Exhibit 10.1

 

DPW HOLDINGS, INC.

 

Common Stock

(par value $0.001 per share)

 

At-The-Market Issuance Sales Agreement

 

August 6, 2019

 

Ascendiant Capital Markets, LLC

18881 Von Karman Avenue, 16th Floor

Irvine, CA 92612

 

Ladies and Gentlemen:

 

DPW Holdings, Inc., a Delaware corporation (the “Company”), confirms its
agreement (this “Agreement”) with Ascendiant Capital Markets, LLC
(“Ascendiant”), as follows:

 

1.             Issuance and Sale of Shares. The Company agrees to issue and sell
through Ascendiant, shares (the “Placement Shares”) of the Company’s common
stock, par value $0.001 per share (the “Common Stock”), from time to time during
the term of this Agreement and on the terms set forth in this Agreement;
provided however, that in no event will the Company issue or sell through
Ascendiant such number of Placement Shares that would exceed $5,500,000 (the
“Maximum Amount”). Notwithstanding anything to the contrary contained herein,
the parties hereto agree that compliance with the limitations set forth in this
Section 1 on the amount of Placement Shares issued and sold under this Agreement
will be the sole responsibility of the Company and that Ascendiant will have no
obligation in connection with such compliance. The issuance and sale of
Placement Shares through Ascendiant will be effected pursuant to the
Registration Statement (as defined below) filed by the Company and declared
effective by the U.S. Securities and Exchange Commission (the “SEC”), although
nothing in this Agreement will be construed as requiring the Company to use the
Registration Statement to issue Common Stock.

 

The Company has filed with the SEC, in accordance with the provisions of the
Securities Act of 1933, as amended (the “Securities Act”), and the rules and
regulations thereunder (the “Securities Act Regulations”), a registration
statement on Form S-3 (File No. 333-222132), including a base prospectus,
relating to certain securities, including the Placement Shares, to be issued
from time to time by the Company, and which incorporates by reference documents
that the Company has filed or will file in accordance with the provisions of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules
and regulations thereunder. The Company has prepared a prospectus supplement
specifically relating to the Placement Shares (the “Prospectus Supplement”) to
the base prospectus included as part of the registration statement. The Company
will furnish to Ascendiant, for use by it, copies of the prospectus included as
part of the registration statement, as supplemented by the Prospectus
Supplement, relating to the Placement Shares. Except when the context otherwise
requires, such registration statement, including all documents filed as part
thereof or incorporated by reference therein, and including any information
contained in a Prospectus (as defined below) subsequently filed with the SEC
pursuant to Rule 424(b) under the Securities Act Regulations or deemed to be a
part of the registration statement pursuant to Rule 430B of the Securities Act
Regulations, is herein called the “Registration Statement.” The base prospectus,
including all documents incorporated therein by reference, included in the
Registration Statement, as it may be supplemented by the Prospectus Supplement,
in the form in which the prospectus and/or Prospectus Supplement have most
recently been filed by the Company with the SEC pursuant to Rule 424(b) under
the Securities Act Regulations is herein called the “Prospectus.” Any reference
herein to the Registration Statement, the Prospectus, or any amendment or
supplement thereto will be deemed to refer to and include the documents
incorporated by reference therein, and any reference herein to the terms
“amend,” “amendment,” or “supplement” respecting the Registration Statement or
the Prospectus will be deemed to refer to and include the filing after the
execution hereof of any document with the SEC deemed to be incorporated by
reference therein (the “Incorporated Documents”).

 

   

 

 

For purposes of this Agreement, all references to the Registration Statement,
the Prospectus, or to any amendment or supplement thereto will be deemed to
include the most recent copy filed with the SEC pursuant to its Electronic Data
Gathering Analysis and Retrieval System, or if applicable, the Interactive Data
Electronic Application system when used by the SEC (collectively, “EDGAR”).

 

2.             Placements. Each time that the Company wishes to issue and sell
Placement Shares hereunder (each, a “Placement”), it will notify Ascendiant by
email notice (or other method mutually agreed to in writing by the parties) of
the number of Placement Shares, the period during which sales are requested to
be made, any limitation on the number of Placement Shares that may be sold in
any one day, and any minimum price below which sales may not be made (a
“Placement Notice”), the form of which is attached hereto as Schedule 1. The
Placement Notice will originate from any of the individuals from the Company set
forth on Schedule 3 (with a copy to each of the other individuals from the
Company listed on the schedule) and will be addressed to each of the individuals
from Ascendiant set forth on Schedule 3, as Schedule 3 may be amended from time
to time. The Placement Notice will be effective unless and until: (a) Ascendiant
declines to accept the terms contained therein for any reason, in its sole
discretion; (b) the entire amount of the Placement Shares thereunder have been
sold; (c) the Company suspends or terminates the Placement Notice; or (d) the
Agreement has been terminated under the provisions of Section 13. The amount of
any discount, commission, or other compensation to be paid by the Company to
Ascendiant in connection with the sale of the Placement Shares will be
calculated in accordance with the terms set forth in Schedule 2. Neither the
Company nor Ascendiant will have any obligation whatsoever respecting a
Placement or any Placement Shares unless and until the Company delivers a
Placement Notice to Ascendiant and Ascendiant does not decline such Placement
Notice pursuant to the terms set forth above, and then only upon the terms
specified therein and herein. In the event of a conflict between the terms of
Sections 2, 3, and 4 of this Agreement and the terms of a Placement Notice, the
terms of the Placement Notice will control.

 

3.             Sale of Placement Shares by Ascendiant. Subject to the terms and
conditions of this Agreement, Ascendiant, for the period specified in the
Placement Notice, will use its commercially reasonable efforts consistent with
its normal trading and sales practices and applicable state and federal laws,
rules, and regulations and the rules of the NYSE American LLC (the “Exchange”),
to sell the Placement Shares up to the amount specified, and otherwise in
accordance with the terms of such Placement Notice. Ascendiant will provide
written confirmation to the Company no later than the opening of the Trading Day
(as defined below) immediately following the Trading Day on which it has sold
Placement Shares hereunder, setting forth the number of Placement Shares sold on
such day, the compensation payable by the Company to Ascendiant pursuant to
Section 2 for such sales, and the Net Proceeds (as defined below) payable to the
Company, with an itemization of the deductions made by Ascendiant (as set forth
in Section 5(b)) from the gross proceeds that it receives from such sales.
Subject to the terms of the Placement Notice, Ascendiant may sell Placement
Shares by any method permitted by law deemed to be an “at the market” offering
as defined in Rule 415(a)(1)(x) and 415(a)(4) of the Securities Act Regulations,
including sales made directly on the Exchange or on any other existing trading
market for the Common Stock or to or through a market maker. Subject to the
terms of a Placement Notice, Ascendiant may also sell Placement Shares by any
other method permitted by law, including in privately negotiated transactions,
with the Company’s consent. “Trading Day” means any day on which Common Stock is
purchased and sold on the Exchange.

 

4.             Suspension of Sales. The Company or Ascendiant may, upon notice
to the other party in writing (including by email correspondence to each of the
individuals of the other party set forth on Schedule 3, if receipt of such
correspondence is actually acknowledged by any of the individuals to whom the
notice is sent, other than via auto-reply) or by telephone (confirmed
immediately by verifiable email correspondence to each of the individuals of the
other party set forth on Schedule 3), suspend any sale of Placement Shares;
provided, however, that such suspension will not affect or impair any party’s
obligations respecting any Placement Shares sold hereunder prior to the receipt
of such notice. Each of the parties agrees that no such notice under this
Section 4 will be effective against any other party unless it is made to one of
the individuals named on Schedule 3 hereto, as such schedule may be amended from
time to time.

 

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5.             Sale and Delivery to Ascendiant; Settlement.

 

(a)       Sale of Placement Shares. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, upon Ascendiant’s acceptance of the terms of a Placement Notice, and
unless the sale of the Placement Shares described therein has been declined,
suspended, or otherwise terminated in accordance with the terms of this
Agreement, Ascendiant, for the period specified in the Placement Notice, will
use its commercially reasonable efforts consistent with its normal trading and
sales practices and applicable state and federal laws, rules and regulations and
the rules of the Exchange to sell such Placement Shares up to the amount
specified, and otherwise in accordance with the terms of such Placement Notice.
The Company acknowledges and agrees that: (i) there can be no assurance that
Ascendiant will be successful in selling Placement Shares; (ii) Ascendiant will
incur no liability or obligation to the Company or any other Person (as defined
herein) if it does not sell Placement Shares for any reason other than a failure
by Ascendiant to use its commercially reasonable efforts consistent with its
normal trading and sales practices and applicable law and regulations to sell
such Placement Shares as required under this Agreement; and (iii) Ascendiant
will be under no obligation to purchase Placement Shares on a principal basis
pursuant to this Agreement, except as otherwise agreed by Ascendiant and the
Company.

 

(b)       Settlement of Placement Shares. Unless otherwise specified in the
applicable Placement Notice, settlement for sales of Placement Shares will occur
on the second Trading Day (or such earlier day as is industry practice for
regular-way trading) following the date on which such sales are made (each, a
“Settlement Date”). The Agent shall notify the Company of each sale of Placement
Shares no later than opening day following the Trading Day that the Agent sold
Placement Shares. The amount of proceeds to be delivered to the Company on a
Settlement Date against receipt of the Placement Shares sold (the “Net
Proceeds”) will be equal to the aggregate sales price received by Ascendiant,
after deduction for: (i) Ascendiant’s commission, discount, or other
compensation for such sales payable by the Company pursuant to Section 2 hereof;
(ii) any transaction fees imposed by any governmental or self-regulatory
organization for such sales, and (iii) the balance of any unpaid costs or
expenses to be paid or reimbursed by Ascendiant pursuant to this Agreement.

 

(c)       Delivery of Placement Shares. On or before each Settlement Date, the
Company will, or will cause its transfer agent to, electronically transfer the
Placement Shares being sold by crediting Ascendiant’s or its designee’s account
(provided Ascendiant will have given the Company written notice of such designee
a reasonable period of time prior to the Settlement Date) at The Depository
Trust Company through its Deposit and Withdrawal at Custodian System or by such
other means of delivery as may be mutually agreed upon by the parties hereto,
which in all cases will be freely tradable, transferable, registered shares in
good deliverable form. On each Settlement Date, Ascendiant will deliver the
related Net Proceeds in same-day funds to an account designated by the Company
on, or prior to, the Settlement Date. The Company agrees that if the Company, or
its transfer agent (if applicable), defaults in its obligation to deliver
Placement Shares on a Settlement Date through no fault of Ascendiant, that in
addition to and in no way limiting the rights and obligations set forth in
Section 11(a) hereto, it will: (i) hold Ascendiant harmless against any loss,
claim, damage, or expense (including reasonable and documented legal fees and
expenses), as incurred, arising out of or in connection with such default by the
Company or its transfer agent (if applicable); and (ii) pay to Ascendiant
(without duplication) any commission, discount, or other compensation to which
it would otherwise have been entitled absent such default.

 

(d)       Limitations on Offering Size. Under no circumstances will the Company
cause or request the offer or sale of any Placement Shares if, after giving
effect to the sale of such Placement Shares, the aggregate gross sales proceeds
of Placement Shares sold pursuant to this Agreement would exceed the lesser of:
(i) together with all sales of Placement Shares under this Agreement, the
Maximum Amount; or (ii) the amount authorized from time to time to be issued and
sold under this Agreement by the Company’s board of directors, a duly authorized
committee thereof, or a duly authorized executive committee, and notified to
Ascendiant in writing. Under no circumstances will the Company cause or request
the offer or sale of any Placement Shares pursuant to this Agreement at a price
lower than the minimum price authorized from time to time by the Company’s board
of directors, a duly authorized committee thereof, or a duly authorized
executive committee, and notified to Ascendiant in writing.

