Exhibit 10.28

  

Execution Copy

 

PLACEMENT AGENCY AGREEMENT

 

October 1, 2014

 

William Blair & Company, L.L.C.

222 West Adams

Chicago, Illinois 60606

 

Ladies and Gentlemen:

 

Assembly Biosciences, Inc., a company incorporated and registered in the State
of Delaware (the “Company”), proposes, subject to the terms and conditions
herein, to issue and sell an aggregate of up to 1,959,000 (the “Shares”), of
common stock $0.001 par value per share (the “Common Stock”) to certain
investors (each an “Investor” and collectively the “Investors”), in an offering
under its registration statement on Form S-3 (Registration No. 333-179259). The
Shares are more fully described in the Disclosure Package (as defined in Section
2(c) hereof). The Company desires to engage William Blair & Company, L.L.C. as
the Company’s exclusive placement agent (in such capacity, the “Placement
Agent”) in connection with such issuance and sale of the Shares.

 

The Company hereby confirms its agreement with you as follows:

 

Section 1.              Agreement to Act as Placement Agent.

 

(a)          On the basis of the representations, warranties and agreements of
the Company herein contained, and subject to all the terms and conditions of
this Placement Agency Agreement (this “Agreement”) between the Company and the
Placement Agent, the Placement Agent shall act as placement agent on a
commercially reasonable efforts basis, in connection with the issuance and sale
by the Company of the Shares to the Investors in a proposed takedown under the
Registration Statement (as defined in Section 2(a)(1) hereof), with the terms of
the offering to be subject to market conditions and negotiations between the
Company, the Placement Agent and the prospective Investors (such takedown shall
be referred to herein as the “Offering”). As compensation for services rendered,
and provided that any of the Shares are sold to Investors in the Offering, on
the Closing Date (as defined in subsection (c) of this Section 1) of the
Offering, the Company shall pay to the Placement Agent an amount equal to 5% of
the gross proceeds received by the Company from the sale of the Shares (the
“Placement Fee”). The sale of the Shares shall be made pursuant to subscription
agreements in the form included as Exhibit A hereto (each, a “Subscription
Agreement” and collectively, the “Subscription Agreements”) on the terms
described on Exhibit B hereto. The Placement Agent shall communicate to the
Company, orally or in writing, each reasonable offer to purchase Shares received
by it as agent of the Company. The Company shall have the sole right to accept
offers to purchase the Shares and may reject any such offer in whole or in part.
Notwithstanding the foregoing, it is understood and agreed that the Placement
Agent or any of its affiliates may, solely at their discretion and without any
obligation to do so, purchase Shares as principal; provided, that any such
purchases by the Placement Agent (or its affiliates) shall be fully disclosed to
the Company and approved by the Company in accordance with the previous two
sentences.

 

(b)          This Agreement shall not give rise to any commitment by the
Placement Agent to purchase any of the Shares, and the Placement Agent shall
have no authority to bind the Company to accept offers to purchase the Shares.
The Placement Agent shall act on a commercially reasonable efforts basis and
does not guarantee that it will be able to raise new capital in the Offering.
The Placement Agent may retain other brokers or dealers to act as sub-agents on
its behalf in connection with the Offering, the fees of which shall be paid out
of the Placement Fee. Prior to the earlier of (i) the date on which this
Agreement is terminated and (ii) the Closing Date, the Company shall not,
without the prior written consent of the Placement Agent, solicit or accept
offers to purchase Common Stock (other than pursuant to the exercise of options
or warrants to purchase Common Stock that are outstanding at the date hereof)
otherwise than through the Placement Agent in accordance herewith.

 

 

 

 

(c)          Payment of the purchase price for, and delivery of, the Shares
shall be made at a closing (the “Closing”) at the offices of Goodwin Procter
LLP, counsel for the Placement Agent, located at 620 Eighth Avenue, New York, NY
10018 at 10:00 a.m., local time, on or before October 6, 2014 or at such time on
such other date as may be agreed upon in writing by the Company and the
Placement Agent (such date of payment and delivery being herein called the
“Closing Date”). All such actions taken at the Closing shall be deemed to have
occurred simultaneously. No Shares which the Company has agreed to sell pursuant
to this Agreement and the Subscription Agreements shall be deemed to have been
purchased and paid for, or sold by the Company, until such Shares shall have
been delivered to the Investor thereof against payment therefor by such
Investor. If the Company shall default in its obligations to deliver Shares to
an Investor with which it has entered into a Subscription Agreement, the Company
shall indemnify and hold the Placement Agent harmless from and against any loss,
claim, damage or liability incurred by the Placement Agent arising from or as a
result of such default by the Company.

 

(d)          The Shares shall be delivered, through the facilities of The
Depository Trust Company and shall be registered in such name or names and shall
be in such denominations, as the Placement Agent may request by written notice
to the Company at least one business day before the Closing Date.

 

Section 2.              Representations, Warranties and Agreements of the
Company.

 

The Company hereby represents, warrants and covenants to the Placement Agent as
of the date hereof as follows:

 

(a)          Registration Statement. (i) The Company has prepared and filed with
the Securities and Exchange Commission (the “Commission”) a registration
statement on Form S-3 (File No. 333-179259) under the Securities Act of 1933, as
amended and the rules and regulations of the Commission thereunder
(collectively, the “Securities Act”), which includes a prospectus relating to
the registration of the Shares (the “Base Prospectus”), and such amendments to
such registration statement as may have been required to the date of this
Agreement. Such registration statement has been declared effective by the
Commission. Each part of such registration statement, at any given time,
including amendments thereto at such time, the exhibits and any schedules
thereto at such time, the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act at such time and the documents
and information otherwise deemed to be a part thereof or included therein by
Rule 430B or 430C under the Securities Act or otherwise pursuant to the
Securities Act that in any case has not been superseded or modified at such
time, is herein called the “Registration Statement.” Any registration statement
filed by the Company pursuant to Rule 462(b) under the Securities Act is called
the “Rule 462(b) Registration Statement” and, from and after the date and time
of filing of the Rule 462(b) Registration Statement, the term “Registration
Statement” shall include the Rule 462(b) Registration Statement. The Company and
the transactions contemplated by this Agreement meet the requirements and comply
with the conditions for the use of Form S-3 under the Securities Act. The
offering of the Shares by the Company complies with the applicable requirements
of Rule 415 under the Securities Act. The Company has complied with all requests
of the Commission for additional or supplemental information.

 

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(ii) No stop order preventing or suspending use of the Registration Statement,
any Preliminary Prospectus (as defined in subsection (a)(iii) of this Section 2)
or the Prospectus (as defined in subsection (a)(iii) of this Section 2) or the
effectiveness of the Registration Statement, has been issued by the Commission,
and no proceedings for such purpose have been instituted or, to the Company’s
knowledge, are contemplated or threatened by the Commission.

 

(iii) The Company proposes to file with the Commission pursuant to Rule 424
under the Securities Act a final prospectus supplement relating to the Shares to
the Base Prospectus. Such final prospectus supplement, in the form in which it
shall be filed with the Commission pursuant to Rule 424(b) (including the Base
Prospectus as so supplemented) is hereinafter called the “Prospectus.” Any
preliminary form of prospectus which is filed or used prior to filing of the
Prospectus is hereinafter called a “Preliminary Prospectus.” Any reference
herein to the Base Prospectus, any Preliminary Prospectus or the Prospectus or
to any amendment or supplement to any of the foregoing shall be deemed to
include any documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the Securities Act as of the date of such prospectus, and, in the
case of any reference herein to the Prospectus, also shall be deemed to include
any documents incorporated by reference therein, and any supplements or
amendments thereto, filed with the Commission after the date of filing of the
Prospectus pursuant to Rule 424(b) under the Securities Act, and prior to the
termination of the offering of the Shares by the Placement Agent.

 

(iv) For purposes of this Agreement, all references to the Registration
Statement, the Base Prospectus, any Preliminary Prospectus, the Prospectus or
any amendment or supplement to any of the foregoing shall be deemed to include
the copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System (“EDGAR”). All references in this Agreement to
amendments or supplements to the Registration Statement, the Base Prospectus,
any Preliminary Prospectus or the Prospectus shall be deemed to mean and include
the subsequent filing of any document under the Securities Exchange Act of 1934,
as amended (collectively with the rules and regulations promulgated thereunder,
the “Exchange Act”), and which is deemed to be incorporated by reference therein
or otherwise deemed to be a part thereof.

 

(b)          Compliance with Registration Requirements. As of the time of filing
of the Registration Statement or any post-effective amendment thereto, at the
time it became effective (including each deemed effective date with respect to
the Placement Agent pursuant to Rule 430B under the Securities Act) and as of
the Closing Date, the Registration Statement complied and will comply, in all
material respects, with the requirements of the Securities Act and did not and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, that the Company makes no representations or
warranty with respect to any Placement Agent Information (as defined in Section
7). The Prospectus, as of its date and as of the Closing Date, complied and will
comply, in all material respects, with the requirements of the Securities Act
and did not and will not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, that the Company makes no representations or warranty with respect to
any Placement Agent Information.

 

(c)          Disclosure Package. As of the Time of Sale (as defined below) and
as of the Closing Date, neither (A) the Issuer General Free Writing
Prospectus(es) (as defined below), if any, issued at or prior to the Time of
Sale, the Base Prospectus and the Preliminary Prospectus dated September 30,
2014 (each as amended or supplemented as of the Time of Sale), and the
information included on Exhibit C hereto, all considered together (collectively,
the “Disclosure Package”), nor (B) any individual Issuer Limited-Use Free
Writing Prospectus (as defined below), if any, when considered together with the
Disclosure Package, included or will include any untrue statement of a material
fact or omitted or will omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, that the Company makes no representations
or warranty in this paragraph with respect to any Placement Agent Information.
As used in this paragraph and elsewhere in this Agreement:

 

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(1)         “Time of Sale” with respect to an Investor means the time of receipt
and acceptance of an executed Subscription Agreement from such Investor.

 

(2)         “Issuer Free Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 under the Securities Act (“Rule 433”),
relating to the Shares in the form filed or required to be filed with the
Commission or, if not required to be filed, in the form retained in the
Company’s records pursuant to Rule 433(g) under the Securities Act.

 

(3)         “Issuer General Free Writing Prospectus” means any Issuer Free
Writing Prospectus that is intended for general distribution to prospective
investors as identified on Schedule I hereto, and does not include a “bona fide
electronic road show” as defined in Rule 433.

 

(4)         “Issuer Limited-Use Free Writing Prospectus” means any Issuer Free
Writing Prospectus that is not an Issuer General Free Writing Prospectus,
including any “bona fide electronic road show” as defined in Rule 433, that is
made available without restriction pursuant to Rule 433(d)(8)(ii), even though
not required to be filed with the Commission.

