Exhibit 1.1
UNDERWRITING AGREEMENT
between
x
G
TECHNOLOGY, INC
.
and
AEGIS CAPITAL CORP.,
as Representative of the Several Underwriters
February 8, 2017
Aegis Capital Corp.
810 Seventh Avenue, 18th Floor
New York, New York 10019
As the Representative of the Several Underwriters
Named on Schedule I hereto
Ladies and Gentlemen:
xG Technology, Inc.,
a corporation organized under the laws of the State of Delaware (the “
Company
”), hereby proposes, subject to
the terms and conditions stated herein, to issue and sell to the several underwriters named in
Schedule I
hereto (collectively,
the “
Underwriters
”), for whom Aegis Capital Corp. is acting as the representative (the “
Representative
”),
an aggregate of (i) 1,750,000 shares (the “
Shares
”) of the Company’s common stock, par value $0.00001
per share (the “
Common Stock
”), and (ii) warrants (each, a “
Warrant
” and collectively, the
“
Warrants
”) to purchase an aggregate of 1,312,500 shares of Common Stock (the “
Warrant Shares
”)
at an exercise price of $2.00 per share. Each Share of Common Stock will be issued together with 0.75 of a Warrant. The Shares
and the Warrants will be separately issued and will be separately transferable immediately upon issuance. The Shares, the Warrants,
the Warrant Shares, the Underwriter Warrants (as defined below) and the Underwriter Warrant Shares (as defined below) are collectively
referred to herein as the “
Securities
”. The Securities are more fully described in the Prospectus (as defined
below).
The Warrants will be
issued pursuant to, and subject to the terms of, a Warrant Agreement (the “
Warrant Agreement
”), by and between
the Company and Continental Stock Transfer & Trust Company, acting as the warrant agent thereunder (the “
Warrant Agent
”)
in the form attached hereto as
Exhibit B
Certain terms used herein are defined in
Section 18 hereof.
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1.
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Representations and Warranties
:
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The Company represents and warrants
to the Underwriters as of the Applicable Time (as defined below) and as of the Closing Date as follows:
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(a)
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Filing of Registration Statement
. The Company has prepared and filed in conformity with
the requirements of the Securities Act of 1933, as amended (the “
Securities Act
”), and published rules and regulations
thereunder (the “
Securities Act Regulations
”) adopted by the Securities and Exchange Commission (the “
Commission
”),
a “shelf” Registration Statement (as hereinafter defined) on Form S-3 (File No. 333-197820), which became effective
on August 21, 2014 (the “Effective Date”), including a base prospectus relating to the securities registered pursuant
to such Registration Statement (the “
Base Prospectus
”), and such amendments and supplements thereto as may have
been required to the date of this Agreement. The term “
Registration Statement
” as used in this Agreement means
such registration statement (including all exhibits, financial schedules and all documents and information deemed to be a part
of the Registration Statement pursuant to Rule 430B under the Securities Act Regulations), as amended and/or supplemented to the
date of this Agreement, including the Base Prospectus. The Registration Statement is effective under the Securities Act and no
stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing the use of the
Prospectus has been issued by the Commission and no proceedings for that purpose have been instituted or, to the knowledge of the
Company, are threatened by the Commission. The Company, if required by the Securities Act Regulations of the Commission, will file
the Prospectus (as defined below), with the Commission pursuant to Rule 424(b) under the Securities Act Regulations. The term “Prospectus,”
as used in this Agreement means the prospectus, in the form in which it is to be filed with the Commission pursuant to Rule 424(b)
under the Securities Act Regulations, or, if the prospectus is not to be filed with the Commission pursuant to Rule 424(b), the
prospectus in the form included as part of the Registration Statement as of the Effective Date; provided that, if any revised prospectus
or prospectus supplement shall be provided to the Underwriters by the Company for use in connection with the offering and sale
of the Securities which differs from the prospectus (whether or not such revised prospectus or prospectus supplement is required
to be filed by the Company pursuant to Rule 424(b) under the Securities Act Regulations), the term “Prospectus” shall
refer to such revised prospectus or prospectus supplement, as the case may be, from and after the time it is first provided to
the Underwriters for such use. Any preliminary prospectus or prospectus subject to completion included in the Registration Statement
or filed with the Commission pursuant to Rule 424 under the Securities Act Regulations is hereafter called a “
Preliminary
Prospectus
.” Any reference herein to the Registration Statement, Base Prospectus, Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were
filed under the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), on or before the last to occur
of the Effective Date, the date of the Preliminary Prospectus, or the date of the Prospectus, and any reference herein to the terms
“amend,” “amendment,” or “supplement” with respect to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include (i) the filing of any document under the Exchange Act after
the Effective Date, the date of such Preliminary Prospectus or the date of the Prospectus, as the case may be, which is incorporated
by reference and (ii) any such document so filed. If the Company has filed an abbreviated registration statement to register additional
securities pursuant to Rule 462(b) under the Securities Act Regulations (the “
462(b) Registration Statement
”),
then any reference herein to the Registration Statement shall also be deemed to include such 462(b) Registration Statement.
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(b)
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Exchange Act Registration
. The Shares and the Warrants are registered pursuant to Section 12(b)
under the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”). The Company has taken no action
designed to, or likely to have the effect of, terminating the registration of the Shares or the Warrants under the Exchange Act,
nor has the Company received any notification that the Commission is contemplating terminating such registration.
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(c)
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Subsidiaries
. Other than as disclosed on Exhibit 21.1 to the Registration Statement, the
Company has no direct or indirect subsidiaries.
