules) that comply
with the requirements of the Exchange Act; such disclosure controls and procedures have been designed to ensure that information required to be disclosed by the Company and its subsidiaries is accumulated and communicated to the Company’s
management, including the Company’s principal executive officer and principal financial officer by others within those entities, such disclosure controls and procedures are effective.
(ii) The minute books of the Company and each of its subsidiaries have been made available to the Underwriters and counsel for the
Underwriters, and such books (i) contain a complete summary of all meetings and actions of the board of directors (including each board committee) and stockholders of the Company (or analogous governing bodies and interest holders, as
applicable), and each of its subsidiaries since the time of its respective incorporation or organization through the date of the latest meeting and action, and (ii) accurately in all material respects reflect all transactions referred to in
such minutes.
(jj) There is no franchise agreement, lease, contract, or other agreement or document required by the Securities
Act or by the Rules and Regulations to be described in the General Disclosure Package and in the Prospectus or a document incorporated by reference therein or to be filed as an exhibit to the Registration Statements or a document incorporated by
reference therein which is not so described or filed therein as required; and all descriptions of any such franchise agreements, leases, contracts, or other agreements or documents contained in the General Disclosure Package and in the Prospectus or
in a document incorporated by reference therein are accurate and complete descriptions of such documents in all material respects. Other than as described in the General Disclosure Package, no such franchise agreement, lease, contract or other
agreement has been suspended or terminated for convenience or default by the Company or any of the other parties thereto, and neither the Company nor any of its subsidiaries has received notice of and the Company does not have knowledge of any such
pending or threatened suspension or termination.
(kk) No relationship, direct or indirect, exists between or among the Company
on the one hand, and the directors, officers, stockholders (or analogous interest holders), customers or suppliers of the Company or any of its affiliates on the other hand, which is required to be described in the General Disclosure Package and the
Prospectus or a document incorporated by reference therein and which is not so described.
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(ll) No person or entity has the right to require registration of shares of Common Stock or
other securities of the Company or any of its subsidiaries because of the filing or effectiveness of the Registration Statements or otherwise, except for persons and entities who have expressly waived such right in writing or who have been given
timely and proper written notice and have failed to exercise such right within the time or times required under the terms and conditions of such right. Except as described in the General Disclosure Package, there are no persons with registration
rights or similar rights to have any securities registered by the Company or any of its subsidiaries under the Securities Act.
(mm) Neither the Company nor any of its subsidiaries own any “margin securities” as that term is defined in Regulation U of the
Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), and none of the proceeds of the sale of the Securities will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for
the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Securities to be considered a “purpose credit” within the
meanings of Regulation T, U or X of the Federal Reserve Board.
(nn) Neither the Company nor any of its subsidiaries is a party
to any contract, agreement or understanding with any person that would give rise to a valid claim against the Company or the Underwriters for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the
Securities or any transaction contemplated by this Agreement, the Registration Statements, the General Disclosure Package or the Prospectus.
(oo) The exercise price of each option issued under the Company’s stock option or other employee benefit plans has been no less than the fair market value of a share of common stock as determined on
the date of grant of such option. All grants of options were validly issued and properly approved by the board of directors of the Company (or a duly authorized committee thereof or pursuant to authority delegated by the board of directors of the
Company or an authorized committee thereof) in material compliance with all applicable laws and regulations and recorded in the Company’s financial statements in accordance with GAAP and, to the Company’s knowledge, no such grants involved
“back dating,” “forward dating” or similar practice with respect to the effective date of grant.
(pp)
Except as described in the General Disclosure Package and the Prospectus, no subsidiary of the Company is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party or is subject, from paying any
dividends to the Company, from making any other distribution on such subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s
properties or assets to the Company or any other subsidiary of the Company.
(qq) Since the date as of which information is
given in the General Disclosure Package and the Prospectus through the date hereof, and except as set forth in the Pricing Prospectus, neither the Company nor any of its subsidiaries has (i) issued or granted any securities other than options
to purchase common stock pursuant to the Company’s stock option plan or shares of Common Stock issued upon the exercise of options, (ii) incurred any material liability or obligation, direct or contingent, other than liabilities and
obligations which were incurred in the ordinary course of business, (iii) entered into any material transaction other than in the ordinary course of business or (iv) declared or paid any dividend on its capital stock.
(rr) If applicable, all of the information provided to the Underwriters or to counsel for the Underwriters by the Company, its officers
and directors and the holders of any securities (debt or equity) or options to acquire any securities of the Company in connection with letters, filings or other supplemental information provided to FINRA pursuant to FINRA Rules 5110 or 5121 is
true, correct and complete.
(ss) The Company is not a Passive Foreign Investment Company (“PFIC”) within the
meaning of Section 1296 of the United States Internal Revenue Code of 1966, and the Company is not likely to become a PFIC.
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(tt) No forward-looking statement (within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act) contained in either the General Disclosure Package or the Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
(uu) The Company is subject to and in compliance in all material respects with the reporting requirements of Section 13 or
Section 15(d) of the Exchange Act. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is listed on The NASDAQ Capital Market (the “Exchange”), and the Company has taken no action designed to,
or reasonably likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from the Exchange, nor, except as described in the General Disclosure Package and the Prospectus, has
the Company received any notification that the Commission or the Exchange is contemplating terminating such registration or listing. No consent, approval, authorization or order of, or filing, notification or registration with, the Exchange is
required for the listing and trading of the Stock and the Warrant Shares on the Exchange, except those that will be made or obtained prior to the Closing Date.
(vv) The Company is in compliance in all material respects with all applicable provisions of the Sarbanes-Oxley Act of 2002 and all rules and regulations promulgated thereunder or implementing the
provisions thereof (the “Sarbanes-Oxley Act”) that are now in effect.
(ww) The Company is in compliance with
all applicable corporate governance requirements set forth in the rules of the Exchange that are now in effect.
(xx) Neither
the Company nor any of its subsidiaries nor, to the Company’s knowledge, any employee or agent of the Company or any subsidiary, has, while acting on behalf of the Company or any subsidiary, (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from
corporate funds, (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended or (iv) made any other unlawful payment.
(yy) There are no transactions, arrangements or other relationships between and/or among the Company, any of its affiliates (as such term is defined in Rule 405 of the Rules and Regulations) and any
unconsolidated entity, including, but not limited to, any structured finance, special purpose or limited purpose entity that could reasonably be expected to materially affect the Company’s liquidity or the availability of or requirements for
its capital resources required to be described in the General Disclosure Package and the Prospectus or a document incorporated by reference therein which have not been described as required.
(zz) There are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company or any of its subsidiaries to or for the benefit of any of the officers or directors of the Company, any of its subsidiaries or any of their respective family members, except as disclosed in the Registration
Statements, the General Disclosure Package and the Prospectus. All transactions by the Company with office holders or control persons of the Company have been duly approved by the board of directors of the Company, or duly appointed committees or
officers thereof, if and to the extent required under U.S. law.
(aaa) The statistical and market related data included in the
Registration Statement, the General Disclosure Package and the Prospectus are based on or derived from sources that the Company believes to be reliable and accurate, and such data agree with the sources from which they are derived.
(bbb) The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering
Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending, or to the
Company’s knowledge, threatened.
13
(ccc) Neither the Company nor any of its subsidiaries nor, to the Company’s knowledge,
any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”);
and the Company will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered by OFAC.
(ddd) The Company and its subsidiaries,
individually and on a consolidated basis, are not as of the date hereof, and immediately after giving effect to the transactions contemplated hereby to occur on the Closing Date, will not be Insolvent (as defined below). For purposes of this
Section 3(ddd), “Insolvent” means, with respect to any Person, (i) the present fair saleable value of such Person’s assets is less than the amount required to pay such Person’s total indebtedness,
(ii) such Person is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) such Person intends to incur or believes that it will incur debts that
would be beyond its ability to pay as such debts mature or (iv) such Person has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.
(eee) Neither the Company nor any of its affiliates (within the meaning of NASD Conduct Rule 2720(b)(1)(a)) directly or indirectly
controls, is controlled by, or is under common control with, or is an associated person (within the meaning of Article I, Section 1(ee) of the By-laws of FINRA) of, any member firm of FINRA.
Any certificate signed by or on behalf of the Company and delivered to the Underwriters or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters covered thereby.
3. PURCHASE,
SALE AND DELIVERY OF OFFERED SECURITIES. 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 sell to the Underwriters, and the Underwriters agree, severally and not jointly, to purchase from the Company the respective numbers of shares of Firm Stock and the Firm Warrants set forth
opposite the names of the Underwriters in Schedule I hereto.