 

(d)          Conflict with Registration Statement. Each Issuer Free Writing
Prospectus, as of its issue date and at all subsequent times through the
completion of the offering and sale of the Shares or until any earlier date that
the Company notified or notifies the Placement Agent, 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 document incorporated by reference therein and any prospectus supplement
deemed to be a part thereof that has not been superseded or modified; provided,
that the Company makes no representations or warranty in this paragraph with
respect to any Placement Agent Information.

 

(e)          Distributed Materials.   The Company has not, directly or
indirectly, distributed and will not distribute any prospectus or other offering
material in connection with the offering and sale of the Shares other than any
Preliminary Prospectus, the Disclosure Package or the Prospectus, and other
materials, if any, permitted under the Securities Act to be distributed and
consistent with Section 3(d) below. The Company will file with the Commission
all Issuer Free Writing Prospectuses in the time, and to the extent, required by
Rule 433(d) under the Securities Act. The Company has satisfied or will satisfy
the conditions in Rule 433 under the Securities Act to avoid a requirement to
file with the Commission any electronic road show. The parties hereto agree and
understand that the content of any and all “road shows” related to the offering
of the Shares contemplated hereby is solely the property of the Company.

 

(f)          Not an Ineligible Issuer. (1) At the time of filing the
Registration Statement and (2) at the date hereof and at the Closing Date, the
Company was not, is not and will not be an “ineligible issuer,” as defined in
Rule 405 under the Securities Act, without taking account of any determination
by the Commission pursuant to Rule 405 that it is not necessary that the Company
be considered an ineligible issuer including, without limitation, for purposes
of Rules 164 and 433 under the Securities Act with respect to the offering of
the Shares as contemplated by the Registration Statement.

 

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(g)          Incorporated Documents. The documents incorporated by reference in
the Disclosure Package and in the Prospectus, when they became effective or were
filed with the Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act or the Exchange Act, as
applicable, and were filed on a timely basis with the Commission and none of
such documents contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.

 

(h)          Due Incorporation. The Company has been duly incorporated and is
validly existing under the laws of the State of Delaware, with the corporate
power and authority to own its properties and to conduct its business as
currently being carried on and as described in the Registration Statement, the
Disclosure Package and the Prospectus. The Company is duly qualified to transact
business as a foreign corporation and is in good standing (or the foreign
equivalent thereof) under the laws of each other jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
qualification, except where the failure to be so qualified and in good standing
would not, individually or in the aggregate, result in any material adverse
effect upon, or material adverse change in, the general affairs, business,
operations, properties, financial condition, or results of operations of the
Company and the Subsidiaries (as defined below) taken as a whole (a “Material
Adverse Effect”). No proceeding has been instituted in Delaware for the
dissolution of the Company.

 

(i)          Subsidiaries. Each subsidiary of the Company (individually, a
“Subsidiary” and collectively, the “Subsidiaries”) has been duly incorporated or
organized, is validly existing as a corporation or other legal entity in good
standing (or the foreign equivalent thereof) under the laws of the jurisdiction
of its incorporation or organization, has the corporate or equivalent power and
authority to own its properties and to conduct its business as currently being
carried on and as described in the Registration Statement, the Disclosure
Package and the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or its
ownership, leasing or operation of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing would
not result in a Material Adverse Effect. All of the issued and outstanding
shares of share capital or other equity interests of each Subsidiary of the
Company have been duly and validly authorized and issued, are fully paid and
non-assessable and, except as disclosed in the Registration Statement, the
Disclosure Package and the Prospectus, are owned directly by the Company or
through its wholly-owned subsidiaries, free and clear of all liens,
encumbrances, equities or claims. There is no outstanding option, right or
agreement of any kind relating to the issuance, sale or transfer of any share
capital or other equity securities of the Subsidiaries to any person or entity
except the Company, and none of the outstanding shares of share capital or other
equity interests of any Subsidiary was issued in violation of any preemptive or
other rights to subscribe for or to purchase or acquire any securities of any of
the Subsidiaries. Except for its Subsidiaries, the Company owns no beneficial
interest, directly or indirectly, in any corporation, partnership, joint venture
or other business entity. The Company has no “significant subsidiaries” (as such
term is defined in Rule 1-02(w) of Regulation S-X promulgated by the Commission)
other than the Subsidiaries listed on Schedule II attached hereto (the
“Significant Subsidiaries”).

 

(j)          Capitalization. The Company has duly and validly authorized share
capital as set forth in each of the Registration Statement, Disclosure Package
and Prospectus; all outstanding Common Stock of the Company conforms to the
description thereof in the Registration Statement, the Disclosure Package and
the Prospectus and have been duly authorized, validly issued, fully paid and
non-assessable; and except as disclosed in the Registration Statement, the
Disclosure Package and the Prospectus, the issuance of the Shares to be
purchased from the Company hereunder is not subject to preemptive or other
similar rights, or any restriction upon the voting or transfer thereof pursuant
to applicable law or the Company’s Amended and Restated Certificate of
Incorporation, bylaws or other governing documents or any agreement to which the
Company is a party or by which it may be bound.

 

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(k)          Authorization, Issuance. All corporate action required to be taken
by the Company for the authorization, issuance and sale of the Shares has been
duly and validly taken. The Shares have been duly and validly authorized. When
the Shares have been issued and delivered against payment therefor as provided
herein, the Shares, when so issued and sold will be duly and validly issued,
fully paid and non-assessable and the Investors or other persons in whose names
Shares are registered will acquire good and valid title to such Shares, in each
case free and clear of all liens, encumbrances, equities, preemptive rights and
other claims. The Shares will conform in all material respects to the
description thereof contained in the Registration Statement, the Disclosure
Package and the Prospectus. No further approval or authority of the shareholders
or the Board of Directors of the Company will be required for the issuance and
sale of the Shares as contemplated herein and in the Subscription Agreements.
Except as disclosed in each of the Disclosure Package and Prospectus, there are
no outstanding subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or rights related to or entitling any person to
purchase or otherwise to acquire any shares of, or any security convertible into
or exchangeable or exercisable for, the share capital of, or other ownership
interest in, the Company, except for such options or rights as may have been
granted by the Company to employees, directors or consultants pursuant to the
Company’s 2014 Stock Incentive Plan.

 

(l)          No Registration Rights. Neither the filing of the Registration
Statement nor the offering or sale of the Shares as contemplated by this
Agreement gives rise to any rights, other than those which have been waived or
satisfied, for or relating to the registration of any Common Shares or other
securities of the Company.

 

(m)          Due Authorization and Enforceability. Each of this Agreement and
each Subscription Agreement has been duly authorized, executed and delivered by
the Company, and constitutes a valid, legal and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
rights to indemnity hereunder may be limited by federal or state securities laws
and except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.

 

(n)          No Violation. Neither the Company nor any of the Significant
Subsidiaries is in breach or violation of or in default (nor has any event
occurred which with notice, lapse of time or both would result in any breach or
violation of, or constitute a default) (i) under the provisions of its Amended
and Restated Certificate of Incorporation, bylaws or other governing documents,
(ii) in the performance or observance of any term, covenant, obligation,
agreement or condition contained in any indenture, mortgage, deed of trust, bank
loan or credit agreement or other evidence of indebtedness, or any license,
lease, contract or other agreement or instrument to which the Company or any of
the Subsidiaries is a party or by which any of them or any of their properties
may be bound or affected, except as set forth in the Registration Statement, the
Disclosure Package and the Prospectus, or (iii) in the performance or observance
of any statute, law, rule, regulation, ordinance, judgment, order or decree of
any court, regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the Company, the Subsidiaries or any
of their respective properties; except, with respect to clauses (ii) and (iii)
above, to the extent any such contravention would not result in a Material
Adverse Effect.

 

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(o)          No Conflict. Except as set forth in the Registration Statement, the
Disclosure Package or the Prospectus, the execution, delivery and performance by
the Company of this Agreement and each Subscription Agreement and the
consummation of the transactions herein contemplated, including the issuance and
sale by the Company of the Shares, will not conflict with or result in a breach
or violation of, or constitute a default under (nor constitute any event which
with notice, lapse of time or both would result in any breach or violation of or
constitute a default under) or result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Company pursuant to the
terms or provisions of, or give any party a right to terminate any of its
obligations under, or result in the acceleration of any obligation under (i) the
provisions of the Amended and Restated Certificate of Incorporation, bylaws or
other governing documents of the Company or any of the Subsidiaries, (ii) any
material indenture, mortgage, deed of trust, bank loan or credit agreement or
other evidence of indebtedness, or any material license, lease, contract or
other agreement or instrument to which the Company or any of the Subsidiaries is
a party or by which any of them or any of their respective properties may be
bound or affected, or (iii) any federal, state, local or foreign (including,
without limitation, the State of Delaware) law, regulation or rule or any
decree, judgment or order applicable to the Company or any of the Subsidiaries;
except, with respect to clauses (ii) and (iii) above, to the extent any such
conflict would not result in a Material Adverse Effect.

 

(p)          No Consents Required. No approval, authorization, consent or order
of or filing with any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency, or of or with any
self-regulatory organization or other non-governmental regulatory authority, or
approval of the shareholders of the Company (including as may be required
pursuant to the rules and regulations of the NASDAQ Capital Market), is required
in connection with the issuance and sale of the Shares or the consummation by
the Company of the transactions contemplated hereby other than (i) as may be
required under the Securities Act, (ii) under the rules and regulations of the
Financial Industry Regulatory Authority (“FINRA”) and (iii) such approval,
authorization, consent or order of or filing as has already been made or may be
required by the rules and regulations of the NASDAQ Capital Market.

 

(q)          Absence of Material Changes. Except as otherwise disclosed in the
Disclosure Package, subsequent to the respective dates as of which information
is given in the Disclosure Package, (a) neither the Company nor any of its
Subsidiaries has incurred any material liability or obligation, direct or
contingent, or entered into any material transaction not in the ordinary course
of business, (b) neither the Company nor any of its Subsidiaries has purchased
any of the Company’s outstanding share capital, or declared, paid or otherwise
made any dividend or distribution of any kind on the Company’s share capital,
(c) there has not been any change in the share capital, or material change in
the short-term debt or long-term debt of the Company and its Subsidiaries or any
issue of options, warrants, convertible securities or other rights to purchase
the share capital (other than grants of stock options under the Company’s 2014
Stock Incentive Plan) of the Company, and (d) there has not been any material
adverse change, or any development involving a prospective material adverse
change, in the business, properties, management,, financial condition or results
of operations of the Company and the Subsidiaries, taken as a whole, from that
set forth in the Disclosure Package (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).

