Exhibit 1.1
Execution
Version
B. RILEY SECURITIES, INC.
As representative of the several Underwriters
c/o B. RILEY SECURITIES, INC.
299 Park Avenue, 21st Floor
New York, New York 10171
Ladies and Gentlemen:
FRANCHISE GROUP, INC., a Delaware corporation
(the “Company”), proposes to issue and sell to the several Underwriters named in Schedule I hereto (the
“Underwriters”) 1,200,000 shares of its 7.50% Series A Cumulative Perpetual Preferred Stock, par value
$0.01 per share and liquidation preference of $25.00 per share (the “Firm Shares”). The Company also proposes
to issue and sell to the several Underwriters not more than an additional 180,000 shares of its 7.50% Series A Cumulative
Perpetual Preferred Stock, par value $0.01 per share and liquidation preference of $25.00 per share (the “Additional Shares”),
if and to the extent that B. Riley Securities, Inc. (“B. Riley Securities”), as representative of the Underwriters,
shall have determined to exercise, on behalf of the Underwriters, the right to purchase such Additional Shares granted to the Underwriters
in Section 2 hereof. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the “Shares.” The shares of Preferred Stock, par value $0.01
per share and liquidation preference of $25.00 per share, of the Company to be outstanding after giving effect to the sales contemplated
hereby are hereinafter referred to as the “Preferred Stock.” The shares of the Common Stock, par value $0.01
per share, of the Company are hereinafter referred to as the “Common Stock.”
The Company has filed with the Securities
and Exchange Commission (the “Commission”) a registration statement on Form S-3 (File No. 333-236211),
including a prospectus, relating to the Shares. The registration statement as amended at the time it became effective, including
the information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A
under the Securities Act of 1933, as amended (the “Securities Act”), is hereinafter referred to as the “Registration
Statement”; the prospectus in the form first used to confirm sales of Shares (or in the form first made available to
the Underwriters by the Company to meet requests of purchasers pursuant to Rule 173 under the Securities Act) is hereinafter
referred to as the “Prospectus.” If the Company has filed an abbreviated registration statement to register
additional shares of Preferred Stock pursuant to Rule 462(b) under the Securities Act (a “Rule 462 Registration
Statement”), then any reference herein to the term “Registration Statement” shall be deemed to include
such Rule 462 Registration Statement.
For purposes of this Agreement, “free
writing prospectus” has the meaning set forth in Rule 405 under the Securities Act, “preliminary prospectus”
shall mean each prospectus included in the Registration Statement (and any amendments thereto) prior to the effectiveness of the
Registration Statement, and each prospectus that omitted information pursuant to Rule 430A under the Securities Act that was
used in connection with the offering of the Shares after such effectiveness and prior to the execution and delivery of this Agreement,
“Time of Sale Prospectus” means the preliminary prospectus contained in the Registration Statement at the time
of its effectiveness that is used in connection with the offering of the Shares together with the documents and pricing information
set forth in Schedule II hereto, and “broadly available road show” means a “bona fide electronic
road show” as defined in Rule 433(h)(5) under the Securities Act that has been made available without restriction
to any person. As used herein, the terms “Registration Statement,” “preliminary prospectus,” “Time
of Sale Prospectus” and “Prospectus” shall include the documents, if any, incorporated by reference therein as
of the date hereof. The terms “supplement,” “amendment” and “amend” as
used herein with respect to the Registration Statement, the Prospectus, the Time of Sale Prospectus or the Prospectus shall include
all documents subsequently filed by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), that are deemed to be incorporated by reference therein.
The Company hereby confirms its engagement
of Incapital LLC (“Incapital”) as, and Incapital hereby confirms its agreement with the Company to render services
as, a “qualified independent underwriter,” within the meaning of Section (f)(12) of Rule 5121 of the
Financial Industry Regulatory Authority, Inc. (“FINRA”) with respect to the offering and sale of the Shares.
Incapital, solely in its capacity as the qualified independent underwriter and not otherwise, is referred to herein as the “QIU.”
Incapital hereby consents to the reference to it as set forth under the heading “Underwriting (Conflicts of Interest)”
in the preliminary prospectus or the Prospectus and any amendment or supplement thereto.
The Company hereby confirms its agreements
with the Underwriters and the QIU as follows:
1. Representations
and Warranties. The Company represents and warrants to and agrees with each of the Underwriters that:
(a) The
Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose or pursuant to Section 8A under the Securities Act are pending before or, to the Company’s
knowledge, threatened by the Commission.
(b) (i) Each
document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Time of Sale Prospectus
or the Prospectus complied or will comply when so filed in all material respects with the Exchange Act and the applicable rules and
regulations of the Commission thereunder, (ii) the Registration Statement, when it became effective, did not contain and,
as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading, (iii) the Registration Statement
and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Securities
Act and the applicable rules and regulations of the Commission thereunder, (iv) the Time of Sale Prospectus does not,
and at the time of each sale of the Shares in connection with the offering when the Prospectus is not yet available to prospective
purchasers and at the Closing Date (as defined in Section 4),
the Time of Sale Prospectus, as then amended or supplemented by the Company, if applicable, will not, contain any untrue statement
of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, (v) each broadly available road show, if any, when considered together with the
Time of Sale Prospectus, does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they were made, not misleading and (vi) the Prospectus
does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made,
not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions
in the Registration Statement, the Time of Sale Prospectus or the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through B. Riley Securities expressly for use therein.
(c) The
Company is not an “ineligible issuer” in connection with the offering pursuant to Rules 164, 405 and 433 under
the Securities Act. Any free writing prospectus that the Company is required to file pursuant to Rule 433(d) under the
Securities Act has been, or will be, filed with the Commission in accordance with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder. Each free writing prospectus that the Company has filed, or
is required to file, pursuant to Rule 433(d) under the Securities Act or that was prepared by or on behalf of or used
or referred to by the Company complies or will comply in all material respects with the requirements of the Securities Act and
the applicable rules and regulations of the Commission thereunder. Except for the free writing prospectuses, if any, identified
in Schedule II hereto, and electronic road shows, if any, each furnished to B. Riley Securities before first use, the Company
has not prepared, used or referred to, and will not, without B. Riley Securities’ prior consent, prepare, use or refer to,
any free writing prospectus.
(d) The
Company and any subsidiary that is a significant subsidiary (as such term is defined in Rule 1-02 of Regulation S-X promulgated
by the Commission, substituting in such definition June 27, 2020 and the 12 months period ended June 27, 2020 for the
end of the most recently completed fiscal year and for the most recently completed fiscal year, respectively)(each, a “Subsidiary,”
collectively, the “Subsidiaries”), have been duly incorporated, formed or organized, as applicable, are validly
existing and in good standing under the laws of their respective jurisdictions of incorporation, formation or organization, as
applicable. The Company and the Subsidiaries are duly licensed or qualified for transaction of business and in good standing under
the laws of each other jurisdiction in which their respective ownership or lease of property or the conduct of their respective
businesses requires such license or qualification, and have all organizational power and authority necessary to own or hold their
respective properties and to conduct their respective businesses as described in the Registration Statement, the Time of Sale Prospectus
and the Prospectus, except where the failure to be so qualified or in good standing or have such power or authority would not,
individually or in the aggregate, reasonably be expected to have a material adverse effect on the assets, business, operations,
earnings, properties, condition (financial or otherwise), prospects, stockholders’ equity or results of operations of the
Company and the Subsidiaries taken as a whole, or prevent the consummation of the transactions contemplated hereby (a “Material
Adverse Effect”).
(e) As
of the date hereof, the Company’s only Subsidiaries are set forth on Schedule III. The Company owns directly or indirectly,
all of the equity interests of the Subsidiaries free and clear of any lien, charge, security interest, encumbrance, right of first
refusal or other restriction, and all the equity interests of the Subsidiaries are validly issued and are fully paid, nonassessable
and free of preemptive and similar rights.
(f) The
Company has full legal right, power and authority to enter into this Agreement and perform the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by the Company and is a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, except to the extent that (i) enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by
general equitable principles and (ii) the indemnification and contribution provisions of Section 8 hereof may
be limited by federal or state securities laws and public policy considerations in respect thereof.
(g) The
Shares, when issued and delivered pursuant to the terms approved by the board of directors of the Company or a duly authorized
committee thereof, or a duly authorized executive committee, against payment therefor as provided herein, will be duly and validly
authorized and issued and fully paid and nonassessable, free and clear of any pledge, lien, encumbrance, security interest or other
claim (other than any pledge, lien, encumbrance, security interest or other claim arising from an act or omission of the Underwriters),
including any statutory or contractual preemptive rights, resale rights, rights of first refusal or other similar rights, and will
be registered pursuant to Section 12 of the Exchange Act. The Shares, when issued, will conform in all material respects to
the description thereof contained in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus, and will
entitle the holders of the Shares to the rights and benefits provided therein and in the Certificate of Designation of the 7.50%
Series A Cumulative Perpetual Preferred Stock of Franchise Group, Inc. (the “COD”).
(h) At
the time of filing the Registration Statement, the Company met the then applicable requirements for use of Form S-3 under
the Securities Act, including compliance with General Instruction I.B.1 of Form S-3, as applicable.
(i) No
consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or any governmental or
regulatory authority having jurisdiction over the Company is required for the execution, delivery and performance by the Company
of this Agreement, and the issuance and sale by the Company of the Shares as contemplated hereby, except (i) as issued by
the Secretary of State of the State of Delaware in respect of the COD, (ii) as may be required under applicable state securities
laws or by the by-laws and rules of the Financial Industry Regulatory Authority (“FINRA”) or the NASDAQ
Global Market (the “Exchange”), including any notices that may be required by the Exchange, in connection with
the sale of the Shares, (iii) as may be required under the Securities Act and (iv) as have been previously obtained by
the Company or the absence of which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(j) Since
the date of the most recent financial statements of the Company included or incorporated by reference in the Registration Statement,
the Time of Sale Prospectus and Prospectus, there has not been (i) any Material Adverse Effect, or any development that would
result in a Material Adverse Effect, (ii) any transaction which is material to the Company and the Subsidiaries taken as a
whole, (iii) any obligation or liability, direct or contingent (including any off-balance sheet obligations), incurred by
the Company or the Subsidiaries, which is material to the Company and the Subsidiaries taken as a whole, (iv) any material
change in the Company’s capital stock (other than (A) the grant of additional options or other equity awards under the
Company’s existing stock option and equity incentive plans, (B) changes in the number of shares of outstanding Common
Stock of the Company due to the issuance of shares upon the exercise or conversion of securities exercisable for, or convertible
into, Common Stock outstanding on the date hereof, (C) as a result of the issuance of the Shares, (D) any repurchases
of capital stock of the Company, (E) as described in a proxy statement filed on Schedule 14A or a Registration Statement on
Form S-4, or (F) otherwise publicly announced) or outstanding long-term indebtedness of the Company or the Subsidiaries
or (v) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company or any Subsidiary,
other than in each case above in the ordinary course of business or as otherwise disclosed in the Registration Statement, the Time
of Sale Prospectus or Prospectus (including any document incorporated by reference therein).
(k) Neither
the Company nor any Subsidiary is (i) in violation of its charter or by-laws or similar organizational documents; (ii) in
default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance
or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other similar
agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound or
to which any of the property or assets of the Company or any Subsidiary is subject; or (iii) in violation of any law or statute
or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority having jurisdiction
over the Company or any Subsidiary, except, in the case of each of clauses (ii) and (iii) above, for any such violation
or default that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. To the Company’s
knowledge, no other party under any material contract or other material agreement to which it or any Subsidiary is a party is in
default in any respect thereunder where such default would have a Material Adverse Effect.
(l) (i) No
person, as such term is defined in Rule 1-02 of Regulation S-X promulgated under the Securities Act (each, a “Person”),
has the right, contractual or otherwise, to cause the Company to issue or sell to such Person any Common Stock or shares of any
other capital stock or other securities of the Company (other than upon the exercise of options or warrants to purchase Common
Stock, the vesting of restricted stock units or restricted shares of Common Stock, the conversion of convertible securities, or
upon the exercise of options or other equity awards that may be granted from time to time under the Company’s stock option
and equity incentive plans), (ii) no Person has any preemptive rights, rights of first refusal, or any other rights (whether
pursuant to a “poison pill” provision or otherwise) to purchase any Preferred Stock or shares of any other capital
stock or other securities of the Company from the Company which have not been duly waived with respect to the offering contemplated
hereby, (iii) no Person has the right to act as an underwriter or as a financial advisor to the Company in connection with
the offer and sale of the Shares, and (iv) no Person has the right, contractual or otherwise, to require the Company to register
under the Securities Act any Preferred Stock or shares of any other capital stock or other securities of the Company, or to include
any such shares or other securities in the Registration Statement or the offering contemplated thereby, whether as a result of
the filing or effectiveness of the Registration Statement or the sale of the Shares as contemplated thereby or otherwise, except
in each case for such rights as have been waived on or prior to the date hereof or such rights which, if not waived, would not
reasonably be expected to have a Material Adverse Effect.
(m) The
issued and outstanding shares of capital stock of the Company have been validly issued, are fully paid and non-assessable and,
other than as disclosed in the Registration Statement, the Time of Sale Prospectus or the Prospectus, are not subject to any preemptive
rights, rights of first refusal or similar rights. The Company has an authorized, issued and outstanding capitalization as set
forth in the Registration Statement, the Time of Sale Prospectus and the Prospectus as of the dates referred to therein (other
than (i) the grant of additional options or other equity awards under the Company’s existing stock option and equity
incentive plans, (ii) changes in the number of outstanding Common Stock of the Company due to the issuance of shares upon
the exercise or conversion of securities exercisable for, or convertible into, Common Stock outstanding on the date hereof, or
the vesting of restricted stock units or restricted shares of Common Stock, (iii) as a result of the issuance of Shares, or
(iv) any repurchases of capital stock of the Company) and such authorized capital stock conforms in all material respects
to the description thereof set forth in the Registration Statement, the Time of Sale Prospectus and the Prospectus. The description
of the Preferred Stock in the Registration Statement, the Time of Sale Prospectus and the Prospectus is complete and accurate in
all material respects. Except as disclosed in or contemplated by the Registration Statement, the Time of Sale Prospectus or the
Prospectus, the Company did not have outstanding any options to purchase, or any rights or warrants to subscribe for, or any securities
or obligations convertible into, or exchangeable for, or any contracts or commitments to issue or sell, any shares of capital stock
or other securities.