The purchase price per share to be paid by the
Underwriters to the Company for the Firm Stock will be $0.4794 per share (the “Per Share Purchase Price”) and each Firm Warrant shall be $0.0094 per Warrant (the “Per Warrant Purchase Price” and together with the
Per Share Purchase Price, the “Purchase Price”).
The Company will deliver to the
Underwriters, for their respective accounts, (i) the Firm Stock through the facilities of The Depository Trust Company and (ii) the Warrants in physical, certificated form, in each such case, issued in such names and in such denominations
as the Underwriters may direct by notice in writing to the Company given at or prior to 12:00 Noon, New York time, on the second (2nd) full business day preceding the Closing Date against payment of the aggregate Purchase Price therefor by wire
transfer in federal (same day) funds to an account at a bank acceptable to the Underwriters payable to the order of the Company all at the offices of Lowenstein Sandler PC, 1251 Avenue of the Americas, New York, New York 10020. Time shall be of the
essence, and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligations of each Underwriter hereunder. The time and date of the delivery and closing shall be at 10:00 A.M., New York time, on August
1, 2011, in accordance with Rule 15c6-1 of the Exchange Act. The time and date of such payment and delivery are herein referred to as the “Closing Date”. The Closing Date and the location of delivery of, and the form of payment for,
the Firm Stock and the Firm Warrants may be varied by agreement among the Company and the Underwriters.
For the purpose of
covering any over-allotments in connection with the distribution and sale of the Firm Stock and Firm Warrants as contemplated by the Prospectus, the Underwriters may purchase all or less than all of the Optional Stock and/or the Optional Warrants.
The price per share to be paid for the Optional Stock shall be the Per Share Purchase Price and the price per warrant to be paid for the Optional Warrants shall be the Per Warrant Purchase Price. The Company agrees to sell to the Underwriters the
number of shares of Optional Stock and/or the number of Optional Warrants specified in the written notice delivered by the Underwriters to the Company
14
described below and the Underwriters agree, severally and not jointly, to purchase such shares of Optional Stock and/or Optional Warrants. Such shares of Optional Stock and/or Optional Warrants
shall be purchased from the Company for the account of each Underwriter in the same proportion as the number of shares of Firm Stock and Firm Warrants set forth opposite such Underwriter’s name on Schedule I bears to the total number of
shares of Firm Stock and the total number of Firm Warrants (subject to adjustment by the Underwriters to eliminate fractions). The option granted hereby may be exercised as to all or any part of the Optional Stock and/or the Optional Warrants at any
time, and from time to time, not more than thirty (30) days subsequent to the date of this Agreement. No Optional Stock shall be sold and delivered unless the Firm Stock previously has been, or simultaneously is, sold and delivered and no
Optional Warrants shall be sold and delivered unless the Firm Warrants previously have been, or simultaneously are, sold and delivered. The right to purchase the Optional Stock and/or the Optional Warrants or any portion thereof may be surrendered
and terminated at any time upon notice by the Underwriters to the Company.
The option granted hereby may be exercised by
written notice being given to the Company by the Underwriters setting forth the number of shares of the Optional Stock and/or the number of Optional Warrants to be purchased by the Underwriters and the date and time for delivery of and payment for
the Optional Stock and/or the Optional Warrants. Each date and time for delivery of and payment for the Optional Stock and/or Optional Warrants (which may be the Closing Date, but not earlier) is herein called the “Option Closing Date” and
shall in no event be earlier one (1) business day nor later than five (5) business days after written notice is given. The Option Closing Date and the Closing Date are herein called the “Closing Dates.”
The Company will deliver to the Underwriters, for their respective accounts, (i) the Optional Stock through the
facilities of The Depository Trust Company and/or (ii) the Optional Warrants in physical, certificated form, in each such case, issued in such names and in such denominations as the Underwriters may direct by notice in writing to the Company
given at or prior to 5:00 p.m., New York time, on first
(1st) business day preceding the Option Closing Date
against payment of the aggregate purchase price therefor by wire transfer in federal (same day) funds to an account at a bank acceptable to the Underwriters payable to the order of the Company, all at the offices of Lowenstein Sandler PC, 1251
Avenue of the Americas, New York, New York 10020. Time shall be of the essence, and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligations of each Underwriter hereunder. The Option Closing Date
and the location of delivery of, and the form of payment for, the Optional Stock and/or the Optional Warrants may be varied by agreement among the Company and the Underwriters.
The several Underwriters propose to offer the Stock and the Warrants for sale upon the terms and conditions set forth in the Prospectus.
4. FURTHER AGREEMENTS OF THE COMPANY . The
Company agrees with the several Underwriters:
(a) To prepare the Rule 462(b) Registration Statement, if
necessary, in a form approved by the Underwriters and file such Rule 462(b) Registration Statement with the Commission by 10:00 P.M., New York time, on the date hereof, and the Company shall at the time of filing either pay to the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 111(b) under the Rules and Regulations; to prepare the Prospectus in a form approved by the Underwriters containing
information previously omitted at the time of effectiveness of the Registration Statement in reliance on Rules 430A, 430B or 430C of the Rules and Regulations and to file such Prospectus pursuant to Rule 424(b) of the Rules and Regulations not later
than the second business (2nd) day following the
execution and delivery of this Agreement or, if applicable, such earlier time as may be required by Rule 430A of the Rules and Regulations; to notify the Underwriters promptly of the Company’s intention to file or prepare any supplement or
amendment to any Registration Statement or to the Prospectus and to make no amendment or supplement to the Registration Statements, the General Disclosure Package or to the Prospectus to which the Underwriters shall reasonably object by notice to
the Company after a reasonable period to review; to advise the Underwriters, promptly after it receives notice thereof, of the time when any amendment to any Registration Statement has been filed or becomes effective or any supplement to the General
Disclosure Package or the Prospectus or any amended Prospectus has been filed and to furnish the Underwriters with copies thereof; to file promptly all material required to be filed by the Company with the Commission pursuant to Rules 433(d) or
163(b)(2) of the Rules and Regulations, as the case may be; to file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14
15
or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) of the Rules and
Regulations) is required in connection with the offering or sale of the Securities; to advise the Underwriters, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus, of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statements, the General Disclosure Package or the Prospectus or for additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus or suspending any such qualification, and promptly to use its reasonable best efforts to obtain the withdrawal
of such order.
(b) The Company represents and agrees that, unless it obtains the prior consent of the Underwriters, and each
Underwriter represents and agrees that, unless it obtains the prior consent of the Company, it has not made and will not, other than the Final Term Sheet (defined below), if any, prepared and filed pursuant to Section 4(c) hereof, make
any offer relating to the Securities that would constitute a “free writing prospectus” as defined in Rule 405 of the Rules and Regulations unless the prior written consent of the Underwriters has been received (each, a “Permitted
Free Writing Prospectus”); provided that the prior written consent of the Underwriters shall be deemed to have been given in respect of the Issuer Free Writing Prospectuses included in Schedule II hereto. The Company represents that
it has treated and agrees that it will treat each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, comply with the requirements of Rules 164 and 433 of the Rules and Regulations applicable to any Issuer Free Writing
Prospectus, including the requirements relating to timely filing with the Commission, legending and record keeping and will not take any action that would result in an Underwriter or the Company being required to file with the Commission pursuant to
Rule 433(d) of the Rules and Regulations a free writing prospectus prepared by or on behalf of such Underwriter that such Underwriter otherwise would not have been required to file thereunder. The Company consents to the use by any Underwriter of a
free writing prospectus that (a) is not an “issuer free writing prospectus” as defined in Rule 433 of the Rules and Regulations, and (b) contains only (i) information describing the preliminary terms of the Securities or the
offering and (ii) information that described the final terms of the Securities or the offering and that is included in the Final Term Sheet, if any, contemplated in Section 4(c) below.
(c) At the request of the Underwriters, the Company will prepare a final term sheet (the “Final Term Sheet”) reflecting
the final terms of the Securities, in form and substance reasonably satisfactory to the Underwriters, and shall file such Final Term Sheet as an Issuer Free Writing Prospectus pursuant to Rule 433 of the Rules and Regulations prior to the close of
business two (2) business days after the date hereof; provided that the Company shall provide the Underwriters with copies on any such Final Term Sheet within a reasonable amount of time prior to such proposed filing and will not use or file
any such document to which the Underwriters or counsel to the Underwriters shall reasonably object.
