Exhibit 10.1

 

UNDERWRITING AGREEMENT

 

March 16, 2016

Dawson James Securities, Inc.

As Representative of the several Underwriters named on Schedule 1 attached
hereto
1 North Federal Highway, 5th Floor

Boca Raton, FL 33432

 

Ladies and Gentlemen:

 

The undersigned, InspireMD, Inc. (the “Company”), hereby confirms its agreement
(this “Agreement”) with Dawson James Securities, Inc. (the “Representative”) and
with the other underwriters named on Schedule 1 hereto for which the
Representative is acting as representative (the Representative and such other
underwriters being collectively called the “Underwriters” or, individually, an
“Underwriter”) as follows: 

 

1.          Purchase and Sale of Units; Representative’s Warrants.

 

(a)          Common Stock and Warrants.

 

(i)          Nature and Purchase of Common Stock and Warrants.

 

(A)          On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to the several Underwriters, an aggregate of 1,900,000
units (“Units”) of securities, each such Unit consisting of (a) one share of the
Company’s common stock (the “Common Stock”) (the “Shares”) and (b) a warrant,
which warrant is each exercisable to purchase 0.5 shares of Common Stock (the
“Warrants”). The Units, the Shares, the Warrants and the shares of Common Stock
issuable upon exercise thereof (the “Warrant Shares”) are hereinafter referred
to together as the “Public Securities.”

 

(B)           The Underwriters, severally and not jointly, agree to purchase
from the Company the number of Units set forth opposite their respective names
on Schedule 1 attached hereto and made a part hereof at a purchase price of
$0.5428 (the “Purchase Price”) per Unit (92% of the public offering price per
Unit). The Units are to be offered initially to the public at the offering price
set forth on the cover page of the Prospectus (as defined in Section 2(a)(i)(A)
hereof).

 

(ii)         Shares Payment and Delivery.

 

(A)          Delivery and payment for the Units shall be made at 10:00 a.m.,
Eastern time, on the third (3rd) Business Day following the date hereof (the
“Effective Date”) (or the fourth (4th) Business Day following the Effective Date
if this Agreement is executed after 4:01 p.m., Eastern time) or at such earlier
time as shall be agreed upon by the Representative and the Company, at the
offices of Schiff Hardin LLP, 901 K Street NW, Suite 700, Washington DC 20001
(“Representative Counsel”), or at such other place (or by electronic
transmission) as shall be agreed upon by the Representative and the Company. The
hour and date of delivery and payment for the Units is called the “Closing
Date.”

 

(B)          Payment for the Units shall be made on the Closing Date by wire
transfer in federal (same day) funds, payable to the order of the Company upon
delivery of the certificates (in form and substance satisfactory to the
Underwriters) representing the Units (or through the facilities of the
Depository Trust Company (“DTC”)), for the account of the Underwriters. The
Units shall be registered in such name or names and in such authorized
denominations as the Representative may request in writing two (2) full Business
Days prior to the Closing Date. The Company shall not be obligated to sell or
deliver the Units except upon tender of payment by the Representative for all of
the Units or via delivery versus payment for the Units. The term “Business Day”
means any day other than a Saturday, a Sunday or a legal holiday or a day on
which banking institutions are authorized or obligated by law to close in New
York, New York.

 

 

 

 

(b)          Underwriter’s Warrants. The Company hereby agrees to issue and sell
to the Representative (and/or its designees) on the Closing Date an option
(“Representative’s Warrant”) for the purchase of an aggregate of 95,000 shares
of Common Stock, representing 5% of the Shares, for an aggregate purchase price
of $100.00. The Representative’s Warrant agreement, in the form attached hereto
as Exhibit A (the “Representative’s Warrant Agreement”), shall be exercisable,
in whole or in part, commencing on a date which is 181 days after the Effective
Date and expiring on the five-year anniversary of the Effective Date at an
initial exercise price per share of Common Stock of $0.7375, which is equal to
125% of the Purchase Price. The Representative’s Warrant Agreement and the
shares of Common Stock issuable upon exercise thereof are hereinafter referred
to together as the “Representative’s Securities.” The Representative understands
and agrees that there are significant restrictions pursuant to FINRA Rule 5110
against transferring the Representative’s Warrant Agreement and the underlying
shares of Common Stock during the one hundred eighty (180) days after the
Effective Date and by its acceptance thereof shall agree that it will not sell,
transfer, assign, pledge or hypothecate the Representative’s Warrant Agreement,
or any portion thereof, or be the subject of any hedging, short sale,
derivative, put or call transaction that would result in the effective economic
disposition of such securities for a period of one hundred eighty (180) days
following the Effective Date to anyone other than (i) an Underwriter or a
selected dealer in connection with the Offering, or (ii) a bona fide officer or
partner of the Representative or of any such Underwriter or selected dealer; and
only if any such transferee agrees to the foregoing lock-up restrictions.
Delivery of the Representative’s Warrant Agreement shall be made on the Closing
Date and shall be issued in the name or names and in such authorized
denominations as the Representative may request.

 

2.          Representations and Warranties of the Company. The Company
represents and warrants to the Underwriters as of the Applicable Time (as
defined below) and as of the Closing Date, as follows:

 

(a)          Registration Matters.

 

(i)          Pursuant to the Securities Act.

 

(A)         The Company has filed with the Commission a registration statement
on Form S-3 (File No. 333-191875) including a related prospectus, for the
registration of certain securities (the "Shelf Securities"), including the
Public Securities and Representative’s Securities under the Securities Act, and
the rules and regulations thereunder (the "Securities Act Regulations"). The
registration statement has been declared effective under the Securities Act by
the Commission. The registration statement, as of any time, means such
registration statement as amended by any post-effective amendments thereto to
such time, including the exhibits and any schedules thereto at such time, the
documents incorporated or deemed to be incorporated by reference therein at such
time pursuant to Item 12 of Form S-3 under the Securities Act and the documents
otherwise deemed to be a part thereof as of such time pursuant to Rule 430A
("Rule 430A") or Rule 430B under the Securities Act Regulations ("Rule 430B"),
is referred to herein as the "Registration Statement;" provided, however, that
the "Registration Statement" without reference to a time means such registration
statement as amended by any post-effective amendments thereto as of the time of
the first contract of sale for the Public Securities, which time shall be
considered the "new effective date" of such registration statement with respect
to the Public Securities within the meaning of paragraph (f)(2) of Rule 430B,
including the exhibits and schedules thereto as of such time, the documents
incorporated or deemed incorporated by reference therein at such time pursuant
to Item 12 of Form S-3 under the Securities Act and the documents otherwise
deemed to be a part thereof as of such time pursuant to the Rule 430A or Rule
430B. Any registration statement filed pursuant to Rule 462(b) of the Securities
Act Regulations is hereinafter called the "Rule 462(b) Registration Statement,"
and after such filing the term "Registration Statement" shall include the 462(b)
Registration Statement. The prospectus covering the Shelf Securities, dated
October 24, 2013, in the form first used to confirm sales of the Public
Securities (or in the form first made available to the Underwriter by the
Company to meet requests of purchasers pursuant to Rule 173 under the Securities
Act) is hereinafter referred to as the "Base Prospectus." The Base Prospectus,
as supplemented by the prospectus supplement specifically related to the Public
Securities in the form first used to confirm sales of the Public Securities (or
in the form first made available to the Underwriter by the Company to meet
requests of purchasers pursuant to Rule 173 under the Securities Act), is
hereinafter referred to, collectively, as the "Prospectus," and the term
"Preliminary Prospectus" means any preliminary form of the Prospectus, including
any preliminary prospectus supplement specifically related to the Public
Securities, filed with the Commission by the Company with the consent of the
Underwriter.

 

(B)         All references in this Agreement to financial statements and
schedules and other information which is “contained,” “included” or “stated” (or
other references of like import) in the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to include all such financial
statements and schedules and other information incorporated or deemed
incorporated by reference in the Registration Statement, such Preliminary
Prospectus or the Prospectus, as the case may be, prior to the execution and
delivery of this Agreement; and all references in this Agreement to amendments
or supplements to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to include the filing of any document under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules
and regulations thereunder (the “Exchange Act Regulations”), incorporated or
deemed to be incorporated by reference in the Registration Statement, such
Preliminary Prospectus or the Prospectus, as the case may be, at or after the
execution and delivery of this Agreement.

 

 

 

 

(C)           The term “Pricing Disclosure Package” means (i) the Preliminary
Prospectus, as most recently amended or supplemented immediately prior to the
Initial Sale Time (as defined herein), (ii) the Issuer Free Writing Prospectuses
(as defined below), if any, identified in Schedule I hereto, and (iii) any other
Free Writing Prospectus (as defined below) that the parties hereto shall
hereafter expressly agree to treat as part of the Pricing Disclosure Package.

 

(D)          “Applicable Time” means 4:30 p.m., Eastern time, on the date of
this Agreement.

 

(E)           “Issuer Free Writing Prospectus” means any issuer free writing
prospectus, as defined in Rule 433 of the Securities Act Regulations. The term
"Free Writing Prospectus" means any free writing prospectus, as defined in Rule
405 of the Securities Act Regulations.

 

(F)           Agreement to Renew Registration Statement. With respect to the
Warrant Shares and the Common Stock underlying the Underwriter’s Warrants, the
Company agrees, to the extent that the Company is eligible to use Form S-3, to
file a new registration statement pursuant to Rule 415(a)(5)-(6) to maintain the
registration of such shares in the timeframe set forth by such rule.

 

(b)          Stock Exchange Listing. The Shares are approved for listing on NYSE
MKT (the “Exchange”) and the Company has taken no action designed to, or likely
to have the effect of, delisting the shares of Common Stock from the Exchange,
nor has the Company received any notification that the Exchange is contemplating
terminating such listing, except as disclosed in the SEC Reports (as defined
below).

 

(c)          No Stop Orders, etc. Neither the Commission nor, to the Company’s
knowledge, any state regulatory authority has issued any order preventing or
suspending the use of the Registration Statement, any Preliminary Prospectus or
the Prospectus or has instituted or, to the Company’s knowledge, threatened to
institute, any proceedings with respect to such an order. The Company has
complied with each request (if any) from the Commission for additional
information.

