Exhibit 10.3

 

NORTHWEST BIOTHERAPEUTICS, INC.

 

PLACEMENT AGENCY AGREEMENT

 

July 4, 2016

 

Chardan Capital Markets, LLC

150 East 58th Street, 28th Fl

New York, NY 10155

 

  

Ladies and Gentlemen:

 

Northwest Biotherapeutics, Inc., a Delaware Corporation (the “Company”),
proposes, subject to the terms and conditions herein, to issue and sell up to an
aggregate of 7,400,000 shares (the “Shares”) of Common Stock of the Company, par
value $0.001 per share (the “Common Stock”), warrants to purchase up to an
aggregate of 3,700,000 shares of Common Stock (the “Warrants”), and up to an
aggregate of 3,700,000 shares of Common Stock issuable from time to time upon
exercise of the Warrants (the “Warrant Shares”) to certain investors (each an
“Investor” and, collectively, the “Investors”), in an offering under its
registration statement on Form S-3 (File No. 333-207976) utilizing a shelf
registration process and Form S-3 MEF (Registration File No. 333-209895). We are
offering one Share together with one-half of one Warrant (the Shares and the
Warrants, together, the “Securities”) with each whole Warrant exercisable for
one Warrant Share. The Securities are more fully described in the Prospectus (as
defined below). The Company desires to engage Chardan Capital Markets, LLC
(“Chardan”) in connection with such issuance and sale of the Securities.

 

The Company hereby confirms its agreement with you as follows:

 

1.             Agreement to Act as Placement Agent.

 

(a)                On the basis of the representations, warranties and
agreements of the Company herein contained, and subject to all the terms and
conditions of this Placement Agency Agreement (this “Agreement”) between the
Company and you, Chardan shall be the Company’s exclusive placement agent (in
such capacity, the “Placement Agent”), on a best efforts basis, in connection
with the issuance and sale by the Company of the Securities to the Investors in
a proposed offering under securities purchase agreements in the form included as
Exhibit A hereto (the “Purchase Agreements”) on the terms described on Exhibit B
hereto, with the terms of the offering to be subject to market conditions and
negotiations between the Company, the Placement Agent and the prospective
Investors (such offering shall be referred to herein as the “Offering”).  As
compensation for services rendered, and provided that any of the Securities are
sold to Investors in the Offering, on the Closing Date (as defined below) of the
Offering, the Company shall pay to the Placement Agent an amount in cash equal
to 8.0% of the gross proceeds received by the Company from the sale of the
Securities to all Investors (the “Placement Fee”).  The Company shall have the
sole right to accept offers to purchase the Securities and may reject any such
offer in whole or in part.  Notwithstanding the foregoing, it is understood and
agreed that the Placement Agent or any of its affiliates may, solely at their
discretion and without any obligation to do so, purchase Securities as a
principal; provided, however, that any such purchases by the Placement Agent (or
its affiliates) shall be fully disclosed to the Company and approved by the
Company in accordance with the previous sentence.

 

(b)               This Agreement shall not give rise to any commitment by the
Placement Agent to purchase any of the Securities, and the Placement Agent shall
have no authority to bind the Company.  The Placement Agent shall act on a
reasonable best efforts basis and does not guarantee that it will be able to
raise new capital in the Offering.  The Placement Agent may retain other brokers
or dealers to act as sub-agents on its behalf in connection with the Offering,
the fees of which shall be paid out of the Placement Fee

 

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(c)                The Company acknowledges and agrees that the Placement Agent
shall act as an independent contractor, and not as a fiduciary, and any duties
of the Placement Agent with respect to investment banking services to the
Company, including the offering of the Securities contemplated hereby (including
in connection with determining the terms of the Offering), shall be contractual
in nature, as expressly set forth herein, and shall be owed solely to the
Company.  Each party disclaims any intention to impose any fiduciary or similar
duty on the other. Additionally, the Placement Agent has not advised, nor is it
advising, the Company or any other person as to any legal, tax, investment,
accounting or regulatory matters in any jurisdiction with respect to the
transactions contemplated hereby.  The Company shall consult with its own
advisors concerning such matters and shall be responsible for making its own
independent investigation and appraisal of the transactions contemplated hereby,
and the Placement Agent shall have no responsibility or liability to the Company
with respect thereto.  Any review by the Placement Agent of the Company, the
transactions contemplated hereby or other matters relating to such transactions
has been and will be performed solely for the benefit of the Placement Agent and
has not been and shall not be on behalf of the Company or any other person.  It
is understood that the Placement Agent has not and will not be rendering an
opinion to the Company as to the fairness of the terms of the Offering.
Notwithstanding anything in this Agreement to the contrary, the Company
acknowledges that the Placement Agent may have financial interests in the
success of the Offering contemplated hereby that are not limited to the
Placement Fee.  The Company hereby waives and releases, to the fullest extent
permitted by law, any claims that the Company may have against the Placement
Agent with respect to any breach or alleged breach of fiduciary duty.