(d) If at any time when a
prospectus relating to the Securities is required to be delivered (or in lieu thereof, the notice referred to in Rule 173(a) of the Rules and Regulations) any event occurs or condition exists as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made when the Prospectus is delivered (or in lieu
thereof, the notice referred to in Rule 173(a) of the Rules and Regulations), not misleading, or if it is necessary at any time to amend or supplement any Registration Statement or the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus to comply with the Securities Act or the Exchange Act, that the Company will promptly notify the Underwriters thereof and upon their request will prepare an appropriate amendment or supplement or upon
their request make an appropriate filing pursuant to Section 13 or 14 of the Exchange Act in form and substance reasonably satisfactory to the Underwriters which will correct such statement or omission or effect such compliance and will use its
reasonable best efforts to have any amendment to any Registration Statement declared effective as soon as possible. The Company will furnish without charge to each Underwriter and to any dealer in securities as many copies as the Underwriters may
from time to time reasonably request of such amendment or supplement. In case any Underwriter is required to deliver a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) of
16
the Rules and Regulations) relating to the Securities, the Company upon the request of such Underwriter will prepare promptly an amended or supplemented Prospectus as may be necessary to permit
compliance with the requirements of Section 10(a)(3) of the Securities Act and deliver to such Underwriter as many copies as such Underwriter may reasonably request of such amended or supplemented Prospectus complying with Section 10(a)(3)
of the Securities Act.
(e) If the General Disclosure Package is being used to solicit offers to buy the Securities at a time
when the Prospectus is not yet available to prospective purchasers and any event shall occur as a result of which, in the judgment of the Company or in the reasonable opinion of the Underwriters, it becomes necessary to amend or supplement the
General Disclosure Package in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or to make the statements therein not conflict with the information contained or incorporated by
reference in the Registration Statement then on file and not superseded or modified, or if it is necessary at any time to amend or supplement the General Disclosure Package to comply with any law, the Company promptly will either (i) prepare,
file with the Commission (if required) and furnish to the Underwriters and any dealers an appropriate amendment or supplement to the General Disclosure Package or (ii) prepare and file with the Commission an appropriate filing under the
Exchange Act which shall be incorporated by reference in the General Disclosure Package so that the General Disclosure Package as so amended or supplemented will not, in the light of the circumstances under which they were made, be misleading or
conflict with the Registration Statement then on file, or so that the General Disclosure Package will comply with law.
(f) If
at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or will conflict with the information contained in the
Registration Statement, Pricing Prospectus or Prospectus, including any document incorporated by reference therein and any prospectus supplement deemed to be a part thereof and not superseded or modified or included or would include an untrue
statement of a material fact or omitted or would omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, the
Company has promptly notified or will promptly notify the Underwriters so that any use of the Issuer Free Writing Prospectus may cease until it is amended or supplemented and has promptly amended or will promptly amend or supplement, at its own
expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission. The foregoing sentence does not apply to statements in or omissions from any Issuer Free Writing Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of any Underwriter specifically for inclusion therein, which information the parties hereto agree is limited to the Underwriter’s Information (as defined in
Section 17).
(g) To the extent not available on the Commission’s Electronic Data Gathering, Analysis and
Retrieval system or any successor system (“EDGAR”), to furnish promptly to each of the Underwriters and to counsel for the Underwriters a signed copy of each of the Registration Statements as originally filed with the Commission,
and of each amendment thereto filed with the Commission, including all consents and exhibits filed therewith.
(h) To the
extent not available on EDGAR, deliver promptly to the Underwriters such number of the following documents as the Underwriters shall reasonably request: (i) conformed copies of the Registration Statements as originally filed with the Commission
(in each case excluding exhibits), (ii) each Preliminary Prospectus, (iii) any Issuer Free Writing Prospectus, (iv) the Prospectus (the delivery of the documents referred to in clauses (i), (ii), (iii) and (iv) of this
paragraph (h) to be made not later than 10:00 A.M., New York time, on the business day following the execution and delivery of this Agreement), (v) conformed copies of any amendment to the Registration Statement (excluding exhibits),
(vi) any amendment or supplement to the General Disclosure Package or the Prospectus (the delivery of the documents referred to in clauses (v) and (vi) of this paragraph (h) to be made not later than 10:00 A.M., New York time, on
the business day following the date of such amendment or supplement) and (vii) any document incorporated by reference in the General Disclosure Package or the Prospectus (excluding exhibits thereto) (the delivery of the documents referred to in
clause (vii) of this paragraph (h) to be made not later than 10:00 A.M., New York time, on the business day following the date of such document).
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(i) To make generally available to its stockholders as soon as practicable, but in any event
not later than eighteen (18) months after the effective date of each Registration Statement (as defined in Rule 158(c) of the Rules and Regulations), an earnings statement of the Company and its subsidiaries (which need not be audited)
complying with Section 11(a) of the Securities Act and the Rules and Regulations (including, at the option of the Company, Rule 158).
(j) To take promptly from time to time such actions as the Underwriters may reasonably request to qualify the Securities for offering and sale under the securities or Blue Sky laws of such jurisdictions
(domestic or foreign) as the Underwriters may designate and to continue such qualifications in effect, and to comply with such laws, for so long as required to permit the offer and sale of Securities in such jurisdictions; provided that the
Company shall not be obligated to qualify as a foreign corporation in any jurisdiction in which it is not so qualified or to file a general consent to service of process in any jurisdiction.
(k) Upon request, during the period of five (5) years from the date hereof, to the extent not available on EDGAR, to deliver to each
of the Underwriters, (i) as soon as they are available, copies of all reports or other communications furnished generally to stockholders, and (ii) as soon as they are available, copies of any reports and financial statements furnished or
filed with the Commission or any national securities exchange on which the Stock is listed. However, so long as the Company is subject to the reporting requirements of either Section 13 or Section 15(d) of the Exchange Act and is timely
filing reports with the Commission on EDGAR, it is not required to furnish such reports or statements to the Underwriters.
(l)
That the Company will not, for a period of sixty (60) days from the date of this Agreement, (the “Lock-Up Period”) without the prior written consent of the Underwriters, directly or indirectly offer, sell, assign, transfer,
pledge, contract to sell, or otherwise dispose of, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, other than (i) the Company’s sale of the Securities hereunder, (ii) the
issuance of Common Stock and/or options to acquire Common Stock pursuant to the Company’s employee benefit plans, qualified stock option plans or other employee compensation plans as such plans are in existence on the date hereof and described
in the Prospectus, (iii) the issuance of Common Stock pursuant to the valid exercises of options, warrants and/or rights outstanding on the date hereof, (iv) the issuance of Common Stock or warrants to purchase Common Stock, which in the
aggregate shall not exceed 10% of the outstanding Common Stock as of the date of this Agreement, issued as consideration in acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that
any such issuance shall only be a person or entity (or to the equityholders of such entity) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and
shall provide to the Company additional benefits in addition to the investment of funds, but shall not, for the purposes of this clause (iv), include a transaction in which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities (such transaction, a “Strategic Transaction”), and (v) the issuance of Common Stock and/or warrants to purchase Common Stock to non-employee consultants
who are engaged by the Company to render bona fide consulting and advisory services to the Company, including, without limitation, services relating to strategic planning, investor relations and introductions and the identification and evaluation of
financing transactions and acquisition and merger candidates and transactions. The Company will cause each officer and director listed in Exhibit C to furnish to the Underwriters, on or prior to the date hereof, a letter, substantially in the
form of Exhibit B hereto. The Company also agrees that during the Lock-Up Period, other than for the sale of the Securities hereunder and other than in connection with issuances of Common Stock, options and warrants permitted above, the
Company will not file any registration statement, preliminary prospectus or prospectus, or any amendment or supplement thereto, under the Securities Act for any such transaction or which registers, or offers for sale, Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, except for a registration statement on Form S-8 relating to employee benefit plans, a registration statement on Form S-4 registering securities to be issued in a Strategic
Transaction, and/or a registration statement relating to the issuance of Common Stock to consultants described in clause (v) above or to relating to the resale of such Common Stock. The Company hereby agrees that, if any Underwriter is at such
time providing research coverage of the Company and is subject to the restrictions set forth in FINRA Rule 2711(f)(4), then (i) if it issues an earnings release or material news, or if a material event relating to the Company occurs, during the
last seventeen (17) days of the Lock-Up Period, or (ii) if prior to the expiration of the Lock-Up Period, the Company announces that it will
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release earnings results during the sixteen (16)-day period beginning on the last day of the Lock-Up Period, the restrictions imposed by this paragraph (l) or the letter shall continue to
apply until the expiration of the eighteen (18)-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. The Company will provide the Underwriters and each stockholder subject to the
Lock-Up Period with prior notice (in accordance with Section 15 herein) of any such announcement that gives rise to an extension of the Lock-Up Period, subject to the Underwriters’ agreement to hold such information in confidence prior to
public disclosure of the same.
