Document:

Exhibit 4.1

 

 Exhibit
4.1

  

Form of Selling Agent’s Warrant Agreement

THE
REGISTERED HOLDER OF THIS PURCHASE WARRANT BY ITS ACCEPTANCE
HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS
PURCHASE WARRANT EXCEPT AS HEREIN PROVIDED AND THE REGISTERED
HOLDER OF THIS PURCHASE WARRANT AGREES THAT IT WILL NOT SELL,
TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE WARRANT OR
CAUSE IT TO BE THE SUBJECT OF ANY HEDGING, SHORT SALE, DERIVATIVE,
PUT, OR CALL TRANSACTION THAT WOULD RESULT IN THE EFFECTIVE
ECONOMIC DISPOSITION OF THE PURCHASE WARRANT BY ANY PERSON FOR A
PERIOD OF ONE HUNDRED EIGHTY (180) DAYS FOLLOWING THE EFFECTIVE
DATE (DEFINED BELOW) TO ANYONE OTHER THAN (I) ALEXANDER CAPITAL,
L.P. OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING, OR (II)
A BONA FIDE OFFICER OR PARTNER OF ALEXANDER CAPITAL, L.P. OR OF ANY
SELECTED DEALER AND IN ACCORDANCE WITH FINRA RULE
5110(G)(2).

 

THIS
PURCHASE WARRANT IS NOT EXERCISABLE PRIOR TO APRIL 3, 2020. VOID
AFTER 5:00 P.M., EASTERN TIME, APRIL 3, 2025.

 

COMMON STOCK PURCHASE WARRANT

 

For the Purchase of
[        ] Shares of
Common

Stock
of

AZURRX
BIOPHARMA, INC.

 

1.
Purchase Warrant.
THIS CERTIFIES THAT, in consideration of funds duly paid by or on
behalf of [ ] (“Holder”), as registered owner of
this Purchase Warrant, to AxurRx BioPharma, Inc., a Delaware
corporation (the “Company”), Holder is entitled, at
any time or from time to time from April 3, 2020 (the
“Commencement
Date”), and at or before 5:00 p.m., Eastern time April
3, 2025 (the “Expiration
Date”), but not thereafter, to subscribe for, purchase
and receive, in whole or in part, up to [●] shares of common
stock of the Company, par value $0.0001 per share (the
“Shares”),
subject to adjustment as provided in Section 5 hereof. If the
Expiration Date is a day on which banking institutions are
authorized by law to close, then this Purchase Warrant may be
exercised on the next succeeding day which is not such a day in
accordance with the terms herein. During the period ending on the
Expiration Date, the Company agrees not to take any action that
would terminate this Purchase Warrant. This Purchase Warrant is
initially exercisable at $2.55 per Share; provided, however, that
upon the occurrence of any of the events specified in Section 5
hereof, the rights granted by this Purchase Warrant, including the
exercise price per Share and the number of Shares to be received
upon such exercise, shall be adjusted as therein specified. This
Warrant is being issued pursuant to the certain Selling Agent
Agreement (the “Selling Agent
Agreement”), dated April 1, 2019, by and among the
Company and the Holder, providing for the public offering (the
“Offering”) of
shares of common stock, par value

 

$0.001
per share, of the Company. The term “Effective Date” shall mean the
effective date of the Offering. The term “Exercise Price” shall mean the
initial exercise price or the adjusted exercise price, depending on
the context.

 

1.

Exercise.

 

  1.1 Exercise
Form. In order to exercise this Purchase Warrant, the
exercise form attached hereto must be duly executed and completed
and delivered to the Company, together with this Purchase Warrant
and payment of the Exercise Price for the Shares being purchased
payable in cash by wire transfer of immediately available funds to
an account designated by the Company or by certified check or
official bank check. If the subscription rights represented hereby
shall not be exercised at or before 5:00 p.m., Eastern time, on the
Expiration Date, this Purchase Warrant shall become and be void
without further force or effect, and all rights represented hereby
shall cease and expire.

 

 

 

 

-1-

 

 

1.2 Cashless
Exercise. If at any time after the Commencement Date there
is no effective registration statement registering, or no current
prospectus available for, the resale of the Shares by the Holder,
then in lieu of exercising this Purchase Warrant by payment of cash
or check payable to the order of the Company pursuant to Section
1.1 above, Holder may elect to receive the number of Shares equal
to the value of this Purchase Warrant (or the portion thereof being
exercised), by surrender of this Purchase Warrant to the Company,
together with the exercise form attached hereto, in which event the
Company shall issue to Holder, Shares in accordance with the
following formula:

 

X
= Y(A-B)

        
A

 

Where,

 

X = The
number of Shares to be issued to Holder;

Y = The
number of Shares for which the Purchase Warrant is being
exercised;

A = The
fair market value of one Share; and

B = The
Exercise Price.

 

For
purposes of this Section 1.2, the fair market value of a Share is
defined as follows:

 

(i)

if the
Company’s common stock is traded on a securities
exchange, the fair market
value shall be deemed to be the closing price on such exchange on
the trading day immediately prior to the date the exercise form is
submitted to the Company in connection with the exercise of the
Purchase Warrant; or

 

(ii)

if the
Company’s
common stock is actively traded over-the-counter, the fair market
value shall be deemed to be the closing bid price on the trading
day immediately prior to the date the exercise form is submitted to
the Company in connection with the exercise of the Purchase
Warrant; or

 

(iii)

if there
is no active public
market, the value shall be the fair market value thereof, as
determined in good faith by the Company’s Board of
Directors.

 

1.3 Legend.
Each certificate for the securities purchased under this Purchase
Warrant shall bear a legend as follows unless such securities have
been registered under the Securities Act of 1933, as amended (the
“Act”): “The
securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the
“Act”), or
applicable state law. Neither the securities nor any interest
therein may be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the
Securities Act, or pursuant to an exemption from registration under
the Securities Act and applicable state law which, in the opinion
of counsel to the Company, is available.”

 

 

 

 

-2-

 

 

1.4 No Obligation to
Net Cash Settle. Notwithstanding anything to the contrary
contained in this Purchase Warrant, in no event will the Company be
required to net cash settle the exercise of the Purchase Warrant.
The holder of the Purchase Warrant will not be entitled to exercise
the Purchase Option unless it exercises such Purchase Warrant
pursuant to the cashless exercise right or a registration statement
is effective, or an exemption from the registration requirements is
available at such time and, if the Holder is not able to exercise
the Purchase Warrant, the Purchase Warrant will expire
worthless.

 

2.

Transfer.

 

2.1 General
Restrictions. The registered Holder of this Purchase Warrant
agrees by his, her or its acceptance hereof, that such Holder will
not: (a) sell, transfer, assign, pledge or hypothecate this
Purchase Warrant for a period of one hundred eighty (180) days
following the Effective Date to anyone other than: (i) Alexander
Capital L.P. (“Alexander
Capital”) or another selected dealer participating in
the Offering, or (ii) a bona fide officer or partner of Alexander
Capital or of any such underwriter or selected dealer, in each case
in accordance with FINRA Conduct Rule 5110(g)(1), or (b) cause this
Purchase Warrant or the securities issuable hereunder to be the
subject of any hedging, short sale, derivative, put or call
transaction that would result in the effective economic disposition
of this Purchase Warrant or the securities hereunder, except as
provided for in FINRA Rule 5110(g)(2). On and after one (1) year
after the Effective Date, transfers to others may be made subject
to compliance with or exemptions from applicable securities laws.
In order to make any permitted assignment, the Holder must deliver
to the Company the assignment form attached hereto duly executed
and completed, together with the Purchase Warrant and payment of
all transfer taxes, if any, payable in connection therewith. The
Company shall within five (5) Business Days transfer this Purchase
Warrant on the books of the Company and shall execute and deliver a
new Purchase Warrant or Purchase Warrants of like tenor to the
appropriate assignee(s) expressly evidencing the right to purchase
the aggregate number of Shares purchasable hereunder or such
portion of such number as shall be contemplated by any such
assignment.

 

2.2 Restrictions
Imposed by the Securities Act. The securities evidenced by
this Purchase Warrant shall not be transferred unless and until:
(i) the Company has received the opinion of counsel for the Holder
that the securities may be transferred pursuant to an exemption
from registration under the Securities Act and applicable state
securities laws, the availability of which is established to the
reasonable satisfaction of the Company (the Company hereby agreeing
that the opinion of Cozen O’Connor shall be deemed
satisfactory evidence of the availability of an exemption), or (ii)
a registration statement or a post-effective amendment to the
Registration Statement relating to the offer and sale of such
securities has been filed by the Company and declared effective by
the U.S. Securities and Exchange Commission (the
“Commission”) and compliance with applicable state
securities law has been established.

 

 

-3-

 

 

3.

Registration
Rights.

 

3.1

“Piggy-Back”
Registration.

 

3.1.1 Grant
of Right. The Holder shall have the right, for a period of
no more than seven (7) years from the Effective Date in accordance
with FINRA Rule 5110(f)(2)(G)(v), to include any portion of the
Shares underlying the Purchase Warrants (collectively, the
“Registrable
Securities”) as part of any other registration of
securities filed by the Company (other than in connection with a
transaction contemplated by Rule 145(a) promulgated under the
Securities Act or pursuant to Form S-8 or any equivalent form);
provided,
however, that if,
solely in connection with any primary underwritten public offering
for the account of the Company, the managing underwriter(s) thereof
shall, in its reasonable discretion, impose a limitation on the
number of shares of common stock which may be included in the
Registration Statement because, in such underwriter(s)’
judgment, marketing or other factors dictate such limitation is
necessary to facilitate public distribution, then the Company shall
be obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to which
the Holder requested inclusion hereunder as the underwriter shall
reasonably permit. Any exclusion of Registrable Securities shall be
made pro rata among the Holders seeking to include Registrable
Securities in proportion to the number of Registrable Securities
sought to be included by such Holders; provided, however, that the Company shall
not exclude any Registrable Securities unless the Company has first
excluded all outstanding securities, the holders of which are not
entitled to inclusion of such securities in such Registration
Statement or are not entitled to pro rata inclusion with the
Registrable Securities.

  

3.1.2 Terms.
The Company shall bear all fees and expenses attendant to
registering the Registrable Securities pursuant to Section 3.1.1
hereof, but the Holders shall pay any and all underwriting
commissions and the expenses of any legal counsel selected by the
Holders to represent them in connection with the sale of the
Registrable Securities. In the event of such a proposed
registration, the Company shall furnish the then Holders of
outstanding Registrable Securities with not less than thirty (30)
days written notice prior to the proposed date of filing of such
registration statement. Such notice to the Holders shall continue
to be given for each registration statement filed by the Company
until such time as all of the Registrable Securities have been sold
by the Holder. The holders of the Registrable Securities shall
exercise the “piggy- back” rights provided for herein
by giving written notice within ten (10) days of the receipt of the
Company’s notice of its intention to file a registration
statement. Except as otherwise provided in this Purchase Warrant,
there shall be no limit on the number of times the Holder may
request registration under this Section 3.1.2; provided, however, that such registration
rights shall terminate upon on the sixth anniversary of the
Commencement Date.

 

3.2

General
Terms.

 

3.2.1 Indemnification.
The Company shall indemnify the Holder(s) of the Registrable
Securities to be sold pursuant to any registration statement
hereunder and each person, if any, who controls such Holders within
the meaning of Section 15 of the Securities Act or Section 20(a) of
the Securities Exchange Act of 1934, as amended (the
“Exchange Act”),
against all loss, claim, damage, expense or liability (including
all reasonable attorneys’ fees and other expenses reasonably
incurred in investigating, preparing or defending against any claim
whatsoever) to which any of them may become subject under the
Securities Act, the Exchange Act or otherwise, arising from such
registration statement but only to the same extent and with the
same effect as the provisions pursuant to which the Company has
agreed to indemnify the Selling Agent contained in Section 6.1 of
the Selling Agent Agreement between the Selling Agent and
the Company, dated as
of April 1, 2019. The Holder(s) of the Registrable Securities to be
sold pursuant to such registration statement, and their successors
and assigns, shall severally, and not jointly, indemnify the
Company and its affiliates, against all loss, claim, damage,
expense or liability (including all reasonable attorneys’
fees and other expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they
may become subject under the Securities Act, the Exchange Act or
otherwise, arising from information furnished by or on behalf of
such Holders, or their successors or assigns, in writing, for
specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained in
Section 6.2 of the Selling Agent Agreement pursuant to which the
Selling Agent has agreed to indemnify the Company.

 

 

 

 

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3.2.2 Exercise
of Purchase Warrants. Nothing contained in this Purchase
Warrant shall be construed as requiring the Holder(s) to exercise
their Purchase Warrants prior to or after the initial filing of any
registration statement or the effectiveness thereof.