 

(d)          Subsidiaries. Each of the Company’s subsidiaries have been duly
incorporated and are validly existing as entities in good standing under the
laws of jurisdictions of their respective organization, with power and authority
to own, lease and operate their respective properties and conduct their
respective businesses as described in the Preliminary Prospectus, and have been
duly qualified as foreign corporations for the transaction of business and are
in good standing under the laws of each other jurisdictions in which they own or
lease properties or conduct any business so as to require such qualification,
except where the failure so to qualify or be in good standing would not have a
Material Adverse Change (as defined below); all of the issued and outstanding
capital stock (or other ownership interests) of such subsidiaries has been duly
and validly authorized and issued, is fully paid and non-assessable and is
owned, directly and indirectly, by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity. Unless otherwise
set forth, all references in this Section 2 to the “Company” shall include
references to all such subsidiaries.

 

(e)          Disclosures in Registration Statement.

 

(i)          Compliance with Securities Act and 10b-5 Representation.

 

(A)          Each of the Registration Statement and any post-effective amendment
thereto, at the time it became effective, complied in all material respects with
the requirements of the Securities Act and the Securities Act Regulations. Each
Preliminary Prospectus, including the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment or
supplement thereto, and the Prospectus, at the time each was filed with the
Commission, complied in all material respects with the requirements of the
Securities Act and the Securities Act Regulations. Each Preliminary Prospectus
delivered to the Underwriters for use in connection with this Offering and the
Prospectus was or will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.

 

(B)          Neither the Registration Statement nor any amendment thereto, at
its effective time, as of the Applicable Time, at the Closing Date, contained,
contains or will contain an untrue statement of a material fact or omitted,
omits or will omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.

 

 

 

 

(C)          The Pricing Disclosure Package, as of the Applicable Time, at the
Closing Date, did not, does not and will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and each Issuer Free Writing Prospectus does not conflict
with the information contained in the Registration Statement, any Preliminary
Prospectus, or the Prospectus, and each such Issuer Free Writing Prospectus, as
supplemented by and taken together with the Preliminary Prospectus as of the
Applicable Time, did not include 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 this representation and warranty shall not apply to statements
made or statements omitted in reliance upon and in conformity with written
information furnished to the Company with respect to the Underwriters by the
Representative expressly for use in the Registration Statement, the Preliminary
Prospectus or the Prospectus or any amendment thereof or supplement thereto. The
parties acknowledge and agree that such information provided by or on behalf of
any Underwriter consists solely of the following disclosure contained in the
following paragraphs in the “Underwriting” section of the Prospectus: (i) the
names of the several underwriters, (ii) the concession and reallowance figures
appearing in the third paragraph thereof, and (iii) the information under the
subsection “Stabilization” (the “Underwriters’ Information”); and

 

(D)          Neither the Prospectus nor any amendment or supplement thereto
(including any prospectus wrapper), as of its issue date, at the time of any
filing with the Commission pursuant to Rule 424(b), at the Closing Date,
included, includes or will include an untrue statement of a material fact or
omitted, omits or 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 this representation and warranty
shall not apply to the Underwriters’ Information.

 

(ii)         Disclosure of Agreements. The agreements and documents described in
the Registration Statement, the Pricing Disclosure Package and the Prospectus
conform in all material respects to the descriptions thereof contained therein
and there are no agreements or other documents required by the Securities Act
and the Securities Act Regulations to be described in the Registration
Statement, the Pricing Disclosure Package and the Prospectus or to be filed with
the Commission as exhibits to the Registration Statement, that have not been so
described or filed. Each agreement or other instrument (however characterized or
described) to which the Company is a party or by which it is or may be bound or
affected and (i) that is referred to in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, and (ii) is material to the Company’s
business, has been duly authorized and validly executed by the Company, is in
full force and effect in all material respects and is enforceable against the
Company and, to the Company’s knowledge, the other parties thereto, in
accordance with its terms, except (x) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally, (y) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and
(z) that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought. None of such
agreements or instruments has been assigned by the Company, and neither the
Company nor, to the Company’s knowledge, any other party is in default
thereunder and, to the Company’s knowledge, no event has occurred that, with the
lapse of time or the giving of notice, or both, would constitute a default
thereunder, except as disclosed in the Registration Statement, the Pricing
Disclosure Package and the Prospectus. To the Company’s knowledge, performance
by the Company of the material provisions of such agreements or instruments will
not result in a violation of any existing applicable law, rule, regulation,
judgment, order or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its assets or businesses
(each, a “Governmental Entity”), including, without limitation, those relating
to environmental laws and regulations.

 

(iii)        Prior Securities Transactions. No securities of the Company have
been sold by the Company or by or on behalf of, or for the benefit of, any
person or persons controlling, controlled by or under common control with the
Company, except as disclosed in the Registration Statement, the Pricing
Disclosure Package and the Preliminary Prospectus.

 

(iv)        Regulations. The disclosures in the Registration Statement, the
Pricing Disclosure Package and the Prospectus concerning the effects of federal,
state, local and all foreign regulation on the Offering and the Company’s
business as currently contemplated are correct in all material respects and no
other such regulations are required to be disclosed in the Registration
Statement, the Pricing Disclosure Package and the Prospectus which are not so
disclosed.

 

(f)          Changes After Dates in Registration Statement.

 

(i)          No Material Adverse Change. Since the respective dates as of which
information is given in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, except as otherwise specifically stated therein:
(i) there has been no material adverse change in the financial position or
results of operations of the Company, nor 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
(a “Material Adverse Change”); (ii) there have been no material transactions
entered into by the Company, other than as contemplated pursuant to this
Agreement; and (iii) no officer or director of the Company has resigned from any
position with the Company.

 

 

 

 

(ii)         Recent Securities Transactions, etc. Subsequent to the respective
dates as of which information is given in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, and except as may otherwise be
indicated or contemplated herein or disclosed in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, the Company has not: (i) issued
any securities (other than (i) grants under any stock compensation plan and (ii)
shares of common stock issued upon exercise or conversion of option, warrants or
convertible securities described in the Registration Statement, the Pricing
Disclosure Package and the Prospectus) or incurred any liability or obligation,
direct or contingent, for borrowed money; or (ii) declared or paid any dividend
or made any other distribution on or in respect to its capital stock.

 

(g)          Independent Accountants. To the knowledge of the Company, Kesselman
& Kesselman, an independent registered public accounting firm and a member firm
of PricewaterhouseCoopers International Limited, during such time as it was
engaged by the Company (collectively, the “Auditors”), is an independent
registered public accounting firm as required by the Securities Act and the
Securities Act Regulations and the Public Company Accounting Oversight Board.
During such time period in which the Auditors served as the Company’s
independent registered public accounting firm the Auditors did not or have not,
during the periods covered by the financial statements included in the
Registration Statement, the Pricing Disclosure Package and the Prospectus,
provided to the Company any non-audit services, as such term is used in Section
10A(g) of the Exchange Act.

 

(h)           SEC Reports; Financial Statements, etc. The Company has complied
in all material respects with requirements to file all reports, schedules,
forms, statements and other documents required to be filed by it under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”) on a timely basis or has received a valid extension
of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted 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 under which they were made, not misleading. The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
during the periods involved (“GAAP”), except as may be otherwise specified in
such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its
consolidated subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments. The
financial statements, including the notes thereto and supporting schedules
included in the Registration Statement, the Pricing Disclosure Package and the
Prospectus, fairly present in all material respects the financial position and
the results of operations of the Company at the dates and for the periods to
which they apply; and such financial statements have been prepared in conformity
with GAAP, consistently applied throughout the periods involved (provided that
unaudited interim financial statements are subject to year-end audit adjustments
that are not expected to be material in the aggregate and do not contain all
footnotes required by GAAP); and the supporting schedules included in the
Registration Statement present fairly in all material respects the information
required to be stated therein. Except as included therein, no historical or pro
forma financial statements are required to be included in the Registration
Statement, the Pricing Disclosure Package or the Prospectus under the Securities
Act or the Securities Act Regulations. The pro forma and pro forma as adjusted
financial information and the related notes, if any, included in the
Registration Statement, the Pricing Disclosure Package and the Prospectus have
been properly compiled and prepared in accordance with the applicable
requirements of the Securities Act and the Securities Act Regulations and
present fairly in all material respects 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. All disclosures contained in the Registration
Statement, the Pricing Disclosure Package or 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 of
Regulation S-K of the Securities Act, to the extent applicable. Each of the
Registration Statement, the Pricing Disclosure Package and the Prospectus
discloses all material off-balance sheet transactions, arrangements, obligations
(including contingent obligations), and other relationships of the Company with
unconsolidated entities or other persons that may have a material current or
future effect on the Company’s financial condition, changes in financial
condition, results of operations, liquidity, capital expenditures, capital
resources, or significant components of revenues or expenses. Except as
disclosed in the Registration Statement, the Pricing Disclosure Package and the
Prospectus, (a) the Company has not incurred any material liabilities or
obligations, direct or contingent, or entered into any material transactions
other than in the ordinary course of business, (b) the Company has not declared
or paid any dividends or made any distribution of any kind with respect to its
capital stock, (c) there has not been any change in the capital stock of the
Company (other than (i) grants under any stock compensation plan and (ii) shares
of common stock issued upon exercise or conversion of option, warrants or
convertible securities described in the Registration Statement, the Pricing
Disclosure Package and the Prospectus), and (d) there has not been any Material
Adverse Change in the Company’s long-term or short-term debt.

 

 

 

 

(i)           Authorized Capital; Options, etc. The Company had, at the date or
dates indicated in the Registration Statement, the Pricing Disclosure Package
and the Prospectus, the duly authorized, issued and outstanding capitalization
as set forth therein. Based on the assumptions stated in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, the Company will
have on the Closing Date the adjusted stock capitalization set forth therein.
Except as set forth in, or contemplated by, the Registration Statement, the
Pricing Disclosure Package and the Prospectus, on the Effective Date, as of the
Applicable Time, on the Closing Date, there will be no stock options, warrants,
or other rights to purchase or otherwise acquire any authorized, but unissued
shares of Common Stock of the Company or any security convertible or exercisable
into shares of Common Stock of the Company, or any contracts or commitments to
issue or sell shares of Common Stock or any such options, warrants, rights or
convertible securities.

