Exhibit 10.2

 

DETERMINE, INC.

2,184,000 shares of Common Stock

PLACEMENT AGENCY AGREEMENT

June 21, 2017

 

Lake Street Capital Markets, LLC
225 South 6th Street, Suite 2050
Minneapolis, MN 55402

 

Ladies and Gentlemen:

 

1.     INTRODUCTION. Subject to the terms and conditions of this Placement
Agency Agreement (this “Agreement”) and the Securities Purchase Agreement in the
form of Exhibit A attached hereto (the “Securities Purchase Agreement”) entered
into with the purchasers identified therein (each a “Purchaser” and
collectively, the “Purchasers”), Determine, Inc., a Delaware corporation (the
“Company”), proposes to issue and sell directly to the Purchasers up to an
aggregate of 2,184,000 shares (the “Shares”) of common stock, $0.0001 par value
per share (the “Common Stock”), of the Company. The Company hereby confirms its
agreement with Lake Street Capital Markets, LLC (the “Placement Agent”) to act
as its Placement Agent in accordance with the terms and conditions hereof.

 

2.     AGREEMENT TO ACT AS PLACEMENT AGENT; PLACEMENT OF SECURITIES. On the
basis of the representations, warranties and agreements of the Company herein
contained, and subject to all the terms and conditions of this Agreement:

 

(a)     The Company hereby authorizes the Placement Agent to act as its
exclusive agent to solicit offers for the purchase of all or part of the Shares
from the Company in connection with the proposed offering of the Shares pursuant
to the Registration Statement hereinafter defined (the “Offering”). Until the
Closing Date (as defined in Section 4 hereof) or earlier upon termination of
this Agreement pursuant to Section 9, the Company shall not, without the prior
written consent of the Placement Agent, solicit or accept offers to purchase the
Shares otherwise than through the Placement Agent.

 

(b)     The Company hereby acknowledges that the Placement Agent has agreed, as
agent of the Company, to use its reasonable efforts to solicit offers to
purchase the Shares from the Company on the terms and subject to the conditions
set forth in the Prospectus (as defined below). The Placement Agent shall use
reasonable efforts to assist the Company in obtaining performance by each
Purchaser whose offer to purchase Shares has been solicited by the
Placement Agent and accepted by the Company, but the Placement Agent shall not,
except as otherwise provided in this Agreement, be obligated to disclose the
identity of any potential purchaser or have any liability to the Company in the
event any such purchase is not consummated for any reason. Under no
circumstances will the Placement Agent or any of its Affiliates (as defined
below) be obligated to underwrite or purchase any Shares for its own account
and, in soliciting purchases of the Shares, the Placement Agent shall act solely
as the Company’s agent and not as principal. As used herein, the term
“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person as such terms are used in and construed under Rule 405 under the
Securities Act of 1933, as amended (the “Securities Act”), and the term “Person”
means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

 

 
 

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(c)     Subject to the provisions of this Section 2, offers for the purchase of
the Shares may be solicited by the Placement Agent as agent for the Company at
such times and in such amounts as the Placement Agent deems advisable. 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 Shares and may
reject any such offer, in whole or in part.

 

(d)     The Shares are being sold to the Purchasers at an offering price of
$2.50 per Share (the “Public Offering Price”). The purchases of Shares by the
Purchasers shall be evidenced by the execution of the Securities Purchase
Agreement by each of the Purchasers and the Company.

 

(e)     As compensation for services rendered, on the Closing Date (as defined
in Section 4 hereof), the Company shall pay to the Placement Agent by wire
transfer of immediately available funds to an account or accounts designated by
the Placement Agent, an aggregate amount equal to six percent (6.0%) of the
gross proceeds received by the Company (the “Placement Fee”) from the sale of
the Shares on such Closing Date; provided, however, that the Placement Fee with
respect to gross proceeds to the Company from the sale of Shares to Lloyd I.
Miller III or his Affiliates shall be equal to two percent (2.0%) thereof. 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 provided, however, such other brokers or dealers must be
approved by the Company, and Placement Agent shall be responsible for the acts
or omissions of such parties as if the Placement Agent’s own.

 

(f)     No Shares that the Company has agreed to sell pursuant to this Agreement
and the Securities Purchase Agreement shall be deemed to have been purchased and
paid for, or sold by the Company, until such Shares shall have been delivered to
the Purchaser thereof against payment by such Purchaser. If the Company shall
default in its obligations to deliver Shares to a Purchaser whose offer it has
accepted, the Company shall indemnify and hold the Placement Agent harmless
against any loss, claim, damage or expense arising from or as a result of such
default by the Company in accordance with the procedures set forth in
Section 8(c) herein.

 

 
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3.     REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to, and agrees with, the Placement Agent that:

 

(a)     The Company has prepared and filed in conformity with the requirements
of the Securities Act and published rules and regulations thereunder (the “Rules
and Regulations”) adopted by the Securities and Exchange Commission (the
“Commission”), a “shelf” Registration Statement (as hereinafter defined) on Form
S-3 (File No. 333-207841), which became effective on November 16, 2015 (the
“Effective Date”), including a base prospectus relating to the securities,
including the Shares, registered pursuant to such Registration Statement (the
“Base Prospectus”), and such amendments and supplements thereto as may have been
required to the date of this Agreement. The term “Registration Statement” as
used in this Agreement means the registration statement (including all exhibits,
financial schedules and all documents and information deemed to be a part of the
Registration Statement pursuant to Rule 430A under the Rules and Regulations),
as amended and/or supplemented to the date of this Agreement, including the Base
Prospectus. The Registration Statement is effective under the Securities Act and
no stop order preventing or suspending the effectiveness of the Registration
Statement or suspending or preventing the use of the Prospectus has been issued
by the Commission and no proceedings for that purpose have been instituted or,
to the knowledge of the Company, are threatened by the Commission. The Company,
if required by the Rules and Regulations of the Commission, will file the
Prospectus (as defined below), with the Commission pursuant to Rule 424(b) under
the Rules and Regulations. The term “Prospectus,” as used in this Agreement
means the Prospectus, in the form in which it is to be filed with the Commission
pursuant to Rule 424(b) under the Rules and Regulations, or, if the Prospectus
is not to be filed with the Commission pursuant to Rule 424(b), the Prospectus
in the form included as part of the Registration Statement as of the Effective
Date, except that if any revised prospectus or prospectus supplement shall be
provided to the Placement Agent by the Company for use in connection with the
offering and sale of the Shares which differs from the Prospectus (whether or
not such revised prospectus or prospectus supplement is required to be filed by
the Company pursuant to Rule 424(b) under the Rules and Regulations), the term
“Prospectus” shall refer to such revised prospectus or prospectus supplement, as
the case may be, from and after the time it is first provided to the Placement
Agent for such use. Any preliminary prospectus or prospectus subject to
completion included in the Registration Statement or filed with the Commission
pursuant to Rule 424 under the Rules and Regulations is hereafter called a
“Preliminary Prospectus.” Any reference herein to the Registration Statement,
any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 which were filed under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), on or before the last to occur of the Effective Date, the
date of the Preliminary Prospectus, or the date of the Prospectus, and any
reference herein to the terms “amend,” “amendment,” or “supplement” with respect
to the Registration Statement, any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include (i) the filing of any document under the
Exchange Act after the Effective Date, the date of such Preliminary Prospectus
or the date of the Prospectus, as the case may be, which is incorporated by
reference and (ii) any such document so filed. If the Company has filed an
abbreviated registration statement to register additional securities pursuant to
Rule 462(b) under the Rules and Regulations (the “462(b) Registration
Statement”), then any reference herein to the Registration Statement shall also
be deemed to include such 462(b) Registration Statement.

 

 
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(b)     As of the Applicable Time (as defined below) and as of the Closing Date,
neither (i) any General Use Free Writing Prospectus (as defined below) issued at
or prior to the Applicable Time, and the Pricing Prospectus (as defined below)
and the information included on Schedule A hereto, all considered together
(collectively, the “General Disclosure Package”), (ii) any individual Limited
Use Free Writing Prospectus (as defined below), nor (iii) the bona fide
electronic road show (as defined in Rule 433(h)(5) under the Rules and
Regulations), if any, that has been made available without restriction to any
Person, when considered together with the General Disclosure Package, included
or will include, any untrue statement of a material fact or omitted or as of the
Closing Date will omit, to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representation or warranty as to information contained in or omitted from any
Issuer Free Writing Prospectus, in reliance upon, and in conformity with,
written information furnished to the Company by the Placement Agent specifically
for inclusion therein, which information the parties hereto agree is limited to
the Placement Agent’s Information (as defined in Section 17). As used in this
paragraph (b) and elsewhere in this Agreement:

 

“Applicable Time” means 7:00 A.M., New York time, on the date of this Agreement.

 

“General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus
that is identified on Schedule A to this Agreement.

 

“Incorporated Documents” shall refer to the documents, if any, incorporated by
reference or deemed to be incorporated by reference into the Registration
Statement, the Base Prospectus or the Prospectus, including, unless the context
otherwise requires, the documents, if any, filed as exhibits to such
Incorporated Documents.

 

“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as
defined in Rule 433 under the Rules and Regulations 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 Rules and Regulations.

 

“Limited Use Free Writing Prospectuses” means any Issuer Free Writing Prospectus
that is not a General Use Free Writing Prospectus.

 

“Pricing Prospectus” means the Preliminary Prospectus, if any, and the Base
Prospectus, each as amended and supplemented immediately prior to the Applicable
Time, including any document incorporated by reference therein and any
prospectus supplement deemed to be a part thereof.

 

(c)     No order preventing or suspending the use of the Base Prospectus, any
Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus
relating to the Offering has been issued by the Commission, and no proceeding
for that purpose or pursuant to Section 8A of the Securities Act has been
instituted or, to the knowledge of the Company, threatened by the Commission.
Each Preliminary Prospectus (if any), at the time of filing thereof, conformed
in all material respects to the requirements of the Securities Act and the Rules
and Regulations, and did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted from any
Preliminary Prospectus, in reliance upon, and in conformity with, written
information furnished to the Company by the Placement Agent specifically for
inclusion therein, which information the parties hereto agree is limited to the
Placement Agent’s Information (as defined in Section 17).

 

 
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(d)     At the time the Registration Statement became or becomes effective, at
the date of this Agreement and at the Closing Date, the Registration Statement
conformed and will conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and did not and will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; the Prospectus, at the time the Prospectus was issued and at
the Closing Date, conformed and will conform in all material respects to the
requirements of the Securities Act and the Rules and Regulations and did not and
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing representations and warranties in this paragraph (d) shall
not apply to information contained in or omitted from the Registration Statement
or the Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by the Placement Agent specifically for inclusion
therein, which information the parties hereto agree is limited to the Placement
Agent’s Information (as defined in Section 17).

 

(e)     Each Issuer Free Writing Prospectus, if any, as of its issue date and at
all subsequent times through the completion of the public offer and sale of the
Shares or until any earlier date that the Company notified or notifies the
Placement Agent as described in Section 5(e), did not, does not and will not
include any information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement, Pricing Prospectus or the
Prospectus, including any document incorporated by reference therein and any
prospectus supplement deemed to be a part thereof that has not been superseded
or modified, or includes an untrue statement of a material fact or omitted or
would omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
prevailing at the subsequent time, not misleading. The foregoing sentence does
not apply to statements in or omissions from any Issuer Free Writing Prospectus
in reliance upon, and in conformity with, written information furnished to the
Company by the Placement Agent specifically for inclusion therein, which
information the parties hereto agree is limited to the Placement Agent’s
Information (as defined in Section 17).

 

 
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(f)     The documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder and none of such documents contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and any further
documents so filed and incorporated by reference in the Prospectus, when such
documents become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the Securities Act
or the Exchange Act, as applicable, and the rules and regulations of
the Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

 

(g)     The Company has not, directly or indirectly, distributed and will not
distribute any offering material in connection with the Offering other than any
Pricing Prospectus, the Prospectus and other materials, if any, permitted under
the Securities Act and consistent with Section 5(b) below. The Company is not an
“ineligible issuer” in connection with the offering pursuant to Rules 164, 405
and 433 under the Securities Act. The Company will file with the Commission all
Issuer Free Writing Prospectuses (other than a “road show,” as defined in Rule
433(d)(8) under the Rules and Regulations), if any, in the time and manner
required under Rules 163(b)(2) and 433(d) under the Rules and Regulations.