 

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6.             Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, Ascendiant that as of the date of
this Agreement and as of each Applicable Time (as defined below), unless such
representation, warranty or agreement specifies a different date or time:

 

(a)       Registration Statement and Prospectus. The Company and, assuming no
act or omission on the part of Ascendiant that would make such statement untrue,
the transactions contemplated by this Agreement meet the requirements for and
comply with the conditions for the use of Form S-3 under the Securities Act. The
Registration Statement has been filed with the SEC and has been declared
effective under the Securities Act. The Prospectus Supplement will name
Ascendiant as the agent in the section entitled “Plan of Distribution.” The
Company has not received, and has no notice of, any order of the SEC preventing
or suspending the use of the Registration Statement or threatening or
instituting proceedings for that purpose. The Registration Statement and the
offer and sale of Placement Shares as contemplated hereby meet the requirements
of Rule 415 under the Securities Act and comply in all material respects with
said Rule. Any statutes, regulations, contracts, or other documents that are
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement have been so described or
filed. Copies of the Registration Statement, the Prospectus, and any such
amendments or supplements and all documents incorporated by reference therein
that were filed with the SEC on or prior to the date of this Agreement have been
delivered, or are available through EDGAR, to Ascendiant and its counsel. The
Company has not distributed and, prior to the later to occur of each Settlement
Date and completion of the distribution of the Placement Shares, will not
distribute any offering material in connection with the offering or sale of the
Placement Shares other than the Registration Statement and the Prospectus and
any Issuer Free Writing Prospectus (as defined below) to which Ascendiant has
consented. The Common Stock is currently listed on the Exchange under the
trading symbol “DPW.” Except as disclosed in the Registration Statement,
including the Incorporated Documents, the Company has not, in the 12 months
preceding the date hereof, received notice from the Exchange to the effect that
the Company is not in compliance with the Exchange’s listing or maintenance
requirements. Except as disclosed in the Registration Statement, including the
Incorporated Documents, or the Prospectus, the Company has no reason to believe
that it will not in the foreseeable future continue to be in compliance with all
such listing and maintenance requirements.

 

(b)       No Misstatement or Omission. The Registration Statement, when it
became effective, and the Prospectus, and any amendment or supplement thereto,
on the date of such Prospectus or amendment or supplement, conformed and will
conform in all material respects with the requirements of the Securities Act. At
each Settlement Date, the Registration Statement and the Prospectus, as of such
date, will conform in all material respects with the requirements of the
Securities Act. The Registration Statement, when it became or becomes effective,
did not, and will 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 not misleading. The Prospectus and any amendment and
supplement thereto, on the date thereof and at each Applicable Time (defined
below), did not or will not include an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. The documents
incorporated by reference in the Prospectus or any Prospectus Supplement did
not, and any further documents filed and incorporated by reference therein will
not, when filed with the SEC, contain an untrue statement of a material fact or
omit to state a material fact required to be stated in such document or
necessary to make the statements in such document, in light of the circumstances
under which they were made, not misleading. The foregoing will not apply to
statements in, or omissions from, any such document made in reliance upon, and
in conformity with, information furnished to the Company by Ascendiant
specifically for use in the preparation thereof.

 

(c)       Conformity with Securities Act and Exchange Act. The documents
incorporated by reference in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, when such documents were or are filed with the
SEC under the Securities Act or the Exchange Act or became or become effective
under the Securities Act, as the case may be, conformed or will conform in all
material respects with the requirements of the Securities Act and the Exchange
Act, as applicable.

 

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(d)       Financial Information. The consolidated financial statements of the
Company included or incorporated by reference in the Registration Statement, the
Prospectus, and the Issuer Free Writing Prospectuses, if any, together with the
related notes and schedules, complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto as in effect as of the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods involved
(except: (i) as may be otherwise indicated in such financial statements or the
notes thereto; or (ii) in the case of unaudited interim statements, to the
extent they may exclude footnotes or may be condensed or summary statements) and
fairly present in all material respects the consolidated financial position of
the Company and the Subsidiaries as of the dates indicated and the consolidated
results of operations and cash flows of the Company for the periods specified
(subject, in the case of unaudited statements, to normal year-end audit
adjustments that will not be material, either individually or in the aggregate);
the other financial and statistical data respecting the Company and the
Subsidiaries contained or incorporated by reference in the Registration
Statement, the Prospectus, and the Issuer Free Writing Prospectuses, if any, are
accurately and fairly presented and prepared on a basis consistent with the
financial statements and books and records of the Company; there are no
financial statements (historical or pro forma) that are required to be included
or incorporated by reference in the Registration Statement or the Prospectus
that are not included or incorporated by reference as required; the Company and
the Subsidiaries (as defined below) do not have any material liabilities or
obligations, direct or contingent (including any off-balance sheet obligations),
not described in the Registration Statement (including the exhibits thereto) and
the Prospectus that are required to be described in the Registration Statement
or the Prospectus (including exhibits thereto and Incorporated Documents); and
all disclosures contained or incorporated by reference in the Registration
Statement, the Prospectus, and the Issuer Free Writing Prospectuses, if any,
regarding “non-GAAP financial measures” (as such term is defined by the rules
and regulations of the SEC) comply in all material respects with Regulation G of
the Exchange Act and Item 10 of Regulation S-K under the Securities Act, to the
extent applicable.

 

(e)       Conformity with EDGAR Filing. The Prospectus delivered to Ascendiant
for use in connection with the sale of the Placement Shares pursuant to this
Agreement will be identical to the versions of the Prospectus created to be
transmitted to the SEC for filing via EDGAR, except to the extent permitted by
Regulation S-T.

 

(f)       Organization. The Company and each of its Subsidiaries are, and will
be, duly organized, validly existing as a corporation, limited partnership,
limited liability company, or other legal entity, and in good standing under the
laws of their respective jurisdictions of organization. The Company and each of
its Subsidiaries are, and will be, duly qualified as a foreign corporation for
transaction of business and in good standing under the laws of each other
jurisdiction in which their respective ownership or lease of property or the
conduct of their respective businesses requires such qualification, and have all
corporate power and authority necessary to own or hold their respective
properties and to conduct their respective businesses as described in the
Registration Statement and the Prospectus, except where the failure to be so
qualified or in good standing or have such power or authority would not,
individually or in the aggregate, have a material adverse effect or would
reasonably be expected to have a material adverse effect on the assets,
business, operations, earnings, properties, condition (financial or otherwise),
prospects, stockholders’ equity, or results of operations of the Company and the
Subsidiaries (as defined below) taken as a whole, or prevent or materially
interfere with consummation of the transactions contemplated hereby (a “Material
Adverse Effect”).

 

(g)       Subsidiaries. The subsidiaries set forth on Schedule 4 (collectively,
the “Subsidiaries”), are the Company’s only subsidiaries. Except as set forth in
the Registration Statement and in the Prospectus, the Company owns, directly or
indirectly, all of the equity interests of the Subsidiaries free and clear of
any lien, charge, security interest, encumbrance, right of first refusal, or
other restriction, and all the equity interests of the Subsidiaries are validly
issued and are fully paid, nonassessable, and free of preemptive and similar
rights.

 

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(h)       No Violation or Default. Neither the Company nor any of its
Subsidiaries is: (i) in violation of its charter or bylaws or similar
organizational documents; (ii) in default, and no event has occurred that, 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, or other agreement or
instrument to which the Company or any of its Subsidiaries is a party, 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 are subject; or (iii) in
violation of any law or statute or any judgment, order, rule, or regulation of
any court, arbitrator, or governmental or regulatory authority, except, in the
case of each of clauses (ii) and (iii) above, for any such violation or default
that would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. Except as described in the Prospectus, the Prospectus
Supplement, or the Incorporated Documents, to the Company’s knowledge, no other
party under any material contract or other agreement to which it or any of its
Subsidiaries is a party is in default in any respect thereunder where such
default would reasonably be expected to have a Material Adverse Effect.

 

(i)       No Material Adverse Change. Subsequent to the respective dates as of
which information is given in the Registration Statement, the Prospectus, and
the Free Writing Prospectuses, if any (including any document deemed
incorporated by reference therein), there has not been: (i) any Material Adverse
Effect, or any development involving a prospective Material Adverse Effect, in
or affecting the business, properties, management, financial, condition
(financial or otherwise), results of operations, or prospects of the Company and
the Subsidiaries taken as a whole; (ii) any transaction that is material to the
Company and the Subsidiaries taken as a whole; (iii) any obligation or
liability, direct or contingent (including any off-balance sheet obligations),
incurred by the Company or any Subsidiary, that is material to the Company and
the Subsidiaries taken as a whole; (iv) any material change in the capital stock
(other than as a result of the sale of Placement Shares or other than as
described in a proxy statement filed on Schedule 14A or a Registration Statement
on Form S-4 and otherwise publicly announced) or outstanding long-term
indebtedness of the Company or any of its Subsidiaries; or (v) any dividend or
distribution of any kind declared, paid, or made on the capital stock of the
Company or any Subsidiary, other than in each case above, in the ordinary course
of business or as otherwise disclosed in the Registration Statement or
Prospectus (including any document deemed incorporated by reference therein).

 

(j)       Capitalization. The issued and outstanding shares of capital stock of
the Company have been validly issued, are fully paid, and nonassessable. The
Company has an authorized, issued, and outstanding capitalization as set forth
in the Registration Statement and the Prospectus as of the dates referred to
therein (other than the grant of additional options under the Company’s existing
stock option plans or changes in the number of outstanding Common Stock of the
Company due to the issuance of shares upon the exercise or conversion of
securities exercisable for, or convertible into, Common Stock outstanding on the
date hereof or as a result of the issuance of Placement Shares), and such
authorized capital stock conforms to the description thereof set forth in the
Registration Statement and the Prospectus. The description of the Common Stock
in the Registration Statement and the Prospectus is complete and accurate in all
material respects. Except as disclosed in or contemplated by the Registration
Statement or the Prospectus, as of the date referred to therein, the Company did
not have reserved or available for issuance any shares of Common Stock in
respect of options, any rights or warrants to subscribe for, any securities or
obligations convertible into or exchangeable for, or any contracts or
commitments to issue or sell, any shares of capital stock or other securities.

 

(k)       Authorization; Enforceability. The Company has full legal right,
power, and authority to enter into this Agreement and perform the transactions
contemplated hereby. This Agreement has been duly authorized, executed, and
delivered by the Company and is a legal, valid, and binding agreement of the
Company enforceable in accordance with its terms, except to the extent that:
(i) enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors’ rights generally and by general
equitable principles; and (ii) the indemnification and contribution provisions
of Section 11 hereof may be limited by federal or state securities laws and
public policy considerations in respect thereof.

 

(l)       Authorization of Placement Shares. The Placement Shares, when issued
and delivered pursuant to the terms approved by the board of directors of the
Company or a duly authorized committee thereof, or a duly authorized executive
committee, against payment therefor as provided herein, will be duly and validly
authorized and issued and fully paid and nonassessable, free and clear of any
pledge, lien, encumbrance, security interest, or other claim (other than any
pledge, lien, encumbrance, security interest, or other claim arising from an act
or omission of Ascendiant or a purchaser), including any statutory or
contractual preemptive rights, resale rights, rights of first refusal, or other
similar rights, and will be registered pursuant to Section 12 of the Exchange
Act. The Placement Shares, when issued, will conform in all material respects to
the description thereof set forth in or incorporated into the Prospectus.

 

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(m)       No Consents Required. No consent, approval, authorization, order,
registration, or qualification of or with any court or arbitrator or any
governmental or regulatory authority is required for the execution, delivery,
and performance by the Company of this Agreement, and the issuance and sale by
the Company of the Placement Shares as contemplated hereby, except for such
consents, approvals, authorizations, orders, and registrations or qualifications
as may be required under applicable state securities laws or by the bylaws and
rules of the Financial Industry Regulatory Authority (“FINRA”) or the Exchange
in connection with the sale of the Placement Shares by Ascendiant.

 

(n)       No Preferential Rights. Except as set forth in the Registration
Statement and the Prospectus: (i) no person, as such term is defined in Rule
1-02 of Regulation S-X promulgated under the Securities Act (each, a “Person”),
has the right, contractual or otherwise, to cause the Company to issue or sell
to such Person any Common Stock or shares of any other capital stock or other
securities of the Company (other than upon the exercise of options or warrants
to purchase Common Stock or upon the exercise of options that may be granted
from time to time under the Company’s stock option plans); (ii) no Person has
any preemptive rights, rights of first refusal, or any other rights (whether
pursuant to a “poison pill” provision or otherwise) to purchase any Common Stock
or shares of any other capital stock or other securities of the Company from the
Company that have not been duly waived respecting the offering contemplated
hereby; (iii) no Person has the right to act as an underwriter or as a financial
advisor to the Company in connection with the offer and sale of the Common
Stock; and (iv) no Person has the right, contractual or otherwise, to require
the Company to register under the Securities Act any Common Stock or shares of
any other capital stock or other securities of the Company, or to include any
such shares or other securities in the Registration Statement or the offering
contemplated thereby, whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Placement Shares as contemplated
thereby or otherwise, except for such rights as have been waived on or prior to
the date hereof.

