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EXECUTION COPY
2,545,000 Shares
HARRIS & HARRIS GROUP, INC.
Common Stock
PLACEMENT AGENCY AGREEMENT
June
16, 2008
ThinkPanmure,
LLC
600
Montgomery Street, 8th Floor
San
Francisco, California 94111
Ladies
and Gentlemen:
Harris
& Harris Group, Inc., a New York corporation (the
“
Company ”),
proposes, subject to the terms and conditions stated herein,
to
issue and sell to
certain investors (each an “
Investor ”
and, collectively, the “
Investors ”),
up to 2,545,000 shares (the “
Shares ”)
of the Company’s common stock, $0.01 par value per share (the
“
Common Stock ”).
The Company desires to engage ThinkPanmure, LLC as its exclusive
placement agent (the “
Placement Agent ”)
in connection with such issuance and sale. The Shares are more
fully described in the Registration Statement ( as
hereinafter defined ).
1.
Agreement to Act as Placement Agent; Delivery and
Payment .
On
the basis of the representations, warranties and agreements of the
Company herein contained, and subject to the terms and conditions
set forth in this Agreement:
(a)
The
Company hereby engages the Placement Agent to act as its
exclusive placement agent in connection with the issuance and
sale, by the Company, of Shares to the Investors and the
Placement Agent hereby agrees, as an agent of the Company, to
use its best efforts to solicit offers to purchase the Shares
from the Company upon the terms and conditions set forth in
the Prospectus (as defined below). The Company expressly
acknowledges and agrees that this Agreement shall not give
rise to a commitment by the Placement Agent or any of its
affiliates to underwrite or purchase any of the Shares or
otherwise provide any financing, and the Placement Agent shall
have no authority to bind (and agrees not to purport to bind)
the Company in respect of the sale of any Shares.
(b)
Concurrently
with the execution and delivery of this Agreement, the Company, the
Placement Agent and JPMorgan Chase, as escrow agent (the
“
Escrow Agent ”),
shall enter into an escrow agreement, dated as of the date hereof
(the “
Escrow Agreement ”),
pursuant to which an escrow account will be established, at the
Company's expense, for the benefit of the Company and the
Investors
(the “
Escrow Account
”). Prior to the Closing Date, (i) each Investor will deposit
in the Escrow Account an amount equal to $6.15 per Share multiplied
by the number of Shares to be purchased by such Investor (the
“
Purchase Amount
”), and (ii) the Escrow Agent will notify the Company and the
Placement Agent in writing of the amount of funds deposited in the
Escrow Account.
(c)
Upon
the occurrence of the Closing (as hereinafter defined), the
Company shall cause to be paid to the Placement Agent, by wire
transfer of immediately available funds payable to the order
of the Placement Agent from the Escrow Account, to an account
designated by the Placement Agent, an aggregate of six percent
(6.0%) of the gross proceeds received by the Company from its
sale of the Shares at such Closing to all Investors (the
“
Agency Fee ”).
(d)
Payment
of the purchase price for, and delivery of, the Shares shall be
made at a closing (the “
Closing ”)
at the offices of Skadden, Arps, Slate, Meagher & Flom LLP,
counsel for the Company, located at
Four Times Square, New York, New York at
10:00 a.m., local time, on June 20, 2008 or at such other time and
date as the Investor and the Company determine pursuant to Rule
15c6-1(a) under the Exchange Act (such date of payment and delivery
being herein referred to as the “
Closing Date ”),
and upon satisfaction of the conditions set forth in this Agreement
and the Subscription Agreements (as defined below), the Company
shall deliver the Shares, which shall be registered in the name or
names and shall be in such denominations as the Placement Agent may
request at least one business day before the Closing Date, to the
Investors, which delivery, with respect to the Shares, may be made
through the facilities of the Depository Trust Company's DWAC
system, and the Escrow Agent will disburse the aggregate funds in
the Escrow Account to the Company reduced by an amount equal to the
sum of the aggregate Agency Fee payable to the Placement Agent and
the Placement Agent’s bona fide written estimate of the
amount, if any, of expenses for which the Placement Agent is
entitled to reimbursement pursuant hereto, with such amounts being
delivered to the Placement Agent, by wire in federal (same day)
funds, as provided in the Escrow Agreement. All
such actions taken at the Closing shall be deemed to have occurred
simultaneously.