 

(h)     The Company and each Subsidiary (as defined below) has been duly
organized and is validly existing as a corporation in good standing (or the
foreign equivalent thereof) under the laws of each of their respective
jurisdictions of organization. The Company and each Subsidiary is duly qualified
to do business and is in good standing as a foreign corporation in each
jurisdiction in which its ownership or lease of property or the conduct of its
business requires such qualification and has all power and authority necessary
to own or hold its properties and to conduct the business in which it is
engaged, except where the failure to so qualify or have such power or authority
(i) would not have, singularly or in the aggregate, a material adverse effect on
the condition (financial or otherwise), results of operations, assets or
business or prospects of the Company and its Subsidiaries, taken as a whole, or
(ii) impair in any material respect the ability of the Company to perform its
obligations under this Agreement or to consummate any transactions contemplated
by this Agreement, the Registration Statement, the General Disclosure Package or
the Prospectus (any such effect as described in clauses (i) or (ii), a “Material
Adverse Effect”). The Company owns or controls, directly or indirectly, only the
following corporations, partnerships, limited liability partnerships, limited
liability companies, associations or other entities: Determine Sourcing, Inc.;
Determine Limited; Determine SAS; and Determine GmbH (each, a “Subsidiary” and,
collectively, the “Subsidiaries”).

 

(i)     The Company has the full right, power and authority to enter into this
Agreement and the Securities Purchase Agreement and to perform and to discharge
its obligations hereunder and thereunder; and this Agreement and the Securities
Purchase Agreement have been duly authorized, executed and delivered by the
Company, and constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors’ rights generally and by general principles of equity.

 

 
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(j)     The Shares to be issued and sold by the Company to the Purchasers
hereunder and under the Securities Purchase Agreement have been duly authorized
and, when issued and delivered against payment therefor as provided herein and
in the Securities Purchase Agreement, will be validly issued, fully paid and
non-assessable and free of any preemptive or similar rights and will conform to
the description thereof contained in the General Disclosure Package and the
Prospectus. The Purchasers will have good and marketable title to the Shares
upon receipt of such Shares, and such Shares will be freely tradable on the
NASDAQ Capital Market.

 

(k)     The Company has an authorized capitalization as set forth in the
Registration Statement, the General Disclosure Package and the Prospectus, and
all of the issued shares of capital stock of the Company have been duly
authorized and validly issued, are fully paid and non-assessable, have been
issued in all material respects in compliance with United States federal and
state securities laws, and conform to the description thereof contained in the
Registration Statement, the General Disclosure Package and the Prospectus. All
of the Company’s options, warrants and other rights to purchase or exchange any
securities for shares of the Company’s capital stock have been duly authorized
and validly issued and were issued in all material respects in compliance with
United States federal and state securities laws. None of the outstanding shares
of Common Stock was issued in violation of any preemptive rights, rights of
first refusal or other similar rights to subscribe for or purchase securities of
the Company. There are no authorized or outstanding shares of capital stock,
options, warrants, preemptive rights, rights of first refusal or other rights to
purchase, or equity or debt securities convertible into or exchangeable or
exercisable for, any capital stock of the Company or any Subsidiary other than
those described above or accurately described in the Registration Statement, the
General Disclosure Package and the Prospectus. The description of the Company’s
stock option, stock bonus and other stock plans or arrangements, and the options
or other rights granted thereunder, as described in the Registration Statement,
the General Disclosure Package and the Prospectus, accurately and fairly present
the information required to be shown with respect to such plans, arrangements,
options and rights.

 

(l)     All the outstanding shares of capital stock of each Subsidiary have been
duly authorized and validly issued, are fully paid and non-assessable and,
except to the extent set forth in the Registration Statement, the General
Disclosure Package and the Prospectus, are owned by the Company directly or
indirectly through one or more wholly-owned Subsidiaries, free and clear of any
claim, lien, encumbrance, security interest, restriction upon voting or transfer
or any other claim of any third party.

 

 
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(m)     The execution, delivery and performance of this Agreement, the
Securities Purchase Agreement by the Company, the issue and sale of the Shares
by the Company and the consummation of the transactions contemplated hereby and
thereby will not (with or without notice or lapse of time or both): (i) conflict
with or result in a breach or violation of any of the terms or provisions of,
constitute a default or Debt Repayment Triggering Event (as defined below)
under, or give rise to the creation or imposition of any lien,
encumbrance, security interest, claim or charge upon any property or assets of
the Company or any Subsidiary pursuant to, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any Subsidiary is a party or by which the Company or any Subsidiary is bound or
to which any of the property or assets of the Company or any Subsidiary is
subject (each, a “Contract” and, collectively, the “Contracts”); (ii) result in
any violation of the provisions of the certificate of incorporation or by-laws
(or analogous governing instruments, as applicable) of the Company or any
Subsidiary; or, (iii) to the Company’s knowledge, result in the violation of any
law, statute, rule, regulation, judgment, order or decree of any court or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or any Subsidiary or any of their properties or assets, except with
respect to clauses (i) and (iii), any breaches, violations or defaults which,
singularly or in the aggregate, would not have a Material Adverse Effect. A
“Debt Repayment Triggering Event” means any event or condition that gives, or
with the giving of notice or lapse of time would give the holder of any note,
debenture or other evidence of indebtedness (or any Person acting on such
holder’s behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any Subsidiary.

 

(n)     Except for the registration of the securities offered in the Offering
under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange Act and
applicable state or foreign securities laws and the Financial Industry
Regulatory Authority, Inc. (“FINRA”) in connection with the offering and sale of
the Shares by the Company, no consent, approval, authorization or order of, or
filing, qualification or registration with, any court or governmental agency or
body, foreign or domestic, which has not been made, obtained or taken and is not
in full force and effect, is required for the execution, delivery and
performance of this Agreement and the Securities Purchase Agreement by the
Company, the offer or sale of the Shares by the Company or the consummation of
the transactions contemplated hereby or thereby.

 

(o)     Armanino LLP, which firm has certified certain financial statements and
related schedules included or incorporated by reference in the Registration
Statement, the General Disclosure Package and the Prospectus, is, to the
knowledge of the Company, an independent registered public accounting firm as
required by the Securities Act and the Rules and Regulations. Except as
pre-approved in accordance with the requirements set forth in Section 10A of the
Exchange Act, Armanino LLP has not been engaged by the Company to perform any
“prohibited activities” (as defined in Section 10A of the Exchange Act).

 

 
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(p)     The consolidated financial statements, together with the related notes
and schedules, included or incorporated by reference in the Registration
Statement, the General Disclosure Package and the Prospectus fairly present in
all material respects the financial position and the results of operations and
changes in financial position of the Company and its Subsidiaries and other
consolidated entities at the respective dates or for the respective periods
therein specified. Such statements and related notes and schedules have been
prepared in accordance with the generally accepted accounting principles in the
United States (“GAAP”) applied on a consistent basis throughout the periods
involved except as may be set forth in the related notes included or
incorporated by reference in the General Disclosure Package. The financial
statements, together with the related notes and schedules, included or
incorporated by reference in the Registration Statement, the General Disclosure
Package and the Prospectus comply in all material respects with the Securities
Act, the Exchange Act, and the Rules and Regulations and the rules and
regulations under the Exchange Act. No other financial statements or
supporting schedules or exhibits are required by the Securities Act or the Rules
and Regulations to be described, or included or incorporated by reference in the
Registration Statement, the General Disclosure Package or the Prospectus. There
is no pro forma or as adjusted financial information which is required to be
included in the Registration Statement, the General Disclosure Package, or the
Prospectus or a document incorporated by reference therein in accordance with
the Securities Act and the Rules and Regulations which has not been included or
incorporated as so required. The pro forma and pro forma as adjusted financial
information and the related notes included or incorporated by reference in the
Registration Statement, the General Disclosure Package and the Prospectus, if
any, have been properly compiled and prepared in accordance with the applicable
requirements of the Securities Act and the Rules and Regulations and present
fairly the information shown therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and circumstances referred to
therein.

 

(q)     Neither the Company nor any Subsidiary has sustained, since the date of
the latest audited financial statements included or incorporated by reference in
the Registration Statement, the General Disclosure Package and the Prospectus,
any material loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Registration Statement, the General Disclosure
Package and the Prospectus; and, since such date, there has not been any
change in the capital stock or long-term debt of the Company or any Subsidiary
or any material adverse changes, or any development involving a prospective
material adverse change, in or affecting the business, assets, management,
financial position, prospects, stockholders’ equity or results of operations of
the Company or any Subsidiary, otherwise than as set forth or contemplated in
the Registration Statement, the General Disclosure Package and the Prospectus.

 

(r)     Except as set forth in the Registration Statement, the General
Disclosure Package and the Prospectus, there is no legal or governmental action,
suit, claim or proceeding pending to which the Company or any Subsidiary is a
party or of which any property or assets of the Company or any Subsidiary is the
subject which is required to be described in the Registration Statement, the
General Disclosure Package or the Prospectus or a document incorporated by
reference therein and is not described therein, or which, singularly or in the
aggregate, if determined adversely to the Company or any Subsidiary could have a
Material Adverse Effect or prevent the consummation of the transactions
contemplated hereby; and to the Company’s knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.

 

 
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(s)     Unless otherwise waived in connection with the Offering, neither the
Company nor any Subsidiary is in (i) violation of its certificate of
incorporation or by-laws (or analogous governing instrument, as applicable),
(ii) default in any respect in the due performance or observance of any term,
covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or by
which it is bound or to which any of its property or assets is subject or (iii)
to the Company’s knowledge, violation of any law, ordinance, governmental rule,
regulation or court order, decree or judgment to which it or its property or
assets is subject except, in the case of clauses (ii) and (iii) of this
paragraph, for any violations or defaults which, singularly or in the aggregate,
would not have a Material Adverse Effect.

 

(t)     The Company and each Subsidiary possesses all licenses, certificates,
authorizations and permits issued by, and have made all declarations and filings
with, the appropriate local, state, federal or foreign regulatory agencies or
bodies which are necessary or desirable for the ownership of its properties or
the conduct of their respective businesses as described in the Registration
Statement, the General Disclosure Package and the Prospectus (collectively, the
“Governmental Permits”) except where any failures to possess or make the same,
singularly or in the aggregate, would not have a Material Adverse Effect. The
Company and each Subsidiary is in compliance with all such Governmental Permits,
and all such Governmental Permits are valid and in full force and effect, except
where any non-compliance or the validity or failure to be in full force and
effect would not, singularly or in the aggregate, have a Material Adverse
Effect. To the Company’s knowledge, all such Governmental Permits are free and
clear of any restriction or condition that are in addition to, or materially
different from those normally applicable to similar licenses, certificates,
authorizations and permits. Neither the Company nor any Subsidiary has received
written notification of any revocation or modification (or proceedings related
thereto) of any such Governmental Permit and, to the Company’s knowledge, there
is no reason to believe that any such Governmental Permit will not be renewed.

 

(u)     Neither the Company nor any Subsidiary is or, after giving effect to the
offering of the Shares and the application of the proceeds thereof as described
in the Registration Statement, the General Disclosure Package and the
Prospectus, will become an “investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations of the
Commission thereunder.

 

(v)     Neither the Company nor any Subsidiary, nor to the Company’s knowledge,
any of the Company’s and any Subsidiary’s officers, directors or Affiliates has
taken or will take, directly or indirectly, any action designed or intended to
stabilize or manipulate the price of any security of the Company, or
which caused or resulted in, or which might in the future reasonably be expected
to cause or result in, stabilization or manipulation of the price of any
security of the Company.

