Exhibit 10.1

 

AT THE MARKET OFFERING AGREEMENT

 

June 7, 2018

 

H.C. Wainwright & Co., LLC
430 Park Avenue
New York, NY 10022

 

Ladies and Gentlemen:

 

Capstone Turbine Corporation, a corporation organized under the laws of Delaware
(the “Company”), confirms its agreement (this “Agreement”) with H.C.
Wainwright & Co., LLC (the “Manager”) as follows:

 

1.                                      Definitions. The terms that follow, when
used in this Agreement and any Terms Agreement, shall have the meanings
indicated.

 

“Accountants” shall have the meaning ascribed to such term in Section 4(m).

 

“Act” shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

 

“Applicable Time” shall mean, with respect to any Shares, the time of sale of
such Shares pursuant to this Agreement or any relevant Terms Agreement.

 

“Base Prospectus” shall mean the base prospectus contained in the First
Registration Statement at the Execution Time and the base prospectus contained
in the Second Registration Statement following the Second Shelf Effective Date.

 

“Board” shall have the meaning ascribed to such term in Section 2(b)(iii).

 

“Broker Fee” shall have the meaning ascribed to such term in Section 2(b)(v).

 

“Business Day” shall mean any day other than a Saturday, a Sunday or a legal
holiday or a day on which banking institutions or trust companies are authorized
or obligated by law to close in New York City.

 

“Code” shall have the meaning ascribed to such term in Section 3(z).

 

“Commission” shall mean the United States Securities and Exchange Commission.

 

“Common Stock” shall have the meaning ascribed to such term in Section 2.

 

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“Common Stock Equivalents” shall mean any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.

 

“Company Counsel” shall have the meaning ascribed to such term in Section 4(l).

 

“DTC” shall have the meaning ascribed to such term in Section 2(b)(vii).

 

“Effective Date” shall mean each date and time that the Registration Statement
and any post-effective amendment or amendments thereto became or becomes
effective.

 

“Environmental Laws” shall have the meaning ascribed to such term in
Section 3(aa).

 

“ERISA” shall have the meaning ascribed to such term in Section 3(z).

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.

 

“Execution Time” shall mean the date and time that this Agreement is executed
and delivered by the parties hereto.

 

“Filing Date” shall have the meaning ascribed to such term in Section 4(w).

 

“FINRA” shall have the meaning ascribed to such term in Section 3(tt).

 

“Free Writing Prospectus” shall mean a free writing prospectus, as defined in
Rule 405.

 

“GAAP” shall have the meaning ascribed to such term in Section 3(o).

 

“Governmental Permits” shall have the meaning ascribed to such term in
Section 3(t).

 

“Incorporated Documents” shall mean the documents or portions thereof filed with
the Commission on or before the Effective Date that are incorporated by
reference in the Registration Statement or the Prospectus and any documents or
portions thereof filed with the Commission after the Effective Date that are
deemed to be incorporated by reference in the Registration Statement or the
Prospectus.

 

“Intellectual Property” shall have the meaning ascribed to such term in
Section 3(w).

 

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“Investment Company Act” shall have the meaning ascribed to such term in
Section 3(u).

 

“Issuer Free Writing Prospectus” shall mean an issuer free writing prospectus,
as defined in Rule 433.

 

“Losses” shall have the meaning ascribed to such term in Section 7(d).

 

“Material Adverse Change” shall have the meaning ascribed to such term in
Section 3(g).

 

“Money Laundering Laws” shall have the meaning ascribed to such term in
Section 3(qq).

 

“Net Proceeds” shall have the meaning ascribed to such term in Section 2(b)(v).

 

“OFAC” shall have the meaning ascribed to such term in Section 3(rr).

 

“Permitted Free Writing Prospectus” shall have the meaning ascribed to such term
in Section 4(g).

 

“Placement” shall have the meaning ascribed to such term in Section 2(c).

 

“Prospectus” shall mean the Base Prospectus, as supplemented by the most
recently filed Prospectus Supplement (if any).

 

“Prospectus Supplement” shall mean each prospectus supplement relating to the
Shares prepared and filed pursuant to Rule 424(b) from time to time.

 

“Registration Statement” shall mean, collectively, (i) for the period from
June 7, 2018 until the Second Shelf Effective Date (as defined herein), the
shelf registration statement (File Number 333-203431) on Form S-3 (the “First
Registration Statement”) that was initially declared effective by the Commission
on June 23, 2015 and (i) for the period from the Second Shelf Effective Date and
thereafter, a new shelf registration statement (File Number 333-225503) on
Form S-3 (the “Second Registration Statement”) that was filed prior to the
expiration of such First Registration Statement and that was declared effective
by the Commission on or after June 7, 2018 (such date of effectiveness of the
Second Registration Statement, the “Second Shelf Effective Date”), including
exhibits and financial statements and any prospectus supplement relating to the
Shares that is filed with the Commission pursuant to Rule 424(b) and deemed part
of such registration statement pursuant to Rule 430B, as amended on each
Effective Date and, in the event any post-effective amendment thereto becomes
effective, shall also mean such registration statement as so amended.

 

“Representation Date” shall have the meaning ascribed to such term in
Section 4(k).

 

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“Rule 158”, “Rule 163”, “Rule 164”, “Rule 172”, “Rule 173”, “Rule 405”,
“Rule 415”, “Rule 424”, “Rule 430B” and “Rule 433” refer to such rules under the
Act.

 

“Rule 462(b) Registration Statement” means the registration statement prepared
by the Company as a post-effective amendment to the Registration Statement,
which was filed with the Commission on or prior to the date hereof and became
automatically effective pursuant to Rule 462(b) promulgated by the Commission
pursuant to the Securities Act.

 

“Sales Notice” shall have the meaning ascribed to such term in Section 2(b)(i).

 

“Settlement Date” shall have the meaning ascribed to such term in
Section 2(b)(vii).

 

“Subsidiary” shall have the meaning ascribed to such term in Section 3(f).

 

“Terms Agreement” shall have the meaning ascribed to such term in Section 2(a).

 

“Time of Delivery” shall have the meaning ascribed to such term in Section 2(c).

 

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

 

“Trading Market” means the Nasdaq Capital Market.

 

2.                                      Sale and Delivery of Shares. The Company
proposes to issue and sell through or to the Manager, as sales agent and/or
principal, up to $25,000,000 of shares (the “Shares”) of the Company’s common
stock, $0.001 par value (“Common Stock”), from time to time during the term of
this Agreement and on the terms set forth herein; provided, however, that in no
event shall the Company issue or sell through the Manager such number of Shares
that (a) exceeds the number or dollar amount of shares of Common Stock
registered on the Registration Statement, pursuant to which the offering is
being made, (b) exceeds the number of authorized but unissued shares of Common
Stock or (c) would cause the Company or the offering of the Shares to not
satisfy the eligibility and transaction requirements for use of Form S-3,
including, if applicable, General Instruction I.B.6 of Registration Statement on
Form S-3 (the lesser of (a), (b) and (c), the “Maximum Amount”). Notwithstanding
anything to the contrary contained herein, the parties hereto agree that
compliance with the limitations set forth in this Section 2 on the number and
aggregate sales price of Shares issued and sold under this Agreement shall be
the sole responsibility of the Company and that Manager shall have no obligation
in connection with such compliance.

 

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(a)                                 Appointment of Manager as Selling Agent;
Term Agreement. For purposes of selling the Shares through the Manager, the
Company hereby appoints the Manager as exclusive agent of the Company for the
purpose of selling the Shares of the Company pursuant to this Agreement and the
Manager agrees to use its commercially reasonable efforts to sell the Shares on
the terms and subject to the conditions stated herein. The Company agrees that,
whenever it determines to sell the Shares directly to the Manager as principal,
it will enter into a separate agreement (each, a “Terms Agreement”) in
substantially the form of Annex I hereto, relating to such sale in accordance
with Section 2 of this Agreement.

 

(b)                                 Agent Sales. Subject to the terms and
conditions and in reliance upon the representations and warranties herein set
forth, the Company will issue and agrees to sell Shares from time to time
through the Manager, acting as sales agent, and the Manager agrees to use its
commercially reasonable efforts to sell, as sales agent for the Company, on the
following terms:

 

(i)                                     The Shares are to be sold on a daily
basis or otherwise as shall be agreed to by the Company and the Manager on any
day that (A) is a Trading Day, (B) the Company has instructed the Manager by
telephone (confirmed promptly by electronic mail) to make such sales (“Sales
Notice”) and (C) the Company has satisfied its obligations under Section 6 of
this Agreement, provided that the deliverables required under Section 6(b) and
Section 6(d) shall only be required to be made on the Execution Time and on a
Representation Date on which a material amendment to the Registration Statement
or Prospectus is made or the Company files its Annual Report on Form 10-K or a
material amendment thereto under the Exchange Act. The Company will designate
the maximum amount of the Shares to be sold by the Manager daily (subject to the
limitations set forth in Section 2(d)) and the minimum price per Share at which
such Shares may be sold. Subject to the terms and conditions hereof, the Manager
shall use its commercially reasonable efforts to sell on a particular day all of
the Shares designated for the sale by the Company on such day. The gross sales
price of the Shares sold under this Section 2(b) shall be the market price for
shares of the Company’s Common Stock on the Trading Market at the time of sale
of such Shares.

 

(ii)                                  The Company acknowledges and agrees that
(A) there can be no assurance that the Manager will be successful in selling the
Shares, (B) the Manager will incur no liability or obligation to the Company or
any other person or entity if it does not sell the Shares for any reason other
than a failure by the Manager to use its commercially reasonable efforts
consistent with its normal trading and sales practices and applicable law and
regulations to sell such Shares as required under this Agreement, and (C) the
Manager shall be under no obligation to purchase Shares on a principal basis
pursuant to this Agreement, except as otherwise specifically agreed by the
Manager and the Company pursuant to a Terms Agreement.