(n) Each
preliminary prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Securities Act with respect to the offering of the Shares, complied when so filed in
all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder.
(o) Neither
the Company nor any Subsidiary is or, after giving effect to the offering and sale of the Shares, will be required to register
as an “investment company” or an entity “controlled” by an “investment company,” as such terms
are defined in the Investment Company Act of 1940, as amended.
(p) The
Company and the Subsidiaries (i) are in compliance with any and all applicable federal, state, local and foreign laws, rules,
regulations, decisions and orders relating to the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (collectively, “Environmental Laws”); (ii) have received
and are in compliance with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct
their respective businesses as described in the Registration Statement, the Time of Sale Prospectus and the Prospectus; and (iii) have
not received notice of any actual or potential liability for the investigation or remediation of any disposal or release of hazardous
or toxic substances or wastes, pollutants or contaminants, except, in the case of any of clauses (i), (ii) or (iii) above,
for any such failure to comply or failure to receive required permits, licenses, other approvals or liability as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(q) (i) Neither
the Company nor, to the Company’s knowledge, the Subsidiaries, nor to the Company’s knowledge, any of their respective
executive officers has, in the past five years, made any unlawful contributions to any candidate for any political office (or failed
fully to disclose any contribution in violation of applicable law) or made any contribution or other payment to any official of,
or candidate for, any federal, state, municipal, or foreign office or other person charged with similar public or quasi-public
duty in violation of any applicable law or of the character required to be disclosed in the Prospectus; (ii) no relationship,
direct or indirect, exists between or among the Company or, to the Company’s knowledge, the Subsidiaries or any affiliate
of any of them, on the one hand, and the directors, officers and stockholders of the Company or, to the Company’s knowledge,
the Subsidiaries, on the other hand, that is required by the Securities Act to be described in the Registration Statement, the
Time of Sale Prospectus and the Prospectus that is not so described; (iii) no relationship, direct or indirect, exists between
or among the Company or the Subsidiaries or any affiliate of them, on the one hand, and the directors, officers, stockholders or
directors of the Company or, to the Company’s knowledge, the Subsidiaries, on the other hand, that is required by the rules of
FINRA to be described in the Registration Statement, the Time of Sale Prospectus and the Prospectus that is not so described; (iv) there
are no material outstanding loans or advances or material guarantees of indebtedness by the Company or, to the Company’s
knowledge, the Subsidiaries to or for the benefit of any of their respective officers or directors or any of the members of the
families of any of them; and (v) the Company has not offered, or caused any placement agent to offer, Preferred Stock to any
person with the intent to influence unlawfully (A) a customer or supplier of the Company or the Subsidiaries to alter the
customer’s or supplier’s level or type of business with the Company or the Subsidiaries or (B) a trade journalist
or publication to write or publish favorable information about the Company or the Subsidiaries or any of their respective products
or services, and, (vi) neither the Company nor the Subsidiaries nor, to the Company’s knowledge, any employee or agent
of the Company or the Subsidiaries has made any payment of funds of the Company or the Subsidiaries or received or retained any
funds in violation of any law, rule or regulation (including, without limitation, the Foreign Corrupt Practices Act of 1977),
which payment, receipt or retention of funds is of a character required to be disclosed in the Registration Statement, the Time
of Sale Prospectus or the Prospectus.
(r) The
operations of the Company and the Subsidiaries are and have been conducted at all times in compliance with applicable financial
record keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions to which the Company or the Subsidiaries are subject, the rules and regulations thereunder
and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency having
jurisdiction over the Company (collectively, the “Money Laundering Laws”), except where the failure to be in
such compliance would not reasonably be expected to result in a Material Adverse Effect; and no action, suit or proceeding by or
before any court or governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect
to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(s) (i)
Neither the Company nor any Subsidiary (collectively, the “Entity”) nor, to the Company’s knowledge, any
director, officer, employee, agent, affiliate or representative of the Entity, is a government, individual, or entity (in this
paragraph (s), “Person”) that is, or is owned or controlled by a Person that is:
(A) the
subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”),
the United Nations Security Council (“UNSC”), the European Union (“EU”), Her Majesty’s
Treasury (“HMT”), or other relevant sanctions authority (collectively, “Sanctions”), nor
(B) located,
organized or resident in a country or territory that is the subject of Sanctions.
(ii) The
Entity will not, directly or indirectly, knowingly use the proceeds of the offering, or lend, contribute or otherwise make available
such proceeds to any subsidiary, joint venture partner or other Person:
(A) to
fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding
or facilitation, is the subject of Sanctions; or
(B) in
any other manner that will result in a violation of Sanctions by any Person (including any Person participating in the offering,
whether as underwriter, advisor, investor or otherwise).
(iii) The
Entity represents and covenants that, except as detailed in the Registration Statement and the Prospectus, for the past 5 years,
it has not knowingly engaged in and is not now knowingly engaged in any dealing or transactions with any Person, or in any country
or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.
(t) The
Company and the Subsidiaries own or possess adequate enforceable rights to use all patents, patent applications, trademarks (both
registered and unregistered), trade names, trademark registrations, service marks, service mark registrations, Internet domain
name registrations, copyrights, copyright registrations, licenses and know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures) (collectively, the “Intellectual Property”),
necessary for the conduct of their respective businesses as conducted as of the date hereof, except to the extent that the failure
to own or possess adequate rights to use such Intellectual Property would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company and the Subsidiaries have not received any written notice of any claim
of infringement or conflict which asserted Intellectual Property rights of others, which infringement or conflict, if the subject
of an unfavorable decision, would reasonably be expected to result in a Material Adverse Effect. There are no pending, or to the
Company’s knowledge, threatened judicial proceedings or interference proceedings challenging the Company’s or any Subsidiary’s
rights in or to or the validity of the scope of any of the Company’s or its Subsidiaries’ patents, patent applications
or proprietary information, except for such right or claim that would not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect. To the Company’s knowledge, no other entity or individual has any right or claim
in any of the Company’s or any of its Subsidiary’s patents, patent applications or any patent to be issued therefrom
by virtue of any contract, license or other agreement entered into between such entity or individual and the Company or any Subsidiary
or by any non-contractual obligation, other than by written licenses granted by the Company or any Subsidiary, except for such
right or claim that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
The Company has not received any written notice of any claim challenging the rights of the Company or its Subsidiaries in or to
any Intellectual Property owned, licensed or optioned by the Company or any Subsidiary which claim, if the subject of an unfavorable
decision, would reasonably be expected to result in a Material Adverse Effect.
(u) Neither
the execution of this Agreement by the Company, nor the issuance, offering or sale of the Shares, nor the consummation by the Company
of any of the transactions contemplated herein, nor the compliance by the Company with the terms and provisions hereof will conflict
with, or will result in a breach of, any of the terms and provisions of, or has constituted or will constitute a default under,
or has resulted in or will result in the creation or imposition of any lien, charge or encumbrance upon any property or assets
of the Company pursuant to the terms of any contract or other agreement to which the Company may be bound or to which any of the
property or assets of the Company is subject, except (i) such conflicts, breaches or defaults as may have been waived and
(ii) such conflicts, breaches and defaults that would not reasonably be expected to have a Material Adverse Effect; nor will
such action result (x) in any violation of the provisions of the organizational or governing documents of the Company, or
(y) in any material violation of the provisions of any statute or any order, rule or regulation applicable to the Company
or of any court or of any federal, state or other regulatory authority or other government body having jurisdiction over the Company,
except where such violation would not have a Material Adverse Effect.
(v) The
Company and the Subsidiaries have good and valid title in fee simple to all items of real property and good and valid title to
all personal property described in the Registration Statement, the Time of Sale Prospectus or Prospectus as being owned by them
that are material to the businesses of the Company or such Subsidiary, in each case free and clear of all liens, encumbrances and
claims, except those that (i) do not materially interfere with the use made of such property by the Company and the Subsidiaries
or (ii) would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Any real property
described in the Registration Statement, the Time of Sale Prospectus or Prospectus as being leased by the Company and the Subsidiaries
is held by them under valid, existing and enforceable leases, except those that (A) do not materially interfere with the use
made or proposed to be made of such property by the Company or the Subsidiaries or (B) would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(w) (i)(x) To
the knowledge of the Company, there has been no material security breach or other compromise of the Company’s information
technology and computer systems, networks, hardware, software, data (including the data of their respective customers, employees,
suppliers, vendors and any third party data maintained by or on behalf of them), equipment or technology used in the Company’s
business (collectively, “IT Systems and Data”) and (y) the Company has not been notified of, and has no
knowledge of any event or condition that would reasonably be expected to result in, any material security breach or other compromise
to its IT Systems and Data; (ii) the Company is presently in material compliance with all applicable laws or statutes and
all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal
policies and contractual obligations relating to the privacy and security of IT Systems and Data and to the protection of such
IT Systems and Data from unauthorized use, access, misappropriation or modification, except as would not, in the case of this clause
(ii), individually or in the aggregate, have a Material Adverse Effect; and (iii) the Company has implemented backup and disaster
recovery technology consistent with industry standards and practices.
(x) The
Company and the Subsidiaries have filed all federal, state, local and foreign tax returns which have been required to be filed
and paid all taxes shown thereon through the date hereof, to the extent that such taxes have become due and are not being contested
in good faith, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect. Except as
otherwise disclosed in or contemplated by the Registration Statement, the Time of Sale Prospectus or the Prospectus, no tax deficiency
has been determined adversely to the Company or any Subsidiary which has had, or would have, individually or in the aggregate,
a Material Adverse Effect. The Company has no knowledge of any federal, state or other governmental tax deficiency, penalty or
assessment which has been asserted or threatened against it which would reasonably be expected to have a Material Adverse Effect.
(y) The
consolidated financial statements of the Company included or incorporated by reference in the Registration Statement, the Time
of Sale Prospectus and the Prospectus, together with the related notes and schedules, present fairly, in all material respects,
the consolidated financial position of the Company and the Subsidiaries as of the dates indicated and the consolidated results
of operations, cash flows and changes in stockholders’ equity of the Company and the Subsidiaries for the periods specified
(subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material, either individually
or in the aggregate) and have been prepared in compliance in all material respects with the published requirements of the Securities
Act and Exchange Act, as applicable, and in conformity with generally accepted accounting principles in the United States (“GAAP”)
applied on a consistent basis (except (i) for such adjustments to accounting standards and practices as are noted therein
and (ii) in the case of unaudited interim financial statements, to the extent they may exclude footnotes or may be condensed
or summary statements) during the periods involved; the other financial and statistical data with respect to the Company and the
Subsidiaries contained or incorporated by reference in the Registration Statement, the Time of Sale Prospectus and the Prospectus,
are, in all material respects, accurately and fairly presented and prepared on a basis materially consistent with the financial
statements and books and records of the Company; there are no financial statements (historical or pro forma) that are required
to be included or incorporated by reference in the Registration Statement, the Time of Sale Prospectus or the Prospectus that are
not included or incorporated by reference as required; and since the date of the most recent financial statements of the Company
included or incorporated by reference in the Registration Statement, the Time of Sale Prospectus and the Prospectus, the Company
and the Subsidiaries do not have any material liabilities or obligations, direct or contingent (including any off balance sheet
obligations), not described in the Registration Statement, the Time of Sale Prospectus and the Prospectus which are required to
be described in the Registration Statement, the Time of Sale Prospectus or Prospectus; and all disclosures contained or incorporated
by reference in the Registration Statement, the Time of Sale Prospectus and the Prospectus, if any, regarding “non-GAAP financial
measures” (as such term is defined by the rules and regulations of the Commission) comply in all material respects with
Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Securities Act, to the extent applicable.
(z) Deloitte &
Touche LLP and Cherry Bekaert LLP (collectively, the “Accountants”), whose reports on the consolidated financial
statements of the Company are filed with the Commission as part of the Company’s most recent transition report on Form 10-K/T,
filed with the Commission and incorporated into the Registration Statement, are and, during the periods covered by their reports,
were independent public accountants within the meaning of the Securities Act and the Public Company Accounting Oversight Board
(United States). To the Company’s knowledge, the Accountants are not in violation of the auditor independence requirements
of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) with respect to the Company.
(aa) The
Company maintains a system of internal accounting controls designed to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
The Company is not aware of any material weaknesses in its internal control over financial reporting (other than as set forth in
the Registration Statement, the Time of Sale Prospectus or the Prospectus). Since the date of the latest audited financial statements
of the Company included or incorporated by reference in the Time of Sale Prospectus and Prospectus, there has been no change in
the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially
affect, the Company’s internal control over financial reporting (other than as set forth in the Registration Statement, the
Time of Sale Prospectus or the Prospectus). The Company has established disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15 and 15d-15) that comply with the requirements of the Exchange Act. The Company’s certifying officers
have evaluated the effectiveness of the Company’s controls and procedures as of a date within 90 days prior to the filing
date of the transition report on Form 10-K/T for the transition period ended December 28, 2019 (such date, the “Evaluation
Date”). The Company presented in its transition report on Form 10-K/T for the transition period ended December 28,
2019, the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their
evaluations as of the most recent Evaluation Date.
(bb) There
are no transactions, arrangements and other relationships between and/or among the Company, and/or, to the knowledge of the Company,
any of its affiliates and any unconsolidated entity, including, but not limited to, any structured finance, special purpose or
limited purpose entity (each, an “Off Balance Sheet Transaction”) that would affect materially the Company’s
liquidity or the availability of or requirements for its capital resources, including those Off Balance Sheet Transactions described
in the Commission’s Statement about Management’s Discussion and Analysis of Financial Conditions and Results of Operations
(Release Nos. 33-8056; 34-45321; FR-61), required to be described in the Registration Statement, the Time of Sale Prospectus or
the Prospectus which have not been described as required.