 

(j)          Valid Issuance of Securities, etc.

 

(i)           Outstanding Securities. All issued and outstanding securities of
the Company issued prior to the transactions contemplated by this Agreement have
been duly authorized and validly issued and are fully paid and non-assessable;
the holders thereof have no rights of rescission with respect thereto, and are
not subject to personal liability by reason of being such holders; and none of
such securities were issued in violation of the preemptive rights of any holders
of any security of the Company or similar contractual rights granted by the
Company. The authorized shares of Common Stock, Company preferred stock and
other outstanding securities conform in all material respects to all statements
relating thereto contained in the Registration Statement, the Pricing Disclosure
Package and the Prospectus. The offers and sales of the outstanding shares of
Common Stock were at all relevant times either registered under the Securities
Act and the applicable state securities or “blue sky” laws or, based in part on
the representations and warranties of the purchasers of such shares, exempt from
such registration requirements.

 

(ii)         Securities Sold Pursuant to this Agreement. The Public Securities
and Representative’s Securities have been duly authorized for issuance and sale
and, when issued and paid for, will be validly issued, fully paid and
non-assessable; the holders thereof are not and will not be subject to personal
liability by reason of being such holders; the Public Securities and
Representative’s Securities are not and will not be subject to the preemptive
rights of any holders of any security of the Company or similar contractual
rights granted by the Company; and all corporate action required to be taken for
the authorization, issuance and sale of the Public Securities and
Representative’s Securities has been duly and validly taken. All corporate
action required to be taken for the authorization, issuance and sale of the
Units, the Shares and the Warrants, has been duly and validly taken; the Warrant
Shares have been duly authorized and reserved for issuance by all necessary
corporate action on the part of the Company and when paid for, if applicable,
and issued in accordance with the Warrants, such Warrant Shares will be validly
issued, fully paid and non-assessable; the holders thereof are not and will not
be subject to personal liability by reason of being such holders; and such
Shares or Warrant Shares are not and will not be subject to the preemptive
rights of any holders of any security of the Company or similar contractual
rights granted by the Company. The Public Securities conform in all material
respects to all statements with respect thereto contained in the Registration
Statement, the Pricing Disclosure Package and the Prospectus. All corporate
action required to be taken for the authorization, issuance and sale of the
Public Securities and Representative’s Securities has been duly and validly
taken; the Shares, Warrants and Warrant Shares, have been duly authorized and
reserved for issuance by all necessary corporate action on the part of the
Company and when paid for and issued such Shares will be validly issued, fully
paid and non-assessable; such Warrants will be validly issued; the holders
thereof are not and will not be subject to personal liability by reason of being
such holders; and such Warrant Shares are not and will not be subject to the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company (except for any such rights that have
been waived).

 

(k)          Registration Rights of Third Parties. Except as set forth in the
Registration Statement, the Pricing Disclosure Package and the Prospectus, no
holders of any securities of the Company or any rights exercisable for or
convertible or exchangeable into securities of the Company have the right to
require the Company to register any such securities of the Company under the
Securities Act or to include any such securities in a registration statement to
be filed by the Company (except for any such rights that have been waived).

 

 

 

 

(l)          Validity and Binding Effect of Agreements. This Agreement and the
Representative’s Warrant Agreement each has been duly and validly authorized by
the Company, and, when executed and delivered, will constitute, the valid and
binding agreement of the Company, enforceable against the Company in accordance
with its respective terms, except: (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally; (ii) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws; and (iii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.

 

(m)         No Conflicts, etc. The execution, delivery and performance by the
Company of this Agreement and all ancillary documents, the consummation by the
Company of the transactions herein and therein contemplated and the compliance
by the Company with the terms hereof and thereof do not and will not, with or
without the giving of notice or the lapse of time or both: (i) result in a
material breach of, or conflict with any of the terms and provisions of, or
constitute a material default under, or result in the creation, modification,
termination or imposition of any lien, charge or encumbrance upon any property
or assets of the Company pursuant to the terms of any agreement or instrument to
which the Company is a party; (ii) result in any violation of the provisions of
the Company’s Certificate of Incorporation (as the same may be amended or
restated from time to time, the “Charter”) or the by-laws of the Company (as the
same may be amended or restated from time to time, the “Bylaws”); or (iii)
violate any existing applicable law, rule, regulation, judgment, order or decree
of any Governmental Entity as of the date hereof (including, without limitation,
those promulgated by the Food and Drug Administration of the U.S. Department of
Health and Human Services (the “FDA”) or by any foreign, federal, state or local
regulatory authority performing functions similar to those performed by the FDA.

 

(n)         Regulatory. Except as described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus or as would not reasonably be
expected to result, individually or in the aggregate, in a Material Adverse
Change: (i) the Company has not received any FDA Form 483, notice of adverse
finding, warning letter or other correspondence or notice from the FDA or any
other Governmental Entity alleging or asserting noncompliance with any
Applicable Laws (as defined in clause (ii) below) or Authorizations (as defined
in clause (iii) below); (ii) the Company is and has been in material compliance
with statutes, laws, ordinances, rules and regulations applicable to the Company
for the ownership, testing, development, manufacture, packaging, processing,
use, distribution, marketing, labeling, promotion, sale, offer for sale,
storage, import, export or disposal of any product manufactured or distributed
by the Company, including without limitation, the Federal Food, Drug, and
Cosmetic Act, 21 U.S.C. § 301, et seq., similar laws of other Governmental
Entities and the regulations promulgated pursuant to such laws (collectively,
“Applicable Laws”); (iii) the Company possesses all licenses, certificates,
approvals, clearances, consents, authorizations, qualifications, registrations,
permits, and supplements or amendments thereto required by any such Applicable
Laws and/or to carry on its businesses as now conducted (“Authorizations”) and
such Authorizations are valid and in full force and effect and the Company is
not in violation of any term of any such Authorizations; (iv) the Company has
not received notice of any claim, action, suit, proceeding, hearing,
enforcement, investigation, arbitration or other action from any Governmental
Entity or third party alleging that any product, operation or activity is in
violation of any Applicable Laws or Authorizations or has any knowledge that any
such Governmental Entity or third party is considering any such claim,
litigation, arbitration, action, suit, investigation or proceeding, nor, to the
best of the Company’s knowledge, has there been any material noncompliance with
or violation of any Applicable Laws by the Company that could reasonably be
expected to require the issuance of any such communication or result in an
investigation, corrective action, or enforcement action by FDA or similar
Governmental Entity; (v) the Company has not received notice that any
Governmental Entity has taken, is taking or intends to take action to limit,
suspend, modify or revoke any Authorizations or has any knowledge that any such
Governmental Entity has threatened or is considering such action; (vi) the
Company has filed, obtained, maintained or submitted all reports, documents,
forms, notices, applications, records, claims, submissions and supplements or
amendments as required by any Applicable Laws or Authorizations and that all
such reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments were complete, correct and not
misleading on the date filed (or were corrected or supplemented by a subsequent
submission); and (vii) the Company has not, either voluntarily or involuntarily,
initiated, conducted or issued, or caused to be initiated, conducted or issued,
any recall, market withdrawal or replacement, safety alert, post-sale warning,
“dear doctor” letter, or other notice or action relating to the alleged lack of
safety or efficacy of any product or any alleged product defect or violation
and, to the Company’s knowledge, no third party has initiated, conducted or
intends to initiate or conduct such notice or action. Neither the Company nor,
to the Company's knowledge, any of its directors, officers, employees or agents
has been convicted of any crime under any Applicable Laws or has been the
subject of an FDA debarment proceeding. The Company has not been or is now
subject to FDA's Application Integrity Policy. To the Company's knowledge,
neither the Company, nor any of its directors, officers, employees or agents,
has made, or caused the making of, any false statements on, or material
omissions from, any other records or documentation prepared or maintained to
comply with the requirements of the FDA or any other Governmental Entity.
Neither the Company nor, to the Company's knowledge, any of its directors,
officers, employees or agents, have with respect to each of the following
statutes, or regulations promulgated thereto, as applicable: (i) engaged in
activities under 42 U.S.C. §§ 1320a-7b or 1395nn; (ii) knowingly engaged in any
activities under 42 U.S.C. § 1320a-7b or the Federal False Claims Act, 31 U.S.C.
§ 3729; or (iii) knowingly and willfully engaged in any activities under 42
U.S.C.§ 1320a-7b, which are prohibited, cause for civil penalties, or mandatory
or permissive exclusion from Medicare, Medicaid, or any other State Health Care
Program or Federal Health Care Program.

 

 

 

 

(o)          No Defaults; Violations. No material default exists in the due
performance and observance of any term, covenant or condition of any material
license, contract, indenture, mortgage, deed of trust, note, loan or credit
agreement, or any other agreement or instrument evidencing an obligation for
borrowed money, or any other material agreement or instrument to which the
Company is a party or by which the Company may be bound or to which any of the
properties or assets of the Company is subject. The Company is not (i) in
violation of any term or provision of its Charter or Bylaws, or (ii) in
violation of any franchise, license, permit, applicable law, rule, regulation,
judgment or decree of any Governmental Entity applicable to the Company.

 

(p)         Corporate Power; Licenses; Consents.

 

(i)          Conduct of Business. Except as described in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, the Company has
all requisite corporate power and authority, and has all necessary
authorizations, approvals, orders, licenses, certificates and permits of and
from all governmental regulatory officials and bodies that it needs as of the
date hereof to conduct its business purpose as described in the Registration
Statement, the Pricing Disclosure Package and the Prospectus.