 

3.2.3 Documents
Delivered to Holders. The Company shall furnish to each
Holder participating in any underwritten offerings and to each
underwriter of any such offering, a signed counterpart, addressed
to such Holder and underwriter, of: (i) an opinion of counsel to
the Company, dated the effective date of such registration
statement (and an opinion dated the date of the closing under any
underwriting agreement related thereto), and (ii) a “cold
comfort” letter dated the effective date of such registration
statement (and a letter dated the date of the closing under the
underwriting agreement) signed by the independent registered public
accounting firm which has issued a report on the Company’s
financial statements included in such registration statement, in
each case covering substantially the same matters with respect to
such registration statement (and the prospectus included therein)
and, in the case of such accountants’ letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer’s counsel and in
accountants’ letters delivered to underwriters in
underwritten public offerings of securities. The Company shall also
deliver promptly to each Holder participating in the underwritten
offering requesting the correspondence and memoranda described
below and to the managing underwriter copies of all correspondence
between the Commission and the Company, its counsel or auditors and
all memoranda relating to discussions with the Commission or its
staff with respect to the registration statement and permit each
Holder and underwriter to do such investigation, upon reasonable
advance notice, with respect to information contained in or omitted
from the registration statement as it deems reasonably necessary to
comply with applicable securities laws or rules of FINRA. Such
investigation shall include access to books, records and properties
and opportunities to discuss the business of the Company with its
officers and independent auditors, all to such reasonable extent
and at such reasonable times as any such Holder shall reasonably
request.

  

3.2.4 Underwriting
Agreement. In the event the Company shall enter into an
underwriting agreement with any managing underwriter(s), if any,
selected by the Company with respect to the Registrable Securities
that are being registered pursuant to this Section 3, which
managing underwriter shall be reasonably satisfactory to the
Majority Holders. Such agreement shall be reasonably satisfactory
in form and substance to the Company and such managing
underwriters, and shall contain such representations, warranties
and covenants by the Company and such other terms as are
customarily contained in agreements of that type used by the
managing underwriter. The Holders shall be parties to any
underwriting agreement relating to an underwritten sale of their
Registrable Securities and may, at their option, require that any
or all the representations, warranties and covenants of the Company
to or for the benefit of such underwriters shall also be made
to and for the benefit of such Holders. Such Holders shall not be
required to make any representations or warranties to or agreements
with the Company or the underwriters except as they may relate to
such Holders, their Shares and their intended methods of
distribution.

 

 

 

 

-5-

 

 

 

3.2.5 Documents
to be Delivered by Holder(s). Each of the Holder(s)
participating in any of the foregoing offerings shall furnish to
the Company a completed and executed questionnaire provided by the
Company requesting information customarily sought of selling
security holders.

 

3.2.6 Damages.
Should the registration or the effectiveness thereof required by
Section 3.1 hereof be delayed by the Company or the Company
otherwise fails to comply with such provisions, the Holder(s)
shall, in addition to any other legal or other relief available to
the Holder(s), be entitled to seek specific performance or other
equitable (including injunctive) relief against the threatened
breach of such provisions or the continuation of any such breach,
without the necessity of proving actual damages and without the
necessity of posting bond or other security.

 

4.

New Purchase Warrants to be
Issued.

 

4.1 Partial
Exercise or Transfer. Subject to the restrictions in Section
2 hereof, this Purchase Warrant may be exercised or assigned in
whole or in part. In the event of the exercise or assignment hereof
in part only, upon surrender of this Purchase Warrant for
cancellation, together with the duly executed exercise or
assignment form and funds sufficient to pay any Exercise Price
and/or transfer tax if exercised pursuant to Section 1.1 hereto,
the Company shall cause to be delivered to the Holder without
charge a new Purchase Warrant of like tenor to this Purchase
Warrant in the name of the Holder evidencing the right of the
Holder to purchase the number of Shares purchasable hereunder as to
which this Purchase Warrant has not been exercised or
assigned.

 

4.2 Lost
Certificate. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of
this Purchase Warrant and of reasonably satisfactory
indemnification or the posting of a bond, the Company shall execute
and deliver a new Purchase Warrant of like tenor and date. Any such
new Purchase Warrant executed and delivered as a result of such
loss, theft, mutilation or destruction shall constitute a
substitute contractual obligation on the part of the
Company.

 

5.

Adjustments.

 

5.1 Adjustments
to Exercise Price and Number of Securities. The Exercise
Price and the number of Shares underlying the Purchase Warrant
shall be subject to adjustment from time to time as hereinafter set
forth:

 

5.1.1 Share
Dividends; Split Ups. If, after the date hereof, and subject
to the provisions of Section 5.3 below, the number of outstanding
Shares is increased by a stock dividend payable in Shares or by a
split up of Shares or other similar event, then, on the effective
day thereof, the number of Shares purchasable hereunder shall be
increased in proportion to such increase in outstanding Shares, and
the Exercise Price shall be proportionately decreased.

 

5.1.2 Aggregation
of Shares. If, after the date hereof, and subject to the
provisions of Section 5.3 below, the number of outstanding Shares
is decreased by a consolidation, combination or
reclassification of Shares or other similar event, then, on the
effective date thereof, the number of Shares purchasable hereunder
shall be decreased in proportion to such decrease in outstanding
Shares, and the Exercise Price shall be proportionately
increased.

 

 

 

 

-6-

 

 

 

5.1.3 Replacement
of Securities upon Reorganization, etc. In case of any
reclassification or reorganization of the outstanding Shares other
than a change covered by Section 5.1.1 or 5.1.2
hereof or that solely affects the par value of such Shares, or in
the case of any share reconstruction or amalgamation or
consolidation of the Company with or into another corporation or
other entity (other than a consolidation or share reconstruction or
amalgamation in which the Company is the continuing corporation and
that does not result in any reclassification or reorganization of
the outstanding Shares), or in the case of any sale or conveyance
to another corporation or entity of the property of the Company as
an entirety or substantially as an entirety in connection with
which the Company is dissolved, the Holder of this Purchase Warrant
shall have the right thereafter (until the expiration of the right
of exercise of this Purchase Warrant) to receive upon the exercise
hereof, for the same aggregate Exercise Price payable hereunder
immediately prior to such event, the kind and amount of shares of
stock or other securities or property (including cash) receivable
upon such reclassification, reorganization, share reconstruction or
amalgamation, or consolidation, or upon a dissolution following any
such sale or transfer, by a Holder of the number of Shares of the
Company obtainable upon exercise of this Purchase Warrant
immediately prior to such event; and if any reclassification also
results in a change in Shares covered by Section 5.1.1 or 5.1.2,
then such adjustment shall be made pursuant to Sections 5.1.1,
5.1.2 and this Section 5.1.3. The provisions of this Section 5.1.3
shall similarly apply to successive reclassifications,
reorganizations, share reconstructions or amalgamations, or
consolidations, sales or other transfers.

 

5.1.4 Changes in Form of Purchase
Warrant. This form of Purchase Warrant need not be changed
because of any change pursuant to this Section 5.1, and Purchase
Warrants issued after such change may state the same Exercise Price
and the same number of Shares as are stated in the Purchase
Warrants initially issued pursuant to this Agreement. The
acceptance by any Holder of the issuance of new Purchase Warrants
reflecting a required or permissive change shall not be deemed to
waive any rights to an adjustment occurring after the Commencement
Date or the computation thereof.

 

5.2 Substitute
Purchase Warrant. In case of any consolidation of the
Company with, or share reconstruction or amalgamation of the
Company with or into, another corporation or other entity (other
than a consolidation or share reconstruction or amalgamation which
does not result in any reclassification or change of the
outstanding Shares), the corporation or other entity formed by such
consolidation or share reconstruction or amalgamation shall execute
and deliver to the Holder a supplemental Purchase Warrant providing
that the holder of each Purchase Warrant then outstanding or to be
outstanding shall have the right thereafter (until the stated
expiration of such Purchase Warrant) to receive, upon exercise of
such Purchase Warrant, the kind and amount of shares of stock and
other securities and property receivable upon such consolidation or
share reconstruction or amalgamation, by a holder of the number of
Shares of the Company for which such Purchase Warrant might have
been exercised immediately prior to such consolidation, share
reconstruction or amalgamation, sale or transfer. Such supplemental
Purchase Warrant shall provide for adjustments which shall be
identical to the adjustments provided for in this Section 5. The
above provision of this Section shall similarly apply to successive
consolidations or share reconstructions or
amalgamations.

 

5.3 Elimination of
Fractional Interests. The Company shall not be required to
issue certificates representing fractions of Shares upon the
exercise of the Purchase Warrant, nor shall it be required to issue
scrip or pay cash in lieu of any fractional interests, it being the
intent of the parties that all fractional interests shall be
eliminated by rounding any fraction up or down, as the case may be,
to the nearest whole number of Shares or other securities,
properties or rights.

 

 

 

 

-7-

 

 

6. Reservation and Listing. The
Company shall at all times reserve and keep available out of its
authorized Shares, solely for the purpose of issuance upon exercise
of the Purchase Warrants, such number of Shares or other
securities, properties or rights as shall be issuable upon the
exercise thereof. The Company covenants and agrees that, upon
exercise of the Purchase Warrants and payment of the Exercise Price
therefor, in accordance with the terms hereby, all Shares and other
securities issuable upon such exercise shall be duly and validly
issued, fully paid and non- assessable and not subject to
preemptive rights of any shareholder. The Company further covenants
and agrees that upon exercise of the Purchase Warrants and payment
of the exercise price therefor, all Shares and other securities
issuable upon such exercise shall be duly and validly issued, fully
paid and non-assessable and not subject to preemptive rights of any
shareholder. As long as the Purchase Warrants shall be outstanding,
the Company shall use its commercially reasonable efforts to cause
all Shares issuable upon exercise of the Purchase Warrants to be
listed (subject to official notice of issuance) on all national
securities exchanges (or, if applicable, on the OTC Bulletin Board
or any successor trading market) on which the Shares issued to the
public in the Offering may then be listed and/or
quoted.

 

7.

Certain Notice
Requirements.

 

7.1 Holder’s
Right to Receive Notice. Nothing herein shall be construed
as conferring upon the Holders the right to vote or consent or to
receive notice as a shareholder for the election of directors or
any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the
expiration of the Purchase Warrants and their exercise, any of the
events described in Section 7.2 shall occur, then, in one or more
of said events, the Company shall give written notice of such event
at least fifteen (15) days prior to the date fixed as a record date
or the date of closing the transfer books for the determination of
the shareholders entitled to such dividend, distribution,
conversion or exchange of securities or subscription rights, or
entitled to vote on such proposed dissolution, liquidation, winding
up or sale. Such notice shall specify such record date or the date
of the closing of the transfer books, as the case may be.
Notwithstanding the foregoing, the Company shall deliver to each
Holder a copy of each notice given to the other shareholders of the
Company at the same time and in the same manner that such notice is
given to the shareholders.

 

 

7.2 Events
Requiring Notice. The Company shall be required to give the
notice described in this Section 7 upon one or more of the
following events: (i) if the Company shall take a record of the
holders of its Shares for the purpose of entitling them to receive
a dividend or distribution payable otherwise than in cash, or a
cash dividend or distribution payable otherwise than out of
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company, (ii) the
Company shall offer to all the holders of its Shares any additional
shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or
any option, right or warrant to subscribe therefor, or (iii) a
dissolution, liquidation or winding up of the Company (other than
in connection with a consolidation or share reconstruction or
amalgamation) or a sale of all or substantially all of its
property, assets and business shall be proposed.

 

7.3 Notice
of Change in Exercise Price. The Company shall, promptly
after an event requiring a change in the Exercise Price pursuant to
Section 5 hereof, send notice to the Holders of such event and
change (“Price
Notice”). The Price Notice shall describe the event
causing the change and the method of calculating same and shall be
certified as being true and accurate by the Company’s Chief
Financial Officer.

 

 

 

 

-8-

 

 

7.4 Transmittal
of Notices. All notices, requests, consents and other
communications under this Purchase Warrant shall be in writing and
shall be deemed to have been duly made when hand delivered, or
mailed by express mail or private courier service: (i) if to the
registered Holder of the Purchase Warrant, to the address of such
Holder as shown on the books of the Company, or

(ii) if
to the Company, to following address or to such other address as
the Company may designate by notice to the Holders:

 

 

If to
the Holder:

 

 

 

Attn:
[●]

Email:

 

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

 

Cozen
O’Connor

33
South 6th Street, Suite
3800

Minneapolis,
Minnesota 55402

Attn:
Christopher J. Bellini, Esq.

Email:
cbellini@cozen.com

 

If to
the Company:

 

AzurRx
BioPharma, Inc. 760 Parkside Avenue

Downstate
Biotechnology Incubator, Suite 304

Brooklyn, New York
11226

Attn:
Chief Executive Officer

Email:
tspoor@azurrx.com

 

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

 

Disclosure Law
Group

655
West Broadway Suite 870

San
Diego, CA 92101

Attn:
Daniel W. Rumsey, Esq.

Email:
drumsey@disclosurelawgroup.com

 

8.

Miscellaneous.