(cc) To
the knowledge of the Company, (i) each material employee benefit plan, within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”) that is maintained, administered or contributed
to by the Company or any of its affiliates for employees or former employees of the Company and the Subsidiaries has been maintained
in material compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations, including
but not limited to ERISA and the Internal Revenue Code of 1986, as amended (the “Code”); (ii) no prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred which would result
in a material liability to the Company with respect to any such plan excluding transactions effected pursuant to a statutory or
administrative exemption; and (iii) for each such plan that is subject to the funding rules of Section 412 of the
Code or Section 302 of ERISA, no “accumulated funding deficiency” as defined in Section 412 of the Code has
been incurred, whether or not waived, and the fair market value of the assets of each such plan (excluding for these purposes accrued
but unpaid contributions) equals or exceeds the present value of all benefits accrued under such plan determined using reasonable
actuarial assumptions, other than, in the case of (i), (ii) and (iii) above, as would not reasonably be expected to have
a Material Adverse Effect.
(dd) No
forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act)
(a “Forward-Looking Statement”) contained in the Registration Statement, the Time of Sale Prospectus and
the Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
(ee) Neither
the issuance, sale and delivery of the Shares nor the application of the proceeds thereof by the Company as described in the Registration
Statement, the Time of Sale Prospectus and the Prospectus will violate Regulation T, U or X of the Board of Governors of the Federal
Reserve System.
(ff) The
Company and the Subsidiaries carry, or are covered by, insurance in such amounts and covering such risks as the Company and the
Subsidiaries reasonably believe are adequate for the conduct of their business.
(gg) The
Company has not been advised, and has no reason to believe, that it and each of its Subsidiaries are not conducting business in
compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, except
where failure to be so in compliance would not reasonably be expected to result in a Material Adverse Effect.
(hh) There
is and has been no failure on the part of the Company or, to the knowledge of the Company, any of the Company’s directors
or officers, in their capacities as such, to comply in all material respects with any applicable provisions of the Sarbanes-Oxley
Act and the rules and regulations promulgated thereunder. Each of the principal executive officer and the principal financial
officer of the Company (or each former principal executive officer of the Company and each former principal financial officer of
the Company as applicable) has made all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act with respect
to all reports, schedules, forms, statements and other documents required to be filed by it or furnished by it to the Commission
during the past 12 months. For purposes of the preceding sentence, “principal executive officer” and “principal
financial officer” shall have the meanings given to such terms in the Exchange Act Rules 13a-15 and 15d-15.
(ii) All
agreements between the Company and third parties expressly referenced in the Prospectus, other than such agreements that have expired
by their terms or whose termination is disclosed in documents filed by the Company on EDGAR, are legal, valid and binding obligations
of the Company and, to the Company’s knowledge, enforceable in accordance with their respective terms, except to the extent
that (i) enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general equitable principles and (ii) the indemnification provisions of certain agreements may be
limited by federal or state securities laws or public policy considerations in respect thereof, and except for any unenforceability
that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
(jj) There
are no legal or governmental proceedings pending or, to the Company’s knowledge, threatened to which the Company or any Subsidiary
is a party or to which any of the properties of the Company or any Subsidiary is subject (i) other than proceedings accurately
described in all material respects in the Registration Statement, Time of Sale Prospectus and Prospectus and proceedings that would
not reasonably be expected to have a Material Adverse Effect, or on the power or ability of the Company to perform its obligations
under this Agreement or to consummate the transactions contemplated by the Prospectus or (ii) that are required to be described
in the Registration Statement, the Time of Sale Prospectus or the Prospectus and are not so described; and there are no statutes,
regulations, contracts or other documents that are required to be described in the Registration Statement, the Time of Sale Prospectus
or the Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed as required.
(kk) The
Company and the Subsidiaries possess or have obtained, all licenses, certificates, consents, orders, approvals, permits and other
authorizations issued by, and have made all declarations and filings with, the appropriate federal, state, local or foreign governmental
or regulatory authorities that are necessary for the ownership or lease of their respective properties or the conduct of their
respective businesses as currently conducted, as described in the Registration Statement, the Time of Sale Prospectus and the Prospectus
(the “Permits”), except where the failure to possess, obtain or make the same would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary has received written
notice of any proceeding relating to revocation or modification of any such Permit or has any reason to believe that such Permit
will not be renewed in the ordinary course, except where the revocation, modification or failure to obtain the renewal of any such
Permit would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(ll) Neither
the Company nor any Subsidiary has defaulted on any installment on indebtedness for borrowed money or on any rental on one or more
long-term leases, which defaults, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
The Company has not filed a report pursuant to Section 13(a) or 15(d) of the Exchange Act since the filing of its
last transition report on Form 10-K/T indicating that it (i) has failed to pay any dividend or sinking fund installment
on preferred stock or (ii) has defaulted on any installment on indebtedness for borrowed money or on any rental on one or
more long-term leases, which defaults, individually or in the aggregate, would reasonably be expected to have a Material Adverse
Effect.
(mm) Neither
the Company nor any Subsidiary has incurred any liability for any finder’s fees, brokerage commissions or similar payments
in connection with the transactions herein contemplated, except as may otherwise exist with respect to the Underwriters pursuant
to this Agreement.
(nn) No
labor disturbance by or dispute with employees of the Company or any Subsidiary exists or, to the knowledge of the Company, is
threatened which would reasonably be expected to result in a Material Adverse Effect.
(oo) Neither
the Company, nor any Subsidiary, nor, to the knowledge of the Company, any of their respective directors, officers or controlling
persons has taken, directly or indirectly, any action designed, or that has constituted or would reasonably be expected to cause
or result in, under the Exchange Act or otherwise, the stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares.
(pp) Neither
the Company nor any Subsidiary (i) is required to register as a “broker” or “dealer” in accordance
with the provisions of the Exchange Act or (ii) directly or indirectly, through one or more intermediaries, controls or is
a “person associated with a member” or “associated person of a member” (within the meaning set forth in
the FINRA Manual).
(qq) The
Company has not relied upon the Underwriters or legal counsel for the Underwriters for any legal, tax or accounting advice in connection
with the offering and sale of the Shares.
(rr) On
the Closing Date, all material stock transfer or other taxes (other than income taxes) which are required to be paid in connection
with the sale and transfer of the Shares to be sold hereunder will be, or will have been, fully paid or provided for by the Company
and all laws imposing such taxes will be or will have been fully complied with by the Company in all material respects.
(ss) The
interactive data in eXtensible Business Reporting Language included or incorporated by reference in the Registration Statement
fairly presents the information called for in all material respects and has been prepared in accordance with the Commission’s
rules and guidelines applicable thereto.
(tt) As
of the time of each sale of the Shares in connection with the offering when the Prospectus is not yet available to prospective
purchasers, none of (A) the Time of Sale Prospectus, (B) any free writing prospectus, when considered together with the
Time of Sale Prospectus, and (C) any individual Testing-the-Waters Communication, when considered together with the Time of
Sale Prospectus, included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state
a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made,
not misleading.
2. Agreements
to Sell and Purchase. The Company hereby agrees to sell to the several Underwriters, and each Underwriter, upon the basis of
the representations and warranties herein contained, but subject to the terms and conditions hereinafter stated, agrees, severally
and not jointly, to purchase from the Company the respective numbers of Firm Shares set forth in Schedule I hereto opposite
its name at $24.2125 a share (the “Purchase Price”).
On the basis of the representations and
warranties contained in this Agreement, and subject to its terms and conditions, the Company agrees to sell to the Underwriters
the Additional Shares, and the Underwriters shall have the right to purchase, severally and not jointly, up to 180,000 Additional
Shares at the Purchase Price, provided, however, that the amount paid by the Underwriters for any Additional Shares shall be reduced
by an amount per share equal to any dividends declared by the Company and payable on the Firm Shares but not payable on such Additional
Shares. B. Riley Securities may exercise this right on behalf of the Underwriters in whole or from time to time in part by giving
written notice not later than 30 days after the date of this Agreement. Any exercise notice shall specify the number of Additional
Shares to be purchased by the Underwriters and the date on which such shares are to be purchased. Each purchase date must be at
least one business day after the written notice is given and may not be earlier than the closing date for the Firm Shares or later
than ten business days after the date of such notice. Additional Shares may be purchased as provided in Section 4
hereof solely for the purpose of covering sales of shares in excess of the number of the Firm Shares. On each day, if any, that
Additional Shares are to be purchased (an “Option Closing Date”), each Underwriter agrees, severally and not
jointly, to purchase the number of Additional Shares (subject to such adjustments to eliminate fractional shares as B. Riley Securities
may determine) that bears the same proportion to the total number of Additional Shares to be purchased on such Option Closing Date
as the number of Firm Shares set forth in Schedule I hereto opposite the name of such Underwriter bears to the total number
of Firm Shares.
3. Terms
of Public Offering. The Company is advised by B. Riley Securities that the Underwriters propose to make a public offering of
their respective portions of the Shares as soon after the Registration Statement and this Agreement have become effective as in
B. Riley Securities’ judgment is advisable. The Company is further advised by B. Riley Securities that the Shares are to
be offered to the public initially at $25.00 a share (the “Public Offering Price”).
4. Payment
and Delivery. Payment for the Firm Shares shall be made to the Company in Federal or other funds immediately available in New
York City against delivery of such Firm Shares for the respective accounts of the several Underwriters at 10:00 a.m. New York
City time, on September 18, 2020 or at such other time on the same or such other date, not later than September 25, 2020,
as shall be designated in writing by B. Riley Securities. The time and date of such payment are hereinafter referred to as the
“Closing Date.”
Payment for any Additional Shares shall
be made to the Company in Federal or other funds immediately available in New York City against delivery of such Additional Shares
for the respective accounts of the several Underwriters at 10:00 a.m., New York City time, on the date specified in the corresponding
notice described in Section 2 or at such other time on
the same or on such other date, in any event not later than October 29, 2020, as shall be designated in writing by B. Riley
Securities.
The Firm Shares and Additional Shares shall
be registered in such names and in such denominations as B. Riley Securities shall request not later than one full business day
prior to the Closing Date or the applicable Option Closing Date, as the case may be. The Firm Shares and Additional Shares shall
be delivered to B. Riley Securities on the Closing Date or the applicable Option Closing Date, as the case may be, for the respective
accounts of the several Underwriters, with any transfer taxes payable in connection with the transfer of the Shares to the Underwriters
duly paid, against payment of the Purchase Price therefor.
5. Conditions
to the Underwriters’ Obligations. The several obligations of the Underwriters are subject to the following conditions:
(a) Subsequent
to the execution and delivery of this Agreement and prior to the Closing Date:
(i) no
order suspending the effectiveness of the Registration Statement shall be in effect, and no proceeding for such purpose or pursuant
to Section 8A under the Securities Act shall be pending before or threatened by the Commission;
(ii) there
shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the possible change, in the rating accorded any of the securities
of the Company or any of its Subsidiaries by any “nationally recognized statistical rating organization,” as such term
is defined in Section 3(a)(62) of the Exchange Act; and
(iii) there
shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations of the Company and its Subsidiaries, taken as a whole, from that set forth in the Time
of Sale Prospectus that, in B. Riley Securities’ judgment, is material and adverse and that makes it, in B. Riley Securities’
judgment, impracticable to market the Shares on the terms and in the manner contemplated in the Time of Sale Prospectus.
(b) The
Underwriters shall have received on the Closing Date a certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in Sections 5(a)(i) and
5(a)(ii) above and to the effect that the representations
and warranties of the Company contained in this Agreement are true and correct as of the Closing Date and that the Company has
complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or
before the Closing Date.
The officer signing and delivering such
certificate may rely upon the best of his or her knowledge as to proceedings threatened.
(c) The
Underwriters shall have received on the Closing Date an opinion and negative assurance letter of Troutman Pepper Hamilton Sanders
LLP, outside counsel for the Company, dated the Closing Date, in form and substance reasonably satisfactory to the Underwriters,
to the effect set forth in Exhibit A hereto.
(d) The
Underwriters shall have received on the Closing Date an opinion and negative assurance letter of Duane Morris LLP, counsel for
the Underwriters, dated the Closing Date, with respect to the due authorization and valid issuance of the Preferred Stock, the
Registration Statement, the Prospectus and other related matters as B. Riley Securities may reasonably request, and such counsel
shall have received such papers and information as they may reasonably request to enable them to pass upon such matters.
(e) The
Underwriters shall have received, on each of the date hereof and the Closing Date, a letter dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the Underwriters, from Deloitte & Touche LLP, independent
public accountants, containing statements and information of the type ordinarily included in accountants’ “comfort
letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration
Statement, the Time of Sale Prospectus and the Prospectus; provided that the letter delivered on the Closing Date shall
use a “cut-off date” not earlier than the date hereof.
(f) The
several obligations of the Underwriters to purchase Additional Shares hereunder are subject to the delivery to B. Riley Securities
on the applicable Option Closing Date of the following:
(i) a
certificate, dated the Option Closing Date and signed by an executive officer of the Company, confirming that the certificate delivered
on the Closing Date pursuant to Section 5(b) hereof remains true and correct as of such Option Closing Date;
(ii) an
opinion and negative assurance letter of Troutman Pepper Hamilton Sanders LLP, outside counsel for the Company, dated the Option
Closing Date, relating to the Additional Shares to be purchased on such Option Closing Date and otherwise to the same effect as
the opinion required by Section 5(c) hereof;
(iii) an
opinion and negative assurance letter of Duane Morris LLP, counsel for the Underwriters, dated the Option Closing Date, relating
to the Additional Shares to be purchased on such Option Closing Date and otherwise to the same effect as the opinion required by
Section 5(d) hereof;
(iv) a
letter dated the Option Closing Date, in form and substance satisfactory to the Underwriters, from Deloitte & Touche LLP,
independent public accountants, substantially in the same form and substance as the letter furnished to the Underwriters pursuant
to Section 5(e) hereof; provided that the letter delivered on the Option Closing Date shall use a “cut-off
date” not earlier than two business days prior to such Option Closing Date; and
(v) such
other documents as B. Riley Securities may reasonably request with respect to the good standing of the Company, the due authorization
and issuance of the Additional Shares to be sold on such Option Closing Date and other matters related to the issuance of such
Additional Shares.