 

(d)               Payment of the purchase price for, and delivery of, the
Securities shall be made at a closing (the “Closing”) at the offices of Pryor
Cashman, LLP, counsel for the Placement Agent, located at 7 Times Square, New
York, New York, at 10:00 a.m., local time, as soon as practicable after the
determination of the public offering price of the Securities, but not later than
July 31, 2016 except as otherwise agreed upon by the Company and the Placement
Agent (such date of payment and delivery being herein called the “Closing
Date”).  All such actions taken at the Closing shall be deemed to have occurred
simultaneously.  No Securities which the Company has agreed to sell pursuant to
this Agreement and the Purchase Agreements shall be deemed to have been
purchased and paid for, or sold by the Company, until such Securities shall have
been delivered to the Investor thereof against payment therefore by such
Investor.  If the Company shall default in its obligations to deliver Securities
to an Investor whose offer it has accepted, the Company shall indemnify and hold
the Placement Agent harmless against any loss, claim or damage incurred by the
Placement Agent arising from or as a result of such default by the Company.

 

(e)                On the Closing Date, (i) the Investors will wire the purchase
price for their respective Securities to the Company pursuant to the terms of
the Purchase Agreements and the Company will wire the amount owed to the
Placement Agent as provided in this Agreement and (ii) the Company shall
deliver, or cause to be delivered, the Securities to the Investors, with the
delivery of the Shares to be made, if possible, through the facilities of The
Depository Trust Company’s DWAC system, and the delivery of the Warrants to be
made by mail to the Investors to the addresses set forth on the applicable
Purchase Agreement.

 

(f)                The Securities shall be registered in such names and in such
denominations as the Placement Agent shall request by written notice to the
Company.

 

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2.             Representations, Warranties and Agreements of the Company.

 

Except as set forth in the SEC Reports, including the Prospectus and the
Prospectus Supplement, and the Disclosure Schedules, which SEC Reports and
Disclosure Schedules shall be deemed a part hereof and shall qualify any
representation or otherwise made herein to the extent of the disclosure
contained in the corresponding section of the SEC Reports and the Disclosure
Schedules, the Company hereby represents, warrants and covenants to the
Placement Agent as of the date hereof, and as of the Closing Date of the
Offering, as follows:

 

(a)                Registration Statement.

 

(i)                 The Company has prepared and filed with the Securities and
Exchange Commission (the “Commission”) a registration statement on Form S-3
(File No. 333-207976) utilizing a shelf registration process and Form S-3 MEF
(Registration File No. 333-209895) under the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder (collectively, the
“Securities Act”), and such amendments to such registration statement as may
have been required to the date of this Agreement. Such registration statement
has been declared effective by the Commission. Each part of such registration
statement, at any given time, including amendments thereto at such time, the
exhibits and any schedules thereto at such time, the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Securities Act at
such time and the documents and information otherwise deemed to be a part
thereof or included therein by Rule 430A, 430B or 430C under the Securities Act
or otherwise pursuant to the Securities Act at such time, is herein called the
“Registration Statement.” Any registration statement filed by the Company
pursuant to Rule 462(b) under the Securities Act is called the “Rule 462(b)
Registration Statement” and, from and after the date and time of filing of the
Rule 462(b) Registration Statement, the term “Registration Statement” shall
include the Rule 462(b) Registration Statement. The Company and the transactions
contemplated by this Agreement meet the requirements and comply with the
conditions for the use of Form S-3 under the Securities Act.

 

(ii)               No stop order preventing or suspending use of the
Registration Statement or the Prospectus or the effectiveness of the
Registration Statement, has been issued by the Commission, and no proceedings
for such purpose have been instituted or, to the Company’s knowledge, are
contemplated or threatened by the Commission.

 

(iii)             The Company proposes to file with the Commission pursuant to
Rule 424 under the Securities Act a final prospectus supplement relating to the
Securities to the form of prospectus included in the Registration Statement
relating to the Securities in the form heretofore delivered to the Placement
Agent.  Such prospectus included in the Registration Statement at the time it
was declared effective by the Commission or in the form in which it has been
most recently filed with the Commission on or prior to the date of this
Agreement is hereinafter called the “Base Prospectus.”  Such prospectus
supplement, in the form in which it shall be filed with the Commission pursuant
to Rule 424(b) (including the Base Prospectus as so supplemented) is hereinafter
called the “Prospectus.”  Any reference herein to the Base Prospectus or  the
Prospectus or to any amendment or supplement to any of the foregoing shall be
deemed to include any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act as of the date of such prospectus,
and, in the case of any reference herein to the Prospectus, also shall be deemed
to include any documents incorporated by reference therein, and any supplements
or amendments thereto, filed with the Commission after the date of filing of the
Prospectus under Rule 424(b) under the Securities Act, and prior to the
termination of the offering of the Securities by the Placement Agent.

 

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

 

(b)               Compliance with Registration Requirements.  At the time the
Registration Statement or any post-effective amendment thereto became effective
(including each deemed effective date with respect to the Placement Agent
pursuant to Rule 430B under the Securities Act), the Registration Statement
complied and will comply, in all material respects, with the requirements of the
Securities Act and did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus, at the
time of filing or the time of first use and as of the Closing Date, complied and
will comply, in all material respects, with the requirements of the Securities
Act and did not and will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

  

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

 

(d)               Incorporated Documents.  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 were
filed on a timely basis with the Commission and none of such documents contained
an untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

 

(e)                Due Incorporation.  The Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
Delaware, with the corporate power and authority to own its properties and to
conduct its business as currently being carried on and as described in the
Registration Statement, the Disclosure Package and the Prospectus.  Each of the
subsidiaries of the Company (the “Subsidiaries”) has been duly organized and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with corporate power and authority to own or
lease its properties and conduct its business as described in the Prospectus and
the Disclosure Package.  The Company and each Subsidiary is duly qualified to
transact business as a foreign corporation and is in good standing under the
laws of each other jurisdiction in which its ownership or leasing of property or
the conduct of its business requires such qualification, except where the
failure to be so qualified and in good standing would not, individually or in
the aggregate, result in any material adverse effect upon, or material adverse
change in, the general affairs, business, prospects, operations, properties,
financial condition, or results of operations of the Company and the
Subsidiaries taken as a whole (a “Material Adverse Effect”).