 

(ii)         Transactions Contemplated Herein. The Company has all corporate
power and authority to enter into this Agreement and to carry out the provisions
and conditions hereof, and all consents, authorizations, approvals and orders
required in connection therewith have been obtained. No consent, authorization
or order of, and no filing with, any court, government agency or other body is
required for the valid issuance, sale and delivery of the Public Securities and
Representative’s Securities and the consummation of the transactions and
agreements contemplated by this Agreement and as contemplated by the
Registration Statement, the Pricing Disclosure Package and the Prospectus,
except with respect to applicable federal and state securities laws and the
rules and regulations of the Financial Industry Regulatory Authority, Inc.
(“FINRA”).

 

(q)          Litigation; Governmental Proceedings. There is no material action,
suit, proceeding, inquiry, arbitration, investigation, litigation or
governmental proceeding pending or, to the Company’s knowledge, threatened
against, or involving the Company or, to the Company’s knowledge, any executive
officer or director which has not been disclosed in the Registration Statement,
the Pricing Disclosure Package and the Prospectus or in connection with the
Company’s listing application for the additional listing of the Shares on the
Exchange.

 

(r)          Good Standing. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of the State of
Delaware as of the date hereof, and is duly qualified to do business and is in
good standing in each other jurisdiction in which its ownership or lease of
property or the conduct of business requires such qualification, except where
the failure to qualify, singularly or in the aggregate, would not have or
reasonably be expected to result in a Material Adverse Change.

 

(s)          Insurance. The Company carries or is entitled to the benefits of
insurance, with, to the Company’s knowledge, reputable insurers, and in such
amounts and covering such risks which the Company believes are reasonably
adequate, and all such insurance is in full force and effect. The Company has no
reason to believe that it 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 its
business as now conducted and at a cost that would not result in a Material
Adverse Change.

 

(t)          Transactions Affecting Disclosure to FINRA.

 

(i)          Finder’s Fees. Except as described in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, there are no claims,
payments, arrangements, agreements or understandings relating to the payment of
a finder’s, consulting or origination fee by the Company or any executive
officer or director of the Company (each an, “Insider”) with respect to the sale
of the Public Securities hereunder or any other arrangements, agreements or
understandings of the Company or, to the Company’s knowledge, any of its
stockholders that may affect the Underwriters’ compensation, as determined by
FINRA.

 

(ii)         Payments Within Twelve (12) Months. Except as described in the
Registration Statement, the Pricing Disclosure Package and the Prospectus, the
Company has not made any direct or indirect payments (in cash, securities or
otherwise) to: (i) any person, as a finder’s fee, consulting fee or otherwise,
in consideration of such person raising capital for the Company or introducing
to the Company persons who raised or provided capital to the Company; (ii) any
FINRA member; or (iii)  any person or entity that has any direct or indirect
affiliation or association with any FINRA member, within the twelve (12) months
prior to the date hereof, other than the payment to the Underwriters as provided
hereunder in connection with the Offering.

 

 

 

 

(iii)        Use of Proceeds. None of the net proceeds of the Offering will be
paid by the Company to any participating FINRA member or its affiliates, except
as specifically authorized herein.

 

(iv)        FINRA Affiliation. There is no (i) officer or director of the
Company, (ii) beneficial owner of 5% or more of any class of the Company's
securities or (iii) beneficial owner of the Company's unregistered equity
securities which were acquired during the 180-day period immediately preceding
the filing of the Registration Statement that is an affiliate or associated
person of a FINRA member participating in the Offering (as determined in
accordance with the rules and regulations of FINRA). 

 

(v)         Information. To the Company’s knowledge, all information provided by
the Company’s officers and directors in their FINRA Questionnaires to
Representative Counsel specifically for use by Representative Counsel in
connection with its Public Offering System filings (and related disclosure) with
FINRA is true, correct and complete in all material respects.

 

(u)         Foreign Corrupt Practices Act. Neither the Company nor, to the
Company’s knowledge, any director, officer, agent, employee or affiliate of the
Company or any other person acting on behalf of the Company, has, directly or
indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer or supplier, or official
or employee of any governmental agency or instrumentality of any government
(domestic or foreign) or any political party or candidate for office (domestic
or foreign) or other person who was, is, or may be in a position to help or
hinder the business of the Company (or assist it in connection with any actual
or proposed transaction) that (i) might subject the Company to any damage or
penalty in any civil, criminal or governmental litigation or proceeding, (ii) if
not given in the past, might have had a Material Adverse Change or (iii) if not
continued in the future, might adversely affect the assets, business, operations
or prospects of the Company. The Company has taken reasonable steps to ensure
that its accounting controls and procedures are sufficient to cause the Company
to comply in all material respects with the Foreign Corrupt Practices Act of
1977, as amended.

 

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

 

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

 

(x)          Officers’ Certificate. Any certificate signed by any duly
authorized officer of the Company and delivered to you or to Representative
Counsel shall be deemed a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.

 

(y)          Related Party Transactions. There are no business relationships or
related party transactions involving the Company or any other person required to
be described in the Registration Statement, the Pricing Disclosure Package and
the Prospectus that have not been described as required.

 

(z)          Board of Directors. The qualifications of the persons serving as
board members and the overall composition of the board comply with the Exchange
Act, the Exchange Act Regulations, the Sarbanes-Oxley Act of 2002 and the rules
promulgated thereunder (the “Sarbanes-Oxley Act”) applicable to the Company and
the listing rules of the Exchange. At least one member of the Audit Committee of
the Board of Directors of the Company qualifies as an “audit committee financial
expert,” as such term is defined under Regulation S-K and the listing rules of
the Exchange. In addition, at least a majority of the persons serving on the
Board of Directors qualify as “independent,” as defined under the listing rules
of the Exchange.

 

 

 

 

(aa)        Sarbanes-Oxley Compliance.

 

(i)          Disclosure Controls. The Company has developed and currently
maintains disclosure controls and procedures that will comply with Rule 13a-15
or 15d-15 under the Exchange Act Regulations applicable to it, and such controls
and procedures are effective to ensure that all material information concerning
the Company will be made known on a timely basis to the individuals responsible
for the preparation of the Company’s Exchange Act filings and other public
disclosure documents.

 

(ii)         Compliance. The Company is, or at the Applicable Time and on the
Closing Date will be, in material compliance with the provisions of the
Sarbanes-Oxley Act applicable to it, and has implemented or will implement such
programs and taken reasonable steps to ensure the Company’s future compliance
(not later than the relevant statutory and regulatory deadlines therefor) with
all of the material provisions of the Sarbanes-Oxley Act.

 

(bb)        Accounting Controls. The Company maintains systems of “internal
control over financial reporting” (as defined under Rules 13a-15 and 15d-15
under the Exchange Act Regulations) that comply with the requirements of the
Exchange Act and have been designed by, or under the supervision of, its
principal executive and principal financial officers, or persons performing
similar functions, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP, including, but not limited to, internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability; (iii) access to assets is permitted only in accordance
with management’s general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
Except as disclosed in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, the Company is not aware of any material weaknesses
in its internal controls. The Auditors and the Audit Committee of the Board of
Directors of the Company have been advised of: (i) all significant deficiencies
and material weaknesses, if any, in the design or operation of internal controls
over financial reporting which are known to the Company’s management and that
have adversely affected or are reasonably likely to adversely affect the
Company’ ability to record, process, summarize and report financial information;
and (ii) any fraud, if any, known to the Company’s management, whether or not
material, that involves management or other employees who have a significant
role in the Company’s internal controls over financial reporting.

 

(cc)        No Investment Company Status. The Company is not and, after giving
effect to the Offering and the application of the proceeds thereof as described
in the Registration Statement, the Pricing Disclosure Package and the
Prospectus, will not be, required to register as an “investment company,” as
defined in the Investment Company Act of 1940, as amended.

 

(dd)        No Labor Disputes. No labor dispute with the employees of the
Company exists or, to the knowledge of the Company, is imminent.

 

(ee)        Intellectual Property Rights. To the Company’s knowledge, the
Company has, or can acquire on reasonable terms, ownership of and/or license to,
or otherwise has the right to use, all inventions, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), patents and patent rights trademarks,
service marks and trade names, copyrights, (collectively “Intellectual
Property”) material to carrying on their businesses as described in the Pricing
Prospectus. The Company has not received any correspondence relating to any
Intellectual Property, including notice of: (A) infringement or misappropriation
of, or conflict with, any Intellectual Property of a third party; (B) asserted
rights of others with respect to any Intellectual Property of the Company; (C)
assertions that any Intellectual Property of the Company is invalid or otherwise
inadequate to protect the interest of the Company, that in each case (if the
subject of any unfavorable decision, ruling or finding), individually or in the
aggregate, would have or would reasonably be expected to have a Material Adverse
Change. There are no third parties who have been able to establish any material
rights to any Intellectual Property, except for the retained rights of the
owners or licensors of any Intellectual Property that is licensed to the
Company. There is no pending or, to the Company’s knowledge, threatened action,
suit, proceeding or claim by others: (A) challenging the validity,
enforceability or scope of any Intellectual Property of the Company or (B)
challenging the Company’s rights in or to any Intellectual Property or (C) that
the Company materially infringes, misappropriates or otherwise violates or
conflicts with any Intellectual Property or other proprietary rights of others.
The Company has complied in all material respects with the terms of each
agreement described in the Registration Statement, Pricing Disclosure Package or
Prospectus pursuant to which any Intellectual Property is licensed to the
Company, and all such agreements related to products currently made or sold by
the Company, or to product candidates currently under development, are in full
force and effect. All patents issued in the name of, or assigned to, the
Company, and all patent applications made by or on behalf of the Company
(collectively, the “Company Patents”) have been duly and properly filed. The
Company is not aware of any material information that was required to be
disclosed to the United States Patent and Trademark Office (the “PTO”) but that
was not disclosed to the PTO with respect to any issued Company Patent, or that
is required to be disclosed and has not yet been disclosed in any pending
application in the Company Patents and that would preclude the grant of a patent
on such application. To the Company’s knowledge, the Company is the sole owner
of the Company Patents.