6. Covenants
of the Company. The Company covenants with each Underwriter as follows:
(a) Prior
to the Closing Date, the Board of Directors of the Company shall adopt the COD and establishing the rights, preferences and entitlements
thereof, which shall conform in all material respects to the description thereof in the Registration Statement, the Time of Sale
Prospectus and the Prospectus. The Company shall file such COD with the Secretary of State of the State of Delaware, accompanied
by all fees required to be paid therewith, and cause the COD to become effective on or prior to the Closing Date.
(b) To
furnish to B. Riley Securities, without charge, eight (8) signed copies of the Registration Statement (including exhibits
thereto and documents incorporated by reference) and for delivery to each other Underwriter a conformed copy of the Registration
Statement (without exhibits thereto but including documents incorporated by reference) and to furnish to B. Riley Securities in
New York City, without charge, prior to 10:00 a.m. New York City time on the business day next succeeding the date of
this Agreement and during the period mentioned in Section 6(e) or
6(f) below, as many copies of the Time of Sale Prospectus,
the Prospectus, any documents incorporated by reference therein and any supplements and amendments thereto or to the Registration
Statement as B. Riley Securities may reasonably request.
(c) Before
amending or supplementing the Registration Statement, the Time of Sale Prospectus or the Prospectus, to furnish to B. Riley Securities
a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which B. Riley
Securities reasonably objects, and to file with the Commission within the applicable period specified in Rule 424(b) under
the Securities Act any prospectus required to be filed pursuant to such Rule.
(d) To
furnish to B. Riley Securities a copy of each proposed free writing prospectus to be prepared by or on behalf of, used by, or referred
to by the Company and not to use or refer to any proposed free writing prospectus to which B. Riley Securities reasonably objects.
(e) Not
to take any action that would result in an Underwriter or the Company being required to file with the Commission pursuant to Rule 433(d) under
the Securities Act a free writing prospectus prepared by or on behalf of the Underwriter that the Underwriter otherwise would not
have been required to file thereunder.
(f) If
the Time of Sale Prospectus is being used to solicit offers to buy the Shares at a time when the Prospectus is not yet available
to prospective purchasers and any event shall occur or condition exist as a result of which it is necessary to amend or supplement
the Time of Sale Prospectus in order to make the statements therein, in the light of the circumstances, not misleading, or if any
event shall occur or condition exist as a result of which the Time of Sale Prospectus conflicts with the information contained
in the Registration Statement then on file, or if, in the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Time of Sale Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish,
at its own expense, to the Underwriters and to any dealer upon request, either amendments or supplements to the Time of Sale Prospectus
so that the statements in the Time of Sale Prospectus as so amended or supplemented will not, in the light of the circumstances
when the Time of Sale Prospectus is delivered to a prospective purchaser, be misleading or so that the Time of Sale Prospectus,
as amended or supplemented, will no longer conflict with the Registration Statement, or so that the Time of Sale Prospectus, as
amended or supplemented, will comply with applicable law.
(g) If,
during such period after the first date of the public offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is required by law to
be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist as a result of which
it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances
when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is delivered to
a purchaser, not misleading, or if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the
Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses B. Riley Securities will furnish to the Company) to which Shares may
have been sold by B. Riley Securities on behalf of the Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of
the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act)
is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with applicable law.
(h) To
endeavor to qualify the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as B. Riley Securities
shall reasonably request.
(i) To
make generally available to the Company’s security holders and to B. Riley Securities as soon as practicable an earnings
statement covering a period of at least twelve months beginning with the first fiscal quarter of the Company occurring after the
date of this Agreement which shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder.
(j) Whether
or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid
all expenses incident to the performance of its obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company’s counsel and the Company’s accountants in connection with the registration and delivery of
the Shares under the Securities Act and all other fees or expenses in connection with the preparation and filing of the Registration
Statement, any preliminary prospectus, the Time of Sale Prospectus, the Prospectus, any free writing prospectus prepared by or
on behalf of, used by, or referred to by the Company and amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies thereof to the Underwriters and dealers, in the quantities
hereinabove specified, (ii) all costs and expenses related to the transfer and delivery of the Shares to the Underwriters,
including any transfer or other taxes payable thereon, (iii) the reasonable cost of printing or producing any Blue Sky or
Legal Investment memorandum in connection with the offer and sale of the Shares under state securities laws and all expenses in
connection with the qualification of the Shares for offer and sale under state securities laws as provided in Section 6(g) hereof,
including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection with such qualification
and in connection with the Blue Sky or Legal Investment memorandum, (iv) all filing fees and the reasonable fees and disbursements
of counsel to the Underwriters incurred in connection with the review and qualification of the offering of the Shares by the Financial
Industry Regulatory Authority, (v) all costs and expenses incident to listing the Shares on the Exchange, (vi) the cost
of printing certificates representing the Shares, (vii) the costs and charges of any transfer agent, registrar or depositary,
(viii) the costs and expenses of the Company relating to investor presentations on any “road show” undertaken
in connection with the marketing of the offering of the Shares, including, without limitation, expenses associated with the preparation
or dissemination of any electronic road show, expenses associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel
and lodging expenses of the representatives and officers of the Company and any such consultants, (ix) the document production
charges and expenses associated with printing this Agreement; and (x) all other costs and expenses incident to the performance
of the obligations of the Company hereunder for which provision is not otherwise made in this Section; provided, however, the aggregate
amount of fees and disbursements to counsel for the Underwriters to be paid by the Company pursuant to clause (iii) and clause
(iv) of this Section 6(i), when taken together, shall not exceed $10,000. It is understood, however, that except as provided
in this Section, Section 8 entitled “Indemnity and Contribution” and the last paragraph of Section 10 below,
the Underwriters will pay all of their costs and expenses, stock transfer taxes payable on resale of any of the Shares by them
and any advertising expenses connected with any offers they may make.
(k) The
Company also covenants with each Underwriter that, without the prior written consent of B. Riley Securities on behalf of the Underwriters,
it will not, and will not publicly disclose an intention to, during the period ending 60 days after the date of the Prospectus
(the “Restricted Period”), (1) 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 shares of Preferred Stock or any securities convertible into or exercisable or exchangeable for
Preferred Stock, or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Preferred Stock, whether any such transaction described in clause 1 or 2 above is
to be settled by delivery of Preferred Stock or such other securities, in cash or otherwise or (3) file any registration statement
with the Commission relating to the offering of any shares of Preferred Stock or any securities convertible into or exercisable
or exchangeable for Preferred Stock. The restrictions contained in the foregoing sentence shall not apply to the Shares to be sold
hereunder.
7. Covenants
of the Underwriters. Each Underwriter, severally and not jointly, covenants with the Company not to take any action that would
result in the Company being required to file with the Commission under Rule 433(d) a free writing prospectus prepared
by or on behalf of such Underwriter that otherwise would not be required to be filed by the Company thereunder, but for the action
of the Underwriter.
8. Indemnity
and Contribution. (a) The Company agrees to indemnify and hold harmless each Underwriter, each person, if any, who controls
any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and each
affiliate of any Underwriter within the meaning of Rule 405 under the Securities Act from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) that arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any amendment thereof, any preliminary prospectus, the
Time of Sale Prospectus or any amendment or supplement thereto, any issuer free writing prospectus as defined in Rule 433(h) under
the Securities Act, any Company information that the Company has filed, or is required to file, pursuant to Rule 433(d) under
the Securities Act, any “road show” as defined in Rule 433(h) under the Securities Act (a “road show”),
the Prospectus or any amendment or supplement thereto, or any Testing-the-Waters Communication, or arise out of, or are based upon,
any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any such
untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information
relating to any Underwriter furnished to the Company in writing by such Underwriter through B. Riley Securities expressly for use
therein, it being understood and agreed that the only such information furnished by the Underwriters through B. Riley Securities
consists of the information described as such in paragraph (b) below.
(b) Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Underwriter,
but only with reference to information relating to such Underwriter furnished to the Company in writing by such Underwriter through
B. Riley Securities expressly for use in the Registration Statement, any preliminary prospectus, the Time of Sale Prospectus, any
issuer free writing prospectus, road show, or the Prospectus or any amendment or supplement thereto, which information consists
solely of: the information contained in paragraphs three (relating to the terms of the offering by the Underwriters), nine and
ten (relating to stabilizing transactions, short positions, and penalty bids), eleven (relating to conflicts of interests), and
twelve (Underwriters’ services) under the section titled “Underwriting (Conflicts of Interest)”.
(c) In
case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity
may be sought pursuant to Section 8(a) or 8(b),
such person (the “indemnified party”) shall promptly notify the person against whom such indemnity may be sought
(the “indemnifying party”) in writing and the indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying
party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect
of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified
parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing
by B. Riley Securities, in the case of parties indemnified pursuant to Section 8(a),
and by the Company, in the case of parties indemnified pursuant to Section 8(b).
The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled
with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered
into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying
party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To
the extent the indemnification provided for in Section 8(a) or
8(b) is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph,
in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the other hand from the offering of the Shares or (ii) if
the allocation provided by clause 8(d)(i) above
is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to
in clause 8(d)(i) above but also the relative fault
of the Company on the one hand and of the Underwriters on the other hand in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other hand in connection with the offering of the Shares shall be deemed
to be in the same respective proportions as the net proceeds from the offering of the Shares (before deducting expenses) received
by the Company and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in
the table on the cover of the Prospectus, bear to the aggregate Public Offering Price of the Shares. The relative fault of the
Company on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates
to information supplied by the Company or by the Underwriters and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Underwriters’ respective obligations to contribute
pursuant to this Section 8 are several in proportion
to the respective number of Shares they have purchased hereunder, and not joint.
(e) Without
limitation and in addition to its obligation under the other subsections of this Section 8,
the Company agrees to indemnify and hold harmless Incapital, in its capacity as the QIU, its affiliates, directors, officers, employees,
agents and each person, if any, who controls the QIU within the meaning of the Securities Act or the Exchange Act from and against
any loss, claim, damage, liabilities or expense, as incurred, arising out of or based upon the QIU’s acting as a “qualified
independent underwriter” (within the meaning of Rule 5121 of the FINRA’s Securities Offering and Trading Standards
and Practices Rules) in connection with the offering contemplated by this Agreement, and agrees to reimburse each such indemnified
party for any legal or other expense reasonably incurred by them in connection with investigating, defending, settling, compromising
or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or expense results from the gross negligence or willful
misconduct of the QIU.
(f) The
Company and the Underwriters agree that it would not be just or equitable if contribution pursuant to this Section 8
were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable considerations referred to in Section 8(d).
The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in Section 8(d) shall
be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8,
no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 8
are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or
in equity.
(g) The
indemnity and contribution provisions contained in this Section 8
and the representations, warranties and other statements of the Company contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter, any person controlling any Underwriter or any affiliate of any Underwriter or by or on behalf of the Company,
its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Shares.
9. Termination.
The Underwriters may terminate this Agreement by notice given by B. Riley Securities to the Company, if after the execution and
delivery of this Agreement and prior to or on the Closing Date or any Option Closing Date, as the case may be, (i) trading
generally shall have been suspended or materially limited on, or by, as the case may be, any of the New York Stock Exchange, the
NYSE American, the NASDAQ Global Market, the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago
Board of Trade, (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a material disruption in securities settlement, payment or clearance services in the United States shall have
occurred, (iv) any moratorium on commercial banking activities shall have been declared by Federal or New York State authorities
or (v) there shall have occurred any outbreak or escalation of hostilities, or any change in financial markets or any calamity
or crisis that, in B. Riley Securities judgment, is material and adverse and which, singly or together with any other event specified
in this clause (v), makes it, in B. Riley Securities’ judgment, impracticable or inadvisable to proceed with the offer,
sale or delivery of the Shares on the terms and in the manner contemplated in the Time of Sale Prospectus or the Prospectus.
10. Effectiveness;
Defaulting Underwriters. This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing
Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase Shares that it has or they have
agreed to purchase hereunder on such date, and the aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of the Shares to be purchased on such
date, the other Underwriters shall be obligated severally in the proportions that the number of Firm Shares set forth opposite
their respective names in Schedule I bears to the aggregate number of Firm Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as B. Riley Securities may specify, to purchase the Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event
shall the number of Shares that any Underwriter has agreed to purchase pursuant to this Agreement be increased pursuant to this
Section 10 by an amount in excess of one-ninth of such
number of Shares without the written consent of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares with respect to which such default occurs is more
than one-tenth of the aggregate number of Firm Shares to be purchased on such date, and arrangements satisfactory to B. Riley Securities
and the Company for the purchase of such Firm Shares are not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter or the Company. In any such case either B. Riley Securities or
the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement, in the Time of Sale Prospectus, in the Prospectus or in any other documents or
arrangements may be effected. If, on an Option Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Additional
Shares and the aggregate number of Additional Shares with respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased on such Option Closing Date, the non-defaulting Underwriters shall have the option
to (i) terminate their obligation hereunder to purchase the Additional Shares to be sold on such Option Closing Date or (ii) purchase
not less than the number of Additional Shares that such non-defaulting Underwriters would have been obligated to purchase in the
absence of such default. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by
the Underwriters, or any of them, because of any failure or refusal on the part of the Company to comply with the terms or to fulfill
any of the conditions of this Agreement, or if for any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the fees and disbursements of their counsel) reasonably incurred
by such Underwriters in connection with this Agreement or the offering contemplated hereunder.
11. Entire
Agreement. (a) This Agreement, together with any contemporaneous written agreements and any prior written agreements (to
the extent not superseded by this Agreement) that relate to the offering of the Shares, represents the entire agreement between
the Company and the Underwriters with respect to the preparation of any preliminary prospectus, the Time of Sale Prospectus, the
Prospectus, the conduct of the offering, and the purchase and sale of the Shares.
(b) The
Company acknowledges that in connection with the offering of the Shares: (i) the Underwriters have acted at arms length, are
not agents of, and owe no fiduciary duties to, the Company or any other person, (ii) the Underwriters owe the Company only
those duties and obligations set forth in this Agreement, any contemporaneous written agreements and prior written agreements (to
the extent not superseded by this Agreement), if any, and (iii) the Underwriters may have interests that differ from those
of the Company. The Company waives to the full extent permitted by applicable law any claims it may have against the Underwriters
arising from an alleged breach of fiduciary duty in connection with the offering of the Shares.