 

 
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(w)     The Company and each Subsidiary owns or possesses the right to use all
patents, trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, software,
databases, know-how, Internet domain names, trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems
or procedures, and other intellectual property (collectively, “Intellectual
Property”) necessary to carry on their respective businesses as currently
conducted, and as proposed to be conducted and described in the Registration
Statement, the General Disclosure Package and the Prospectus, and the Company is
not aware of any claim to the contrary or any challenge by any other Person to
the rights of the Company or any Subsidiary with respect to the foregoing except
for those that could not have a Material Adverse Effect. To the Company’s
knowledge, the Company’s and each Subsidiary’s business as now conducted and as
proposed to be conducted does not and will not infringe or conflict with any
valid patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses or other Intellectual Property or franchise right of any
Person, except for any such acts that would not have a Material Adverse Effect.
No claim has been made against the Company or any Subsidiary alleging the
infringement by the Company or any Subsidiary of any patent, trademark, service
mark, trade name, copyright, trade secret, license in or other intellectual
property right or franchise right of any Person. The Company and each Subsidiary
has taken all reasonable steps to protect, maintain and safeguard its
rights in all Intellectual Property, including the execution of appropriate
nondisclosure and confidentiality agreements. The consummation of the
transactions contemplated by this Agreement will not result in the
loss or impairment of or payment of any additional amounts with respect to, nor
require the consent of any other Person in respect of, each of the Company’s and
each Subsidiary’s right to own, use, or hold for use any of the Intellectual
Property as owned, used or held for use in the conduct of its business as
currently conducted. The Company and each Subsidiary has at all times complied
in all material respects with all applicable laws relating to privacy, data
protection, and the collection and use of personal information collected, used,
or held for use by the Company or any Subsidiary in the conduct of the Company’s
or any Subsidiary’s business. No claims have been asserted or threatened against
the Company or any Subsidiary alleging a violation of any Person’s privacy or
personal information or data rights and the consummation of the transactions
contemplated hereby will not breach or otherwise cause any violation of any law
related to privacy, data protection, or the collection and use of personal
information collected, used, or held for use by the Company or any Subsidiary
in the conduct of the Company’s or any Subsidiary’s business. The Company and
each Subsidiary takes reasonable measures to ensure that such information is
protected against unauthorized access, use, modification, or other misuse.

 

(x)     The Company and each Subsidiary has good and marketable title in fee
simple to, or has valid rights to lease or otherwise use, all items of real or
personal property which are material to the business of the Company and any
Subsidiary, free and clear of all liens, encumbrances, security interests,
claims and defects that do not, singularly or in the aggregate, materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company or any Subsidiary; and all
of the leases and subleases material to the business of the Company or any
Subsidiary, and under which the Company or any Subsidiary holds properties
described in the Registration Statement, the General Disclosure Package and the
Prospectus, are in full force and effect, and neither the Company nor any
Subsidiary has received any notice of any material claim of any sort that has
been asserted by anyone adverse to the rights of the Company or any Subsidiary
under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or any Subsidiary to the continued
possession of the leased or subleased premises under any such lease or sublease.

 

(y)     No organized labor disturbance by the employees of the Company or any
Subsidiary exists or, to the Company’s knowledge, is imminent, and the Company
has no actual knowledge of any existing or imminent labor disturbance by the
employees of any of its or any Subsidiary’s principal suppliers, manufacturers,
customers or contractors, that could reasonably be expected, singularly or in
the aggregate, to have a Material Adverse Effect. The Company is not aware that
any key employee or significant group of employees of the Company or any
Subsidiary plans to terminate employment with the Company or any Subsidiary.

 

 
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(z)     No “prohibited transaction” (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder (“ERISA”), or Section 4975 of the
Internal Revenue Code of 1986, as amended from time to time (the “Code”)) or
“accumulated funding deficiency” (as defined in Section 302 of ERISA) or any of
the events set forth in Section 4043(b) of ERISA (other than events with respect
to which the thirty (30)-day notice requirement under Section 4043 of ERISA has
been waived) has occurred or could reasonably be expected to occur with respect
to any employee benefit plan of the Company or any Subsidiary which could,
singularly or in the aggregate, have a Material Adverse Effect. Each employee
benefit plan of the Company or any Subsidiary is in compliance in all material
respects with applicable law, including ERISA and the Code.  The Company and
each Subsidiary has not incurred and could not reasonably be expected to incur
liability under Title IV of ERISA with respect to the termination of, or
withdrawal from, any pension plan (as defined in ERISA). Each pension plan for
which the Company or any Subsidiary would have any liability that is intended to
be qualified under Section 401(a) of the Code is so qualified, and nothing has
occurred, whether by action or by failure to act, which could, singularly or in
the aggregate, cause the loss of such qualification to the extent such loss
would have a Material Adverse Effect.

 

(aa)     The Company and each Subsidiary is in compliance with all foreign,
federal, state and local rules, laws and regulations relating to the use,
treatment, storage and disposal of hazardous or toxic substances or waste and
protection of health and safety or the environment which are applicable to its
businesses (“Environmental Laws”), except where the failure to comply would not,
singularly or in the aggregate, have a Material Adverse Effect. There has been
no storage, generation, transportation, handling, treatment, disposal,
discharge, emission, or other release of any kind of toxic or other wastes or
other hazardous substances regulated by Environmental Laws (“Hazardous
Substances”) by or caused by the Company or any Subsidiary (or, to the Company’s
knowledge and without independent investigation, any other entity for whose acts
or omissions the Company or any Subsidiary is or may otherwise be liable)
upon any of the property now or previously owned or leased by the Company or any
Subsidiary, or upon any other property, in violation of any law, statute,
ordinance, rule, regulation, order, judgment, decree or permit or which would,
under any law, statute, ordinance, rule (including rule of common law),
regulation, order, judgment, decree or permit, give rise to any liability,
except for any violation or liability which would not have, singularly or in the
aggregate with all such violations and liabilities, a Material Adverse Effect;
to the Company’s actual knowledge and without independent investigation, there
has been no disposal, discharge, emission or other release onto property now
leased by the Company or any Subsidiary or into the environment surrounding
such property of any Hazardous Substance, except for any such disposal,
discharge, emission, or other release in violation of Environmental Laws which
would not have, singularly or in the aggregate with all such discharges and
other releases, a Material Adverse Effect.

 

 
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(bb)     The Company and each Subsidiary (i) has timely filed (or filed an
extension to file) all necessary federal, state, local and foreign tax returns,
and all such filed returns were true, complete and correct, (ii) has paid all
federal, state, local and foreign taxes, assessments, governmental or other
charges due and payable for which it is liable, including, without limitation,
all sales and use taxes and all taxes which the Company or any Subsidiary is
obligated to withhold from amounts owing to employees, creditors and third
parties, and (iii) does not have any tax deficiency or claims outstanding or
assessed or, to its knowledge, proposed against any of them, except those, in
each of the cases described in clauses (i), (ii) and (iii) of this Paragraph
3(bb), that would not, singularly or in the aggregate, have a Material Adverse
Effect. The Company and each Subsidiary has not engaged in any transaction which
is a corporate tax shelter or which could be characterized as such by the
Internal Revenue Service or any other taxing authority.

 

(cc)     The Company and each Subsidiary carries, or is covered by, insurance
provided by recognized, financially sound and reputable institutions with
policies in such amounts and covering such risks as is adequate for the conduct
of their respective businesses and the value of its properties and as is
customary for companies engaged in similar businesses in similar industries. The
Company has no reason to believe that it or any Subsidiary will not be able (i)
to renew its existing insurance coverage as and when such policies expire or
(ii) to obtain comparable coverage from similar institutions as may be necessary
or appropriate to conduct their respective businesses as now conducted and at a
cost that would not result in a Material Adverse Effect. Neither the Company nor
any Subsidiary has been denied any insurance coverage that it has sought or for
which it has applied.

 

(dd)     The Company and each Subsidiary maintains a system of internal
accounting and other controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Except as described in the Registration Statement, the General
Disclosure Package and the Prospectus, since the end of the Company’s most
recent audited fiscal year, there as been (A) no material weakness in the
Company’s internal control over financial reporting (whether or not remediated)
and (B) no change in the Company’s internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.

 

(ee)     The minute books of the Company and each Subsidiary have been made
available to the Placement Agent and counsel for the Placement Agent, and such
books (i) contain a complete summary in all material respects of all meetings
and actions of the board of directors (including each board committee) and
stockholders of the Company and each Subsidiary (or analogous governing bodies
and interest holders, as applicable), since January 1, 2015 through the date of
the latest meeting and action, and (ii) accurately, in all material respects,
reflect all transactions referred to in such minutes.

 

 
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(ff)     There is no franchise, lease, contract, agreement or document required
by the Securities Act or by the Rules and Regulations to be described in the
Registration Statement, the General Disclosure Package and the Prospectus or a
document incorporated by reference therein or to be filed as an exhibit to the
Registration Statement or a document incorporated by reference therein which is
not described or filed therein as required, except for the failure to include
such documents that would not reasonably be expected to, singularly or in the
aggregate, have a Material Adverse Effect; and all descriptions of any such
franchises, leases, contracts, agreements or documents contained in the
Registration Statement, the General Disclosure Package and the Prospectus or in
a document incorporated by reference therein are accurate and complete
descriptions of such documents in all material respects. Other than as described
in the Registration Statement, the General Disclosure Package and the
Prospectus, no such franchise, lease, contract or agreement has been suspended
or terminated for convenience or default by the Company or any Subsidiary or any
of the other parties thereto, and neither the Company nor any Subsidiary has
received notice nor does the Company have any other knowledge of any such
pending or threatened suspension or termination, except for such pending or
threatened suspensions or terminations that would not, reasonably be expected
to, singularly or in the aggregate, have a Material Adverse Effect.

 

(gg)     No relationship, direct or indirect, exists between or among the
Company and any Subsidiary on the one hand, and the directors, officers,
stockholders (or analogous interest holders), customers or suppliers of the
Company or any Subsidiary or any of their Affiliates on the other hand, which is
required to be described in the Registration Statement, the General Disclosure
Package and the Prospectus or a document incorporated by reference therein and
which is not so described.

 

(hh)     No Person or entity has the right to require registration of shares of
Common Stock or other securities of the Company or any Subsidiary because of the
filing or effectiveness of the Registration Statement or otherwise, except for
persons and entities who have expressly waived such right in writing or who have
been given timely and proper written notice and have failed to exercise such
right within the time or times required under the terms and conditions of such
right. Except (i) as described in the Registration Statement, the General
Disclosure Package and the Prospectus and (ii) as waived in writing in
connection with this Offering, there are no persons with registration rights or
similar rights to have any securities registered by the Company or any
Subsidiary under the Securities Act.

 

(ii)     Neither the Company nor any Subsidiary owns any “margin securities” as
that term is defined in Regulation U of the Board of Governors of the Federal
Reserve System (the “Federal Reserve Board”), and none of the proceeds of the
sale of the Shares will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the Shares to
be considered a “purpose credit” within the meanings of Regulation T, U or X of
the Federal Reserve Board.

 

 
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(jj)     Except for this Agreement, neither the Company nor any Subsidiary is a
party to any contract, agreement or understanding with any Person that would
give rise to a valid claim against the Company or the Placement Agent for a
brokerage commission, finder’s fee or like payment in connection with the
offering and sale of the Shares or any transaction contemplated by this
Agreement, the Registration Statement, the General Disclosure Package or the
Prospectus.

 

(kk)     No forward-looking statement (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) contained in either the
Registration Statement, the General Disclosure Package or the Prospectus has
been made or reaffirmed without a reasonable basis or has been disclosed other
than in good faith.

 

(ll)     The Common Stock is registered pursuant to Section 12(b) of the
Exchange Act, and the Company has taken no action designed to, or which to its
knowledge is likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such registration.
The Company has not, in the 12 months preceding the date hereof, received notice
from the NASDAQ Capital Market to the effect that the Company is not in
compliance with any NASDAQ Marketplace Rule or any other listing or maintenance
requirements of the NASDAQ Capital Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements. The Common Stock is
currently eligible for electronic transfer through the Depository Trust Company
or another established clearing corporation and the Company is current in
payment of the fees to the Depository Trust Company (or such other established
clearing corporation) in connection with such electronic transfer.

 

(mm)     The Company and each of the Subsidiaries are in compliance in all
material respects with any and all applicable requirements of the Sarbanes-Oxley
Act of 2002 that are effective as of the date hereof, and any and all applicable
rules and regulations promulgated by the Commission thereunder that are
effective as of the date hereof and as of the Closing Date.

 

(nn)     Neither the Company nor any Subsidiary, nor to the knowledge of the
Company or any Subsidiary, any agent or other Person acting on behalf of the
Company or any Subsidiary, has (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related
to foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company or any Subsidiary (or made
by any Person acting on its behalf of which the Company is aware) which is in
violation of law, or (iv) violated in any material respect any provision of the
Foreign Corrupt Practices Act of 1977, as amended.

 

(oo)     There are no transactions, arrangements or other relationships between
and/or among the Company or any Subsidiary, any of their Affiliates (as such
term is defined in Rule 405 of the Securities Act) and any unconsolidated
entity, including, but not limited to, any structured finance, special purpose
or limited purpose entity that could reasonably be expected to materially affect
the Company’s or any Subsidiary’s liquidity or the availability of or
requirements for their capital resources required to be described in the
Registration Statement, the General Disclosure Package and the Prospectus or a
document incorporated by reference therein which have not been described as
required.