 

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(iii)                               The Company shall not authorize the issuance
and sale of, and the Manager shall not be obligated to use its commercially
reasonable efforts to sell, any Share at a price lower than the minimum price
therefor designated from time to time by the Company’s Board of Directors (the
“Board”), or a duly authorized committee thereof, or such duly authorized
officers of the Company, and notified to the Manager in writing. The Company or
the Manager may, upon notice to the other party hereto by telephone (confirmed
promptly by electronic mail), suspend the offering of the Shares for any reason
and at any time; provided, however, that such suspension or termination shall
not affect or impair the parties’ respective obligations with respect to the
Shares sold hereunder prior to the giving of such notice.

 

(iv)                              The Manager may sell Shares by any method
permitted by law deemed to be an “at the market offering” as defined in Rule 415
under the Act, including without limitation sales made directly on the Trading
Market, on any other existing trading market for the Common Stock or to or
through a market maker. The Manager may also sell Shares in privately negotiated
transactions, provided that the Manager receives the Company’s prior written
approval for any sales in privately negotiated transactions and if so provided
in the “Plan of Distribution” section of the Prospectus Supplement.

 

(v)                                 The compensation to the Manager for sales of
the Shares under this Section 2(b) shall be a placement fee of 3% of the gross
sales price of the Shares sold pursuant to this Section 2(b) (“Broker Fee”). The
foregoing rate of compensation shall not apply when the Manager acts as
principal, in which case the Company may sell Shares to the Manager as principal
at a price agreed upon at the relevant Applicable Time pursuant to a Terms
Agreement. The remaining proceeds, after deduction of the Broker Fee and
deduction of any transaction fees imposed by any clearing firm, execution broker
or governmental or self-regulatory organization in respect of such sales, shall
constitute the net proceeds to the Company for such Shares (the “Net Proceeds”).

 

(vi)                              The Manager shall provide written confirmation
(which may be by facsimile or electronic mail) to the Company following the
close of trading on the Trading Market each day in which the Shares are sold
under this Section 2(b) setting forth the number of the Shares sold on such day,
the aggregate gross sales proceeds and the Net Proceeds to the Company, and the
compensation payable by the Company to the Manager with respect to such sales.

 

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(vii)                           Unless otherwise agreed between the Company and
the Manager, settlement for sales of the Shares will occur on the second (2nd)
Trading Day (or such earlier day as is industry practice for regular-way
trading) following the date on which such sales are made (each, a “Settlement
Date”). On or before the Trading Day prior to each Settlement Date, the Company
will, or will cause its transfer agent to, electronically transfer the Shares
being sold by crediting the Manager’s or its designee’s account (provided the
Manager shall have given the Company written notice of such designee at least
one Trading Day prior to the Settlement Date) at The Depository Trust Company
(“DTC”) through its Deposit and Withdrawal at Custodian System or by such other
means of delivery as may be mutually agreed upon by the parties hereto which
Shares in all cases shall be freely tradable, transferable, registered shares in
good deliverable form. On each Settlement Date, the Manager will deliver the
related Net Proceeds in same day funds to an account designated by the Company
on, or prior to, the Settlement Date. The Company agrees that, if the Company,
or its transfer agent (if applicable), defaults in its obligation to deliver
duly authorized Shares on a Settlement Date, in addition to and in no way
limiting the rights and obligations set forth in Section 7 hereto, the Company
will (i) hold the Manager harmless against any loss, claim, damage, or
reasonable, documented expense (including reasonable and documented legal fees
and expenses), as incurred, arising out of or in connection with such default by
the Company, and (ii) pay to the Manager any commission, discount or other
compensation to which the Manager would otherwise have been entitled absent such
default.

 

(viii)                        At each Applicable Time, Settlement Date,
Representation Date and Filing Date, the Company shall be deemed to have
affirmed each representation and warranty contained in this Agreement as if such
representation and warranty were made as of such date, modified as necessary to
relate to the Registration Statement and the Prospectus as amended as of such
date. Any obligation of the Manager to use its commercially reasonable efforts
to sell the Shares on behalf of the Company shall be subject to the continuing
accuracy of the representations and warranties of the Company herein, to the
performance by the Company of its obligations hereunder and to the continuing
satisfaction of the additional conditions specified in Section 6 of this
Agreement.

 

(c)                                  Term Sales. If the Company wishes to sell
the Shares pursuant to this Agreement but other than as set forth in
Section 2(b) of this Agreement (each, a “Placement”), it will notify the Manager
of the proposed terms of such Placement. If the Manager, acting as principal,
wishes to accept such proposed terms (which it may decline to do for any reason
in its sole discretion) or, following discussions with the Company wishes to
accept amended terms, the Manager and the Company will enter into a Terms
Agreement setting forth the terms of such Placement. The terms set forth in a
Terms Agreement will not be binding on the Company or the Manager unless and
until the Company and the Manager have each executed such Terms Agreement
accepting all of the terms of such Terms Agreement. In the event of a conflict
between the terms of this Agreement and the terms of a Terms Agreement, the
terms of such Terms Agreement will control. A Terms Agreement may also specify
certain provisions

 

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relating to the reoffering of such Shares by the Manager. The commitment of the
Manager to purchase the Shares pursuant to any Terms Agreement shall be deemed
to have been made on the basis of the representations and warranties of the
Company herein contained and shall be subject to the terms and conditions herein
set forth. Each Terms Agreement shall specify the number of the Shares to be
purchased by the Manager pursuant thereto, the price to be paid to the Company
for such Shares, any provisions relating to rights of, and default by,
underwriters acting together with the Manager in the reoffering of the Shares,
and the time and date (each such time and date being referred to herein as a
“Time of Delivery”) and place of delivery of and payment for such Shares. Such
Terms Agreement shall also specify any requirements for opinions of counsel,
accountants’ letters and officers’ certificates pursuant to Section 6 of this
Agreement and any other information or documents required by the Manager.

 

(d)                                 Maximum Number of Shares. Under no
circumstances shall the Company cause or request the offer or sale of any Shares
if, after giving effect to the sale of such Shares, the aggregate amount of
Shares sold pursuant to this Agreement would exceed the lesser of (A) together
with all sales of Shares under this Agreement, the Maximum Amount, (B) the
amount available for offer and sale under the currently effective Registration
Statement and (C) the amount authorized from time to time to be issued and sold
under this Agreement by the Board, a duly authorized committee thereof or a duly
authorized executive committee, and notified to the Manager in writing. Under no
circumstances shall the Company cause or request the offer or sale of any Shares
pursuant to this Agreement at a price lower than the minimum price authorized
from time to time by the Board, a duly authorized committee thereof or a duly
authorized executive officer, and notified to the Manager in writing. Further,
under no circumstances shall the Company cause or permit the aggregate offering
amount of Shares sold pursuant to this Agreement to exceed the Maximum Amount.

 

(e)                                  Regulation M Notice. Unless the exceptive
provisions set forth in Rule 101(c)(1) of Regulation M under the Exchange Act
are satisfied with respect to the Shares, the Company shall give the Manager at
least one Business Day’s prior notice of its intent to sell any Shares in order
to allow the Manager time to comply with Regulation M.

 

3.                                      Representations and Warranties. The
Company represents and warrants to, and agrees with, the Manager at the
Execution Time and on each such time the following representations and
warranties are repeated or deemed to be made pursuant to this Agreement, as set
forth below or in the Registration Statement, the Prospectus or the Incorporated
Documents.

 

(a)                                 Compliance with Registration Requirements.
The Registration Statement and any Rule 462(b) Registration Statement have been
declared effective by the Commission under the Act.  The Company has complied to
the Commission’s satisfaction with all requests of the Commission for additional
or supplemental information.  No stop order suspending the effectiveness of the

 

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Registration Statement or any Rule 462(b) Registration Statement is in effect
and no proceedings for such purpose have been instituted or are pending or, to
the best knowledge of the Company, are contemplated or threatened by the
Commission.  The initial Effective Date of the Registration Statement was not
earlier than the date three years before the Execution Time.  The Company meets
the requirements for use of Form S-3 under the Act.  The sale of the Shares
hereunder meets the requirements of General Instruction I.B.1 of Form S-3.

 

(b)                                 No Misstatement or Omission.  The Prospectus
when filed complied and, as amended or supplemented, if applicable, will comply
in all material respects with the Act.  Each of the Registration Statement, any
Rule 462(b) Registration Statement and any post-effective amendment thereto, at
the time it became effective, complied and, as of each of the Settlement Dates,
if any, will comply in all material respects with the Act and did not and, as of
each of the Settlement Dates, if any, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus, as
amended or supplemented, as of its date, did not and, as of each of the
Settlement Dates, if any, will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the two immediately
preceding sentences do not apply to statements in or omissions from the
Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment thereto, or the Prospectus, or any amendments or
supplements thereto, made in reliance upon and in conformity with information
relating to the Manager furnished to the Company in writing by the Manager
expressly for use therein.  There are no contracts or other documents required
to be described in the Prospectus or to be filed as exhibits to the Registration
Statement which have not been described or filed as required

 

(c)                                  [RESERVED]

 

(d)                                 Not an Ineligible Issuer. The Company
currently is not an “ineligible issuer,” as defined in Rule 405 of the rules and
regulation of the Commission.  The Company agrees to notify the Manager promptly
upon the Company becoming an “ineligible issuer.”

 

(e)                                  Distribution of Offering Material By the
Company. The Company has not distributed and will not distribute, prior to the
completion of the Manager’s distribution of the Common Stock, any offering
material in connection with the offering and sale of the Common Stock other than
the Prospectus or the Registration Statement.

 

(f)                                   Subsidiaries. All of the direct and
indirect subsidiaries (individually, a “Subsidiary”) of the Company are set
forth on Exhibit 21.1 to the Company’s most recent Annual Report on Form 10-K
filed with the Commission.

 

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The Company owns, directly or indirectly, all of the capital stock or other
equity interests of each Subsidiary free and clear of any “Liens” (which for
purposes of this Agreement shall mean a lien, charge, security interest,
encumbrance, right of first refusal, preemptive right or other restriction), and
all the issued and outstanding shares of capital stock of each Subsidiary are
validly issued and are fully paid, non-assessable and free of preemptive and
similar rights to subscribe for or purchase securities.