12. Recognition
of the U.S. Special Resolution Regimes. (a) In the event that any Underwriter that is a Covered Entity becomes subject
to a proceeding under a U.S. Special Resolution Regime, the transfer from such Underwriter of this Agreement, and any interest
and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S.
Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States
or a state of the United States.
(b) In
the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding
under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Underwriter are
permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime
if this Agreement were governed by the laws of the United States or a state of the United States.
For purposes of this Section a “BHC
Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance
with, 12 U.S.C. § 1841(k). “Covered Entity” means any of the following: (i) a “covered entity”
as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank”
as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI”
as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b). “Default Right” has
the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1,
as applicable. “U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and
the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act
and the regulations promulgated thereunder.
13. Counterparts.
This Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. Counterparts may be delivered via facsimile, electronic mail (including any electronic
signature complying with the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act or other applicable law, e.g.,
www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered
and be valid and effective for all purposes.
14. Applicable
Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.
15. Headings.
The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
16. Notices.
All communications hereunder shall be in writing and effective only upon receipt and if to the Underwriters shall be delivered,
mailed or sent to B. Riley Securities at 299 Park Avenue, 21st Floor, New York, New York 10171, Attention: General
Counsel; and if to the Company shall be delivered, mailed or sent to 2387 Liberty Way, Virginia Beach, Virginia 23456.
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Very truly yours,
FRANCHISE GROUP, INC.
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By:
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/s/ Andrew F. Kaminsky
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Name:
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Andrew F. Kaminsky
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Title:
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Executive Vice President and Chief Administrative Officer
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Accepted as of the date hereof
B. RILEY SECURITIES, INC.
Acting on behalf of themselves and the
several Underwriters named in
Schedule I hereto.
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By:
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/s/ Patrice McNicoll
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Name:
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Patrice McNicoll
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Title:
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Co-Head of Investment Banking
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Schedule I
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Underwriter
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Number of Firm Shares
To Be Purchased
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B. Riley Securities, Inc.
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237,000
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Incapital LLC
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243,000
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D.A. Davidson & Co.
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306,000
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Janney Montgomery Scott LLC
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87,000
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Ladenburg Thalmann & Co. Inc.
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30,000
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National Securities Corporation
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168,000
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Aegis Capital Corp.
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129,000
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Total:
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1,200,000
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Schedule II
Time of Sale Prospectus
Time of Sale: 5:05 pm New York City time, on September 15,
2020
Issuer Free Writing Prospectus
Filed pursuant to Rule 433
Registration No. 333-236211
FRANCHISE GROUP, INC.
Shares of 7.50% Series A Cumulative Perpetual Preferred Stock
(Liquidation Amount of $25.00 Per Share)
Final Term Sheet
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Issuer:
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Franchise Group, Inc.
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Securities:
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7.50% Series A Cumulative Perpetual Preferred Stock (the “Series A Preferred Stock”)
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Number of Shares:
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1,200,000 Shares of Series A Preferred Stock
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Option to Purchase Additional Shares:
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Up to 180,000 Shares Series A Preferred Stock
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Trade Date:
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September 16, 2020
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Settlement Date:
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September 18, 2020
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Listing:
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Expected NASDAQ “FRGAP”
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Size:
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$30,000,000
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Option:
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Up to $4,500,000
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Maturity Date:
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Perpetual (unless redeemed by us on or after September 18, 2025 or in connection with a Change of Control or Delisting Event).
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Rating:
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The Series A Preferred Stock will not be rated.
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Dividend Rate (Cumulative):
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We will pay cumulative cash dividends on the Series A Preferred Stock, when and as declared by our Board of Directors, at the rate of 7.50% of the $25.00 liquidation preference per year, equivalent to $1.875.
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Dividend Payment Dates:
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Dividends will be payable quarterly in arrears, on or about the 15th day of January, April, July and October, beginning on or about October 15, 2020; provided that if any dividend payment date is not a business day, then the dividend which would otherwise have been payable on that dividend payment date may be paid on the next succeeding business day, and no interest, additional dividends or other sums will accumulate. Dividends will accumulate and be cumulative from, and including, the date of original issuance, which is expected to be September 18, 2020. The first dividend, which is scheduled to be paid on or about October 15, 2020 in the amount of $0.140625 per share, will be for less than a full quarter and will cover the period from, and including, the first date we issue and sell the Series A Preferred Stock through, but not including, October 15, 2020.
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Price to the Public:
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100%
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Day Count:
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30/360
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Liquidation Preference:
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The liquidation preference of each share of Series A Preferred Stock is $25.00. Upon liquidation, holders of Series A Preferred Stock will be entitled to receive the liquidation preference with respect to their shares of Series A Preferred Stock plus an amount equal to accumulated but unpaid dividends with respect to such shares.
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Optional Redemption:
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Series A Preferred Stock is not redeemable by us prior to the fifth anniversary of the issue date. After the fifth anniversary of the issue date, we may redeem the Series A Preferred Stock, in whole or from time to time in part, for cash at a redemption price equivalent to $25.00 per share, plus accumulated and unpaid dividends to, but not including, the redemption date.
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Special Optional Redemption Upon a
Change of Control or Delisting Event:
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Special optional redemption by the Company upon a Change of Control or Delisting Event, in whole or in part, for $25.00 per share, plus accrued but unpaid dividends, to, but not including, the redemption date (the “Redemption Right”). The circumstances that will constitute a “Change of Control” and a “Delisting Event” will be set forth in the documents governing the Series A Preferred Stock.
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Special Conversion Right Upon a Change
of Control or Delisting Event:
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Upon the occurrence of a Change of Control or Delisting Event, in the event the Company does not exercise the Redemption Right, holders of the Series A Preferred Stock will have the right to convert some or all of the Series A Preferred Stock held by such holder into a number of common shares at a predetermined ratio.
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DRD/QDI Eligible:
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Yes
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Minimum Denomination / Multiples:
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$25.00/$25.00
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CUSIP/ISIN:
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35180X 204 / US35180X2045
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Book-Running Managers:
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B. Riley Securities, Inc., Incapital LLC, D.A. Davidson & Co., Janney Montgomery Scott LLC, Ladenburg Thalmann & Co. Inc., National Securities Corporation and Aegis Capital Corp.
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Conflict of Interest:
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B. Riley Securities, Inc. has a “conflict of interest” in this offering within the meaning of FINRA Rule 5121, and this offering will be conducted in compliance with Rule 5121. This rule requires that a “qualified independent underwriter” meeting certain standards participate in the preparation of the registration statement, the prospectus supplement and the accompanying base prospectus and exercise the usual standards of due diligence with respect thereto. Incapital LLC has assumed the responsibilities of acting as a “qualified independent underwriter” within the meaning of Rule 5121 in connection with this offering. In addition, B. Riley Securities, Inc. and its affiliates have performed investment banking, commercial banking and advisory services for us from time to time for which they have received customary fees and expenses. B. Riley Securities, Inc. may, from time to time in the future, engage in transactions with and perform services for us in the ordinary course of business. Affiliates of B. Riley Securities, Inc. participate in our credit facilities. As a result, such affiliates may receive a portion of the net proceeds of this offering through the repayment of any borrowings under such facilities if we decide to pay down such indebtedness.
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This communication is intended for the
sole use of the person to whom it is provided by the issuer.
The issuer has filed a registration statement
(including a base prospectus dated June 22, 2020) and a preliminary prospectus supplement dated September 15, 2020 with
the Securities and Exchange Commission (“SEC”) for the offering to which this communication relates. Before you invest,
you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete
information about the issuer and this offering.
You may get these documents for free
by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating
in the offering will arrange to send you the prospectus and related preliminary prospectus supplement if you request them from
B. Riley Securities at 1300 17th Street, Suite 1300, Arlington, VA 22209, or by calling (703) 312-9580, or by emailing
prospectuses@brileyfin.com.
ANY DISCLAIMERS OR OTHER NOTICES THAT
MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND SHOULD BE DISREGARDED. SUCH DISCLAIMERS OR OTHER NOTICES WERE
AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER E-MAIL SYSTEM.
Schedule III
Subsidiaries
1. Franchise
Group New Holdco, LLC
2. American
Freight, LLC
3. Vitamin
Shoppe Industries LLC
4. Vitamin
Shoppe Procurement Services, LLC
5. American
Freight Outlet Stores, LLC (fka Sears Outlet Stores, L.L.C.)
6. Buddy's
Newco, LLC
7. Buddy's
Franchising and Licensing, LLC
8. JTH
Tax LLC
9. Wefile
LLC
10. JTH
Financial, LLC
11. Liberty
Tax Service, Inc. Canada
exhibit
a
opinion
of company counsel
[To
be provided under separate cover]
Exhibit 3.1
CERTIFICATE OF DESIGNATION
OF
7.50% SERIES A CUMULATIVE PERPETUAL PREFERRED
STOCK
OF
FRANCHISE GROUP, INC.
Pursuant to the General Corporation Law
of the State of Delaware
Franchise Group, Inc.,
a Delaware corporation (the “Corporation”), hereby certifies, that pursuant to the authority expressly vested
in the Board of Directors of the Corporation (the “Board”) by the Second Amended and Restated Certificate of
Incorporation of the Corporation (as amended, restated or otherwise modified from time to time, the “Certificate of Incorporation”),
the Board has duly adopted the following resolutions.
RESOLVED, that, pursuant
to Section 1 of Article IV of the Certificate of Incorporation (which authorizes a total of 20,000,000 shares of preferred
stock, $0.01 par value per share (the “Preferred Stock”)), and the authority vested in the Board pursuant to
Section 3 of Article IV of the Certificate of Incorporation, a series of Preferred Stock to be known as the “7.50%
Series A Cumulative Perpetual Preferred Stock” be, and it hereby
is, created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative,
participating, optional or other rights, and the qualifications, limitations and restrictions thereof are as set forth in the Certificate
of Incorporation and this Certificate of Designation (as amended, restated or otherwise modified from time to time, this “Certificate
of Designation”) as set forth on Exhibit A hereto.
IN WITNESS WHEREOF,
this Certificate of Designation is executed on behalf of the Corporation by its Chief Financial Officer this 18th day
of September, 2020.
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By:
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/s/ Eric Seeton
|
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Name: Eric Seeton
|
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Title: Chief Financial Officer
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EXHIBIT A
TO
CERTIFICATE OF DESIGNATION
OF
7.50% SERIES A CUMULATIVE PERPETUAL
PREFERRED STOCK
OF
FRANCHISE GROUP, INC.
Section 1.
Designation and Number. The designation of the series of preferred stock shall be 7.50% Series A Cumulative
Perpetual Preferred Stock (hereinafter referred to as the “Series A Preferred Stock”). Each share of Series A
Preferred Stock shall be identical in all respects to every other share of Series A Preferred Stock. The number of authorized
shares of Series A Preferred Stock shall be 1,380,000. Such number may from time to time be increased (but not in excess of
the total number of authorized shares of preferred stock) or decreased (but not below the number of shares of Series A Preferred
Stock then outstanding) by further resolution duly adopted by the Board of Directors of the Corporation or any duly authorized
committee of the Board of Directors of the Corporation and by the filing of a certificate pursuant to the provisions of the Delaware
General Corporation Law stating that such increase or reduction, as the case may be, has been so authorized. The Corporation shall
have the authority to issue fractional shares of Series A Preferred Stock.
Section 2.
Rank. The Series A Preferred Stock will, as to dividend rights
and rights upon our liquidation, dissolution or winding-up, rank (1) senior to all classes or series of our common stock and
to all other equity securities issued by us expressly designated as ranking junior to the Series A Preferred Stock, (2) on
parity with any future class or series of our equity securities expressly designated as ranking on parity with the Series A
Preferred Stock; (3) junior to all equity securities issued by us with terms specifically providing that those equity securities
rank senior to the Series A Preferred Stock with respect to the payment of dividends and the distribution of assets upon our
liquidation, dissolution or winding up; and (4) effectively junior to all our existing and future indebtedness (including
indebtedness convertible into our common stock or preferred stock) and to the indebtedness and other liabilities of (as well as
any preferred equity interests held by others in) our existing or future subsidiaries.
Section 3.
Dividends.
(a) Subject
to the preferential rights of the holders of any class or series of capital stock of the Corporation ranking senior to the Series A
Preferred Stock as to dividend rights, the holders of shares of the Series A Preferred Stock shall be entitled to receive,
when, as and if authorized by the Board of Directors and declared by the Corporation, out of funds legally available for the payment
of dividends, cumulative cash dividends at the rate of 7.50% per annum of the $25.00
liquidation preference per share of the Series A Preferred Stock. Such dividends shall accrue and be cumulative from and including
the first date on which any shares of Series A Preferred Stock are issued (the “Original Issue Date”),
or, if later, the most recent Dividend Payment Date (as defined below) to which dividends have been paid in full (or declared and
the corresponding Dividend Record Date (as defined below) for determining stockholders entitled to payment thereof has passed),
and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on or about October 15,
2020; provided, however,
that if any Dividend Payment Date is not a Business Day (as defined below), then the dividend which would otherwise have been payable
on such Dividend Payment Date may be paid, at the Corporation’s option, on either the immediately preceding Business Day
or the next succeeding Business Day, except that, if such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same force and effect as if paid on such Dividend Payment
Date, and no interest or additional dividends or other sums shall accrue on the amount so payable from such Dividend Payment Date
to such next succeeding Business Day; provided, further,
that no dividends shall accrue on any share of Series A Preferred Stock for any Dividend Period (as defined below) having
a Dividend Record Date (as defined below) before the date such share of Series A Preferred Stock was issued. The amount of
any dividend payable on the Series A Preferred Stock for any period greater or less than a full Dividend Period shall be prorated
and computed on the basis of a 360-day year consisting of twelve 30-day months.