 

 
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(pp)     There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees or
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of their respective family members, except as
disclosed in the Registration Statement, the General Disclosure Package and the
Prospectus.

 

(qq)     The statistical and market related data included in the Registration
Statement, the General Disclosure Package and the Prospectus are based on or
derived from sources that the Company believes to be reliable and accurate, and
such data agree with the sources from which they are derived.

 

(rr)     The operations of the Company and each Subsidiary are and have been
conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, applicable money laundering statutes and applicable rules
and regulations thereunder (collectively, the “Money Laundering Laws”), and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any Subsidiary with
respect to the Money Laundering Laws is pending, or to the knowledge of the
Company, threatened.

 

(ss)     Neither the Company nor any Subsidiary nor, to the knowledge of the
Company, any director, officer, agent, employee or Affiliate of the Company or
any Subsidiary 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 for the purpose of financing the
activities of any Person currently subject to any U.S. sanctions administered by
OFAC.

 

(tt)     Neither the Company, nor any Subsidiary, nor, to the Company’s
knowledge, any of their Affiliates (within the meaning of FINRA Rule
5121(b)(1)(a)) directly or indirectly controls, is controlled by, or is under
common control with, or is an associated Person (within the meaning of Article
I, Section l(ee) of the By-laws of FINRA) of, any member firm of FINRA.

 

(uu)     No approval of the stockholders of the Company under the rules and
regulations of the NASDAQ Capital Market (including NASDAQ Marketplace Rule
5635) is required for the Company to issue and sell the Shares.

 

(vv)     Any certificate signed by or on behalf of the Company and delivered to
the Placement Agent or to counsel for the Placement Agent shall be deemed to be
a representation and warranty by the Company to the Placement Agent as to the
matters covered thereby.

 

 
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4.     THE CLOSING. The time and date of closing, payment of the purchase price
for and delivery of the Shares, and delivery of the documents required to be
delivered to the Placement Agent pursuant to Sections 5 and 7 hereof shall be at
10:00 A.M., Minneapolis, Minnesota time, on June 26, 2017 (the “Closing Date”)
at the offices of Fredrikson & Byron, P.A., 200 South Sixth Street, Suite 4000,
Minneapolis, Minnesota 55402 (or at such other time and place as shall be agreed
upon by the Placement Agent and the Company). Unless otherwise specified in the
Securities Purchase Agreement, the Shares will be settled through the facilities
of The Depository Trust Company’s DWAC system. Subject to the terms hereof,
payment of the purchase price for the Shares shall be made to the Company in the
manner set forth below by Federal Funds wire transfer, against delivery of the
Shares to such persons and shall be registered in the name or names and shall be
in such denominations as the Placement Agent may request at least one business
day before the Closing Date. Payment of the purchase price for the Shares to be
purchased by the Purchasers shall be made by such Purchasers directly to the
Company.

 

5.     COVENANTS.

 

5.1     FURTHER AGREEMENTS OF THE COMPANY. The Company agrees with the Placement
Agent:

 

(a)     To prepare the Rule 462(b) Registration Statement, if necessary, in a
form approved by the Placement Agent and file such Rule 462(b) Registration
Statement with the Commission on the date hereof; to prepare the Prospectus in a
form approved by the Placement Agent containing information previously omitted
at the time of effectiveness of the Registration Statement in reliance on rules
430A, 430B and 430C and to file such Prospectus pursuant to Rule 424(b) under
the Rules and Regulations not later than the second business day following the
execution and delivery of this Agreement or, if applicable, such earlier time as
may be required by Rule 430A under the Rules and Regulations; to notify the
Placement Agent immediately of the Company’s intention to file or prepare any
supplement or amendment to the Registration Statement or to the Prospectus and
to make no amendment or supplement to the Registration Statement, the General
Disclosure Package or to the Prospectus to which the Placement Agent shall
reasonably object by notice to the Company after a reasonable period to review;
to advise the Placement Agent, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the General Disclosure Package or the Prospectus
or any amended Prospectus has been filed and to furnish the Placement Agent
copies thereof; to file promptly all material required to be filed by the
Company with the Commission pursuant to Rule 433(d) or 163(b)(2), as the case
may be; to file promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
the Prospectus and for so long as the delivery of a prospectus (or in lieu
thereof, the notice referred to in Rule 173(a) under the Rules and Regulations)
is required in connection with the offering or sale of the Securities; to advise
the Placement Agent, promptly after it receives notice thereof, of the issuance
by the Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the
Prospectus, of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement, the General
Disclosure Package or the Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or suspending
the use of the Base Prospectus, any Preliminary Prospectus, any Issuer Free
Writing Prospectus or the Prospectus or suspending any such qualification, and
promptly to use its reasonable efforts to obtain the withdrawal of such order.

 

 
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(b)     The Company represents and agrees that, unless it obtains the prior
consent of the Placement Agent, it has not made and will not, make any offer
relating to the Shares that would constitute a “free writing prospectus” as
defined in Rule 405 under the Rules and Regulations unless the prior written
consent of the Placement Agent has been received (each, a “Permitted Free
Writing Prospectus”); provided, that the prior written consent of the Placement
Agent shall be deemed to have been given in respect of the Issuer Free Writing
Prospectus(es) identified on Schedule A hereto. The Company represents that it
has treated and agrees that it will treat any Permitted Free Writing Prospectus
as an Issuer Free Writing Prospectus, comply with the requirements of Rules 164
and 433 under the Rules and Regulations applicable to any Issuer Free Writing
Prospectus, including the requirements relating to timely filing with the
Commission, legending and record keeping and will not take any action that would
result in the Placement Agent or the Company being required to file with the
Commission pursuant to Rule 433(d) under the Rules and Regulations a free
writing prospectus prepared by or on behalf of the Placement Agent that the
Placement Agent otherwise would not have been required to file thereunder.

 

(c)     If at any time when a Prospectus relating to the Shares is required to
be delivered under the Securities Act, any event occurs or condition exists as a
result of which the Prospectus, as then amended or supplemented, would include
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, or the Registration Statement, as
then amended or supplemented, would include any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein
not misleading, or if for any other reason it is necessary at any time to amend
or supplement the Registration Statement or the Prospectus to comply with the
Securities Act or the Exchange Act, the Company will promptly notify the
Placement Agent, and upon the Placement Agent’s request, the Company will
promptly prepare and file with the Commission, at the Company’s expense, an
amendment to the Registration Statement or an amendment or supplement to the
Prospectus that corrects such statement or omission or effects such compliance
and will deliver to the Placement Agent, without charge, such number of copies
thereof as the Placement Agent may reasonably request. The Company consents to
the use of the Prospectus or any amendment or supplement thereto by the
Placement Agent.

 

(d)     If the General Disclosure Package is being used to solicit offers to buy
the Shares at a time when the Prospectus is not yet available to prospective
purchasers and any event shall occur as a result of which, in the judgment of
the Company or in the reasonable opinion of the Placement Agent, it becomes
necessary to amend or supplement the General Disclosure Package in order to make
the statements therein, in the light of the circumstances then prevailing, not
misleading, or to make the statements therein not conflict with the information
contained or incorporated by reference in the Registration Statement then on
file and not superseded or modified, or if it is necessary at any time to amend
or supplement the General Disclosure Package to comply with any law, the Company
promptly will either (i) prepare, file with the Commission (if required) and
furnish to the Placement Agent and any dealers an appropriate amendment or
supplement to the General Disclosure Package or (ii) prepare and file with the
Commission an appropriate filing under the Exchange Act which shall be
incorporated by reference in the General Disclosure Package so that the General
Disclosure Package as so amended or supplemented will not, in the light of the
circumstances then prevailing, be misleading or conflict with the Registration
Statement then on file, or so that the General Disclosure Package will comply
with law.

 

 
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(e)     If at any time following issuance of an Issuer Free Writing Prospectus
there occurred or occurs an event or development as a result of which such
Issuer Free Writing Prospectus conflicted or will conflict with the information
contained in the Registration Statement, the Base Prospectus, any Pricing
Prospectus or the Prospectus, including any document incorporated by reference
therein and any prospectus supplement deemed to be a part thereof and not
superseded or modified or included or would include an untrue statement of a
material fact or omitted or would omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances prevailing at the subsequent time, not misleading,
the Company has promptly notified or will promptly notify the Placement Agent so
that any use of the Issuer Free Writing Prospectus may cease until it is amended
or supplemented and has promptly amended or will promptly amend or supplement,
at its own expense, such Issuer Free Writing Prospectus to eliminate or
correct such conflict, untrue statement or omission. The foregoing sentence does
not apply to statements in or omissions from any Issuer Free Writing Prospectus
in reliance upon, and in conformity with, written information furnished to the
Company by the Placement Agent specifically for inclusion therein, which
information the parties hereto agree is limited to the Placement Agent’s
Information (as defined in Section 17).

 

(f)     To the extent not available on the Commission’s EDGAR system or any
successor system, to deliver promptly to the Placement Agent in Minneapolis,
Minnesota 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 (in each case excluding exhibits), (ii) the
Base Prospectus, (iii) each Preliminary Prospectus, (iv) any Issuer Free Writing
Prospectus, (v) the Prospectus (the delivery of the documents referred to in
clauses (i), (ii), (iii), (iv) and (v) of this paragraph (f) to be made not
later than 9:00 A.M., New York time, on the business day following the execution
and delivery of this Agreement), (vi) conformed copies of any amendment to the
Registration Statement (excluding exhibits), (vii) any amendment or supplement
to the General Disclosure Package or the Prospectus (the delivery of the
documents referred to in clauses (vi) and (vii) of this paragraph (f) to be made
not later than 9:00 A.M., New York City time, on the business day following the
date of such amendment or supplement) and (viii) any document incorporated by
reference in the Registration Statement, the General Disclosure Package or the
Prospectus (excluding exhibits thereto) (the delivery of the documents referred
to in clause (viii) of this paragraph (f) to be made not later than 9:00 A.M.,
New York City time, on the business day following the date of such document).

 

 
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(g)     To make generally available to its stockholders as soon as practicable,
an earnings statement of the Company and any Subsidiary (which need not be
audited) complying with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Company, Rule 158); and to furnish
to its stockholders as soon as practicable after the end of each fiscal year an
annual report (including a balance sheet and statements of income, stockholders’
equity and cash flows of the Company and its consolidated subsidiaries certified
by independent public accountants) and as soon as possible after each of the
first three fiscal quarters of each fiscal year (beginning with the first fiscal
quarter after the effective date of such Registration Statement), consolidated
summary financial information of the Company and its subsidiaries for such
quarter in reasonable detail.

 

(h)     To take promptly from time to time such actions as the Placement Agent
may reasonably request to qualify the Shares for offering and sale under the
securities or Blue Sky laws of such jurisdictions (domestic or foreign) as the
Placement Agent may designate and to continue such qualifications in effect, and
to comply with such laws, for so long as required to permit the offer and sale
of the Shares in such jurisdictions; provided that the Company shall not be
obligated to qualify as a foreign corporation in any jurisdiction in which it
is not so qualified or to file a general consent to service of process in any
jurisdiction.

 

(i)     That the Company will not, for a period of ninety (90) days from the
date of the Prospectus (the “Lock-Up Period”), without the prior written consent
of the Placement Agent, directly or indirectly offer, sell, assign, transfer,
pledge, contract to sell, or otherwise dispose of, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
at an effective price per share less than the Public Offering Price, other than:
(i) the Company’s sale of the Shares hereunder; (ii) the issuance of restricted
Common Stock units, options to acquire Common Stock or other equity awards
pursuant to the Company’s employee benefit plans, qualified stock option plans
or other employee compensation plans as such plans are in existence on the date
hereof and described in the Prospectus; (iii) the purchase or sale of the
Company’s securities pursuant to a plan, contract or instruction that satisfies
all of the requirements of Rule 10b5-1(c)(1)(i)(B); (iv) transfers, sales or
other dispositions to the Company or the withholding by the Company of shares of
Common Stock to satisfy tax obligations resulting from the exercise, vesting or
settlement of any stock options, restricted stock or restricted stock units; and
(v) the issuance of Common Stock pursuant to the valid exercises or conversions
of options, warrants, convertible indebtedness or rights outstanding on the date
hereof. The Company will cause each executive officer, director and significant
stockholder listed in Schedule B to furnish to the Placement Agent, on or prior
to the date of this Agreement, a letter, substantially in the form of Exhibit B
hereto, pursuant to which each such Person shall agree, among other things, not
to directly or indirectly offer, sell, assign, transfer, pledge, contract to
sell, or otherwise dispose of, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock, not
to engage in any swap or other agreement or arrangement that transfers, in whole
or in part, directly or indirectly, the economic risk of ownership of Common
Stock or any such securities and not to engage in any short selling of any
Common Stock or any such securities, during the Lock-Up Period, without the
prior written consent of the Placement Agent.  The Company also agrees that,
without the prior written consent of the Placement Agent, during such period,
the Company will not file any registration statement, preliminary prospectus or
prospectus, or any amendment or supplement thereto, under the Securities Act for
any such transaction or which registers, or offers for sale, Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock,
except for a registration statement on Form S-8 relating to employee benefit
plans and any amendments to registration statements that have been previously
filed by the Company and declared effective.