 

8.1 Amendments.
The Company and Alexander Capital may from time to time supplement
or amend this Purchase Warrant without the approval of any of the
Holders in order to cure any ambiguity, to correct or supplement
any provision contained herein that may be defective or
inconsistent with any other provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder that
the Company and Alexander Capital may deem necessary or desirable
and that the Company and Alexander Capital deem shall not adversely
affect the interest of the Holders. All other modifications or
amendments shall require the written consent of and be signed by
the party against whom enforcement of the modification or amendment
is sought.

 

 

 

 

-9-

 

 

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

 

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

 

8.4 Binding
Effect. This Purchase Warrant shall inure solely to the
benefit of and shall be binding upon, the Holder and the Company
and their permitted assignees, respective successors, legal
representative and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Purchase Warrant or any
provisions herein contained.

 

8.5 Governing
Law; Submission to Jurisdiction; Trial by Jury. This
Purchase Warrant shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without giving
effect to conflict of laws principles thereof. The Company hereby
agrees that any action, proceeding or claim against it arising out
of, or relating in any way to this Purchase Warrant shall be
brought and enforced in the New York Supreme Court, County of New
York, or in the United States District Court for the Southern
District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The Company hereby waives
any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum. Any process or summons to be
served upon the Company may be served by transmitting a copy
thereof by registered or certified mail, return receipt requested,
postage prepaid, addressed to it at the address set forth in
Section 7 hereof. Such mailing shall be deemed personal service and
shall be legal and binding upon the Company in any action,
proceeding or claim. The Company and the Holder agree that the
prevailing party(ies) in any such action shall be entitled to
recover from the other party(ies) all of its reasonable
attorneys’ fees and expenses relating to such action or
proceeding and/or incurred in connection with the preparation
therefor. The Company (on its behalf and, to the extent permitted
by applicable law, on behalf of its stockholders and affiliates)
and the Holder hereby irrevocably waive, to the fullest extent
permitted by applicable law, any and all right to trial by jury in
any legal proceeding arising out of or relating to this Agreement
or the transactions contemplated hereby.

 

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

 

8.7 Execution
in Counterparts. This Purchase Warrant may be executed in
one or more counterparts, and by the different parties hereto in
separate counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and
the same agreement, and shall become effective when one or more
counterparts has been signed by each of the parties hereto and
delivered to each of the other parties hereto. Such counterparts
may be delivered by facsimile transmission or other electronic
transmission.

 

 

[Signature Page
Follows]

 

 

-10-

 

 

IN
WITNESS WHEREOF, the Company has caused this Purchase Warrant to be
signed by its duly authorized officer as of the day of ,
2019.

 

 

AZURRX
BIOPHARMA, INC.

 

 

By:
_________________________

Name:

Title:

 

 

 

-11-

 

 

[Form to be used to exercise Purchase
Warrant]

 

Date:
___________________ , 20____

 

The
undersigned hereby elects irrevocably to exercise the Purchase
Warrant for shares of common stock,
par value $0.0001 per share (the “Shares”), of AzurRx BioPharma,
Inc., a Delaware corporation (the “Company”), and hereby makes
payment of $(at the rate of $2.55 per Share) in
payment of the Exercise Price pursuant thereto. Please issue the
Shares as to which this Purchase Warrant is exercised in accordance
with the instructions given below and, if applicable, a new
Purchase Warrant representing the number of Shares for which this
Purchase Warrant has not been exercised.

 

or

  

The
undersigned hereby elects irrevocably to convert its right to
purchase ____ Shares of the Company under
the Purchase Warrant for _____ Shares, as determined in accordance
with the following
formula:

 

X
= Y(A-B)

        
A

 

Where,

 

X = The
number of Shares to be issued to Holder;

Y = The
number of Shares for which the Purchase Warrant is being
exercised;

A = The
fair market value of one Share; and

B = The
Exercise Price.

 

The
undersigned agrees and acknowledges that the calculation set forth
above is subject to confirmation by the
Company and any disagreement with respect to the calculation shall
be resolved by the Company in its sole discretion.

Please
issue the Shares as to which this Purchase Warrant is exercised in
accordance with the instructions given below and, if applicable, a
new Purchase Warrant representing the number of Shares for which
this Purchase Warrant has not been converted.

 

 

Signature

 

Signature
Guaranteed_____________________

 

-12-

 

 

INSTRUCTIONS FOR
REGISTRATION OF SECURITIES

 

Name:

 

 

 

(Print
in Block Letters)

 

Address:
_________________________

            
  _________________________

              
_________________________ 

 

NOTICE:
The signature to this form must correspond with the name as written
upon the face of the Purchase Warrant without alteration or
enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm
having membership on a registered national securities
exchange.

 

 

 

-13-

 

 

[Form to be used to assign Purchase
Warrant]

 

ASSIGNMENT

 

 

(To be
executed by the registered Holder to effect a transfer of the
within Purchase Warrant):

 

 

FOR VALUE RECEIVED,
____________________  does hereby sell, assign and transfer
unto the right to purchase shares of common stock, par value
$0.0001 per share, of AzurRx BioPharma, Inc., a Delaware
corporation (the “Company”), evidenced by the
Purchase Warrant and does hereby authorize the Company to transfer
such right on the books of the Company.

 

 

 

Dated:
________________, 20

Signature

Signature
Guaranteed_______________________

 

NOTICE:
The signature to this form must correspond with the name as written
upon the face of the within Purchase Warrant without alteration or
enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm
having membership on a registered national securities
exchange.

 

 

 

 

-14-Exhibit 10.1

 

 
Exhibit
10.1

  

AZURRX
BIOPHARMA, INC. SELLING AGENT AGREEMENT

 

 
April
1, 2019

 

 

 

Alexander Capital
L.P.

As the
“Selling Agent”

17
State Street, 5th
Floor

New
York, NY 10004

 

Ladies
and Gentlemen:

 

AzurRx
Biopharma, Inc., a corporation organized and existing under the
laws of State of Delaware (the “Company”), proposes to issue and
sell to the purchasers identified on Schedule A (each a
“Purchaser” and
collectively, the “Purchasers”), pursuant to the
terms and conditions of this Selling Agent Agreement (this
“Agreement”), up
to an aggregate of $2,758,200.90 in shares (the “Shares”) of common stock, par
value $0.0001, of the Company (“Common Stock”). The Company hereby
confirms its agreement with Alexander Capital L.P. (the
“Selling Agent”)
to act as Selling Agent in accordance with the terms and conditions
hereof.

 

The
offering and sale of the Shares contemplated by this Agreement is
referred to herein as the “Offering.”

 

1.

Registration Statement and
Prospectus.

 

The
Company has prepared and filed with the Securities and Exchange
Commission (the “Commission”) a registration
statement on Form S-3 (File No. 333- 226065) under the Securities
Act of 1933, as amended (the “Securities Act”) and the rules and
regulations (the “Rules and
Regulations”) of the Commission thereunder, and such
amendments to such registration statement (including post effective
amendments) as may have been required to the date of this Agreement
and a preliminary prospectus supplement or “red
herring” pursuant to Rule 424(b) under the Securities Act.
Such registration statement, as amended (including any post
effective amendments), has been declared effective by the
Commission. Such registration statement, including amendments
thereto (including any post effective amendments thereto) at the
time of effectiveness thereof (the “Effective Date”), the exhibits and
any schedules thereto at the Effective Date or thereafter during
the period of effectiveness and the documents and information
otherwise deemed to be a part thereof or included therein by the
Securities Act or otherwise pursuant to the Rules and Regulations
at the Effective Date or thereafter during the period of
effectiveness, is herein called the “Registration Statement.” If the
Company has filed or files an abbreviated registration statement
pursuant to Rule 462(b) under the Securities Act (the
“Rule 462 Registration
Statement”), then any reference herein to the term
Registration Statement shall include such Rule 462 Registration
Statement.

 

The
Company is filing with the Commission pursuant to Rule 424 under
the Securities Act a final prospectus supplement relating to the
Shares to a form of prospectus included in the Registration
Statement. The form of prospectus included in the Registration
Statement at the time it was declared effective, as it may have
been amended, modified or supplemented and filed with the
Commission after such effective date and prior to the date hereof
pursuant to Rule 424(b), is hereinafter called
the “Base
Prospectus,” and such final prospectus supplement, as
filed, along with the Base Prospectus, is hereinafter called the
“Final
Prospectus.” Such Final Prospectus and any preliminary
prospectus supplement or “red herring” relating to the
Shares in the form in which they shall be filed with the Commission
pursuant to Rule 424(b) under the Securities Act (including the
Base Prospectus as so supplemented) is hereinafter called a
“Prospectus.”
For purposes of this Agreement, “Applicable Time”, as used in the
Act, means 4:00 p.m., New York City time, on the date of this
Agreement.

 

 

-1-

 

 

 

For
purposes of this Agreement, all references to the Registration
Statement, the Rule 462 Registration Statement, the Base
Prospectus, the Final Prospectus, the Prospectus or any amendment
or supplement to any of the foregoing shall be deemed to include
the copy filed with the Commission pursuant to its Interactive Data
Electronic Applications system. All references to a Prospectus
shall include all documents and information otherwise deemed to be
a part thereof or included therein by the Securities Act or
otherwise pursuant to the Rules and Regulations. All references in
this Agreement to amendments or supplements to the Registration
Statement, the Rule 462 Registration Statement, the Base
Prospectus, the Final Prospectus or the Prospectus shall be deemed
to mean and include the subsequent filing of any document under the
Securities Exchange Act of 1934, as amended (the
“Exchange Act”),
that is deemed to be incorporated by reference therein or otherwise
deemed by the Rules and Regulations to be a part
thereof.

 

2.

Selling Agent.

 

2.1

Appointment of Selling
Agent.

 

(a) The Company hereby
authorizes the Selling Agent to act as its exclusive agent to
solicit offers on a best efforts basis for the purchase of all or
part of the Shares from the Company in connection with the proposed
Offering of the Shares. Until the Closing Date (as defined below)
or earlier upon termination of this Agreement pursuant to
Section 8.2, the
Company shall not, without the prior written consent of the Selling
Agent, solicit or accept offers to purchase the Shares otherwise
than through the Selling Agent.

 

(b) The Company hereby
acknowledges that the Selling Agent has agreed, as agent of the
Company, to use its reasonable and best efforts to solicit offers
to purchase the Shares from the Company on the terms and subject to
the conditions set forth in the Prospectus (as defined below). The
Selling Agent shall use reasonable efforts to assist the Company in
obtaining performance by each Purchaser whose offer to purchase
Shares has been solicited by the Selling Agent and accepted by the
Company, but the Selling Agent shall not, except as otherwise
provided in this Agreement, be obligated to disclose the identity
of any potential purchaser or have any liability to the Company in
the event any such purchase is not consummated for any reason.
Under no circumstances will the Selling Agent be obligated to
underwrite or purchase any Shares for its own account and, in
soliciting purchases of the Shares, the Selling Agent shall act
solely as the Company’s agent and not as
principal.

 

(c) Subject to the
provisions of this Section
2, offers for the purchase of the Shares may be solicited by
the Selling Agent as agent for the Company at such times and in
such amounts as the Selling Agent deems advisable. The Selling
Agent shall communicate to the Company, orally or in writing, each
reasonable offer to purchase Shares received by it as agent of the
Company. The Company shall have the sole right to accept offers to
purchase Shares and may reject any such offer, in whole or in part.
The Selling Agent shall have the right, in its discretion
reasonably
exercised, without notice to the Company, to reject any offer to
purchase Shares received by it, in whole or in part, and any such
rejection shall not be deemed a breach of this
Agreement.

 

 

-2-

 

 

 

2.2

Share Payment and
Compensation.

 

(a) The Shares are
being sold to the Purchasers at the following offering
price: $2.13 per share of
Common Stock (the “Purchase
Price”).

 

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

 

(c) As compensation for
services rendered, on the Closing Date (as defined in Section 2.3 hereof), the
Company shall pay to the Selling Agent by wire transfer of
immediately available funds to an account or accounts designated by
the Selling Agent, a cash fee (the “Selling Fee”) in an aggregate
amount equal to seven percent (7%) of the gross proceeds received
by the Company from the sale of the Shares on such Closing Date.
The Selling Agent may retain other brokers or dealers to act as
sub-agents on its behalf in connection with the Offering, the fees
of which shall be paid out of the Selling Fee. The Selling Fee
shall be contingent upon the successful completion and closing of
the Offering.

 

(d) The Company also
hereby agrees to issue and sell to the Selling Agent (and/or its
designee) on the Closing Date an option (“Selling Agent’s Warrants”)
for the purchase of an aggregate of 38,848 shares of Common Stock,
representing 3% of the Shares, for an aggregate purchase price of
$100.00. The Selling Agent’s Warrant agreement, in the form
attached hereto as Exhibit
A (the “Selling
Agent’s Warrant Agreement”), shall be
exercisable, in whole or in part, commencing on a date which is one
(1) year after the Effective Date and expiring on the five-year
anniversary of the Effective Date at an initial exercise price per
share of Common Stock of $2.55, which is equal to 120% of price at
which the Shares are convertible to Common Stock. The Selling Agent
understands and agrees that there are significant restrictions
pursuant to FINRA Rule 5110 against transferring the Selling
Agent’s Warrant Agreement and the underlying shares of Common
Stock during the one hundred eighty (180) days after the Effective
Date and by its acceptance thereof shall agree that it will not
sell, transfer, assign, pledge or hypothecate the Selling
Agent’s Warrant Agreement, or any portion thereof, or be the
subject of any hedging, short sale, derivative, put or call
transaction that would result in the effective economic disposition
of such securities for a period of one hundred eighty (180) days
following the Effective Date to anyone other than (i) a selected
dealer in connection with the Offering, or (ii) a bona fide officer
or partner of the Selling Agent or of any such selected dealer; and
only if any such transferee agrees to the foregoing lock-up
restrictions.