 

 

 

 

(ff)         Taxes. The Company has filed all returns (as hereinafter defined)
required to be filed with taxing authorities prior to the date hereof or has
duly obtained extensions of time for the filing thereof. The Company has paid
all taxes (as hereinafter defined) shown as due on such returns that were filed
and has paid all taxes imposed on or assessed against the Company, except for
such exceptions as could not be expected, individually or in the aggregate, to
have a Material Adverse Change. The provisions for taxes payable, if any, shown
on the financial statements filed with or as part of the Registration Statement
are sufficient for all accrued and unpaid taxes, whether or not disputed, and
for all periods to and including the dates of such consolidated financial
statements. Except as disclosed in writing to the Underwriters, (i) no issues
have been raised (and are currently pending) by any taxing authority in
connection with any of the returns or taxes asserted as due from the Company,
and (ii) no waivers of statutes of limitation with respect to the returns or
collection of taxes have been given by or requested from the Company. The term
“taxes” mean all federal, state, local, foreign and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, lease, service, service use, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits, customs,
duties or other taxes, fees, assessments or charges of any kind whatever,
together with any interest and any penalties, additions to tax or additional
amounts with respect thereto. The term “returns” means all returns,
declarations, reports, statements and other documents required to be filed in
respect to taxes.

 

(gg)       Employee Benefit Laws. The operations of the Company and its
subsidiaries are and have been conducted at all times in material compliance
with the Employee Retirement Income Security Act of 1974, as amended, the rules
and regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Employee Benefit 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 its subsidiaries with respect to the Employee Benefit
Laws is pending or, to the knowledge of the Company, threatened.

 

(hh)       Compliance with Laws. The Company: (A) is and at all times has been
in compliance with all Applicable Laws, except as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Change; (B) has
not received any correspondence from any Governmental Entity alleging or
asserting noncompliance with any Applicable Laws or any Authorizations; (C)
possesses all material Authorizations and such Authorizations are valid and in
full force and effect and the Company is not in material violation of any term
of any such Authorizations, in each case except as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Change; (D) has
not received written notice of any claim, action, suit, proceeding, hearing,
enforcement, investigation, arbitration or other action from any Governmental
Entity or third party alleging that any product operation or activity is in
violation of any Applicable Laws or Authorizations and has no knowledge that any
such Governmental Entity or third party is considering any such claim,
litigation, arbitration, action, suit, investigation or proceeding; (E) has not
received written notice that any Governmental Entity has taken, is taking or
intends to take action to limit, suspend, modify or revoke any Authorizations;
(F) has filed, obtained, maintained or submitted all material reports,
documents, forms, notices, applications, records, claims, submissions and
supplements or amendments as required by any Applicable Laws or Authorizations
and that all such reports, documents, forms, notices, applications, records,
claims, submissions and supplements or amendments were complete and correct in
all material respects on the date filed (or were corrected or supplemented by a
subsequent submission); and (G) has not, either voluntarily or involuntarily,
initiated, conducted, or issued or caused to be initiated, conducted or issued,
any recall, market withdrawal or replacement, safety alert, post-sale warning,
“dear doctor” letter, or other notice or action relating to the alleged lack of
safety or efficacy of any product or any alleged product defect or violation
and, to the Company’s knowledge, no third party has initiated, conducted or
intends to initiate any such notice or action.

 

(ii)         Ineligible Issuer.  At the time of filing the Registration
Statement and any post-effective amendment thereto, at the time of effectiveness
of the Registration Statement and any amendment thereto, at the earliest time
thereafter that the Company or another offering participant made a bona fide
offer (within the meaning of Rule 164(h)(2) of the Securities Act Regulations)
of the Public Securities and at the date hereof, the Company was not and is not
an “ineligible issuer,” as defined in Rule 405, 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.

 

(jj)         Industry Data.  The statistical and market-related data included in
each of the Registration Statement, the Pricing Disclosure Package and the
Prospectus are based on or derived from sources that the Company reasonably and
in good faith believes are reliable and accurate or represent the Company’s good
faith estimates that are made on the basis of data derived from such sources.

 

 

 

 

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

 

(ll)          Margin Securities. The Company owns no “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 Offering 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 of Common Stock to be
considered a “purpose credit” within the meanings of Regulation T, U or X of the
Federal Reserve Board.

 

(mm)      Integration. Neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would cause the Offering to be integrated with prior
offerings by the Company for purposes of the Securities Act that would require
the registration of any such securities under the Securities Act.

 

(nn)       Confidentiality and Non-Competition. To the Company’s knowledge, no
director, officer, key employee or consultant of the Company is subject to any
confidentiality, non-disclosure, non-competition agreement or non-solicitation
agreement with any employer or prior employer that could reasonably be expected
to materially affect his ability to be and act in his respective capacity of the
Company or be expected to result in a Material Adverse Change.

 

3.          Covenants of the Company. The Company covenants and agrees as
follows:

 

(a)          Amendments to Registration Statement. The Company shall deliver to
the Representative, prior to filing, any amendment or supplement to the
Registration Statement or Prospectus proposed to be filed after the Effective
Date and not file any such amendment or supplement to which the Representative
shall reasonably object in writing; provided however, that this Section 3(a)
shall not be applicable with respect to any supplements to the Registration
Statement filed solely for the purpose of supplementing the Registration
Statement or Prospectus with a report filed with the Commission by the Company
pursuant to the Exchange Act.

 

(b)         Federal Securities Laws.

 

(i)          Compliance. The Company shall comply with the requirements of Rule
430A of the Securities Act Regulations, and will notify the Representative
promptly, and confirm the notice in writing, (i) when any amendment or
supplement to the Prospectus shall have been filed; (ii) of the receipt of any
comments from the Commission related to the Prospectus or Offering; (iii) of any
request by the Commission for any amendment or supplement to the Prospectus or
for additional information; (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any
post-effective amendment or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, or of the suspension of the
qualification of the Public Securities and Representative’s Securities for
offering or sale in any jurisdiction, or of the initiation or, to the Company’s
knowledge, threatening, of any proceedings for any of such purposes or of any
examination pursuant to Section 8(d) or 8(e) of the Securities Act concerning
the Registration Statement and (v) if the Company becomes the subject of a
proceeding under Section 8A of the Securities Act in connection with the
Offering of the Public Securities and Representative’s Securities. The Company
shall effect all filings required under Rule 424(b) of the Securities Act
Regulations, in the manner and within the time period required by Rule 424(b)
(without reliance on Rule 424(b)(8)), and shall take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. The Company shall
use its best efforts to prevent the issuance of any stop order, prevention or
suspension and, if any such order is issued, to obtain the lifting thereof at
the earliest possible moment.

 

(ii)         Free Writing Prospectuses. The Company agrees that, unless it
obtains the prior written consent of the Representative, it shall not make any
offer relating to the Public Securities that would constitute an Issuer Free
Writing Prospectus or that would otherwise constitute a “free writing
prospectus,” or a portion thereof, required to be filed by the Company with the
Commission or retained by the Company under Rule 433; provided that the
Representative shall be deemed to have consented to each Issuer Free Writing
Prospectus and any “road show that is a written communication” within the
meaning of Rule 433(d)(8)(i) that is set forth on Schedule I. The Company
represents that it has treated or agrees that it will treat each such free
writing prospectus consented to, or deemed consented to, by the Underwriters as
an “issuer free writing prospectus,” as defined in Rule 433, and that it has
complied and will comply with the applicable requirements of Rule 433 with
respect thereto, including timely filing with the Commission where required,
legending and record keeping. If at any time following issuance of an Issuer
Free Writing Prospectus there occurred or occurs an event or development as a
result of which such Issuer Free Writing Prospectus conflicted or would conflict
with the information contained in the Registration Statement or included or
would include an untrue statement of a material fact or omitted or would omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at that subsequent time, not misleading, the
Company will promptly notify the Underwriters and will promptly amend or
supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate
or correct such conflict, untrue statement or omission.

 

 

 

 

(c)          Delivery to the Underwriters of Prospectuses. The Company has
delivered or made available or will deliver or make available to each
Underwriter, without charge, as many copies of each Preliminary Prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the Securities Act. The Company
will furnish to each Underwriter, without charge, during the period when a
prospectus relating to the Public Securities is (or, but for the exception
afforded by Rule 172, would be) required to be delivered under the Securities
Act, such number of copies of the Prospectus (as amended or supplemented) as
such Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.

 

(d)          Effectiveness and Events Requiring Notice to the Representative.
The Company shall use its commercially reasonable efforts to cause the
Registration Statement to remain effective with a current prospectus through and
including the expiration date of the Warrants (or the date all Warrants have
been exercised or duly called, if earlier), and shall notify the Representative
immediately and confirm the notice in writing: (i) of the effectiveness of the
Registration Statement and any amendment thereto; (ii) of the issuance by the
Commission of any stop order or of the initiation, or to the Company’s
knowledge, the threatening, of any proceeding for that purpose; (iii) of the
issuance by any state securities commission of any proceedings for the
suspension of the qualification of the Public Securities for offering or sale in
any jurisdiction or of the initiation, or to the Company’s knowledge, the
threatening, of any proceeding for that purpose; (iv) of the mailing and
delivery to the Commission for filing of any amendment or supplement to the
Prospectus; (v) of the receipt of any comments or request for any additional
information from the Commission related to the Prospectus; and (vi) of the
happening of any event during the period described in this Section 3(d) that, in
the judgment of the Company, makes any statement of a material fact made in the
Registration Statement, the Pricing Disclosure Package or the Prospectus untrue
or that requires the making of any changes in (a) the Registration Statement in
order to make the statements therein not misleading, or (b) in the Pricing
Disclosure Package or the Prospectus in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. If the
Commission or any state securities commission shall enter a stop order or
suspend such qualification at any time, the Company shall make every reasonable
effort to obtain promptly the lifting of such order.

 

(e)          Listing. The Company shall use its commercially reasonable efforts
to maintain the listing of the shares of Common Stock (including the Shares) on
the Exchange for until the earlier of five (5) years after the date of this
Agreement or the date on which no Warrants are outstanding.