 

(o)       Independent Public Accountant. Marcum LLP (the “Accountants”), whose
reports on the consolidated financial statements of the Company are filed with
the SEC as part of the Company’s most recent Annual Report on Form 10-K and
incorporated into the Registration Statement, are and, during the periods
covered by its report, were an independent registered public accounting firm
within the meaning of the Securities Act and the Public Company Accounting
Oversight Board (United States). To the Company’s knowledge, after due inquiry,
the Accountants are not in violation of the auditor independence requirements of
the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) respecting the
Company.

 

(p)       Enforceability of Agreements. To the Company’s knowledge, all
agreements between the Company and third parties expressly referenced in the
Prospectus, other than such agreements that have expired by their terms or whose
termination is disclosed in documents filed by the Company on EDGAR, are legal,
valid, and binding obligations of the Company enforceable in accordance with
their respective terms, except to the extent that: (i) enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting creditors’ rights generally and by general equitable principles; and
(ii) the indemnification provisions of certain agreements may be limited be
federal or state securities laws or public policy considerations in respect
thereof, except for any unenforceability that, individually or in the aggregate,
would not unreasonably be expected to have a Material Adverse Effect.

 

(q)       No Litigation. Except as set forth in the Registration Statement or
the Prospectus: (i) there are no legal, governmental, or regulatory actions,
suits, or proceedings pending or, to the Company’s knowledge, any legal,
governmental, or regulatory investigations to which the Company or a Subsidiary
is a party or to which any property of the Company or any of its Subsidiaries is
the subject that, individually or in the aggregate, if determined adversely to
the Company or any of its Subsidiaries, would reasonably be expected to have a
Material Adverse Effect or materially and adversely affect the ability of the
Company to perform its obligations under this Agreement; (ii) to the Company’s
knowledge, no actions, suits, or proceedings are threatened or contemplated by
any governmental or regulatory authority or threatened by others that,
individually or in the aggregate, if determined adversely to the Company or any
of its Subsidiaries, would reasonably be expected to have a Material Adverse
Effect; (iii) there are no current or pending legal, governmental, or
regulatory, actions, suits, proceedings or, to the Company’s knowledge,
investigations that are required under the Securities Act to be described in the
Prospectus that are not described in the Prospectus; and (iv) there are no
contracts or other documents that are required under the Securities Act to be
filed as exhibits to the Registration Statement that are not so filed.

 

 7  

 

 

(r)       Licenses and Permits. Except as set forth in the Registration
Statement or the Prospectus, the Company and each of its Subsidiaries possess or
have obtained all licenses, certificates, consents, orders, approvals, permits,
and other authorizations issued by, and have made all declarations and filings
with, the appropriate federal, state, local, or foreign governmental or
regulatory authorities that are necessary for the ownership or lease of their
respective properties or the conduct of their respective businesses as described
in the Registration Statement and the Prospectus (the “Permits”), except where
the failure to possess, obtain, or make the same would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. Except
as disclosed in the Registration Statement or the Prospectus, neither the
Company nor its Subsidiaries have received written notice of any proceeding
relating to revocation or modification of any such Permit or have any reason to
believe that such Permit will not be renewed in the ordinary course, except when
the failure to obtain any such renewal would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

(s)       S-3 Eligibility. (i) At the time of filing the Registration Statement;
and (ii) if applicable, at the time of the most recent amendment thereto for the
purposes of complying with Section 10(a)(3) of the Securities Act (whether such
amendment was by post-effective amendment, incorporated report filed pursuant to
Section 13 or 15(d) of the Exchange Act, or form of prospectus), the Company met
the then-applicable requirements for use of Form S-3 under the Securities Act,
including compliance with General Instruction I.B. of Form S-3, up to the
Maximum Amount.

 

(t)        No Material Defaults. Except as set forth in the Registration
Statement and Prospectus, neither the Company nor any of the Subsidiaries has
defaulted on any installment on indebtedness for borrowed money or on any rental
on one or more long-term leases, which defaults, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
Except as set forth in the Registration Statement and Prospectus, the Company
has not filed a report pursuant to Section 13(a) or 15(d) of the Exchange Act
since the filing of its last Annual Report on Form 10-K, indicating that it:
(i) has failed to pay any dividend or sinking fund installment on preferred
stock; or (ii) has defaulted on any installment on indebtedness for borrowed
money or on any rental on one or more long-term leases, which defaults,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

(u)       Certain Market Activities. Neither the Company or any of the
Subsidiaries, nor any of their respective directors, officers, or controlling
Persons has taken, directly or indirectly, any action designed, or that has
constituted or might reasonably be expected to cause or result in, under the
Exchange Act or otherwise, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Placement
Shares.

 

(v)       Broker-Dealer Relationships. Neither the Company nor any of the
Subsidiaries or any related entities: (i) are required to register as a “broker”
or “dealer” in accordance with the provisions of the Exchange Act; or
(ii) directly or indirectly through one or more intermediaries, control or are a
“person associated with a member” or “associated person of a member” (within the
meaning set forth in the FINRA rules).

 

(w)       No Reliance. The Company has not relied upon Ascendiant or legal
counsel for Ascendiant for any legal, tax, or accounting advice in connection
with the offering and sale of the Placement Shares.

 

(x)       Taxes. The Company and each of its Subsidiaries have filed all
federal, state, local, and foreign tax returns that have been required to be
filed and paid all taxes shown thereon through the date hereof, to the extent
that such taxes have become due and are not being contested in good faith,
except when the failure to do so would not reasonably be expected to have a
Material Adverse Effect. Except as otherwise disclosed in or contemplated by the
Registration Statement or the Prospectus, no tax deficiency has been determined
adversely to the Company or any of its Subsidiaries that has had, or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. The Company has no knowledge of any federal, state, or other
governmental tax deficiency, penalty, or assessment that has been or might be
asserted or threatened against it that could have a Material Adverse Effect.

 

 8  

 

 

(y)       Title to Real and Personal Property. The Company and each of its
Subsidiaries have good and defensible title to all of their real and personal
property owned by them, in each case, free and clear of all liens, encumbrances,
and defects, except as described in the Registration Statement and Prospectus or
that do not materially affect the value of the properties of the Company and its
Subsidiaries, considered as one enterprise, and do not interfere in any material
respect with the use made and proposed to be made of such properties by the
Company and its Subsidiaries, considered as one enterprise; and all of the
leases, subleases, and other rights under which the Company or any of its
Subsidiaries holds or uses properties described in the Registration Statement
and Prospectus are in full force and effect, with such exceptions as would not
reasonably be expected to have a Material Adverse Effect, and neither the
Company nor any of its Subsidiaries has any notice of any material claim of any
sort that has been asserted by anyone adverse to the rights of the Company or
its Subsidiaries under any of the leases, subleases, and other rights mentioned
above, or affecting or questioning the rights of the Company or any Subsidiary
thereof to the continued possession or use of the leased or subleased premises
or the premises granted by leases, subleases, and other rights. The Company and
each of its Subsidiaries have the consents, easements, rights-of-way, or
licenses from any Person as are necessary to enable them to conduct their
business in the manner described in the Registration Statement and the
Prospectus, subject to such qualifications as may be set forth in the
Registration Statement and the Prospectus, and except for the consents,
easements, rights-of-way, or licenses the lack of which would not have,
individually or in the aggregate, a Material Adverse Effect.

 

(z)       Intellectual Property. Except as set forth in the Registration
Statement or the Prospectus, to the Company’s knowledge, the Company and its
Subsidiaries own or possess adequate enforceable rights to use all patents,
patent applications, trademarks (both registered and unregistered), service
marks, trade names, trademark registrations, service mark registrations,
copyrights, licenses, and know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems, or
procedures) (collectively, the “Intellectual Property”), necessary for the
conduct of their respective businesses as conducted as of the date hereof,
except to the extent that the failure to own or possess adequate rights to use
such Intellectual Property would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; except as disclosed in
writing to Ascendiant, the Company and any of its Subsidiaries have not received
any written notice of any claim of infringement or conflict that asserted
Intellectual Property rights of others, which infringement or conflict, if the
subject of an unfavorable decision, would result in a Material Adverse Effect;
there are no pending, or to the Company’s knowledge, threatened judicial
proceedings or interference proceedings against the Company or its Subsidiaries
challenging the Company’s or its Subsidiaries’ rights in or to or the validity
of the scope of any of the Company’s or its Subsidiaries’ material patents,
patent applications, or proprietary information; to the Company’s knowledge, no
other entity or individual has any right or claim in any of the Company’s or its
Subsidiaries’ owned, material patents, patent applications, or any patent to be
issued therefrom by virtue of any contract, license, or other agreement entered
into between such entity or individual and the Company or a Subsidiary or by any
non-contractual obligation of the Company or a Subsidiary, other than by written
licenses granted by the Company or a Subsidiary; the Company and its
Subsidiaries have not received any written notice of any claim challenging the
rights of the Company or a Subsidiary in or to any Intellectual Property owned,
licensed, or optioned by the Company or such Subsidiary that, if the subject of
an unfavorable decision, would result in a Material Adverse Effect.

 

(aa)       Environmental Laws. Except as set forth in the Registration Statement
or the Prospectus, the Company and its Subsidiaries: (i) are in compliance with
any and all applicable federal, state, local, and foreign laws, rules,
regulations, decisions, and orders relating to the protection of human health
and safety, the environment, hazardous or toxic substances or wastes,
pollutants, or contaminants (collectively, “Environmental Laws”); (ii) have
received and are in compliance with all permits, licenses, or other approvals
required of them under applicable Environmental Laws to conduct their respective
businesses as described in the Registration Statement and the Prospectus;
(iii) have not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or toxic
substances or wastes, pollutants, or contaminants, except, in the case of any of
clauses (i), (ii), or (iii) above, for any such failure to comply or failure to
receive required permits, licenses, other approvals or liability as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; and (iv) there are no costs or liabilities arising under
Environmental Laws respecting the operation of the Company’s and each of its
Subsidiaries’ properties (including any capital or operating expenditures
required for clean-up or closure of the properties, compliance with
Environmental Laws, any permit, license, or approval or any related legal
constraints or operating activities, and any potential liabilities of third
parties assumed under contract by the Company or any of its Subsidiaries) that
would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.

 

 9  

 

 

(bb)       Disclosure Controls. The Company and each of its Subsidiaries
maintain systems of internal accounting controls designed to provide reasonable
assurance that: (i) transactions are executed in accordance with management’s
general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken respecting any differences. The Company is not aware of any material
weaknesses in its internal control over financial reporting (other than as set
forth in the Prospectus). Since the date of the latest audited financial
statements of the Company included in the Prospectus, there has been no change
in the Company’s internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting (other than as set forth in the Prospectus).
The Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15 and 15d-15) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company and each of its Subsidiaries is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q,
as the case may be, is being prepared. The Company’s certifying officers have
evaluated the effectiveness of the Company’s controls and procedures as of a
date within 90 days prior to the filing date of the Form 10-K for the fiscal
year most recently ended (such date, the “Evaluation Date”). The Company
presented in its Form 10-K for the fiscal year most recently ended the
conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation Date.
Since the Evaluation Date, there have been no significant changes in the
Company’s internal controls (as such term is defined in Item 307(b) of
Regulation S-K under the Securities Act). To the knowledge of the Company, the
Company’s “internal controls over financial reporting” and “disclosure controls
and procedures” are effective.

 

(cc)       Sarbanes-Oxley. There is and has been no failure on the part of the
Company or, to the knowledge of the Company, any of the Company’s directors or
officers, in their capacities as such, to comply with any applicable provisions
of the Sarbanes-Oxley Act and the rules and regulations promulgated thereunder.
Each of the principal executive officer and the principal financial officer of
the Company (or each former principal executive officer of the Company and each
former principal financial officer of the Company as applicable) has made all
certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act
respecting all reports, schedules, forms, statements, and other documents
required to be filed by it or furnished by it to the SEC. For purposes of the
preceding sentence, “principal executive officer” and “principal financial
officer” will have the meanings given to such terms in the Sarbanes-Oxley Act.