 

(g)                                  Organization and Good Standing.  The
Company and each of its Subsidiaries have been duly organized and are validly
existing as corporations or other legal entities in good standing (or the
foreign equivalent thereof) under the laws of their respective jurisdictions of
organization.  The Company and each of its Subsidiaries are duly qualified to do
business  and  are  in  good  standing  as  foreign  corporations  or  other 
legal  entities  in  each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses requires such
qualification and have all power and authority (corporate or other) necessary to
own or hold their respective properties and to conduct the businesses in which
they are engaged, except where the failure to so qualify or have such power or
authority would not (i) have, singularly or in the aggregate, a material adverse
effect on the business, properties, management, financial position,
stockholders’ equity, results of operations or prospects of the Company and its
Subsidiaries taken as a whole, or (ii) impair in any material respect the
ability of the Company to perform its obligations under this Agreement or to
consummate any transactions contemplated by this Agreement or the Prospectus
(any such effect as described in clauses (i) or (ii), a “Material Adverse
Change”).

 

(h)                                 Sales Agreement.  This Agreement has been
duly authorized, executed and delivered by, and is a valid and binding agreement
of, the Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.

 

(i)                                     Common Stock.  The Common Stock to be
sold by the Manager, acting as agent and/or principal for the Company, has been
duly authorized for issuance and sale pursuant to this Agreement and, when
issued and delivered by the Company to the Manager pursuant to this Agreement,
will be duly authorized, validly issued, fully paid and non-assessable.

 

(j)                                    Capitalization.  The Company has an
authorized capitalization as set forth in the Prospectus, and all of the issued
and outstanding shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable, have been
issued in compliance with federal and state securities laws, and conform to the
description thereof contained in the Prospectus.  As of June 4, 2018, there were
63,508,244 shares of Common Stock issued and outstanding; no shares of preferred
stock, par value $0.001, of the

 

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Company issued and outstanding; and 4,948,898 shares of Common Stock were
issuable upon the exercise of all options, warrants and convertible securities
and the vesting of all restricted stock units outstanding as of such date.
Except as otherwise set forth in the Prospectus, since such date, the Company
has not issued any securities, other than Common Stock issued pursuant to the
exercise of stock options previously outstanding under the Company’s stock
option plans or the issuance of Common Stock pursuant to employee stock purchase
plans or the vesting of restricted stock units.  All of the Company’s options,
warrants and other rights to purchase or exchange any securities for shares of
the Company’s capital stock have been duly authorized and validly issued and
were issued in compliance with U.S. federal and state securities laws.   None of
the outstanding shares of Common Stock were issued in violation of any
preemptive rights, rights of first refusal or other similar rights to subscribe
for or purchase securities of the Company, except for such rights as may have
been fully satisfied or waived.  There are no authorized or outstanding shares
of capital stock, options, warrants, preemptive rights, rights of first refusal
or other rights to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or any of its
Subsidiaries other than those described above or accurately described in the
Prospectus.  The description of the Company’s stock option, stock bonus and
other stock plans or arrangements, and the options or other rights granted
thereunder, as described in the Registration Statement and the Prospectus,
accurately and fairly present the information required to be shown with respect
to such plans, arrangements, options and rights.

 

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

 

(l)                                     No Conflicts.  The execution, delivery
and performance of this Agreement by the Company, the issuance and sale of the
Common Stock by the Company and the consummation of the transactions
contemplated hereby or thereby will not (with or without notice or lapse of time
or both) conflict with or result in a breach or violation of any of the terms or
provisions of, constitute a default or Debt Repayment Triggering Event (as
defined below) under, give rise to any right of termination or other right or
the cancellation or acceleration of any right or obligation or loss of a benefit
under, or give rise to the creation or imposition of any lien, encumbrance,
security interest, claim or charge upon any property or assets of the Company or
any Subsidiary pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound or to which any of the property or assets of the Company or any of its
Subsidiaries is subject, except to such extent as, individually or in the
aggregate, does not have a Material Adverse Change, nor

 

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will such actions result in any violation of the provisions of the charter or
by-laws (or analogous governing instruments, as applicable) of the Company or
any of its Subsidiaries or any law, statute, rule, regulation, judgment, order
or decree of any court or governmental agency or body, domestic or foreign,
having jurisdiction over the Company or any of its Subsidiaries or any of their
properties or assets, except where any such conflict, breach, violation, default
or right could not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Change.  A “Debt Repayment Triggering Event” means any
event or condition that gives, or with the giving of notice or lapse of time
would give the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder’s behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such indebtedness by
the Company or any of its Subsidiaries.

 

(m)                             No Consents Required.  Except for the
registration of the Common Stock under the Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under the 
Exchange  Act  and  applicable  state  or  foreign  securities  laws and the
Nasdaq Capital Market in connection with the offering and sale of the Common
Stock by the Company, and the listing of the Common Stock on the Nasdaq Capital
Market, no consent, approval, authorization or order of, or filing,
qualification or registration with, any court or governmental agency or body,
foreign or domestic, which has not been made, obtained or taken and is not in
full force and effect, is required for the execution, delivery and performance
of this Agreement by the Company, the offer or sale of the Common Stock or the
consummation of the transactions contemplated hereby or thereby.

 

(n)                                 Independent Auditors.  Marcum LLP, who has
certified certain financial statements and related schedules included or
incorporated by reference in the Registration Statement and the Prospectus. 
Except as pre-approved in accordance with the requirements set forth in
Section 10A of the Exchange Act, Marcum LLP has not been engaged by the Company
to perform any “prohibited activities” (as defined in Section 10A of the
Exchange Act).

 

(o)                                 Financial Statements. The financial
statements, together with the related notes and schedules, included or
incorporated by reference in the Prospectus and Registration Statement fairly
present in all material respects the financial position and the results of
operations and changes in financial position of the Company and its consolidated
Subsidiaries and other consolidated entities at the respective dates or for the
respective periods therein specified.  Such statements and related notes and
schedules have been prepared in accordance with the generally accepted
accounting principles in the United States (“GAAP”) applied on a consistent
basis throughout the periods involved, except as may be set forth in the related
notes included or incorporated by reference in the Prospectus.  The financial
statements, together with the related notes and schedules, included or
incorporated by reference in the Prospectus comply in all material respects with
the Act and the Exchange Act.  No other financial

 

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statements or supporting schedules or exhibits are required by the Act to be
described, or included or incorporated by reference in the Registration
Statement or the Prospectus.  There is no pro forma or as adjusted financial
information which is required to be included in the Registration Statement, the
Prospectus or a document incorporated by reference therein in accordance with
the Act which has not been included or incorporated as so required.  The
financial data set forth or incorporated in the Prospectus under the caption
“Ratio of Earnings to Fixed Charges” fairly presents the information set forth
therein on a basis consistent with that of the audited financial statements
contained, incorporated or deemed to be incorporated in the Registration
Statement.

 

(p)                                 eXtensible Business Reporting Language.  The
interactive data in eXtensible Business Reporting Language included or
incorporated by reference in the Registration Statement fairly presents the
information called for in all material respects and has been prepared in
accordance with the Commission’s rules and guidelines applicable thereto.

 

(q)                                 No Material Adverse Change. Since the date
of the latest audited financial statements included or incorporated by reference
in the Prospectus, (i) neither the Company nor any of its Subsidiaries has
sustained any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or action, order or decree of any court or governmental or
regulatory authority, otherwise than as set forth or contemplated in the
Prospectus; and (ii) there has not been any change in the capital stock (other
than the issuance of shares of Common Stock upon exercise of stock options or
warrants and vesting of restricted stock units described as outstanding in, and
the grant of options and awards under existing equity incentive plans described
in, the Registration Statement and the Prospectus and sales of Common Stock
under the Sales Agreement, dated August 28, 2015, by and between the Company and
Cowen & Company, LLC) or long-term debt of the Company or any of its
Subsidiaries, or any dividend or distribution of any kind declared, set aside
for payment, paid or made by the Company on any class of capital stock, or any
material adverse changes, or any development involving a prospective material
adverse change, in or affecting the business, properties, assets, general
affairs, management, financial position, prospects, stockholders’ equity or
results of operations of the Company and its Subsidiaries taken as a whole,
otherwise than as set forth or contemplated in the Prospectus.

 

(r)                                    No Violation or Default. Neither the
Company nor any of its Subsidiaries is in (i) violation of its charter or
by-laws (or analogous governing instrument, as applicable), (ii) default in any
respect, and no event has occurred which, with notice or lapse of time or both,
would constitute such  a  default,  in  the  due  performance or  observance of 
any  term,  covenant  or  condition contained in any indenture, mortgage, deed
of trust, loan agreement, lease or other agreement or instrument to which it is
a party or by which it is bound or to which any of its property or assets is
subject  or  (iii)  violation  in  any  respect  of  any  statute,  law, 
ordinance,  governmental rule, regulation or court order, decree or

 

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judgment to which it or its property or assets may be subject except, in the
case of clauses (ii) and (iii) of this paragraph (r), for any violations or
defaults which, singularly or in the aggregate, could not reasonably be expected
to cause a Material Adverse Change.

 

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

 

(t)                                    Investment Company Act.  The Company has
been advised of the rules and requirements under the Investment Company Act of
1940, as amended (“Investment Company Act”).  The Company is not, and after
receipt of payment for the Common Stock will not be, an “investment company”
within the meaning of the Investment Company Act and will conduct its business
in a manner so that it will not become subject to the Investment Company Act.

 

(u)                                 No Stabilization.  Neither the Company, its
Subsidiaries nor, to the Company’s knowledge, any of the Company’s or its
Subsidiaries’ officers, directors or affiliates has taken or will take, directly
or indirectly, any action designed or intended to stabilize or manipulate the
price of any security of the Company, or which caused or resulted in, or which
might in the future reasonably be expected to cause or result in, stabilization
or manipulation of the price of any security of the Company.