 

(f)          Payment of Expenses. The Company hereby agrees to pay on each of
the Closing Date, all expenses incident to the performance of the obligations of
the Company under this Agreement, including, but not limited to: (a) all filing
fees and communication expenses relating to the registration of the Units to be
sold in the Offering with the Commission; (b) all actual Public Offering Filing
System filing fees associated with the review of the Offering by FINRA; (c) all
fees and expenses relating to the listing of the Common Stock on the Exchange;
(d) all fees, expenses and disbursements relating to the registration or
qualification of the Securities under the “blue sky” securities laws of such
states and other jurisdictions as Dawson may reasonably designate (including,
without limitation, all filing and registration fees, and the reasonable fees
and disbursements of “blue sky” counsel, which will be Dawson’s counsel it being
agreed that such fees and expenses of Dawson’s counsel will be $20,000); (e) all
fees, expenses and disbursements relating to the registration, qualification or
exemption of the Public Securities under the securities laws of such foreign
jurisdictions as the Representative may reasonably designate; (f) the costs of
all mailing and printing of the underwriting documents, Registration Statements,
Prospectuses and all amendments, supplements and exhibits thereto and as many
preliminary and final Prospectuses as the Representative may reasonably deem
necessary; (g) the costs of preparing, printing and delivering certificates
representing the Public Securities and Representative’s Securities; (h) fees and
expenses of the transfer and warrant agent for the Shares and warrant agent for
the Warrants; (i) stock transfer and/or stamp taxes, if any, payable upon the
transfer of securities from the Company to the Underwriters; (j) the fees and
expenses of the Company’s accountants; (k) the fees and expenses of the
Company’s legal counsel and other agents and representatives; and (l) “road
show” expenses, diligence expenses and legal fees and expenses of the
Underwriter’s legal counsel, in any case not to exceed $25,000. The
Representative may deduct from the net proceeds of the Offering payable to the
Company on the Closing Date, the expenses set forth herein to be paid by the
Company to the Underwriters, provided, however, that in the event that the
Offering is terminated, the Company agrees to reimburse the Underwriters
pursuant to Section 8(c) hereof.

 

 

 

 

(g)         Application of Net Proceeds. The Company shall apply the net
proceeds from the Offering received by it in a manner consistent with the
application thereof described under the caption “Use of Proceeds” in the
Registration Statement, the Pricing Disclosure Package and the Prospectus.

 

(h)         Rule 158. The Company will timely file such reports pursuant to the
Exchange Act as are necessary in order to make generally available to its
security holders as soon as practicable an earnings statement for the purposes
of, and to provide to the Underwriters the benefits contemplated by, Rule 158(a)
under Section 11(a) of the Securities Act.

 

(i)          Stabilization. Neither the Company nor, to its knowledge, any of
its employees, directors or stockholders (without the consent of the
Representative) has taken or shall take, directly or indirectly, any action
designed to or that has constituted or that might reasonably be expected to
cause or result in, under Regulation M of the Exchange Act, or otherwise,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Public Securities.

 

(j)          FINRA. For a period of 90 days from the Closing Date, the Company
shall advise the Representative (who shall make an appropriate filing with
FINRA) if it is or becomes aware that (i) any officer or director of the
Company, (ii) any beneficial owner of 5% or more of any class of the Company's
securities or (iii) any beneficial owner of the Company's unregistered equity
securities which were acquired during the 180 days immediately preceding the
filing of the Registration Statement is or becomes an affiliate or associated
person of a FINRA member participating in the Offering (as determined in
accordance with the rules and regulations of FINRA).

 

(k)         No Fiduciary Duties. The Company acknowledges and agrees that the
Underwriters’ responsibility to the Company is solely contractual in nature and
that none of the Underwriters or their affiliates or any selling agent shall be
deemed to be acting in a fiduciary capacity, or otherwise owes any fiduciary
duty to the Company or any of its affiliates in connection with the Offering and
the other transactions contemplated by this Agreement.

 

(l)          Blue Sky Qualifications. The Company shall use its best efforts, in
cooperation with the Underwriters, if necessary, to qualify the Public
Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions (domestic or foreign) as the Representative may
designate and to maintain such qualifications in effect so long as required to
complete the distribution of the Public Securities; provided, however, that the
Company shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject.

 

(m)        Reporting Requirements. The Company, during the period when a
prospectus relating to the Public Securities is (or, but for the exception
afforded by Rule 172, would be) required to be delivered under the Securities
Act, will file all documents required to be filed with the Commission pursuant
to the Exchange Act within the time periods required by the Exchange Act and
Exchange Act Regulations.

 

4.          Conditions of Underwriters’ Obligations. The obligations of the
Underwriters to purchase and pay for the Public Securities, as provided herein,
shall be subject to (i) the continuing accuracy of the representations and
warranties of the Company as of the date hereof and as of each of the Closing
Date; (ii) the accuracy of the statements of officers of the Company made
pursuant to the provisions hereof; (iii) the performance by the Company of its
obligations hereunder; and (iv) the following conditions:

 

(a)          Regulatory Matters.

 

(i)          Effectiveness of Registration Statement; Rule 430A Information. The
Registration Statement has become effective not later than 5:00 p.m., Eastern
time, on the date of this Agreement or such later date and time as shall be
consented to in writing by the Representative, and, at each of the Closing Date,
no stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto has been issued under the Securities Act, no
order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus has been issued and no proceedings for any of those purposes have
been instituted or are pending or, to the Company’s knowledge, contemplated by
the Commission. The Company has complied with each request (if any) from the
Commission for additional information. The Prospectus containing the Rule 430A
Information shall have been filed with the Commission in the manner and within
the time frame required by Rule 424(b) (without reliance on Rule 424(b)(8)) or a
post-effective amendment providing such information shall have been filed with,
and declared effective by, the Commission in accordance with the requirements of
Rule 430A.

 

 

 

 

(ii)         FINRA Clearance. On or before the date of this Agreement, the
Representative shall have received clearance from FINRA as to the amount of
compensation allowable or payable to the Underwriters as described in the
Registration Statement.

 

(iii)        Exchange Stock Market Clearance. On the Closing Date, the
additional listing application for the Common Stock included in the Units and
underlying the Warrants shall have been approved by the Exchange, subject only
to official notice of issuance.

 

(b)          Company Counsel Matters.

 

(i)          Closing Date Opinion of Counsel. On the Closing Date, the
Representative shall have received the favorable opinion of Haynes and Boone,
LLP, counsel to the Company, dated the Closing Date and addressed to the
Representative, substantially in form and substance reasonably satisfactory to
the Representative.

 

(ii)         Reliance. In In rendering such opinions, such counsel may rely: (i)
as to matters involving the application of laws other than the laws of the
United States and jurisdictions in which they are admitted, to the extent such
counsel deems proper and to the extent specified in such opinion, if at all,
upon an opinion or opinions (in form and substance reasonably satisfactory to
the Representative) of other counsel reasonably acceptable to the
Representative, familiar with the applicable laws; and (ii) as to matters of
fact, to the extent they deem proper, on certificates or other written
statements of officers of the Company and officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to Representative Counsel if requested.

 

(c)          Comfort Letters.

 

(i)          Comfort Letter. At the time this Agreement is executed
Representative shall have received from the Auditors a cold comfort letter
containing statements and information of the type customarily included in
accountants’ comfort letters with respect to the financial statements and
certain financial information contained in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, addressed to the Representative
and in form and substance satisfactory in all respects to Representative and to
the Auditors, dated as of the date of this Agreement.

 

(ii)         Bring-down Comfort Letter. At the Closing Date, the Representative
shall have received from the Auditors a letter, dated as of the Closing Date, as
applicable, to the effect that such Auditor reaffirms the statements made in the
letter furnished pursuant to Section 4(c)(i).

 

(d)         Officers’ Certificates.

 

(i)          Officers’ Certificate. The Company shall have furnished to the
Representative a certificate, dated the Closing Date, of its Chief Executive
Officer and its Chief Financial Officer stating that (i) such officers have
carefully examined the Registration Statement, the Pricing Disclosure Package,
any Issuer Free Writing Prospectus and the Prospectus and, in their opinion, the
Registration Statement and each amendment thereto, as of the Applicable Time 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 Pricing
Disclosure Package, as of the Applicable Time and as of the Closing Date, any
Issuer 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 Pricing Disclosure
Package or the Prospectus, (iii) to their knowledge after reasonable
investigation, as of the Closing Date, the representations and warranties of the
Company in this Agreement are true and correct and the Company 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 in the Pricing Disclosure Package, any Material Adverse Change in the
financial position or results of operations of the Company, 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, except as set forth in the Prospectus.

 

 

 

 

(ii)         Secretary’s Certificate. At each of the Closing Date, the
Representative shall have received a certificate of the Company signed by the
Secretary of the Company, dated the Closing Date, certifying: (i) that each of
the Charter and Bylaws is true and complete, has not been modified and is in
full force and effect; (ii) that the resolutions of the Company’s Board of
Directors relating to the Offering are in full force and effect and have not
been modified; (iii) the good standing of the Company and its subsidiaries; and
(iv) as to the incumbency of the officers of the Company. The documents referred
to in such certificate shall be attached to such certificate.

 

(e)          No Material Changes. Prior to and on each of the Closing Date:
(i) there shall have been no Material Adverse Change or development involving a
prospective Material Adverse Change in the condition or prospects or the
business activities, financial or otherwise, of the Company from the latest
dates as of which such condition is set forth in the Registration Statement, the
Pricing Disclosure Package and the Prospectus; (ii) no action, suit or
proceeding, at law or in equity, shall have been pending or threatened against
the Company or any Insider before or by any court or federal or state
commission, board or other administrative agency wherein an unfavorable
decision, ruling or finding may materially adversely affect the business,
operations, prospects or financial condition or income of the Company, except as
set forth in the Registration Statement, the Pricing Disclosure Package and the
Prospectus; (iii) no stop order shall have been issued under the Securities Act
and no proceedings therefor shall have been initiated or threatened by the
Commission; and (iv) the Registration Statement, the Pricing Disclosure Package
and the Prospectus and any amendments or supplements thereto shall contain all
material statements which are required to be stated therein in accordance with
the Securities Act and the Securities Act Regulations and shall conform in all
material respects to the requirements of the Securities Act and the Securities
Act Regulations, and neither the Registration Statement, the Pricing Disclosure
Package nor the Prospectus nor any amendment or supplement thereto shall 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.