 

(dd)       Finder’s Fees. Other than as set forth on Schedule 6(dd), neither the
Company nor any of the Subsidiaries has incurred any liability for any finder’s
fees, brokerage commissions, or similar payments in connection with the
transactions herein contemplated, except as may otherwise exist respecting
Ascendiant pursuant to this Agreement.

 

(ee)       Labor Disputes. No labor disturbance by or dispute with employees of
the Company or any of its Subsidiaries exists or, to the knowledge of the
Company, is threatened that would reasonably be expected to result in a Material
Adverse Effect.

 

(ff)        Investment Company Act. Neither the Company nor any of the
Subsidiaries is or, after giving effect to the offering and sale of the
Placement Shares, will be an “investment company” or an entity “controlled” by
an “investment company,” as such terms are defined in the Investment Company Act
of 1940, as amended (the “Investment Company Act”).

 

 10  

 

 

(gg)       Operations. The operations of the Company and its Subsidiaries are
and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions to which the Company or its Subsidiaries are subject, the
rules and regulations thereunder, and any related or similar rules, regulations,
or guidelines, issued, administered, or enforced by any governmental agency
having jurisdiction over the Company (collectively, the “Money Laundering
Laws”), except as would not reasonably be expected to result in a Material
Adverse Effect; 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 respecting the Money Laundering Laws is pending or,
to the knowledge of the Company, threatened.

 

(hh)       Off-Balance Sheet Arrangements. There are no transactions,
arrangements, and other relationships between and/or among the Company, and/or,
to the knowledge of the Company, any of its affiliates and any unconsolidated
entity, including any structural finance, special purpose, or limited purpose
entity (each, an “Off Balance Sheet Transaction”) that could reasonably be
expected to affect materially the Company’s liquidity or the availability of or
requirements for its capital resources, including those Off Balance Sheet
Transactions described in the SEC’s Statement about Management’s Discussion and
Analysis of Financial Conditions and Results of Operations (Release Nos.
33-8056; 34-45321; FR-61), required to be described in the Prospectus that have
not been described as required.

 

(jj)         Underwriter Agreements. The Company is not a party to any agreement
with an agent or underwriter for any other “at-the-market” or continuous equity
transaction.

 

(jj)         ERISA. To the knowledge of the Company: (i) each material employee
benefit plan, within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), that is maintained,
administered, or contributed to by the Company or any of its Subsidiaries (other
than a Multiemployer Plan, within the meaning of Section 3(37) of ERISA) for
employees or former employees of the Company and any of its Subsidiaries has
been maintained in compliance with its terms and the requirements of any
applicable statutes, orders, rules, and regulations, including ERISA and the
Internal Revenue Code of 1986, as amended (the “Code”); (ii) no prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of the
Code, has occurred respecting any such plan (excluding transactions effected
pursuant to a statutory or administrative exemption); and (iii) for each such
plan that is subject to the funding rules of Section 412 of the Code or Section
302 of ERISA, no “accumulated funding deficiency” as defined in Section 412 of
the Code has been incurred, whether or not waived, and the fair market value of
the assets of each such plan (excluding for these purposes accrued but unpaid
contributions) equals or exceeds the present value of all benefits accrued under
such plan determined using reasonable actuarial assumptions, other than, in the
case of (i), (ii), and (iii) above, as would not reasonably be expected to have
a Material Adverse Effect.

 

(kk)       Margin Rules. Neither the issuance, sale, and delivery of the
Placement Shares nor the application of the proceeds thereof by the Company as
described in the Registration Statement and the Prospectus will violate
Regulation T, U, or X of the Board of Governors of the Federal Reserve System or
any other regulation of such Board of Governors.

 

(ll)         Insurance. The Company and each of its Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as the Company and
each of its Subsidiaries reasonably believe are adequate for the conduct of
their properties and as is customary for companies of similar size engaged in
similar businesses in similar industries.

 

 11  

 

 

(mm)       No Improper Practices. (i) Neither the Company nor, to the Company’s
knowledge, the Subsidiaries or any of their respective executive officers has,
in the past five years, made any unlawful contributions to any candidate for any
political office (or failed fully to disclose any contribution in violation of
law) or made any contribution or other payment to any official of, or candidate
for, any federal, state, municipal, or foreign office or other Person charged
with similar public or quasi-public duty in violation of any law or of the
character required to be disclosed in the Prospectus; (ii) no relationship,
direct or indirect, exists between or among the Company or, to the Company’s
knowledge, any Subsidiary or any affiliate of any of them, on the one hand, and
the directors, officers and stockholders of the Company or, to the Company’s
knowledge, any Subsidiary, on the other hand, that is required by the Securities
Act to be described in the Registration Statement and the Prospectus that is not
so described; (iii) no relationship, direct or indirect, exists between or among
the Company or any Subsidiary or any affiliate of them, on the one hand, and the
directors, officers, stockholders, or directors of the Company or, to the
Company’s knowledge, any Subsidiary, on the other hand, that is required by the
rules of FINRA to be described in the Registration Statement and the Prospectus
that is not so described; (iv) except as described in the Prospectus, there are
no material outstanding loans or advances or material guarantees of indebtedness
by the Company or, to the Company’s knowledge, any Subsidiary to or for the
benefit of any of their respective officers or directors or any of the members
of the families of any of them; and (v) the Company has not offered, or caused
any placement agent to offer, Common Stock to any Person with the intent to
influence unlawfully: (1) a customer or supplier of the Company or any
Subsidiary to alter the customer’s or supplier’s level or type of business with
the Company or any Subsidiary; or (2) a trade journalist or publication to write
or publish favorable information about the Company or any Subsidiary or any of
their respective products or services; and (vi) neither the Company nor any
Subsidiary nor, to the Company’s knowledge, any employee or agent of the Company
or any Subsidiary has made any payment of funds of the Company or any Subsidiary
or received or retained any funds in violation of any law, rule, or regulation
(including the Foreign Corrupt Practices Act of 1977), which payment, receipt,
or retention of funds is of a character required to be disclosed in the
Registration Statement or the Prospectus.

 

(nn)       Status under the Securities Act. The Company was not and is not an
ineligible issuer as defined in Rule 405 under the Securities Act at the times
specified in Rules 164 and 433 under the Securities Act in connection with the
offering of the Placement Shares.

 

(oo)       No Misstatement or Omission in an Issuer Free Writing Prospectus.
Each Issuer Free Writing Prospectus, as of its issue date and as of each
Applicable Time (as defined in Section 25 below), did not, does not and will not
include any information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement or the Prospectus, including
any incorporated document deemed to be a part thereof that has not been
superseded or modified. The foregoing sentence does not apply to statements in
or omissions from any Issuer Free Writing Prospectus based upon and in
conformity with written information furnished to the Company by Ascendiant
specifically for use therein.

 

(pp)       No Conflicts. None of the execution of this Agreement; the issuance,
offering, or sale of the Placement Shares; the consummation of any of the
transactions contemplated herein; or the compliance by the Company with the
terms and provisions hereof will conflict with or result in a breach of any of
the terms and provisions of; constitute or will constitute a default under; or
has resulted in or will result in the creation or imposition of any lien,
charge, or encumbrance upon any property or assets of the Company pursuant to
the terms of any contract or other agreement to which the Company may be bound
or to which any of the property or assets of the Company is subject, except:
(i) such conflicts, breaches, or defaults as may have been waived; and (ii) such
conflicts, breaches, and defaults that would not reasonably be expected to have
a Material Adverse Effect; nor will such action result in any violation of the
provisions of the organizational or governing documents of the Company or in any
material violation of the provisions of any statute or any order, rule, or
regulation applicable to the Company or of any court or of any federal, state,
or other regulatory authority or other government body having jurisdiction over
the Company, except where such violation would not reasonably be expected to
have a Material Adverse Effect.

 

 12  

 

 

(qq)        Regulatory Compliance.

 

(i)       Neither the Company nor any of its Subsidiaries (each, an “Entity”)
nor any director, officer, employee, agent, affiliate, or representative of the
Entity, is a government, individual, or entity that is owned or controlled by
any director, officer, employee, agent, affiliate, or representative of the
Entity that is:

 

(1)       the subject of any sanctions administered or enforced by the U.S.
Department of Treasury’s Office of Foreign Assets Control, the United Nations
Security Council, the European Union, Her Majesty’s Treasury, or other relevant
sanctions authority (collectively, “Sanctions”); or

 

(2)       located, organized, or resident in a country or territory that is the
subject of Sanctions (including Burma/Myanmar, Cuba, Iran, North Korea, Sudan
and Syria).

 

(ii)       The Company, on behalf of each Entity, represents and covenants that
it will not, directly or indirectly, use, lend, contribute, or otherwise make
available the proceeds of the offering governed by this Agreement to any
subsidiary, joint venture partner, or other director, officer, employee, agent,
affiliate, or representative of the Entity:

 

(1)       to fund or facilitate any activities or business of or with any Person
or in any country or territory that, at the time of such funding or
facilitation, is the subject of Sanctions; or

 

(2)       in any other manner that will result in a violation of Sanctions by
any Person (including any Person participating in the offering, whether as
underwriter, advisor, investor, or otherwise).

 

(iii)       Except as detailed in the Prospectus, for the past five years, the
Entity has not knowingly engaged in, is not now knowingly engaged in, and will
not engage in, any dealings or transactions with any Person, or in any country
or territory, that at the time of the dealing or transaction is or was the
subject of Sanctions.

 

(rr)          Stock Transfer Taxes. On each Settlement Date, all stock transfer
or other taxes (other than income taxes) that are required to be paid in
connection with the sale and transfer of the Placement Shares to be sold
hereunder will be, or will have been, fully paid or provided for by the Company
and all laws imposing such taxes will be or will have been fully complied with
in all material respects.

 

Any certificate signed by an officer of the Company and delivered to Ascendiant
or to counsel for Ascendiant pursuant to or in connection with this Agreement
will be deemed to be a representation and warranty by the Company, as
applicable, to Ascendiant as to the matters set forth therein.

 

7.             Covenants of the Company. The Company covenants and agrees with
Ascendiant that:

 

(a)          Registration Statement Amendments. After the date of this Agreement
and during any period in which a Prospectus relating to any Placement Shares is
required to be delivered by Ascendiant under the Securities Act (including in
circumstances when such requirement may be satisfied pursuant to Rule 172 under
the Securities Act): (i) the Company will notify Ascendiant promptly of the time
when any subsequent amendment to the Registration Statement, other than
documents incorporated by reference, has been filed with the SEC and/or has
become effective or any subsequent supplement to the Prospectus has been filed
and of any request by the SEC for any amendment or supplement to the
Registration Statement or Prospectus or for additional information; (ii) the
Company will prepare and file with the SEC, promptly upon Ascendiant’s
reasonable request, any amendments or supplements to the Registration Statement
or Prospectus that, in Ascendiant’s reasonable opinion, may be necessary or
advisable in connection with the distribution of the Placement Shares by
Ascendiant (provided, however, that the failure of Ascendiant to make such
request will not relieve the Company of any obligation or liability hereunder,
or affect Ascendiant’s right to rely on the representations and warranties made
by the Company in this Agreement and provided, further, that the only remedy
Ascendiant will have respecting the failure to make such filing will be to cease
making sales under this Agreement until such amendment or supplement is filed);
(iii) the Company will not file any amendment or supplement to the Registration
Statement or Prospectus relating to the Placement Shares or a security
convertible into the Placement Shares unless a copy thereof has been submitted
to Ascendiant within a reasonable period of time before the filing and
Ascendiant has not

 

 13  

 

 

reasonably objected thereto (provided, however, that the failure of Ascendiant
to make such objection will not relieve the Company of any obligation or
liability hereunder, or affect Ascendiant’s right to rely on the representations
and warranties made by the Company in this Agreement and provided, further, that
the only remedy Ascendiant will have respecting the failure by the Company to
provide Ascendiant with such copy will be to cease making sales under this
Agreement) and the Company will furnish to Ascendiant at the time of filing
thereof a copy of any document that upon filing is deemed to be incorporated by
reference into the Registration Statement or Prospectus, except for those
documents available via EDGAR; and (iv) the Company will cause each amendment or
supplement to the Prospectus to be filed with the SEC as required pursuant to
the applicable paragraph of Rule 424(b) of the Securities Act or, in the case of
any document to be incorporated therein by reference, to be filed with the SEC
as required pursuant to the Exchange Act, within the period prescribed (the
determination to file or not file any amendment or supplement with the SEC under
this Section 7(a), based on the Company’s reasonable opinion or reasonable
objections, will be made exclusively by the Company).