 

 
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(j)     To supply the Placement Agent with copies of 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 or the Registration
Statement, any Preliminary Prospectus or the Prospectus, or any amendment or
supplement thereto or document incorporated by reference therein.

 

(k)     Prior to the Closing Date, not to issue any press release or other
communication directly or indirectly or hold any press conference with respect
to the Company, its condition, financial or otherwise, or earnings, business
affairs or business prospects (except for routine oral marketing communications
in the ordinary course of business and consistent with the past practices of the
Company and of which the Placement Agent is notified), without the prior written
consent of the Placement Agent, unless in the judgment of the Company and its
counsel, and after notification to the Placement Agent, such press release or
communication is required by law.

 

(l)     Until the Placement Agent shall have notified the Company of the
completion of the offering of the Shares, that the Company will not, and will
cause its affiliated purchasers (as defined in Regulation M under the Exchange
Act) not to, either alone or with one or more other persons, bid for or
purchase, for any account in which it or any of its affiliated purchasers has a
beneficial interest, any Shares, or attempt to induce any Person to purchase any
Shares; and not to, and to cause its affiliated purchasers not to, make bids
or purchase for the purpose of creating actual, or apparent, active trading in
or of raising the price of the Shares.

 

(m)     Not to take any action prior to the Closing Date which would require the
Prospectus to be amended or supplemented pursuant to Section 5.

 

(n)     Prior to the Closing Date, comply in all material respects with all
applicable provisions of the Sarbanes-Oxley Act in effect from time to time.

 

(o)     To apply the net proceeds from the sale of the Shares as set forth in
the Registration Statement, the General Disclosure Package and the Prospectus
under the heading “Use of Proceeds.”

 

(p)     To use its reasonable efforts to do and perform all things required to
be done or performed under this Agreement by the Company prior to the Closing
Date.

 

5.2     FURTHER AGREEMENTS OF THE PLACEMENT AGENT. The Placement Agent covenants
and agrees with the Company that, unless it obtains the prior written consent of
the Company, it has not made and will not make any offer relating to the Shares
that would constitute a free writing prospectus required to be filed with the
Commission; provided that the prior written consent of the Company shall be
deemed to have been given in respect of the free writing prospectus(es) included
in Schedule A. Any such free writing prospectus consented to by the Company is
hereinafter referred to as an “Agent Permitted Free Writing Prospectus.” The
Placement Agent represents that it has treated or agrees that it will treat each
Agent Permitted Free Writing Prospectus as a free writing prospectus and has
complied and will comply with the requirements of Rule 164 and Rule 433
applicable to any Agent Permitted Free Writing Prospectus.

 

 
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6.     PAYMENT OF EXPENSES. In addition to the Placement Fee, the Company,
whether or not the Offering is consummated, will reimburse the Placement Agent
for all reasonable out-of-pocket expenses incurred by the Placement Agent in
connection with the performance of its services hereunder, including reasonable
fees and disbursements of the Placement Agent’s legal counsel; provided that, in
any event, reimbursement of expenses pursuant to this Section 6 will not exceed
$75,000 in the aggregate without the Company’s prior written approval. At least
one day prior to the Closing Date, the Placement Agent shall submit to the
Company its bona fide estimate of the amount of expenses for which it is
entitled to reimbursement pursuant hereto, and the Company agrees to reimburse
such amount to the Placement Agent at the Closing. As soon as reasonably
practicable after the Closing Date, the Placement Agent shall submit to the
Company its expense reimbursement invoice and the Company or the Placement
Agent, as applicable, shall make any necessary reconciling payment(s) within
thirty (30) days of receipt of such invoices.

 

7.     CONDITIONS TO THE OBLIGATIONS OF THE PLACEMENT AGENT AND THE PURCHASERS,
AND THE SALE OF THE SHARES. The respective obligations of the Placement Agent
hereunder and the Purchasers under the Securities Purchase Agreement, and the
Closing of the sale of the Shares, are subject to the accuracy, when made and as
of the Applicable Time and on the Closing Date, of the representations and
warranties of the Company contained herein, to the accuracy of the statements of
the Company made in any certificates pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder, and to each of the
following additional terms and conditions:

 

(a)     No stop order suspending the effectiveness of the Registration Statement
or any part thereof, preventing or suspending the use of any Base Prospectus,
any Preliminary Prospectus, any Pricing Prospectus, the Prospectus or any
Permitted Free Writing Prospectus or any part thereof shall have been issued and
no proceedings for that purpose or pursuant to Section 8A under the Securities
Act shall have been initiated or threatened by the Commission, and all requests
for additional information on the part of the Commission (to be included or
incorporated by reference in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the reasonable satisfaction of the
Placement Agent; the Rule 462(b) Registration Statement, if any, each Issuer
Free Writing Prospectus, if any, and the Prospectus shall have been filed with
the Commission within the applicable time period prescribed for such filing by,
and in compliance with, the Rules and Regulations and in accordance
with Section 5(a) and the Rule 462(b) Registration Statement, if any, shall have
become effective immediately upon its filing with the Commission; and FINRA
shall have raised no objection to the fairness and reasonableness of the terms
of this Agreement or the transactions contemplated hereby.

 

(b)     The Placement Agent shall not have discovered and disclosed to the
Company on or prior to the Closing Date that the Registration Statement or any
amendment or supplement thereto contains an untrue statement of fact that, in
the opinion of counsel for the Placement Agent, is material or omits to state
any fact that, in the opinion of such counsel, is material and is required to be
stated therein or is necessary to make the statements therein not misleading, or
that the General Disclosure Package, any Issuer Free Writing Prospectus or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of fact that, in the opinion of such counsel, is material or omits to state any
fact which, in the opinion of such counsel, is material and is necessary in
order to make the statements, in the light of the circumstances in which they
were made, not misleading.

 

 
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(c)     All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of this Agreement, the Securities
Purchase Agreement, the Shares, the Registration Statement, the General
Disclosure Package, each Issuer Free Writing Prospectus, if any, and the
Prospectus and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Placement Agent, and the Company shall have
furnished to such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.

 

(d)     Faegre Baker Daniels LLP shall have furnished to the Placement Agent,
such counsel’s written opinion and negative assurances statement, as counsel to
the Company, addressed to the Placement Agent and dated the Closing Date, in
form and substance reasonably satisfactory to the Placement Agent.

 

(e)     At the time of the execution of this Agreement, the Placement Agent
shall have received a letter from Armanino LLP, in form and substance reasonably
satisfactory to the Placement Agent, addressed to the Placement Agent and dated
the date hereof (i) confirming that they are independent public accountants
within the meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants under Rule
2-01 of Regulation S-X of the Commission, and (ii) stating, as of the date
hereof (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
General Disclosure Package, as of a date not more than five days prior to the
date of such letter), the conclusions and findings of such firm with respect to
the financial information and other matters ordinarily covered by accountants’
“comfort letters” to placement agents in connection with registered public
offerings.

 

(f)      With respect to the letter of Armanino LLP referred to in the preceding
paragraph and delivered to the Placement Agent concurrently with the execution
of this Agreement (the “initial letter”), the Company shall have furnished to
the Placement Agent a letter (the “bring-down letter”) of such accountants,
addressed to the Placement Agent and dated as of the Closing Date (i) confirming
that they are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable requirements relating
to the qualifications of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date of the bring-down letter (or, with
respect to matters involving changes or developments since the respective dates
as of which specified financial information is given in the General Disclosure
Package, as of a date not more than three days prior to the date of the
bring-down letter), the conclusions and findings of such firm with respect to
the financial information and other matters covered by the initial letter and
(iii) confirming in all material respects the conclusions and findings set forth
in the initial letter.

 

 
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(g)     The Company shall have furnished to the Placement Agent a certificate,
dated the Closing Date, of its Chief Executive Officer and its Chief Financial
Officer stating that (i) such officers have examined the Registration Statement,
the General Disclosure Package, any Permitted Free Writing Prospectus and the
Prospectus and, in their opinion, the Registration Statement and each amendment
thereto, at the Applicable Time and as of the date of this Agreement and as of
the Closing Date did not include any untrue statement of a material fact and did
not omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and the General Disclosure Package,
as of the Applicable Time and as of the Closing Date, any Permitted Free Writing
Prospectus as of its date and as of the Closing Date, the Prospectus and
each amendment or supplement thereto, as of the respective date thereof and as
of the Closing Date, did not include any untrue statement of a material fact and
did not omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances in which they were made, not
misleading, (ii) since the effective date of the Registration Statement, no
event has occurred which should have been set forth in a supplement or amendment
to the Registration Statement, the General Disclosure Package or the Prospectus
which has not been so set forth, (iii) to their knowledge, as of the Closing
Date, the representations and warranties of the Company in this Agreement are
true and correct and the Company, in all material respects (or, to the extent
representations and warranties are qualified by materiality or Material Adverse
Effect, in all respects), has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date, and (iv) there has not been, subsequent to the date of the most
recent audited financial statements included or incorporated by reference in the
Registration Statement, the General Disclosure Package and the Prospectus, and
after giving effect to the Offering, any material adverse change in the
financial position or results of operations of the Company or any Subsidiary, or
any change or development that, singularly or in the aggregate, would involve a
material adverse change or a prospective material adverse change, in or
affecting the condition (financial or otherwise), results of
operations, business, assets or prospects of the Company or any Subsidiary,
except as set forth in the Registration Statement, the General Disclosure
Package and the Prospectus.

 

(h)     Since the date of the latest audited financial statements included in
the Registration Statement, the General Disclosure Package and the Prospectus or
incorporated by reference therein as of the date hereof, and after giving effect
to the Offering, (i) neither the Company nor any Subsidiary shall have sustained
any material loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth in the Registration Statement, the General Disclosure Package and the
Prospectus, and (ii) there shall not have been any change in the capital stock
(other than a change in the number of outstanding shares of Common Stock due to
the issuance of shares upon the exercise of outstanding options or warrants or
the conversion of restricted stock units or convertible indebtedness) or
long-term debt (other than upon conversion of convertible indebtedness) of the
Company or any Subsidiary, or any change, or any development involving a
prospective change, in or affecting the business, management, financial
position, stockholders’ equity or results of operations of the
Company, otherwise than as set forth in the Registration Statement, the General
Disclosure Package and the Prospectus, the effect of which, in any such
case described in clause (i) or (ii) of this Paragraph 7(h) is, in the
reasonable judgment of the Placement Agent, so material and adverse as to make
it impracticable or inadvisable to proceed with the sale or delivery of the
Shares on the terms and in the manner contemplated in the General Disclosure
Package.

 

 
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(i)     No action shall have been taken and no law, statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency or
body that would prevent the issuance or sale of the Shares or materially and
adversely affect the business or operations of the Company or any Subsidiary;
and no injunction, restraining order or order of any other nature by any federal
or state court of competent jurisdiction shall have been issued which would
prevent the issuance or sale of the Shares or materially and adversely affect
the business or operations of the Company or any Subsidiary.