Each of the Company and the Placement Agent hereby agree to deliver
to the Escrow Agent a Closing Notice in the form attached as
Exhibit C to the Escrow Agreement at least one day prior to
the Closing Date. At least one day prior to the Closing Date,
the Placement Agent shall submit to the Company its bona fide
written estimate of the amount, if any, of expenses for which such
Placement Agent is entitled to reimbursement pursuant
hereto.
(e)
The
sale of the Shares shall be made pursuant to subscription
agreements in the form included as
Exhibit A hereto
(the “
Subscription Agreements ”).
The Company shall have the sole right to accept offers to purchase
the Shares and may reject any such offer in whole or in part, and,
except as set forth in Section 4 hereof, in no event shall fees be
payable on any proposed purchase which is rejected for any reason
or which otherwise does not close for any reason.
(f)
Prior
to the earlier of (i) the date on which this Agreement is
terminated and (ii) the Closing Date, the Company shall not,
without the prior written consent of the Placement Agent,
solicit or accept offers to purchase Shares of the Company
(other than pursuant to the exercise of options or warrants to
purchase shares of Common Stock that are outstanding at the
date hereof) otherwise than through the Placement Agent in
accordance herewith.
2.
Representations and Warranties of the Company
.
The
Company represents and warrants to the Placement Agent as of the
date hereof, and as of the Closing Date, as follows:
(a)
Registration Statement .
The Company meets the requirements for the use of Form N-2 under
the Securities Act of 1933 (the "
Securities Act "),
and a registration statement (Registration No. 333-138996) on Form
N-2 relating to the Shares being offered by the Company, and such
amendments thereof as may have been required to the date of this
Agreement, have been prepared by the Company in accordance with the
provisions of the Securities Act and the rules and regulations
(collectively referred to as the "
Rules and Regulations ")
of the Securities and Exchange Commission (the "
Commission ")
thereunder, and such registration statement has been filed with and
has been declared effective by the Commission. A final prospectus
supplement containing information permitted to be omitted at the
time of effectiveness by Rule 430C of the Rules and Regulations
will be filed promptly by the Company with the Commission in
accordance with Rule 497 of the Rules and Regulations.
(i)
The
term "
Registration Statement "
as used in this Agreement means the registration statement, as
amended at the time it became effective, including all documents
filed as a part thereof, and including any information contained in
a prospectus subsequently filed with the Commission pursuant to
Rule 497 under the Securities Act and deemed to be a part of the
registration statement at the time of effectiveness pursuant to
Rule 430C under the Securities Act, and as supplemented or amended,
prior to the execution of this Agreement, including all financial
schedules and exhibits thereto. If the Company has filed one or
more abbreviated registration statements to register additional
shares of Common Stock pursuant to Rule 462(b) under the Rules and
Regulations (each a “
Rule 462(b) Registration Statement ”),
then any reference herein to the term “
Registration Statement ”
shall also be deemed to include any such Rule 462(b) Registration
Statement.
-2-
(ii)
The
term "
Base Prospectus "
as used in this Agreement means the base prospectus, dated as of
May 29, 2008, included in the Registration Statement at the time it
was declared effective by the Commission. The term "
Preliminary Prospectus "
as used in this Agreement means any preliminary prospectus
supplement specifically relating to the Shares in the form that is
first filed with the Commission pursuant to Rule 497 under the
Securities Act. The term "
Prospectus Supplement "
as used in this Agreement means the final prospectus supplement
specifically relating to the Shares in the form that is first filed
with the Commission pursuant to Rule 497 under the Securities Act
after the date and time this Agreement is executed and delivered by
the parties hereto. The term “
Prospectus ”
as used in this Agreement means the Base Prospectus together with
the Prospectus Supplement.
(iii)
The
term "
Time of Sale "
as used in this Agreement means the time of execution of this
Agreement.
(iv)
The
term "
Pricing Information "
as used in this Agreement, means the information included on
Schedule I hereto
(which information the Placement
Agent
has informed the Company is being conveyed orally by the
Placement
Agent
to prospective purchasers at or prior to confirming sales of the
shares in the offering).
(v)
The
term “
Disclosure Package ”
as used in this Agreement, means the Preliminary Prospectus and the
Pricing Information, all considered together.
(b)
Registration Statement; Disclosure Package and
Prospectus .