 

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(f)                Capitalization.  The Company has duly and validly authorized
capital stock as set forth in each of the Registration Statement, the Disclosure
Package and the Prospectus; all outstanding Common Stock of the Company conform,
or when issued will conform, to the description thereof in the Registration
Statement, the Disclosure Package and the Prospectus and have been, or, when
issued and paid for in the manner described herein will be, duly authorized,
validly issued, fully paid and non-assessable; and except as disclosed in the
Registration Statement, the Disclosure Package and the Prospectus, the issuance
of the Securities, including, without limitation, issuance of the Warrant Shares
upon exercise, to be purchased from the Company hereunder is not subject to
preemptive or other similar rights, or any restriction upon the voting or
transfer thereof pursuant to applicable law or the Company’s Certificate of
Incorporation or governing documents or any agreement to which the Company is a
party or by which it may be bound.

 

(g)                Authorization, Issuance.  All corporate action required to be
taken by the Company for the authorization, issuance and sale of the Securities
has, or will have, been duly and validly taken prior to the Closing Date.  The
Shares and the Warrant Shares have, or will have, been duly and validly
authorized prior to the Closing Date. When the Shares and the Warrant Shares
have been issued and delivered against payment therefor as provided herein and
in the Warrant, as the case may be, the Shares, when so issued and sold, and the
Warrant Shares, when issued upon exercise of the Warrants, will be duly and
validly issued, fully paid and non-assessable and the Investors or other persons
in whose names Shares or Warrant Shares are registered will acquire good and
valid title to such Shares or Warrant Shares, in each case, free and clear of
all liens, encumbrances, equities, preemptive rights and other claims. The
Shares and the Warrant Shares will conform in all material respects to the
description thereof contained in the Registration Statement, the Disclosure
Package and the Prospectus.  No further approval or authority of the
stockholders or the Board of Directors of the Company will be required for the
issuance and sale of the Shares, the Warrants or the Warrant Shares as
contemplated herein and in the Purchase Agreements.  The Warrants conform, or
when issued will conform, to the description thereof contained in the Disclosure
Package and the Prospectus and have been duly and validly authorized by the
Company and upon delivery to the Investors at the Closing Date will be valid and
binding obligations of the Company, enforceable in accordance with their terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights and remedies of
creditors generally or subject to general principles of equity.  Except as
disclosed in each of the Disclosure Package and Prospectus, or incorporated by
reference therein, there are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or rights related to
or entitling any person to purchase or otherwise to acquire any shares of, or
any security convertible into or exchangeable or exercisable for, the capital
stock of, or other ownership interest in, the Company, except for such options
or rights as may have been granted by the Company to employees, directors or
consultants pursuant to its stock option or stock purchase plans.

 

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

 

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

 

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(j)                 No Violation.  Neither the Company nor any of the
Subsidiaries is in breach or violation of or in default (nor has any event
occurred which with notice, lapse of time or both would result in any breach or
violation of, or constitute a default) (i) under the provisions of its
Certificate of Incorporation or governing documents or (ii) in the performance
or observance of any term, covenant, obligation, agreement or condition
contained in any indenture, mortgage, deed of trust, bank loan or credit
agreement or other evidence of indebtedness, or any license, lease, contract or
other agreement or instrument to which the Company or any of the Subsidiaries is
a party or by which any of them or any of their properties may be bound or
affected, or (iii) in the performance or observance of any statute, law, rule,
regulation, ordinance, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company, the Subsidiaries or any of their respective
properties (including, without limitation, those administered by the
Environmental Protection Agency (the “EPA”) or by any foreign, federal, state or
local regulatory authority performing functions similar to those performed by
the EPA), except, with respect to clauses (ii) and (iii) above, to the extent
any such contravention would not result in a Material Adverse Effect.  Except as
set forth in the Registration Statement, the Disclosure Package and the
Prospectus, the Company is not in violation of any of the rules, regulations or
requirements of the Nasdaq Capital Market (“Nasdaq”) and has no knowledge of any
facts or circumstances that would reasonably lead to delisting or suspension of
the Common Stock by Nasdaq in the foreseeable future.