 

(e) Delivery of the
Selling Agent’s Warrant Agreement shall be made on the
Closing Date and shall be issued in the name or names and in such
authorized denominations as the Selling Agent may request in
writing.

 

(f) The Company agrees
that the Selling Agent and the Selling Agent’s affiliates
shall have a right, but not an obligation, to purchase shares of
Common Stock for their own account, and that any such purchase
shall not constitute a conflict of interest for purposes of the
Selling Agent’s engagement.

 

 

-3-

 

 

 

2.3 Delivery and Payment. The
Shares shall be delivered to such persons, through the facilities
of DTC or by delivery of a certificate. Prior to the completion of
the purchase and sale of the Shares pursuant to this Agreement,
each Purchaser shall deliver by wire transfer of immediately
available funds, to an account designated in writing by the
Company, an amount equal to the product of (x) the number of Shares
such Purchaser has agreed to purchase and (y) the Purchase Price.
On the Closing Date, upon satisfaction or waiver of all of the
conditions to Closing, the Company shall cause the Shares to be
delivered to the Purchasers through the facilities of DTC or by
irrevocably instructing the Transfer Agent (as defined below) to
issue certificates representing such Shares. Such date of delivery
is hereinafter referred to as the “Closing Date”.

 

3. Representations and Warranties of the
Company. The Company represents and warrants, as of the date
hereof and as of the Closing Date (as defined below), to the
following:

 

3.1

Filing of Registration
Statement.

 

3.1.1 Form
S-3. The Company has filed the Registration Statement under
the Securities Act and the Rules and Regulations of the Commission
thereunder, and such amendments to such Registration Statement
(including post effective amendments) as may have been required to
the date of this Agreement and a preliminary prospectus supplement
or “red herring” pursuant to Rule 424(b) under the
Securities Act. Such Registration Statement, as amended (including
any post effective amendments), has been declared effective by the
Commission. All of the Shares have been registered under the
Securities Act pursuant to the Registration Statement or, if any
Rule 462(b) Registration Statement is filed, will be duly
registered under the Securities Act with the filing of such Rule
462(b) Registration Statement. The Registration Statement has been
declared effective by the Commission, except for any Rule 462(b)
Registration Statement, which will be effective upon
filing.

 

3.1.2 Registration
under the Exchange Act and Stock Exchange Listing. The
Company has filed with the Commission a Form 8-A12B (File Number
001- 38148), as amended, providing for the registration under the
Securities Exchange Act of 1934, as amended (the
“Exchange Act”),
of the Common Stock. The registration of the Shares under the
Exchange Act is effective. The Common Stock is registered pursuant
to Section 12(b) of the Exchange Act and has been approved for
listing on The NASDAQ Capital Market (“NASDAQ”), subject to official
notice of issuance and evidence of satisfactory distribution, and
the Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Common Stock under
the Exchange Act or delisting the Common Stock from NASDAQ, nor has
the Company received any notification that the Commission or NASDAQ
is contemplating terminating such registration or listing except as
described in the Registration Statement and
Prospectus.

 

3.2 No Stop Orders, etc. Neither
the Commission nor, to the Company’s knowledge, any state
regulatory authority has issued any order preventing or suspending
the use of any Prospectus or the Registration Statement or has
instituted or, to the Company’s knowledge, threatened to
institute any proceedings with respect to such an
order.

 

 

 

-4-

 

 

 

3.3

Disclosures in Registration
Statement.

 

3.3.1 10b-5
Representation. At the time of effectiveness of the
Registration Statement (or at the effective time of any
post-effective amendment to the Registration Statement) and at all
times subsequent thereto up to the Closing Date, the Registration
Statement and the Prospectus contained or will contain all material
statements that are required to be stated therein in accordance
with the Act and the Regulations, and did or will, in all material
respects, conform to the requirements of the Act and the
Regulations. On the Effective Date, the Registration Statement did
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading. As of the
Closing Date, the Prospectus (together with any supplement thereto)
did not and will not include any untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading. As of the Applicable Time,
the Prospectus did not include any untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which
they were made, not misleading. The representations and warranties
made in this Section
3.3.1 do not apply to statements made or statements omitted
in reliance upon and in conformity with written information
furnished to the Company with respect to the Selling Agent by the
Selling Agent expressly for use in the Registration Statement or
Prospectus or any amendment thereof or supplement thereto, which
information, it is agreed, shall consist solely of (i) the names of
the Selling Agent appearing under “Plan of
Distribution” and (ii) information under “Electronic
Offer, Sale and Distribution of Common Stock”
(“Selling Agent’s
Information”).

  

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

 

3.3.3 Form
S-3. The Company satisfies all of the requirements of the
Act for use of Form S-3 for the offering of Common Stock
contemplated hereby. The aggregate market value of securities sold
by or on behalf of the Company under the Registration Statement
during the 12 month period immediately prior to, and including, the
sale of the Shares pursuant to this Agreement is no more than
one-third of the aggregate market value of the voting and
non-voting common equity held by non-affiliates of the Company, as
determined pursuant to General Instruction I.B.6 of Form
S-3.

 

 

 

 

-5-

 

 

 

3.3.4 Regulations.
The disclosures in the Registration Statement and the Prospectus
concerning the effects of Federal, state and local regulation on
the Company’s business as currently contemplated fairly
summarize, to the Company’s knowledge, such effects and do
not omit to state a material fact necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading.

 

3.3.5 Issuer
Free Writing Prospectuses. The Company has not made any
offer relating to the Shares that would constitute an “issuer
free writing prospectus” (as defined in Rule 433 of the
Regulations) or that would otherwise constitute a “free
writing prospectus,” or a portion thereof, required to be
filed by the Company with the Commission or retained by the Company
under Rule 433 of the Regulations.

 

3.3.6 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 Registration Statement and the Prospectus has been
made or reaffirmed without a reasonable basis or has been disclosed
other than in good faith.

 

3.4

Changes after Dates in Registration
Statement.

 

3.4.1 No
Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise specifically stated therein: (i)
there has been no material adverse change in the condition,
financial or otherwise, of the Company (a “Material Adverse Effect”); (ii)
there have been no material transactions entered into by the
Company, other than as contemplated pursuant to this
Agreement;

(iii)
no member of the Company’s board of directors or management
has resigned from any position with the Company; and (iv) no event
or occurrence has taken place which materially impairs, or would
likely materially impair, with the passage of time, the ability of
the members of the Company’s board of directors or management
to act in their capacities with the Company as described in the
Registration Statement and the Prospectus.

 

3.4.2 Recent
Securities Transactions, etc. Subsequent to the respective
dates as of which information is given in the Registration
Statement and the Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not:
(i) issued any securities (other than shares of Common Stock that
may be issued upon conversion of the Company’s outstanding
indebtedness) or incurred any liability or obligation, direct or
contingent, for borrowed money; or (ii) declared or paid any
dividend or made any other distribution on or in respect to its
capital stock.

 

3.5 Independent Accountants. To the
knowledge of the Company, Mazars USA LLP (“Mazars”), whose report is filed
with the Commission as part of the Registration Statement and the
Prospectus, are independent registered public accountants as
required by the Act and the Regulations. To the
knowledge of the Company, Mazars is registered with and in good
standing with the PCAOB. Except for the preparation of federal tax
returns, Mazars has not, during the periods covered by the
financial statements included in the Registration Statement and the
Prospectus, provided to the Company any non-audit services, as such
term is used in Section 10A(g) of the Exchange Act.

 

 

-6-

 

 

 

3.6

Financial Statements, Statistical
Data.

 

3.6.1 Financial
Statements. Excluding any pro forma information and the
notes and assumptions thereto, the financial statements, including
the notes thereto and supporting schedules, if any, included in the
Registration Statement and the Prospectus fairly present in all
material respects the financial position and the results of
operations of the Company at the dates and for the periods to which
they apply; and such financial statements have been prepared in
conformity with United States generally accepted accounting
principles (“GAAP”), consistently applied
throughout the periods involved. The Registration Statement and the
Prospectus disclose all material off-balance sheet transactions,
arrangements, obligations (including contingent obligations), and
other relationships of the Company with unconsolidated entities or
other persons that may have a material current effect on the
Company’s financial condition, changes in financial
condition, results of operations, liquidity, capital expenditures,
capital resources, or significant components of revenues or
expenses. Except as disclosed in the Registration Statement and the
Prospectus, (a) the Company has not incurred any material
liabilities or obligations, direct or contingent, or entered into
any material transactions, other than in the ordinary course of
business,

 

(b) the
Company has not declared or paid any dividends or made any
distribution of any kind with respect to its capital stock, except
as disclosed in Section
3.4.2, (c) there has not been any change in the capital
stock of the Company or any material additional grants under any
stock compensation plan and, (d) there has not been any material
adverse change in the Company’s long-term or short- term
debt.

  

3.6.2 Statistical
Data. The statistical, industry-related and market-related
data included in the Registration Statement and the Prospectus are
based on or derived from sources which the Company reasonably and
in good faith believes are reliable and accurate, and such data
agree with the sources from which they are derived.

 

3.7 Authorized Capital; Options,
etc. The Company had at the date or dates indicated in each
of the Registration Statement and the Prospectus, as the case may
be, duly authorized, issued and outstanding capitalization as set
forth therein. Based on the assumptions stated in the Registration
Statement and the Prospectus, the Company will have on the Closing
Date the adjusted stock capitalization set forth therein. Other
than as disclosed in the Registration Statement and the Prospectus
on the Effective Date and the Closing Date, there will be no
material increase in the options, warrants, or other rights to
purchase or otherwise acquire any authorized, but unissued Common
Stock of the Company or any security convertible into Common Stock
of the Company, or any contracts or commitments to issue or sell
Common Stock or any such options, warrants, rights or convertible
securities.

 

3.8    
Valid Issuance of
Securities, etc.

 

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

 

 

-7-

 

 

 

3.8.2 Shares
Sold Pursuant to this Agreement. The Shares have been duly
authorized and reserved for issuance and when issued and paid for
in accordance with this Agreement, will be validly issued, fully
paid and non-assessable; the holders thereof are not and will not
be subject to personal liability by reason of being such holders;
the Shares are not and will not be subject to the preemptive rights
of any holders of any security of the Company or similar
contractual rights granted by the Company; and all corporate action
required to be taken for the authorization, issuance and sale of
the Shares has been duly and validly taken. The Shares conform in
all material respects to all statements with respect thereto
contained in the Registration Statement and the Prospectus, as the
case may be.

 

3.8.3 No
Integration. Neither the Company nor any of its affiliates
has, prior to the date hereof, made any offer or sale of any
securities which are required to be “integrated”
pursuant to the Act or the Regulations with the offer and sale of
the Shares pursuant to the Registration Statement.

 

3.9 Registration Rights of Third
Parties. Except as set forth in the Registration Statement
or the Prospectus or as to which a registration statement has been
filed under the Act, no holders of any securities of the Company or
any rights exercisable for or convertible or exchangeable into
securities of the Company have the right to require the Company to
register any such securities of the Company under the Act or to
include any such securities in a registration statement to be filed
by the Company.

 

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

 

3.11 No
Conflicts, etc. The execution, delivery, and performance by
the Company of this Agreement, the consummation by the Company of
the transactions herein and therein contemplated and the compliance
by the Company with the terms hereof and thereof do not and will
not, with or without the giving of notice or the lapse of time or
both: (i) result in a material breach of, or conflict with any of
the terms and provisions of, or constitute a material default
under, or result in the creation, modification, termination or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to the terms of any agreement
or instrument to
which the Company is a party; (ii) result in any violation of the
provisions of the Company’s Certificate of Incorporation (as
the same may be amended from time to time, the “Certificate of Incorporation”); or
(iii) violate any existing applicable law, rule, regulation,
judgment, order or decree of any governmental agency or body or
court, domestic or foreign, having jurisdiction over the Company or
any of its properties or business constituted as of the date
hereof.

 

 

 

 

-8-

 

 

 

3.12 No
Defaults; Violations. No material default exists in the due
performance and observance of any term, covenant or condition of
any material license, contract, indenture, mortgage, deed of trust,
note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any
other material agreement or instrument to which the Company is a
party or by which the Company may be bound or to which any of the
properties or assets of the Company is subject. The Company is not
in material violation of any term or provision of its Certificate
of Incorporation, or in material violation of any franchise,
license, permit, applicable law, rule, regulation, judgment or
decree of any governmental agency or body or court, domestic or
foreign, having jurisdiction over the Company or any of its
properties or businesses.