 

(r)          Permits. The Company and each of the Subsidiaries possess all
necessary licenses, authorizations, consents and approvals and have made all
necessary filings required under any federal, state, local or foreign
(including, without limitation, the State of Delaware) law, regulation or rule
in order to conduct its business. Neither the Company nor any of the
Subsidiaries is in violation of, or in default under, or has received notice of
any proceedings relating to revocation or modification of, any such license,
authorization, consent or approval. The Company and each of the Subsidiaries is
in compliance in all material respects with all applicable federal, state, local
and foreign (including, without limitation, the State of Delaware) laws,
regulations, orders or decrees.

 

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(s)          Legal Proceedings. There are no legal or governmental proceedings
pending or, to the Company’s knowledge, threatened or contemplated to which the
Company or any of the Subsidiaries is or would be a party or of which any of
their respective properties is or would be subject at law or in equity, before
or by any federal, state, local or foreign (including, without limitation, the
State of Delaware) governmental or regulatory commission, board, body, authority
or agency, or before or by any self-regulatory organization or other
non-governmental regulatory authority (including, without limitation, the NASDAQ
Capital Market), except (i) as described in the Registration Statement, the
Disclosure Package and the Prospectus, (ii) any such proceeding which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or (iii) any such proceeding that would not prevent or materially
and adversely affect the ability of the Company to consummate the transactions
contemplated hereby. The Disclosure Package contains in all material respects
the same description of the foregoing matters contained in the Prospectus.

 

(t)          Statutes; Contracts. There are no statutes or regulations
applicable to the Company or contracts or other documents of the Company which
are required to be described in the Registration Statement, the Disclosure
Package or the Prospectus or filed as exhibits to the Registration Statement by
the Securities Act which have not been so described or filed.

 

(u)          Independent Accountants. EisnerAmper LLP, which has audited the
financial statements of the Company and the Subsidiaries, is an independent
registered public accounting firm (as defined in Section 2(a)(12) of the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”)) with respect to the
Company within the meaning of the Securities Act and the applicable rules and
regulations thereunder adopted by the Commission and the Public Company
Accounting Oversight Board (United States).

 

(v)         Financial Statements. The financial statements of the Company,
together with the related schedules and notes thereto, set forth or incorporated
by reference in the Registration Statement, the Disclosure Package and the
Prospectus comply in all material respects with the applicable requirements of
the Securities Act and the Exchange Act, as applicable, and present fairly in
all material respects in accordance with generally accepted accounting
principles as in effect in the United States (“GAAP”) (i) the financial
condition of the Company and the Subsidiaries, taken as a whole, as of the dates
indicated and (ii) the consolidated results of operations, shareholders’ equity
and changes in cash flows of the Company and the Subsidiaries, taken as a whole,
for the periods therein specified; and such financial statements and related
schedules and notes thereto have been prepared in conformity with GAAP,
consistently applied throughout the periods involved (except as otherwise stated
therein and subject, in the case of unaudited financial statements, to the
absence of footnotes and normal year-end adjustments). There are no other
financial statements (historical or pro forma) that are required to be included
in the Registration Statement, the Disclosure Package and the Prospectus; and
the Company and the Subsidiaries do not have any material liabilities or
obligations, direct or contingent (including any off-balance sheet obligations),
not disclosed in the Registration Statement, the Disclosure Package and the
Prospectus; and all disclosures contained in the Registration Statement, the
Disclosure Package and the Prospectus regarding “non-GAAP financial measures”
(as such term is defined by the rules and regulations of the Commission), if
any, comply in all material respects with Regulation G of the Exchange Act and
Item 10(e) of Regulation S-K of the Commission, to the extent applicable, and
present fairly the information shown therein and the Company’s basis for using
such measures. The interactive data in eXtensible Business Reporting Language
incorporated by reference in the Registration Statement fairly presents the
information called for in all material respects and has been prepared in
accordance with the Commission’s rules and guidelines applicable thereto.

 

(w)          Not an Investment Company. The Company is not and, after giving
effect to the offering and sale of the Shares and the application of the
proceeds thereof as described in the Prospectus, will be required to register as
an “investment company” as defined in the Investment Company Act of 1940, as
amended.

 

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(x)          Good Title to Property. The Company and each of the Subsidiaries
has good and valid title to all property (whether real or personal) described in
the Registration Statement, the Disclosure Package and the Prospectus as being
owned by each of them, in each case free and clear of all liens, claims,
security interests, other encumbrances or defects except such as are described
in the Registration Statement, the Disclosure Package and the Prospectus and
those that would not, individually or in the aggregate materially and adversely
affect the value of such property and do not materially and adversely interfere
with the use made and proposed to be made of such property by the Company and
the Subsidiaries. All of the property described in the Registration Statement,
the Disclosure Package and the Prospectus as being held under lease by the
Company or a Subsidiary is held thereby under valid, subsisting and enforceable
leases, without any liens, restrictions, encumbrances or claims, except those
that, individually or in the aggregate, are not material and do not materially
interfere with the use made and proposed to be made of such property by the
Company and the Subsidiaries.

 

(y)          Intellectual Property Rights. Except as described in the
Registration Statement, the Disclosure Package and the Prospectus, the Company
and the Subsidiaries own, or have obtained valid and enforceable licenses for,
or other rights to use, the inventions, patent applications, patents, trademarks
(both registered and unregistered), tradenames, copyrights, trade secrets and
other proprietary information described in the Registration Statement, the
Disclosure Package and the Prospectus as being owned or licensed by them or
which are necessary for the conduct of their respective businesses
(collectively, “Intellectual Property”), except where the failure to own,
license or have such rights would not, individually or in the aggregate, result
in a Material Adverse Effect. Except as described in the Registration Statement,
the Disclosure Package and the Prospectus or as would not have a Material
Adverse Effect (i) there are no third parties who have or, to the Company’s
knowledge, will be able to establish rights to any Intellectual Property, except
for the ownership rights of the owners of the Intellectual Property which is
licensed to the Company; (ii) to the Company’s knowledge, there is no
infringement by third parties of any Intellectual Property; (iii) there is no
pending or, to the Company’s knowledge, threatened action, suit, proceeding or
claim by others challenging the Company’s rights in or to, or the validity,
enforceability, or scope of, any Intellectual Property owned by or licensed to
the Company, and the Company is unaware of any facts which could form a
reasonable basis for any such claim; (iv) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or claim by others that
the Company or any of the Subsidiaries infringes or otherwise violates any
patent, trademark, copyright, trade secret or other proprietary rights of
others, and the Company is unaware of any facts which could form a reasonable
basis for any such claim; (v) to the Company’s knowledge, there is no patent or
patent application that contains claims that interfere with the issued or
pending claims of any of the Intellectual Property; (vi) to the Company’s
knowledge, there is no prior art that may render any patent owned by the Company
invalid, nor is there any prior art known to the Company that may render any
patent application owned by the Company unpatentable; and (vii) the Company has
complied with all restrictions of and with all undertakings towards the OCS.

 

(z)          Taxes. The Company and each of the Subsidiaries has timely filed
all material federal, state, local and foreign income and franchise tax returns
(or timely filed applicable extensions therefore) that have been required to be
filed in and are not in default in the payment of any taxes which were payable
pursuant to said returns or any assessments with respect thereto, other than any
which the Company or any of the Subsidiaries is contesting in good faith and for
which adequate reserves have been provided and reflected in the Company’s
financial statements included in the Registration Statement, the Disclosure
Package and the Prospectus. Neither the Company nor any of its Subsidiaries has
any tax deficiency that has been or, to the knowledge of the Company, might be
asserted or threatened against it that would result in a Material Adverse
Effect.

 

(aa)         Insurance. The Company and each of the Subsidiaries maintains
insurance in such amounts and covering such risks as is adequate for the conduct
of its business and the value of its properties and as is customary for
companies engaged in similar businesses in similar industries. All such
insurance is fully in force on the date hereof and will be fully in force as of
the Closing Date. Neither the Company nor any of the Subsidiaries has any reason
to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
have a Material Adverse Effect.

 

-9-

 

  

(bb)         Accounting Controls. The Company and each of the Subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management’s general or specific authorization, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain accountability for assets, (iii) access to assets is
permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

 

(cc)         Disclosure Controls. The Company has established, maintains and
evaluates “disclosure controls and procedures” (as such term is defined in Rule
13a-15(e) and 15d-15(e) under the Exchange Act), which (i) are designed to
ensure that material information relating to the Company is made known to the
Company’s principal executive officer and its principal financial officer by
others within the Company, particularly during the periods in which the periodic
reports required under the Exchange Act are being prepared, (ii) have been
evaluated for effectiveness as of the end of the last fiscal period covered by
the Registration Statement, and (iii) such disclosure controls and procedures
are effective to perform the functions for which they were established. There
are no significant deficiencies or material weaknesses in the design or
operation of internal controls which could adversely affect the Company’s
ability to record, process, summarize, and report financial data to management
and the Board of Directors. The Company is not aware of any fraud, whether or
not material, that involves management or other employees who have a role in the
Company’s internal controls; and since the date of the most recent evaluation of
such disclosure controls and procedures, there have been no significant changes
in internal controls or in other factors that could significantly affect
internal controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.

 

(dd)         Corrupt Practices. Neither the Company nor, to the Company’s
knowledge, any other person associated with or acting on behalf of the Company,
including without limitation any director, officer, agent or employee of the
Company or its Subsidiaries has, directly or indirectly, while acting on behalf
of the Company or its Subsidiaries (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds, (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended or (iv) made any other unlawful
payment.

 

(ee)         No Price Stabilization. Neither the Company nor any of the
Subsidiaries nor, to the Company’s knowledge, any of their respective officers,
directors, affiliates or controlling persons has taken or will take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which 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 the Shares.

 

(ff)         No Undisclosed Relationships. No relationship or related party
transactions, whether direct or indirect, exists between or among the Company on
the one hand and the directors, officers, shareholders, customers or suppliers
of the Company on the other hand which is required to be described in the
Registration Statement, the Disclosure Package or the Prospectus which has not
been so described. The Company has obtained, with respect to each related party
transaction entered into by the Company, all approvals required with respect to
such transaction. There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or guarantees
of indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any member of their respective immediate families,
except as disclosed in the Registration Statement, the Disclosure Package and
the Prospectus. The Company has not, in violation of the Sarbanes-Oxley Act,
directly or indirectly, extended or maintained credit, arranged for the
extension of credit, or renewed an extension of credit, in the form of a
personal loan to or for any director or executive officer of the Company.