 

(b)       Notice of SEC Stop Orders. The Company will advise Ascendiant,
promptly after it receives notice or obtains knowledge thereof, of the issuance
or threatened issuance by the SEC of any stop order suspending the effectiveness
of the Registration Statement, of the suspension of the qualification of the
Placement Shares for offering or sale in any jurisdiction, or of the initiation
or threatening of any proceeding for any such purpose; and it will promptly use
its commercially reasonable efforts to prevent the issuance of any stop order or
to obtain its withdrawal if such a stop order should be issued. The Company will
advise Ascendiant promptly after it receives any request by the SEC for any
amendments to the Registration Statement or any amendment or supplements to the
Prospectus or any Issuer Free Writing Prospectus or for additional information
related to the offering of the Placement Shares or for additional information
related to the Registration Statement, the Prospectus or any Issuer Free Writing
Prospectus.

 

(c)       Delivery of Prospectus; Subsequent Changes. During any period in which
a Prospectus relating to the Placement Shares is required to be delivered by
Ascendiant under the Securities Act respecting the offer and sale of the
Placement Shares (including in circumstances where such requirement may be
satisfied pursuant to Rule 172 under the Securities Act) (the “Prospectus
Delivery Period”), the Company will comply with all requirements imposed upon it
by the Securities Act, as from time to time in force, and to file on or before
their respective due dates all reports and any definitive proxy or information
statements required to be filed by the Company with the SEC pursuant to Sections
13(a), 13(c), 14, 15(d), or any other provision of or under the Exchange Act. If
the Company has omitted any information from the Registration Statement pursuant
to Rule 430A under the Securities Act, it will use its best efforts to comply
with the provisions of and make all requisite filings with the SEC pursuant to
said Rule 430A and to notify Ascendiant promptly of all such filings. If during
the Prospectus Delivery Period any event occurs as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances then existing, not
misleading, or if during the Prospectus Delivery Period it is necessary to amend
or supplement the Registration Statement or Prospectus to comply with the
Securities Act, the Company will promptly notify Ascendiant to suspend the
offering of Placement Shares during such period and the Company will promptly
amend or supplement the Registration Statement or Prospectus (at the expense of
the Company) so as to correct such statement or omission or effect such
compliance; provided, however, that the Company may delay any amendment or
supplement, if in the sole discretion of the Company, it is in the Company’s
best interest to do so.

 

(d)       Listing of Placement Shares. During the Prospectus Delivery Period,
the Company will use its reasonable best efforts to cause the Placement Shares
to be listed on the Exchange and to qualify the Placement Shares for sale under
the securities laws of such jurisdictions as Ascendiant reasonably designates
and to continue such qualifications in effect so long as required for the
distribution of the Placement Shares; provided, however, that the Company will
not be required in connection therewith to qualify as a foreign corporation or
dealer in securities or file a general consent to service of process in any
jurisdiction.

 

 14  

 

 

(e)       Delivery of Registration Statement and Prospectus. The Company will
furnish to Ascendiant and its counsel (at the expense of the Company) copies of
the Registration Statement, the Prospectus (including all documents incorporated
by reference therein) and all amendments and supplements to the Registration
Statement or Prospectus that are filed with the SEC during the Prospectus
Delivery Period (including all documents filed with the SEC during such period
that are deemed to be incorporated by reference therein), in each case as soon
as reasonably practicable and in such quantities as Ascendiant may from time to
time reasonably request and, at Ascendiant’s request, will also furnish copies
of the Prospectus to each exchange or market on which sales of the Placement
Shares may be made; provided, however, that the Company will not be required to
furnish any document (other than the Prospectus) to Ascendiant to the extent
such document is available on EDGAR.

 

(f)        Earnings Statement. The Company will make generally available to its
security holders as soon as practicable, but in any event not later than 15
months after the end of the Company’s current fiscal quarter, an earnings
statement covering a 12-month period that satisfies the provisions of Section
11(a) and Rule 158 of the Securities Act. The Company’s compliance with the
reporting requirements of the Exchange Act shall be deemed to satisfy this
Section 7(f).

 

(g)       Use of Proceeds. The Company will use the Net Proceeds as described in
the Prospectus in the section entitled “Use of Proceeds.”

 

(h)       Notice of Other Sales. Without the prior written notice to Ascendiant,
the Company will not, directly or indirectly, offer to sell, sell, contract to
sell, grant any option to sell or otherwise dispose of any Common Stock (other
than the Placement Shares offered pursuant to this Agreement) or securities
convertible into or exchangeable for Common Stock, warrants or any rights to
purchase or acquire, Common Stock during the period beginning on the fifth
Trading Day immediately prior to the date on which any Placement Notice is
delivered to Ascendiant hereunder and ending on the fifth Trading Day
immediately following the final Settlement Date respecting Placement Shares sold
pursuant to such Placement Notice (or, if the Placement Notice has been
terminated or suspended prior to the sale of all Placement Shares covered by a
Placement Notice, the date of such suspension or termination); and will not
directly or indirectly in any other “at-the-market” offering sell, contract to
sell, grant any option to sell or otherwise dispose of any Common Stock (other
than the Placement Shares offered pursuant to this Agreement) or securities
convertible into or exchangeable for Common Stock, warrants or any rights to
purchase or acquire, Common Stock prior to the later of the termination of this
Agreement and the earliest to occur of: (i) the date on which this Agreement is
terminated by the Company pursuant to Section 13(b)(ii); (ii) the date on which
Ascendiant terminates this Agreement pursuant to Section 13(c) or (3) the
thirtieth day immediately following the final Settlement Date respecting
Placement Shares sold pursuant to such Placement Notice; provided, however, that
such restrictions will not be required in connection with the Company’s issuance
or sale of: (1) Common Stock, options to purchase Common Stock or Common Stock
issuable upon the exercise of options, pursuant to any employee or director
stock option or benefits plan, stock ownership plan or dividend reinvestment
plan (but not Common Stock subject to a waiver to exceed plan limits in its
dividend reinvestment plan) of the Company whether now in effect or hereafter
implemented; (2) Common Stock issuable upon conversion of securities or the
exercise of warrants, options or other rights in effect or outstanding, and
disclosed in filings by the Company available on EDGAR or otherwise in writing
to Ascendiant; and (3) Common Stock, or securities convertible into or
exercisable for Common Stock, offered and sold in a privately negotiated
transaction to vendors, customers, strategic partners or potential strategic
partners who are qualified institutional buyers and not more than three Persons
that are “accredited investors” within the meaning of such term under paragraph
(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) of Rule 501 under the Securities Act
and otherwise conducted in a manner so as not to be integrated with the offering
of Common Stock hereby.

 

(i)        Change of Circumstances. The Company will, at any time during the
pendency of a Placement Notice, advise Ascendiant promptly after it will have
received notice or obtained knowledge thereof, of any information or fact that
would alter or affect in any material respect any opinion, certificate, letter
or other document required to be provided to Ascendiant pursuant to this
Agreement.

 

(j)        Due Diligence Cooperation. The Company will cooperate with any
reasonable due diligence review conducted by Ascendiant or its representatives
in connection with the transactions contemplated hereby, including providing
information and making available documents and senior corporate officers, during
regular business hours and at the Company’s principal offices or such other
location mutually agreed to by the parties, as Ascendiant may reasonably
request.

 

 15  

 

 

(k)          Required Filings Relating to Placement of Placement Shares. The
Company agrees that on such dates as the Securities Act requires, the Company
will: (i) file a prospectus supplement with the SEC under the applicable
paragraph of Rule 424(b) under the Securities Act (each and every filing under
Rule 424(b), a “Filing Date”), which prospectus supplement will set forth,
within the relevant period, the amount of Placement Shares sold through
Ascendiant, the Net Proceeds to the Company and the compensation payable by the
Company to Ascendiant respecting such Placement Shares; and (ii) deliver such
number of copies of each such prospectus supplement to each exchange or market
on which such sales were effected as may be required by the rules or regulations
of such exchange or market.

 

(l)           Representation Dates; Certificate. On the date of this Agreement
and each time the Company:

 

(i)       files the Prospectus relating to the Placement Shares or amends or
supplements (other than a prospectus supplement relating solely to an offering
of securities other than the Placement Shares) the Registration Statement or the
Prospectus relating to the Placement Shares by means of a post-effective
amendment, sticker, or supplement but not by means of incorporation of documents
by reference into the Registration Statement or the Prospectus relating to the
Placement Shares;

 

(ii)       files an annual report on Form 10-K under the Exchange Act (including
any Form 10-K/A that contains restated financial statements);

 

(iii)       files a quarterly report on Form 10-Q under the Exchange Act; or

 

(iv)       files a current report on Form 8-K containing amended audited
financial information (other than information “furnished” pursuant to Items 2.02
or 7.01 of Form 8-K or to provide disclosure pursuant to Item 8.01 of Form 8-K
relating to the reclassification of certain properties as discontinued
operations in accordance with Statement of Financial Accounting Standards No.
144) under the Exchange Act (each date of filing of one or more of the documents
referred to in clauses (i) through (iv) will be a “Representation Date”);

 

the Company will furnish Ascendiant (but in the case of clause (iv) above only
if Ascendiant reasonably determines that the information contained in such Form
8-K is material) with a certificate, in the form attached hereto as Exhibit A.
The requirement to provide a certificate under this Section 7(l) will be waived
for any Representation Date occurring at a time at which no Placement Notice is
pending, which waiver will continue until the earlier to occur of the date the
Company delivers a Placement Notice hereunder (which for such calendar quarter
will be considered a Representation Date) and the next occurring Representation
Date; provided, however, that such waiver will not apply for any Representation
Date on which the Company files its annual report on Form 10-K. Notwithstanding
the foregoing, if the Company subsequently decides to sell Placement Shares
following a Representation Date when the Company relied on such waiver and did
not provide Ascendiant with a certificate under this Section 7(l), then before
the Company delivers the Placement Notice or Ascendiant sells any Placement
Shares, the Company will provide Ascendiant with a certificate, in the form
attached hereto as Exhibit A, dated the date of the Placement Notice.

 

(m)          Legal Opinion. On the date of this Agreement and within five
Trading Days of each Representation Date for which the Company is obligated to
deliver a certificate in the form attached hereto as Exhibit A for which no
waiver is applicable, the Company will cause to be furnished to Ascendiant
written opinions of Sichenzia Ross Ference LLP (“Company Counsel”), or other
counsel reasonably satisfactory to Ascendiant, in form and substance reasonably
satisfactory to Ascendiant and its counsel; provided, however, the Company will
be required to furnish to Ascendiant no more than one opinion hereunder per
calendar quarter; provided, further, that in lieu of such opinions for
subsequent periodic filings under the Exchange Act, Company Counsel may furnish
Ascendiant with a letter (a “Reliance Letter”) to the effect that Ascendiant may
rely on a prior opinion delivered under this Section 7(m) to the same extent as
if it were dated the date of such letter (except that statements in such prior
opinion will be deemed to relate to the Registration Statement and the
Prospectus as amended or supplemented as of the date of the Reliance Letter).

 

 16  

 

 

(n)       Comfort Letters. On the date of this Agreement and within five Trading
Days of each Representation Date, other than pursuant to Section 7(l)(iii), for
which the Company is obligated to deliver a certificate in the form attached
hereto as Exhibit A for which no waiver is applicable, the Company will cause
its Accountants to furnish Ascendiant letters (the “Comfort Letters”), dated the
date the Comfort Letters are delivered, which will meet the requirements set
forth in this Section 7(n). The Comfort Letter from each of the Accountants will
be in a form and substance reasonably satisfactory to Ascendiant: (i) confirming
that they are an independent public accounting firm within the meaning of the
Securities Act and the PCAOB; (ii) stating, as of such date, the conclusions and
findings of such firm respecting the financial information and other matters
ordinarily covered by accountants’ “comfort letters” to underwriters in
connection with registered public offerings (the first such letter, the “Initial
Comfort Letter”); and (iii) updating the Initial Comfort Letter with any
information that would have been included in the Initial Comfort Letter had it
been given on such date and modified as necessary to relate to the Registration
Statement and the Prospectus, as amended and supplemented to the date of such
letter.