No order preventing or suspending the use of the Base Prospectus
has been issued by the Commission, and no stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereto has been issued, and no proceedings for that
purpose have been instituted or, to the Company's knowledge, are
threatened by the Commission. The Registration Statement complied
when it became effective, in all material respects, with the
requirements of Form N-2 under the Securities Act. The conditions
to the use of Form N-2 in connection with the offering and sale of
the Shares as contemplated hereby have been satisfied. The
Registration Statement did not, as of the Time of Sale, contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading; the Disclosure Package, as of
the Time of Sale, did 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 the light of the circumstances under
which they were made, not misleading; and the Prospectus, as of the
date that it is filed with the Commission and as of the Closing
Date, 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 the light of the circumstances under which
they were made, not misleading; provided, in each case, that the
Company makes no representations or warranty with respect to any
Placement Agent Information (as defined in
Section 7 ).
(c)
Organization .
The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of New
York, with the corporate power and authority necessary to own,
lease and operate its properties and to conduct its business as
described in the Registration Statement, the Disclosure Package and
the Prospectus.
-3-
(d)
Capitalization .
The authorized capital stock of the Company consists of (i)
45,000,000 shares of Common Stock and (ii) 2,000,000 shares of
preferred stock, par value $0.10 per share (the "
Preferred Stock ").
As of the date hereof, 23,314,573 shares of Common Stock are issued
and outstanding and no shares of Preferred Stock are issued and
outstanding.
(e)
The Shares .
The Shares have been duly and validly authorized by the Company
and, when issued, delivered and paid for in accordance with the
terms of this Agreement and the Subscription Agreements, will have
been duly and validly issued and will be fully paid and
nonassessable.
(f)
Description of Capital Stock .
The terms of the capital stock of the Company, including the
Shares, conforms in all material respects to the description
thereof contained in the Registration Statement, the Disclosure
Package and the Prospectus.
(g)
Authorization and Execution .
This Agreement and each Subscription Agreement has been duly
authorized, executed and delivered by the Company.
(h)
Subsidiaries .
None
of the Company’s subsidiaries are significant subsidiaries
(as such term is defined in Rule 1-02(w) of Regulation S-X
promulgated by the Commission). The Company owns all of the issued
and outstanding capital stock of each of the subsidiaries listed
on
Schedule II attached
hereto (collectively, the “
Subsidiaries ”).
Each of the Subsidiaries has been duly organized and is validly
existing and in good standing under the laws of its jurisdiction of
organization; each of the Subsidiaries has the power and authority
to own, lease and operate its properties and conduct its business
as described in the Disclosure Package and the Prospectus. All of
the outstanding shares of capital stock of each of the Subsidiaries
held directly or indirectly by the Company have been duly
authorized and validly issued, are fully paid and non-assessable,
have been issued in compliance with all applicable securities laws,
were not issued in violation of any preemptive right, resale right,
right of first refusal or similar right to subscribe for or
purchase securities of the Subsidiaries and are owned by the
Company or another Subsidiary subject to no security interest,
other encumbrance or adverse claims.
(i)
No Violation or Default .
The Company is not in breach or violation of or in default under
(i) the provisions of its charter or by-laws, (ii) any material
agreement filed as an exhibit to the Registration Statement, or
(iii) any federal or state statute or law, any rule or regulation
issued pursuant to any federal or state statute or law, or any
order issued pursuant to any federal or state statute or law by any
court or governmental agency or body having jurisdiction over the
Company, except, with respect to clauses (ii) and (iii) above, as
described in the Disclosure Package and the Prospectus or, to the
extent any such contravention would not, individually or in the
aggregate, have a material adverse effect on the business,
properties, prospects, financial condition or results of operations
of the Company (a "
Material Adverse Effect ").
(j)
No Conflicts .
The execution, delivery and performance by the Company of this
Agreement, each Subscription Agreement and the Escrow Agreement,
including the issuance and sale by the Company of the Shares, will
not conflict with or result in a breach or violation of, or
constitute a default under (i) the provisions of its charter or
by-laws, (ii) any material agreement filed as an exhibit to the
Registration Statement, or (iii) any federal or state statute or
law, any rule or regulation issued pursuant to any federal or state
statute or law, or any order issued pursuant to any federal or
state statute or law by any court or governmental agency or body
having jurisdiction over the Company, except, with respect to
clauses (ii) and (iii) above, as described in the Disclosure
Package and the Prospectus or, to the extent any such contravention
would not, individually or in the aggregate, have a Material
Adverse Effect.