(m) To supply the Underwriters with copies of all correspondence to and from, and all documents
issued to and by, the Commission in connection with the registration of the Securities under the Securities Act or any of the Registration Statements, any Preliminary Prospectus or the Prospectus, or any amendment or supplement thereto or document
incorporated by reference therein.
(n) Prior to each of the Closing Dates, to furnish to the Underwriters, as soon as they
have been prepared, copies of any unaudited interim consolidated financial statements of the Company for any periods subsequent to the periods covered by the financial statements appearing in the Registration Statements and the Prospectus.
(o) Prior to the latest of the Closing Dates, not to issue any press release or other communication directly or indirectly or
hold any press conference with respect to the Company, its condition, financial or otherwise, or earnings, business affairs or business prospects (except for routine oral marketing communications in the ordinary course of business and consistent
with the past practices of the Company and of which the Underwriters are notified), without the prior written consent of the Underwriters, unless in the judgment of the Company and its counsel, and after notification to the Underwriters, such press
release or communication is required by law.
(p) Until the Underwriters shall have notified the Company of the completion of
the resale of the Stock and the Warrants, that the Company will not, and will cause its affiliated purchasers (as defined in Regulation M under the Exchange Act) not to, either alone or with one or more other persons, bid for or purchase, for any
account in which it or any of its affiliated purchasers has a beneficial interest, any Stock or Warrants, or attempt to induce any person to purchase any Stock or Warrants; and not to, and to cause its affiliated purchasers not to, make bids or
purchase for the purpose of creating actual, or apparent, active trading in or of raising the price of the Stock or Warrants.
(q) Not to take any action prior to latest of the Closing Dates which would require the Prospectus to be amended or supplemented pursuant
to Section 4(c).
(r) To at all times comply in all material respects with all applicable provisions of the
Sarbanes-Oxley Act in effect from time to time.
(s) To maintain, at its expense, a registrar and transfer agent for the Stock
and a registrar and transfer agent for the Warrants.
(t) To apply the net proceeds from the sale of the Securities as set
forth in the Registration Statement, the General Disclosure Package and the Prospectus under the heading “Use of Proceeds,” and except as disclosed in the General Disclosure Package, not to use any of the proceeds from the sale of the
Securities hereunder to repay any outstanding debt owed to any affiliate of any Underwriter. The Company shall manage its affairs and investments in such a manner as not to be or become an “investment company” within the meaning of the
Investment Company Act and the rules and regulations thereunder.
(u) To use its reasonable best efforts to list, subject to
notice of issuance, and to maintain the listing of the Stock and the Warrant Shares on the Exchange
(v) To reserve and keep
available at all times a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue the Warrant Shares.
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(w) To use its reasonable best efforts to do and perform all things required to be done or
performed under this Agreement by the Company prior to each Closing Date and to satisfy all conditions precedent to the delivery of the Stock and the Warrants.
(x) Upon request of any Underwriter, to furnish, or cause to be furnished, to such Underwriter an electronic version of the Company’s trademarks, servicemarks and corporate logo for use on the
website, if any, operated by such Underwriter for the purpose of facilitating the on-line offering of the Securities (the “License”); provided, however that the License shall be used solely for the purpose described above, is
granted without any fee and may not be assigned or transferred.
5. PAYMENT OF
EXPENSES. The Company agrees to pay, or reimburse if paid by any Underwriter, whether or not the transactions contemplated hereby are consummated or this Agreement is terminated: (a) the costs incident to the
authorization, issuance, sale, preparation and delivery of the Securities and any taxes payable in that connection; (b) the costs incident to the registration of the Securities under the Securities Act; (c) the costs incident to the
preparation, printing and distribution of the Registration Statements, the Base Prospectus, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the General Disclosure Package, the Prospectus, any amendments, supplements and exhibits
thereto or any document incorporated by reference therein and the costs of printing, reproducing and distributing the “Agreement Among Underwriters” among the Underwriters, the Master Selected Dealers’ Agreement, the
Underwriters’ Questionnaire, this Agreement and any closing documents by mail, telex or other means of communications; (d) the reasonable and documented fees and expenses (including related reasonable and documented fees and expenses of
counsel for the Underwriters) incurred in connection with securing any required review by FINRA of the terms of the sale of the Securities and any filings made with FINRA; (e) any applicable listing or other fees; (f) the reasonable and
documented fees and expenses (including related reasonable and documented fees and expenses of counsel to the Underwriters) of qualifying the Securities under the securities laws of the several jurisdictions as provided in Section 4(j))
and of preparing, printing and distributing wrappers, Blue Sky Memoranda and Legal Investment Surveys; (g) the cost of preparing and printing stock certificates and warrant certificates; (h) all fees and expenses of the registrar and
transfer agent of the Stock and the registrar and transfer agent of the Warrants; (i) the costs and expenses of the Company relating to investor presentations on any “road show” undertaken in connection with the marketing of the
offering 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, and travel and lodging expenses of the officers of the Company and such consultants, (j) the reasonable and documented out-of-pocket
expenses of the Underwriters in connection with the offering of the Securities, including reasonable and documented fees and disbursements of counsel to the Underwriters; provided that out-of-pocket and legal expenses (other than those
covered in clauses (d) and (e) above) exceeding $50,000 by either Underwriter shall require the prior approval of the Company, such approval not to be unreasonably withheld, and (k) all other costs and expenses incident to the
offering of the Securities or the performance of the obligations of the Company under this Agreement (including, without limitation, the fees and expenses of the Company’s counsel and the Company’s independent accountants); provided
that, except to the extent otherwise provided in this Section 5 and in Sections 9 and 10, the Underwriters shall pay their own costs and expenses, including the fees and expenses of their counsel, any transfer taxes on the
resale of any Securities by them and the expenses of advertising any offering of the Securities made by the Underwriters. In no event shall the total compensation paid to the Underwriters, including any selling group members or other securities
brokers and dealers participating in the offering of the Securities, exceed 8.0% of the gross proceeds to the Company from the sale of the Securities as contemplated hereby.
6. CONDITIONS OF UNDERWRITERS’ OBLIGATIONS. The respective obligations of the several Underwriters hereunder are subject to the
accuracy, when made and as of the Applicable Time and on such Closing Date, of the representations and warranties of the Company contained herein, to the accuracy of the statements of the Company made in any certificates pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder, and to each of the following additional terms and conditions:
(a) The Registration Statements have become effective under the Securities Act, and no stop order suspending the effectiveness of any Registration Statement or any part thereof, preventing or suspending
the use of any Base Prospectus, any Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus or any part thereof shall have been issued and no proceedings for that purpose or pursuant to Section 8A under the Securities
Act shall have been initiated or threatened by the Commission, and all
20
requests for additional information on the part of the Commission (to be included or incorporated by reference in the Registration Statements or the Prospectus or otherwise) shall have been
complied with to the reasonable satisfaction of the Underwriters; the Rule 462(b) Registration Statement, if any, each Issuer Free Writing Prospectus and the Prospectus shall have been filed with, the Commission within the applicable time period
prescribed for such filing by, and in compliance with, the Rules and Regulations and in accordance with Section 4(a), and the Rule 462(b) Registration Statement, if any, shall have become effective immediately upon its filing with the
Commission; and FINRA shall have raised no objection to the fairness and reasonableness of the terms of this Agreement or the transactions contemplated hereby.
(b) None of the Underwriters shall have discovered and disclosed to the Company on or prior to such Closing Date that any Registration Statement or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the Underwriters, is material or omits to state any fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein
not misleading, or that the General Disclosure Package, any Issuer Free Writing Prospectus or the Prospectus or any amendment or supplement thereto contains an untrue statement of fact which, in the opinion of such counsel, is material or omits to
state any fact which, in the opinion of such counsel, is material and is necessary in order to make the statements, in the light of the circumstances in which they were made, not misleading.
(c) All corporate proceedings and other legal matters incident to the authorization, form and validity of each of this Agreement, the
Securities, the Registration Statements, the General Disclosure Package, each Issuer Free Writing Prospectus and the Prospectus and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters.