 

3.13

Corporate Power; Licenses;
Consents.

 

3.13.1 Conduct
of Business. The Company has all requisite corporate power
and authority, and has all necessary authorizations, approvals,
orders, licenses, certificates and permits of and from all
governmental regulatory officials and bodies that it needs as of
the date hereof to conduct its business purpose as described in the
Registration Statement and the Prospectus (the “Authorization”), except where the
absence of the Authorization would not have a Material Adverse
Effect. To the knowledge of the Company, the disclosures in the
Registration Statement and the Prospectus concerning the effects of
foreign, federal, state and local regulation on this Offering and
the Company’s business purpose as currently contemplated are
correct in all material respects and do not omit to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading.

  

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

 

3.14 D&O
Questionnaires. To the knowledge of the Company, all
information contained in the questionnaires (the
“Questionnaires”)
completed by each of the Company’s directors and officers and
5% and greater shareholders (the “Insiders”) is true and correct in
all material respects, and the Company has not become aware of any
information which would cause the information disclosed in the
Questionnaires completed by each Insider to become inaccurate and
incorrect. To the extent that information in the Registration
Statement and the Prospectus differs from the information provided
in a Questionnaire, the information in the Registration
Statement and the
Prospectus will be deemed to supersede and replace the information
in the Questionnaires.

 

 

 

 

-9-

 

 

3.15 Litigation;
Governmental Proceedings. There is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or
governmental proceeding pending or, to the Company’s
knowledge, threatened against, or involving the Company or, to the
Company’s knowledge, any Insider which has not been disclosed
in the Registration Statement and the Prospectus. There is no
proceeding, inquiry or investigation, other than the listing
application of the Company, pending, or, to the Company’s
knowledge, threatened against or involving the Company or, to the
Company’s knowledge, any Insider.

 

3.16 Good
Standing. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of
the State of Delaware as of the date hereof, and is duly qualified
to do business and is in good standing in each jurisdiction in
which its ownership or lease of property or the conduct of business
requires such qualification, except where the failure to qualify
would not have a Material Adverse Effect on the assets, business or
operations of the Company.

 

3.17

Transactions Affecting Disclosure to
FINRA.

 

3.17.1 Finder’s
Fees. Except as described in the Registration Statement and
the Prospectus, there are no claims, payments, arrangements,
agreements or understandings relating to the payment of a
finder’s, consulting or origination fee by the Company or any
Insider with respect to the sale of the Shares hereunder or any
other arrangements, agreements or understandings of the Company or,
to the Company’s knowledge, any of its stockholders that may
affect the Selling Agents’ compensation, as determined by
FINRA.

 

3.17.2 Payments
Within 180 Days. Except as described in the Registration
Statement and the Prospectus, the Company has not made any direct
or indirect payments (in cash, securities or otherwise) to: (i) any
person, as a finder’s fee, consulting fee or otherwise, in
consideration of such person raising capital for the Company or
introducing to the Company persons who raised or provided capital
to the Company; (ii) to any FINRA member; or (iii) to the knowledge
of the Company, to any person or entity that has any direct or
indirect affiliation or association with any FINRA member, within
the 180-day period prior to the initial filing of the Registration
Statement, other than, in each case, payments to the Selling Agent.
Except as described in the Registration Statement and the
Prospectus, no officer, director, or beneficial owner of 5% or more
of any class of the Company’s securities (whether debt or
equity, registered or unregistered, regardless of the time acquired
or the source from which derived) (any such individual or entity, a
“Company
Affiliate”) is a member, a person associated, or
affiliated with a member of FINRA. For purposes of the meaning of
“beneficial owner” as used in this Section, the
definition of Rule 13d-3, promulgated by the SEC under the Exchange
Act shall apply.

 

 

3.17.3 Company
Affiliate Membership. Except as described in the
Registration Statement and the Prospectus, to the knowledge of the
Company, no Company Affiliate is an owner (of record or
beneficially) of stock or other securities of any member of FINRA
(other than securities purchased on the open market).

 

3.17.4 Subordinated
Loans. Except as described in the Registration Statement and
the Prospectus, to the knowledge of the Company, no Company
Affiliate has made a subordinated loan to any member of
FINRA.

 

3.17.5 Use
of Proceeds. Except as described in the Registration
Statement and the Prospectus, no proceeds from the sale of the
Shares will be paid to any FINRA member or to any persons
associated or affiliated with a member of FINRA, except as
specifically authorized herein.

 

 

 

 

-10-

 

 

3.17.6 No
other Options, etc. The Company has not issued any warrants
or other securities, or granted any options, directly or indirectly
to anyone who is a potential selected dealer in the Offering or a
related person (as defined by FINRA rules) of such selected dealer
within the 180-day period prior to the date of the
Prospectus.

 

3.17.7 FINRA
Relationship. Except as described in the Registration
Statement and the Prospectus, to the knowledge of the Company, no
person to whom securities of the Company have been privately issued
within the 180-day period prior to the initial filing date of the
Registration Statement has any relationship or affiliation or
association with any member of FINRA, other than such issuances to
the Selling Agent.

 

3.17.8 FINRA
Conflicts. Except as described in the Registration Statement
and the Prospectus, no FINRA member intending to participate in the
Offering has a conflict of interest with the Company. For this
purpose, a “conflict of interest” exists when a member
of FINRA and its associated persons, parent or affiliates in the
aggregate beneficially own 10% or more of the Company’s
outstanding subordinated debt or common equity, or 10% or more of
the Company’s preferred equity. “Members participating
in the Offering” include managing agents, syndicate group
members and all dealers which are members of FINRA.

 

3.17.9 Other
Arrangements. Except as described in the Registration
Statement and the Prospectus and except with respect to the Selling
Agent in connection with the Offering, the Company has not entered
into any agreement or arrangement (including, without limitation,
any consulting agreement or any other type of agreement) during the
180-day period prior to the initial filing date of the Registration
Statement, which arrangement or agreement provides for the receipt
of any item of value and/or the transfer of any warrants, options,
or other securities from the Company to a FINRA member or, the
knowledge of the Company, any person associated with a member (as
defined by FINRA rules), any potential selected dealer in the
Offering and any related persons, other than such arrangements with
the Selling Agent.

 

3.18 Foreign
Corrupt Practices Act. Neither the Company, nor to the
knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company, is aware of or has taken any action
directly or indirectly, that would result in a material violation
by such persons of the FCPA (as defined below), including, without
limitation, making use of the mails or any means or instrumentality
of interstate commerce corruptly in furtherance of an offer,
payment, promise to pay or authorization of the payment of any
money, or other property, gift, promise to give, or authorization
of the giving of anything of value to any “foreign
official” (as such term is defined in the FCPA) or any
foreign political party or official thereof or any candidate for
foreign political office, in contravention of the FCPA and the
Company has conducted its business in compliance in all material
respects with the FCPA and instituted and maintained policies and
procedures designed to ensure, and which are reasonably expected to
continue to ensure, continued compliance in all
material respects therewith. “FCPA” means the Foreign Corrupt
Practices Act of 1977, as amended, and the rules and regulations
thereunder.

 

 

 

 

-11-

 

 

3.19 Money
Laundering Laws. Neither the Company nor to the knowledge of
the Company, any director, officer, agent, employee or affiliate of
the Company has made any payment of funds of the Company or
received or retained any funds in violation of any law, rule or
regulation relating to the “know your customer” and
anti-money laundering laws of any United States or non-United
States jurisdiction (collectively, the “Money Laundering Laws”) and no
action, suit or proceeding by or before any governmental agency or
body involving the Company with respect to the Money Laundering
Laws is pending or, to the Company’s knowledge,
threatened.

 

3.20 OFAC.
Neither the Company nor to the Company’s knowledge, any
director, officer, agent, employee or affiliate of the Company is
currently the target of or reasonably likely to become the target
of any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Department of the Treasury (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the Offering, 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 the
target of any U.S. sanctions administered by OFAC.

 

3.21 Officers’
Certificate. Any certificate signed by any duly authorized
officer of the Company and delivered to you shall be deemed a
representation and warranty by the Company to the Selling Agents as
to the matters covered thereby.

 

3.22 Lock-Up
Period. At the Closing Date, each of the Company’s
officers and directors and each beneficial owner of the
Company’s outstanding Common Stock (or securities convertible
into Common Stock at any time) listed on Schedule B (together the
“Lock-Up
Parties”) will have agreed pursuant to executed
Lock-Up Agreements (in the form of Exhibit B) that for a period of
one hundred and twenty (120) days from the date of this Agreement
(the “Lock-Up
Period”) which may be extended under certain
circumstances as set forth in the Lock-Up Agreement, such persons
and their affiliated parties shall not offer, pledge, sell,
contract to sell, grant, lend or otherwise transfer or dispose of,
directly or indirectly, any Common Stock, or any securities
convertible into or exercisable or exchangeable for Common Stock,
without the consent of the Selling Agent, except for the exercise
or conversion of currently outstanding warrants, options and
convertible debentures, as applicable and the exercise of options
under an acceptable stock incentive plan. The Selling Agent may
consent to an early release from the applicable Lock-Up Period. The
Company will cause each of the Lock-Up Parties to deliver to the
Selling Agent the agreements of each of the Lock-Up Parties to the
foregoing effect prior to the Closing Date.

 

3.23 Subsidiaries.
Except as described in the Registration Statement and Prospectus,
the Company does not have any significant direct or indirect
subsidiary.

 

3.24 Related
Party Transactions. There is no relationship, direct or
indirect, exists between or among any of the Company or any Company
Affiliate, on the one hand, and any director, officer, shareholder,
customer or supplier of the Company or any Company Affiliate, on
the other hand, which is required by the Act, the Exchange Act or
the Regulations to be described in the Registration Statement and
the Prospectus that is not so described and described as required.
There are no outstanding loans, advances (except normal advances
for business expenses in the ordinary course of business), credit
arrangements, or guarantees of indebtedness by the Company
to or for the
benefit of any of the officers or directors of the Company or any
of their respective family members.

 

3.25 Board
of Directors. The Board of Directors of the Company is
comprised of the persons set forth in the Prospectus. The
qualifications of the persons serving as board members and the
overall composition of the board comply with the Sarbanes-Oxley Act
of 2002 and the rules promulgated thereunder applicable to the
Company and the rules of NASDAQ. At least one member of the Board
of Directors of the Company qualifies as a “financial
expert” as such term is defined under the Sarbanes-Oxley Act
of 2002 and the rules promulgated thereunder and the rules of
NASDAQ. In addition, at least a majority of the persons serving on
the Board of Directors qualify as “independent” as
defined under the rules of NASDAQ.

 

 

 

 

-12-

 

 

3.26

Sarbanes-Oxley
Compliance.

 

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

 

3.26.2 Compliance.
The Company is, or on the Effective Date will be, in material
compliance with the provisions of the Sarbanes-Oxley Act of 2002
applicable to it, and has implemented or will implement such
programs and taken reasonable steps to ensure the Company’s
future compliance (not later than the relevant statutory and
regulatory deadlines therefore) with all the provisions of the
Sarbanes-Oxley Act of 2002.

 

3.27 No
Investment Company Status. The Company is not and, after
giving effect to the Offering and sale of the Shares and the
application of the proceeds thereof, will not be, an
“investment company” as defined in the Investment
Company Act of 1940, as amended.

 

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

 

3.29 Employment
Laws Compliance. The Company has not violated, or received
notice of any violation with respect to, any law, rule, regulation,
order, decree or judgment applicable to it and its business,
including those relating to transactions with affiliates,
environmental, safety or similar laws, federal or state laws
relating to discrimination in the hiring, promotion or pay of
employees, federal or state wages and hours law, the Employee
Retirement Income Security Act of 1974, as amended, or the rules
and regulations promulgated thereunder, except for those violations
that would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.

  

3.30 Intellectual
Property. Except as described
in the Registration Statement and the Prospectus, none of the
Intellectual Property (defined below) necessary for the conduct of
the business of the Company as currently carried on and as
contemplated by the Company, as described in the Registration
Statement and the Prospectus, are in dispute or are in any conflict
with the rights of any other person or entity. The Company (i) owns
or has the right to use, free and clear of all liens, charges,
claims, encumbrances, pledges, security interests, defects or other
restrictions or equities of any kind whatsoever, all of its
Intellectual Property and the licenses and rights with
respect to the foregoing, used in the conduct of the business of
the Company as currently carried on and contemplated by the
Company, as described in the Registration Statement and the
Prospectus, without infringing upon or otherwise acting adversely
to the right or claimed right of any person, corporation or other
entity under or with respect to any of the foregoing, and
(ii) except as
provided in the material license agreements filed as exhibits to
the Registration Statement, is not obligated or under any liability
whatsoever to make any payment by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any
Intellectual Property with respect to the use thereof or in
connection therewith for the conduct of its business or otherwise.
For the purposes of this Section and this Agreement, the term
“Intellectual
Property” means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and
patent disclosures, together with all reissuances, continuations,
continuations in part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations,
adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask
works and all applications, registrations, and renewals in
connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development,
know how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings,
diagrams, specifications, customer and supplier lists, catalogs,
pricing and cost information, and business and marketing plans and
proposals), (f) all computer software (including data and related
documentation) (whether purchased or internally developed), (g) all
information systems and management procedures, (h) all other
proprietary rights, and (h) all copies and tangible embodiments
thereof (in whatever form or medium).