 

(v)                                 Intellectual Property.   Except as disclosed
in, or incorporated by reference into, the Registration Statement or the
Prospectus, the Company and its Subsidiaries own or possess the right to use all
patents, trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, software,
databases, know-how, Internet domain names, trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures, and other intellectual property (collectively, “Intellectual
Property”) necessary to carry on their respective businesses as

 

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currently conducted, and as proposed to be conducted and described in the
Prospectus, and the Company has no knowledge of any claim to the contrary or any
challenge by any other person to the rights of the Company and its Subsidiaries
with respect to the foregoing except for those that could not reasonably be
expected to cause a Material Adverse Change.  The Intellectual Property licenses
material to the conduct of the Company’s and each of its Subsidiaries’
businesses described in the Prospectus are valid, binding upon, and enforceable
by or against the Company and, to the Company’s knowledge, the other parties
thereto in accordance with their terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors rights generally and subject to
general principles of equity.  The Company and each of its Subsidiaries has
complied in all material respects with, and are not in breach and have not
received any asserted or threatened claim of breach of, any Intellectual
Property license, except for any such breaches that could not individually or in
the aggregate cause a Material Adverse Change, and the Company has no knowledge
of any breach or anticipated breach by any other person to any Intellectual
Property license.  The Company’s and each of its Subsidiaries’ businesses as now
conducted and as proposed to be conducted do not and will not infringe upon any
valid and enforceable patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses or other Intellectual Property of any
person.  No claim has been asserted against the Company or any of its
Subsidiaries alleging the infringement by the Company or any of its Subsidiaries
of any patent, trademark, service mark, trade name, copyright, trade secret,
license or other intellectual property right or franchise right of any person. 
The Company and each of its Subsidiaries has taken all reasonable steps to
protect, maintain and safeguard its rights in all Intellectual Property,
including the execution of appropriate nondisclosure and confidentiality
agreements.  The consummation of the transactions contemplated by this Agreement
will not result in the loss or impairment of, or payment of any additional
amounts with respect to, nor require the consent of any other person in respect
of, the Company’s or any of its Subsidiaries’ right to own, use, or hold for use
any of the Intellectual Property as owned, used or held for use in the conduct
of the businesses as currently conducted.  Neither the Company nor any of its
Subsidiaries, with respect to the use of the software material to the conduct of
the Company’s or any of its Subsidiaries’ businesses as they are currently
conducted, has experienced any material defects in such software (including any
material error or omission in the processing of  any  transactions  other  than 
defects  which  have  been  corrected),  except  as  would  not reasonably be
expected to individually or in the aggregate cause a Material Adverse Change. 
To the  knowledge of  the  Company, no  such  software described in the
immediately preceding sentence contains any device or feature designed to
disrupt, disable, or otherwise impair the functioning of any software or is
subject to the terms of any “open source” or other similar license that provides
for the source code of the software to be publicly distributed or dedicated to
the public, except as would not reasonably be expected to individually or in the
aggregate cause a Material Adverse Change.  The Company and each of its
Subsidiaries has at all times

 

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complied in all  material  respects  with  all  applicable  laws  relating  to 
privacy,  data  protection,  and  the collection and use of personal information
collected, used, or held for use by the Company and any of its Subsidiaries in
the conduct of the Company’s and its Subsidiaries’ businesses. No claims have
been asserted or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries alleging a violation of any person’s privacy
or personal information or data rights, and the consummation of the transactions
contemplated hereby will not breach or otherwise cause any violation of any law
related to privacy, data protection, or the collection and use of personal
information collected, used, or held for use by the Company or any of its
Subsidiaries in the conduct of the Company’s or any of its Subsidiaries’
businesses.  The Company and each of its Subsidiaries takes reasonable measures
to ensure that such information is protected against unauthorized access, use,
modification, or other misuse.

 

(w)                               Title to Real and Personal Property.  Neither
the Company nor its Subsidiaries own any real property.  The Company and each of
its Subsidiaries have good and marketable title in fee simple to, or have valid
rights to lease or otherwise use, all items of real or personal property which
are material to the business of the Company and its Subsidiaries taken as a
whole, in each case free and clear of all liens, encumbrances, security
interests, claims and defects that do not, singularly or in the aggregate,
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company or any
of its Subsidiaries; and all of the leases and subleases material to the
business of the Company and its Subsidiaries,  considered  as  one  enterprise, 
and  under  which  the  Company  or  any  of  its Subsidiaries holds properties
described in the Prospectus, are in full force and effect, and neither the
Company nor any Subsidiary has received any notice of any material claim of any
sort that has been asserted by anyone adverse to the rights of the Company or
any Subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or any Subsidiary to the
continued possession of the leased or subleased premises under any such lease or
sublease.

 

(x)                                 No Labor Dispute.  No labor disturbance by
the employees of the Company or any of its Subsidiaries exists or, to the best
of the Company’s knowledge, is threatened or imminent, and the Company does not
have knowledge of any existing or imminent labor disturbance by the employees of
any of its or its Subsidiaries’ principal suppliers, manufacturers, customers or
contractors, that could reasonably be expected, singularly or in the aggregate,
to cause a Material Adverse Change.  To the Company’s knowledge, no key employee
or significant group of employees of the Company or any Subsidiary plans to
terminate employment with the Company or any such Subsidiary.

 

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

 

(z)                                  Environmental Laws and Hazardous
Materials.   The Company and its Subsidiaries are in compliance with all
foreign, federal, state and local rules, laws and regulations relating to the
use, treatment, storage and disposal of hazardous or toxic substances or waste
and protection of health and safety or the environment which are applicable to
their businesses (“Environmental Laws”), except where the failure to comply
could not, singularly or in the aggregate, reasonably be expected to cause a
Material Adverse Change.  There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission, or other release of any kind
of toxic or other wastes or other hazardous substances by, due to, or caused by
the Company or any of its Subsidiaries (or, to the Company’s knowledge, any
other entity for whose acts or omissions the Company or any of its Subsidiaries
is or may otherwise be liable) upon any of the property now or previously owned
or leased by the Company or any of its Subsidiaries, or upon any other property,
in violation of any law, statute, ordinance, rule, regulation, order, judgment,
decree or permit or which would, under any law, statute, ordinance,
rule (including rule of common law), regulation, order, judgment, decree or
permit, give rise to any liability, except for any violation or liability which
would not cause, singularly or in the aggregate with all such violations and
liabilities, a Material Adverse Change; and there has been no disposal,
discharge, emission or other release of any kind onto such property or into the
environment surrounding such property of any toxic or other wastes or other
hazardous substances with respect to which the Company has knowledge, except for
any such disposal, discharge, emission, or other release of any kind which would
not cause, singularly or in the aggregate with all such discharges and other
releases, a Material Adverse Change.  In the ordinary course of business, the
Company and its Subsidiaries conduct periodic reviews of the effect of
Environmental Laws on their business and assets, in the course of which they
identify and evaluate associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of

 

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properties or compliance with Environmental Laws or Governmental Permits issued
thereunder, any related constraints on operating activities and any potential
liabilities to third parties).  On the basis of such reviews, the Company and
its Subsidiaries have reasonably concluded that such associated costs and
liabilities could not reasonably be expected to cause, singularly or in the
aggregate, a Material Adverse Change.

 

(aa)                          Taxes.   The Company and its Subsidiaries, each
(i) has timely filed all necessary federal, state and foreign income and
franchise tax returns (or have received such permissible extensions to file),
and all such tax returns were true, complete and correct in all material
respects, (ii) has paid all federal, state and foreign income and franchise
taxes due and payable and (iii) does not have any income or franchise tax
deficiency or claims outstanding or assessed or, to its knowledge, proposed
against any of them, except those, in each of the cases described in clauses
(i), (ii) and (iii) of this paragraph (aa), that would not, singularly or in the
aggregate, cause a Material Adverse Change. The accruals and reserves on the
books and records of the Company and its Subsidiaries in respect of income and
franchise tax liabilities for any taxable period not yet finally determined are
adequate to meet any assessments and related liabilities for any such period,
and since December 31, 2017, the Company and each of its Subsidiaries has not
incurred any liability for income or franchise taxes other than in the ordinary
course.

 

(bb)                          Insurance.  The Company and each of its
Subsidiaries carries, or is covered by, insurance provided by  licensed insurers
with  policies in  such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses in
similar industries.  The Company has no reason to believe that it or any
Subsidiary will not be able (i) to renew its existing insurance coverage as and
when such policies expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as now
conducted and at a cost that would not result in a Material Adverse Change.

 

(cc)                            Accounting Controls.  The Company maintains a
system of internal control over financial reporting (as such term is defined in
Rule 13a-15 of the rules and regulations under the Exchange Act) that complies
with the requirements of the Exchange Act and that has been designed by the
Company’s principal executive officer and principal financial officer, or under
their supervision to provide reasonable assurances that (i) transactions are
executed in accordance with management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization; (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences; and (v) interactive data in eXtensible
Business Reporting Language

 

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included or incorporated by reference in the Registration Statement complies in
all material respects with the Commission’s rules and guidelines applicable
thereto.  The Company’s internal control over financial reporting is effective.
Except as described in the Prospectus, since the end of the Company’s most
recent audited fiscal year, there has been (A) no material weakness in the
Company’s internal control over financial reporting (whether or not remediated)
and (B) no change in the Company’s internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.

 

(dd)                          Disclosure Controls.   The Company and its
Subsidiaries maintain disclosure controls and procedures (as such is defined in
Rule 13a-15(e) of the Exchange Act) that comply with the requirements of the
Exchange Act; such disclosure controls and procedures have been designed to
ensure that information required to be disclosed by the Company and its
Subsidiaries in reports that they file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the Commission’s rules and forms, including controls and procedures designed
to ensure that such information is accumulated and communicated to the Company’s
management to allow timely decisions regarding disclosures.  The Company and its
Subsidiaries have conducted evaluations of the effectiveness of their disclosure
controls as required by Rule 13a-15 of the Exchange Act.

 

(ee)                            Description of Agreements. There is no
franchise, lease, contract, agreement or document required by the Act to be
described in the Prospectus or a document incorporated by reference therein or
to be filed as an exhibit to the Registration Statement or a document
incorporated by reference therein which is not described or filed therein as
required; and all descriptions of any such franchises, leases, contracts,
agreements or documents contained in the Registration Statement or in a document
incorporated by reference therein are accurate and complete descriptions of such
documents in all material respects.  Other than as described in the Prospectus,
no such franchise, lease, contract or agreement has been suspended or terminated
for convenience or default by the Company or any of its Subsidiaries or any of
the other parties thereto, and neither the Company nor any of its Subsidiaries
has received notice nor does the Company have any other knowledge of any such
pending or threatened suspension, termination or non-renewal, except for such
pending or threatened suspensions, terminations or non-renewals that would not
reasonably be expected to, singularly or in the aggregate, cause a Material
Adverse Change.