 

(k)               No Conflict.  Except as set forth in the Registration
Statement, the Disclosure Package and the Prospectus, the execution, delivery
and performance by the Company of this Agreement, each Purchase Agreement and
the consummation of the transactions herein contemplated, including the issuance
and sale by the Company of the Securities, will not conflict with or result in a
breach or violation of, or constitute a default under (nor constitute any event
which with notice, lapse of time or both would result in any breach or violation
of or constitute a default under) (i) the provisions of the Certificate of
Incorporation or governing documents of the Company or any of the Subsidiaries,
(ii) any material indenture, mortgage, deed of trust, bank loan or credit
agreement or other evidence of indebtedness, or any material license, lease,
contract (including, without limitation, any engagement agreement or arrangement
with any other broker-dealer) or other agreement or instrument to which the
Company or any of the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound or affected, or (iii) any federal,
state, local or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company or any of the Subsidiaries, except, with respect to
clauses (ii) and (iii) above, to the extent any such contravention would not
result in a Material Adverse Effect.

 

(l)                 No Consents Required.  No approval, authorization, consent
or order of or filing with any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency, or with any
self-regulatory organization or other non-governmental regulatory authority
(including, without limitation, Nasdaq or approval of the stockholders of the
Company (including as may be required pursuant to the rules and regulations of
Nasdaq)), is required in connection with the issuance and sale of the Securities
or the consummation by the Company of the transactions contemplated hereby other
than (i) as may be required under the Securities Act, (ii) under the rules and
regulations of the Financial Industry Regulatory Authority (“FINRA”) and (iii)
as may be required by Nasdaq.  The Company has full power and authority to enter
into this Agreement and each Purchase Agreement and to authorize, issue and sell
the Securities as contemplated by this Agreement and each Purchase Agreement.

 

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(m)             Absence of Material Changes. Subsequent to the respective dates
as of which information is given in the Disclosure Package, (a) neither the
Company nor any of its subsidiaries has incurred any material liability or
obligation, direct or contingent, or entered into any material transaction not
in the ordinary course of business; (b) neither the Company nor any of its
subsidiaries has purchased any of the Company’s outstanding capital stock, or
declared, paid or otherwise made any dividend or distribution of any kind on the
Company’s capital stock; (c) there has not been any change in the capital stock
(other than a change in the number of shares of outstanding Common Stock due to
the issuance of such Common Stock upon the exercise of outstanding options or
warrants or pursuant to the terms of employment agreements outstanding prior to
the date of the Disclosure Package), or material change in the short−term debt
or long−term debt of the Company and its Subsidiaries or any issue of options,
warrants, convertible securities or other rights to purchase the capital stock
(other than grants of stock options under the Company’s stock option plans
existing on the date hereof) of the Company, or (d) there has not been any
Material Adverse Effect from that set forth in the Disclosure Package (exclusive
of any amendments or supplements thereto subsequent to the date of this
Agreement).

 

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

 

(o)               Legal Proceedings. There are no legal or governmental
proceedings pending or, to the Company’s knowledge, threatened or contemplated
to which the Company or any of the Subsidiaries is or would be a party or of
which any of their respective properties is or would be subject at law or in
equity, before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency, or before or by any
self-regulatory organization or other non-governmental regulatory authority
(including, without limitation, FINRA and Nasdaq), except (i) as described in
the Registration Statement, the Disclosure Package and the Prospectus, (ii) any
such proceeding, which if resolved adversely to the Company or any Subsidiary,
would not result in a judgment, decree or order having, individually or in the
aggregate, a Material Adverse Effect or (iii) any such proceeding that would not
prevent or materially and adversely affect the ability of the Company to
consummate the transactions contemplated hereby.  

 

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

 

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

 

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

 

(s)                Not an Investment Company.  Neither the Company nor any of
the Subsidiaries is or, after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described in the
Prospectus, will be required to register as an “investment company” as defined
in the Investment Company Act of 1940, as amended.

 

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

 

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

 

 8 

 

 

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

 

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

 

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

 

(y)               No Price Stabilization.  Neither the Company nor any of the
Subsidiaries nor, to the Company’s knowledge, any of their respective officers,
directors, affiliates or controlling persons has taken or will take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities.

 

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

 

 9 

 

 

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

 

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

 

(cc)            Exchange Act Requirements. The Company has filed in a timely
manner all reports required to be filed pursuant to Sections 13, 14 and 15(d) of
the Exchange Act during the preceding 12 months.  Except as set forth in the
Registration Statement, the Disclosure Package and the Prospectus, the Company’s
Common Stock is listed and trades on the Nasdaq and no stop order or notice of
suspension of trading of its Common Stock on the Nasdaq Capital Market has been
received from or, to the Company’s knowledge, threatened by any person.

 

(dd)           FINRA Affiliations.  To the Company’s knowledge, there are no
affiliations or associations between (i) any member of FINRA and (ii) the
Company or any of the Company’s officers, directors or 5% or greater security
holders or any beneficial owner of the Company’s unregistered equity securities
that were acquired at any time on or after the one hundred eightieth (180th) day
immediately preceding the date the Registration Statement was initially filed
with the Commission.

 

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

 

(ff)             No Labor Disputes.  Neither the Company nor any Subsidiary is
engaged in any unfair labor practice; except for matters that would not,
individually or in the aggregate, result in a Material Adverse Effect.  There is
(A) no unfair labor practice complaint pending or, to the Company’s knowledge
after due inquiry, threatened against the Company or any Subsidiary before the
National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under collective bargaining agreements is pending or, to the
Company’s knowledge, threatened, (B) no strike, labor dispute, slowdown or
stoppage pending or, to the Company’s knowledge after due inquiry, threatened
against the Company or any Subsidiary and (C) no union representation dispute
currently existing concerning the employees of the Company or any Subsidiary,
and (ii) to the Company’s knowledge (A) no union organizing activities are
currently taking place concerning the employees of the Company or any Subsidiary
and (B) there has been no violation of any federal, state, local or foreign law
relating to discrimination in the hiring, promotion or pay of employees or any
applicable wage or hour laws concerning the employees of the Company or any
Subsidiary.