 

(j)     Subsequent to the execution and delivery of this Agreement there shall
not have occurred any of the following: (i) trading in securities generally on
the New York Stock Exchange or the NASDAQ Stock Market or in the
over-the-counter market, or trading in any securities of the Company on
any exchange or in the over-the-counter market, shall have been suspended or
materially limited, or minimum or maximum prices or maximum range for prices
shall have been established on any such exchange or such market by the
Commission, by such exchange or market or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium shall have
been declared by Federal or state authorities or a material disruption has
occurred in commercial banking or securities settlement or clearance services in
the United States, (iii) the United States shall have become engaged in
hostilities, or the subject of an act of terrorism, or there shall have been an
outbreak of or escalation in hostilities involving the United States, or there
shall have been a declaration of a national emergency or war by the United
States or (iv) there shall have occurred such a material adverse change in
general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States shall be
such) as to make it, in the reasonable judgment of the Placement Agent,
impracticable or inadvisable to proceed with the sale or delivery of the Shares
on the terms and in the manner contemplated in the Registration Statement, the
General Disclosure Package and the Prospectus.

 

(k)     The Placement Agent shall have received on or prior to the date of this
Agreement the written agreements, substantially in the form of Exhibit B hereto,
of the executive officers, directors and significant stockholders of the Company
listed in Schedule B to this Agreement.

 

(l)     The Company shall have entered into the Securities Purchase Agreement
with each of the Purchasers and such agreement shall be in full force and
effect.

 

(m)     FINRA shall have raised no objection as to the amount of compensation
allowable or payable to the Placement Agent as described in the General
Disclosure Package, any Pricing Prospectus or any Preliminary Prospectus.

 

(n)     Prior to the Closing Date, the Company shall have furnished to the
Placement Agent such further information, opinions, certificates, letters or
documents as the Placement Agent shall have reasonably requested.

 

 
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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.

 

8.     INDEMNIFICATION AND CONTRIBUTION.

 

(a)     The Company shall indemnify and hold harmless the Placement Agent, its
Affiliates and each of its and their respective directors, officers, members,
employees, representatives and agents and its Affiliates, and each of its and
their respective directors, officers, members, employees, representatives and
agents and each Person, if any, who controls the Placement Agent within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act (collectively the “Placement Agent Indemnified Parties,” and each a
“Placement Agent Indemnified Party”) against any loss, claim, damage, expense or
liability whatsoever (or any action, investigation or proceeding in
respect thereof), joint or several, to which such Placement Agent Indemnified
Party may become subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage, expense, liability, action, investigation or proceeding
arises out of or is based upon (A) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the Base
Prospectus, any Preliminary Prospectus, any Pricing Prospectus, any Issuer Free
Writing Prospectus, any “issuer information” filed or required to be filed
pursuant to Rule 433(d) under the Rules and Regulations, or the Prospectus, or
in any amendment or supplement thereto or document incorporated by reference
therein, (B) the omission or alleged omission to state in the Registration
Statement, the Base Prospectus, any Preliminary Prospectus, any Pricing
Prospectus, any Issuer Free Writing Prospectus, any ”issuer information” filed
or required to be filed pursuant to Rule 433(d) under the Rules and Regulations,
or the Prospectus, or in any amendment or supplement thereto or document
incorporated by reference therein, a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (C) any breach of
the representations and warranties of the Company contained herein or failure of
the Company to perform its obligations hereunder or pursuant to any law, any act
or failure to act, or any alleged act or failure to act, by the Placement Agent
in connection with, or relating in any manner to, the Shares or the Offering,
and which is included as part of or referred to in any loss, claim, damage,
expense, liability, action, investigation or proceeding arising out of or based
upon matters covered by subclause (A), (B) or (C) above of this Section 8(a)
(provided that the Company shall not be liable in the case of any matter covered
by this subclause (C) to the extent that it is determined in a final judgment by
a court of competent jurisdiction that such loss, claim, damage, expense
or liability resulted directly from any such act or failure to act undertaken or
omitted to be taken by the Placement Agent through its gross negligence or
willful misconduct), and shall reimburse the Placement Agent Indemnified Party
promptly upon demand for any legal fees or other expenses reasonably incurred by
that Placement Agent Indemnified Party in connection with investigating, or
preparing to defend, or defending against, or appearing as a third party witness
in respect of, or otherwise incurred in connection with, any such loss, claim,
damage, expense, liability, action, investigation or proceeding, as such fees
and expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage, expense
or liability arises out of or is based upon an untrue statement or alleged
untrue statement in, or omission or alleged omission from the Registration
Statement, the Base Prospectus, any Preliminary Prospectus, any Pricing
Prospectus, any Issuer Free Writing Prospectus, any “issuer information” filed
or required to be filed pursuant to Rule 433(d) under the Rules and Regulations,
or the Prospectus, or in any amendment or supplement thereto or document
incorporated by reference therein made in reliance upon and in conformity with
written information furnished to the Company by the Placement Agent specifically
for use therein, which information the parties hereto agree is limited to the
Placement Agent’s Information (as defined in Section 17).  This indemnity
agreement is not exclusive and will be in addition to any liability, which the
Company might otherwise have and shall not limit any rights or remedies which
may otherwise be available at law or in equity to the Placement Agent
Indemnified Party.

 

 
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(b)     The Placement Agent shall indemnify and hold harmless the Company, its
Affiliates and each of its and their respective directors, officers, members,
employees, representatives and agents and its Affiliates, and each of its and
their respective directors, officers, members, employees, representatives and
agents and each Person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act of or Section 20 of the Exchange Act
(collectively the “Company Indemnified Parties” and each a “Company Indemnified
Party”), and the successors and assigns of all of the foregoing persons, against
any loss, claim, damage, expense or liability whatsoever (or any action,
investigation or proceeding in respect thereof), joint or several, to which such
Company Indemnified Party may become subject, under the Securities Act, 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) or otherwise,
insofar as such loss, claim, damage, expense, liability, action, investigation
or proceeding arises out of or is based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, the
Base Prospectus, any Preliminary Prospectus, any Pricing Prospectus, any Issuer
Free Writing Prospectus, any “issuer information” filed or required to be filed
pursuant to Rule 433(d) under the Rules and Regulations, or the Prospectus, or
in any amendment or supplement thereto or document incorporated by reference
therein, or (ii) the omission or alleged omission to state in the Registration
Statement, the Base Prospectus, any Preliminary Prospectus, any Pricing
Prospectus, any Issuer Free Writing Prospectus, any “issuer information” filed
or required to be filed pursuant to Rule 433(d) under the Rules and Regulations,
or the Prospectus, or in any amendment or supplement thereto or document
incorporated by reference therein, a material fact required to be stated therein
or necessary to make the statements therein not misleading, but in each case
only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Placement Agent specifically
for use therein, which information the parties hereto agree is limited to the
Placement Agent’s Information as defined in Section 17 and shall reimburse the
Company for any legal or other expenses reasonably incurred by such party in
connection with investigating or preparing to defend or defending against or
appearing as third party witness in connection with any such loss, claim,
damage, liability, action, investigation or proceeding, as such fees and
expenses are incurred.

 

 
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(c)     Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, the indemnified party shall, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 8 notify such indemnifying party in writing of the commencement of that
action; provided, however, that the failure to notify the indemnifying party
shall not relieve it from any liability which it may have under this Section 8
except to the extent it has been materially prejudiced by such failure; and,
provided, further, that the failure to notify an indemnifying party shall not
relieve it from any liability which it may have to an indemnified party
otherwise than under this Section 8. If any such action shall be brought against
an indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense of such action with counsel reasonably satisfactory to the
indemnified party (which counsel shall not, except with the written consent of
the indemnified party, be counsel to the indemnifying party). After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such action, except as provided herein, the indemnifying party shall
not be liable to the indemnified party under Section 8 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense of such action other than reasonable costs of investigation; provided,
however, that any indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense of such action but
the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized in writing by the Company in
the case of a claim for indemnification under Section 8(a) or Section 2(f) or
the Placement Agent in the case of a claim for indemnification under
Section 8(b) (ii) such indemnified party shall have been advised by its counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party, or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party within a reasonable
period of time after notice of the commencement of the action or the
indemnifying party does not diligently defend the action after assumption of the
defense, in which case, if such indemnified party notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of (or, in the case of a failure to diligently defend the action
after assumption of the defense, to continue to defend) such action on behalf of
such indemnified party and the indemnifying party shall be responsible for legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense of such action; provided, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for all such
indemnified parties (in addition to any local counsel), which firm shall be
designated in writing by the Placement Agent if the indemnified parties under
this Section 8 consist of any Placement Agent Indemnified Party or by the
Company if the indemnified parties under this Section 8 consist of any Company
Indemnified Parties. Subject to this Section 8(c), the amount payable by an
indemnifying party under Section 8 shall include, but not be limited to, (x)
reasonable legal fees and expenses of counsel to the indemnified party and any
other expenses in investigating, or preparing to defend or defending against, or
appearing as a third party witness in respect of, or otherwise incurred in
connection with, any action, investigation, proceeding or claim, and (y) all
amounts paid in settlement of any of the foregoing. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of judgment with respect to any pending or
threatened action or any claim whatsoever, in respect of which indemnification
or contribution could be sought under this Section 8 (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party in form and substance reasonably satisfactory to such
indemnified party from all liability arising out of such action or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party. Subject to the
provisions of the following sentence, no indemnifying party shall be liable for
settlement of any pending or threatened action or any claim whatsoever that is
effected without its written consent (which consent shall not be unreasonably
withheld or delayed), but if settled with its written consent, if its consent
has been unreasonably withheld or delayed or if there be a judgment for the
plaintiff in any such matter, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment. In addition, if at any time an
indemnified party shall have requested that an indemnifying party reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated
herein effected without its written consent if (i) such settlement is entered
into more than sixty (60) days after receipt by such indemnifying party of the
request for reimbursement, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least thirty (30) days prior to such
settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the
date of such settlement.

 

 
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(d)     If the indemnification provided for in this Section 8 is unavailable or
insufficient to hold harmless an indemnified party under Section 8(a) or
Section 8(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid, payable or otherwise incurred
by such indemnified party as a result of such loss, claim, damage, expense or
liability (or any action, investigation or proceeding in respect thereof), as
incurred, (i) in such proportion as shall be appropriate to reflect the
relative benefits received by the Company on the one hand and the Placement
Agent on the other hand from the offering of the Shares, or (ii) if the
allocation provided by clause (i) of this Section 8(d) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) of this Section 8(d) but also the
relative fault of the Company on the one hand and the Placement Agent on the
other with respect to the statements, omissions, acts or failures to act which
resulted in such loss, claim, damage, expense or liability (or any action,
investigation or proceeding in respect thereof) as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Placement Agent on the other with respect to such offering
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Shares purchased under this Agreement (before deducting
expenses) received by the Company bear to the total Placement Fee received
by the Placement Agent in connection with the Offering, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault of
the Company on the one hand and the Placement Agent on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Placement Agent on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such untrue statement, omission, act or failure to act; provided that the
parties hereto agree that the written information furnished to the Company by
the Placement Agent for use in the Registration Statement, the Base Prospectus,
any Preliminary Prospectus, any Pricing Prospectus, any Issuer Free Writing
Prospectus, any “issuer information” filed or required to be filed pursuant to
Rule 433(d) under the Rules and Regulations, or the Prospectus, or in any
amendment or supplement thereto or document incorporated by reference therein,
consists solely of the Placement Agent’s Information as defined in Section 17.
The Company and the Placement Agent agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were to be determined
by pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage, expense,
liability, action, investigation or proceeding referred to above in this
Section 8(d) shall be deemed to include, for purposes of this Section 8(d), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating, preparing to defend or defending against or
appearing as a third party witness in respect of, or otherwise incurred in
connection with, any such loss, claim, damage, expense, liability, action,
investigation or proceeding. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.

 

 
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9.     TERMINATION. The obligations of the Placement Agent hereunder may be
terminated by the Placement Agent, in its absolute discretion by notice given to
the Company prior to delivery of and payment for the Shares if, prior to that
time, (i) any of the conditions to closing in Section 7 shall not have been
satisfied in full and shall not have been expressly waived in writing by the
Placement Agent, or (ii) any of the events described in Section 7(a), (b), (i)
or (j) shall have occurred.

 

10.     [RESERVED].