 

 

 

 

-13-

 

 

3.31 Trade
Secrets, etc. The Company owns or has the right to use all
trade secrets, know-how (including all other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), inventions, designs, processes, works of authorship,
computer programs and technical data and information that are
material to the development, manufacture, operation and sale of all
products and services sold or proposed to be sold by the Company,
free and clear of and without violating any right, lien, or claim
of others, including without limitation, former employers of its
employees.

 

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

 

4.

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

 

4.1 Amendments to Registration
Statement. The Company will deliver to the Selling Agent,
prior to filing, any amendment or supplement to the Registration
Statement or Prospectus proposed to be filed after the Effective
Date and not file any such amendment or supplement to which the
Selling Agent shall reasonably object in writing.

 

4.2

Federal Securities
Laws.

  

4.2.1 Compliance.
During the time when a Prospectus is required to be delivered under
the Act, the Company will use its reasonable efforts to comply with
all requirements imposed upon it by the Act, the Regulations and
the Exchange Act and by the regulations under the Exchange Act, as
from time to time in force, so far as necessary to permit the
continuance of sales of or dealings in the Shares in accordance
with the provisions hereof and the Prospectus. If at any time when
a Prospectus relating to the Shares is required to be delivered
under the Act, any event shall have occurred as a result of which,
in the opinion of counsel for the Company or Selling Agent’s
counsel, the Prospectus, as then amended or supplemented, includes
an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading, or if it is necessary at any time
to amend the Prospectus to comply with the Act, the Company will
notify the Selling Agent promptly and prepare and file with the
Commission, subject to Section 4.1 hereof, an
appropriate amendment or supplement in accordance with Section 10
of the Act.

  

4.2.2 Filing
of Final Prospectus. The Company will file the Prospectus
(in form and substance satisfactory to the Selling Agent) with the
Commission pursuant to the requirements of Rule 424 of the
Regulations.

 

4.2.3 Exchange
Act Registration. For a period of five (5) years from the
Effective Date, the Company will use its commercially reasonable
efforts to maintain the registration of the Common Stock under the
Exchange Act.

 

4.2.4 Sarbanes-Oxley
Compliance. The Company shall take all actions necessary to
maintain material compliance with each applicable provision of the
Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated thereunder and related or similar rules and regulations
promulgated by any other governmental or self-regulatory entity or
agency with jurisdiction over the Company, including maintenance of
a system of internal accounting controls sufficient to provide
reasonable assurances that: (i) transactions are executed in
accordance with management’s general or specific
authorization; (ii) transactions are recorded as necessary in order
to permit preparation of financial statements in accordance with
GAAP and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect
to any differences.

 

 

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4.2.5 Issuer
Free Writing Prospectuses. The Company agrees that it 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,” or a portion thereof,
required to be filed by the Company with the Commission or retained
by the Company under Rule 433 of the Regulations.

 

4.3 Delivery to the Selling Agent of
Prospectuses. The Company will deliver to the Selling Agent,
without charge, from time to time during the period when the
Prospectus is required to be delivered under the Act or the
Exchange Act such number of copies of each Prospectus as the
Selling Agent may reasonably request and, as soon as the
Registration Statement or any amendment or supplement thereto
becomes effective, deliver to the Selling Agent two original
executed Registration Statements, including exhibits, and all
post-effective amendments thereto and copies of all exhibits filed
therewith or incorporated therein by reference and all original
executed consents of certified experts.

 

4.4 Effectiveness and Events Requiring
Notice to the Selling Agent. The Company will use its
reasonable commercial efforts to cause the Registration Statement
to remain effective with a current prospectus through the Closing
Date and will promptly notify the Selling Agent and confirm the
notice in writing: (i) of the effectiveness of any amendment to the
Registration Statement; (ii) of the issuance by the Commission of
any stop order or of the initiation, or the threatening, of any
proceeding for that purpose; (iii) of the issuance by any state
securities commission of any proceedings for the suspension of the
qualification of the Shares for offering or sale in any
jurisdiction or of the initiation, or the threatening, of any
proceeding for that purpose; (iv) of the mailing
and delivery to the Commission for filing of any amendment or
supplement to the Registration Statement or Prospectus; (v) of the
receipt of any comments or request for any additional information
from the Commission; and (vi) of the happening of any event during
the period described in this Section 4.4 hereof that, in the
judgment of the Company, makes any statement of a material fact
made in the Registration Statement or the Prospectus untrue or that
requires the making of any changes in the Registration Statement or
the Prospectus in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. If
the Commission or any state securities commission shall enter a
stop order or suspend such qualification at any time, the Company
will make every reasonable effort to obtain promptly the lifting of
such order.

 

4.5

Reports to the Selling
Agent.

  

4.5.1 Periodic
Reports, etc. For a period of five (5) years from the
Effective Date, the Company will furnish to the Selling Agent
copies of such financial statements and other periodic and special
reports as the Company from time to time furnishes generally to
holders of any class of its securities and also promptly furnish to
the Selling Agent: (i) a copy of each periodic report the Company
shall be required to file with the Commission; (ii) a copy of each
Form 8-K prepared and filed by the Company; (iii) a copy of each
registration statement filed by the Company under the Act; and (iv)
such additional documents and information with respect to the
Company and the affairs of any future Subsidiaries of the Company
as the Selling Agent may from time to time reasonably request.
Documents filed with the Commission pursuant to its EDGAR system
shall be deemed to have been delivered to the Selling Agent
pursuant to this Section
4.5.1.

 

4.5.2 Transfer
Agent. For a period of five (5) years from the Effective
Date, the Company shall retain a transfer and registrar agent
reasonably acceptable to the Selling Agent (the “Transfer Agent”).

 

4.5.3 Due
Diligence. The Company shall cooperate with the Selling
Agent and furnish to, or cause to be furnished to, Selling Agent
any and all information as the Selling Agent deems appropriate and
shall make Company management reasonably available to Selling Agent
to enable Selling Agent to conduct a due diligence
review.

 

 

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4.6

Payment of General Expenses Related to
the Offering.

 

4.6.1

Accountable
Expenses.

 

(a) The Company hereby
agrees to pay on the Closing Date all expenses typically borne by
issuers relating to the offering, including (i) all filing fees and
communication expenses relating to the registration of the Shares
with the Securities and Exchange Commission;

(ii)
all Public Filing System filing fees associated with the review of
the Offering by FINRA; (iii) all fees and expenses relating to the
listing of the Common Stock on The NASDAQ Capital Market, (iv) all
fees, expenses and disbursements relating to the registration,
qualification or exemption of the Shares under the securities laws
of such foreign jurisdictions as the Company and the Selling Agent
together determine; (v) the costs of all mailing and printing of
the Registration Statement, the Prospectus and all amendments,
supplements and exhibits thereto (all in such quantities as the
Selling Agent may reasonably require); (vi) the costs of preparing,
printing and delivering certificates representing the Shares; (vii)
fees and expenses of the transfer agent for the Shares; (viii)
stock transfer and/or stamp taxes, if any, payable upon the
transfer of the Shares from the Company to the Selling Agent; (ix)
actual accountable road show expenses for the Offering; (x) the
cost associated with the Selling Agent’s use of book-building
and compliance software for the Offering; (xi) up to $30,000 of the
reasonable and documented fees and disbursements of the Selling
Agent’s counsel; and (xii) background checks of the
Company’s officers and directors; provided, that the total actual
accountable expenses of the Selling Agent reimbursed under this
Section 4.6.1(a)
(including Selling Agent’s counsel expenses) shall not exceed
$50,000.

 

(b) In the event of
termination of this Agreement, any reimbursement of expenses to the
Selling Agent will be limited to those actually incurred by the
Selling Agent pursuant to FINRA Rule 5110(f)(2)(D)(i).

 

4.6.2 Non-Accountable
Expenses. The Company further agrees that, in addition to
the expenses payable pursuant to Section 4.6.1, on the Closing
Date it shall pay to the Selling Agent, by deduction from the net
proceeds of the Offering, a non-accountable expense allowance equal
to one percent (1.0%) of the gross proceeds received by the Company
from the sale of Shares in the Offering.

 

4.7 Application of Net Proceeds.
The section of the Prospectus, “Use of Proceeds,” will
indicate the intended uses of the net proceeds from the Offering.
The Company will apply the net proceeds from the Offering received
by it in a manner consistent with the application described under
the caption “Use of Proceeds” in the
Prospectus.

 

4.8 Delivery of Earnings Statements to
Security Holders. The Company will make generally available
to its security holders as soon as practicable, but not later than
the first day of the sixteenth full calendar month following the
Effective Date, an earnings statement (which need not be certified
by independent public or independent certified public accountants
unless required by the Act or the Regulations, but which shall
satisfy the provisions of Rule 158(a) of the Regulations)
covering a period of at least twelve consecutive months beginning
after the Effective Date.

  

4.9 Stabilization. Neither the
Company, nor, to its knowledge, any of its employees, directors or
stockholders (without the consent of the Selling Agent) has taken
or will take, directly or indirectly, any action designed to or
that has constituted or that might reasonably be expected to cause
or result in, under the Exchange Act, or otherwise, stabilization
or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.

 

 

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4.10 Accountants.
The Company shall retain a nationally recognized independent
certified public accounting firm after the Effective Date. The
Selling Agent acknowledges that Mazars is acceptable to the Selling
Agent.

 

4.11 Director
and Officer Insurance. As of the Closing Date, the Company
will have obtained director and officer insurance in an aggregate
coverage amount of not less than

$5,000,000, to be
effective as of the Closing Date, under a form of insurance policy
that is reasonably acceptable to the Selling Agent.

 

4.12 FINRA.
The Company shall advise the Selling Agent (who shall make an
appropriate filing with FINRA) if it becomes aware that any 5% or
greater stockholder of the Company becomes an affiliate or
associated person of a FINRA member participating in the
distribution of the Shares.

 

4.13 Electronic
Prospectus. The Company shall cause to be prepared and
delivered to the Selling Agent, at the Company’s expense,
promptly, but in no event later than one (1) Business Day from the
effective date of this Agreement, an Electronic Prospectus to be
used by the Selling Agents in connection with the Offering. As used
herein, the term “Electronic
Prospectus” means a form of prospectus, and any
amendment or supplement thereto, that meets each of the following
conditions: (i) it shall be encoded in an electronic format,
satisfactory to the Selling Agent, that may be transmitted
electronically by any other selected dealer to offerees and
purchasers of the Shares for at least the period during which a
prospectus relating to the Shares is required to be delivered under
the Act; (ii) it shall disclose the same information as the paper
prospectus and prospectus filed pursuant to EDGAR, except to the
extent that graphic and image material cannot be disseminated
electronically, in which case such graphic and image material shall
be replaced in the electronic prospectus with a fair and accurate
narrative description or tabular representation of such material,
as appropriate; and (iii) it shall be in or convertible into a
paper format or an electronic format, satisfactory to the Selling
Agent, that will allow recipients thereof to store and have
continuously ready access to the prospectus at any future time,
without charge to such recipients (other than any fee charged for
subscription to the Internet as a whole and for on-line time). The
Company hereby confirms that it has included or will include in the
Prospectus filed pursuant to EDGAR or otherwise with the Commission
and in the Registration Statement at the time it was declared
effective an undertaking that, upon receipt of a request by an
investor or his or her representative within the period when a
prospectus relating to the Shares is required to be delivered under
the Act, the Company shall transmit or cause to be transmitted
promptly, without charge, a paper copy of the
Prospectus.

 

5. Conditions of Selling Agent’s
Obligations. The time and date of closing and delivery of
the documents required to be delivered to the Selling Agent on the
Closing Date shall be at to the offices of Cozen O’Connor.
The several obligations of the Selling Agent, as provided herein,
shall be subject to (i)
the continuing accuracy of the representations and warranties of
the Company as of the date hereof and, as of each of the Closing
Date; (ii) the accuracy of the statements of officers of the
Company made pursuant to the provisions hereof; (iii) the
performance by the Company of its obligations hereunder, and (iv)
the following conditions:

 

 

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5.1

Regulatory
Matters.

 

5.1.1 Effectiveness
of Registration Statement. The Registration Statement shall
be effective on the date of this Agreement, and, at each of the
Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings
for that purpose shall have been instituted or shall be pending or
contemplated by the Commission and any request on the part of the
Commission for additional information shall have been complied
with.

 

5.1.2 FINRA
Clearance. By the Effective Date, the Selling Agent shall
have received clearance from FINRA as to the amount of compensation
allowable or payable to the Selling Agent as described in the
Registration Statement.