 

 10 

 

 

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

 

(hh)           Exchange Act Registration.  Except as set forth in the SEC
Reports, the Registration Statement, the Disclosure Package and the Prospectus,
the Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from Nasdaq, nor has the Company received any
notification that the Commission or Nasdaq is contemplating terminating such
registration or listing. Except as set forth in the Registration Statement, the
Disclosure Package and the Prospectus, the Company has complied in all material
respects with the applicable requirements of Nasdaq for maintenance of listing
of the Common Stock thereon.

 

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

 

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

 

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

 

 11 

 

 

3.             Covenants. The Company covenants and agrees with the Placement
Agent as follows:

 

(a)                Reporting Obligations; Exchange Act Compliance.  The Company
will (i) file the Prospectus with the Commission within the time periods
specified by Rule 424(b) and Rules 430A, 430B and 430C, as applicable under the
Securities Act, and (ii) file timely all reports required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c) or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and during such period as
the Prospectus would be required by law to be delivered  (whether physically or
through compliance with Rule 172 under the Securities Act or any similar rule)
(the “Prospectus Delivery Period”).

 

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

 

 

 

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

 

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

 

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

 

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

 

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

 

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

 

 12 

 

 

(i)                 Exchange Act Reports.  During the Prospectus Delivery
Period, the Company will file with the Commission such periodic and current
reports as required by the Exchange Act.

 

4.             Representations, Warranties and Agreements of Placement Agent.
The Placement Agent represents and agrees that, without the prior consent of the
Company, it has not made and will not make any offer relating to the Securities
that would constitute a free writing prospectus.

 

5.             Costs and Expenses. The Company and the Placement Agent agree
that except as provided in Section 7, the Company shall pay all of its own costs
and expenses, including, without limitation, all costs and expenses of its own
counsel, incident to the performance of each of its obligations under this
Agreement and in connection with the transactions contemplated hereby. The
Company shall reimburse the Placement Agent for its out-of-pocket expenses
incurred in connection with the Offering, including, but not limited to, fees of
its legal counsel and travel and road show expenses, up to a maximum of $25,000.

 

6.             Conditions of Placement Agent’s Obligations. The obligations of
the Placement Agent hereunder are subject to the following conditions:

 

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

 

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

 

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

 

(d)               No Material Adverse Change.  Prior to the Closing, there shall
not have occurred any Material Adverse Effect from that set forth in the
Disclosure Package and the Prospectus that makes it, in the Placement Agent’s
reasonable judgment, impracticable to market the Securities on the terms and in
the manner contemplated in the Disclosure Package, including, without
limitation, any of the following:

 

(i)                 a suspension or material limitation in trading in securities
generally on the New York Stock Exchange, the NYSE MKT, the NASDAQ Stock Market,
the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
Market, or the over the counter market or the establishing on such exchanges or
markets by the SEC or by such exchanges or markets of minimum or maximum prices
that are not in force and effect on the date hereof;

 

 13 

 

 

(ii)               a suspension or material limitation in trading in the
Company’s securities on any other exchange or market or the establishing on any
such market or exchange by the SEC or by such market of minimum or maximum
prices that are not in force and effect on the date hereof;

 

(iii)             a general moratorium on commercial banking activities declared
by either federal or any state authorities;

 

(iv)             the outbreak or escalation of hostilities involving the United
States or the declaration by the United States of a national emergency or war,
which in the Placement Agent’s sole judgment makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities in the manner contemplated in the Prospectus; or

 

(v)               any calamity or crisis, change in national, international or
world affairs, act of God, change in the international or domestic markets, or
change in the existing financial, political or economic conditions in the United
States or elsewhere, that in the Placement Agent’s judgment makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Securities in the manner contemplated in each of the Disclosure Package
and the Prospectus.

 

(e)                Representations and Warranties.  Each of the representations
and warranties of the Company contained herein shall be true and correct, in all
material respects (other than those representations, warranties and agreements
that are qualified as to materiality, which shall be true and correct in all
respects), as of the date hereof and the Closing Date, and all covenants and
agreements herein contained to be performed on the part of the Company and all
conditions herein contained to be fulfilled or complied with by the Company at
or prior to the Closing Date shall have been duly performed, fulfilled or
complied with.

 

(f)                On the Closing Date, there shall have been furnished to the
Placement Agent the opinion and negative assurance letter of Kane Kessler, P.C,
counsel for the Company, dated the Closing Date and addressed to the Placement
Agent, in form and substance reasonably satisfactory to the Placement Agent.