 

(f)           Additional Documents. At the Closing Date, Representative Counsel
shall have been furnished with such documents and opinions as they may require
for the purpose of enabling Representative Counsel to deliver an opinion to the
Underwriters, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance and
sale of the Public Securities and the Representative’s Securities as herein
contemplated shall be satisfactory in form and substance to the Representative
and Representative Counsel.

 

5.         Indemnification.

 

(a)          Indemnification of the Underwriters. The Company agrees to
indemnify and hold harmless each Underwriter, its affiliates and each person
controlling such Underwriter (within the meaning of Section 15 of the Securities
Act), and the directors, officers, agents and employees of each Underwriter, its
affiliates and each such controlling person (each Underwriter, and each such
entity or person hereafter is referred to as an “Indemnified Person”) from and
against any losses, claims, damages, judgments, assessments, costs and other
liabilities (collectively, the “Liabilities”), and shall reimburse each
Indemnified Person for all fees and expenses (including the reasonable fees and
expenses of counsel for the Indemnified Persons, except as otherwise expressly
provided in this Agreement) (collectively, the “Expenses”) and agrees to advance
payment of such Expenses as they are incurred by an Indemnified Person in
investigating, preparing, pursuing or defending any actions, whether or not any
Indemnified Person is a party thereto, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in (i) the
Registration Statement, the Pricing Disclosure Package, the Preliminary
Prospectus, the Prospectus or in any Issuer Free Writing Prospectus (as from
time to time each may be amended and supplemented); (ii) any materials or
information provided to investors by, or with the approval of, the Company in
connection with the marketing of the Offering, including any “road show” or
investor presentations made to investors by the Company (whether in person or
electronically); or (iii) any application or other document or written
communication (in this Section 5, collectively called “application”) executed by
the Company or based upon written information furnished by the Company in any
jurisdiction in order to qualify the Public Securities and Representative’s
Securities under the securities laws thereof or filed with the Commission, any
state securities commission or agency, the Exchange or any other national
securities exchange; or the omission or alleged omission therefrom of 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,
unless such statement or omission was made in reliance upon, and in conformity
with, the Underwriters’ Information. The Company also agrees to reimburse each
Indemnified Person for all Expenses as they are incurred in connection with such
Indemnified Person's enforcement of his or its rights under this Agreement. 

 

 

 

 

(b)          Procedure. Upon receipt by an Indemnified Person of actual notice
of an action against such Indemnified Person with respect to which indemnity may
reasonably be expected to be sought under this Agreement, such Indemnified
Person shall promptly notify the Company in writing; provided that failure by
any Indemnified Person so to notify the Company shall not relieve the Company
from any obligation or liability which the Company may have on account of this
Section 5 or otherwise to such Indemnified Person, except to the extent the
Company is materially prejudiced as a proximate result of such failure. The
Company shall have the right to assume the defense of any such action (including
the employment of counsel designated by the Company and reasonably satisfactory
to the Representative). Any Indemnified Person shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Person unless: (i) the Company has failed promptly to assume the
defense and employ counsel satisfactory to the Representative for the benefit of
the Underwriters and the other Indemnified Persons or (ii) such Indemnified
Person shall have been advised that in the opinion of counsel that there is an
actual or potential conflict of interest that prevents (or makes it imprudent
for) the counsel engaged by the Company for the purpose of representing the
Indemnified Person, to represent both such Indemnified Person and any other
person represented or proposed to be represented by such counsel. The Company
shall not be liable for the fees and expenses of more than one separate counsel
(together with local counsel), representing all Indemnified Persons who are
parties to such action), which counsel (together with any local counsel) for the
Indemnified Persons shall be selected by the Representative. The Company shall
not be liable for any settlement of any action effected without its written
consent (which shall not be unreasonably withheld). In addition, the Company
shall not, without the prior written consent of the Underwriters, settle,
compromise or consent to the entry of any judgment in or otherwise seek to
terminate any pending or threatened action in respect of which advancement,
reimbursement, indemnification or contribution may be sought hereunder (whether
or not such Indemnified Person is a party thereto) unless such settlement,
compromise, consent or termination (i) includes an unconditional release of each
Indemnified Person, acceptable to such Indemnified Party, from all Liabilities
arising out of such action for which indemnification or contribution may be
sought hereunder 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
Person. The advancement, reimbursement, indemnification and contribution
obligations of the Company required hereby shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as every
Liability and Expense is incurred and is due and payable, and in such amounts as
fully satisfy each and every Liability and Expense as it is incurred (and in no
event later than 30 days following the date of any invoice therefore).

 

(c)          Indemnification of the Company. Each Underwriter, severally and not
jointly, agrees to indemnify and hold harmless the Company, its directors, its
officers who signed the Registration Statement and persons who control the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any and all Liabilities, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions made
in the Registration Statement, any Preliminary Prospectus, the Pricing
Disclosure Package or Prospectus or any amendment or supplement thereto, in
reliance upon, and in strict conformity with, the Underwriters’ Information. In
case any action shall be brought against the Company or any other person so
indemnified based on any Preliminary Prospectus, the Registration Statement, the
Pricing Disclosure Package or Prospectus or any amendment or supplement thereto,
and in respect of which indemnity may be sought against any Underwriter, such
Underwriter shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the rights and duties
given to the several Underwriters by the provisions of Section 5(b). The Company
agrees promptly to notify the Representative of the commencement of any
litigation or proceedings against the Company or any of its officers, directors
or any person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, in connection with the
issuance and sale of the Public Securities or in connection with the
Registration Statement, the Pricing Disclosure Package, the Prospectus or any
Issuer Free Writing Prospectus; provided that failure by the Company so to
notify the Representative shall not relieve any Underwriter from any obligation
or liability which such Underwriter may have on account of this Section 5 or
otherwise to the Company, except to the extent such Underwriter is materially
prejudiced as a proximate result of such failure.

 

(d)          Contribution. In the event that a court of competent jurisdiction
makes a finding that indemnity is unavailable to an Indemnified Person, the
Company shall contribute to the Liabilities and Expenses paid or payable by such
Indemnified Person in such proportion as is appropriate to reflect (i) the
relative benefits to the Company, on the one hand, and to the Underwriters and
any other Indemnified Person, on the other hand, of the matters contemplated by
this Agreement or (ii) if the allocation provided by the immediately preceding
clause is not permitted by applicable law, not only such relative benefits but
also the relative fault of the Company, on the one hand, and the Underwriters
and any other Indemnified Person, on the other hand, in connection with the
matters as to which such Liabilities or Expenses relate, as well as any other
relevant equitable considerations; provided that in no event shall the Company
contribute less than the amount necessary to ensure that all Indemnified
Persons, in the aggregate, are not liable for any Liabilities and Expenses in
excess of the amount of commissions actually received by the Underwriters
pursuant to this Agreement. The relative fault 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
Underwriters on the other and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this subsection (d) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). For purposes
of this paragraph, the relative benefits to the Company, on the one hand, and to
the Underwriters on the other hand, of the matters contemplated by this
Agreement shall be deemed to be in the same proportion as: (a) the total value
received by the Company in the Offering, whether or not such Offering is
consummated, bears to (b) the commissions paid to the Underwriters under this
Agreement. Notwithstanding the above, no person guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the Securities Act
shall be entitled to contribution from a party who was not guilty of fraudulent
misrepresentation.

 

 

 

 

(e)          Limitation. The Company also agrees that no Indemnified Person
shall have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Company for or in connection with advice or services rendered
or to be rendered by any Indemnified Person pursuant to this Agreement, the
transactions contemplated thereby or any Indemnified Person's actions or
inactions in connection with any such advice, services or transactions, except
to the extent that a court of competent jurisdiction has made a finding that
Liabilities (and related Expenses) of the Company have resulted exclusively from
such Indemnified Person's gross negligence or willful misconduct in connection
with any such advice, actions, inactions or services.

 

(f)          Survival. The advancement, reimbursement, indemnity and
contribution obligations set forth in this Section 5 shall remain in full force
and effect regardless of any termination of, or the completion of any
Indemnified Person's services under or in connection with, this Agreement.

 

6.         Default by an Underwriter.

 

(a)          Default Not Exceeding 10% of Units. If any Underwriter or
Underwriters shall default in its or their obligations to purchase the Units,
and if the number of the Units with respect to which such default relates does
not exceed in the aggregate 10% of the number of Units that all Underwriters
have agreed to purchase hereunder, then such Units to which the default relates
shall be purchased by the non-defaulting Underwriters in proportion to their
respective commitments hereunder.

 

(b)          Default Exceeding 10% of Units. In the event that the default
addressed in Section 6(a) relates to more than 10% of the Units, the
Representative may in its discretion arrange for itself or for another party or
parties to purchase such Units to which such default relates on the terms
contained herein. If, within one (1) Business Day after such default relating to
more than 10% of the Units, the Representative does not arrange for the purchase
of such Units, then the Company shall be entitled to a further period of one (1)
Business Day within which to procure another party or parties satisfactory to
the Representative to purchase said Units on such terms. In the event that
neither the Representative nor the Company arrange for the purchase of the Units
to which a default relates as provided in this Section 6, this Agreement will
automatically be terminated by the Representative or the Company without
liability on the part of the Company (except as provided in Sections 3(h) and 5
hereof) or the several Underwriters (except as provided in Section 5 hereof);
and provided, further, that nothing herein shall relieve a defaulting
Underwriter of its liability, if any, to the other Underwriters and to the
Company for damages occasioned by its default hereunder.

 

(c)          Postponement of Closing Date. In the event that the Units to which
the default relates are to be purchased by the non-defaulting Underwriters, or
are to be purchased by another party or parties as aforesaid, the Representative
or the Company shall have the right to postpone the Closing Date for a
reasonable period, but not in any event exceeding five (5) Business Days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement, the Pricing Disclosure Package or the Prospectus or in
any other documents and arrangements, and the Company agrees to file promptly
any amendment to the Registration Statement, the Pricing Disclosure Package or
the Prospectus that in the opinion of counsel for the Underwriter may thereby be
made necessary. The term “Underwriter” as used in this Agreement shall include
any party substituted under this Section 6 with like effect as if it had
originally been a party to this Agreement with respect to such Securities.