 

-10-

 

  

(gg)         Sarbanes-Oxley Act. The Company, and to its knowledge after due
inquiry, all of the Company’s directors or officers, in their capacities as
such, are in compliance in all material respects with all effective provisions
of the Sarbanes-Oxley Act currently applicable to the Company and any related
rules and regulations promulgated by the Commission.

 

(hh)         Brokers Fees. Neither the Company nor any of the Subsidiaries is a
party to any contract, agreement or understanding with any person (other than
this Agreement) that would give rise to a valid claim against the Company or the
Subsidiaries or the Placement Agent for a brokerage commission, finder’s fee or
other like payment in connection with the offering and sale of the Shares.

 

(ii)         Exchange Act Requirements. The Company has filed in a timely manner
(or received an extension and has filed prior to the expiration of such
extension) all reports required to be filed pursuant to Sections 13(a), 13(e),
14 and 15(d) of the Exchange Act during the preceding 12 months (except to the
extent that Section 15(d) requires reports to be filed pursuant to Sections
13(d) and 13(g) of the Exchange Act, which shall be governed by the next clause
of this sentence); and the Company has filed in a timely manner all reports
required to be filed pursuant to Sections 13(d) and 13(g) of the Exchange Act
since January 1, 2011, except where the failure to timely file could not
reasonably be expected individually or in the aggregate to have a Material
Adverse Effect.

 

(jj)         FINRA Affiliations. To the Company’s knowledge, there are no
affiliations or associations between (i) any member of FINRA and (ii) the
Company or any of the Company’s officers, directors or 5% or greater
securityholders or any beneficial owner of the Company’s unregistered equity
securities that were acquired at any time on or after the one hundred eightieth
(180th) day immediately preceding (A) the date the Registration Statement was
initially filed with the Commission and (B) the date the Prospectus was filed
with the Commission, except as set forth in the Registration Statement, the
Disclosure Package and the Prospectus.

 

(kk)         Compliance with Environmental Laws. The Company and the
Subsidiaries (a) are in compliance with any and all applicable foreign, federal,
state and local laws, orders, rules, regulations, directives, decrees and
judgments relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
(“Environmental Laws”), (b) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (c) are in compliance with all terms and conditions of
any such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, individually or in the aggregate, result in a
Material Adverse Effect. There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties) which
would, individually or in the aggregate, result in a Material Adverse Effect.

 

-11-

 

  

(ll)         Labor Matters. Neither the Company nor any Subsidiary is engaged in
any unfair labor practice; except for matters that would not, individually or in
the aggregate, result in a Material Adverse Effect. (i) There is (A) no unfair
labor practice complaint pending or, to the Company’s knowledge, threatened
against the Company or any Subsidiary before the National Labor Relations Board
and no grievance or arbitration or legal proceeding arising out of or under
collective bargaining agreements is pending or threatened, (B) no strike, labor
dispute, slowdown or stoppage pending or, to the Company’s knowledge, threatened
against the Company or any Subsidiary and (C) to the Company’s knowledge no
union representation dispute currently existing concerning the employees of the
Company or any Subsidiary, and (ii) to the Company’s knowledge (A) the Company
is not bound by or subject to (and none of its assets or properties are bound by
or subject to) any written, oral, express or implied contract, commitment or
arrangement with any labor union, and no union organizing activities are
currently taking place concerning the employees of the Company or any
Subsidiary; (B) there has been no violation of any federal, state, local or
foreign law relating to discrimination in the hiring, promotion or pay of
employees or any applicable wage or hour laws concerning the employees of the
Company or any Subsidiary, except as would not have a Material Adverse Effect;
(C) there is no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
with respect to federal, state, local or foreign labor law pending or
threatened; (D) there is no existing or imminent labor disturbance by the
employees of any of its principal suppliers or contractors which would have a
Material Adverse Effect; and (E) there is no pending or threatened litigation
between the Company or its Subsidiaries and any of its executive officers which,
if adversely determined, could have a Material Adverse Effect and the Company
has no reason to believe that such executive officers will not remain in the
employment of the Company.

 

(mm)         ERISA, Pension and Other Employee Benefits. The Company and its
Subsidiaries are in compliance in all material respects with all presently
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
(“ERISA”); no “reportable event” (as defined in ERISA) has occurred with respect
to any “pension plan” (as defined in ERISA) for which the Company would have any
liability; the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any “pension plan” or (ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the “Code”); and each “pension plan” for which the Company would
have any liability that is intended to be qualified under Section 401(a) of the
Code is so qualified in all material respects and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification.

 

(nn)         NASDAQ Capital Market; Exchange Act Registration. The Common Stock
is registered pursuant to Section 12(b) of the Exchange Act and accepted for
listing on the NASDAQ Capital Market, and the Company has taken no action
designed to, or likely to have the effect of, terminating the registration of
the Common Stock under the Exchange Act or delisting the Common Stock from the
NASDAQ Capital Market, nor has the Company received any notification that the
Commission or the NASDAQ Capital Market is contemplating terminating such
registration or listing. The Company has complied in all material respects with
the applicable requirements of the NASDAQ Capital Market for maintenance of
listing of the Common Stock thereon.

 

(oo)         PFIC Status. The Company is not, for the taxable year ended
December 31, 2013, and upon consummation of the transactions described hereby
and the application of the proceeds as described in the Registration Statement,
the Disclosure Package and the Prospectus is not expected to become, a Passive
Foreign Investment Company within the meaning of Section 1297 of the Code.

 

(pp)         Statistical or Market-Related Data. Any statistical,
industry-related and market-related data included or incorporated by reference
in the Registration Statement, the Disclosure Package and the Prospectus, is
based on or derived from sources that the Company reasonably and in good faith
believes to be reliable and accurate in all material respects, and such data
agrees with the sources from which it is derived in all material respects.

 

-12-

 

  

(qq)         Descriptions of Documents. The statements set forth in each of the
Registration Statement, the Disclosure Package and the Prospectus describing the
Shares and this Agreement, insofar as they purport to describe the provisions of
the laws and documents referred to therein, are accurate, complete and fair in
all material respects.

 

(rr)         Money Laundering Laws. The operations of the Company are and have
been conducted at all times in compliance in all material respects 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, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency in which the Company or any Subsidiary
operates (collectively, the “Money Laundering Laws”) and no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company with respect to the Money Laundering Laws
is pending, or to the knowledge of the Company, threatened.

 

(ss)         OFAC. Neither the Company nor any of its Subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or affiliate of
the Company or any of its Subsidiaries is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Company will not directly or indirectly
use the proceeds of the Offering, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or other person
or entity that, to the Company’s knowledge, will use such proceeds, for the
purpose of financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC.

 

(tt)         Lock-Up Agreements.  The Company has obtained for the benefit of
the Placement Agent the agreement, in the form set forth as Exhibit D hereto, of
its directors and officers listed on Schedule III hereto (each a “Lock-Up
Agreement” and collectively, the “Lock-Up Agreements”).

 

Any certificate signed by any officer of the Company or a Subsidiary and
delivered to the Placement Agent or to counsel for the Placement Agent in
connection with the offering of the Shares shall be deemed a representation and
warranty by the Company (and not such officer in an individual capacity) to the
Placement Agent as to the matters covered thereby.

 

Section 3.              Covenants.

 

(I)            The Company covenants and agrees with the Placement Agent as
follows:

 

(a)          Reporting Obligations; Exchange Act and Securities Law Compliance.
The Company will (i) file the Preliminary Prospectus, if any, and the Prospectus
with the Commission within the time periods specified by Rule 424(b) and Rules
430B and 430C, as applicable, under the Securities Act, (ii) file any Issuer
Free Writing Prospectus to the extent required by Rule 433 under the Securities
Act, if applicable, (iii) file promptly all reports required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c) or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and during such period as
the Prospectus would be required by law to be delivered (whether physically or
through compliance with Rule 172 under the Securities Act or any similar rule)
(the “Prospectus Delivery Period”), and (iv) furnish copies of each Issuer Free
Writing Prospectus, if any, (to the extent not previously delivered) to the
Placement Agent prior to 11:00 a.m. Eastern time, on the second business day
next succeeding the date of this Agreement in such quantities as the Placement
Agent shall reasonably request.

 

-13-

 

  

(b)          Abbreviated Registration Statement. If the Company elects to rely
upon Rule 462(b) under the Securities Act, the Company shall file a registration
statement under Rule 462(b) with the Commission in compliance with Rule 462(b)
by 8:00 a.m., Eastern time, on the business day next succeeding the date of this
Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for such Rule 462(b) registration statement or give
irrevocable instructions for the payment of such fee pursuant to the Securities
Act.

 

(c)          Amendments or Supplements. The Company will not, during the
Prospectus Delivery Period in connection with the Offering contemplated by this
Agreement, file any amendment or supplement to the Registration Statement or the
Prospectus unless a copy thereof shall first have been submitted to the
Placement Agent within a reasonable period of time prior to the filing thereof
and the Placement Agent shall not have reasonably objected thereto in good
faith.

 

(d)          Free Writing Prospectuses. The Company will (i) not make any offer
relating to the Shares that would constitute an “issuer free writing prospectus”
(as defined in Rule 433) or that would otherwise constitute a “free writing
prospectus” (as defined in Rule 405 under the Securities Act) required to be
filed by the Company with the Commission under Rule 433 under the Securities Act
unless the Placement Agent approves its use in writing prior to first use (each,
a “Permitted Free Writing Prospectus”); provided that the prior written consent
of the Placement Agent hereto shall be deemed to have been given in respect of
the Issuer Free Writing Prospectus(es) included in Schedule I hereto, (ii) treat
each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus,
(iii) comply with the requirements of Rules 164 and 433 under the Securities Act
applicable to any Issuer Free Writing Prospectus, including the requirements
relating to timely filing with the Commission, legending and record keeping and
(iv) not take any action that would result in the Placement Agent or the Company
being required to file with the Commission pursuant to Rule 433(d) under the
Securities Act a free writing prospectus prepared by or on behalf of such
Placement Agent that such Placement Agent otherwise would not have been required
to file thereunder. The Company will satisfy the conditions in Rule 433 under
the Securities Act to avoid a requirement to file with the Commission any
electronic road show.