-4-
(k)
No Consents Required .
No filing with, or authorization, approval, consent or order of,
any court or governmental agency or body is required for the
issuance and sale of the Shares, except as referred to in this
Agreement, the Registration Statement ,
the Disclosure Package or
the Prospectus and (i) such as have been already obtained or as may
be required under the Securities Act, the Investment Company Act of
1940, as amended (the "
Investment Company Act ")
or the Securities Exchange Act of 1934, as amended (the "
Exchange Act "),
(ii) such as may be required under the rules and regulations of the
Financial Industry Regulatory Authority (“
FINRA ”),
or (iii) such as may be required under the "blue sky" laws of any
jurisdiction in connection with the purchase and distribution of
the Shares in the manner contemplated in this Agreement, the
Registration Statement ,
the Disclosure Package and
the Prospectus.
(l)
Disclosure .
The statements set forth in the Prospectus under the captions
"Taxation" and "Certain Governmental Regulations," insofar as they
purport to describe the provisions of the laws referred to therein,
are accurate and complete in all material respects.
(m)
Absence of Material Changes. Subsequent
to the respective dates as of which information is given in the
Disclosure Package and the Prospectus, and other than as
contemplated therein, there has not been (i) any material adverse
change in the business, properties, prospects, financial condition
or results of operations of the Company, (ii) any transaction which
is material to the Company, (iii) any material change in the
capital stock, or any material change in the outstanding
indebtedness, of the Company, or (v) any dividend or distribution
declared, paid or made on the capital stock of the
Company.
(n)
Legal Proceedings .
Except as described in the
Disclosure Package and
the Prospectus, there are no legal proceedings pending or, to the
Company's knowledge, threatened to which the Company or any of its
properties is or would be subject at law or in equity, before or by
any federal or state court or governmental agency or body, except
any such legal proceedings, which if resolved adversely to the
Company, would not result in a judgment, decree or order having,
individually or in the aggregate, a Material Adverse Effect.
(o)
Good Title to Property .
The Company
has good
and valid title to all property (whether real or personal)
described in the Disclosure
Package, the Prospectus Supplement and, except to the extent
modified by the Prospectus Supplement, the
Base Prospectus as being owned by it, except such property as shall
have been disposed of in the ordinary course after the date
thereof, in each case free and clear of all liens, claims, security
interests, other encumbrances or defects except such as are
described in the Disclosure
Package and
the Prospectus and those that would not, individually or in the
aggregate materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of
such property by the Company. All of the property described in
the Disclosure
Package, the Prospectus Supplement and, except to the extent
modified by the Prospectus Supplement, the
Base Prospectus as being held under lease by the Company, except
such property as shall have been disposed of in the ordinary course
after the date thereof, is held thereby under valid, subsisting and
enforceable leases (except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors’
rights generally and by general equitable principles), without any
liens, restrictions, encumbrances or claims, except those
that, individually or in the aggregate, are not material or do
not materially interfere with the use made and proposed to be made
of such property by the Company.
-5-
(p)
Intellectual Property Rights .
Except as set forth on
Schedule 2(p) attached
hereto, the Company does not own any patent applications, patents,
trademarks (both registered and unregistered), tradenames,
copyrights, trade secrets or other proprietary information which
are necessary for the conduct of its business, except where the
failure to own such rights would not, individually or in the
aggregate, result in a Material Adverse Effect.
(q)
Financial Statements .
The consolidated financial statements of the Company, together with
the related schedules and notes thereto, set forth or incorporated
by reference in the Registration Statement, the Disclosure Package
and the Prospectus present fairly in all material respects the
consolidated financial condition of the Company as of the dates
indicated and the consolidated results of operations, cash flows
and changes in net assets of the Company for the periods specified
and have been prepared in conformity with United States generally
accepted accounting principles, consistently applied throughout the
periods involved.
(r)
Independent Accountants .
To the Company’s knowledge, PricewaterhouseCoopers LLP, who
have certified the consolidated financial statements of the
Company, is (i) an
independent public accounting firm within the meaning of the
Securities Act and the Rules and Regulations, (ii) a registered
public accounting firm (as defined in Section 2(a)(12) of the
Sarbanes-Oxley Act of 2002 (the “
Sarbanes-Oxley Act
”)), and (iii) not in violation of the auditor independence
requirements of the Sarbanes-Oxley Act as such requirements apply
to their relationship with the Company.