Dividends will be payable to holders of record as they appear in the stockholder records of the Corporation at the close of business
on the applicable Dividend Record Date. Notwithstanding any provision to the contrary contained herein, each holder of an outstanding
share of Series A Preferred Stock shall be entitled to receive a dividend with respect to any Dividend Record Date equal to
the dividend paid with respect to each other share of Series A Preferred Stock that is outstanding on such date. “Dividend
Record Date” shall mean the date designated by the Board of Directors for the payment
of dividends that is not more than 30 or fewer than 10 days prior to the applicable Dividend Payment Date. “Dividend
Payment Date” shall mean the 15th calendar day of each January,
April, July and October commencing on October 15,
2020. “Dividend Period” shall mean the respective periods commencing
on the 15th day of January, April, July and October of each year
and ending on and including the day preceding the first day of the next succeeding Dividend Period (other than the initial Dividend
Period, which shall commence on the Original Issue Date and end on but exclude October 15,
2020, and other than the Dividend Period during which any shares of Series A Preferred Stock shall be redeemed pursuant to
Section 5 or Section 6 hereof, which shall end on and include the day preceding the redemption date with respect to the
shares of Series A Preferred Stock being redeemed).
The term “Business
Day” shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking
institutions in New York City are authorized or required by law, regulation or executive order to close.
(b) Notwithstanding
anything contained herein to the contrary, dividends on the Series A Preferred Stock shall accrue whether or not the Corporation
has earnings, whether or not there are funds legally available for the payment of such dividends, and whether or not such dividends
are authorized or declared.
(c) Except as provided in Section 3(d) or
3(f) below, no dividends shall be declared and paid or declared and set apart for payment, and no other distribution of cash
or other property may be declared and made, directly or indirectly, on or with respect to any shares of Common Stock or shares
of any other class or series of capital stock of the Corporation ranking, as to dividends, on parity with or junior to the Series A
Preferred Stock for any period, nor shall any shares of Common Stock or any other shares of any other class or series of capital
stock of the Corporation ranking, as to payment of dividends and the distribution of assets upon the Corporation’s liquidation,
dissolution or winding up, on parity with or junior to the Series A Preferred Stock be redeemed, purchased or otherwise acquired
for any consideration, nor shall any funds be paid or made available for a sinking fund for the redemption of such shares, and
no other distribution of cash or other property may be made, directly or indirectly, on or with respect thereto by the Corporation,
unless full cumulative dividends on the Series A Preferred Stock for all past Dividend Periods shall have been or contemporaneously
are (i) declared and paid or (ii) declared and a sum sufficient for the payment thereof is set apart for such payment.
(d) Except as
provided in Section 3(f) below, when dividends are not paid in full (or declared and a sum sufficient for such full payment
is not so set apart) on the Series A Preferred Stock and the shares of any other class or series of capital stock ranking,
as to dividends, on parity with the Series A Preferred Stock, all dividends declared upon the Series A Preferred Stock
and each such other class or series of capital stock ranking, as to dividends, on parity with the Series A Preferred Stock
(which, for the avoidance of doubt, shall not include the redemption or repurchase of shares of any such class or series) shall
be declared pro rata so that the amount of dividends declared per share of Series A Preferred Stock and such other
class or series of capital stock shall in all cases bear to each other the same ratio that accrued dividends per share on the Series A
Preferred Stock and such other class or series of capital stock (which shall not include any accrual in respect of unpaid dividends
on such other class or series of capital stock for prior Dividend Periods if such other class or series of capital stock does not
have a cumulative dividend) bear to each other. No interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the Series A Preferred Stock which may be in arrears.
(e) Holders of
shares of Series A Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or shares of capital
stock, in excess of full cumulative dividends on the Series A Preferred Stock as provided herein. Any dividend payment made
on the Series A Preferred Stock shall first be credited against the earliest accrued but unpaid dividends due with respect
to such shares which remain payable. Accrued but unpaid dividends on the Series A Preferred Stock will accrue as of the Dividend
Payment Date on which they first become payable.
(f) Notwithstanding
the provisions of this Section 3 or Sections 5 or 6 and regardless of whether dividends are paid in full (or declared and
a sum sufficient for such full payment is not so set apart) on the Series A Preferred Stock or the shares of any other class
or series of capital stock ranking, as to dividends, on parity with the Series A Preferred Stock for any or all Dividend
Periods, the Corporation shall not be prohibited or limited from (i) paying dividends on any shares of stock of the Corporation
in shares of Common Stock or in shares of any other class or series of capital stock ranking junior to the Series A Preferred
Stock as to payment of dividends and the distribution of assets upon the Corporation’s liquidation, dissolution and winding
up, (ii) converting or exchanging any shares of stock of the Corporation for shares of any other class or series of capital
stock of the Corporation ranking junior to the Series A Preferred Stock as to payment of dividends and the distribution of
assets upon the Corporation’s liquidation, dissolution and winding up, or (iii) purchasing or acquiring shares of Series A
Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series A
Preferred Stock.
Section 4.
Liquidation Preference.
(a) Upon
any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, before any distribution or payment shall
be made to holders of shares of Common Stock or any other class or series of capital stock of the Corporation ranking, as to rights
upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, junior to the Series A Preferred
Stock, the holders of shares of Series A Preferred Stock shall be entitled to be paid out of the assets of the Corporation
legally available for distribution to its stockholders, after payment of or provision for the debts and other liabilities of the
Corporation and any class or series of capital stock of the Corporation ranking, as to rights upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, senior to the Series A Preferred Stock, a liquidation preference
of $25.00 per share, plus an amount equal to any accrued and unpaid dividends (whether or not authorized or declared) up to but
excluding the date of payment. In the event that, upon such voluntary or involuntary liquidation, dissolution or winding up, the
available assets of the Corporation are insufficient to pay the full amount of the liquidating distributions on all outstanding
shares of Series A Preferred Stock and the corresponding amounts payable on all shares of other classes or series of capital
stock of the Corporation ranking, as to rights upon the Corporation’s liquidation, dissolution or winding up, on parity with
the Series A Preferred Stock in the distribution of assets, then the holders of the Series A Preferred Stock and each
such other class or series of capital stock ranking, as to rights upon any voluntary or involuntary liquidation, dissolution or
winding up, on parity with the Series A Preferred Stock shall share ratably in any such distribution of assets in proportion
to the full liquidating distributions to which they would otherwise be respectively entitled. Written notice of any such voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, stating the payment date or dates when, and the place
or places where, the amounts distributable in such circumstances shall be payable, shall be given not fewer than 30 or more than
60 days prior to the payment date stated therein, to each record holder of shares of Series A Preferred Stock at the respective
addresses of such holders as the same shall appear on the stock transfer records of the Corporation. After payment of the full
amount of the liquidating distributions to which they are entitled, the holders of Series A Preferred Stock will have no right
or claim to any of the remaining assets of the Corporation. The consolidation, merger or conversion of the Corporation with
or into any other corporation, trust or entity, or the voluntary sale, lease, transfer or conveyance of all or substantially all
of the property or business of the Corporation, shall not be deemed to constitute a liquidation, dissolution or winding up of the
Corporation.
(b) In determining
whether a distribution (other than upon voluntary or involuntary liquidation), by dividend, redemption or other acquisition of
shares of capital stock of the Corporation or otherwise, is permitted under the Delaware General Corporation Law, amounts that
would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon
dissolution of holders of shares of Series A Preferred Stock shall not be added to the Corporation’s total liabilities.
Section 5. Redemption.
(a) Shares of
Series A Preferred Stock shall not be redeemable prior to September 18, 2025 except as set forth in Section 6 hereof.
(b) On or after
September 18, 2025, the Corporation, at its option, upon notice in accordance with Section 5(d), may redeem the Series A
Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus,
subject to Section 5(e), all accrued and unpaid dividends (whether or not authorized or declared) thereon up to but not including
the date fixed for redemption, without interest, to the extent the Corporation has funds legally available therefor (the “Redemption
Right”). If fewer than all of the outstanding shares of Series A Preferred Stock are to be redeemed pursuant to
this Section 5(b), the shares of Series A Preferred Stock to be redeemed shall be redeemed pro rata (as nearly as may
be practicable without creating fractional shares) or by lot as determined by the Corporation. Holders of Series A Preferred
Stock to be redeemed shall surrender such Series A Preferred Stock at the place, or in accordance with the book-entry procedures,
designated in such notice and shall be entitled to the redemption price of $25.00 per share and any accrued and unpaid dividends
payable upon such redemption following such surrender. If (i) notice of redemption of any shares of Series A Preferred
Stock has been given (in the case of a redemption of the Series A Preferred Stock), (ii) the funds necessary for such
redemption have been set aside by the Corporation for the benefit of the holders of any shares of Series A Preferred Stock
so called for redemption, and (iii) irrevocable instructions have been given to pay the redemption price and all accrued and
unpaid dividends, then from and after the redemption date, dividends shall cease to accrue on such shares of Series A Preferred
Stock, such shares of Series A Preferred Stock shall no longer be deemed outstanding, and all rights of the holders of such
shares shall terminate, except the right to receive the redemption price plus any accrued and unpaid dividends payable upon such
redemption, without interest. So long as full cumulative dividends on the Series A Preferred Stock and any class or series
of parity Preferred Stock for all past Dividend Periods shall have been or contemporaneously are (i) declared and paid, or
(ii) declared and a sum sufficient for the payment thereof is set apart for payment, nothing herein shall prevent or restrict
the Corporation’s right or ability to purchase, from time to time, either at a public or a private sale, all or any part
of the Series A Preferred Stock at such price or prices as the Corporation may determine, subject to the provisions of applicable
law, including the repurchase of shares of Series A Preferred Stock in open-market transactions duly authorized by the Board
of Directors.
(c) Except as
provided in Section 3(f) above, unless full cumulative dividends on the Series A Preferred Stock for all past Dividend
Periods shall have been or contemporaneously are (i) declared and paid in cash, or (ii) declared and a sum sufficient
for the payment thereof in cash is set apart for payment, no shares of Series A Preferred Stock shall be redeemed pursuant
to the Redemption Right or Special Optional Redemption Right (defined below) unless all outstanding shares of Series A Preferred
Stock are simultaneously redeemed, and the Corporation shall not purchase or otherwise acquire directly or indirectly any shares
of Series A Preferred Stock or any class or series of capital stock of the Corporation ranking, as to payment of dividends
and the distribution of assets upon liquidation, dissolution or winding up of the Corporation, on parity with or junior to the
Series A Preferred Stock (except by conversion into or exchange for shares of capital stock of the Corporation ranking, as
to payment of dividends and the distribution of assets upon liquidation, dissolution or winding up of the Corporation, junior to
the Series A Preferred Stock); provided, however, that the foregoing shall not prevent the purchase of Series A Preferred
Stock, or any other class or series of capital stock of the Corporation ranking, as to payment of dividends and the distribution
of assets upon liquidation, dissolution or winding up of the Corporation, on parity with or junior to the Series A Preferred
Stock, by the Corporation pursuant to the provisions of Article IV of the Charter or Sections 5 and 9 of this Certificate
of Designation or any comparable provision of the Charter relating to any class or series of capital stock hereinafter classified
and designated, or the purchase or acquisition of Series A Preferred Stock pursuant to a purchase or exchange offer made on
the same terms to holders of all outstanding shares of Series A Preferred Stock.
(d) Notice of
redemption pursuant to the Redemption Right will be mailed by the Corporation, postage prepaid, not fewer than 30 or more than
60 days prior to the redemption date, addressed to the respective holders of record of the Series A Preferred Stock to be
redeemed at their respective addresses as they appear on the stock transfer records of the Corporation. No failure to give or defect
in such notice shall affect the validity of the proceedings for the redemption of any Series A Preferred Stock except as to
the holder to whom such notice was defective or not given. In addition to any information required by law or by the applicable
rules of any exchange upon which the Series A Preferred Stock may be listed or admitted to trading, each such notice
shall state: (i) the redemption date; (ii) the redemption price; (iii) the number of shares of Series A Preferred
Stock to be redeemed; (iv) the place or places where the certificates, if any, representing shares of Series A Preferred
Stock are to be surrendered for payment of the redemption price; (v) procedures for surrendering noncertificated shares of
Series A Preferred Stock for payment of the redemption price; (vi) that dividends on the shares of Series A Preferred
Stock to be redeemed will cease to accrue on such redemption date; and (vii) that payment of the redemption price and any
accumulated and unpaid dividends will be made upon presentation and surrender of such Series A Preferred Stock. If fewer than
all of the shares of Series A Preferred Stock held by any holder are to be redeemed, the notice mailed to such holder shall
also specify the number of shares of Series A Preferred Stock held by such holder to be redeemed.
(e) If a redemption
date falls after a Dividend Record Date and on or prior to the corresponding Dividend Payment Date, each holder of Series A
Preferred Stock at the close of business of such Dividend Record Date shall be entitled to the dividend payable on such shares
on the corresponding Dividend Payment Date notwithstanding the redemption of such shares on or prior to such Dividend Payment Date,
and each holder of Series A Preferred Stock that surrenders its shares on such redemption date will be entitled to the dividends
accruing after the end of the Dividend Period to which such Dividend Payment Date relates up to but excluding the redemption date.
Except as provided herein, the Corporation shall make no payment or allowance for unpaid dividends, whether or not in arrears,
on Series A Preferred Stock for which a notice of redemption has been given.
(f) All shares
of the Series A Preferred Stock redeemed or repurchased pursuant to this Section 5, or otherwise acquired in any other
manner by the Corporation, shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation
as to series or class.
Section 6. Special Optional
Redemption by the Corporation.
(a) Upon the occurrence
of a Delisting Event or Change of Control (each as defined below), the Corporation will have the option upon written notice mailed
by the Corporation, postage pre-paid, no fewer than 30 nor more than 60 days prior to the redemption date and addressed to the
holders of record of shares of the Series A Preferred Stock to be redeemed at their respective addresses as they appear on
the stock transfer records of the Corporation, to redeem the Series A Preferred Stock, in whole or in part, within 90 days
after the first date on which such Delisting Event occurred or within 120 days after the first date on which the Change of Control
occurred, as applicable, for cash at $25.00 per share plus, subject to Section 6(d), accrued and unpaid dividends, if any,
to, but not including, the redemption date (“Special Optional Redemption Right”). No failure to give such notice
or any defect thereto or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of
Series A Preferred Stock except as to the holder to whom notice was defective or not given. If, on or prior to the Delisting
Event Conversion Date or Change of Control Conversion Date (each as defined below), as applicable, the Corporation has provided
or provides notice of redemption with respect to the Series A Preferred Stock (whether pursuant to the Redemption Right or
the Special Optional Redemption Right), the holders of shares of Series A Preferred Stock will not have the conversion right
described below in Section 8.