 

11.     ABSENCE OF FIDUCIARY RELATIONSHIP. The Company acknowledges and agrees
that:

 

(a)     the Placement Agent’s responsibility to the Company is solely
contractual in nature, the Placement Agent has been retained solely to act as
Placement Agent in connection with the Offering and no fiduciary, advisory or
agency relationship between the Company and the Placement Agent has been
created in respect of any of the transactions contemplated by this Agreement,
irrespective of whether the Placement Agent has advised or is advising the
Company on other matters;

 

(b)     the price of the Shares set forth in this Agreement was established by
the Company following discussions and arms-length negotiations with the
Placement Agent and the Purchasers, and the Company is capable of evaluating and
understanding, and understands and accepts, the terms, risks and conditions of
the transactions contemplated by this Agreement;

 

 
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(c)     it has been advised that the Placement Agent and its Affiliates
are engaged in a broad range of transactions which may involve interests that
differ from those of the Company and that the Placement Agent has no obligation
to disclose such interests and transactions to the Company by virtue of any
fiduciary, advisory or agency relationship; and

 

(d)     it waives, to the fullest extent permitted by law, any claims it may
have against the Placement Agent for breach of fiduciary duty or alleged breach
of fiduciary duty and agrees that the Placement Agent shall have no liability
(whether direct or indirect) to the Company in respect of such a fiduciary duty
claim or to any Person asserting a fiduciary duty claim on behalf of or in right
of the Company, including stockholders, employees or creditors of the Company.

 

12.     SUCCESSORS; PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of and be binding upon the Placement Agent, the
Company, and their respective successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
Person, other than the persons mentioned in the preceding sentence, any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other Person; except that the representations,
warranties, covenants, agreements and indemnities of the Company contained in
this Agreement shall also be for the benefit of the Placement Agent Indemnified
Parties and the indemnities of the  Placement Agent shall be for the benefit of
the Company Indemnified Parties. It is understood that the Placement Agent’s
responsibility to the Company is solely contractual in nature and the Placement
Agent does not owe the Company, or any other party, any fiduciary duty as a
result of this Agreement.

 

13.     SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company and the Placement Agent, as set forth in this
Agreement or made by them respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation made by or on behalf
of the Placement Agent, the Company, the Purchasers or any Person controlling
any of them and shall survive delivery of and payment for the Shares.
Notwithstanding any termination of this Agreement, including without limitation
any termination pursuant to Section 9, the indemnity and contribution agreements
contained in Section 8 and the covenants, representations, warranties set forth
in this Agreement shall not terminate and shall remain in full force and effect
at all times.

 

14.     NOTICES. All statements, requests, notices and agreements hereunder
shall be in writing, and:

 

(a)     if to the Placement Agent, shall be delivered or sent by mail, telex,
facsimile transmission or overnight courier to Lake Street Capital Markets, LLC,
225 South 6th Street, Suite 2050, Minneapolis, Minnesota 55402, Attention:
Michael Townley, Email: mike.townley@lakestreetcm.com, with a copy (which shall
not constitute notice) to Fredrikson & Byron, P.A., 200 South Sixth Street,
Suite 4000, Minneapolis, Minnesota 55402, Attention: Ryan C. Brauer, Email:
rbrauer@fredlaw.com, and Christopher J. Melsha, Email: cmelsha@fredlaw.com, Fax
(612) 492-2077; and

 

 
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(b)     if to the Company, shall be delivered or sent by mail, telex, facsimile
transmission or overnight courier to Determine, Inc., 615 West Carmel Drive,
Suite 100, Carmel, Indiana 46032, Attention: Chief Executive Officer, with a
copy (which shall not constitute notice) to: Faegre Baker Daniels LLP, 2200
Wells Fargo Center, 90 South Seventh Street, Minneapolis, Minnesota 55402,
Attention: Jonathan R. Zimmerman, Email: jon.zimmerman@FaegreBD.com, Fax: (612)
766-1600.

 

Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof, except that any such statement, request, notice or
agreement delivered or sent by email shall take effect at the time of
confirmation of receipt thereof by the recipient thereof.

 

15.     DEFINITION OF CERTAIN TERMS. For purposes of this Agreement, “business
day” means any day on which the NASDAQ Capital Market is open for trading.

 

16.     GOVERNING LAW, AGENT FOR SERVICE AND JURISDICTION. This Agreement shall
be governed as to validity, interpretation, construction, effect and in all
other respects by the internal laws of the State of New York, without regard to
the conflict of laws principles thereof. Each of the Placement Agent and the
Company: (i) agrees that any legal suit, action or proceeding arising out of or
relating to this Agreement and/or the transactions contemplated hereby shall be
instituted exclusively in New York Supreme Court, County of New York, or in the
United States District Court for the Southern District of New York, (ii) waives
any objection which it may have or hereafter to the venue of any such suit,
action or proceeding, and (iii) irrevocably consents to the jurisdiction of the
New York Supreme Court, County of New York, and the United States District Court
for the Southern District of New York in any such suit, action or proceeding.
Each of the Placement Agent and the Company further agrees to accept and
acknowledge service of any and all process which may be served in any such suit,
action or proceeding in the New York Supreme Court, County of New York, or in
the United States District Court for the Southern District of New York and
agrees that service of process upon the Company mailed by certified mail to the
Company’s address shall be deemed in every respect effective service of process
upon the Company, in any such suit, action or proceeding, and service of process
upon the Placement Agent mailed by certified mail to the Placement Agent’s
address shall be deemed in every respect effective service process upon the
Placement Agent, in any such suit, action or proceeding. Notwithstanding any
provision of this Agreement to the contrary, the Company agrees that neither the
Placement Agent nor its Affiliates, and the respective officers, directors,
employees, agents and representatives of the Placement Agent, its Affiliates and
each other Person, if any, controlling the Placement Agent or any of its
Affiliates, shall have any liability (whether direct or indirect, in contract or
tort or otherwise) to the Company for or in connection with the engagement and
transaction described herein except for any such liability for losses, claims,
damages or liabilities incurred by us that are finally judicially determined to
have resulted from the bad faith or gross negligence of such individuals or
entities. If either party shall commence an action or proceeding to enforce any
provision of this Agreement, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its reasonable attorney’s
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.

 

 
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17.     PLACEMENT AGENT’S INFORMATION. The parties hereto acknowledge and agree
that, for all purposes of this Agreement, the Placement Agent’s Information
consists solely of the following information in the Prospectus: under the
heading “Plan of Distribution,” (i) the second sentence of the first paragraph,
and (ii) the first paragraph under “—Electronic Distribution.”

 

18.     PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any
section, paragraph, clause or provision of this Agreement shall not affect the
validity or enforceability of any other section, paragraph, clause or provision
hereof. If any section, paragraph, clause or provision of this Agreement is for
any reason determined to be invalid or unenforceable, there shall be deemed to
be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.

 

19.     GENERAL. This Agreement constitutes the entire agreement of the parties
to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. In this Agreement, the masculine, feminine and neuter
genders and the singular and the plural include one another. The
Section headings in this Agreement are for the convenience of the parties only
and will not affect the construction or interpretation of this Agreement. This
Agreement may be amended or modified, and the observance of any term of this
Agreement may be waived, only by a writing signed by the Company and the
Placement Agent.

 

20.     COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument and such signatures
may be delivered by facsimile or portable document format (.pdf).

 

21.     EFFECTIVENESS. This Agreement shall become effective upon the execution
and delivery hereof by the parties hereto.

 

 

 

 

 

[Signature Page Follows.]

 

 
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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,

 

DETERMINE, INC.

 

 

By:    /s/ John Nolan                                              
Name: John Nolan
Title: Chief Financial Officer

 

Accepted as of the date first above written:

 

LAKE STREET CAPITAL MARKETS, LLC

 

 

By:    /s/ Michael Townley                                    
Name: Michael Townley
Title: Head of Investment Banking

 

 

Signature Page to Placement Agency Agreement

 

 

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SCHEDULE A

 

General Use Free Writing Prospectuses

 

None.

 

 

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SCHEDULE B

 

List of Directors, Officers and Stockholders for Lock-Up Agreements

 

Patrick Stakenas

John Nolan

Alan B. Howe

Lloyd Sems

Michael Casey

J. Michael Gullard

Michael Brodsky

Jeffrey Grosman

 

Lloyd I. Miller III

Milfam I L.P.

Milfam II L.P.

Lloyd I. Miller Trust A-4

Catherine Miller Trust C

Lloyd I. Miller Irrevocable Trust D

Marli Bryant Miller Revocable Trust

Alimco Financial Corporation

 

 

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EXHIBIT A

 

Form of Securities Purchase Agreement 

 

See attached.

 

 

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SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of June 21,
2017, by and among Determine, Inc., a Delaware corporation (the “Company”), and
the purchasers identified on the signature page hereto (including each
purchaser’s successors and assigns, individually, a “Purchaser,” and
collectively, the “Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the “Securities Act”), the Company desires to issue and sell
to the Purchasers, and the Purchasers desire to purchase from the Company,
securities of the Company as more fully described in this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:

 

ARTICLE I.

DEFINITIONS 

 

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement,
the following terms have the meanings set forth in this Section 1.1:

 

“Closing” means the closing of the purchase and sale of the Shares pursuant to
Section 2.1.

 

“Closing Date” means the Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to pay the Subscription
Amount and (ii) the Company’s obligations to deliver the Shares, in each case,
have been satisfied or waived, but in no event later than the third Trading Day
following the date hereof.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, par value $0.0001 per
share, and any other class of securities into which such securities may
hereafter be reclassified or changed.

 

“Fredrikson” means Fredrikson & Byron, P.A., legal counsel to the Placement
Agent.

 

“Fundamental Transaction” means any of the following: (i) the Company effects
any merger or consolidation of the Company with or into another Person, (ii) the
Company effects any sale of all or substantially all of its assets in one or a
series of related transactions, (iii) any tender offer or exchange offer
(whether by the Company or another person) is completed pursuant to which
holders of Common Stock are permitted to tender or exchange their shares for
other securities, cash or property, or (iv) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property.

 

“Material Adverse Effect” means (i) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and its subsidiaries, taken as a whole, or (ii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document.

 

“Offering” means the sale of the Shares to the Purchasers.

 

“Per Share Purchase Price” equals $2.50, subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement but
on or prior to the Closing Date.

 

 
 

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“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

 

“Placement Agent” means Lake Street Capital Markets, LLC.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.

 

“Prospectus” means the final prospectus included in the Registration Statement.

 

“Prospectus Supplement” means the supplement to the Prospectus complying with
Rule 424(b) of the Securities Act that is filed with the Commission and
delivered by the Company to the Purchasers.

 

“Registration Statement” means the effective registration statement on Form S-3
filed with the Commission (File No. 333-207841) that registers the offer and
sale of the Shares.

 

“Shares” means the shares of Common Stock issued or issuable to the Purchasers
pursuant to this Agreement.

 

“Subscription Amount” means the aggregate amount to be paid for the Shares
purchased hereunder as specified below each Purchaser’s name on the signature
page of this Agreement and next to the heading “Subscription Amount” in United
States dollars and in immediately available funds.

 

“Trading Day” means a day on which the principal Trading Market is open for
trading.

 

“Trading Market” means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE
MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange or the OTCQB Venture Market (or any
successors to any of the foregoing).

 

“Transaction Documents” means this Agreement and any other documents or
agreements executed in connection with the transactions contemplated hereunder.

 

“Transfer Agent” means Wells Fargo Shareowner Services, 1110 Centre Point Curve,
Suite 101, Mendota Heights, Minnesota 55120, and any successor transfer agent of
the Company.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1 Closing. On the Closing Date, upon the terms and subject to the conditions
set forth herein, the Company agrees to sell, and each Purchaser agrees to
purchase, the Shares identified on such Purchaser’s signature page hereto. At
the Closing, each Purchaser shall deliver to the Company, via wire transfer,
immediately available funds equal to such Purchaser’s Subscription Amount or
settle via delivery versus payment (“DVP”) through DTC with the Placement Agent,
the Company shall deliver to the Purchasers the Shares as determined pursuant to
Section 2.3(a), and the Company and each Purchaser shall deliver the other items
set forth in Section 2.3 deliverable at the Closing. Upon satisfaction of the
covenants and conditions set forth in Sections 2.3 and 2.4, the Closing shall
occur at such location or by electronic exchange of documents, as the parties
shall mutually agree.

 

2.2 Prospectus. Each Purchaser represents and warrants to the Company that it
has received (or otherwise had made available to it by the filing by the Company
of an electronic version thereof with the Commission) the Prospectus filed by
the Company with the Commission and, if applicable, certain “free writing
prospectuses” (as that term is defined in Rule 405 under the Securities Act),
that have been or will be filed with the Commission and delivered to the
Purchaser on or prior to the date hereof, containing certain supplemental
information regarding the Shares, the terms of the Offering and the Company, and
the Prospectus Supplement. Each Purchaser acknowledges that, prior to the
delivery of this Agreement by the Purchaser to the Company, the Purchaser will
receive certain additional information regarding the Offering, including pricing
information. Such information may be provided to the Purchaser by any means
permitted under the Securities Act, including the Prospectus Supplement, a free
writing prospectus and oral communications.