(s)
Taxes .
The Company has timely filed all material federal and state income
and franchise tax returns (or timely filed applicable extensions
therefore) that have been required to be filed and is not in
default in the payment of any taxes which were payable pursuant to
said returns or any assessments with respect thereto, except to the
extent that the failure to timely file or pay would not,
individually or in the aggregate, have a Material Adverse
Effect.
(t)
Nasdaq; Exchange Act Registration .
The Common Stock is registered pursuant to Section 12(b) or 12(g)
of the Exchange Act and is accepted for quotation on the Nasdaq
Global Market, and the Company has taken no action designed to
terminate the registration of the Common Stock under the Exchange
Act or delisting the Common Stock from the Nasdaq Global Market,
nor, except as disclosed in the Registration Statement
,
the Disclosure Package and
the Prospectus, has the Company received any notification that the
Commission or FINRA is contemplating terminating such registration
or listing. Except as disclosed in the Registration
Statement ,
the Disclosure Package and
the Prospectus, the Company has complied in all material respects
with the applicable requirements of the Nasdaq Global Market for
maintenance of inclusion of the Common Stock thereon.
(u)
Accounting Controls .
The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions
are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles 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.
(v)
Disclosure Controls .
The Company has established, maintains and evaluates "disclosure
controls and procedures" (as such term is defined in Rule 13a-15e
and 15d-15e under the Exchange Act), which (i) are designed to
ensure that material information required to be disclosed by the
Company in the reports that it files under the Exchange Act is made
known to the Company's principal executive officer and its
principal financial officer, particularly during the periods in
which the periodic reports required under the Exchange Act are
being prepared, and such disclosure controls and procedures are
effective to perform the functions for which they were established;
the Company's auditors and the Audit Committee of the Board of
Directors of the Company have been advised of: (i) any significant
deficiencies and material weaknesses in the design or operation of
internal control over financial reporting (as such term is defined
in Rule 13a-15f and 15d-15f under the Exchange Act) which could
adversely affect the Company's ability to record, process,
summarize, and report financial data; and (ii) any fraud, whether
or not material, that involves management or other employees who
have a role in the Company's internal control over financial
reporting; any material weaknesses in internal control over
financial reporting have been identified for the Company's
auditors; and since the date of the most recent evaluation of such
internal control over financial reporting, there have been no
changes in internal control over financial reporting or in other
factors that could significantly affect internal control over
financial reporting, including any corrective actions with regard
to significant deficiencies and material weaknesses.
-6-
(w)
Sarbanes-Oxley Act .
The Company, and to its knowledge, all of the Company's directors
or officers, in their capacities as such, is in compliance in all
material respects with all applicable provisions of the
Sarbanes-Oxley Act.
(x)
Investment Company Act; Compliance .
The Company has elected to be regulated as a "business development
company" under the Investment Company Act and has not withdrawn
such election, and the Commission has not ordered that such
election be withdrawn nor to the Company's knowledge have
proceedings to effectuate such withdrawal been initiated or
threatened by the Commission. Except as set forth in the
Registration Statement ,
the Disclosure Package and
the Prospectus, the Company’s current business operations and
investments and contemplated business operations and investments
are in compliance in all material respects with the provisions of
the Investment Company Act and the rules and regulations of the
Commission thereunder (as set forth in the Code of Federal
Regulations (“
CFR ”))
applicable to business development companies and, after giving
effect to the issuance and sale of the Shares, will be in
compliance in all material respects with such provisions and rules
and regulations (as set forth in the CFR). The provisions of the
corporate charter and bylaws of the Company and the investment
policies described in the Registration Statement
, the Disclosure Package and
the Prospectus are not inconsistent with the requirements of the
Investment Company Act and the rules and regulations of the
Commission thereunder (as set forth in the CFR) applicable to a
business development company.
(y)
Insurance .
The Company maintains insurance in such amounts and covering such
risks as it reasonably considers to be adequate for the conduct of
its business and the value of its properties and as is customary
for companies engaged in similar businesses in similar industries.
All such insurance is fully in force on the date hereof and will be
fully in force as of the Closing Date. The Company has no reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse
Effect.
(z)
Brokers Fees .
The Company is not a party to any contract, agreement or
understanding with any person (other than this Agreement) that
would give rise to a valid claim against the Company or the
Placement Agent for a brokerage commission, finder’s fee or
other like payment in connection with the offering and sale of the
Shares.