 

7.          Other Matters.

 

(a)          Tail Financing. The Representative shall be entitled to the
compensation set forth herein with respect to any public or private offering or
other financing or capital-raising transaction of any kind (“Tail Financing”) to
the extent that such Tail Financing is provided to the Company by any investors
in this offering, if such Tail Financing is consummated at any time within the
12-month period following the Closing Date.

 

 

 

 

(b)          Right of First Refusal. During the period ending 18 months after
the Closing Date, the Company grants the Representative the right of first
refusal to act as lead managing underwriter or book runner, or as lead placement
agent, for any and all future equity, equity-linked or debt (excluding
commercial bank debt) offerings during such period, of the Company, or any
successor to or any subsidiary of the Company; provided that the foregoing right
of first refusal shall terminate prior to such 18-month period if during such
period the Company files a Form S-1 registration statement for a public offering
in an amount of at least $12.0 million (or such lesser amount as mutually agreed
to by the parties) naming the Representative as underwriter or placement agent,
and within 30 days of the Company clearing all SEC comments on such registration
statement an offering for at least $12 million (or such lesser amount as
mutually agreed to by the parties) is not completed (assuming the prospectus
included in such registration statement is legally permitted to be utilized
during such 30-day period). Notwithstanding the foregoing, in the event of a
public or private sale of securities during the foregoing 18-month period (other
than a financing through a strategic corporate partnership) (unless terminated
earlier as described above), the Representative shall be entitled to receive as
its compensation at least 50% of the compensation payable to the underwriting or
placement agent to extent one is engaged by the Company. During the 18-month
period described above, and without regard to whether the right of first refusal
is terminated early, if the Company makes any equity, equity-linked or debt
offerings (excluding commercial bank debt or financings from a strategic
corporate partner), the Representative shall be permitted to participate at a
50% level as a placement agent or underwriter for such offering to the extent
the Company engages any placement agents or underwriters.

 

8.         Effective Date of this Agreement and Termination Thereof.

 

(a)          Effective Date. This Agreement shall become effective when both the
Company and the Representative have executed the same and delivered counterparts
of such signatures to the other party.

 

(b)          Termination. The Representative shall have the right to terminate
this Agreement at any time prior to any Closing Date, (i) if any domestic or
international event or act or occurrence has materially disrupted, or in
Representative’s opinion will in the immediate future materially disrupt,
general securities markets in the United States; or (ii) if trading on the New
York Stock Exchange or the NASDAQ Stock Market LLC shall have been suspended or
materially limited, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required by
FINRA or by order of the Commission or any other government authority having
jurisdiction; or (iii) if the United States shall have become involved in a new
war or an increase in major hostilities; or (iv) if a banking moratorium has
been declared by a New York State or federal authority; or (v) if a moratorium
on foreign exchange trading has been declared which materially adversely impacts
the United States securities markets; or (vi) if the Company shall have
sustained a material loss by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether or not such
loss shall have been insured, will, in Representative opinion, make it
inadvisable to proceed with the delivery of the Units; or (vii) if the Company
is in material breach of any of its representations, warranties or covenants
hereunder; or (viii) if the Representative shall have become aware after the
date hereof of such a Material Adverse Change in the conditions or prospects of
the Company, or such adverse material change in general market conditions as in
the Representative’s judgment would make it impracticable to proceed with the
offering, sale and/or delivery of the Public Securities or to enforce contracts
made by the Underwriters for the sale of the Public Securities. Section 5 of
this Agreement shall survive any termination of this Agreement.

 

(c)          Expenses. Notwithstanding anything to the contrary in this
Agreement, except in the case of a default by the Underwriters pursuant to
Section 6(b) above, in the event that this Agreement shall not be carried out
for any reason whatsoever, within the time specified herein or any extensions
thereof pursuant to the terms herein, the Company shall be obligated to pay to
the Underwriters their actual and accountable out-of-pocket expenses related to
the transactions contemplated herein then due and payable and upon demand the
Company shall pay the full amount thereof to the Representative on behalf of the
Underwriters; provided, that the fees and expenses of the Underwriter’s legal
counsel shall not exceed $25,000; and provided, however, that such expense cap
in no way limits or impairs the indemnification and contribution provisions of
this Agreement. Notwithstanding the foregoing, any advance received by the
Representative will be reimbursed to the Company to the extent not actually
incurred in compliance with FINRA Rule 5110(f)(2)(C).

 

(d)          Indemnification. Notwithstanding any contrary provision contained
in this Agreement, any election hereunder or any termination of this Agreement,
and whether or not this Agreement is otherwise carried out, the provisions of
Section 5 shall remain in full force and effect and shall not be in any way
affected by, such election or termination or failure to carry out the terms of
this Agreement or any part hereof.

 

 

 

 

(e)          Representations, Warranties, Agreements to Survive. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company submitted pursuant hereto, shall remain
operative and in full force and effect regardless of (i) any investigation made
by or on behalf of any Underwriter or its affiliates or selling agents, any
person controlling any Underwriter, its officers or directors or any person
controlling the Company or (ii) delivery of and payment for the Public
Securities.

 

9.         Miscellaneous.

 

(a)          Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed (registered or
certified mail, return receipt requested), or personally delivered and shall be
deemed given when so delivered or if mailed, two (2) days after such mailing.

 

If to the Representative:

 

Dawson James Securities, Inc.

1 North Federal Highway, 5th Floor

Boca Raton, FL 33432
Attention: Robert D. Keyser, Jr.

 

If to the Company:

 

InspireMD, Inc.

800 Boylston Street, Suite 16041

Boston, Massachusetts 02199

Attention: Chief Executive Officer

 

(b)          Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.

 

(c)          Amendment. This Agreement may only be amended by a written
instrument executed by each of the parties hereto.

 

(d)          Entire Agreement. This Agreement (together with the other
agreements and documents being delivered pursuant to or in connection with this
Agreement) constitutes the entire agreement of the parties hereto with respect
to the subject matter hereof and thereof, and supersedes all prior agreements
and understandings of the parties, oral and written, with respect to the subject
matter hereof.

 

(e)          Binding Effect. This Agreement shall inure solely to the benefit of
and shall be binding upon the Representative, the Underwriters, each Indemnified
Person referred to in Section 5, the Company and the controlling persons,
directors and officers referred to in Section 5 hereof, and their respective
successors, legal representatives, heirs and assigns, and no other person shall
have or be construed to have any legal or equitable right, remedy or claim under
or in respect of or by virtue of this Agreement or any provisions herein
contained. The term “successors and assigns” shall not include a purchaser, in
its capacity as such, of securities from any of the Underwriters.

 

(f)          Governing Law; Consent to Jurisdiction; Trial by Jury. This
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of New York, without giving effect to conflict of laws
principles thereof. The Company hereby agrees that any action, proceeding or
claim against it arising out of, or relating in any way to this Agreement shall
be brought and enforced 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
irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive.
The Company hereby waives any objection to such exclusive jurisdiction and that
such courts represent an inconvenient forum. Any such process or summons to be
served upon the Company may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage prepaid,
addressed to it at the address set forth in Section 9(a) hereof. Such mailing
shall be deemed personal service and shall be legal and binding upon the Company
in any action, proceeding or claim. The Company agrees that the prevailing
party(ies) in any such action shall be entitled to recover from the other
party(ies) all of its reasonable attorneys’ fees and expenses relating to such
action or proceeding and/or incurred in connection with the preparation
therefor. The Company (on its behalf and, to the extent permitted by applicable
law, on behalf of its stockholders and affiliates) and each of the Underwriters
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.

 

 

 

 

(g)          Execution in Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement, and shall become effective when one
or more counterparts has been signed by each of the parties hereto and delivered
to each of the other parties hereto. Delivery of a signed counterpart of this
Agreement by email/pdf transmission shall constitute valid and sufficient
delivery thereof.

 

(h)          Waiver, etc. The failure of any of the parties hereto to at any
time enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provision, nor to in any way effect the
validity of this Agreement or any provision hereof or the right of any of the
parties hereto to thereafter enforce each and every provision of this Agreement.
No waiver of any breach, non-compliance or non-fulfillment of any of the
provisions of this Agreement shall be effective unless set forth in a written
instrument executed by the party or parties against whom or which enforcement of
such waiver is sought; and no waiver of any such breach, non-compliance or
non-fulfillment shall be construed or deemed to be a waiver of any other or
subsequent breach, non-compliance or non-fulfillment.

 

[Signature Page Follows]

  

 

 

 

[Signature Page]

InspireMD, Inc. – Underwriting Agreement

 

If the foregoing correctly sets forth the understanding between the Underwriters
and the Company, please so indicate in the space

 

Very truly yours,   InspireMD, Inc.     By: /s/ Craig Shore       Name: Craig
Shore       Title: Chief Financial Officer

 

Confirmed as of the date first written above mentioned, on behalf of itself and
as Representative of the several Underwriters named on Schedule 1 hereto:  
Dawson James Securities, Inc.     By: /s/ Robert D. Keyser, Jr.       Name:
Robert D. Keyser, Jr.       Title: Chief Executive Officer       On behalf of
each of the Underwriters

   

 

 

 

SCHEDULE 1

 

Underwriter  Total Number of Units to be Purchased        Dawson James
Securities, Inc.   1,900,000         Total:   1,900,000 

 

 

 

 

SCHEDULE 2-A

 

Pricing Information

 

Number of Units: 1,900,000

 

Number of Shares included in the Units: one (1) share

 

Number of Warrants included in the Units: one (1) Warrant

 

Shares underlying Warrant: one-half share of Common Stock per Warrant

 

Public Offering Price per Unit: $0.59

 

Underwriting Discount per Unit: $0.0472 (8% per Unit)

 

Proceeds to Company per Unit (before expenses): $0.5428 

 

 

 

 

SCHEDULE I

 

Issuer Use Free Writing Prospectuses

 

None.