 

 
2 

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2.3 Deliveries.

 

(a) On or prior to the Closing Date, the Company shall deliver or cause to be
delivered to the Purchasers the following:

 

(i) this Agreement, duly executed by the Company;

 

(ii) a copy of the irrevocable instructions to the Transfer Agent instructing
the Transfer Agent to deliver a number of Shares equal to each Purchaser’s
Subscription Amount, designated on the signature page as “Subscription Amount,”
divided by the Per Share Purchase Price for Common Stock, registered in the name
of such Purchaser, via The Depository Trust Company (“DTC”) Deposit and
Withdrawal at Custodian (“DWAC”) system or via DVP through DTC, as indicated on
such Purchaser’s signature page hereto; and

 

(iii) the Prospectus and Prospectus Supplement (which may be delivered in
accordance with Rule 172 under the Securities Act).

 

(b) On or prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following:

 

(i) this Agreement, duly executed by such Purchaser; and

 

(ii) such Purchaser’s Subscription Amount by wire transfer to the account
specified in writing by the Company.

 

2.4 Closing Conditions.

 

(a) The obligations of the Company hereunder in connection with the Closing are
subject to the following conditions being met:

 

(i) all obligations, covenants and agreements of the Purchasers required to be
performed at or prior to the Closing Date shall have been performed; and

 

(ii) the delivery by the Purchasers of the items set forth in Section 2.3(b) of
this Agreement.

 

(b) The obligations of the Purchasers hereunder in connection with the Closing
are subject to the following conditions being met:

 

(i) all obligations, covenants and agreements of the Company under this
Agreement required to be performed at or prior to the Closing Date shall have
been performed;

 

(ii) the delivery by the Company of the items set forth in Section 2.3(a) of
this Agreement;

 

(iii) there shall have been no Material Adverse Effect with respect to the
Company since the date hereof; and

 

(iv) from the date hereof to the Closing Date, trading in the Common Stock shall
not have been suspended by the Commission or the Company’s principal Trading
Market, and, from the date hereof and at any time prior to the Closing Date,
trading in securities generally as reported by Bloomberg L.P. shall not have
been suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by such service, or on any Trading Market,
nor shall a banking moratorium have been declared either by the United States or
New York State authorities, nor shall there have occurred any material outbreak
or escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, makes it reasonably impracticable or inadvisable to
purchase the Shares at the Closing.

 

 
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ARTICLE III.

MISCELLANEOUS

 

3.1 Termination. This Agreement may be terminated by the Purchasers or by the
Company by written notice to the other party if the Closing has not been
consummated on or before June 26, 2017; provided, however, that no such
termination will affect the right of either party to sue for any breach by the
other party.

 

3.2 Fees and Expenses. Each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all Transfer
Agent fees, stamp taxes and other taxes and duties levied in connection with the
delivery of any Shares to the Purchasers.

 

3.3 Entire Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, the Prospectus and the Prospectus Supplement, contain the
entire understanding of the parties with respect to the subject matter hereof
and thereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been
merged into such documents, exhibits and schedules.

 

3.4 Amendments; Waivers. No provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed, in the case of an
amendment, by the Company and the Purchasers, or, in the case of a waiver, by
the party against whom enforcement of any such waived provision is sought. No
waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such
right.

 

3.5 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers (except if in connection
with a Fundamental Transaction).

 

3.6 No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns only,
and is not for the benefit of, nor may any provision hereof be enforced by, any
other Person.

 

3.7 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members, employees or
agents) shall be commenced exclusively in the state and federal courts sitting
in the City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, or that such court is
an improper or inconvenient venue for such Proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address for notice set forth on the signature page hereto and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law. If any party shall
commence a Proceeding to enforce any provisions of the Transaction Documents,
then the prevailing party in such Proceeding shall be reimbursed by the other
party for its reasonable attorneys’ fees and other reasonable costs and expenses
incurred with the investigation, preparation and prosecution of such Proceeding.

 

 
4 

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3.8 Execution. This Agreement may be executed by electronic signature and in
counterparts, all of which when taken together shall be considered one and the
same agreement, and this Agreement shall become effective when each party has
delivered its signature to each other party. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed), with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.

 

3.9 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

 

3.10 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, the Purchasers and the
Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages would not be adequate
compensation for any loss incurred by reason of any breach of obligations
contained in the Transaction Documents and hereby agree to waive and not to
assert in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.

 

3.11 Independent Nature of Purchasers’ Obligations and Rights. The obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto
or thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
Proceeding for such purpose. Each Purchaser has been represented by its own
separate legal counsel in its review and negotiation of the Transaction
Documents. For reasons of administrative convenience only, each Purchaser and
its respective counsel have chosen to communicate with the Company through
Fredrikson. Fredrikson does not represent any of the Purchasers and only
represents the Placement Agent. The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience of
the Company and not because it was required or requested to do so by any of the
Purchasers. It is expressly understood and agreed that each provision contained
in this Agreement and in each other Transaction Document is between the Company
and a Purchaser, solely, and not between the Company and the Purchasers
collectively and not between and among the Purchasers.

 

 
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3.12 Acknowledgment. Each Purchaser acknowledges that the Offering is not being
underwritten by the Placement Agent and that there is no minimum Subscription
Amount. Such Purchaser confirms that it has had full access to all filings made
by the Company with the Commission, including the Registration Statement, the
Prospectus and the Prospectus Supplement relating to the Shares, and the
documents incorporated by reference therein, and that it was able to read and
review each such filing. In subscribing to the Shares, such Purchaser affirms
that it has conducted substantive due diligence with respect to the Company and
the Shares including, without limitation, reviewing in detail the Registration
Statement (including the exhibits thereto), the Prospectus and the Prospectus
Supplement, including the documents incorporated by reference in such documents.
In addition, such Purchaser understands that there is a high degree of risk in
subscribing to the Shares and that such Purchaser may lose the entire investment
in the Shares.

 

3.13 Liquidated Damages. The Company’s obligation to pay Transfer Agent fees,
stamp taxes and other taxes and duties levied in connection with the delivery of
any Shares to the Purchasers is a continuing obligation of the Company and shall
not terminate until all such unpaid amounts have been paid.

 

3.14 Construction. The parties agree that each of them and/or their respective
counsel have reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments thereto. In
addition, each and every reference to share prices and shares of Common Stock in
any Transaction Document shall be subject to adjustment for reverse and forward
stock splits, stock dividends, stock combinations and other similar transactions
of the Common Stock that occur after the date of this Agreement but on or prior
to the Closing Date.

 

3.15 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

 

 

[Signature Pages Follow]

 

 
6 

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

 

 

Determine, Inc.

 

 

By:                                                                    

Name:                                                               

Title:                                                                 

Address for Notice:

 

615 West Carmel Drive, Suite 100

Carmel, Indiana 46032

 

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

 

Faegre Baker Daniels LLP

2200 Wells Fargo Center

90 South Seventh Street

Minneapolis, Minnesota 55402

Attention: Jonathan R. Zimmerman

 

 

Signature Page to Securities Purchase Agreement

 

 
 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed by an authorized signatory as of the date first
indicated above.

 

Name of Purchaser:

         

Signature of Authorized Signatory of Purchaser:

         

Name of Authorized Signatory:

         

Title of Authorized Signatory:

         

Email Address of Authorized Signatory:

         

Address for Notice to Purchaser:

                     

DTC Participant Account Name:

         

DTC Participant Account Number:

         

Subscription Amount:

 

$

     

Shares:

         

EIN Number: 

   

 

The above-named Purchaser elects settlement of the Shares purchased as follows
(check one):

 

[___]

Delivery by crediting the account of Purchaser’s prime broker (as specified
above) with DTC through its DWAC system, whereby Purchaser’s prime broker shall
initiate a DWAC transaction on the Closing Date using its DTC participant
identification number, and released by the Transfer Agent, at the Company's
direction.

 

[___]

Delivery versus payment through DTC (i.e., on the Closing Date, the Company
shall issue Shares registered in the Purchaser’s name and address as set forth
below and released by the Transfer Agent directly to the account(s) at the
Placement Agent identified by the Purchaser).

 

 

Signature Page to Securities Purchase Agreement

 

 
 

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EXHIBIT B

 

Form of Lock-Up Agreement

 

____________, 2017

 

 

Lake Street Capital Markets, LLC

225 South Sixth Street, Suite 2050

Minneapolis, MN 55402

 

 

Ladies and Gentlemen:

 

The undersigned understands that Lake Street Capital Markets, LLC (the
“Placement Agent”) proposes to enter into a Placement Agency Agreement (the
“Agency Agreement”) with Determine, Inc., a Delaware corporation (the
“Company”), relating to a proposed offering (the “Offering”) of shares of the
Company’s common stock, par value $0.0001 per share (the “Common Stock”).

 

In consideration of the foregoing, and in order to induce the Placement Agent 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, the undersigned will
not, during the period beginning on the date hereof and ending 90 days following
the filing of the final prospectus supplement relating to the Offering, (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, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for shares of Common Stock (including
without limitation, shares of Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and securities 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 the shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
shares of Common Stock or such other securities, in cash or otherwise, (3) make
any demand for or exercise any right with respect to, the registration of any
shares of Common Stock or any security convertible into or exercisable or
exchangeable for shares of Common Stock, or (4) publicly announce an intention
to effect any transaction specific in clause (1), (2) or (3) above.

 

 
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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 or by
will or intestacy, provided that the donee(s), heir(s) or beneficiary(ies)
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 or
(iii) if the undersigned is a corporation, partnership, limited liability
company, trust or other business entity (x) transfers to another corporation,
partnership, limited liability company, trust or other business entity that is a
direct or indirect affiliate (as defined in Rule 405 promulgated under the
Securities Act of 1933, as amended) of the undersigned or (y) distributions of
shares of Common Stock or any security convertible into or exercisable for
Common Stock to limited partners, limited liability company members or
stockholders of the undersigned, provided that any such transferee or
distributee agrees to be bound in writing by the restrictions set forth herein;
(b) the acquisition or exercise of any stock options or other stock-based awards
issued pursuant to the undersigned by the Company, including any exercise
effected by the delivery of shares of Common Stock of the Company held by the
undersigned; (c) the purchase or sale of the Company’s securities pursuant to a
plan, contract or instruction that satisfies all of the requirements of Rule
10b5-1(c)(1)(i)(B); (d) transfers, sales or other dispositions to the Company or
the withholding by the Company of shares of Common Stock to satisfy tax
obligations resulting from the exercise, vesting or settlement of any stock
options, restricted stock or restricted stock units; or (e) transfers, sales,
tenders or other dispositions of the Common Stock pursuant to a tender offer for
securities of the Company that would, if consummated, result in not less than a
majority of the outstanding voting securities of the Company being disposed in
such transaction or pursuant to any other transaction, including, without
limitation, a merger, consolidation or other business combination, resulting in
not less than a majority of the outstanding voting securities of the Company
being disposed in such transaction (including, without limitation, entering into
any lock-up, voting or similar agreement pursuant to which the undersigned may
agree to transfer, sell, tender or otherwise dispose of any of the undersigned’s
shares of Common Stock in connection with any such transaction or to vote any of
the undersigned’s shares of Common Stock in favor of any such transaction);
provided that, if such tender offer or other transaction is not completed, any
of the undersigned’s Common Stock shall remain subject to the restrictions
contained in this Lock-Up Agreement. For purposes of this Lock-Up Agreement,
“immediate family” shall mean any relationship by blood, marriage or adoption,
not more remote than first cousin.

 

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 shares of Common Stock
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 shares of Common Stock 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 shares of Common Stock except in
compliance with the foregoing restrictions.

 

 
B-2

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The undersigned understands that, if (i) the Company notifies the Placement
Agent that it does not intend to proceed with the Offering, (ii) the Agency
Agreement does not become effective, or (iii) the Agency Agreement (other than
the provisions thereof which survive termination) shall terminate or be
terminated prior to payment for and delivery of the securities to be sold
thereunder, 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,

 

 

 

                                                                                              

Printed Name of Holder

 

 

 

By:                
                                                                       

        Signature

 

 

 

                                                                                              

Printed Name of Person Signing

(and indicate capacity of person signing if signing as custodian,

trustee, or on behalf or an entity)

 

 

 

B-3