(d) TroyGould PC shall have furnished to the Underwriters such counsel’s written opinion letter, as counsel to the Company, addressed
to the Underwriters and dated such Closing Date, in form and substance reasonably satisfactory to the Underwriters and to the effect set forth in Schedule IV hereto.
(e) Ropes & Gray LLP shall have furnished to the Underwriters such counsel’s written opinion, as intellectual property counsel to the Company, addressed to the Underwriters and dated such
Closing Date, to the effect set forth in Schedule V hereto.
(f) The Underwriters shall have received from Lowenstein
Sandler PC, counsel for the Underwriters, such opinion or opinions, dated such Closing Date, with respect to such matters as the Underwriters may reasonably require, and the Company shall have furnished to such counsel such documents as they
reasonably request for enabling them to pass upon such matters.
(g) At the time of the execution of this Agreement, the
Underwriters shall have received from BDO USA, LLP a letter, addressed to the Underwriters, executed and dated such date, in form and substance reasonably satisfactory to the Underwriters (i) confirming that they are an independent registered
accounting firm with respect to the Company and its subsidiaries within the meaning of the Securities Act and the Rules and Regulations and PCAOB and (ii) stating the conclusions and findings of such firm, of the type ordinarily included in
accountants’ “comfort letters” to underwriters, with respect to the financial statements and certain financial information contained or incorporated by reference in the Registration Statements, the General Disclosure Package and the
Prospectus.
(h) On the effective date of any post-effective amendment to any Registration Statement and on such Closing Date,
the Underwriters shall have received a letter (the “bring-down letter”) from BDO USA, LLP addressed to the Underwriters and dated such Closing Date confirming, as of the date of the bring-down letter (or, with respect to matters
involving changes or developments since the respective dates as of which specified financial information is given in the General Disclosure Package and the Prospectus, as the case may be, as of a date not more than three (3) business days prior
to the date of the bring-down letter), the conclusions and findings of such firm, of the type ordinarily included in accountants’ “comfort letters” to underwriters, with respect to the financial information and other matters covered
by its letter delivered to
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the Underwriters concurrently with the execution of this Agreement pursuant to paragraph (g) of this Section 6.
(i) The Company shall have furnished to the Underwriters a certificate, dated such Closing Date, of its President and Chief Executive Officer and its Chief Financial Officer stating that (i) such
officers have carefully examined the Registration Statement, the General Disclosure Package, any Permitted Free Writing Prospectus and the Prospectus and, in their opinion, the Registration Statements and each amendment thereto, at the Applicable
Time, as of the date of this Agreement and as of such Closing Date did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not
misleading, and the General Disclosure Package, as of the Applicable Time and as of such Closing Date, any Permitted Free Writing Prospectus as of its date and as of such Closing Date, the Prospectus and each amendment or supplement thereto, as of
the respective date thereof and as of such Closing Date, did not include any untrue statement of a material fact and did not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances in which
they were made, not misleading, (ii) since the effective date of the Initial Registration Statement, no event has occurred which should have been set forth in a supplement or amendment to the Registration Statements, the General Disclosure
Package or the Prospectus, (iii) to their knowledge after due inquiry (as defined in this Agreement), as of such Closing Date, the representations and warranties of the Company in this Agreement are true and correct and the Company has complied
with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to such Closing Date, and (iv) there has not been, subsequent to the date of the most recent audited financial statements included
or incorporated by reference in the General Disclosure Package, any material adverse change in the financial position or results of operations of the Company and its subsidiaries, or any change or development that, singularly or in the aggregate,
would involve a material adverse change or a prospective material adverse change, in or affecting the condition (financial or otherwise), results of operations, business, assets or prospects of the Company and its subsidiaries taken as a whole,
except as set forth in the Prospectus.
(j) Since the date of the latest audited financial statements included in the General
Disclosure Package or incorporated by reference in the General Disclosure Package as of the date hereof, (i) neither the Company nor any of its subsidiaries shall have sustained any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth in the General Disclosure Package, and (ii) there shall not have been any
change in the capital stock (other than stock option and warrant exercises and stock repurchases in the ordinary course of business) or long-term debt of the Company or any of its subsidiaries, or any change, or any development involving a
prospective change, in or affecting the business, general affairs, management, financial position, stockholders’ equity or results of operations of the Company and its subsidiaries, otherwise than as set forth in the General Disclosure Package,
the effect of which, in any such case described in clause (i) or (ii) of this paragraph (j), is, in the judgment of the Underwriters, so material and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery
of the Stock and the Warrants on the terms and in the manner contemplated in the General Disclosure Package.
(k) No action
shall have been taken and no law, statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency or body which would prevent the issuance or sale of the Securities or materially and adversely affect or
potentially materially and adversely affect the business or operations of the Company or any of its subsidiaries; and no injunction, restraining order or order of any other nature by any federal or state court of competent jurisdiction shall have
been issued which would prevent the issuance or sale of the Stock and the Warrants or materially and adversely affect or potentially materially and adversely affect the business or operations of the Company.
(l) Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange, The NASDAQ Capital Market or the NYSE Amex or in the over-the-counter market, or trading in any securities of the Company on any exchange or in the over-the-counter market, shall have been
suspended or materially limited, or minimum or maximum prices or maximum range for prices shall have been established on any such exchange or such market by the Commission, by such exchange or market or by any other regulatory body
22
or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by Federal or state authorities or a material disruption has occurred in commercial banking
or securities settlement or clearance services in the United States, (iii) the United States shall have become engaged in hostilities, or the subject of an act of terrorism, or there shall have been an outbreak of or escalation in hostilities
involving the United States, or there shall have been a declaration of a national emergency or war by the United States or (iv) there shall have occurred such a material adverse change in general economic, political or financial conditions (or
the effect of international conditions on the financial markets in the United States shall be such) as to make it, in the judgment of the Underwriters, impracticable or inadvisable to proceed with the sale or delivery of the Stock and the Warrants
on the terms and in the manner contemplated in the General Disclosure Package and the Prospectus.
(m) The Company shall have
filed a Notification: Listing of Additional Shares with The NASDAQ Capital Market with respect to the Stock and the Warrant Shares and shall have received no objection thereto from The NASDAQ Capital Market.
(n) The Underwriters shall have received satisfactory evidence of the good standing of the Company and its subsidiaries in their
respective jurisdictions of organization and their good standing as foreign entities in such other jurisdictions as the Underwriters may reasonably request, in each case in writing or any standard form of telecommunication from the appropriate
Governmental Authorities of such jurisdictions.
(o) The Underwriters shall have received, on or prior to the date hereof, the
written agreements, substantially in the form of Exhibit B hereto, of the persons listed in Exhibit C to this Agreement.
(p) On or prior to such Closing Date, the Company shall have furnished to the Underwriters such further certificates and documents as the Underwriters may reasonably request.
All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Underwriters.
7.
INDEMNIFICATION AND CONTRIBUTION.
(a) The Company shall indemnify and hold
harmless:
each Underwriter, its directors, officers, managers, members, employees, representatives and agents and each person,
if any, who controls any Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively the “Underwriter Indemnified Parties,” and each an “Underwriter
Indemnified Party”) against any loss, claim, damage, expense or liability whatsoever (or any action, investigation or proceeding in respect thereof), joint or several, to which such Underwriter Indemnified Party may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, expense, liability, action, investigation or proceeding arises out of or is based upon (A) any untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, any Issuer Free Writing Prospectus, any “issuer information” that is used in connection with the offer and sale of the Securities by, or with the approval of, the Company, filed or required to be filed pursuant
to Rule 433(d) of the Rules and Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement thereto or document incorporated by reference therein, or (B) the omission or alleged omission to state in any
Preliminary Prospectus, any Issuer Free Writing Prospectus, any “issuer information” that is used in connection with the offer and sale of the Securities by, or with the approval of, the Company, filed or required to be filed pursuant to
Rule 433(d) of the Rules and Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement thereto or document incorporated by reference therein, a material fact required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse each Underwriter Indemnified Party promptly upon demand for any legal fees or other expenses reasonably incurred by that Underwriter Indemnified Party in connection with investigating, or
preparing to defend, or defending against, or appearing as a third party witness in respect of, or otherwise incurred in connection with, any such loss, claim, damage, expense, liability, action, investigation or
23
proceeding, as such fees and expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, expense
or liability arises out of or is based upon an untrue statement or alleged untrue statement in, or omission or alleged omission from any Preliminary Prospectus, any Registration Statement or the Prospectus, or any such amendment or supplement
thereto, or any Issuer Free Writing Prospectus made in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Underwriter specifically for use therein, which information the parties hereto agree is
limited to the Underwriters’ Information (as defined in Section 17).