 

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

 

(i)                 each of the representations, warranties and agreements of
the Company in this Agreement are true and correct, in all material respects
(other than those representations, warranties and agreements that are qualified
as to materiality, which are true and correct in all respects), as of the Time
of Sale and the Closing Date; and the Company has complied with all agreements
and satisfied all the conditions on its part required under this Agreement to be
performed or satisfied at or prior to the Closing Date;

 

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

 

 14 

 

 

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

 

(iv)             the signers of said certificate have reviewed the Registration
Statement, the Disclosure Package and the Prospectus, and any amendments thereof
or supplements thereto (and any documents filed under the Exchange Act and
deemed to be incorporated by reference into the Disclosure Package and the
Prospectus), and (A) (i) the Registration Statement and any amendment thereof
did not contain when the Registration Statement (or such amendment) became
effective, any untrue statement of a material fact or omit to state when the
Registration Statement (or such amendment) became effective, any material fact
required to be stated therein or necessary to make the statements therein not
misleading and (ii) as of the Time of Sale,the Disclosure Package did not
contain any untrue statement of material fact or omitted to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading and (iii) the Prospectus, as amended
or supplemented, does not and did not contain, as of the time of filing and as
of the Closing Date, any untrue statement of material fact or omit to state and
did not omit to state as of such date, a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (B) since the Time of Sale, there has occurred no event
required to be set forth in an amendment or supplement to the Registration
Statement, the Disclosure Package or the Prospectus which has not been so set
forth and there has been no document required to be filed under the Exchange Act
that upon such filing would be deemed to be incorporated by reference in to the
Disclosure Package and into the Prospectus that has not been so filed.

 

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

 

(i)                 Other Filings with the Commission.  No later than the
business day immediately following the date hereof, the Company shall have
prepared and filed with the Commission a Current Report on Form 8-K with respect
to the transactions contemplated hereby, including as an exhibit thereto this
Agreement and any other documents relating thereto.

 

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

 

 15 

 

 

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

 

If any condition specified in this Section 6 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the Placement
Agent by notice to the Company at any time prior to the Closing Date, which
termination shall be without liability on the part of any party to any other
party, except that Section 5, Section 7 and Section 9 shall at all times be
effective and shall survive such termination.

 

7.             Indemnification and Contribution.

 

(a)                Indemnification of the Placement Agent.  The Company agrees
to indemnify, defend and hold harmless each of the Placement Agent, its
respective directors and officers, and each person, if any, who controls such
Placement Agent within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and the successors and assigns of all of the
foregoing persons, from and against any loss, damage, claim or liability, which,
jointly or severally, such Placement Agent or any such person may become subject
under the Securities Act, the Exchange Act, or other federal or state statutory
law or regulation, the common law or otherwise, (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such loss, damage, claim or liability (or actions in
respect thereof as contemplated below) arises out of or is based upon: (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto or the omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; (ii) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, or
the Prospectus (or any amendment or supplement thereto), or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading; and, in the case of (i) and (ii)
above, to reimburse such Placement Agent and each such controlling person for
any and all reasonable expenses (including reasonable fees and disbursements of
counsel) as such expenses are incurred by such Placement Agent or such
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the foregoing indemnity shall not apply to any
loss, claim, damage, liability or expense to the extent, but only to the extent,
it arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in or omitted from, and in conformity
with information concerning such Placement Agent furnished in writing by or on
behalf of such Placement Agent to the Company expressly for use therein, or
(iii) any untrue statement or alleged untrue statement of any material fact
contained in any audio or visual materials provided to Investors by or with the
approval of the Company including, without limitation, slides, videos, films or
tape recordings used in any road show or investor presentations made to
investors by the Company (whether in person or electronically) or in connection
with the marketing of the Securities.

 

(b)               Indemnification of the Company.  The Placement Agent will
indemnify, defend and hold harmless the Company, its directors and officers, and
any person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, and the
successors and assigns of all of the foregoing persons, from and against any
loss, claim, damage, liability or expense, as incurred to which, jointly or
severally, the Company or any such person may become subject under the
Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, the common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Placement Agent), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or any amendment thereto, or the
omission or alleged omission therefrom to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading, in the
case of each of (i) and (ii) above, to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any Preliminary Prospectus or
the Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with information concerning such Placement Agent furnished in writing
by or on behalf of such Placement Agent to the Company expressly for use therein
and to reimburse the Company, or any such director, officer or controlling
person for any legal and other expense reasonably incurred by the Company, or
any such director, officer or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action.

 

 16 

 

 