(aa)
No Stabilization .
Neither the Company, nor, to the Company's knowledge, any of its
officers, directors, affiliates or controlling persons, 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 to facilitate the sale or resale of the
Shares.
-7-
(bb)
FINRA Affiliations .
To the Company’s knowledge, there are no affiliations or
associations between (i) any member of FINRA and (ii) the Company
or any of the Company’s officers, directors or 5% or greater
securityholders, except as set forth in the Registration
Statement ,
the Disclosure Package and
the Prospectus.
(cc)
No Labor Disputes .
The Company is not involved in any labor dispute nor, to the
knowledge of the Company, is any such dispute threatened, which
dispute would have a Material Adverse Effect.
(dd)
ERISA .
The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and
published interpretations thereunder (“
ERISA ”);
no “reportable event” (as defined in ERISA) has
occurred with respect to any “pension plan” (as defined
in ERISA) maintained by the Company or for which the Company would
reasonably be expected to have any liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV
of ERISA with respect to termination of, or withdrawal from, any
“pension plan” or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the
“
Code ”);
and each “pension plan” maintained by the Company that
is intended to be qualified under Section 401(a) of the Code has
received a determination letter from the Internal Revenue Service
to the effect that it is so qualified and nothing has occurred,
whether by action or by failure to act, which would reasonably be
expected to cause the loss of such qualification.
(ee)
Statistical or Market-Related Data
. Any statistical, industry-related and market-related data
included in the Registration Statement, the Disclosure Package and
the Prospectus, are based on or derived from sources that the
Company reasonably and in good faith believes to be reliable and
accurate, and such data agree with the sources from which they are
derived.
3.
Covenants
. The
Company covenants and agrees with the Placement Agent as
follows:
(a)
Prospectus Supplement .
The Company shall file the Prospectus Supplement with the
Commission within the time periods specified by Rule 497 and Rule
430C under the Securities Act.
(b)
Notice to Placement Agent .
During any period when a prospectus relating to the Shares is
required to be delivered under the Securities Act in connection
with the offering contemplated by this Agreement
(the “
Prospectus Delivery Period
”) ,
the Company will notify the Placement Agent promptly, and will, if
requested, confirm such notification in writing: (i) of the
receipt of any comments of, or requests for additional or
supplemental information from, the Commission; (ii) of the time and
date of any filing of any post-effective amendment to the
Registration Statement or any amendment or supplement to any
Preliminary Prospectus or the Prospectus, (iii) the time and date
when any post-effective amendment to the Registration Statement
becomes effective; (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement, or any post-effective amendment thereto or any order
preventing or suspending the use of any Preliminary Prospectus or
the Prospectus, or the initiation of any proceedings for that
purpose or the threat thereof; and (v) of receipt by the
Company of any notification with respect to any suspension of the
approval of the Shares from any securities exchange upon which they
are listed for trading or included or designated for quotation, or
the initiation or threatening of any proceeding for such purpose.
The Company will use its reasonable best efforts to prevent the
issuance or invocation of any such stop order or suspension by the
Commission and, if any such stop order or suspension is so issued
or invoked, to obtain as soon as possible the withdrawal or removal
thereof.
-8-
(c)
Filing of Amendments or Supplements .
If, during the Prospectus Delivery Period, any event shall occur or
condition exist as a result of which, in the judgment of the
Company or in the reasonable opinion of the Placement Agent, it
becomes necessary to amend or supplement the Prospectus in order to
make the statements therein, in the light of the circumstances when
the Prospectus is delivered to an Investor, not misleading, or if
it is necessary to amend or supplement the Prospectus to comply
with applicable law, forthwith to prepare, file with the Commission
and furnish, at its own expense, to the Placement Agent, either
amendments or supplements to the Prospectus so that the statements
in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to an
Investor, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(d)
Delivery of Copies .
The Company will deliver promptly to the Placement Agent and its
counsel such number of the following documents as the Placement
Agent shall reasonably request: (i) conformed copies of the
Registration Statement as originally filed with the Commission and
each amendment thereto (in each case excluding exhibits), (ii)
copies of each Preliminary Prospectus, if any; (iii) during the
Prospectus Delivery Period, copies of the Prospectus (or any
amendments or supplements thereto); and (iv) all correspondence to
and from, and all documents issued to and by, the Commission in
connection with the registration of the Shares under the Securities
Act.