The indemnity agreement in this
Section 7(a) is not exclusive and is in addition to any other liability which the Company might have under this Agreement or otherwise, and shall not limit any rights or remedies which may otherwise be available under this Agreement, at
law or in equity to any Underwriter Indemnified Party.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company and its directors, its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively the “Company Indemnified Parties” and each a “Company Indemnified Party”) against any loss, claim, damage, expense or liability whatsoever (or any action, investigation or proceeding in respect
thereof), joint or several, to which such Company Indemnified Party may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, expense, liability, action, investigation or proceeding arises out of or is based
upon (i) any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any “issuer information” that is used in connection with the offer and sale of
the Securities by, or with the approval of, the Company, filed or required to be filed pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, or (ii) the
omission or alleged omission to state in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any “issuer information” that is used in connection with the offer and sale of the Securities by, or with the approval of, the
Company, filed or required to be filed pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, a material fact required to be stated therein or necessary to make
the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the
Company by or on behalf of that Underwriter specifically for use therein, which information the parties hereto agree is limited to the Underwriter’s Information as defined in Section 17, and shall promptly reimburse the Company Indemnified
Parties for any legal or other expenses reasonably incurred by such party in connection with investigating or preparing to defend or defending against or appearing as third party witness in connection with any such loss, claim, damage, liability,
action, investigation or proceeding, as such fees and expenses are incurred. This indemnity agreement is not exclusive and will be in addition to any other liability which the Underwriters might otherwise have and shall not limit any rights or
remedies which may otherwise be available under this Agreement, at law or in equity to the Company Indemnified Parties.
(c)
Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party under this
Section 7, notify such indemnifying party in writing of the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this
Section 7 except to the extent it has been materially prejudiced by such failure; and, provided, further, that the failure to notify an indemnifying party shall not relieve it from any liability which it may have to an indemnified
party otherwise than under this Section 7. If any such action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the
extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense of such action with counsel reasonably satisfactory to the indemnified party (which counsel shall not, except with the written consent of the
indemnified party, be counsel to the indemnifying party). After notice from the indemnifying party to the indemnified party of its election to assume the defense of such action, except as provided herein, the indemnifying party shall not be liable
to the indemnified party under Section 7 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense of such action
24
other than reasonable costs of investigation; provided, however, that any indemnified party shall have the right to employ separate counsel in any such action and to participate in the
defense of such action but the fees and expenses of such counsel (other than reasonable costs of investigation) shall be at the expense of such indemnified party unless (i) the employment thereof has been specifically authorized in writing by
the Company in the case of a claim for indemnification under Section 7(a), or the Underwriters in the case of a claim for indemnification under Section 7(b), (ii) such indemnified party shall have been advised by its
counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party, or (iii) the indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party within a reasonable period of time after notice of the commencement of the action or the indemnifying party does not diligently defend the action after assumption of the defense, in which
case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of (or, in the case
of a failure to diligently defend the action after assumption of the defense, to continue to defend) such action on behalf of such indemnified party and the indemnifying party shall be responsible for legal or other expenses subsequently incurred by
such indemnified party in connection with the defense of such action; provided, however, that the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time for all such indemnified parties (in addition to any local counsel),
which firm shall be designated in writing by the Underwriters if the indemnified parties under this Section 7 consist of any Underwriter Indemnified Party or by the Company if the indemnified parties under this Section 7
consist of any Company Indemnified Parties. Subject to this Section 7(c), the amount payable by an indemnifying party under Section 7 shall include, but not be limited to, (x) reasonable legal fees and expenses of counsel to
the indemnified party and any other expenses in investigating, or preparing to defend or defending against, or appearing as a third party witness in respect of, or otherwise incurred in connection with, any action, investigation, proceeding or
claim, and (y) all amounts paid in settlement of any of the foregoing. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of judgment with respect to any
pending or threatened action or any claim whatsoever, in respect of which indemnification or contribution could be sought under this Section 7 (whether or not the indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each indemnified party in form and substance reasonably satisfactory to such indemnified party from all liability arising out of such action or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. Subject to the provisions of the following sentence, no indemnifying party shall be liable for settlement of any
pending or threatened action or any claim whatsoever that is effected without its written consent (which consent shall not be unreasonably withheld or delayed), but if settled with its written consent, if its consent has been unreasonably withheld
or delayed or if there be a judgment for the plaintiff in any such matter, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. In
addition, if at any time an indemnified party shall have requested that an indemnifying party reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature
contemplated by Sections 7(a) or 7(b) effected without its written consent if (i) such settlement is entered into more than forty-five (45) days after receipt by such indemnifying party of the request for reimbursement,
(ii) such indemnifying party shall have received notice of the terms of such settlement at least thirty (30) days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of such settlement.
(d) If the indemnification provided for in this
Section 7 is unavailable or insufficient to hold harmless an indemnified party under Section 7(a) or 7(b), then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid, payable or otherwise incurred by such indemnified party as a result of such loss, claim, damage, expense or liability (or any action, investigation or proceeding in respect thereof), as incurred, (i) in such proportion as shall be
appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Securities, or (ii) if the allocation provided by clause (i) of this Section 7(d)
is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) of
25
this Section 7(d) but also the relative fault of the Company on the one hand and the Underwriters on the other with respect to the statements, omissions, acts or failures to act which
resulted in such loss, claim, damage, expense or liability (or any action, investigation or proceeding in respect thereof) as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the
Underwriters on the other with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Securities purchased under this Agreement (before deducting expenses) received by the Company
bear to the total underwriting discounts and commissions received by the Underwriters with respect to the Securities purchased under this Agreement, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of
the Company on the one hand and the Underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the Underwriters on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement, omission, act
or failure to act; provided that the parties hereto agree that the written information furnished to the Company by or on behalf of the Underwriters for use in the Preliminary Prospectus, any Registration Statement or the Prospectus, or in any
amendment or supplement thereto, consists solely of the Underwriter’s Information as defined in Section 17.
(e) The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to Section 7(d)
above were to be determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to Section 7(d) above. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage, expense, liability, action, investigation or proceeding referred to in Section 7(d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating, preparing to defend or defending against or appearing as a third party witness in respect of, or otherwise incurred in connection with, any such loss, claim, damage, expense,
liability, action, investigation or proceeding. Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the total underwriting discounts and commissions received by such
Underwriter with respect to the offering of the Securities exceeds the amount of any damages which the Underwriter has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement, omission or alleged omission, act or
alleged act or failure to act or alleged failure to act. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The Underwriters’ obligations to contribute as provided in this Section 7 are several in proportion to their respective underwriting obligations and not joint.
8. TERMINATION. The obligations of the Underwriters hereunder may be terminated by the Underwriters, in their absolute discretion
by notice given to the Company prior to delivery of and payment for the Firm Stock and the Firm Warrants if, prior to that time, any of the events described in Sections 6(j), 6(k) or 6(l) have occurred or if the Underwriters shall
decline to purchase the Stock or the Warrants for any reason permitted under this Agreement.
9. REIMBURSEMENT
OF UNDERWRITERS’ EXPENSES. Notwithstanding anything to the contrary in this Agreement, if (a) this Agreement shall have been terminated pursuant to Section 8 or
10, (b) the Company shall fail to tender the Stock and the Warrants for delivery to the Underwriters for any reason not permitted under this Agreement, (c) the Underwriters shall decline to purchase the Stock and the Warrants for
any reason permitted under this Agreement or (d) the sale of the Stock and the Warrants is not consummated because any condition to the obligations of the Underwriters set forth herein is not satisfied or because of the refusal, inability or
failure on the part of the Company to perform any agreement herein or to satisfy any condition or to comply with the provisions hereof, then in addition to the payment of amounts in accordance with Section 5, the Company shall reimburse
the Underwriters for the reasonable and documented fees and expenses of Underwriters’ counsel and for such other reasonable and documented out-of-pocket expenses as shall have been incurred by them in connection with this Agreement and the
proposed purchase of the Stock and the Warrants, including, without limitation, reasonable and documented travel and lodging expenses of the Underwriters, and upon demand the Company shall pay the full amount thereof to the Underwriters;
provided that if this Agreement is terminated pursuant to Section 10 by reason of the default of one or more Underwriters, the Company shall not be obligated to reimburse any defaulting Underwriter on account of expenses to the
extent incurred by such defaulting Underwriter provided further that the
26
foregoing shall not limit any reimbursement obligation of the Company to any non-defaulting Underwriter under this Section 9.
10. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or Underwriters shall default in its or their obligations to purchase shares of
Stock and/or Warrants hereunder on any Closing Date and the aggregate number of shares and/or Warrants which such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed ten percent (10%) of the total number of
shares and/or Warrants to be purchased by all Underwriters on such Closing Date, the other Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the shares and/or Warrants which such
defaulting Underwriter or Underwriters agreed but failed to purchase on such Closing Date. If any Underwriter or Underwriters shall so default and the aggregate number of shares and/or Warrants with respect to which such default or defaults occur is
more than ten percent (10%) of the total number of shares and/or Warrants to be purchased by all Underwriters on such Closing Date and arrangements satisfactory to the remaining Underwriter and the Company for the purchase of such shares by
other persons are not made within forty eight (48) hours after such default, this Agreement shall terminate.
If the
remaining Underwriter or substituted Underwriters are required hereby or agree to take up all or part of the shares of Stock or Warrants of a defaulting Underwriter or Underwriters on such Closing Date as provided in this Section 10,
(i) the Company shall have the right to postpone such Closing Date for a period of not more than five (5) full business days in order that the Company may effect whatever changes may thereby be made necessary in the Registration Statements
or the Prospectus, or in any other documents or arrangements, and the Company agrees promptly to file any amendments to the Registration Statements or supplements to the Prospectus which may thereby be made necessary, and (ii) the respective
numbers of shares to be purchased by the remaining Underwriter or substituted Underwriters shall be taken as the basis of their underwriting obligation for all purposes of this Agreement. Nothing herein contained shall relieve any defaulting
Underwriter of its liability to the Company or the other Underwriter for damages occasioned by its default hereunder. Any termination of this Agreement pursuant to this Section 10 shall be without liability on the part of any non
defaulting Underwriter or the Company, except that the representations, warranties, covenants, indemnities, agreements and other statements set forth in Section 2, the obligations with respect to expenses to be paid or reimbursed
pursuant to Sections 5 and 9 and the provisions of Section 7 and Sections 11 through 20, inclusive, shall not terminate and shall remain in full force and effect.
11. ABSENCE OF FIDUCIARY RELATIONSHIP. The Company acknowledges and agrees that:
(a) each Underwriter’s responsibility to the Company is solely contractual in nature, the Underwriters have been retained
solely to act as underwriters in connection with the sale of the Securities and no fiduciary, advisory or agency relationship between the Company and the Underwriters has been created in respect of any of the transactions contemplated by this
Agreement, irrespective of whether any of the Underwriters has advised or is advising the Company on other matters;
(b) the
price of the Stock and the terms of the Warrants set forth in this Agreement was established by the Company following discussions and arms-length negotiations with the Underwriters, 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 Underwriters and their affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and that the Underwriters have no obligation to disclose such interests and
transactions to the Company by virtue of any fiduciary, advisory or agency relationship; and
(d) it waives, to the fullest
extent permitted by law, any claims it may have against the Underwriters for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that the Underwriters shall have no liability (whether direct or indirect) to the Company in respect
of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Company, including stockholders, employees or creditors of the Company.
12. SUCCESSORS; PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of and be binding upon the several Underwriters, the Company and their respective successors and assigns. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, other than
the
27
persons mentioned in the preceding sentence, any legal or equitable right, remedy or claim under or in respect of this Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of such persons and for the benefit of no other person; except that the representations, warranties, covenants, agreements and indemnities of the
Company contained in this Agreement shall also be for the benefit of the Underwriter Indemnified Parties, and the indemnities of the several Underwriters shall be for the benefit of the Company Indemnified Parties. It is understood that each
Underwriter’s responsibility to the Company is solely contractual in nature and the Underwriters do not owe the Company, or any other party, any fiduciary duty as a result of this Agreement. No purchaser of any of the Stock or Warrants from any
Underwriter shall be deemed to be a successor or assign by reason merely of such purchase.
13. SURVIVAL OF
INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC. The respective indemnities, covenants, agreements, representations, warranties and other statements of the Company and the several
Underwriters, as set forth in this Agreement or made by them respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation made by or on behalf of any Underwriter, the Company or any person
controlling any of them and shall survive delivery of and payment for the Stock and the Warrants. Notwithstanding any termination of this Agreement, including without limitation any termination pursuant to Section 8 or
Section 10, the indemnities, covenants, agreements, representations, warranties and other statements forth in Sections 2, 5, 7 and 9 and Sections 11 through 20, inclusive, of this Agreement shall
not terminate and shall remain in full force and effect at all times.
14. NOTICES. All statements,
requests, notices and agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by
mail, telex, email or facsimile transmission to Cowen and Company, LLC, 599 Lexington Avenue, New York, New York 10022, Attention: Head of Equity Capital Markets, Fax: 646-562-1249 with a copy (which shall not constitute notice) to the General
Counsel, Fax: 646-562-1124; and Roth Capital Partners, LLC, 24 Corporate Plaza, Newport Beach, California 92660, Attention: Aaron Gurewitz, Fax: 949- 720-7227, with a copy (which shall not constitute notice) to: Lowenstein Sandler PC, 1251 Avenue of
the Americas, New York, NY 10020, Attention: John D. Hogoboom, Fax: 973-597-2400
(b) if to the Company, shall be delivered or
sent by mail, telex, email or facsimile transmission to CytRx Corporation, 11726 San Vicente Boulevard, Suite 650, Los Angeles, California 90049, Attention: Steven A. Kriegsman, President and Chief Executive Officer, Fax: 310-826-6139, with a copy
(which shall not constitute notice) to: TroyGould PC, 1801 Century Park East, Suite 1600, Los Angeles, California 90067, Attention: Dale E. Short, Fax: 310-789-1459.
Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof.
15. DEFINITION OF CERTAIN TERMS. For purposes of this Agreement, (a) “business day” means any day on
which The NASDAQ Capital Market is open for trading and (b) “subsidiary” has the meaning set forth in Rule 405 of the Rules and Regulations.
16. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, including without
limitation Section 5-1401 of the New York General Obligations. The Company irrevocably (a) submits to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York for the purpose of
any suit, action or other proceeding arising out of this Agreement or the transactions contemplated by this Agreement, the Registration Statements and any Preliminary Prospectus or the Prospectus, (b) agrees that all claims in respect of any
such suit, action or proceeding may be heard and determined by any such court, (c) waives to the fullest extent permitted by applicable law, any immunity from the jurisdiction of any such court or from any legal process, (d) agrees not to
commence any such suit, action or proceeding other than in such courts, and (e) waives, to the fullest extent permitted by applicable law, any claim that any such suit, action or proceeding is brought in an inconvenient forum.
17. UNDERWRITERS’ INFORMATION. The parties hereto acknowledge and agree that, for all purposes of this
Agreement, the Underwriters’ Information consists solely of the following information in the Prospectus: (i) the last paragraph on the front cover page concerning the terms of the offering by the Underwriters; and (ii) the statements
28
concerning the Underwriters contained in the eighth, ninth, tenth, twelfth, fourteenth, sixteenth and nineteenth paragraphs (determined without regard to “bullet point”
subparagraphs) under the heading “Underwriting.”
18. PARTIAL UNENFORCEABILITY. The invalidity
or unenforceability of any section, paragraph, clause or provision of this Agreement shall not affect the validity or enforceability of any other section, paragraph, clause or provision hereof. If any section, paragraph, clause or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.
19. GENERAL. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all
prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. In this Agreement, the masculine, feminine and neuter genders and the singular and the plural include one
another. The section headings in this Agreement are for the convenience of the parties only and will not affect the construction or interpretation of this Agreement. This Agreement may be amended or modified, and the observance of any term of this
Agreement may be waived, only by a writing signed by the Company and the Underwriters.