(c)                Notice and Procedures.  If any action, suit or proceeding
(each, a “Proceeding”) is brought against a person (an “indemnified party”) in
respect of which indemnity may be sought against the Company or the Placement
Agent (as applicable, the “indemnifying party”) pursuant to subsection (a) or
(b), respectively, of this Section 7, such indemnified party shall promptly
notify such indemnifying party in writing of the institution of such Proceeding
and such indemnifying party shall assume the defense of such Proceeding,
including the employment of counsel reasonably satisfactory to such indemnified
party and payment of all fees and expenses; provided, however, that the omission
to so notify such indemnifying party shall not relieve such indemnifying party
from any liability which such indemnifying party may have to any indemnified
party or otherwise, except to the extent such failure results in the forfeiture
by the indemnifying party of substantial rights or defenses. The indemnified
party or parties shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless (i) the employment of such counsel
shall have been authorized in writing by the indemnifying party in connection
with the defense of such Proceeding, (ii) the indemnifying party shall not have,
within a reasonable period of time in light of the circumstances, employed
counsel to defend such Proceeding or (iii) such indemnified party or parties
shall have reasonably concluded that there may be defenses available to it or
them which are different from, additional to or in conflict with those available
to such indemnifying party, in any of which events such reasonable fees and
expenses shall be borne by such indemnifying party and paid as incurred (it
being understood, however, that such indemnifying party shall not be liable for
the expenses of more than one separate counsel (in addition to any local
counsel) in any one Proceeding or series of related Proceedings in the same
jurisdiction representing the indemnified parties who are parties to such
Proceeding). An indemnifying party shall not be liable for any settlement of any
Proceeding (including by consent to the entry of any judgment) effected without
its written consent but, if settled with its written consent or if there be a
final judgment for the plaintiff, such indemnifying party agrees to indemnify
and hold harmless the indemnified party or parties from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel (which fees and expenses shall be reasonably documented) as contemplated
by the second sentence of this Section 7(c), then the indemnifying party agrees
that it shall be liable for any settlement of any Proceeding effected without
its written consent if (i) such settlement is entered into more than 90 days
after receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall not have fully reimbursed the indemnified party in
accordance with such request prior to the date of such settlement and (iii) such
indemnified party shall have given the indemnifying party at least 30 days’
prior notice of its intention to settle. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement,
compromise or consent to the entry of judgment in any pending or threatened
Proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
Proceeding and does not include an admission of fault or culpability or a
failure to act by or on behalf of such indemnified party.

 

 17 

 

 

(d)               Contribution.  If the indemnification provided for in this
Section 7 is unavailable to an indemnified party under subsections (a) or (b) of
this Section 7 or insufficient to hold an indemnified party harmless in respect
of any losses, claims, damages, liabilities or expenses referred to therein,
then each applicable indemnifying party shall, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages, liabilities or
expenses referred to in subsection (a) or (b) above, (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Placement Agent on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Placement Agent on the other hand
in connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations.  The relative benefits received by the Company on the
one hand and the Placement Agent on the other hand shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Securities (before deducting expenses) received by the Company and the Placement
Fee received by the Placement Agent, in each case as set forth on the cover of
the Prospectus, bear to the aggregate public offering price of the
Securities.  The relative fault of the Company on the one hand and the Placement
Agent on the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, on the one hand, or by the Placement Agent, on the
other hand, and the parties’ relevant intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission.  The
Company and the Placement Agent agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were to be determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the first sentence of this Section
7(d).  The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first sentence of this
Section 7(d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
against any action or claim which is the subject of this Section
7(d).  Notwithstanding the provisions of this Section 7(d), the Placement Agent
shall not be required to contribute any amount in excess of the Placement
Fee.  No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.

 

(e)                Representations and Agreements to Survive Delivery.  The
obligations of the Company under this Section 7 shall be in addition to any
liability which the Company may otherwise have.  The indemnity and contribution
agreements of the parties contained in this Section 7 and the covenants,
warranties and representations of the Company contained in this Agreement shall
remain operative and in full force and effect regardless of (i) any termination
of this Agreement, (ii) any investigation made by or on behalf of the Placement
Agent, any person who controls the Placement Agent within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act or any
affiliate of the Placement Agent, or by or on behalf of the Company, its
directors or officers or any person who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
and (iii) the issuance and delivery of the Securities. The Company and the
Placement Agent agree promptly to notify each other of the commencement of any
Proceeding against it and, in the case of the Company, against any of the
Company’s officers or directors in connection with the issuance and sale of the
Securities, or in connection with the Registration Statement, the Disclosure
Package or the Prospectus.

 

 18 

 

 

8.             [Reserved]

 

9.             Termination.

 

(a)                The Placement Agent shall have the right to terminate this
Agreement by giving notice as hereinafter specified at any time at or prior to
the Closing Date, without liability on the part of the Placement Agent to the
Company, if (i) prior to delivery and payment for the Securities (A) trading in
securities generally shall have been suspended or materially limited on or by
the New York Stock Exchange, the NASDAQ Stock Market, the NASDAQ Global Select
Market, the NASDAQ Global Market, the NASDAQ Capital Market, or the NYSE MKT
(each, a “Trading Market”), (B) trading in the Common Stock of the Company shall
have been suspended or materially limited on any exchange or in the
over-the-counter market, (C) a general moratorium on commercial banking
activities shall have been declared by federal or New York state authorities,
(D) there shall have occurred any outbreak or material escalation of hostilities
or acts of terrorism involving the United States or there shall have been a
declaration by the United States of a national emergency or war, (E) there shall
have occurred any other calamity or crisis or any material change in general
economic, political or financial conditions in the United States or elsewhere,
if the effect of any such event specified in clause (D) or (E), in the
reasonable judgment of the Placement Agent, makes it impractical or inadvisable
to proceed with the completion of the sale of and payment for the Securities on
the Closing Date on the terms and in the manner contemplated by this Agreement,
the Disclosure Package and the Prospectus, or (ii) since the time of execution
of this Agreement or the earlier respective dates as of which information is
given in the Disclosure Package, there has been, (A) in the reasonable judgment
of the Placement Agent, any Material Adverse Effect or (B) the Company shall
have sustained a loss by strike, fire, flood, earthquake, accident or other
calamity of such character that would, in the reasonable judgment of the
Placement Agent, individually or in the aggregate, result in a Material Adverse
Effect and which would, in the reasonable judgment of the Placement Agent, make
it impracticable or inadvisable to proceed with the offering or the delivery of
the Securities on the terms and in the manner contemplated in the Disclosure
Package.  Any such termination shall be without liability of any party to any
other party except that the provisions of Section 5, Section 7, Section 9(b) and
Section 12 hereof shall at all times be effective notwithstanding such
termination.