 

(o)       Market Activities. The Company will not, directly or indirectly:
(i) take any action designed to cause or result in, or that constitutes or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of Common
Stock; or (ii) sell, bid for, or purchase Common Stock in violation of
Regulation M, or pay anyone any compensation for soliciting purchases of the
Placement Shares other than Ascendiant.

 

(p)       Investment Company Act. The Company will conduct its affairs in such a
manner so as to reasonably ensure that neither it nor any of its Subsidiaries
will be or become, at any time prior to the termination of this Agreement, an
“investment company,” as such term is defined in the Investment Company Act.

 

(q)       No Offer to Sell. Other than an Issuer Free Writing Prospectus
approved in advance by the Company and Ascendiant in its capacity as agent
hereunder, neither Ascendiant nor the Company (including its agents and
representatives, other than Ascendiant in its capacity as such) will make, use,
prepare, authorize, approve, or refer to any written communication (as defined
in Rule 405 under the Securities Act), required to be filed with the SEC, that
constitutes an offer to sell or solicitation of an offer to buy Placement Shares
hereunder.

 

(r)       Sarbanes-Oxley Act. The Company and the Subsidiaries will maintain and
keep accurate books and records reflecting their assets and maintain internal
accounting controls in a manner designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles and including those policies and procedures that:
(i) pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the
Company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit the preparation of the Company’s consolidated financial
statements in accordance with generally accepted accounting principles;
(iii) that receipts and expenditures of the Company are being made only in
accordance with management’s and the Company’s directors’ authorization; and
(iv) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that could
have a material effect on its financial statements. The Company and the
Subsidiaries will maintain such controls and other procedures, including those
required by Sections 302 and 906 of the Sarbanes-Oxley Act, and the applicable
regulations thereunder that are designed to ensure that information required to
be disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the periods
specified in the SEC’s rules and forms, including controls and procedures
designed to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the Exchange Act is accumulated and
communicated to the Company’s management, including its principal executive
officer and principal financial officer, or individuals performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure and to ensure that material information relating to the Company or
the Subsidiaries is made known to them by others within those entities,
particularly during the period in which such periodic reports are being
prepared.

 

 17  

 

 

8.             Representations and Covenants of Ascendiant. Ascendiant
represents and warrants that it is duly registered as a broker-dealer under
FINRA, the Exchange Act, and the applicable statutes and regulations of each
state in which the Placement Shares will be offered and sold, except such states
in which Ascendiant is exempt from registration or such registration is not
otherwise required. Ascendiant will continue, for the term of this Agreement, to
be duly registered as a broker-dealer under FINRA, the Exchange Act, and the
applicable statutes and regulations of each state in which the Placement Shares
will be offered and sold, except such states in which Ascendiant is exempt from
registration or such registration is not otherwise required, during the term of
this Agreement. Ascendiant will comply with all applicable law and regulations
in connection with the Placement Shares, including Regulation M.

 

9.             Payment of Expenses. The Company will pay all expenses incident
to the performance of its obligations under this Agreement, including: (i) the
preparation, filing, including any fees required by the SEC, and printing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment and supplement thereto and each Free
Writing Prospectus, in such number as Ascendiant will reasonably deem necessary;
(ii) the printing and delivery to Ascendiant of this Agreement and such other
documents as may be required in connection with the offering, purchase, sale,
issuance, or delivery of the Placement Shares; (iii) the preparation, issuance,
and delivery of the certificates, if any, for the Placement Shares to
Ascendiant, including any stock or other transfer taxes and any capital duties,
stamp duties, or other duties or taxes payable upon the sale, issuance, or
delivery of the Placement Shares to Ascendiant; (iv) the fees and disbursements
of the counsel, accountants, and other advisors to the Company; (v) the fees and
expenses of the transfer agent and registrar for the Common Stock; (vi) the
filing fees incident to any review by FINRA of the terms of the sale of the
Placement Shares; (vii) the fees and expenses incurred in connection with the
listing of the Placement Shares on the Exchange; (viii) usual and customary
transaction, ticket, and similar charges; (ix) $30,000 of the fees and expenses
of Ascendiant’s legal counsel initially and, thereafter, the reasonable fees and
expenses of Ascendiant’s legal counsel over $30,000 incurred in connection with
quarterly and annual bring-downs required hereunder; the Company shall pay
retainers to Ascendiant’s counsel at the reasonable request of Ascendiant to
cover future fees and expenses.

 

10.          Conditions to Ascendiant’s Obligations. The obligations of
Ascendiant hereunder respecting a Placement will be subject to the continuing
accuracy and completeness of the representations and warranties made by the
Company herein, to the due performance by the Company of its obligations
hereunder, to the completion by Ascendiant of a due diligence review
satisfactory to it in its reasonable judgment, and to the continuing
satisfaction (or waiver by Ascendiant in its sole discretion) of the following
additional conditions:

 

(a)       Registration Statement Effective. The Company shall at all times
maintain in effect the Registration Statement, which will be available for the
sale of all Placement Shares contemplated to be issued by any Placement Notice.

 

(b)       No Material Notices. None of the following events will have occurred
and be continuing: (i) receipt by the Company of any request for additional
information from the SEC or any other federal or state governmental authority
during the period of effectiveness of the Registration Statement the response to
which would require any post-effective amendments or supplements to the
Registration Statement or the Prospectus; (ii) the issuance by the SEC or any
other federal or state governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose; (iii) receipt by the Company of any notification respecting
the suspension of the qualification or exemption from qualification of any of
the Placement Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; or (iv) the occurrence of any
event that requires the making of any changes in the Registration Statement, the
Prospectus or documents so that, in the case of the Registration Statement, it
will not contain any materially 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, that in the case of the Prospectus, it
will not contain any materially untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

 

(c)       No Misstatement or Material Omission. Ascendiant will not have advised
the Company that the Registration Statement or Prospectus, or any amendment or
supplement thereto, contains an untrue statement of fact that in Ascendiant’s
reasonable opinion is material, or omits to state a fact that in Ascendiant’s
opinion is material and is required to be stated therein or is necessary to make
the statements therein not misleading.

 

 18  

 

 

(d)          Material Changes. Except as contemplated in the Prospectus, or
disclosed in the Company’s reports filed with the SEC, there will not have been
any material adverse change, on a consolidated basis, in the authorized capital
stock of the Company or any Material Adverse Effect, or any development that
could reasonably be expected to cause a Material Adverse Effect.

 

(e)          Legal Opinion. Ascendiant will have received the opinions of
Company Counsel required to be delivered pursuant Section 7(m) on or before the
date on which such delivery of such opinions is required pursuant to Section
7(m).

 

(f)           Comfort Letters. Ascendiant will have received the Comfort Letters
required to be delivered pursuant Section 7(n) on or before the date on which
such delivery of such letter is required pursuant to Section 7(n).

 

(g)          Representation Certificate. Ascendiant will have received the
certificate required to be delivered pursuant to Section 7(l) on or before the
date on which delivery of such certificate is required pursuant to Section 7(l).

 

(h)          No Suspension. Trading in the Common Stock will not have been
suspended on the Exchange and the Common Stock will not have been delisted from
the Exchange.

 

(i)           Other Materials. On each date on which the Company is required to
deliver a certificate pursuant to Section 7(l), the Company will have furnished
to Ascendiant such appropriate further information, certificates, and documents
as Ascendiant may reasonably request and that are usually and customarily
furnished by an issuer of securities in connection with a securities offering.
All such opinions, certificates, letters, and other documents will be in
compliance with the provisions hereof. The Company will furnish Ascendiant with
such conformed copies of such opinions, certificates, letters, and other
documents as Ascendiant will reasonably request.

 

(j)           Securities Act Filings Made. All filings with the SEC required by
Rule 424 under the Securities Act to have been filed prior to the issuance of
any Placement Notice hereunder will have been made within the applicable period
prescribed for such filing by Rule 424.

 

(k)          Approval for Listing. The Placement Shares will either have been
approved for listing on the Exchange, subject only to notice of issuance, or the
Company will have filed an application for listing of the Placement Shares on
the Exchange at, or prior to, the issuance of any Placement Notice.

 

(l)           No Termination Event. No event will have occurred that would
permit Ascendiant to terminate this Agreement pursuant to Section 13(a).

 

11.          Indemnification and Contribution.

 

(a)          Company Indemnification. The Company agrees to indemnify and hold
harmless Ascendiant, its partners, members, directors, officers, employees, and
agents and each Person, if any, who controls Ascendiant within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act as follows:

 

(i)       against any and all loss, liability, claim, damage, and expense
whatsoever, as incurred, joint or several, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading, or arising out of any untrue
statement or alleged untrue statement of a material fact included in any related
Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;

 

 19  

 

 

(ii)       against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, joint or several, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that any such settlement is effected with the
written consent of the Company, which consent will not unreasonably be delayed
or withheld; and

 

(iii)       against any and all expense whatsoever, as incurred (including the
reasonable fees and disbursements of counsel), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;

 

provided, however, that this indemnity agreement will not apply to any loss,
liability, claim, damage, or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made solely in
reliance upon and in conformity with written information furnished to the
Company by Ascendiant expressly for use in the Registration Statement (or any
amendment thereto), or in any related Issuer Free Writing Prospectus or the
Prospectus (or any amendment or supplement thereto).

 

(b)          Ascendiant Indemnification. Ascendiant agrees to indemnify and hold
harmless the Company and its directors and each officer of the Company who
signed the Registration Statement, and each Person, if any, that: (i) controls
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act; or (ii) is controlled by or is under common control with
the Company against any and all loss, liability, claim, damage, and expense
described in the indemnity contained in Section 11(c), as incurred, but only
respecting untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendments thereto), the
Prospectus (or any amendment or supplement thereto) or any Free Writing
Prospectus in reliance upon and in conformity with information furnished to the
Company in writing by Ascendiant expressly for use therein.

 

(c)          Procedure.

 

(i)       Any party that proposes to assert the right to be indemnified under
this Section 11 will, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section 11, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve the indemnifying party from: (1) any liability that it might have to any
indemnified party otherwise than under this Section 11; and (2) any liability
that it may have to any indemnified party under the foregoing provision of this
Section 11 unless, and only to the extent that, such omission results in the
forfeiture or material impairment of substantive rights or defenses by the
indemnifying party.

 

(ii)       If any such action is brought against any indemnified party and it
notifies the indemnifying party of its commencement, the indemnifying party will
be entitled to participate in and, to the extent that it elects by delivering
written notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any other
indemnifying party similarly notified, to assume the defense of the action, with
counsel reasonably satisfactory to the indemnified party, and after notice from
the indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense.

 

 20  

 

 

(iii)      The indemnified party will have the right to employ its own counsel
in any such action, but the fees, expenses and other charges of such counsel
will be at the expense of such indemnified party unless: (1) the employment of
counsel by the indemnified party has been authorized in writing by the
indemnifying party; (2) the indemnified party has reasonably concluded (based on
advice of counsel) that there may be legal defenses available to it or other
indemnified parties that are different from or in addition to those available to
the indemnifying party; (3) a conflict or potential conflict exists (based on
advice of counsel to the indemnified party) between the indemnified party and
the indemnifying party (in which case the indemnifying party will not have the
right to direct the defense of such action on behalf of the indemnified party);
or (4) the indemnifying party has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties.

 

(iv)       It is understood that the indemnifying party or parties will not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees, disbursements and other charges of more than
one separate firm admitted to practice in such jurisdiction at any one time for
all such indemnified party or parties. All such fees, disbursements, and other
charges will be reimbursed by the indemnifying party promptly after the
indemnifying party receives a written invoice relating to fees, disbursements
and other charges in reasonable detail.