 

5.1.3 Exchange
Stock Market Clearance. On the Closing Date, to the extent a
notice filing is required under the NASDAQ listing rules, NASDAQ
shall have notified the Company that it has completed its review of
the Offering of the Shares.

 

5.2

Company Counsel
Matters.

 

5.2.1 Closing
Date Opinion of Counsel. On the Closing Date, the Selling
Agent shall have received the opinion of Disclosure Law Group,
counsel to the Company, addressed to the Selling Agent, dated the
Closing Date and in form and substance reasonably satisfactory to
the Selling Agent.

  

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

 

5.3 Cold Comfort Letter. On the
Closing Date, the Selling Agent shall have received a cold comfort
letter, addressed to it, and in form and substance reasonably
satisfactory in all respects to the Selling Agent from Mazars,
dated as of the Closing Date.

 

5.4

Company
Certificates.

 

5.4.1 Officers’
Certificate. On the Closing Date, the Selling Agent shall
have received a certificate of the Company signed by the Chief
Executive Officer of the Company, dated the Closing Date, to the
effect that the Company has performed all covenants and complied
with all conditions
required by this Agreement to be performed or complied with by the
Company prior to and as of the Closing Date, and that the
conditions set forth in Section 5.5 hereof have been
satisfied as of such date and that, as of the Closing Date, the
representations and warranties of the Company set forth in
Section 3 hereof
are true and correct. In addition, the Selling Agent shall have
received such other and further certificates of officers of the
Company as the Selling Agent may reasonably request.

 

 

-18-

 

 

 

5.4.2 Secretary’s
Certificate. On the Closing Date, the Selling Agent shall
have received a certificate of the Company signed by the Secretary
or Assistant Secretary of the Company, dated the Closing Date,
certifying: (i) that the Certificate of Incorporation are true and
complete, have not been modified and is in full force and effect;
(ii) that the resolutions of the Company’s Board of Directors
relating to the Offering contemplated by this Agreement are in full
force and effect and have not been modified; (iii) as to the
accuracy and completeness of all correspondence between the Company
or its counsel and the Commission; and (iv) as to the incumbency of
the officers of the Company. The documents referred to in such
certificate shall be attached to such certificate.

 

5.5 No Material Changes. Prior to
and on the Closing Date: (i) there shall have been no material
adverse change or development involving a prospective material
adverse change in the condition or the business activities,
financial or otherwise, of the Company from the latest dates as of
which such condition is set forth in the Registration Statement and
the Prospectus; (ii) no action, suit or proceeding, at law or in
equity, shall have been pending or, to the knowledge of the
Company, threatened against the Company or any Insider before or by
any court or federal or state commission, board or other
administrative agency wherein an unfavorable decision, ruling or
finding may materially adversely affect the business, operations or
financial condition or income of the Company, except as set forth
in the Registration Statement and the Prospectus; (iii) no stop
order shall have been issued under the Act and no proceedings
therefore shall have been initiated or threatened by the
Commission; and (iv) the Registration Statement and the Prospectus
and any amendments or supplements thereto shall contain all
material statements which are required to be stated therein in
accordance with the Act and the Regulations and shall conform in
all material respects to the requirements of the Act and the
Regulations, and the Registration Statement or the Prospectus and
any amendment or supplement thereto shall not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not
misleading.

 

5.6 Delivery of Agreements. On or
prior to the Effective Date, the Company shall have delivered to
the Selling Agent an executed copy of this Agreement and, on or
prior to the Closing Date, the Company shall have delivered to the
Selling Agent executed copies of the Lock-Up
Agreements.

 

 

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6.

Indemnification.

 

6.1

Indemnification by the
Company.

 

6.1.1 General.
Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless the Selling Agent and each dealer
selected by the Selling Agent that participates in the Offering and
each of their respective directors, officers and employees and each
person (a “Controlling
Person”), if any, who controls within the meaning of
Section 15 of the Act or Section 20
of the Exchange Act (each “Indemnified Person”), such
Indemnified Person and the dealer, and the successors and assigns
of all of the foregoing persons, against any and all loss,
liability, claim, damage and expense whatsoever (including but not
limited to any and all legal or other expenses reasonably incurred
in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, whether arising
out of any action between such Indemnified Person and the Company
or between such Indemnified Person and any third party or
otherwise) to which they or any of them may become subject under
the Act, the Exchange Act or any other statute or at common law or
otherwise or under the laws of foreign countries, arising out of or
based upon any untrue statement or alleged untrue statement of a
material fact contained in (i) the Registration Statement or the
Prospectus (as from time to time each may be amended and
supplemented); (ii) any materials or information provided to
investors by, or with the approval of, the Company in connection
with the marketing of the Offering of the Shares, including any
“road show” or investor presentations made to investors
by the Company (whether in person or electronically); or (iii) any
application or other document or written communication (in this
Section 6,
collectively called “application”) executed by the
Company or based upon written information furnished by the Company
in any jurisdiction in order to qualify the Shares under the
securities laws thereof or filed with the Commission, any state
securities commission or agency, NASDAQ or any securities exchange;
or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading, unless such statement or omission was made in
reliance upon and in strict conformity with “Selling
Agent’s Information” (as described in Section 3.3.1) furnished to the
Company by the Selling Agents. The Company agrees promptly to
notify the Indemnified Persons of the commencement of any
litigation or proceedings against the Company or any of its
officers, directors or Controlling Persons in connection with the
issue and sale of the Shares or in connection with the Registration
Statement or the Prospectus.

 

6.1.2 Procedure.
If any action is brought against an Indemnified Person or a
Controlling Person in respect of which indemnity may be sought
against the Company pursuant to Section 6.1.1 or 6.1.2, such Indemnified Person
shall promptly notify the Company in writing of the institution of
such action and the Company shall assume the defense of such
action, including the employment and fees of counsel (subject to
the reasonable approval of such Indemnified Person) and payment of
actual expenses. Any delay in notice will not relieve the Company
of any liability to an indemnified party, except to the extent that
the Company demonstrates that the delay prejudiced the defense of
the action. Any indemnified person shall have the right to employ
its or their own counsel in any such case, but the fees and
expenses of such counsel which are incurred after the Company
assumes the defense of the action shall be at the expense of such
Indemnified Person unless (i) the employment of such counsel at the
expense of the Company shall have been authorized in writing by the
Company in connection with the defense of such action, or (ii) the
Company fails to assume the defense or to employ counsel to have
charge of the defense of such action within a reasonable time after
notice of the action, or (iii) such indemnified party or parties
shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to
those available to the Company (in which case the Company shall not
have the right to direct the defense of such action on behalf of
the indemnified party or parties), in any of which events the
reasonable fees and expenses of not more than one additional firm
of attorneys (in addition to local counsel) selected by such
Indemnified Person in their sole discretion shall be borne by the
Company and paid as incurred or, at the option of the indemnified
party, advanced pursuant to Section 6.1.5.

 

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6.1.3 Settlement.
The Company will not affect any settlement of a proceeding in
respect of which indemnification may be sought hereunder (whether
or not any indemnified person is a party therein) unless the
Company has given an Indemnified Person reasonable prior written
notice thereof and such settlement, compromise, consent or
termination includes an unconditional release of each indemnified
party from any liabilities arising out of such proceeding. The
Company will not permit any such settlement, compromise, consent or
termination to include a statement as to, or an admission of,
fault, culpability or a failure to act by or on behalf of any
indemnified party, without that party’s prior written
consent. Notwithstanding anything to the contrary contained herein,
if an Indemnified Person shall conduct the defense of an action as
provided in Section
6.1.2, the Company shall have the right to approve the terms
of any settlement of such action, which approval shall not be
unreasonably withheld, except that if the Company is required to
and nonetheless fails to reimburse or advance the expenses of such
defense, then the Company shall be bound by any determination made
in the action or by any compromise or settlement made by the
Indemnified Person without the Company’s written consent,
subject to the requirements of Section 6.1.4.

  

6.1.4 Settlement
without Consent if Failure to Reimburse or Advance. If at
any time an Indemnified Person shall have requested the Company to
reimburse or advance to such Indemnified Person its fees and
expenses, including those of counsel, the Company agrees that it
shall be liable for any settlement of the nature contemplated by
Section 6.1.3
affected without its written consent if (i) such settlement is
entered into more than sixty (60) days after receipt by the Company
of the aforesaid request, (ii) the Company shall have received
notice of the terms of such settlement at least forty-five (45)
days prior to such settlement being entered into, and (iii) the
Company shall not have reimbursed or advanced to such Indemnified
Person in accordance with such request prior to the date of such
settlement, unless such failure to reimburse or advance to such
Indemnified Person is based on a dispute with a good faith basis as
to either the obligation of the Company arising under this
Section 6 to
indemnify such Indemnified Person or the amount of such obligation,
and the Company shall have notified such Indemnified Person of such
good faith dispute prior to the date of such
settlement.

 

6.1.5 Advances.
Notwithstanding any other provision hereof, the Company shall
advance, to the extent not prohibited by law, all expenses
reasonably anticipated to be incurred by or on behalf of an
Indemnified Person in connection with any proceeding, whether
pending or threatened, within fifteen (15) days of receipt of a
statement or statements from such indemnified parties, or any of
them, requesting such advances from time to time. This advancement
obligation shall include any retainers of counsel engaged by
indemnified parties. Any statement requesting advances shall
evidence the expenses anticipated or incurred by the indemnified
party with reasonable particularity and may include only those
expenses reasonably expected to be incurred within the ninety
(90)-day period following each statement. In the event some portion
of the amounts advanced are unused, or in the event a court of
ultimate jurisdiction determines that the indemnified parties are
not entitled to be indemnified against certain expenses, the
recipient shall return the unused or disallowed portion of any
advances within thirty (30) days of the final disposition of any
proceeding to which such advances pertain.

 

6.2 Indemnification of the Company.
The Selling Agent and each dealer selected by the Selling Agent
that participates in the Offering (a “Selected Dealer”), severally and
not jointly, agrees to indemnify and hold harmless the Company, its
directors, officers and employees and agents who control the
Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act against any and all loss, liability, claim,
damage and expense described in the foregoing indemnity
from the Company to the Selling Agent, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue
statements or omissions made in the Registration Statement or
Prospectus or any amendment or supplement thereto or in any
application, made in reliance upon and in strict conformity with
the “Selling Agents’ Information” furnished by
the Selling Agents to the Company expressly for use in the
Registration Statement or the Prospectus or any amendment or
supplement thereto or in any such application. In case any action
shall be brought against the Company or any other person so
indemnified based on the Registration Statement or the Prospectus
or any amendment or supplement thereto or any application, and in
respect of which indemnity may be sought against the Selling Agent
or any Selected Dealer, such Selling Agent or Selected Dealer shall
have the rights and duties given to the Company, and the Company
and each other person so indemnified shall have the rights and
duties given to such Selling Agent or Selected Dealer, by the
provisions of Section
6.1.2.

 

 

 

 

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6.3

Contribution.

 

6.3.1 Contribution
Rights. In order to provide for just and equitable
contribution under the Act in any case in which (i) any person
entitled to indemnification under this Section 6 makes claim for
indemnification pursuant hereto but it is judicially determined (by
the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this
Section 6 provides
for indemnification in such case, or (ii) contribution
under the Act, the Exchange Act or otherwise may be required on the
part of any such person in circumstances for which indemnification
is provided under this Section 6 but is unavailable,
then, and in each such case, the Company and the Selling Agent
(and, if applicable, any Selected Dealer) shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the
nature contemplated by said indemnity agreement incurred by the
Company and the Selling Agent (and, if applicable, any Selected
Dealer), as incurred, in such proportions that the Selling Agent
are responsible for that portion represented by the percentage that
the Selling Fee bears to Purchase Price and the Company shall be
responsible for the balance; provided, that, no person
guilty of a 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.
Notwithstanding the provisions of this Section 6.3.1, neither the
Selling Agent nor any Selected Dealer shall be required to
contribute any amount in excess of the amount by which the total
price at which the Shares sold by it and distributed to the public
were offered to the public exceeds the amount of any damages that
the Selling Agent or any Selected Dealer has otherwise been
required to pay in respect of such losses, liabilities, claims,
damages and expenses. For purposes of this Section 6.3.1, each director,
officer and employee of the Selling Agent, any Selected Dealer or
the Company, as applicable, and each person, if any, who controls
the Selling Agent or the Company, as applicable, within the meaning
of Section 15 of the Act shall have the same rights to contribution
as the Selling Agent, any Selected Dealer or the Company, as
applicable.

 

6.3.2 Contribution
Procedure. Within fifteen days after receipt by any party to
this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if
a claim for contribution in respect thereof is to be made against
another party (“contributing
party”), notify the contributing party of the
commencement thereof, but the failure to so notify the contributing
party will not relieve it from any liability which it may have to
any other party other than for contribution hereunder. In case any
such action, suit or proceeding is brought against any party, and
such party notifies a contributing party or its representative of
the commencement thereof within the aforesaid fifteen days, the
contributing party will be entitled to participate therein with the
notifying party and any other contributing party similarly
notified. Any such contributing party shall not be liable to any
party seeking contribution on account of any settlement of any
claim, action or proceeding affected by such party seeking
contribution without the written consent of such contributing
party. The contribution provisions contained in this Section 6.3.2 are intended to
supersede, to the extent permitted by law, any right to
contribution under the Act, the Exchange Act or otherwise
available.