 

(e)          Notice to Placement Agent. The Company will notify the Placement
Agent promptly, and will, if requested, confirm such notification in writing:
(i) of the receipt of any comments of, or requests for additional information
from, the Commission; (ii) of the time and date of any filing of any
post-effective amendment to the Registration Statement or any amendment or
supplement to the Disclosure Package or the Prospectus; (iii) of the time and
date when any post-effective amendment to the Registration Statement becomes
effective; (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement, or any post-effective amendment
thereto or any order preventing or suspending the use of any prospectus included
in the Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus,
or the initiation of any proceedings for that purpose or the threat thereof; or
(v) of receipt by the Company of any notification with respect to any suspension
or the approval of the Shares from any securities exchange upon which they are
listed for trading or included or designated for quotation, or the initiation or
threatening of any proceeding for such purpose. The Company will use its best
efforts to prevent the issuance or invocation of any such stop order or
suspension by the Commission and, if any such stop order or suspension is so
issued or invoked, to obtain as soon as possible the withdrawal or removal
thereof.

 

-14-

 

  

(f)          Filing of Amendments or Supplements. If, during the Prospectus
Delivery Period, any event shall occur or condition exist as a result of which
it is necessary to amend or supplement the Prospectus (or, if the Prospectus is
not yet available to prospective purchasers, the Disclosure Package) in order to
make the statements therein, in the light of the circumstances when the
Prospectus (or, if the Prospectus is not yet available to prospective
purchasers, the Disclosure Package) is delivered to an Investor, not misleading,
or if, in the opinion of counsel for the Placement Agent, it is necessary to
amend or supplement the Prospectus (or, if the Prospectus is not yet available
to prospective purchasers, the Disclosure Package) to comply with applicable
law, forthwith to prepare, file with the Commission and furnish, at its own
expense, to the Placement Agent, either amendments or supplements to the
Prospectus (or, if the Prospectus is not yet available to prospective
purchasers, the Disclosure Package) so that the statements in the Prospectus
(or, if the Prospectus is not yet available to prospective purchasers, the
Disclosure Package) as so amended or supplemented will not, in the light of the
circumstances when the Prospectus (or, if the Prospectus is not yet available to
prospective purchasers, the Disclosure Package) is delivered to an Investor, be
misleading or so that the Prospectus (or, if the Prospectus is not yet available
to prospective purchasers, the Disclosure Package), as amended or supplemented,
will comply with law. If at any time following issuance of an Issuer Free
Writing Prospectus there occurred or occurs an event or development as a result
of which such Issuer Free Writing Prospectus conflicted or would conflict with
the information contained in the Registration Statement relating to the Shares
or included or would include an untrue statement of a material fact or omitted
or would omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances prevailing at that subsequent time,
not misleading, the Company promptly will notify the Placement Agent and will
promptly amend or supplement, at its own expense, such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or omission.

 

(g)          Delivery of Copies. The Company will deliver promptly to the
Placement Agent and its counsel such number of the following documents as the
Placement Agent shall reasonably request: (i) conformed copies of the
Registration Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits), (ii) copies of any
Preliminary Prospectus or Issuer Free Writing Prospectus, (iii) during the
Prospectus Delivery Period, copies of the Prospectus (or any amendments or
supplements thereto); (iv) any document incorporated by reference in the
Prospectus (other than any such document that is filed with the Commission
electronically via EDGAR or any successor system) and (v) all correspondence to
and from, and all documents issued to and by, the Commission in connection with
the registration of the Shares under the Securities Act.

 

(h)          Earnings Statement.   As soon as practicable, but in any event not
later than 15 months after the end of the Company’s current fiscal quarter, the
Company will make generally available to holders of the Shares and deliver to
the Placement Agent, an earnings statement of the Company (which need not be
audited) that will satisfy the provisions of Section 11(a) and Rule 158 of the
Securities Act.

 

(i)          Use of Proceeds. The Company will apply the net proceeds from the
sale of the Shares in the manner set forth in the Disclosure Package and the
Prospectus under the heading “Use of Proceeds”.

 

(j)          Public Communications. Prior to the Closing Date, the Company will
not issue any press release or other communication directly or indirectly or
hold any press conference with respect to the Company, its condition, financial
or otherwise, or the earnings, business, operations or prospects of any of them,
or the offering of the Shares, without the prior consent of the Placement Agent,
unless in the reasonable judgment of the Company and its counsel, and after
notification to the Placement Agent, such press release or communication is
required by law, in which case the Company shall use its reasonable best efforts
to allow the Placement Agent reasonable time to comment on such release or other
communication in advance of such issuance.

 

-15-

 

  

(k)          Lock-Up Period. For a period of 90 days after the date hereof (the
“Lock-Up Period”), the Company will not directly or indirectly, (1) offer to
sell, hypothecate, pledge, announce the intention to sell, sell, contract to
sell, sell any option or contract to purchase (to the extent such option or
contract to purchase is exercisable within one year from the Closing Date),
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act, with
respect to, any Common Stock, or any securities convertible into or exercisable
or exchangeable for Common Stock; (2) file or cause to become effective a
registration statement under the Securities Act relating to the offer and sale
of any Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock except for the filing of, but not the sale under,
a new “shelf” registration statement on Form S-3, or (3) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clauses (1), (2) or (3) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise, without the prior
written consent of the Placement Agent (which consent may be withheld in its
sole discretion), other than (i) the Shares to be sold hereunder, (ii) the
issuance of stock options or shares of restricted stock to employees, directors
and consultants pursuant to the Company’s 2014 Stock Incentive Plan, or (iii)
issuances of Common Stock upon the exercise of options or warrants disclosed as
outstanding in the Disclosure Package and the Prospectus or upon the conversion
or exchange of convertible or exchangeable securities disclosed as outstanding
in the Disclosure Package and the Prospectus. Notwithstanding the foregoing, for
the purpose of allowing the Placement Agent to comply with FINRA Rule
2711(f)(4), if (1) during the last 17 days of the Lock-Up Period, the Company
releases earnings results or publicly announces other material news or a
material event relating to the Company occurs or (2) prior to the expiration of
the Lock-Up Period, the Company announces that it will release earnings results
during the 16 day period beginning on the last day of the Lock-Up Period, then
in each case the Lock-Up Period will be extended until the expiration of the 18
day period beginning on the date of release of the earnings results or the
public announcement regarding the material news or the occurrence of the
material event, as applicable, unless the Placement Agent waives, in writing,
such extension. The Placement Agent agrees to waive such extension if the
provisions of FINRA Rule 2711(f)(4) are not applicable to the Offering. The
Company agrees not to accelerate the vesting of any option or warrant or the
lapse of any repurchase right prior to the expiration of the Lock-Up Period.

 

(l)          Stabilization.  The Company will not take directly or indirectly
any action designed, or that might reasonably be expected to cause or result in,
or that will constitute, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the Shares.

 

(m)          Transfer Agent. The Company shall maintain, at its expense, a
transfer agent and, if necessary under the jurisdiction of incorporation of the
Company, a registrar for the Shares.

 

(n)          Investment Company Act. The Company shall not invest, or otherwise
use the proceeds received by the Company from its sale of the Shares in such a
manner as would require the Company to register as an investment company under
the Investment Company Act.

 

(o)          Sarbanes-Oxley Act. The Company will comply with all effective
provisions of the Sarbanes-Oxley Act applicable to the Company.

 

(p)          Periodic Reports. The Company will file with the Commission such
periodic and special reports as required by the Exchange Act and the rules
promulgated thereunder.

 

(q)          NASDAQ Capital Market. The Company will use its reasonable best
efforts to obtain approval for, and maintain the listing of the Shares the
NASDAQ Capital Market for so long as the Common Stock is listed thereon.

 

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Section 4.              Costs and Expenses.

 

The Company, whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated, will pay or reimburse if paid by
the Placement Agent all costs and expenses incident to the performance of its
obligations under this Agreement and in connection with the transactions
contemplated hereby, including but not limited to costs and expenses of or
relating to (i) the preparation, printing, filing, delivery and shipping of the
Registration Statement, any Issuer Free Writing Prospectus, each Preliminary
Prospectus, the Disclosure Package and the Prospectus, and any amendment or
supplement to any of the foregoing and the printing and furnishing of copies of
each thereof to the Placement Agent and dealers (including costs of mailing and
shipment), (ii) the registration, issue, sale and delivery of the Shares
including any stock or transfer taxes and stamp or similar duties payable upon
the sale, issuance or delivery of the Shares and the printing, delivery,
shipping of the certificates representing the Shares, (iii) the fees and
expenses of any transfer agent or registrar for the Shares, (iv) the filing fees
required to be paid by the Placement Agent or Company with FINRA, (v) fees,
disbursements and other charges of counsel to the Company (vi) listing fees, if
any, for the listing or quotation of the Shares on the NASDAQ Capital Market,
(vii) fees and disbursements of the Company’s auditor incurred in delivering the
letters described in Section 5(l) hereof, and (viii) the costs and expenses of
the Company in connection with the marketing of the Offering and the sale of the
Shares to prospective investors including, but not limited to, those related to
any presentations or meetings undertaken in connection therewith including,
without limitation, expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants (other than the Placement
Agent) engaged by the Company in connection with the road show presentations,
travel, lodging and other expenses incurred by the officers of the Company and
any such consultants, and the cost of any aircraft or other transportation
chartered by the Company in connection with the road show. It is understood that
except as provided in Section 6 and Section 8(b), the Placement Agent shall pay
all of its own expenses.

 

Section 5.              Conditions of Placement Agent’s Obligations.

 

The obligations of the Placement Agent hereunder are subject to the following
conditions:

 

(a)          Filings with the Commission. The Prospectus shall have been filed
with the Commission pursuant to Rule 424(b) under the Securities Act at or
before 5:30 p.m., Eastern time, on the second full business day after the date
of this Agreement (or such earlier time as may be required under the Securities
Act).

 

(b)          Abbreviated Registration Statement. If the Company has elected to
rely upon Rule 462(b), the registration statement filed under Rule 462(b) shall
have become effective under the Securities Act by 8:00 a.m., Eastern time, on
the business day next succeeding the date of this Agreement.

 

(c)          No Stop Orders. Prior to the Closing: (i) no stop order suspending
the effectiveness of the Registration Statement shall have been issued under the
Securities Act and no proceedings initiated under Section 8(d) or 8(e) of the
Securities Act for that purpose shall be pending or threatened by the
Commission, and (ii) any request for additional information on the part of the
Commission (to be included in the Registration Statement, the Disclosure
Package, the Prospectus or any Issuer Free Writing Prospectus or otherwise)
shall have been complied with to the reasonable satisfaction of the Placement
Agent.

 

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(d)          Action Preventing Issuance. No action shall have been taken and no
statute, rule, regulation or order shall have been enacted, adopted or issued by
any governmental agency or body which would, as of the Closing Date, prevent the
issuance or sale of the Shares; and no injunction, restraining order or order of
any other nature by any United States federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would prevent
the issuance or sale of the Shares.