 

(ff)                              No Undisclosed Relationships.  No
relationship, direct or indirect, exists between or among the Company and any of
its Subsidiaries on the one hand, and the directors, officers, stockholders (or
analogous interest holders), customers or suppliers of the Company or any of its
Subsidiaries or any of their affiliates on the other hand, which is required to
be described in the Prospectus or a document incorporated by reference therein
and which is not so described.

 

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(gg)                            No Registration Rights.  There are no persons
with registration or other similar rights to have any equity or debt securities
registered for sale under the Registration Statement or included in the offering
contemplated by this Agreement, except for such rights as have been duly waived.

 

(hh)                          Margin Rules.  The application of the proceeds
received by the Company from the issuance, sale and delivery of the Common Stock
as described in the Prospectus will not violate Regulation T, U or X of the
Board of Governors of the Federal Reserve system or any other regulation of such
Board of Governors.

 

(ii)                                  No Broker’s Fees. Neither the Company nor
any of its Subsidiaries is a party to any contract, agreement or understanding
with any person (other than this Agreement) that would give rise to a valid
claim against the Company or any of its Subsidiaries or the Manager for a
brokerage commission, finder’s fee or like payment in connection with the
offering and sale of the Common Stock or any transaction contemplated by this
Agreement, the Registration Statement or the Prospectus.

 

(jj)                                No Restrictions on Subsidiaries. Except as
described in the Prospectus, no Subsidiary of the Company is currently
prohibited, directly or indirectly, under any agreement or other instrument to
which it is a party or is subject, from paying any dividends to the Company,
from making any other distribution on such Subsidiary’s capital stock, from
repaying to the Company any loans or advances to such Subsidiary from the
Company or from transferring any of such subsidiary’s properties or assets to
the Company or any other Subsidiary of the Company.

 

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

 

(ll)                                  Listing.  The Company is subject to and in
compliance in all material respects with the reporting requirements of
Section 13 or Section 15(d) of the Exchange Act.  The Common Stock is registered
pursuant to Section 12(b) of the Exchange Act and is listed on the Nasdaq
Capital Market and, since the date which is twelve (12) months prior to the date
of this Agreement, the Company has taken no action designed to, or reasonably
likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act or delisting the Common Stock from the Nasdaq Capital
Market, nor has the Company received any notification that the Commission or the
Nasdaq Stock Market LLC is contemplating terminating such registration or
listing other than as disclosed in the Form 8-Ks that were filed on June 14,
2017, December 22, 2017, and April 4, 2018. No consent, approval, authorization
or order of, or filing, notification or registration with, the Nasdaq Capital
Market is required for the listing and trading of the Common Stock on the Nasdaq
Capital Market, except for a Notification Form: Change in the Number of Shares
Outstanding.

 

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(mm)                  Sarbanes-Oxley Act.  The Company is in compliance with all
applicable provisions of the Sarbanes-Oxley Act of 2002 and all rules and
regulations promulgated thereunder or implementing the provisions thereof (the
“Sarbanes-Oxley Act”).

 

(nn)                          No Unlawful Payments.   Neither the Company nor
any of its Subsidiaries nor, to the Company’s knowledge, any employee or agent
of the Company or any Subsidiary, has (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds, (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended or (iv) made any other unlawful
payment.

 

(oo)                          Statistical and Market Data.  The statistical and
market-related data included in the Registration Statement and the Prospectus
are based on or derived from sources that the Company believes to be reliable
and accurate.

 

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

 

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

 

(rr)                                Exchange Act Compliance.  The documents
incorporated or deemed to be incorporated by reference in the Prospectus, at the
time they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the Exchange Act, and,
when read together with

 

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the other information in the Prospectus, at the Settlement Dates, will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

 

(ss)                              No Associated Persons; FINRA Matters. Neither
the Company nor, to its knowledge, any of its affiliates (within the meaning of
the Financial Industry Regulatory Authority (“FINRA”) Rule 5121(f)(1)) directly
or indirectly controls, is controlled by, or is under common control with, or is
an associated person (within the meaning of Article I, Section 1(ee) of the
By-laws of FINRA) of, any member firm of FINRA.

 

(tt)                                Solvency. Based on the financial condition
of the Company as of the Effective Date, (i) the Company’s fair saleable value
of its assets exceeds the amount that will be required to be paid on or in
respect of the Company’s existing debts and other liabilities (including known
contingent liabilities) as they mature, (ii) the Company’s assets do not
constitute unreasonably small capital to carry on its business as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof, and
(iii) the current cash flow of the Company, together with the proceeds the
Company would receive, were it to liquidate all of its assets, after taking into
account all anticipated uses of the cash, would be sufficient to pay all amounts
on or in respect of its debt when such amounts are required to be paid. Within
one year of the Effective Date, the Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its debt).  The SEC
Reports set forth as of the dates thereof all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
shall mean (a) any liabilities for borrowed money or amounts owed in excess of
$50,000 (other than accrued liabilities and trade accounts payable incurred in
the ordinary course of business), (b) all guaranties, endorsements and other
contingent obligations in respect of indebtedness of others, whether or not the
same are or should be reflected in the Company’s balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(c) the present value of any lease payments in excess of $50,000 due under
leases required to be capitalized in accordance with GAAP.

 

(uu)                          No Decrease in Purchases. Except as set forth in
the Prospectus, no customer of or supplier to the Company or any of its
Subsidiaries has ceased purchases or shipments of merchandise to the Company or
indicated, to the Company’s knowledge, an interest in decreasing or ceasing its
purchases from or sales to the Company or otherwise modifying its relationship
with the Company, other than in the normal and ordinary course of business
consistent with past practices and in a manner which would not, singly or in the
aggregate, result in a Material Adverse Change.

 

22

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

 

4.                                      Agreements. The Company agrees with the
Manager that:

 

(a)                                 Right to Review Amendments and Supplements
to Registration Statement and Prospectus. During any period when the delivery of
a prospectus relating to the Shares is required (including in circumstances
where such requirement may be satisfied pursuant to Rule 172, 173 or any similar
rule) to be delivered under the Act in connection with the offering or the sale
of Shares, the Company will not file any amendment to the Registration Statement
or supplement (including any Prospectus Supplement) to the Base Prospectus
unless the Company has furnished to the Manager a copy for its review prior to
filing and will not file any such proposed amendment or supplement to which the
Manager reasonably objects (provided, however, that the Company will have no
obligation to provide the Manager any advance copy of such filing or to provide
the Manager an opportunity to object to such filing if the filing does not name
the Manager and does not relate to the transaction herein provided). The Company
has properly completed the Prospectus, in a form approved by the Manager, and
filed such Prospectus, as amended at the Execution Time, with the Commission
pursuant to the applicable paragraph of Rule 424(b) by the Execution Time and
will cause any supplement to the Prospectus to be properly completed, in a form
approved by the Manager, and will file such supplement with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed thereby and will provide evidence reasonably satisfactory to the
Manager of such timely filing. The Company will promptly advise the Manager
(i) when the Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b), (ii) when, during any
period when the delivery of a prospectus (whether physically or through
compliance with Rule 172, 173 or any similar rule) is required under the Act in
connection with the offering or sale of the Shares, any amendment to the
Registration Statement shall have been filed or become effective (other than any
annual report of the Company filed pursuant to Section 13(a) or 15(d) of the
Exchange Act), (iii) of any request by the Commission or its staff for any
amendment of the Registration Statement, or any Rule 462(b) Registration
Statement, or for any supplement to the Prospectus or for any additional
information, (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or of any notice objecting to
its use or the institution or threatening of any proceeding for that purpose and
(v) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any jurisdiction or
the institution or threatening of any proceeding for such purpose. The Company
will use its commercially reasonable best efforts to prevent the issuance of any
such stop

 

23

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order or the occurrence of any such suspension or objection to the use of the
Registration Statement and, upon such issuance, occurrence or notice of
objection, to obtain as soon as possible the withdrawal of such stop order or
relief from such occurrence or objection, including, if necessary, by filing an
amendment to the Registration Statement or a new registration statement and
using its commercially reasonable best efforts to have such amendment or new
registration statement declared effective as soon as practicable.

 

(b)                                 Subsequent Events. If, at any time on or
after an Applicable Time but prior to the related Settlement Date, any event
occurs as a result of which the Registration Statement or Prospectus would
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the circumstances
under which they were made or the circumstances then prevailing not misleading,
the Company will (i) notify promptly the Manager so that any use of the
Registration Statement or Prospectus may cease until such are amended or
supplemented; (ii) amend or supplement the Registration Statement or Prospectus
to correct such statement or omission; and (iii) supply any amendment or
supplement to the Manager in such quantities as the Manager may reasonably
request.

 

(c)                                  Notification of Subsequent Filings. During
any period when the delivery of a prospectus relating to the Shares is required
(including in circumstances where such requirement may be satisfied pursuant to
Rule 172, 173 or any similar rule) to be delivered under the Act, any event
occurs as a result of which the Prospectus as then supplemented would include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend the
Registration Statement, file a new registration statement or supplement the
Prospectus to comply with the Act or the Exchange Act or the respective
rules thereunder, including in connection with use or delivery of the
Prospectus, the Company promptly will (i) notify the Manager of any such event,
(ii) subject to Section 4(a), prepare and file with the Commission an amendment
or supplement or new registration statement which will correct such statement or
omission or effect such compliance, (iii) use its commercially reasonable best
efforts to have any amendment to the Registration Statement or new registration
statement declared effective as soon as practicable in order to avoid any
disruption in use of the Prospectus and (iv) supply any supplemented Prospectus
to the Manager in such quantities as the Manager may reasonably request.

 

(d)                                 Earnings Statements. As soon as practicable,
the Company will make generally available to its security holders and to the
Manager an earnings statement or statements of the Company and its Subsidiaries
which will satisfy the provisions of Section 11(a) of the Act and Rule 158. For
the avoidance of doubt, the Company’s compliance with the reporting requirements
of the Exchange Act shall be deemed to satisfy the requirements of this
Section 4(d).