 

 

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7.

Additional
Covenants.

 

7.1 Board Composition and Board
Designations. The Company shall ensure that: (i) the
qualifications of the persons serving as board members and the
overall composition of the board comply with the Sarbanes-Oxley Act
of 2002 and the rules promulgated thereunder and with the listing
requirements of NASDAQ or any other national securities exchange or
national securities association, as the case may be, in the event
the Company seeks to have its Shares listed on another exchange or
quoted on an automated quotation system, and (ii) if applicable, at
least one member of the board of directors qualifies as a
“financial expert” as such term is defined under the
Sarbanes-Oxley Act of 2002 and the rules promulgated
thereunder.

 

7.2

Subsequent
Offerings.

 

7.2.1 The
Company, on behalf of itself and any successor entity, has agreed
that, without the prior written consent of the Selling Agent, it
will not, for a period ending sixty (60) days after the Effective
Date (the “Restricted Period”), (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any freely trading shares of its capital
stock or any securities convertible into or exercisable or
exchangeable for shares of its capital stock. The restrictions
contained in this Section 7.2 shall not apply to (i) the Shares
sold in this offering,

(ii)
the issuance of Common Stock upon the exercise of an option or
warrant or the conversion of a security outstanding on the date
hereof or (iii) the issuance of any option to purchase or shares of
the Company’s capital stock under any stock compensation plan
of the Company outstanding on the date hereof or otherwise for
compensatory purposes.

 

7.2.2 For
a period of thirty (30) after the expiration of the Restricted
Period, the Selling Agent shall have the right and option to
participate as a co- or joint book running manager or underwriter
for any public offering of the Company’s Common Stock
(“Covered Offering”); provided, however, the parties
agree and acknowledge that the Company shall only pay one customary
selling, placement or underwriting fee in connection with such
Covered Offering agreed to by the Company in connection therewith,
and shall not be required to pay a Selling Fee to Selling Agent, as
set forth in this Agreement in connection with the Covered
Offering.

 

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8.

Effective Date of this Agreement and
Termination Thereof.

 

8.1 Effective Date. This Agreement
shall become effective when the Company, the Selling Agent have
executed the same and delivered counterparts of such signatures to
the other parties.

 

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

 

 

8.3 Indemnification.
Notwithstanding any contrary provision contained in this Agreement,
any election hereunder or any termination of this Agreement, and
whether or not this Agreement is otherwise carried out, the
provisions of Section
6 shall not be in any way effected by, such election or
termination or failure to carry out the terms of this Agreement or
any part hereof.

 

 

-24-

 

 

 

9.

Miscellaneous.

 

9.1 Notices. All communications
hereunder, except as herein otherwise specifically provided, shall
be in writing and shall be mailed (registered or certified mail,
return receipt requested), personally delivered or sent by
facsimile transmission and confirmed, or by electronic transmission
via PDF, and shall be deemed given when so delivered or faxed and
confirmed or transmitted or if mailed, two days after such
mailing.

 

If to
the Selling Agent:

 

Alexander
Capital

17
State Street, 5th
Floor

New
York, NY 10004

Attn:
Jonathan Gazdak

Fax
No.: (212) 687-5649

 

Copy to
(which shall not constitute notice):

 

                                                                     
Cozen
O'Connor P.C.

33
South 6th Street, Suite
3800

                                                                            
Minneapolis, MN 55402

Attn:
Christopher J. Bellini, Esq.

Fax
No.: (646) 838-1314

 

If to
the Company:

 

AzurRx
BioPharma, Inc.

760
Parkside Avenue

Downstate
Biotechnology Incubator, Suite 304

Brooklyn, New York
11226

Attn:
Chief Executive Officer Fax No.:

 

Copy to
(which shall not constitute notice):

 

Disclosure Law
Group

655
West Broadway Suite

870 San
Diego, CA 92101

Attn:
Daniel W. Rumsey, Esq.

Fax
No.: (619) 330-2101

 

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

 

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

 

9.4 Entire Agreement. This
Agreement (together with the other agreements and documents being
delivered pursuant to or in connection with this Agreement)
constitutes the entire agreement of the parties hereto with respect
to the subject matter hereof and thereof, and supersedes all prior
agreements and understandings of the parties, oral and written,
with respect to the subject matter hereof. Notwithstanding anything
to the contrary set forth herein, it is understood and agreed by
the parties hereto that all terms and conditions of that certain
engagement letter between the Company and the Selling Agent, dated
March 22, 2019, shall remain in full force and effect.

 

9.5 Binding Effect. This Agreement
shall inure solely to the benefit of and shall be binding upon the
Selling Agent, the Company and the directors, officers and
Controlling Persons referred to in Section 6 hereof, and their
respective successors, legal representatives and assigns, and no
other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provisions herein contained. The
term

 

“successors
and assigns” shall not include a purchaser, in its capacity
as such, of securities from the Selling Agent.

 

 

 

 

-25-

 

 

9.6 Governing Law. This Agreement
shall be deemed to have been executed and delivered in New York and
both this Agreement and the transactions contemplated hereby shall
be governed as to validity, interpretation, construction, effect,
and in all other respects by the laws of the State of New York,
without regard to the conflicts of laws principals thereof (other
than Section 5-1401 of The New York General Obligations Law). Each
of the Selling Agent and the Company: (a) agrees that any legal
suit, action or proceeding arising out of or relating to this
Agreement and/or the transactions contemplated hereby shall be
instituted exclusively in the Supreme Court of the State of New
York, New York County, or in the United States District Court for
the Southern District of New York, (b) waives any objection which
it may have or hereafter to the venue of any such suit, action or
proceeding, and (c) irrevocably consents to the jurisdiction of
Supreme Court of the State of New York, New York County, or in the
United States District Court for the Southern District of New York
in any such suit, action or proceeding. Each of the Selling Agent
and the Company further agrees to accept and acknowledge service of
any and all process which may be served in any such suit, action or
proceeding in the Supreme Court of the State of New York, New York
County, or in the United States District Court for the Southern
District of New York and agrees that service of process upon the
Company mailed by certified mail to the Company’s address or
delivered by Federal Express via overnight delivery shall be deemed
in every respect effective service of process upon the Company, in
any such suit, action or proceeding, and service of process upon
the Selling Agents mailed by certified mail to the Selling
Agents’ address or delivered by Federal Express via overnight
delivery shall be deemed in every respect effective service process
upon the Selling Agents, in any such suit, action or proceeding.
THE COMPANY (ON BEHALF OF ITSELF, THE SUBSIDIARIES AND, TO THE
FULLEST EXTENT PERMITTED BY LAW, ON BEHALF OF ITS RESPECTIVE EQUITY
HOLDERS AND CREDITORS) HEREBY WAIVE ANY RIGHT THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON, ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT, THE REGISTRATION STATEMENT AND THE
PROSPECTUS.

 

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

 

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

 

-26-

 

 

 

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

 

9.10 Enforcement
of Agreement. The Company acknowledges and agrees that the
Selling Agent would be irreparably damaged if any of the
Company’s covenants hereunder, including without limitations
those set forth in Section
4, is not performed in accordance with its specific terms
and that any such breach of covenant could not be adequately
compensated in all cases by monetary damages alone. Accordingly, in
addition to any other right or remedy to which the Selling Agent
may be entitled, at law or in equity, it shall be entitled to
enforce any covenant of the Company hereunder by a decree of
specific performance and to temporary, preliminary and permanent
injunctive relief to prevent a breach or threatened breach by the
Company of any such covenant, without posting any bond or other
undertaking.

 

[SIGNATURE PAGE
FOLLOWS]

 

 

 

-27-

 

 

If the
foregoing correctly sets forth the understanding between the
Selling Agent and the Company, please so indicate in the space
provided below for that purpose, whereupon this letter shall
constitute a binding agreement between us.

 

 

Very
truly yours,

 

 

AZURRX
BIOPHARMA, INC.

 

 

By: /s/ Maged
Shenouda

Maged
Shenouda

Chief
Financial
Officer

 

 

Confirmed as of the
date first written above mentioned,

 

ALEXANDER CAPITAL
L.P.

 

By: /s/ Jonathan
Gazdak 

Jonathan
Gazdak

Managing
Director

 

 

 

 

 

 

 

 

[Signature Page to
Selling Agent Agreement]

 

-28-

 

 

 

SCHEDULE
A

 

Purchasers

 

 

 

 

 

 

 

 

Schedule
A

 

 

 

-29-

 

 

 

SCHEDULE
B

 

Lock-Up Parties

 

 

 

Schedule
B

 

 

 

-30-

 

 

 

EXHIBIT
A

 

Form of Selling Agent’s Warrant Agreement

 

 

 

 

 

-31-

 

 

 

EXHIBIT
B

 

Lock-Up
Agreement

 

 

Alexander Capital
L.P.

17 State Street,
5th Floor

New York, NY
10004

 

Ladies
and Gentlemen:

 

The
undersigned understands that Alexander Capital L.P. (the
“Selling Agent”)
proposes to enter into a Selling Agent Agreement (the
“Selling Agent
Agreement”) with AzurRx BioPharma, Inc., a Delaware
corporation (the “Company”), providing for the
offering (the “Offering”) of shares of common
stock, par value $0.0001, of the Company (“Common Stock”).

 

To
induce the Selling Agent to continue its efforts in connection with
the Offering, the undersigned hereby agrees that, without the prior
written consent of the Selling Agent, the undersigned will not,
during the period commencing on the date hereof and ending 120 days
after the date hereof (the “Lock-Up Period”), (1) offer,
pledge, sell, contract to sell, grant, lend or otherwise transfer
or dispose of, directly or indirectly, any Common Stock, or any
securities convertible into or exercisable or exchangeable for
Common Stock (collectively, the “Lock-Up Securities”), without the
consent of the Selling Agent, except for the exercise or conversion
of currently outstanding warrants, options and convertible
debentures or notes (including any principal or interest incurred
during the Lock-Up Period), as applicable, and the exercise of
options under a stock incentive plan approved by the board of
directors of the Company (but not including any subsequent sales of
the securities received upon such exercise or conversion); or (2)
publicly disclose the intention to make any offer, sale, pledge or
disposition, or to enter into any transaction, swap, hedge or other
arrangement relating to any Lock-Up Securities.

 

Notwithstanding the
foregoing, and subject to the conditions below, the undersigned may
transfer Lock-Up Securities without the prior written consent of
the Selling Agent in connection with (a) transactions relating to
Lock-Up Securities acquired in open market transactions after the
completion of the Offering; (b) transfers of Lock-Up Securities as
a bona fide gift, by will
or intestacy or to a family member or trust for the benefit of the
undersigned and/or its family member (for purposes of this lock-up
agreement, “family member” means any relationship by
blood, marriage or adoption, not more remote than first cousin);
(c) transfers of Lock-Up Securities to a charity or educational
institution; or (d) if the undersigned is or, directly or
indirectly, controls a corporation, partnership, limited liability
company or other business entity, any transfers of Lock- Up
Securities to any shareholder, partner or member of, or owner of
similar equity interests in, the undersigned or such business
entity, as the case may be; provided that in the case of
any transfer pursuant to the foregoing clauses (b), (c) or (d), (i)
any such transfer shall not involve a disposition for value (other
than in exchange for interests in a trust referred to in clause
(b)) and (ii) each transferee shall sign and deliver to the Selling
Agent a lock-up agreement substantially in the form of this lock-up
agreement. The undersigned also agrees and consents to the entry of
stop transfer instructions with the Company’s transfer agent
and registrar against the transfer of the undersigned’s
Lock-Up Securities except in compliance with this lock-up
agreement.

 

This
Agreement, and the obligations of the undersigned hereunder, shall
take effect as of the closing date of the Offering.

 

 

 

-32-

 

 

The
undersigned understands that the Company and the Selling Agent are
relying upon this lock-up agreement in proceeding toward
consummation of the Offering. The undersigned further understands
that this lock-up agreement is irrevocable and shall be binding
upon the undersigned’s heirs, legal representatives,
successors and assigns.

 

Whether
or not the Offering actually occurs depends on a number of factors,
including market conditions. Any Offering will only be made
pursuant to a Selling Agent Agreement, the terms of which are
subject to negotiation between the Company and the Selling
Agent.

 

 

Very
truly yours,

 

___________________________________________

(Name -
Please Print)

 

______________________________________________

(Signature)

 

 

______________________________________________

(Name
of Signatory, in the case of entities - Please Print)

 

 

______________________________________________

(Title
of Signatory, in the case of entities - Please Print)

 

______________________________________________

 

______________________________________________ 

 

______________________________________________ 

Address

 

 

 

-33-

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