 

(v)       An indemnifying party will not, in any event, be liable for any
settlement of any action or claim effected without its written consent. No
indemnifying party will, without the prior written consent of each indemnified
party, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, or proceeding relating to the matters
contemplated by this Section 11 (whether or not any indemnified party is a party
thereto), unless such settlement, compromise or consent: (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding, 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.

 

(d)          Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in the
foregoing paragraphs of this Section 11 is applicable in accordance with its
terms but for any reason is held to be unavailable from the Company or
Ascendiant, the Company and Ascendiant will contribute to the total losses,
claims, liabilities, expenses, and damages (including any investigative, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted, but
after deducting any contribution received by the Company from Persons other than
Ascendiant, such as Persons that control the Company within the meaning of the
Securities Act, officers of the Company who signed the Registration Statement
and directors of the Company, who also may be liable for contribution) to which
the Company and Ascendiant may be subject in such proportion as is appropriate
to reflect the relative benefits received by the Company, on the one hand, and
Ascendiant, on the other hand. The relative benefits received by the Company, on
the one hand, and Ascendiant, on the other hand, will be deemed to be in the
same proportion as the total net proceeds from the sale of the Placement Shares
(before deducting expenses) received by the Company bear to the total
compensation received by Ascendiant (before deducting expenses) from the sale of
Placement Shares on behalf of the Company. If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law, the
allocation of contribution will be made in such proportion as is appropriate to
reflect not only the relative benefits referred to in the foregoing sentence but
also the relative fault of the Company, on the one hand, and Ascendiant, on the
other hand, respecting the statements or omission that resulted in such loss,
claim, liability, expense or damage, or action in respect thereof, as well as
any other relevant equitable considerations respecting such offering. Such
relative fault will be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
or Ascendiant, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and Ascendiant agree that it would not be just

 

 21  

 

 

and equitable if contributions pursuant to this Section 11(d) were to be
determined by pro rata allocation or by any other method of allocation that does
not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
liability, expense, or damage, or action in respect thereof, referred to above
in this Section 11(d) will be deemed to include, for the purpose of this Section
11(d), any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim to the
extent consistent with Section 11(c) hereof. Notwithstanding the foregoing
provisions of this Section 11(d), Ascendiant will not be required to contribute
any amount in excess of the commissions received by it under this Agreement and
no Person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) will be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 11(d), any Person who controls a party to this Agreement within the
meaning of the Securities Act, and any officers, directors, partners, employees
or agents of Ascendiant, will have the same rights to contribution as that
party, and each officer and director of the Company who signed the Registration
Statement will have the same rights to contribution as the Company, subject in
each case to the provisions hereof. Any party entitled to contribution, promptly
after receipt of notice of commencement of any action against such party in
respect of which a claim for contribution may be made under this Section 11(d),
will notify any such party or parties from whom contribution may be sought, but
the omission to so notify will not relieve that party or parties from whom
contribution may be sought from any other obligation it or they may have under
this Section 11(d) except to the extent that the failure to so notify such other
party materially prejudiced the substantive rights or defenses of the party from
whom contribution is sought. Except for a settlement entered into pursuant to
the last sentence of Section 11(c) hereof, no party will be liable for
contribution respecting any action or claim settled without its written consent
if such consent is required pursuant to Section 11(c) hereof.

 

12.           Representations and Agreements to Survive Delivery. The indemnity
and contribution agreements contained in Section 11 of this Agreement and all
representations and warranties of the Company herein or in certificates
delivered pursuant hereto will survive, as of their respective dates, regardless
of: (a) any investigation made by or on behalf of Ascendiant, any controlling
Persons, or the Company (or any of their respective officers, directors, or
controlling Persons); (b) delivery and acceptance of the Placement Shares and
payment therefor; or (c) any termination of this Agreement.

 

13.           Termination.

 

(a)       Ascendiant may terminate this Agreement, by notice to the Company, as
hereinafter specified at any time: (i) if there has been, since the time of
execution of this Agreement or since the date as of which information is given
in the Prospectus, any Material Adverse Effect, or any development has occurred
that is reasonably likely to have a Material Adverse Effect or in the sole
judgment of Ascendiant makes it impractical or inadvisable to market the
Placement Shares or to enforce contracts for the sale of the Placement Shares;
(ii) if there has occurred any material adverse change in the financial markets
in the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of Ascendiant, impracticable or inadvisable
to market the Placement Shares or to enforce contracts for the sale of the
Placement Shares; (iii) if trading in the Common Stock has been suspended or
limited by the SEC or the Exchange, or if trading generally on the Exchange has
been suspended or limited, or minimum prices for trading have been fixed on the
Exchange; (iv) if any suspension of trading of any securities of the Company on
any exchange or in the over-the-counter market will have occurred and be
continuing; (v) if a major disruption of securities settlements or clearance
services in the United States will have occurred and be continuing; or (vi) if a
banking moratorium has been declared by either U.S. Federal or New York
authorities. Any such termination will be without liability of any party to any
other party except that the provisions of Section 9 (Expenses), Section 11
(Indemnification), Section 12 (Survival of Representations), Section 18
(Applicable Law; Waiver of Jury Trial), and Section 19 (Consent to Jurisdiction)
hereof will remain in full force and effect notwithstanding such termination. If
Ascendiant elects to terminate this Agreement as provided in this Section 13(a),
Ascendiant will provide the required notice as specified in Section 14
(Notices).

 

 22  

 

 

(b)           (i)        The Company will have the right, by giving 10 days’
notice as hereinafter specified to terminate this Agreement in its sole
discretion at any time after the date of this Agreement.

 

(ii)       If Ascendiant declines any commercially reasonable placement notice
pursuant to Section 2(a) of this Agreement, then the Company will have the right
to terminate this Agreement by giving written notice of termination to
Ascendiant. Any such termination will be effective immediately upon a delivery
of a termination notice by the Company to Ascendiant.

 

Any termination pursuant to Section 13(b) will be without liability of any party
to any other party except that the provisions of Section 9, Section 11, Section
12, Section 18, and Section 19 hereof will remain in full force and effect
notwithstanding such termination.

 

(c)       Ascendiant will have the right, by giving 10 days’ notice as
hereinafter specified to terminate this Agreement in its sole discretion at any
time after the date of this Agreement. Any such termination will be without
liability of any party to any other party except that the provisions of Section
9, Section 11, Section 12, Section 18, and Section 19 hereof will remain in full
force and effect notwithstanding such termination.

 

(d)       Unless earlier terminated pursuant to this Section 13, this Agreement
will automatically terminate upon the earlier to occur of: (i) the one-year
anniversary of the date hereof; or (ii) the issuance and sale of all of the
Placement Shares through Ascendiant on the terms and subject to the conditions
set forth herein, except that, in either such case, the provisions of Section 9,
Section 11, Section 12, Section 18 and Section 19 hereof will remain in full
force and effect notwithstanding such termination.

 

(e)       This Agreement will remain in full force and effect unless terminated
pursuant to Sections 13(a), (b), (c), or (d) above or otherwise by mutual
agreement of the parties. Upon termination of this Agreement, the Company will
not have any liability to Ascendiant for any discount, commission, or other
compensation respecting any Placement Shares not otherwise sold by Ascendiant
under this Agreement.

 

(f)       Any termination of this Agreement will be effective on the date
specified in such notice of termination; provided, however, that such
termination will not be effective until the close of business on the date of
receipt of such notice by Ascendiant or the Company, as the case may be. If such
termination will occur prior to the Settlement Date for any sale of Placement
Shares, such Placement Shares will settle in accordance with the provisions of
this Agreement.

 

14.           Notices.

 

(a)       All notices or other communications required or permitted to be given
by any party to any other party pursuant to the terms of this Agreement will be
in writing, unless otherwise specified, and if sent to Ascendiant, will be
delivered to:

 

Ascendiant Capital Markets, LLC

Attention: Managing Partner

18881 Von Karman Avenue, 16th Floor

Irvine, CA 92612

 

with a copy to:

 

Michael Best & Friedrich LLP

Attention: James R. Kruse

170 South Main Street, Suite 1000

Salt Lake City, UT 84101

 

 23  

 

 

and if to the Company, will be delivered to:

 

DPW Holdings, Inc.

Attention: Milton Ault, III, Chief Executive Officer

201 Shipyard Way, Suite E

Newport Beach, CA 92663

 

with a copy to:

 

Sichenzia Ross Ference LLP

Attention: Marc J. Ross

1185 Avenue of the Americas, 37th Floor

New York, NY 10036

 

(b)       Each such notice or other communication will be deemed given: (i) when
delivered personally on or before 4:30 p.m., New York City time, on a Business
Day or, if such day is not a Business Day, on the next succeeding Business Day;
or (ii) on the next Business Day after timely delivery to a nationally
recognized overnight courier. For purposes of this Agreement, “Business Day”
will mean any day on which the Exchange and commercial banks in the City of New
York are open for business.

 

(c)       An electronic communication (“Electronic Notice”) will be deemed
written notice for purposes of this Section 14 if sent to the electronic mail
address specified by the receiving party under separate cover. Electronic Notice
will be deemed received at the time the party sending Electronic Notice receives
confirmation of receipt by the receiving party. Any party receiving Electronic
Notice may request and will be entitled to receive the notice on paper, in a
nonelectronic form (“Nonelectronic Notice”), which will be sent to the
requesting party within 10 days of receipt of the written request for
Nonelectronic Notice.

 

(d)       Each party to this Agreement may change such address for notices by
sending to the parties to this Agreement written notice of a new address for
such purpose.

 

15.           Successors and Assigns. This Agreement will inure to the benefit
of and be binding upon the Company and Ascendiant and their respective
successors and the affiliates, controlling persons, partners, members, officers,
directors, employees, and agents referred to in Section 11 hereof. References to
any of the parties contained in this Agreement will be deemed to include the
successors and permitted assigns of such party. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and permitted assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. Neither party may assign its
rights or obligations under this Agreement without the prior written consent of
the other party.

 

16.           Adjustments for Stock Splits. The parties acknowledge and agree
that all share-related numbers contained in this Agreement will be adjusted to
take into account any share consolidation, stock split, stock dividend,
corporate domestication or similar event effected respecting the Placement
Shares.

 

17.           Entire Agreement; Amendment; Severability. This Agreement
(including all schedules and exhibits attached hereto and Placement Notices
issued pursuant hereto), by and between the Company and Ascendiant constitutes
the entire agreement of the parties respecting the subject matter hereof and
thereof and supersedes all other prior and contemporaneous agreements and
undertakings, both written and oral, among the parties hereto with regard to the
subject matter hereof and thereof. Neither this Agreement nor any term hereof
may be amended except pursuant to a written instrument executed by the Company
and Ascendiant. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal, or unenforceable as written by a court of competent jurisdiction, then
such provision will be given full force and effect to the fullest possible
extent that it is valid, legal, and enforceable, and the remainder of the terms
and provisions herein will be construed as if such invalid, illegal, or
unenforceable term or provision was not contained herein, but only to the extent
that giving effect to such provision and the remainder of the terms and
provisions hereof will be in accordance with the intent of the parties as
reflected in this Agreement.

 

 24  

 

 

18.           APPLICABLE LAW; WAIVER OF JURY TRIAL. THIS AGREEMENT WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME. THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

19.           CONSENT TO JURISDICTION. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE
CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH ANY TRANSACTION CONTEMPLATED HEREBY, AND HEREBY
IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING,
ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH
COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM
OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS
BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF
(CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED) TO SUCH PARTY AT THE
ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH
SERVICE WILL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING CONTAINED HEREIN WILL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT
TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.

 

20.           Use of Information. Ascendiant may not use any information gained
in connection with this Agreement and the transactions contemplated by this
Agreement, including due diligence, to advise any party respecting transactions
not expressly approved by the Company. Ascendiant acknowledges that any
information gained in connection with this Agreement and the transactions
contemplated by this Agreement are subject to confidentiality and other
restrictions pursuant to the Confidentiality Agreement and agrees to abide by
the terms of the Confidentiality Agreement.

 

21.           Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. Delivery of an executed
Agreement by one party to the other may be made by facsimile transmission.

 

22.           Effect of Headings. The section and exhibit headings herein are
for convenience only and will not affect the construction hereof.