 

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(e)                                  [RESERVED]

 

(f)                                   Qualification of Shares. The Company will
arrange, if necessary, for the qualification of the Shares for sale under the
laws of such jurisdictions as the Manager may designate and will maintain such
qualifications in effect so long as required for the distribution of the Shares;
provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take any
action that would subject it to service of process in suits, other than those
arising out of the offering or sale of the Shares, in any jurisdiction where it
is not now so subject.

 

(g)                                  Free Writing Prospectus. The Company agrees
that, unless it has or shall have obtained the prior written consent of the
Manager, and the Manager agrees with the Company that, unless it has or shall
have obtained, as the case may be, the prior written consent of the Company, it
has not made and will not make any offer relating to the Shares that would
constitute an Issuer Free Writing Prospectus or that would otherwise constitute
a “free writing prospectus” (as defined in Rule 405) required to be filed by the
Company with the Commission or retained by the Company under Rule 433. Any such
free writing prospectus consented to by the Manager or the Company is
hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company
agrees that (i) it has treated and will treat, as the case may be, each
Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus and
(ii) it has complied and will comply, as the case may be, with the requirements
of Rules 164 and 433 applicable to any Permitted Free Writing Prospectus,
including in respect of timely filing with the Commission, legending and record
keeping.

 

(h)                                 Subsequent Equity Issuances. The Company
shall not deliver any Sales Notice hereunder for at least three (3) Business
Days prior to the date on which the Company or any Subsidiary offers, sells,
issues, contracts to sell, contracts to issue or otherwise disposes of, directly
or indirectly, any other shares of Common Stock or any Common Stock Equivalents
(other than the Shares), subject to Manager’s right to waive this obligation,
provided that, without compliance with the foregoing obligation, the Company may
issue and sell Common Stock pursuant to any employee equity plan, stock
ownership plan or dividend reinvestment plan of the Company in effect at the
Execution Time and the Company may issue Common Stock issuable upon the
conversion or exercise of Common Stock Equivalents outstanding at the Execution
Time.

 

(i)                                     Market Manipulation. Until the
termination of this Agreement, the Company will not take, directly or
indirectly, any action designed to or that would constitute or that might
reasonably be expected to cause or result in, under the Exchange Act or
otherwise, stabilization or manipulation in violation of the Act, Exchange Act
or the rules and regulations thereunder of the price of any security of the
Company to facilitate the sale or resale of the Shares or otherwise violate any
provision of Regulation M under the Exchange Act.

 

25

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(j)                                    Notification of Incorrect Certificate.
The Company will, at any time during the term of this Agreement, as supplemented
from time to time, advise the Manager immediately after it shall have received
notice or obtained knowledge thereof, of any information or fact that would
alter or affect any opinion, certificate, letter and other document provided to
the Manager pursuant to Section 6 herein.

 

(k)                                 Certification of Accuracy of Disclosure.
Upon commencement of the offering of the Shares under this Agreement (and upon
the recommencement of the offering of the Shares under this Agreement following
the termination of a suspension of sales hereunder lasting more than 30 Trading
Days), and each time that (i) the Registration Statement or Prospectus shall be
amended or supplemented, other than by means of Incorporated Documents, (ii) the
Company files its Annual Report on Form 10-K under the Exchange Act, (iii) the
Company files its quarterly reports on Form 10-Q under the Exchange Act,
(iv) the Company files a Current Report on Form 8-K containing amended financial
information (other than information that is furnished and not filed), if the
Manager reasonably determines that the information in such Form 8-K is material,
or (v) the Shares are delivered to the Manager as principal at the Time of
Delivery pursuant to a Terms Agreement (such commencement or recommencement date
and each such date referred to in (i), (ii), (iii), (iv) and (v) above, a
“Representation Date”), unless waived by the Manager, the Company shall furnish
or cause to be furnished to the Manager forthwith a certificate dated and
delivered on the Representation Date, in form reasonably satisfactory to the
Manager to the effect that the statements contained in the certificate referred
to in Section 6 of this Agreement which were last furnished to the Manager are
true and correct at the Representation Date, as though made at and as of such
date (except that such statements shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to such date) or, in
lieu of such certificate, a certificate of the same tenor as the certificate
referred to in said Section 6, modified as necessary to relate to the
Registration Statement and the Prospectus as amended and supplemented to the
date of delivery of such certificate.

 

(l)                                     Bring Down Opinions; Negative Assurance.
At each Representation Date and at the Second Shelf Effective Date, unless
waived by the Manager, the Company shall furnish or cause to be furnished
forthwith to the Manager and to counsel to the Manager a written opinion of
counsel to the Company (“Company Counsel”) addressed to the Manager and dated
and delivered on such Representation Date, in form and substance reasonably
satisfactory to the Manager, including a negative assurance representation. In
lieu of delivering such an opinion for Representation Dates subsequent to the
commencement of the offering of the Shares under this Agreement and at the
Second Shelf Effective Date, such counsel may furnish the Manager with a letter
to the effect that the Manager may rely on a prior opinion delivered under
Section 6(b) or this Section 4(l) to the same extent as if it were dated the
date of such letter (except that statements in such prior opinion shall be
deemed to relate to the

 

26

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Registration Statement and the Prospectus as amended or supplemented as of such
subsequent Representation Date). The requirement to furnish or cause to be
furnished an opinion under this Section 4(l) shall be waived for any
Representation Date other than a Representation Date on which a material
amendment to the Registration Statement or Prospectus is made or the Company
files its Annual Report on Form 10-K or a material amendment thereto under the
Exchange Act and other than the Second Shelf Effective Date.

 

(m)                             Auditor Bring Down “Comfort” Letter. At each
Representation Date, unless waived by the Manager, the Company shall cause
(1) the Company’s auditors (the “Accountants”), or other independent accountants
satisfactory to the Manager forthwith to furnish the Manager a letter, and
(2) the Chief Financial Officer of the Company forthwith to furnish the Manager
a certificate, in each case dated on such Representation Date, in form
satisfactory to the Manager, of the same tenor as the letters and certificate
referred to in Section 6 of this Agreement but modified to relate to the
Registration Statement and the Prospectus, as amended and supplemented to the
date of such letters and certificate; provided, however, that the Company will
not be required to cause the Accountants to furnish such letters to the Manager
in connection with the filing of a Current Report on Form 8-K unless (i) such
Current Report on Form 8-K is filed at any time during which a prospectus
relating to the Shares is required to be delivered under the Act and (ii) the
Manager has requested such letter based upon the event or events reported in
such Current Report on Form 8-K. The requirement to furnish or cause to be
furnished a “comfort” letter under this Section 4(m) shall be waived for any
Representation Date other than a Representation Date on which a material
amendment to the Registration Statement or Prospectus is made or the Company
files its Annual Report on Form 10-K or a material amendment thereto under the
Exchange Act.

 

(n)                                 Due Diligence Session. Upon commencement of
the offering of the Shares under this Agreement (and upon the recommencement of
the offering of the Shares under this Agreement following the termination of a
suspension of sales hereunder lasting more than 30 Trading Days), and at each
Representation Date, the Company will conduct a due diligence session, in form
and substance, reasonably satisfactory to the Manager, which shall include
representatives of management and the Accountants. The Company shall cooperate
timely with any reasonable due diligence request from or review conducted by the
Manager or its agents from time to time in connection with the transactions
contemplated by this Agreement, including, without limitation, providing
information and available documents and access to appropriate corporate officers
and the Company’s agents during regular business hours and at the Company’s
principal offices, and timely furnishing or causing to be furnished such
certificates, letters and opinions from the Company, its officers and its
agents, as the Manager may reasonably request. The Company shall reimburse the
Manager for Manager’s counsel’s time in each such due diligence update session,
up to a maximum of $2,500 per update, plus any incidental expense incurred by
the Manager in connection therewith.

 

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(o)                                 Acknowledgment of Trading. The Company
consents to the Manager trading in the Common Stock for the Manager’s own
account and for the account of its clients at the same time as sales of the
Shares occur pursuant to this Agreement or pursuant to a Terms Agreement.

 

(p)                                 Disclosure of Shares Sold. The Company will
disclose in its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q,
as applicable, the number of Shares sold through the Manager under this
Agreement, the Net Proceeds to the Company and the compensation paid by the
Company with respect to sales of Shares pursuant to this Agreement during the
relevant quarter; and, if required by any subsequent change in Commission policy
or request, more frequently by means of a Current Report on Form 8-K or a
further Prospectus Supplement.

 

(q)                                 Rescission Right. If to the knowledge of the
Company, the conditions set forth in Section 6 shall not have been satisfied as
of the applicable Settlement Date, the Company will offer to any person who has
agreed to purchase Shares from the Company as the result of an offer to purchase
solicited by the Manager the right to refuse to purchase and pay for such
Shares.

 

(r)                                    Bring Down of Representations and
Warranties. Each acceptance by the Company of an offer to purchase the Shares
hereunder, and each execution and delivery by the Company of a Terms Agreement,
shall be deemed to be an affirmation to the Manager that the representations and
warranties of the Company contained in or made pursuant to this Agreement are
true and correct as of the date of such acceptance or of such Terms Agreement as
though made at and as of such date, and an undertaking that such representations
and warranties will be true and correct as of the Settlement Date for the Shares
relating to such acceptance or as of the Time of Delivery relating to such sale,
as the case may be, as though made at and as of such date (except that such
representations and warranties shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented relating to such
Shares).

 

(s)                                   Reservation of Shares. The Company shall
ensure that there are at all times sufficient shares of Common Stock to provide
for the issuance, free of any preemptive rights, out of its authorized but
unissued shares of Common Stock or shares of Common Stock held in treasury, of
the maximum aggregate number of Shares authorized for issuance by the Board
pursuant to the terms of this Agreement. The Company will use its commercially
reasonable efforts to cause the Shares to be listed for trading on the Trading
Market and to maintain such listing.

 

(t)                                    Obligation Under Exchange Act. During any
period when the delivery of a prospectus relating to the Shares is required
(including in circumstances where such requirement may be satisfied pursuant to
Rule 172, 173 or any similar rule) to be delivered under the Act, the Company
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 the
regulations thereunder.