 

(e)          Objection of Placement Agent. No prospectus or amendment or
supplement to the Registration Statement shall have been filed to which the
Placement Agent shall have objected in writing, which objection shall not be
unreasonable. The Placement Agent shall not have advised the Company that the
Registration Statement, the Disclosure Package or the Prospectus, or any
amendment thereof or supplement thereto, or any Issuer Free Writing Prospectus
contains an untrue statement of fact which, in their opinion, is material, or
omits to state a fact which, in their opinion, is material and is required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

(f)          No Material Adverse Change. (i) Prior to the Closing, there shall
not have occurred any change, or any development involving a prospective change,
in the general affairs, business, operations, properties, financial condition,
or results of operations of the Company and the Subsidiaries from that set forth
in the Disclosure Package and the Prospectus that, in the Placement Agent’s
judgment, is material and adverse and that makes it, in the Placement Agent’s
judgment, impracticable to market the Shares on the terms and in the manner
contemplated in the Disclosure Package.

 

(ii) There shall not have occurred any of the following: (i) a suspension or
material limitation in trading in securities generally on the New York Stock
Exchange, the Nasdaq Stock Market or the Nasdaq Capital Market or the over the
counter market or the establishing on such exchanges or markets by the
Commission or by such exchanges or markets of minimum or maximum prices that are
not in force and effect on the date hereof; (ii) a suspension or material
limitation in trading in the Company’s securities on the Nasdaq Capital Market
or any other exchange or market or the establishing on any such market or
exchange by the Commission or by such market of minimum or maximum prices that
are not in force and effect on the date hereof; (iii) a general moratorium on
commercial banking activities declared by either United States federal or any
state authorities; (iv) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national emergency or
war, which in the Placement Agent’s judgment makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares in
the manner contemplated in the Prospectus; or (v) any calamity or crisis, change
in national, international or world affairs, act of God, change in the
international or domestic markets, or change in the existing financial,
political or economic conditions in the United States or elsewhere, that in the
Placement Agent’s judgment makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares in the manner contemplated in
each of the Disclosure Package and the Prospectus.

 

(g)          Representations and Warranties. Each of the representations and
warranties of the Company contained herein shall be true and correct when made
and on and as of the Closing Date, as if made on such date (except that those
representations and warranties that address matters only as of a particular date
shall remain true and correct as of such date), and all covenants and agreements
herein contained to be performed on the part of the Company and all conditions
herein contained to be fulfilled or complied with by the Company at or prior to
the Closing Date shall have been duly performed, fulfilled or complied with.

 

(h)          Opinion of Counsel to the Company. The Placement Agent shall have
received from Wyrick Robbins Yates & Ponton, counsel to the Company, such
counsel’s written opinion, addressed to the Placement Agent and dated the
Closing Date, in form and substance as set forth in Exhibit E attached hereto.

 

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(i)          Opinion of Counsel to the Placement Agent. The Placement Agent
shall have received from Goodwin Procter LLP counsel to the Placement Agent,
such counsel’s written opinions, addressed to the Placement Agent and dated the
Closing Date in form and substance reasonably satisfactory to the Placement
Agent.

 

(j)          Opinion of IP Counsel to the Company. The Placement Agent shall
have received from Moore & Van Allen PLLC, Intellectual Property counsel to the
Company, such counsel’s written opinion, addressed to the Placement Agent and
dated the Closing Date, in form and substance as set forth in Exhibit F attached
hereto.

 

(k)          Opinion of IP Counsel to the Company. The Placement Agent shall
have received from Goodwin Procter LLP, Intellectual Property counsel to the
Company, such counsel’s written opinion, addressed to the Placement Agent and
dated the Closing Date, in form and substance as set forth in Exhibit G attached
hereto.

 

(l)          The Placement Agent shall have received from EisnerAmper LLP,
letters dated, respectively, the date of this Agreement and the Closing Date,
and addressed to the Placement Agent in customary forms reasonably satisfactory
to the Placement Agent, which letters shall cover, without limitation, the
various financial disclosures contained in the Registration Statement, the
Prospectus and the Permitted Free Writing Prospectuses relating to the Company,
if any.

 

(m)          Officer’s Certificate. The Placement Agent shall have received on
the Closing Date a certificate, addressed to the Placement Agent and dated the
Closing Date, of the chief executive officer and the chief financial officer of
the Company to the effect that:

 

(i)          each of the representations, warranties and agreements of the
Company in this Agreement were true and correct when originally made and are
true and correct as of the Time of Sale and the Closing Date (except that those
representations and warranties that address matters only as of a particular date
shall remain true and correct as of such date); and the Company has complied
with all agreements and satisfied all the conditions on its part required under
this Agreement to be performed or satisfied at or prior to the Closing Date;

 

(ii)         subsequent to the respective dates as of which information is given
in the Disclosure Package, there has not been (A) a material adverse change or
any development involving a prospective material adverse change in the general
affairs, business, operations, prospects, properties, management, financial
condition or results of operations of the Company and the Subsidiaries taken as
a whole, (B) any transaction that is material to the Company and the
Subsidiaries taken as a whole, except transactions entered into in the ordinary
course of business, (C) any obligation, direct or contingent, that is material
to the Company and the Subsidiaries taken as a whole, incurred by the Company or
the Subsidiaries, except obligations incurred in the ordinary course of
business, (D) except as disclosed in the Disclosure Package and in the
Prospectus, any change in the share capital (other than a change in the number
of outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants) or any material change in the short
term or long term indebtedness of the Company or any of the Subsidiaries taken
as a whole, (E) any dividend or distribution of any kind declared, paid or made
on the share capital of the Company or any of the Subsidiaries or (F) any loss
or damage (whether or not insured) to the property of the Company or any of its
Subsidiaries which has been sustained or will have been sustained which has had
or is reasonably likely to result in a Material Adverse Effect; and

 

-19-

 

  

(iii)        no stop order suspending the effectiveness of the Registration
Statement or any part thereof or any amendment thereof or the qualification of
the Shares for offering or sale, nor suspending or preventing the use of the
Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus shall
have been issued, and no proceedings for that purpose shall be pending or to
their knowledge, threatened by the Commission or any state or regulatory body.

 

(n)          Secretary’s Certificate. On the Closing Date, the Company shall
have furnished to the Placement Agent a Secretary’s Certificate of the Company.

 

(o)          Company Corporate Documents. On the Closing Date, the Company shall
have delivered to the Placement Agent satisfactory evidence of the valid
existence of the Company.

 

(p)          Subsidiary Corporate Documents. On the Closing Date, the Company
shall have delivered to the Placement Agent a certificate evidencing the
incorporation or formation, as the case may be, and good standing of each of the
domestic Significant Subsidiaries in their respective state of incorporation or
formation, as the case may be, issued by the Secretary of State of such state of
incorporation or formation (or comparable authority), as the case may be, dated
as of a date within three (3) calendar days of the Closing Date.

 

(q)          Foreign Qualifications. On the Closing Date, the Company shall have
delivered to the Placement Agent certificates evidencing the Company’s
qualification as a foreign corporation in good standing issued by the Secretary
of State (or comparable office) of each jurisdiction in which the Company
conducts business and is required to so qualify, dated as of a date within three
(3) calendar days of the Closing Date.

 

(r)          Other Filings with the Commission. The Company shall have prepared
and filed with the Commission a Current Report on Form 8-K with respect to the
transactions contemplated hereby.

 

(s)          No FINRA Objection. FINRA shall not have raised any objection with
respect to the fairness and reasonableness of the placement agency terms and
arrangements relating to the issuance and sale of the Shares; provided that if
any such objection is raised, the Company and the Placement Agent shall
negotiate promptly and in good faith appropriate modifications to such placement
agency terms and arrangements in order to satisfy such objections.

 

(t)          NASDAQ Capital Market. The Shares shall have been approved for
listing on the NASDAQ Capital Market, subject to official notice of issuance.

 

(u)          Additional Documents. Prior to the Closing Date, the Company shall
have furnished to the Placement Agent such further information, certificates or
documents as the Placement Agent shall have reasonably requested for the purpose
of enabling it to pass upon the issuance and sale of the Shares as contemplated
herein, or in order to evidence the accuracy of any of the representations and
warranties, or the satisfaction of any of the conditions or agreements, herein
contained.

 

All opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Placement Agent.

 

If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the Placement
Agent by notice to the Company at any time prior to the Closing Date, which
termination shall be without liability on the part of any party to any other
party, except that Section 6 and Section 8 shall at all times be effective and
shall survive such termination.

 

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Section 6.              Indemnification and Contribution.

 

(a)          Indemnification of the Placement Agent. The Company agrees to
indemnify, defend and hold harmless each of the Placement Agent, its respective
directors and officers, and each person, if any, who controls such Placement
Agent within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act, and the successors and assigns of all of the foregoing
persons, from and against any loss, damage, claim or liability, which, jointly
or severally, such Placement Agent or any such person may become subject under
the Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, or the laws or regulations of foreign jurisdictions where Shares
have been offered or sold, the common law or otherwise (including in settlement
of any litigation, if such settlement is effected with the written consent of
the Company), insofar as such loss, damage, claim or liability (or actions in
respect thereof as contemplated below) arises out of or is based upon: (i) 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 to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; or (ii) any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, any Issuer Free Writing Prospectus, any road show (as defined in
Rule 433) or the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; and, in the case of
(i) and (ii) above, to reimburse such Placement Agent and each such controlling
person for any and all reasonable expenses (including reasonable fees and
disbursements of counsel) as such expenses are incurred by such Placement Agent
or such controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action; provided, however, that the foregoing indemnity shall not
apply to any loss, claim, damage, liability or expense to the extent, but only
to the extent, it arises out of or is based upon any untrue statement or alleged
untrue statement of a material fact contained in or omitted from, and in
conformity with information concerning such Placement Agent furnished in writing
by or on behalf of such Placement Agent to the Company expressly for use
therein, which information the parties hereto agree is limited to the Placement
Agent Information (as defined in Section 7).

 

(b)          Indemnification of the Company. The Placement Agent will indemnify,
defend and hold harmless the Company, its directors and officers, and any
person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act, and the successors and
assigns of all of the foregoing persons, from and against any loss, claim,
damage, liability or expense, as incurred to which, jointly or severally, the
Company or any such person may become subject under the Securities Act, the
Exchange Act, or other federal or state statutory law or regulation, the common
law or otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of the Placement Agent), insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon: (i) 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 to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; (ii) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, any
Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading, in the
case of each of (i) and (ii) above, to the extent but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any Preliminary Prospectus,
Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with information concerning the
Placement Agent furnished in writing by or on behalf of the Placement Agent to
the Company expressly for use therein and to reimburse the Company, or any such
director, officer or controlling person for any legal and other expense
reasonably incurred by the Company, or any such director, officer or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; provided,
that the parties hereto hereby agree that such written information provided by
the Placement Agent consists solely of the Placement Agent Information.
Notwithstanding the provisions of this Section 6(b), in no event shall any
indemnity by the Placement Agent under this Section 6(b) exceed the Placement
Fee.