(e)
Blue Sky Laws .
The Company will promptly take or cause to be taken, from time to
time, such actions as the Placement Agent may reasonably request to
qualify the Shares for offering and sale under the state
securities, or blue sky, laws of such states as the Placement Agent
may reasonably request and to maintain such qualifications in
effect so long as the Placement Agent may reasonably request for
the distribution of the Shares,
provided ,
that in no event shall the Company 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 or subject itself to taxation as doing business in any
jurisdiction. The Company will advise the Placement Agent promptly
of the suspension of the qualification or registration of (or any
exemption relating to) the Shares for offering, sale or trading in
any jurisdiction or any initiation or threat of any proceeding for
any such purpose, and in the event of the issuance of any order
suspending such qualification, registration or exemption, the
Company shall use its best efforts to obtain the withdrawal thereof
at the earliest possible moment.
(f)
Use of Proceeds .
The
Company will apply the net proceeds from the sale of the Shares in
the manner set forth in the Prospectus under the heading “Use
of Proceeds”.
(g)
Lock-Up Period .
Beginning on the date hereof and continuing for a
period of 90 days after the date of the Prospectus (the
“
Lock-Up Period ”)
,
the Company will not (1) offer to sell, hypothecate, pledge,
announce the intention to sell, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, or establish or
increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the
Exchange Act, with respect to, any shares of Common Stock, any
securities convertible into or exercisable or exchangeable for
Common Stock; (2) file or cause to become effective a
registration statement under the Securities Act relating to the
offer and sale of any shares of Common Stock or securities
convertible into or exercisable or exchangeable for Common Stock
except for a registration statement on Form S-8 relating to
employee benefit plans or (3) enter into any swap or other
agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such
transaction described in clause (1), (2) or (3) above is to be
settled by delivery of Common Stock or such other securities, in
cash or otherwise, without the prior written consent of the
Placement Agent (which consent may be withheld in its sole
discretion), other than: (i) the Shares to be sold hereunder,
(ii) the issuance of employee stock options or restricted
stock awards pursuant to equity incentive plans described in the
Registration Statement (excluding the exhibits thereto)
,
the Disclosure Package and
the Prospectus, (iii) issuances of Common Stock upon the exercise
of options or warrants (either upon current terms thereof or upon
subsequently amended terms but excluding a general repricing)
disclosed as outstanding in the Registration Statement (excluding
the exhibits thereto) ,
the Disclosure Package and
the Prospectus or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of the date of this
Agreement; (iv) the issuance by the Company of any shares of Common
Stock as consideration for mergers, acquisitions, other business
combinations, or strategic alliances, occurring after the date of
this Agreement;
provided that
each recipient of shares pursuant to this clause (iv) agrees that
all such shares remain subject to restrictions substantially
similar to those contained in this
Section 3(g) ;
or (v) the purchase or sale of the Company’s securities
pursuant to a plan, contract or instruction that satisfies all of
the requirements of Rule 10b5-1(c)(1)(i)(B) that was in effect
prior to the date hereof. Notwithstanding the foregoing, the
Company shall be permitted to establish a 10b5-1 trading plan that
complies with Rule 10b5-1 under the Exchange Act, or to amend an
existing 10b5-1 trading plan in accordance with Rule 10b5-1 under
the Exchange Act, provided, in each case, that no sales or other
dispositions of shares of the Common Stock under such 10b5-1
trading plans that were not in effect prior to the date hereof by
any person that has signed or is otherwise bound by a Lock-Up
Agreement (as defined below) will be permitted during the Lock-Up
Period, as the same may be extended hereby. For the purpose of
allowing the Placement Agent to comply with FINRA Rule 2711(f)(4),
if (1) during the last 17 days of the Lock-Up Period, the Company
releases earnings results or publicly announces other material news
or a material event relating to the Company occurs or (2) 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, then in each case the Lock-Up
Period will be extended until the expiration of the 18-day period
beginning on the date of release of the earnings results or the
public announcement regarding the material news or the occurrence
of the material event, as applicable, unless the Placement Agent
waives, in writing, such extension. Without the prior written
consent of the Placement Agent, the Company agrees not to
accelerate the vesting of any option or warrant or the lapse of any
repurchase right prior to the expiration of the Lock-Up
Period.
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