 

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(u)                                 DTC Facility. The Company shall cooperate
with Manager and use its commercially reasonable best efforts to permit the
Shares to be eligible for clearance and settlement through the facilities of
DTC.

 

(v)                                 Use of Proceeds. The Company will apply the
Net Proceeds from the sale of the Shares in the manner set forth in the
Prospectus.

 

(w)                               Filing of Prospectus Supplement. If any sales
are made pursuant to this Agreement which are not made in “at the market”
offerings as defined in Rule 415, including, without limitation, any Placement
pursuant to a Terms Agreement, the Company shall file a Prospectus Supplement
describing the terms of such transaction, the amount of Shares sold, the price
thereof, the Manager’s compensation, and such other information as may be
required pursuant to Rule 424 and Rule 430B, as applicable, within the time
required by Rule 424.

 

(x)                                 Additional Registration Statement. To the
extent that the Registration Statement is not available for the sales of the
Shares as contemplated by this Agreement, the Company shall file a new
registration statement with respect to any additional shares of Common Stock
necessary to complete such sales of the Shares and shall cause such registration
statement to become effective as promptly as practicable. After the
effectiveness of any such registration statement, all references to
“Registration Statement” included in this Agreement shall be deemed to include
such new registration statement, including all documents incorporated by
reference therein pursuant to Item 12 of Form S-3, and all references to “Base
Prospectus” included in this Agreement shall be deemed to include the final form
of prospectus, including all documents incorporated therein by reference,
included in any such registration statement at the time such registration
statement became effective.

 

5.                                      Payment of Expenses. The Company agrees
to pay the costs and expenses incident to the performance of its obligations
under this Agreement, whether or not the transactions contemplated hereby are
consummated, including without limitation: (i) the preparation, printing or
reproduction and filing with the Commission of the Registration Statement
(including financial statements and exhibits thereto), the Prospectus and each
Issuer Free Writing Prospectus, and each amendment or supplement to any of them;
(ii) the printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
Registration Statement, the Prospectus, and each Issuer Free Writing Prospectus,
and all amendments or supplements to any of them, as may, in each case, be
reasonably requested for use in connection with the offering and sale of the
Shares; (iii) the preparation, printing, authentication, issuance and delivery
of certificates for the Shares, including any stamp or transfer taxes in
connection with the original issuance and sale of the Shares; (iv) the printing
(or reproduction) and delivery of this Agreement, any blue sky memorandum and
all other agreements or documents printed (or reproduced) and delivered in
connection with the

 

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offering of the Shares; (v) the registration of the Shares under the Exchange
Act, if applicable, and the listing of the Shares on the Trading Market;
(vi) any registration or qualification of the Shares for offer and sale under
the securities or blue sky laws of the several states (including filing fees and
the reasonable fees and expenses of counsel for the Manager relating to such
registration and qualification); (vii) the transportation and other expenses
incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Shares; (viii) the fees and
expenses of the Company’s accountants and the fees and expenses of counsel
(including local and special counsel) for the Company; (ix) the filing fee under
FINRA Rule 5110, including, without limitation, for the Second Registration
Statement; (x) the reasonable fees and expenses of the Manager’s counsel, not to
exceed $50,000 (excluding any periodic due diligence fees provided for under
Section 4(n)), which shall be payable by the Company on the earlier of (a) the
first Settlement Date related to a Sales Notice hereunder or (b) sixty (60) days
following the date of this Agreement; and (xi) all other costs and expenses
incident to the performance by the Company of its obligations hereunder.

 

6.                                      Conditions to the Obligations of the
Manager. The obligations of the Manager under this Agreement and any Terms
Agreement shall be subject to (i) the accuracy of the representations and
warranties on the part of the Company contained herein as of the Execution Time,
each Representation Date, and as of each Applicable Time, Settlement Date and
Time of Delivery, (ii) to the performance by the Company of its obligations
hereunder and (iii) the following additional conditions:

 

(a)                                 Filing of Prospectus Supplement. The
Prospectus, and any supplement thereto, required by Rule 424 to be filed with
the Commission have been filed in the manner and within the time period required
by Rule 424(b) with respect to any sale of Shares; each Prospectus Supplement
shall have been filed in the manner required by Rule 424(b) within the time
period required hereunder and under the Act; any other material required to be
filed by the Company pursuant to Rule 433(d) under the Act, shall have been
filed with the Commission within the applicable time periods prescribed for such
filings by Rule 433; and no stop order suspending the effectiveness of the
Registration Statement or any notice objecting to its use shall have been issued
and no proceedings for that purpose shall have been instituted or threatened.

 

(b)                                 Delivery of Opinion. The Company shall have
caused the Company Counsel to furnish to the Manager its opinion and negative
assurance statement, dated as of the date hereof and addressed to the Manager in
form and substance acceptable to the Manager.

 

(c)                                  Delivery of Officer’s Certificate. The
Company shall have furnished or caused to be furnished to the Manager a
certificate of the Company signed by the Chief Executive Officer or the
President and the principal financial or accounting officer of the Company,
dated as of the date hereof, to the effect that the signers of such certificate
have carefully examined the Registration Statement, the Prospectus, any
Prospectus Supplement and any documents incorporated by reference therein and
any supplements or amendments thereto and this Agreement and that:

 

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(i)                                     the representations and warranties of
the Company in this Agreement are true and correct on and as of the date hereof
and the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the date
hereof;

 

(ii)                                  no stop order suspending the effectiveness
of the Registration Statement or any notice objecting to its use has been issued
and no proceedings for that purpose have been instituted or, to the Company’s
knowledge, threatened; and

 

(iii)                               since the date of the most recent financial
statements included in the Registration Statement, the Prospectus and the
Incorporated Documents, there has been no Material Adverse Change on the
condition (financial or otherwise), earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Registration Statement and the Prospectus.

 

(d)                                 Delivery of Accountants’ “Comfort” Letter.
The Company shall have requested and caused the Accountants to have furnished to
the Manager letters (which may refer to letters previously delivered to the
Manager), dated as of the date hereof, in form and substance satisfactory to the
Manager, confirming that they are independent accountants within the meaning of
the Act and the Exchange Act and the respective applicable rules and regulations
adopted by the Commission thereunder and that they have performed a review of
any unaudited interim financial information of the Company and included or
incorporated by reference in the Registration Statement and the Prospectus and
provide customary “comfort” as to such review in form and substance satisfactory
to the Manager.

 

(e)                                  No Material Adverse Event. Since the
respective dates as of which information is disclosed in the Registration
Statement, the Prospectus and the Incorporated Documents, except as otherwise
stated therein, there shall not have been (i) any change or decrease in
previously reported results specified in the letter or letters referred to in
paragraph (d) of this Section 6 or (ii) any change, or any development involving
a prospective change, in or affecting the condition (financial or otherwise),
earnings, business or properties of the Company and its subsidiaries taken as a
whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Registration Statement,
the Prospectus and the Incorporated Documents (exclusive of any amendment or
supplement thereto) the effect of which, in any case referred to in clause
(i) or (ii) above, is, in the sole judgment of the Manager, so material and
adverse as to make it impractical or inadvisable to proceed with the offering or
delivery of the Shares as contemplated by the Registration Statement (exclusive
of any amendment thereof), the Incorporated Documents and the Prospectus
(exclusive of any amendment or supplement thereto).

 

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(f)                                   Payment of All Fees. The Company shall
have paid the required Commission filing fees relating to the Shares within the
time period required by Rule 456(b)(1)(i) of the Act without regard to the
proviso therein and otherwise in accordance with Rules 456(b) and 457(r) of the
Act and, if applicable, shall have updated the “Calculation of Registration Fee”
table in accordance with Rule 456(b)(1)(ii) either in a post-effective amendment
to the Registration Statement or on the cover page of a prospectus filed
pursuant to Rule 424(b).

 

(g)                                  No FINRA Objections. FINRA shall not have
raised any objection with respect to the fairness and reasonableness of the
terms and arrangements under this Agreement.

 

(h)                                 Shares Listed on Trading Market. The Shares
shall have been listed and admitted and authorized for trading on the Trading
Market and satisfactory evidence of such actions shall have been provided to the
Manager.

 

(i)                                     Other Assurances. Prior to each
Settlement Date and Time of Delivery, as applicable, the Company shall have
furnished to the Manager such further information, certificates and documents as
the Manager may reasonably request.

 

If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as provided in this Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Manager and counsel for the
Manager, this Agreement and all obligations of the Manager hereunder may be
canceled at, or at any time prior to, any Settlement Date or Time of Delivery,
as applicable, by the Manager. Notice of such cancellation shall be given to the
Company in writing or by telephone or facsimile confirmed in writing.

 

The documents required to be delivered by this Section 6 shall be delivered at
the office of Ellenoff Grossman & Schole LLP, counsel for the Manager, at 1345
Avenue of the Americas, New York, New York 10105, on each such date as provided
in this Agreement.

 

7.                                      Indemnification and Contribution.

 

(a)                                 Indemnification by Company. The Company
agrees to indemnify and hold harmless the Manager, the directors, officers,
employees and agents of the Manager and each person who controls the Manager
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any

 

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untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement for the registration of the Shares as originally filed or
in any amendment thereof, or in the Base Prospectus, any Prospectus Supplement,
the Prospectus, any Issuer Free Writing Prospectus, or in any amendment thereof
or supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or result from or relate
to any breach of any of the representations, warranties, covenants or agreements
made by the Company in this Agreement, and agrees to reimburse each such
indemnified party for the legal expenses of one counsel (plus local counsel) or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by the Manager specifically for inclusion therein. This indemnity
agreement will be in addition to any liability that the Company may otherwise
have.

 

(b)                                 Indemnification by Manager. The Manager
agrees to indemnify and hold harmless the Company, each of its directors, each
of its officers, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, to the same extent as the foregoing
indemnity from the Company to the Manager, but only with reference to written
information relating to the Manager furnished to the Company by the Manager
specifically for inclusion in the documents referred to in the foregoing
indemnity; provided, however, that in no case shall the Manager be responsible
for any amount in excess of the Broker Fee applicable to the Shares and paid
hereunder. This indemnity agreement will be in addition to any liability which
the Manager may otherwise have.