 

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(c)          Notice and Procedures. If any action, suit or proceeding (each, a
“Proceeding”) is brought against a person (an “indemnified party”) in respect of
which indemnity may be sought against the Company or any Placement Agent (as
applicable, the “indemnifying party”) pursuant to subsection (a) or (b),
respectively, of this Section 6, such indemnified party shall promptly notify
such indemnifying party in writing of the institution of such Proceeding and
such indemnifying party shall assume the defense of such Proceeding, including
the employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the omission to so
notify such indemnifying party shall not relieve such indemnifying party from
any liability which such indemnifying party may have to any indemnified party or
otherwise, except to the extent the indemnifying party does not otherwise learn
of the Proceeding and such failure results in the forfeiture by the indemnifying
party of substantial rights or defenses. The indemnified party or parties shall
have the right to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
or parties unless (i) the employment of such counsel shall have been authorized
in writing by the indemnifying party in connection with the defense of such
Proceeding, (ii) the indemnifying party shall not have, within a reasonable
period of time in light of the circumstances, employed counsel to defend such
Proceeding or (iii) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from, additional to or in conflict with those available to such indemnifying
party, in any of which events such reasonable fees and expenses shall be borne
by such indemnifying party and paid as incurred (it being understood, however,
that such indemnifying party shall not be liable for the expenses of more than
one separate counsel (in addition to any local counsel) in any one Proceeding or
series of related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). An indemnifying party
shall not be liable for any settlement of any Proceeding (including by consent
to the entry of any judgment) effected without its written consent but, if
settled with its written consent or if there be a final judgment for the
plaintiff, such indemnifying party agrees to indemnify and hold harmless the
indemnified party or parties from and against any loss or liability by reason of
such settlement or judgment. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel (which fees and
expenses shall be reasonably documented) as contemplated by the second sentence
of this Section 6(c), then the indemnifying party agrees that it shall be liable
for any settlement of any Proceeding effected without its written consent if (i)
such settlement is entered into more than 90 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
not have fully reimbursed the indemnified party in accordance with such request
prior to the date of such settlement and (iii) such indemnified party shall have
given the indemnifying party at least 30 days’ prior notice of its intention to
settle. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement, compromise or consent to the entry of
judgment in any pending or threatened Proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding and does not include an admission
of fault or culpability or a failure to act by or on behalf of such indemnified
party.

 

-22-

 

  

(d)          Contribution. If the indemnification provided for in this Section 6
is unavailable to an indemnified party under subsections (a) or (b) of this
Section 6 or insufficient to hold an indemnified party harmless in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each applicable indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of the losses, claims, damages, liabilities or expenses
referred to in subsection (a) or (b) above, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Placement Agent on the other from the offering of the Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party or
parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Placement Agent on the other hand shall be
deemed to be in the same respective proportions as the total net proceeds from
the offering of the Shares (before deducting expenses but after deducting the
Placement Fee) received by the Company and the Placement Fee received by the
Placement Agent, in each case as set forth on the cover of the Prospectus, bear
to the aggregate public offering price of the Shares. The relative fault of the
Company on the one hand and the Placement Agent on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, on the one hand,
or by the Placement Agent, on the other hand, and the parties’ relevant intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Placement Agent agree that it
would not be just and equitable if contribution pursuant to this subsection (d)
were to be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the first sentence of this Section 6(d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this Section 6(d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending against any action or claim
which is the subject of this Section 6(d). Notwithstanding the provisions of
this Section 6(d), the Placement Agent shall not be required to contribute any
amount in excess of the Placement Fee less the amount of any damages which such
Placement Agent has otherwise paid or become liable to pay by reason of such
untrue statement or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

 

(e)          Representations and Agreements to Survive Delivery. The obligations
of the Company under this Section 6 shall be in addition to any liability which
the Company may otherwise have. The indemnity and contribution agreements of the
parties contained in this Section 6 and the covenants, warranties and
representations of the Company contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of the Placement Agent,
any person who controls the Placement Agent within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act or any affiliate of
the Placement Agent, or by or on behalf of the Company, its directors or
officers or any person who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, and (iii)
the issuance and delivery of the Shares. The Company and the Placement Agent
agree promptly to notify each other of the commencement of any Proceeding
against it and, in the case of the Company, against any of the Company’s
officers or directors in connection with the issuance and sale of the Shares, or
in connection with the Registration Statement, the Disclosure Package or the
Prospectus.

 

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Section 7.              Information Furnished by Placement Agent.

 

The Company acknowledges that the statements set forth in the sixth and
thirteenth paragraphs of the Plan of Distribution in the Prospectus (the
“Placement Agent Information”) constitute the only information relating to the
Placement Agent furnished in writing to the Company by the Placement Agent as
such information is referred to in Sections 2 and 6 hereof.

 

Section 8.              Termination.

 

The Placement Agent shall have the right to terminate this Agreement by giving
notice as hereinafter specified at any time at or prior to the Closing Date,
without liability on the part of the Placement Agent to the Company, if (i)
prior to delivery and payment for the Shares (A) trading in securities generally
shall have been suspended or materially limited on or by New York Stock
Exchange, the Nasdaq Stock Market or the Nasdaq Capital Market (each, a “Trading
Market”), (B) trading in the Shares of the Company shall have been suspended or
materially limited on any exchange or in the over-the-counter market, (C) a
general moratorium on commercial banking activities shall have been declared by
United States federal, New York state authorities, (D) there shall have occurred
any outbreak or material escalation of hostilities or acts of terrorism
involving the United States, or there shall have been a declaration by the
United States of a national emergency or war, (E) there shall have occurred any
other calamity or crisis or any material change in general economic, political
or financial conditions in the United States or elsewhere, if the effect of any
such event specified in clause (D) or (E), in the judgment of the Placement
Agent, makes it impractical or inadvisable to proceed with the completion of the
sale of and payment for the Shares on the Closing Date on the terms and in the
manner contemplated by this Agreement, the Disclosure Package and the
Prospectus, or (ii) since the time of execution of this Agreement or the earlier
respective dates as of which information is given in the Disclosure Package,
there has been (A) any Material Adverse Effect or (B) the Company shall have
sustained a loss by strike, fire, flood, earthquake, accident or other calamity
of such character that in the judgment of the Placement Agent would,
individually or in the aggregate, result in a Material Adverse Effect and which
would, in the judgment of the Placement Agent, make it impracticable or
inadvisable to proceed with the offering or the delivery of the Shares on the
terms and in the manner contemplated in the Disclosure Package and the
Prospectus. Any such termination shall be without liability of any party to any
other party except that the provisions of Section 6, Section 8(b) and Section 11
hereof shall at all times be effective notwithstanding such termination.

 

Section 9.              Notices.

 

All statements, requests, notices and agreements hereunder shall be in writing
or by facsimile, and:

 

(a)            if to the Placement Agent, shall be delivered or sent by mail,
telex or facsimile transmission to:

 

  William Blair & Company, L.L.C.

  222 West Adams

  Chicago, Illinois 60606

  Attention: Managing Director

  Facsimile No.: (312) 368-9418

   

-24-

 

 

 with a copy (which shall not constitute notice) to:

 

  Goodwin Procter LLP

  620 Eighth Avenue

  New York, NY 10018

  Attention: Edwin M. O’Connor, Esq.

  Facsimile No.: (212) 355-3333

 

(b)            if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to:

 

  Assembly Biosciences, Inc.

  99 Hudson Street, 5th Floor

  New York, NY 10013

  Attention: Chief Executive Officer

  Facsimile No.: (646) 224-8199

 

  with a copy (which shall not constitute notice) to:

 

  Wyrick Robbins Yates & Ponton LLP

  4101 Lake Boone Trail

  Suite 300

  Raleigh, NC 27607

  Attention: W. David Mannheim

  Facsimile No.: (919) 781-4865

 

Any such notice shall be effective only upon receipt. Any party to this
Agreement may change such address for notices by sending to the parties to this
Agreement written notice of a new address for such purpose.

 

Section 10.            Persons Entitled to Benefit of Agreement.

 

This Agreement shall inure to the benefit of and shall be binding upon the
Placement Agent, the Company and their respective successors and assigns and the
controlling persons, officers and directors referred to in Section 6. Nothing in
this Agreement is intended or shall be construed to give to any other person,
firm or corporation, other than the persons, firms or corporations mentioned in
the preceding sentence, any legal or equitable remedy or claim under or in
respect of this Agreement, or any provision herein contained.

 

Section 11.            Governing Law.

 

This Agreement shall be governed by and construed in accordance with the laws of
the State of New York, without giving effect to the conflicts of laws provisions
thereof.

 

-25-

 

  

Section 12.             No Fiduciary Relationship.

 

The Company hereby acknowledges that the Placement Agent is acting solely as an
independent contractor with respect to providing investment banking services to
the Company, including the offering of the Shares contemplated hereby (including
in connection with determining the terms of the Offering). The Company further
acknowledges that in no event do the parties intend that the Placement Agent act
or be responsible as a fiduciary to the Company, its management, shareholders,
creditors or any other person in connection with any activity that the Placement
Agent may undertake or have undertaken in furtherance of the offering of the
Company’s securities, either before or after the date hereof. The Placement
Agent hereby expressly disclaims any fiduciary or similar obligations to the
Company, either in connection with the transactions contemplated by this
Agreement or any matters leading up to such transactions, and the Company hereby
confirms its understanding and agreement to that effect. The Company and the
Placement Agent agree that they are each responsible for making their own
independent judgments with respect to any such transactions, and that any
opinions or views expressed by the Placement Agent to the Company regarding such
transactions, including but not limited to any opinions or views with respect to
the price or market for the Company’s securities, do not constitute advice or
recommendations to the Company. The Company hereby waives and releases, to the
fullest extent permitted by law, any claims that the Company may have against
the Placement Agent with respect to any breach or alleged breach of any
fiduciary or similar duty to the Company in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions.
The Company further acknowledges and agrees that Placement Agent has not
advised, nor is advising, the Company or any other person as to any legal, tax,
investment, accounting or regulatory matters in any jurisdiction with respect to
the transactions contemplated hereby. The Company shall consult with its own
advisors concerning such matters and shall be responsible for making its own
independent investigation and appraisal of the transactions contemplated hereby,
and the Placement Agent shall have no responsibility or liability to the Company
with respect thereto. Any review by the Placement Agent of the Company, the
transactions contemplated hereby or other matters relating to such transactions
has been and will be performed solely for the benefit of the Placement Agent and
has not been and shall not be performed on behalf of the Company or any other
person. It is understood that the Placement Agent has not and will not be
rendering an opinion to the Company as to the fairness of the terms of the
Offering.