20. COUNTERPARTS.
This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
29
If the foregoing is in accordance with your understanding of the agreement between the
Company and the several Underwriters, kindly indicate your acceptance in the space provided for that purpose below.
|
|
|
|
|
| Very truly yours, |
|
| CYTRX CORPORATION |
|
|
| By: |
|
/s/ Steven A. Kriegsman |
|
|
Name: |
|
Steven A. Kriegsman |
|
|
Title: |
|
President and Chief Executive Officer |
|
|
|
|
|
| Accepted as of the date first above written: |
|
| COWEN AND COMPANY, LLC |
|
|
| By: |
|
/s/ Kevin J. Raidy |
|
|
Name: |
|
Kevin J. Raidy |
|
|
Title: |
|
Managing Director |
|
|
|
|
|
| ROTH CAPITAL PARTNERS, LLC |
|
|
| By: |
|
/s/ Aaron Gurewitz |
|
|
Name: |
|
Aaron Gurewitz |
|
|
Title: |
|
Head of Equity Capital Markets |
30
SCHEDULE I
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name |
|
Number of Shares of
Firm Stock to be
Purchased |
|
Number of Firm Warrants
to be Purchased |
|
|
Number of Shares of
Optional Stock to be
Purchased |
|
|
Number of Optional
Warrants to be Purchased |
|
| Cowen and Company, LLC |
|
19,600,000 |
|
|
19,600,000 |
|
|
|
2,940,000 |
|
|
|
2,940,000 |
|
| Roth Capital Partners, LLC |
|
19,600,000 |
|
|
19,600,000 |
|
|
|
2,940,000 |
|
|
|
2,940,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
39,200,000 |
|
|
39,200,000 |
|
|
|
5,880,000 |
|
|
|
5,880,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
SCHEDULE II
General Use Free Writing Prospectuses
None.
2
SCHEDULE III
Pricing Information
Firm Stock to be Sold: 39,200,000 shares
Firm Warrants to be Sold: Warrants to purchase 39,200,000 shares
Public Offering Price: $0.51 per share; $0.01 per Warrant
Underwriting Discounts and
Commissions: 6%
Estimated Net Proceeds to the Company, before offering expenses: $19,160,960
Exercise Price of the Warrants: $0.64
Warrant
Term: Five years from the date of issuance
SCHEDULE IV
Form of TroyGould PC Opinion
SCHEDULE V
Form of Ropes & Gray LLP Letter
Exhibit A
Form of Warrant
Exhibit B
Form of Lock-Up Agreement
July [•], 2011
COWEN AND COMPANY, LLC
599 Lexington Avenue
New York, New York 10022
ROTH CAPITAL PARTNERS, LLC
24 Corporate Plaza
Newport Beach, CA 92660
Re: CytRx Corporation – Offering of Securities
Dear Sirs:
This Agreement is being delivered to you in connection with the proposed Underwriting
Agreement (the “Underwriting Agreement”) among CytRx Corporation, a Delaware corporation (the “Company”), Cowen and Company, LLC and Roth Capital Partners, LLC (collectively, the “Underwriters”), relating to the
proposed public offering of securities of the Company, including shares of the common stock, par value $0.001 per share (the “Common Stock”) of the Company.
In order to induce you to enter into the Underwriting Agreement, and in light of the benefits that the offering of the Common Stock will confer upon the undersigned in his capacity as a securityholder,
and/or an officer, director or employee of the Company, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees with each Underwriter that, during the period beginning on and
including the date hereof through and including the date that is the sixtieth (60th) day after the date of the Underwriting Agreement (the “Lock-Up Period”), the undersigned will not, without the prior written consent of the Underwriters, directly or indirectly,
(i) offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, or announce the intention to otherwise dispose of, any shares of Common Stock (including, without limitation, Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and regulations promulgated under the Securities Exchange Act of 1934, as the same may be amended or supplemented
from time to time (the “Exchange Act”) (such shares, the “Beneficially Owned Shares”)) or securities convertible into or exercisable or exchangeable for Common Stock,
(ii) enter into any swap, hedge or similar agreement or arrangement that transfers in whole or in part, the economic risk of ownership of the Beneficially Owned Shares or securities convertible into or exercisable or exchangeable for Common
Stock, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition, or (iii) engage in any short selling of the Common Stock or securities convertible
into or exercisable or exchangeable for Common Stock.
If you are at such time providing research coverage to the Company and subject to the
restrictions set forth in FINRA Rule 2711(f)(4), then if (i) the Company issues an earnings release or material news or a material event relating to the Company occurs during the last 17 days of the Lock-Up Period, or (ii) prior to the
expiration of the Lock-Up Period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the Lock-Up Period, the Lock-Up Period shall be extended and the restrictions imposed by this
Agreement shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.
The restrictions set forth in the two immediately preceding paragraphs shall not apply to any transfers made by the undersigned (a) as a bona fide gift to any member of the immediate family (as
defined below) of the undersigned or to a trust the beneficiaries of which are exclusively the undersigned or members of the undersigned’s immediate family, (b) by will or intestate succession upon the death of the undersigned or
(c) as a bona fide gift to a charity or educational institution, provided, however, that it shall be a condition to the transfer that (A) the transferee executes and delivers to the Underwriters, not later than one business day prior to
such transfer, a written agreement, in substantially the form of this agreement (it being understood that any references to “immediate family” in the agreement executed by such transferee shall expressly refer only to the immediate family
of the undersigned and not to the immediate family of the transferee) and otherwise satisfactory in form and substance to the Underwriters, and (B) if the undersigned is required to file a report under Section 16(a) of the Exchange Act
reporting a reduction in beneficial ownership of shares of Common Stock or Beneficially Owned Shares or any securities convertible into or exercisable or exchangeable for Common Stock or Beneficially Owned Shares during the Lock-Up Period (as the
same may be extended as described above), the undersigned shall include a statement in such report to the effect that such transfer is being made as a gift or by will or intestate succession. For purposes of this paragraph, “immediate
family” shall mean a spouse, child, grandchild or other lineal descendant (including by adoption), father, mother, brother or sister of the undersigned; and “affiliate” shall have the meaning set forth in Rule 405 under the Securities
Act of 1933, as amended. Furthermore, the restrictions set forth in the two immediately preceding paragraphs shall not apply to (i) the establishment by the undersigned of a trading plan in accordance with Rule 10b5-1 under the Exchange Act,
provided that no prohibited sale under such plan may occur during the Lock-Up Period (as the same may be extended as described above), or (ii) the exercise of any of the undersigned’s rights to acquire shares of Common Stock or other
securities of the Company issued pursuant to any stock option or similar equity incentive or compensation plan approved by the Board of Directors of the Company (“Equity Incentive Grants”), provided that such plan is in effect as of the
date of this Agreement and provided further that, to the extent the undersigned receives shares of Common Stock as part of an Equity Incentive Grant, the undersigned may offer, sell, contract to sell, or otherwise dispose of up to the number of such
shares of Common Stock necessary to satisfy withholding tax obligations incurred by the undersigned in connection with such Equity Incentive Grant.
The undersigned further agrees that (i) he will not, during the Lock-Up Period (as the same may be extended as described above), make any demand or request for or exercise any right with respect to
the registration under the Securities Act of 1933, as amended, of any shares of Common Stock or other Beneficially Owned Shares or any securities convertible into or exercisable or exchangeable for Common Stock or other Beneficially Owned Shares,
and (ii) the Company may, with respect to any Common Stock
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or other Beneficially Owned Shares or any securities convertible into or exercisable or exchangeable for Common Stock or other Beneficially Owned Shares owned or held (of record or beneficially)
by the undersigned, cause the transfer agent or other registrar to enter stop transfer instructions and implement stop transfer procedures with respect to such securities during (but not after) the Lock-Up Period (as the same may be extended as
described above).
The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this
agreement and that this agreement has been duly executed and delivered by the undersigned and is a valid and binding agreement of the undersigned. This agreement and all authority herein conferred are irrevocable and shall survive the death or
incapacity of the undersigned and shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned.
It is
agreed that, if (i) the Company notifies the Underwriters that it does not intend to proceed with the proposed public offering of Common Stock, (ii) the Underwriting Agreement (other than the provisions thereof which survive termination)
shall terminate or be terminated prior to payment for and delivery of the shares of Common Stock to be sold thereunder, or (iii) the proposed public offering of Common Stock shall not have been completed by August 1, 2011, this Agreement
shall immediately be terminated and the undersigned shall be released from all obligations under this Agreement.
The undersigned acknowledges
and agrees that whether or not any public offering of Common Stock actually occurs depends on a number of factors, including market conditions.
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| Very truly yours, |
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| (Name of Stockholder - Please Print) |
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| (Signature) |
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| Address: |
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EXHIBIT C
Persons Executing Lock-Up Agreements
Max Link, Ph.D.
Steven A. Kriegsman
Marvin R. Selter
Louis Ignarro, Ph.D.
Joseph
Rubinfeld, Ph.D.
Richard L. Wennekamp
John Caloz
Daniel Levitt, M.D., Ph.D.
D. Scott Geyer
D. Scott Wieland
Benjamin S. Levin
David J. Haen