 

(c)                                  Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 7,
notify the indemnifying party in writing of the commencement thereof; but the
failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or
(b) above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party’s choice at the indemnifying party’s expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel

 

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retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party’s election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ one separate counsel (plus local counsel), and
the indemnifying party shall bear the documented and reasonable fees, costs and
expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. An indemnifying party
will not, without the prior written consent of the indemnified parties, settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.

 

(d)                                 Contribution. In the event that the
indemnity provided in paragraph (a), (b) or (c) of this Section 7 is unavailable
to or insufficient to hold harmless an indemnified party for any reason, the
Company and the Manager agree to contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending the same) (collectively “Losses”)
to which the Company and the Manager may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and by the Manager on the other from the offering of the Shares; provided,
however, that in no case shall the Manager be responsible for any amount in
excess of the Broker Fee applicable to the Shares and paid hereunder. If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the Company and the Manager severally shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and of the Manager on the
other in connection with the statements or omissions which resulted in such
Losses as well as any other relevant equitable considerations. Benefits received
by the Company shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses) received by it, and benefits received by
the Manager shall be deemed to be equal to the Broker Fee applicable to the
Shares and paid hereunder as determined by this Agreement. Relative fault shall
be determined by reference to, among other things, whether

 

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any untrue or any alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information provided by the
Company on the one hand or the Manager on the other, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The Company and the Manager agree
that it would not be just and equitable if contribution were determined by pro
rata allocation or any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the provisions
of this paragraph (d), no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 7, each person who controls the Manager within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of the Manager shall have the same rights to contribution as the Manager,
and each person who controls the Company within the meaning of either the Act or
the Exchange Act, each officer of the Company and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to the applicable terms and conditions of this paragraph (d).

 

8.                                      Termination.

 

(a)                                 The Company shall have the right, by giving
written notice as hereinafter specified, to terminate the provisions of this
Agreement relating to the solicitation of offers to purchase the Shares in its
sole discretion at any time upon five (5) Business Days’ prior written notice.
Any such termination shall be without liability of any party to any other party
except that (i) with respect to any pending sale, through the Manager for the
Company, the obligations of the Company, including in respect of compensation of
the Manager, shall remain in full force and effect notwithstanding the
termination and (ii) the provisions of Sections 5, 7, 8, 9, 10, 12 and 14 of
this Agreement shall remain in full force and effect notwithstanding such
termination.

 

(b)                                 The Manager shall have the right, by giving
written notice as hereinafter specified, to terminate the provisions of this
Agreement relating to the solicitation of offers to purchase the Shares in its
sole discretion at any time. Any such termination shall be without liability of
any party to any other party except that the provisions of Sections 5, 7, 8, 9,
10, 12 and 14 of this Agreement shall remain in full force and effect
notwithstanding such termination.

 

(c)                                  This Agreement shall remain in full force
and effect until the earliest of June 7, 2021, such date that this Agreement is
terminated pursuant to Sections 8(a) or (b) above, or all of the Shares covered
by this Agreement have been sold or otherwise by mutual agreement of the
parties; provided that any such termination by mutual agreement shall in all
cases be deemed to provide that Sections 5, 7, 8, 9, 10, 12 and 14 shall remain
in full force and effect.

 

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(d)                                 Any termination of this Agreement shall be
effective on the date specified in such notice of termination, provided that
such termination shall not be effective until the close of business on the date
of receipt of such notice by the Manager or the Company, as the case may be. If
such termination shall occur prior to the Settlement Date or Time of Delivery
for any sale of the Shares, such sale shall settle in accordance with the
provisions of Section 2(b) of this Agreement.

 

(e)                                  In the case of any purchase of Shares by
the Manager pursuant to a Terms Agreement, the obligations of the Manager
pursuant to such Terms Agreement shall be subject to termination, in the
absolute discretion of the Manager, by prompt oral notice given to the Company
prior to the Time of Delivery relating to such Shares, if any, and confirmed
promptly by facsimile or electronic mail, if since the time of execution of the
Terms Agreement and prior to such delivery and payment, (i) trading in the
Company’s Common Stock shall have been suspended by the Commission or the
Trading Market or trading in securities generally on the Trading Market shall
have been suspended or limited or minimum prices shall have been established on
such exchange, (ii) a banking moratorium shall have been declared either by
Federal or New York State authorities or (iii) there shall have occurred any
outbreak or escalation of hostilities, declaration by the United States of a
national emergency or war, or other calamity or crisis the effect of which on
financial markets is such as to make it, in the sole judgment of the Manager,
impractical or inadvisable to proceed with the offering or delivery of the
Shares as contemplated by the Prospectus (exclusive of any amendment or
supplement thereto).

 

9.                                      Representations and Indemnities to
Survive. The respective agreements, representations, warranties, indemnities and
other statements of the Company or its officers and of the Manager set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by the Manager or the Company or any of the
officers, directors, employees, agents or controlling persons referred to in
Section 7, and will survive delivery of and payment for the Shares.

 

10.                               Notices. All communications hereunder will be
in writing and effective only on receipt, and, if sent to the Manager, will be
mailed, delivered or facsimiled to the address set forth on the signature
page hereto.

 

11.                               Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and the officers, directors, employees, agents and controlling
persons referred to in Section 7, and no other person will have any right or
obligation hereunder.

 

12.                               No Fiduciary Duty. The Company hereby
acknowledges that (a) the purchase and sale of the Shares pursuant to this
Agreement is an arm’s-length commercial transaction between the Company, on the
one hand, and the Manager and any affiliate through which it may be acting, on
the other, (b) the Manager is acting solely as sales agent and/or principal in
connection with the purchase and sale of the Company’s

 

36

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securities and not as a fiduciary of the Company and (c) the Company’s
engagement of the Manager in connection with the offering and the process
leading up to the offering is as independent contractors and not in any other
capacity. Furthermore, the Company agrees that it is solely responsible for
making its own judgments in connection with the offering (irrespective of
whether the Manager has advised or is currently advising the Company on related
or other matters). The Company agrees that it will not claim that the Manager
has rendered advisory services of any nature or respect, or owe an agency,
fiduciary or similar duty to the Company, in connection with such transaction or
the process leading thereto.

 

13.                               Integration. This Agreement and any Terms
Agreement supersede all prior agreements and understandings (whether written or
oral) between the Company and the Manager with respect to the subject matter
hereof.

 

14.                               Applicable Law. This Agreement and any Terms
Agreement will be governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and to be performed within the
State of New York.

 

15.                               WAIVER OF JURY TRIAL. THE COMPANY HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY TERMS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.

 

16.                               Counterparts. This Agreement and any Terms
Agreement may be signed in one or more counterparts, each of which shall
constitute an original and all of which together shall constitute one and the
same agreement, which may be delivered by facsimile or in .pdf file via e-mail.

 

17.                               Headings. The section headings used in this
Agreement and any Terms Agreement are for convenience only and shall not affect
the construction hereof.

 

If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the Company
and the Manager.

 

***************************

 

37

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Very truly yours,

 

 

 

CAPSTONE TURBINE CORPORATION

 

 

 

 

 

 

By:

/s/ Jayme Brooks

 

Name: Jayme Brooks

 

Title: CFO & CAO

 

 

 

The foregoing Agreement is hereby confirmed and accepted as of the date first
written above.

 

 

 

H.C. WAINWRIGHT & CO., LLC

 

 

 

 

 

 

By:

/s/ Edward D. Silvera

 

Name: Edward D. Silvera

 

Title: Chief Operating Officer

 

 

 

Address for Notice:

 

 

 

430 Park Avenue

 

New York, New York 10022

 

Attention: Chief Executive Officer

 

 

SIGNATURE PAGE TO AT THE MARKET OFFERING AGREEMENT

 

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Form of Terms Agreement

 

ANNEX I

 

CAPSTONE TURBINE CORPORATION TERMS AGREEMENT

 

Dear Sirs:

 

Capstone Turbine Corporation (the “Company”) proposes, subject to the terms and
conditions stated herein and in the At The Market Offering Agreement, dated
June 7, 2018 (the “At The Market Offering Agreement”), between the Company and
H.C. Wainwright & Co., LLC (“Manager”), to issue and sell to Manager the
securities specified in the Schedule I hereto (the “Purchased Shares”).

 

Each of the provisions of the At The Market Offering Agreement not specifically
related to the solicitation by H.C. Wainwright & Co., LLC, as agent of the
Company, of offers to purchase securities is incorporated herein by reference in
its entirety, and shall be deemed to be part of this Terms Agreement to the same
extent as if such provisions had been set forth in full herein. Each of the
representations and warranties set forth therein shall be deemed to have been
made at and as of the date of this Terms Agreement and the Time of Delivery,
except that each representation and warranty in Section 3 of the At The Market
Offering Agreement which makes reference to the Prospectus (as therein defined)
shall be deemed to be a representation and warranty as of the date of the At The
Market Offering Agreement in relation to the Prospectus, and also a
representation and warranty as of the date of this Terms Agreement and the Time
of Delivery in relation to the Prospectus as amended and supplemented to relate
to the Purchased Shares.

 

An amendment to the Registration Statement (as defined in the At The Market
Offering Agreement), or a supplement to the Prospectus, as the case may be,
relating to the Purchased Shares, in the form heretofore delivered to the
Manager is now proposed to be filed with the Securities and Exchange Commission.

 

Subject to the terms and conditions set forth herein and in the At The Market
Offering Agreement which are incorporated herein by reference, the Company
agrees to issue and sell to Manager and the latter agrees to purchase from the
Company the number of shares of the Purchased Shares at the time and place and
at the purchase price set forth in the Schedule I hereto.

 

If the foregoing is in accordance with your understanding, please sign and
return to us a counterpart hereof, whereupon this Terms Agreement, including
those provisions of the At The Market Offering Agreement incorporated herein by
reference, shall constitute a binding agreement between the Manager and the
Company.

 

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Very truly yours,

 

 

 

CAPSTONE TURBINE CORPORATION

 

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

ACCEPTED as of the date first written above.

 

 

 

H.C. WAINWRIGHT & CO., LLC

 

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

SIGNATURE PAGE TO ANNEX I TO AT THE MARKET OFFERING AGREEMENT

 

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