 

(b)               Whether or not the Offering is completed, during the six
months following the termination of the Engagement Letter by and between the
Company and the Placement Agent, dated May 24, 2016, any person or entity to
whom the Placement Agent introduced the Company, or with whom there have been
discussions or negotiations about an investment in the Company during the term
of the Placement Agent’s engagement on behalf of the Company, purchases
securities from the Company, the Company agrees to pay the Placement Agent upon
the closing of such transaction a cash fee in the amount that would otherwise
have been payable to the Placement Agent if such transaction occurred during the
term of this Agreement.

 

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

 

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

 

Chardan Capital Markets, LLC

150 East 58th Street, 28th Fl

New York, New York 10155

Attention: Jonathan Schechter

Facsimile No.: (347) 801-2502

 

 19 

 

 

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

 

Pryor Cashman LLP

7 Times Square

New York, New York 10036

Attention:  M. Ali Panjwani, Esq.

Facsimile No.: (212) 798-6319

 

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

 

Northwest Biotherapeutics, Inc.

4800 Montgomery Lane, Suite 800

Bethesda, MD 20814

Attn: Chief Executive Officer

Facsimile No.: [ ]

 

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

 

Kane Kessler, P.C.

1350 Avenue of the Americas

New York, N.Y. 10019

Attention:  Peter Campitiello, Esq.

Facsimile No.: (212) 245-3009

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

 

11.         Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and shall be binding upon the Placement Agent, the Company and
their respective successors and assigns and the controlling persons, officers
and directors referred to in Section 7.  Nothing in this Agreement is intended
or shall be construed to give to any other person, firm or corporation
(including the Investors), other than the persons, firms or corporations
mentioned in the preceding sentence, any legal or equitable remedy or claim
under or in respect of this Agreement, or any provision herein contained.  The
term “successors and assigns” as herein used shall not include any purchaser of
the Securities by reason merely of such purchase.

 

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

 

13.         No Fiduciary Relationship. The Company hereby acknowledges that the
Placement Agent is acting solely as Placement Agent in connection with the
offering of the Company’s securities. The Company further acknowledges that the
Placement Agent is acting pursuant to a contractual relationship created solely
by this Agreement entered into on an arm’s length basis and in no event do the
parties intend that the Placement Agent act or be responsible as a fiduciary to
the Company, its management, shareholders, creditors or any other person in
connection with any activity that the Placement Agent may undertake or have
undertaken in furtherance of the offering of the Company’s securities, either
before or after the date hereof. The Placement Agent hereby expressly disclaims
any fiduciary or similar obligations to the Company, either in connection with
the transactions contemplated by this Agreement or any matters leading up to
such transactions, and the Company hereby confirms its understanding and
agreement to that effect. The Company and the Placement Agent agree that they
are each responsible for making their own independent judgments with respect to
any such transactions, and that any opinions or views expressed by the Placement
Agent to the Company regarding such transactions, including but not limited to
any opinions or views with respect to the price or market for the Company’s
securities, do not constitute advice or recommendations to the Company. The
Company hereby waives and releases, to the fullest extent permitted by law, any
claims that the Company may have against the Placement Agent with respect to any
breach or alleged breach of any fiduciary or similar duty to the Company in
connection with the transactions contemplated by this Agreement or any matters
leading up to such transactions.

 

 20 

 

 

14.         Entire Agreement. This Agreement, together with the schedules and
exhibits attached hereto and as the same may be amended from time to time in
accordance with the terms hereof, contains the entire agreement among the
parties hereto relating to the subject matter hereof and there are no other or
further agreements outstanding not specifically mentioned herein.

 

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

 

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

 

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

 

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

 

 

[Signature pages follow]

 

 21 

 

 

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,                 NORTHWEST BIOTHERAPEUTICS, INC.            
              By:         Name:         Title:    

 

 

Accepted as of

the date first above written:

 

CHARDAN CAPITAL MARKETS, LLC

 

 

By:       Name:     Title:  

 

 

Signature Page to Placement Agency Agreement

 

 

 

 

None.

 

 

 

 

 

 

 Schedule I 

 

 

Exhibit A

 

Form of Purchase Agreement

 

 

 

 

 

 

  Exhibit A 

 

 

Exhibit B

 

Pricing Information

 

 

Number of Shares to be Sold: 7,400,000

 

Number of Warrants to be Sold: 3,700,000

 

Offering Price: $0.50

 

Exercise Price of Warrants: $0.60, exercisable until January [ ], 2022.

 

Aggregate Placement Agency Fees: $296,000

 

 

 

 

 

 

 

  Exhibit B 

 

 

Exhibit C

 

Disclosure Materials

 

 

None.

 

 

 

 

 

  Exhibit C 

 

 

Exhibit D

 

Form of Warrant

 

 

 

 

 

 

 

  Exhibit D