 

Section 13.            Headings.

 

The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.

 

Section 14.            Amendments and Waivers.

 

No supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. The failure of a party to
exercise any right or remedy shall not be deemed or constitute a waiver of such
right or remedy in the future. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.

 

Section 15.            Submission to Jurisdiction.

 

Except as set forth below, no Proceeding may be commenced, prosecuted or
continued in any court other than the courts of the State of New York located in
the City and County of New York or in the United States District Court for the
Southern District of New York, which courts shall have jurisdiction over the
adjudication of such matters, and the Company hereby irrevocably consents to the
exclusive jurisdiction of such courts and personal service with respect thereto.
The Company hereby consents to personal jurisdiction, service and venue in any
court in which any Proceeding arising out of or in any way relating to this
Agreement is brought by any third party against the Placement Agent. The Company
and the Placement Agent hereby waive all right to trial by jury in any
Proceeding (whether based upon contract, tort or otherwise) in any way arising
out of or relating to this Agreement. The Company and the Placement Agent agree
that a final judgment in any such Proceeding brought in any such court shall be
conclusive and binding upon such party and may be enforced in any other courts
in the jurisdiction of which such party is or may be subject, by suit upon such
judgment.

 

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Section 16.            Service of Process.

 

The Company agrees that service of process upon its authorized agent or
successor (and written notice of said service to the Company, mailed by
certified mail or otherwise delivered as provided in Section 9 above) shall be
deemed in every respect personal service of process upon the Company in any such
suit, proceeding or other action. In the event that service of any process or
notice or motion or other application to any such court in connection with any
such action or proceeding cannot be made in the manner described above, such
service may be made in the manner set forth in conformance with the Hague
Convention on the Service Abroad of Judicial and Extrajudicial Documents of
Civil and Commercial Matters or any successor convention or treaty. Nothing
contained in this Agreement shall affect or limit the right of the Placement
Agent to serve any process or notice of motion or other application in any other
manner permitted by law.

 

Section 17.            Counterparts.

 

This Agreement may be executed in one or more counterparts and, if executed in
more than one counterpart, the executed counterparts shall each be deemed to be
an original and all such counterparts shall together constitute one and the same
instrument. Delivery of an executed counterpart by facsimile shall be effective
as delivery of a manually executed counterpart thereof.

 

-27-

 

 

If the foregoing is in accordance with your understanding of the agreement
between the Company and the Placement Agent, kindly indicate your acceptance in
the space provided for that purpose below.

 

  Very truly yours,       Assembly Biosciences, Inc.       By: /s/ Russel H.
Ellison     Name: Russel H. Ellison     Title: CEO

 

Accepted as of   the date first above written:       WILLIAM BLAIR & COMPANY,
L.L.C.       By: /s/ Brent Felitto     Name: Brent Felitto     Title: Partner  

 

[Signature Page to Placement Agency Agreement]

 

 

 

 

Schedules and Exhibits

  

Schedule I: Issuer General Free Writing Prospectuses     Schedule II:
Significant Subsidiaries     Schedule III: Directors and Officers Executing
Lock-Up Agreements     Exhibit A: Form of Subscription Agreement     Exhibit B:
Pricing Information     Exhibit C: Disclosure Materials     Exhibit D: Form of
Lock-up Agreement     Exhibit E: Form of Legal Opinion of Wyrick Robbins Yates &
Ponton     Exhibit F: Form of Intellectual Property Legal Opinion of Moore & Van
Allen PLLC     Exhibit G: Form of Intellectual Property Legal Opinion of Goodwin
Procter LLP

 

 

 

 

Schedule I

 

Issuer General Free Writing Prospectuses

 

None.

 

 

 

 

Schedule II

 

Significant Subsidiaries

 

Assembly Pharmaceuticals, Inc.

 

 

 

 

Schedule III

 

Directors and Officers Executing Lock-Up Agreements

 

Directors
Anthony Altig

Mark Auerbach

Richard DiMarchi

Russell Ellison

Myron Holubiak

William Ringo

Derek Small

 

Officers

Lee Arnold

David Barrett

Uri Lopatin

 

Others

Adam Zlotnick

 

 

 

 

Exhibit A

 

Form of Subscription Agreement

 

 

 

 

Exhibit B

 

Pricing Information

 

Number of Shares to be Sold: 1,959,000

 

Offering Price: $8.04

 

Placement Agency Fees: $787,518

 

 

 

 

Exhibit C

 

Disclosure Materials

 

None.

 

 

 

 

Exhibit D

 

Form of Lock-Up Agreement

 

October 1, 2014

 

William Blair & Company, L.L.C.

222 West Adams

Chicago, Illinois 60606

 

Ladies and Gentlemen:

 

The undersigned understands that you, as Placement Agent, propose to enter into
the Placement Agency Agreement (the “Placement Agency Agreement”) with Assembly
Biosciences, Inc., a company incorporated and registered in the State of
Delaware (the “Company”), providing for the offering (the “Offering”) of (i)
common shares (the “Shares”), par value $0.001 per share (the “Common Shares”),
of the Company. Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Placement Agency Agreement.

 

In consideration of the foregoing, and in order to induce you to participate in
the Offering, and for other good and valuable consideration receipt of which is
hereby acknowledged, the undersigned hereby agrees that, without the prior
written consent of the Placement Agent (which consent may be withheld in its
sole discretion), the undersigned will not, during the period (the “Lock-Up
Period”) beginning on the date hereof and ending on the date ninety (90) days
after the date of the final prospectus (including the final prospectus
supplement) filed with the U.S. Securities and Exchange Commission (the
“Commission”) in connection with the sale of the Shares (the “Final
Prospectus”), (1) offer, pledge, announce the intention to sell, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, or file (or participate in the
filing of) a registration statement with the Commission in respect of, any
Common Shares or any securities convertible into or exercisable or exchangeable
for Common Shares which may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations of the Commission
including Common Shares which may be issued upon exercise of a stock option or
warrant, (2) enter into any swap or other agreement that transfers, in whole or
in part, any of the economic consequences of ownership of Common Shares, whether
any such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Shares or such other Common Shares, in cash or otherwise, (3)
make any demand for or exercise any right with respect to, the registration of
any Common Shares or any security convertible into or exercisable or
exchangeable for Common Shares, or (4) publicly announce an intention to effect
any transaction specific in clause (1), (2) or (3) above.

 

Notwithstanding the foregoing, the restrictions set forth in clauses (1) and (2)
above shall not apply to (a) transfers (i) as a bona fide gift or gifts,
provided that the donee or donees thereof agree to be bound in writing by the
restrictions set forth herein, (ii) to any trust for the direct or indirect
benefit of the undersigned or the immediate family of the undersigned, provided
that the trustee of the trust agrees to be bound in writing by the restrictions
set forth herein, and provided further that any such transfer shall not involve
a disposition for value, (iii) pursuant to the laws of descent, (iv) by
operation of law, such as pursuant to a domestic relations order or in
connection with a divorce settlement or (v) with your prior written consent, (b)
the acquisition or exercise of any stock option issued pursuant to the Company’s
existing stock option plan, including any exercise effected by the delivery of
Common Shares of the Company held by the undersigned, or (c) the entry into a
plan, contract or instruction that satisfies all of the requirements of Rule
10b5-1(c)(1)(i)(B) , so long as such plan is not publicly announced and no sales
are made pursuant to such plan during the Lock-Up Period. For purposes of this
Lock-Up Agreement, “immediate family” shall mean any relationship by blood,
marriage or adoption, not more remote than first cousin. None of the
restrictions set forth in this Lock-Up Agreement shall apply to Common Shares
acquired in open market transactions.

 

 

 

 

For the purpose of allowing you to comply with FINRA Rule 2711(f)(4), if (1)
during the last 17 days of the Lock-Up Period, the Company releases earnings
results or publicly announces other material news or a material event relating
to the Company occurs or (2) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the 16 day period
beginning on the last day of the Lock-Up Period, then in each case the Lock-Up
Period will be extended until the expiration of the 18 day period beginning on
the date of release of the earnings results or the public announcement regarding
the material news or the occurrence of the material event, as applicable, unless
the Placement Agent waives, in writing, such extension. The Placement Agent
agrees to waive such extension if the provisions of FINRA Rule 2711(f)(4) are
not applicable to the Offering. The Company agrees not to accelerate the vesting
of any option or warrant or the lapse of any repurchase right prior to the
expiration of the Lock-Up Period. In furtherance of the foregoing, the Company,
and any duly appointed transfer agent or depositary for the registration or
transfer of the securities described herein, are hereby authorized to decline to
make any transfer of securities if such transfer would constitute a violation or
breach of this Lock-Up Agreement.

 

The foregoing restrictions are expressly agreed to preclude the undersigned from
engaging in any hedging or other transaction which is designed to or reasonably
expected to lead to or result in a sale or disposition of Common Shares even if
such securities would be disposed of by someone other than the undersigned. Such
prohibited hedging or other transactions would include without limitation any
short sale or any purchase, sale or grant of any right (including without
limitation any put option or put equivalent position or call option or call
equivalent position) with respect to any of the Common Shares or with respect to
any security that includes, relates to, or derives any significant part of its
value from such shares.

 

The undersigned hereby represents and warrants that the undersigned has full
power and authority to enter into this Lock-Up Agreement. All authority herein
conferred or agreed to be conferred and any obligations of the undersigned shall
be binding upon the successors, assigns, heirs or personal representatives of
the undersigned.

 

The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company’s transfer agent and registrar or depositary
against the transfer of the undersigned’s Common Shares except in compliance
with the foregoing restrictions.

 

The undersigned understands that, if the Placement Agency Agreement does not
become effective by October 31, 2014, or if the Placement Agency Agreement
(other than the provisions thereof which survive termination) shall terminate or
be terminated prior to payment for and delivery of the Shares, the undersigned
shall be released from all obligations under this Lock-Up Agreement.

 

 

 

 

This Lock-Up Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the conflict of laws principles
thereof.

 

  Very truly yours,                 Name:  

 

 

 

 

Exhibit E

 

Form of Legal Opinion of Wyrick Robbins Yates & Ponton

 

 

 

 

Exhibit F

 

Form of Intellectual Property Legal Opinion of Moore & Van Allen PLLC

 

 

 

 

Exhibit G

 

Form of Intellectual Property Legal Opinion of Goodwin Procter LLP