A “Change
of Control” is when, after the original issuance of the Series A Preferred Stock, each of the following have occurred
and are continuing:
(i) the acquisition
by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), of beneficial ownership, directly or indirectly, through
a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of stock
of the Corporation entitling that person to exercise more than 50% of the total voting power of all stock of the Corporation entitled
to vote generally in the election of the Corporation’s directors (except that such person will be deemed to have beneficial
ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable
only upon the occurrence of a subsequent condition); and
(ii) following
the closing of any transaction referred to in (i) above, neither the Corporation nor the acquiring or surviving entity (or,
if in connection with such transaction holders of Common Stock receive Alternative Form Consideration consisting of common
equity securities of another entity, such other entity) has a class of common securities (or American depositary receipts representing
such securities) listed on the NASDAQ Stock Market (“NASDAQ”), the New York Stock Exchange (the “NYSE”),
or the NYSE American, LLC (the “NYSE AMER”), or listed or quoted on an exchange or quotation system that is
a successor to NASDAQ, the NYSE or the NYSE AMER.
A “Delisting
Event” occurs when, after the original issuance of Series A Preferred Stock, both (i) the shares of Series A
Preferred Stock (or the depositary shares) are no longer listed on NASDAQ, the NYSE or the NYSE AMER, or listed or quoted on an
exchange or quotation system that is a successor to NASDAQ, the NYSE or the NYSE AMER, and (ii) we are not subject to the
reporting requirements of the Exchange Act, but any Series A Preferred Stock is still outstanding.
(b) In addition
to any information required by law or by the applicable rules of any exchange upon which the Series A Preferred Stock
may be listed or admitted to trading, such notice shall state: (i) the redemption date; (ii) the redemption price; (iii) the
number of shares of Series A Preferred Stock to be redeemed; (iv) the place or places where the certificates, if any,
representing shares of Series A Preferred Stock are to be surrendered for payment of the redemption price; (v) procedures
for surrendering noncertificated shares of Series A Preferred Stock for payment of the redemption price; (vi) that dividends
on the shares of Series A Preferred Stock to be redeemed will cease to accrue on the redemption date; (vii) that payment
of the redemption price and any accumulated and unpaid dividends will be made upon presentation and surrender of such Series A
Preferred Stock; (viii) that the shares of Series A Preferred Stock are being redeemed pursuant to the Special Optional
Redemption Right in connection with the occurrence of a Delisting Event or Change of Control, as applicable, and a brief description
of the transaction or transactions constituting such Delisting Event or Change of Control, as applicable; and (ix) that holders
of the shares of Series A Preferred Stock to which the notice relates will not be able to tender such shares of Series A
Preferred Stock for conversion in connection with the Delisting Event or Change of Control, as applicable, and each share of Series A
Preferred Stock tendered for conversion that is selected, prior to the Delisting Event Conversion Date or Change of Control Conversion
Date, as applicable, for redemption will be redeemed on the related redemption date instead of converted on the Delisting Event
Conversion Date or Change of Control Conversion Date, as applicable. If fewer than all of the shares of Series A Preferred
Stock held by any holder are to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series A
Preferred Stock held by such holder to be redeemed. Holders of Series A Preferred Stock to be redeemed shall surrender such
Series A Preferred Stock at the place, or in accordance with the book-entry procedures, designated in such notice and shall
be entitled to the redemption price of $25.00 per share and any accrued and unpaid dividends payable upon such redemption following
such surrender.
If fewer than all of
the outstanding shares of Series A Preferred Stock are to be redeemed pursuant to the Special Optional Redemption Right, the
shares of Series A Preferred Stock to be redeemed shall be redeemed pro rata (as nearly as may be practicable without creating
fractional shares) or by lot as determined by the Corporation.
(c) If (i) the
Corporation has given a notice of redemption pursuant to the Special Optional Redemption Right, (ii) the funds necessary for
such redemption have been set aside by the Corporation in trust for the benefit of the holders of the shares of Series A Preferred
Stock so called for redemption, and (iii) irrevocable instructions have been given to pay the redemption price and all accrued
and unpaid dividends, then from and after the redemption date, dividends shall cease to accrue on such shares of Series A
Preferred Stock, such shares of Series A Preferred Stock shall no longer be deemed outstanding, and all rights of the holders
of such shares shall terminate, except the right to receive the redemption price plus any accrued and unpaid dividends payable
upon such redemption, without interest. So long as full cumulative dividends on the Series A Preferred Stock for all past
Dividend Periods shall have been or contemporaneously are (i) declared and paid, or (ii) declared and a sum sufficient
for the payment thereof is set apart for payment, nothing herein shall prevent or restrict the Corporation’s right or ability
to purchase, from time to time, either at a public or a private sale, all or any part of the Series A Preferred Stock at such
price or prices as the Corporation may determine, subject to the provisions of applicable law, including the repurchase of shares
of Series A Preferred Stock in open-market transactions duly authorized by the Board of Directors.
(d) If a redemption
date falls after a Dividend Record Date and on or prior to the corresponding Dividend Payment Date, each holder of Series A
Preferred Stock at the close of business of such Dividend Record Date shall be entitled to the dividend payable on such shares
on the corresponding Dividend Payment Date notwithstanding the redemption of such shares on or prior to such Dividend Payment Date,
and each holder of Series A Preferred Stock that surrenders its shares on such redemption date will be entitled to the dividends
accruing after the end of the Dividend Period to which such Dividend Payment Date relates up to but excluding the redemption date.
Except as provided herein, the Corporation shall make no payment or allowance for unpaid dividends, whether or not in arrears,
on Series A Preferred Stock for which a notice of redemption has been given.
(e) All shares
of the Series A Preferred Stock redeemed or repurchased pursuant to this Section 6, or otherwise acquired in any other
manner by the Corporation, shall be retired and shall be restored to the status of authorized but unissued shares of Preferred
Stock, without designation as to series or class.
Section 7. Voting Rights.
(a) Holders of
the Series A Preferred Stock shall not have any voting rights, except as set forth in this Section 7.
(b) Whenever dividends
on any shares of Series A Preferred Stock shall be in arrears for six or more consecutive or non-consecutive quarterly periods
(a “Preferred Dividend Default”), the holders of Series A Preferred
Stock and the holders of all other classes or series of preferred stock of the Corporation ranking on parity with the Series A
Preferred Stock with respect to payment of dividends and the distribution of assets upon the Corporation’s liquidation, dissolution
or winding up and upon which like voting rights have been conferred, and are exercisable (“Parity Preferred”)
and with which the holders of Series A Preferred Stock are entitled to vote together as a single class voting together as
a single class, shall be entitled to vote for the election of a total of two additional directors to serve on the Board of Directors
of the Corporation (the “Preferred Directors”) until all dividends
accumulated and unpaid on such Series A Preferred for all past Dividend Periods shall have been fully paid. At such time as
the holders of Series A Preferred Stock become entitled to vote in the election of Preferred Directors, the number of directors
serving on the Board of Directors will be increased automatically by two directors (unless the number of directors has previously
been so increased pursuant to the terms of any class or series of Parity Preferred). For the purposes of determining whether a
Preferred Dividend Default has occurred or is continuing, a dividend in respect of Series A Preferred Stock shall be considered
timely made if made within two Business Days after the applicable Dividend Payment Date if at the time of such late payment date
there shall not be any prior quarterly Dividend Periods in respect of which full dividends were not timely made at the applicable
Dividend Payment Date.
(c) A Preferred
Director will be elected by a plurality of the votes cast in the election of Preferred Directors and shall serve until the next
annual meeting of stockholders and until his or her successor is duly elected and qualifies, subject to Section 7(e) or
such Preferred Director’s earlier death, disqualification, resignation or removal. The election of Preferred Directors will
take place at (i) either (A) a special meeting called in accordance with Section 7(d) below if the request
is received more than 90 days before the date fixed for the Corporation’s next annual or special meeting of stockholders
or (B) the next annual or special meeting of stockholders if the request is received within 90 days of the date fixed for
the Corporation’s next annual or special meeting of stockholders, and (ii) at each subsequent annual meeting of stockholders,
or special meeting at which Preferred Directors are to be elected, until the right of holders of Series A Preferred Stock
to elect Preferred Directors shall have terminated as specified in Section 7(e).
(d) At any time
when holders of Series A Preferred Stock are entitled to vote in the election of Preferred Directors, the Secretary of the
Corporation shall, unless the request is received more than 90 days before the date fixed for the Corporation’s next annual
or special meeting of stockholders, call or cause to be called, upon written request of holders of record of at least 10% of the
outstanding shares of Series A Preferred Stock and Parity Preferred with which the holders of Series A Preferred Stock
are entitled to vote together as a single class in the election of Preferred Directors, call a special meeting of stockholders
for the purpose of electing Preferred Directors by mailing or causing to be mailed to the stockholders entitled to vote a notice
of such special meeting to be held not fewer than ten or more than 45 days after the date such notice is given. The record date
for determining holders of the Series A Preferred Stock entitled to notice of and to vote at such special meeting will be
the close of business on the third Business Day preceding the day on which such notice is mailed. The holder or holders of one-third
of the outstanding shares of Series A Preferred Stock and Parity Preferred with which the holders of Series A Preferred
Stock are entitled to vote together as a single class in the election of Preferred Directors, present in person or by proxy, will
constitute a quorum for the election of the Preferred Directors except as otherwise required by law. Notice of all meetings of
stockholders at which holders of Series A Preferred Stock are entitled to vote in the election of Preferred Directors will
be given to such holders at their addresses as they appear in the Corporation’s stock transfer records. At any such meeting
or adjournment thereof, in the absence of a quorum, subject to the provisions of any applicable law, the affirmative vote of a
majority of the holders of the Series A Preferred Stock and Parity Preferred with which the holders of Series A Preferred
Stock are entitled to vote together as a single class in the election of Preferred Directors present in person or by proxy, voting
together as a single class, shall be sufficient to adjourn the meeting for the election of the Preferred Directors, without notice
other than an announcement at the meeting, until a quorum is present. If a Preferred Dividend Default shall terminate after the
notice of a special meeting for the purpose of electing Preferred Directors has been given but before such special meeting has
been held, the Corporation shall, as soon as practicable after such termination, mail or cause to be mailed notice of such termination
to holders of the Series A Preferred Stock that would have been entitled to vote at such special meeting.
(e) If and when
all accumulated dividends on such Series A Preferred Stock for all past Dividend Periods shall have been fully paid, the right
of the holders of Series A Preferred Stock to elect such additional two directors shall immediately cease (subject to revesting
in the event of each and every Preferred Dividend Default), and, unless there are outstanding shares of Parity Preferred upon which
like voting remain exercisable, the term of office of each Preferred Director so elected shall terminate and the number of directors
constituting the Board of Directors shall be reduced accordingly. If the rights of holders of Series A Preferred Stock to
elect Preferred Directors have terminated in accordance with this Section 7(e) after any record date for the determination
of stockholders entitled to vote in the election of such Preferred Directors but before the closing of the polls in such election,
holders of Series A Preferred Stock outstanding as of such record date shall not be entitled to vote in such election of Preferred
Directors. Any Preferred Director may be removed at any time with or without cause by the vote of, and shall not be removed otherwise
than by the vote of, the holders of record of a majority of the outstanding shares of Series A Preferred Stock and the Parity
Preferred then entitled to vote together as a single class in the election of Preferred Directors (voting together as a single
class). So long as a Preferred Dividend Default shall continue, any vacancy in the office of a Preferred Director may be filled
by written consent of the Preferred Director remaining in office, or if none remains in office, by a plurality of the votes cast
in the election of Preferred Directors. Each of the Preferred Directors shall be entitled to one vote on any matter before the
Corporation’s board of directors.
(f) So long as
any shares of Series A Preferred Stock remain outstanding, the affirmative vote or consent of the holders of two-thirds of
the outstanding shares of Series A Preferred Stock and each other class or series of Parity Preferred with which the holders
of Series A Preferred Stock are entitled to vote together as a single class on such matter (voting together as a single class),
given in person or by proxy, either in writing or at a meeting, will be required to: (i) authorize, create or issue, or increase
the number of authorized or issued number of shares of, any class or series of capital stock ranking senior to the Series A
Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up
of the Corporation (collectively, “Senior Capital Stock”) or reclassify any authorized shares of capital stock
of the Corporation into Senior Capital Stock, or create, authorize or issue any obligation or security convertible into or evidencing
the right to purchase any Senior Capital Stock; or (ii) amend, alter or repeal the provisions of the Charter, including the
terms of the Series A Preferred Stock, whether by merger, consolidation, transfer or conveyance of all or substantially all
of its assets or otherwise (an “Event”), so as to materially and adversely affect any right, preference, privilege
or voting power of the Series A Preferred Stock; provided however, with respect to the occurrence of any Event, so
long as the Series A Preferred Stock remains outstanding with the terms thereof materially unchanged, taking into account
that, upon the occurrence of such Event, the Corporation may not be the surviving entity and the surviving entity may not be a
corporation, the occurrence of such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges
or voting power of Series A Preferred Stock, and in such case such holders shall not have any voting rights with respect to
the occurrence of any Event. In addition, if the holders of the Series A Preferred Stock receive the greater of the full trading
price of the Series A Preferred Stock on the date of an Event or the $25.00 liquidation preference per share of the Series A
Preferred Stock plus all accrued and unpaid dividends thereon pursuant to the occurrence of any Event, then such holders shall
not have any voting rights with respect to such Event. If any Event would materially and adversely affect the rights, preferences,
privileges or voting powers of the Series A Preferred Stock disproportionately relative to other classes or series of Parity
Preferred with which the holders of Series A Preferred Stock are entitled to vote together as a single class on such Event,
the affirmative vote of the holders of at least two-thirds of the outstanding shares of the Series A Preferred Stock, voting
as a separate class, will also be required. Notwithstanding the foregoing, holders of shares of Series A Preferred Stock shall
not be entitled to vote with respect to (A) any increase in the total number of authorized shares of Common Stock or Preferred
Stock of the Corporation, (B) any increase in the number of authorized shares of Series A Preferred Stock or the creation
or issuance of any other class or series of capital stock or (C) any increase in the number of authorized shares of any other
class or series of capital stock; provided that, in each case referred to in clause (A), (B) or (C) above, such
capital stock ranks on parity with or junior to the Series A Preferred Stock with respect to the payment of dividends and
the distribution of assets upon liquidation, dissolution or winding up of the Corporation. Except as set forth herein, holders
of the Series A Preferred Stock shall not have any voting rights with respect to, and the consent of the holders of the Series A
Preferred Stock shall not be required for, the taking of any corporate action, including an Event, regardless of the effect that
such corporate action or Event may have upon the powers, preferences, voting power or other rights or privileges of the Series A
Preferred Stock.