 

23.           Permitted Free Writing Prospectuses. The Company represents,
warrants, and agrees that, unless it obtains the prior consent of Ascendiant,
and Ascendiant represents, warrants and agrees that, unless it obtains the prior
consent of the Company, it has not made and will not make any offer relating to
the Placement Shares that would constitute an Issuer Free Writing Prospectus, or
that would otherwise constitute a “free writing prospectus,” as defined in
Rule 405, required to be filed with the SEC. Any such free writing prospectus
consented to by Ascendiant or by the Company, as the case may be, is hereinafter
referred to as a “Permitted Free Writing Prospectus.” The Company represents and
warrants that it has treated and agrees that it will treat each Permitted Free
Writing Prospectus as an “issuer free writing prospectus,” as defined in
Rule 433, and has complied and will comply with the requirements of Rule 433
applicable to any Permitted Free Writing Prospectus, including timely filing
with the SEC where required, legending, and recordkeeping. For the purposes of
clarity, the parties hereto agree that all free writing prospectuses, if any,
listed in Exhibit B hereto are Permitted Free Writing Prospectuses.

 

 25  

 

 

24.           Absence of Fiduciary Relationship. The Company acknowledges and
agrees that:

 

(a)       Ascendiant is acting solely as agent in connection with the public
offering of the Placement Shares and in connection with each transaction
contemplated by this Agreement and the process leading to such transactions, and
no fiduciary or advisory relationship between the Company or any of its
respective affiliates, stockholders (or other equity holders), creditors or
employees or any other party, on the one hand, and Ascendiant, on the other
hand, has been or will be created in respect of any of the transactions
contemplated by this Agreement, irrespective of whether or not Ascendiant has
advised or is advising the Company on other matters, and Ascendiant has no
obligation to the Company respecting the transactions contemplated by this
Agreement except the obligations expressly set forth in this Agreement;

 

(b)       it is capable of evaluating and understanding, and understands and
accepts, the terms, risks and conditions of the transactions contemplated by
this Agreement;

 

(c)       Ascendiant has not provided any legal, accounting, regulatory or tax
advice respecting the transactions contemplated by this Agreement and it has
consulted its own legal, accounting, regulatory and tax advisors to the extent
it has deemed appropriate;

 

(d)       it is aware that Ascendiant and its affiliates are engaged in a broad
range of transactions that may involve interests that differ from those of the
Company and Ascendiant has no obligation to disclose such interests and
transactions to the Company by virtue of any fiduciary, advisory or agency
relationship or otherwise; provided that Ascendiant hereby agrees not to engage
in any such transaction that would cause its interests to be in direct conflict
with the best interests of the Company; and

 

(e)       it waives, to the fullest extent permitted by law, any claims it may
have against Ascendiant for breach of fiduciary duty or alleged breach of
fiduciary duty in connection with the sale of Placement Shares under this
Agreement and agrees that Ascendiant will not have any liability (whether direct
or indirect, in contract, tort or otherwise) to it in respect of such a
fiduciary duty claim or to any Person asserting a fiduciary duty claim on its
behalf or in right of it or the Company, employees or creditors of Company,
other than in respect of Ascendiant’s obligations under this Agreement and to
keep information provided by the Company to Ascendiant and Ascendiant’s counsel
confidential to the extent not otherwise publicly available.

 

25.           Definitions. As used in this Agreement, the following terms have
the respective meanings set forth below:

 

(a)       “Applicable Time” means: (i) each Representation Date; and (ii) the
time of each sale of any Placement Shares pursuant to this Agreement.

 

(b)       “Issuer Free Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433, relating to the Placement Shares.

 

(c)       “Rule 164,” “Rule 172,” “Rule 405,” “Rule 415,” “Rule 424,”
“Rule 424(b),” “Rule 430A,” “Rule 430B,” and “Rule 433” refer to such rules
under the Securities Act Regulations.

 

(d)       All references in this Agreement to financial statements and schedules
and other information that is “contained,” “included,” or “stated” in the
Registration Statement or the Prospectus (and all other references of like
import) will be deemed to mean and include all such financial statements and
schedules and other information that is incorporated by reference in the
Registration Statement or the Prospectus, as the case may be.

 

(e)       All references in this Agreement to the Registration Statement, the
Prospectus or any amendment or supplement to any of the foregoing will be deemed
to include the copy filed with the SEC pursuant to EDGAR; all references in this
Agreement to any Issuer Free Writing Prospectus (other than any Issuer Free
Writing Prospectuses that, pursuant to Rule 433, are not required to be filed
with the SEC) will be deemed to include the copy thereof filed with the SEC
pursuant to EDGAR; and all references in this Agreement to “supplements” to the
Prospectus will include any supplements, “wrappers,” or similar materials
prepared in connection with any offering, sale, or private placement of any
Placement Shares by Ascendiant outside of the United States.

 

[Signature Page Follows]

 

 26  

 

 

If the foregoing correctly sets forth the understanding between the Company and
Ascendiant, please so indicate in the space provided below for that purpose,
whereupon this letter will constitute a binding agreement between the Company
and Ascendiant.

 

  Very truly yours,          

DPW HOLDINGS, INC.

 

          By:       Name: Milton Ault, III     Title: Chief Executive Officer
and Chairman

 

 

ACCEPTED as of the date first-above written:

 

 

ASCENDIANT CAPITAL MARKETS, LLC

 

      By:     Name: Bradley J. Wilhite   Title: Managing Partner

 

 27  

 

 

SCHEDULE 1

 

 

 

_________________________________

 

FORM OF PLACEMENT NOTICE

 

_________________________________

 

 

 

From:DPW Holdings, Inc.

 

To:Ascendiant Capital Markets, LLC
Attention: Bradley J. Wilhite

 

Subject:At-The-Market Issuance--Placement Notice

 

Gentlemen:

 

Pursuant to the terms and subject to the conditions contained in the
At-The-Market Issuance Sales Agreement between DPW Holdings, Inc., a Delaware
corporation (the “Company”) and Ascendiant Capital Markets, LLC (“Ascendiant”),
dated August 6, 2019, the Company hereby requests that Ascendiant sell up to
____________ of the Company’s Common Stock, par value $0.001 per share, at a
minimum market price of $_______ per share, during the period beginning [month,
day, time] and ending [month, day, time].

 

   

 

 

 

SCHEDULE 2

 

 

 

__________________________

 

Compensation

 

__________________________

 

The Company will pay to Ascendiant in cash, upon each sale of Placement Shares
pursuant to this Agreement, an amount equal to 4.0% of the gross proceeds from
each sale of Placement Shares.

 

   

 

 

SCHEDULE 3

 

 

 

__________________________

 

Notice Parties

 

__________________________

 

 

 

The Company:

 

Milton C. Ault, III Todd@DPWHoldings.com

 

 

 

 

 

 

Ascendiant:

 

Bradley J. Wilhite bwilhite@ascendiant.com

 

 

   

 

 

SCHEDULE 4

 

 

 

__________________________

 

Subsidiaries

 

__________________________

 

1.Coolisys Technologies, Inc., a Delaware corporation

 

2.DPW Technologies Group, Inc., a Delaware corporation

 

3.DPW Financial Group, Inc., a Delaware corporation

 

4.Microphase Corporation, a Delaware corporation

 

5.FlexiSphere Acquisition Corp., a Delaware corporation

 

6.Digital Farms, Inc. (f/k/a Super Crypto Mining, Inc.), a Delaware corporation

 

7.Digital Power Corporation, a Delaware corporation

 

8.Digital Power Lending, LLC, a California limited liability company

 

9.Power-Plus Technical Distributors, LLC, a California limited liability company

 

10.Digital Power Limited, a company organized under the laws of England and
Wales

 

   

 

 

SCHEDULE 6(a)

  

On January 4, 2019, the Company received a deficiency letter from NYSE American
indicating that it was not in compliance with the continued listing standards as
set forth in Section 1003(f)(v) of the NYSE American Company Guide (the “Company
Guide”). Specifically, the letter informed the Company that the Exchange had
determined that the shares of its common stock have been selling for a low price
per share for a substantial period of time and, pursuant to Section 1003(f)(v)
of the Company Guide, the Company's continued listing was predicated on the
Company effecting a reverse stock split of its common stock or otherwise
demonstrating sustained price improvement within a reasonable period of time,
which the NYSE American determined to be no later than July 4, 2019. On March
18, 2019 the Company effectuated a reverse split whereby each twenty (20) shares
of its common stock were combined into one such share, which increased the
market price to a level where the Company regained compliance with the Company
Guide. However, since that time the common stock declined significantly.

 

On July 29, 2019, the Company received another deficiency letter from NYSE
American indicating that it was not in compliance with the continued listing
standards as set forth in Section 1003(f)(v) of the Company Guide. Specifically,
the letter informed the Company that the Exchange has determined that the shares
of its common stock had been selling for a low price per share for a substantial
period of time and, pursuant to Section 1003(f)(v) of the Company Guide, the
Company's continued listing is predicated on the Company effecting a reverse
stock split of its common stock or otherwise demonstrating sustained price
improvement within a reasonable period of time, which the NYSE American
determined to be no later than September 16, 2019. On August 5, 2019 the Company
effectuated a reverse split whereby each forty (40) shares of common stock were
combined into one such share, which increased the market price to a level where
the Company regained compliance with the Company Guide.

 

   

 

 

 

SCHEDULE 6(dd)

 

On February 27, 2018, DPW Holdings, Inc. (“DPW”) entered into a Sales Agreement
(the “HCW Sales Agreement”) with H.C. Wainwright & Co., LLC (“HCW”) to sell
shares of common stock (the “Shares”) through an “at the market offering”
program (the “ATM Offering”) under which HCW acted as sales agent. DPW sent HCW
a notice terminating the HCW Sales Agreement on September 13, 2018, which
termination took effect on September 23, 2018. On September 25, 2018, DPW and
HCW entered into an agreement (the “Agreement”) providing for the release by HCW
of DPW’s obligations under the rights of first refusal provisions set forth in
Section 8(b) of the HCW Sales Agreement in consideration for DPW’s agreement to
pay to HCW, among other items, three percent (3%) of the aggregate gross
proceeds received by DPW occurring after the date of the Agreement until
February 28, 2020 from any capital raise that DPW consummates.

 

   

 

 

Exhibit A

 

Form of Representation Date Certificate

 

This Officer’s Certificate (this “Certificate”) is executed and delivered in
connection with Section 7(l) of the At-The-Market Issuance Sales Agreement (the
“Agreement”), dated August 6, 2019, and entered into between DPW Holdings, Inc.
(the “Company”) and Ascendiant Capital Markets, LLC. All capitalized terms used
but not defined herein shall have the meanings given to such terms in the
Agreement

 

The undersigned, a duly appointed and authorized officer of the Company, having
made all necessary inquiries to establish the accuracy of the statements below
and having been authorized by the Company to execute this certificate, hereby
certifies as follows:

 

1.As of the date of this Certificate, (i) the Registration Statement does not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading and (ii) neither the Registration Statement nor the
Prospectus contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (iii) no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein not untrue or misleading.

 

2.Each of the representations and warranties of the Company contained in the
Agreement were, when originally made, and are, as of the date of this
Certificate, true and correct in all material respects.

 

3.Each of the covenants required to be performed by the Company in the Agreement
on or prior to the date of the Agreement, this Representation Date, and each
such other date as set forth in the Agreement, has been duly, timely and fully
performed in all material respects and each condition required to be complied
with by the Company on or prior to the date of the Agreement, this
Representation Date, and each such other date as set forth in the Agreement has
been duly, timely and fully complied with in all material respects.

 

4.Subsequent to the date of the most recent financial statements in the
Prospectus, there has been no Material Adverse Effect.

 

5.No stop order suspending the effectiveness of the Registration Statement or of
any part thereof has been issued, and no proceedings for that purpose have been
instituted or are pending or threatened by any securities or other governmental
authority (including, without limitation, the Commission).

 

6.Digital Power Limited, a private limited company formed and currently existing
under the laws of England and Wales and wholly owned subsidiary of the Company,
does not engage in or conduct any trade or business within the United States.

 

The undersigned has executed this Officer’s Certificate as of the date first
written above.

 

 

 

DPW HOLDINGS, INC.

 

      By:     Name: Milton C. Ault, III   Title: Chief Executive Officer and
Chairman