(g) The foregoing
voting provisions of this Section 7 shall not apply if, at or prior to the time when the act with respect to which such vote
would otherwise be required shall be effected, all outstanding shares of Series A Preferred Stock shall have been redeemed
or called for redemption upon proper notice pursuant to this Certificate of Designation, and sufficient funds, in cash, shall have
been deposited in trust to effect such redemption.
(h) In any matter
in which the Series A Preferred Stock may vote together as a single class with holders of all other classes or series of parity
preferred stock (as expressly provided herein), each share of Series A Preferred Stock shall be entitled to one vote per $25.00
of liquidation preference.
Section 8.
Conversion. The shares of Series A Preferred Stock are not convertible into or exchangeable for any other
property or securities of the Corporation, except as provided in this Section 8.
(a) Upon the occurrence
of a Delisting Event or Change of Control, as applicable, each holder of outstanding shares of Series A Preferred Stock shall
have the right, unless, on or prior to the Delisting Event Conversion Date or Change of Control Conversion Date, as applicable,
the Corporation has provided or provides notice of its election to redeem the Series A Preferred Stock pursuant to the Redemption
Right or Special Optional Redemption Right, to convert some or all of the Series A Preferred Stock held by such holder (the
“Delisting Event Conversion Right” or “Change of Control Conversion Right,” as applicable)
on the Delisting Event Conversion Date or Change of Control Conversion Date, as applicable, into a number of shares of Common Stock
per share of Series A Preferred Stock to be converted (the “Common Stock Conversion Consideration”) equal
to the lesser of (A) the quotient obtained by dividing (i) the sum of (x) the $25.00 liquidation preference per
share of Series A Preferred Stock to be converted plus (y) the amount of any accrued and unpaid dividends to, but not
including, the Delisting Event Conversion Date or Change of Control Conversion Date, as applicable (unless the Delisting Event
Conversion Date or Change of Control Conversion Date, as applicable, is after a Dividend Record Date and prior to the corresponding
Dividend Payment Date, in which case no additional amount for such accrued and unpaid dividends will be included in such sum) by
(ii) the Common Stock Price (as defined herein) and (B) 1.9608 (the “Share Cap”), subject to the immediately
succeeding paragraph.
The Share Cap is subject
to pro rata adjustments for any stock splits (including those effected pursuant to a distribution of the Common Stock), subdivisions
or combinations (in each case, a “Share Split”) with respect to the Common Stock as follows: the adjusted Share
Cap as the result of a Share Split shall be the number of shares of Common Stock that is equivalent to the product obtained by
multiplying (i) the Share Cap in effect immediately prior to such Share Split by (ii) a fraction, the numerator of which
is the number of shares of Common Stock outstanding after giving effect to such Share Split and the denominator of which is the
number of shares of Common Stock outstanding immediately prior to such Share Split.
In the case of a Delisting
Event or Change of Control, as applicable, pursuant to which shares of Common Stock shall be converted into cash, securities or
other property or assets (including any combination thereof) (the “Alternative Form Consideration”), a
holder of shares of Series A Preferred Stock shall receive upon conversion of such shares of Series A Preferred Stock
the kind and amount of Alternative Form Consideration which such holder would have owned or been entitled to receive upon
the Delisting Event or Change of Control, as applicable, had such holder held a number of shares of Common Stock equal to the Common
Stock Conversion Consideration immediately prior to the effective time of the Delisting Event or Change of Control, as applicable
(the “Alternative Conversion Consideration”; and the Common Stock Conversion Consideration or the Alternative
Conversion Consideration, as may be applicable to a Delisting Event or Change of Control, as applicable, shall be referred to herein
as the “Conversion Consideration”).
In the event that holders
of Common Stock have the opportunity to elect the form of consideration to be received in the Delisting Event or Change of Control,
as applicable, the Conversion Consideration will be deemed to be the kind and amount of consideration actually received by holders
of a majority of the shares of Common Stock that were voted in such an election (if electing between two types of consideration)
or holders of a plurality of the shares of Common Stock that were voted in such an election (if electing between more than two
types of consideration), as the case may be, and will be subject to any limitations to which all holders of Common Stock are subject,
including, without limitation, pro rata reductions applicable to any portion of the consideration payable in the Delisting Event
or Change of Control, as applicable.
The “Delisting
Event Conversion Date” or “Change of Control Conversion Date”, as applicable, shall be a Business
Day set forth in the notice of Delisting Event or Change of Control, as applicable, provided in accordance with Section 8(c) below
that is no less than 20 days nor more than 35 days after the date on which the Corporation provides such notice pursuant to Section 8(c).
The “Common
Stock Price” shall be (i) if the consideration to be received in the Change of Control by the holders of Common
Stock is solely cash, the amount of cash consideration per share of Common Stock or (ii) if the consideration to be received
in the Change of Control by holders of Common Stock is other than solely cash (x) the average of the closing sale prices per
share of Common Stock (or, if no closing sale price is reported, the average of the closing bid and ask prices or, if more than
one in either case, the average of the average closing bid and the average closing ask prices) for the ten consecutive trading
days immediately preceding, but not including, the effective date of the Change of Control as reported on the principal U.S. securities
exchange on which the Common Stock is then traded, or (y) the average of the last quoted bid prices for the Common Stock in
the over-the-counter market as reported by OTC Markets Group, Inc. or similar organization for the ten consecutive trading
days immediately preceding, but not including, the effective date of the Change of Control, if the Common Stock is not then listed
for trading on a U.S. securities exchange.
The “Common
Stock Price” for any Delisting Event will be the average of the closing price per share of our common stock on the 10
consecutive trading days immediately preceding, but not including, the effective date of the Delisting Event.
(b) No fractional
shares of Common Stock shall be issued upon the conversion of Series A Preferred Stock. In lieu of fractional shares of Common
Stock otherwise issuable in respect of the aggregate number of shares of Series A Preferred Stock of any holder that are converted,
that holder shall be entitled to receive the cash value of such fractional shares based on the Common Stock Price. If more than
one share of Series A Preferred Stock is surrendered for conversion at one time by or for the same holder, the number of full
shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Series A
Preferred Stock so surrendered.
(c) Within 15
days following the occurrence of a Delisting Event or Change of Control, as applicable, a notice of occurrence of the Delisting
Event or Change of Control, as applicable, describing the resulting Delisting Event Conversion Right or Change of Control Conversion
Right, as applicable, shall be delivered to the holders of record of the Series A Preferred Stock at their addresses as they
appear on the Corporation’s stock transfer records and notice shall be provided to the Corporation’s transfer agent.
No failure to give such notice or any defect thereto or in the mailing thereof shall affect the validity of the proceedings for
the conversion of any share of Series A Preferred Stock except as to the holder to whom notice was defective or not given.
Each notice shall state: (i) the events constituting the Delisting Event or Change of Control, as applicable; (ii) the
date of the Delisting Event or Change of Control, as applicable; (iii) the last date on which the holders of Series A
Preferred Stock may exercise their Delisting Event Conversion Right or Change of Control Conversion Right, as applicable; (iv) the
method and period for calculating the Common Stock Price; (v) the Delisting Event Conversion Right or Change of Control Conversion
Date, as applicable; (vi) that if, on or prior to the Delisting Event Conversion Right or Change of Control Conversion Date,
as applicable, the Corporation has provided or provides notice of its election to redeem all or any portion of the Series A
Preferred Stock, the holder will not be able to convert shares of Series A Preferred Stock designated for redemption and such
shares of Series A Preferred Stock shall be redeemed on the related redemption date, even if they have already been tendered
for conversion pursuant to the Delisting Event Conversion Right or Change of Control Conversion Right; (vii) if applicable,
the type and amount of Alternative Conversion Consideration entitled to be received per share of Series A Preferred Stock;
(viii) the name and address of the paying agent and the conversion agent; and (ix) the procedures that the holders of
Series A Preferred Stock must follow to exercise the Delisting Event Conversion Right or Change of Control Conversion Right,
as applicable.
(d) The Corporation
shall issue a press release for publication on the Dow Jones & Corporation, Inc., Business Wire, PR Newswire or Bloomberg
Business News (or, if such organizations are not in existence at the time of issuance of such press release, such other news or
press organization as is reasonably calculated to broadly disseminate the relevant information to the public), or post notice on
the Corporation’s website, in any event prior to the opening of business on the first Business Day following any date on
which the Corporation provides notice pursuant to Section 8(c) above to the holders of Series A Preferred Stock.
(e) In order to
exercise the Delisting Event Conversion Right or Change of Control Conversion Right, as applicable, a holder of shares of Series A
Preferred Stock shall be required to deliver, on or before the close of business on the Delisting Event Conversion Right or Change
of Control Conversion Date, as applicable, the certificates (if any) representing the shares of Series A Preferred Stock to
be converted, duly endorsed for transfer, together with a written conversion notice completed, to the Corporation’s transfer
agent. Such notice shall state: (i) the relevant Delisting Event Conversion Date or Change of Control Conversion Date, as
applicable; (ii) the number of shares of Series A Preferred Stock to be converted; and (iii) that the shares of
Series A Preferred Stock are to be converted pursuant to the applicable provisions of this Certificate of Designation. Notwithstanding
the foregoing, if the shares of Series A Preferred Stock are held in global form, such notice shall comply with applicable
procedures of The Depository Trust Corporation (“DTC”).
(f) Holders of
Series A Preferred Stock may withdraw any notice of exercise of a Delisting Event Conversion Right or Change of Control Conversion
Right (in whole or in part), as applicable, by a written notice of withdrawal delivered to the Corporation’s transfer agent
prior to the close of business on the Business Day prior to the Delisting Event Conversion Date or Change of Control Conversion
Date, as applicable. The notice of withdrawal must state: (i) the number of withdrawn shares of Series A Preferred Stock;
(ii) if certificated shares of Series A Preferred Stock have been issued, the certificate numbers of the shares of withdrawn
Series A Preferred Stock; and (iii) the number of shares of Series A Preferred Stock, if any, which remain subject
to the conversion notice. Notwithstanding the foregoing, if the shares of Series A Preferred Stock are held in global form,
the notice of withdrawal shall comply with applicable procedures of DTC.
(g) Shares of
Series A Preferred Stock as to which the Delisting Event Conversion Right or Change of Control Conversion Right, as applicable,
has been properly exercised and for which the conversion notice has not been properly withdrawn shall be converted into the applicable
Conversion Consideration in accordance with the Delisting Event Conversion Right or Change of Control Conversion Right, as applicable,
on the Delisting Event Conversion Date or Change of Control Conversion Date, as applicable, unless, on or prior to the Delisting
Event Conversion Date or Change of Control Conversion Date, as applicable, the Corporation has provided or provides notice of its
election to redeem such shares of Series A Preferred Stock, whether pursuant to its Redemption Right or Special Optional Redemption
Right. If the Corporation elects to redeem shares of Series A Preferred Stock that would otherwise be converted into the applicable
Conversion Consideration on a Delisting Event Conversion Date or Change of Control Conversion Date, as applicable, such shares
of Series A Preferred Stock shall not be so converted and the holders of such shares shall be entitled to receive on the applicable
redemption date $25.00 per share, plus any accrued and unpaid dividends thereon to, but not including, the redemption date.
(h) The Corporation
shall deliver the applicable Conversion Consideration no later than the third Business Day following the Delisting Event Conversion
Date or Change of Control Conversion Date, as applicable.
(i) The shares
of Series A Preferred Stock shall not be convertible into or exchangeable for any other property or securities of the Corporation
or any other entity, except as otherwise provided herein.
Section 9.
No Conversion Rights. The shares of Series A Preferred Stock shall not be convertible into or exchangeable
for any other property or securities of the Corporation or any other entity, except as otherwise provided herein.
Section 10.
Record Holders. The Corporation and its transfer agent may deem and treat the record holder of any Series A
Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor its transfer agent shall
be affected by any notice to the contrary.
Section 11.
No Maturity or Sinking Fund. The Series A Preferred Stock has no maturity date, and no sinking fund has
been established for the retirement or redemption of Series A Preferred Stock.
Section 12.
Exclusion of Other Rights. The Series A Preferred Stock shall not have any preferences or other rights,
voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption
other than expressly set forth in the Charter and this Certificate of Designation.
Section 13.
Headings of Subdivisions. The headings of the various subdivisions hereof are for convenience of reference only
and shall not affect the interpretation of any of the provisions hereof.
Section 14.
Severability of Provisions. If any preferences or other rights, voting powers, restrictions, limitations as to
dividends or other distributions, qualifications or terms or conditions of redemption of the Series A Preferred Stock set
forth in this Certificate of Designation are invalid, unlawful or incapable of being enforced by reason of any rule of law
or public policy, all other preferences or other rights, voting powers, restrictions, limitations as to dividends or other distributions,
qualifications or terms or conditions of redemption of Series A Preferred Stock set forth in this Certificate of Designation
which can be given effect without the invalid, unlawful or unenforceable provision thereof shall, nevertheless, remain in full
force and effect and no preferences or other rights, voting powers, restrictions, limitations as to dividends or other distributions,
qualifications or terms or conditions of redemption of the Series A Preferred Stock herein set forth shall be deemed dependent
upon any other provision thereof unless so expressed therein.
Section 15.
No Preemptive Rights. No holder of Series A Preferred Stock shall be entitled to any preemptive rights to
subscribe for or acquire any unissued shares of capital stock of the Corporation (whether now or hereafter authorized) or securities
of the Corporation convertible into or carrying a right to subscribe to or acquire shares of capital stock of the Corporation.
* * * * * *