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(d)
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Exchange Listing
. The Common Stock is listed on The NASDAQ Capital Market (the “
Exchange
”)
subject to official notice of issuance, and the Company has taken no action designed to, or likely to, have the effect of delisting
the Common Stock from the Exchange, nor has the Company received any notification that the Exchange is contemplating terminating
such listing except as otherwise described in the Registration Statement, the Pricing Disclosure Package and the Prospectus. The
Company has filed an application for the Listing of Additional Shares with the Exchange to list the shares of Common Stock included
in the Securities.
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(e)
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No Stop Orders, etc
. Neither the Commission nor, to the Company’s knowledge, any state
regulatory authority has issued any order preventing or suspending the use of the Registration Statement, any Preliminary Prospectus
or the Prospectus or has instituted or, to the Company’s knowledge, threatened to institute, any proceedings with respect
to such an order. The Company has complied with each request (if any) from the Commission for additional information.
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(f)
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Disclosures in Registration Statement
.
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(i)
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Each of the Registration Statement and any post-effective amendment thereto, at the time it became
effective, complied in all material respects with the requirements of the Act and the Securities Act Regulations. Each Preliminary
Prospectus, including the prospectus filed as part of the Registration Statement as originally filed or as part of any amendment
or supplement thereto, and the Prospectus, at the time each was filed with the Commission, complied in all material respects with
the requirements of the Act and the Securities Act Regulations. Each Preliminary Prospectus delivered to the Underwriters for use
in connection with this Offering and the Prospectus was or will be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T;
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(ii)
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Neither the Registration Statement nor any amendment thereto, at the time each part thereto became
effective pursuant to the Securities Act Regulations, as of the date of this Agreement and at the Closing Date, contained, contains
or will contain an untrue statement of a material fact or omitted, omits or will omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading provided however that this representation and warranty shall
not apply to statements made or statements omitted in reliance upon and in conformity with written information furnished to the
Company with respect to the Underwriters by the Underwriters expressly for use in the Registration Statement, the Pricing Prospectus
or the Prospectus or any amendment thereof or supplement thereto. The parties acknowledge and agree that such information provided
by or on behalf of any Underwriter consists solely of the following disclosure: the names of the Underwriters contained on the
cover page of the Pricing Prospectus and Prospectus and the following disclosure contained in the “Underwriting” section of
the Prospectus: statements that relate to the amount of selling concession and re-allowance or to over-allotment and stabilization
and related activities that may be undertaken by the Underwriters (collectively, the “
Underwriters’ Information
”);
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(iii)
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The Pricing Disclosure Package, as of the Applicable Time, as of the date of this Agreement and
at the Closing Date, did not, does not and will not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to the Underwriters’ Information. Each Issuer Free
Writing Prospectus does not conflict with the information contained in the Registration Statement, the Preliminary Prospectus,
the Pricing Prospectus or the Prospectus, and each such Issuer Free Writing Prospectus, as supplemented by and taken together with
the Pricing Prospectus as of the Applicable Time, did not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to the Underwriters’ Information; and
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(iv)
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Neither the Prospectus nor any amendment or supplement thereto (including any prospectus wrapper),
as of its issue date, at the time of any filing with the Commission pursuant to Rule 424(b)and at the Closing Date, included,
includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to the Underwriters’ Information.
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(g)
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Disclosure of Agreements
. The agreements and documents described in the Registration Statement,
the Pricing Disclosure Package and the Prospectus conform in all material respects to the descriptions thereof contained therein
and there are no agreements or other documents required by the Act and the Securities Act Regulations to be described in the Registration
Statement, the Pricing Disclosure Package and the Prospectus or to be filed with the Commission as exhibits to the Registration
Statement, that have not been so described or filed. Each agreement or other instrument (however characterized or described) to
which the Company or its subsidiary is a party or by which it is or may be bound or affected and (i) that is referred to in
the Registration Statement, the Pricing Disclosure Package and the Prospectus, or (ii) is material to the Company’s
business, has been duly authorized and validly executed by the Company or its subsidiary, is in full force and effect in all material
respects and is enforceable against the Company or its subsidiary and, to the Company’s knowledge, the other parties thereto,
in accordance with its terms, except (x) as such enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors’ rights generally, (y) as enforceability of any indemnification or contribution provision
may be limited under the federal and state securities laws, and (z) that the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. None of such agreements or instruments has been assigned by the Company or its subsidiary,
and neither the Company, its subsidiary nor, to the Company’s knowledge, any other party is in default thereunder and, to
the Company’s knowledge, no event has occurred that, with the lapse of time or the giving of notice, or both, would constitute
a default thereunder. To the best of the Company’s knowledge, performance by the Company or its subsidiary of the material
provisions of such agreements or instruments will not result in a violation of any existing applicable law, rule, regulation, judgment,
order or decree of any governmental authority, agency or court, domestic or foreign, having jurisdiction over the Company, or it
subsidiary or any of its assets or businesses, including, without limitation, those relating to environmental laws and regulations.
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(h)
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Prior Securities Transactions
. No securities of the Company have been sold by the Company
or by or on behalf of, or for the benefit of, any person or persons controlling, controlled by or under common control with the
Company, except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Preliminary Prospectus.
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(i)
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Regulations
. The disclosures in the Registration Statement, the Pricing Disclosure Package
and the Prospectus concerning the effects of federal, state, local and all foreign regulation on the Offering and the Company’s
and its subsidiary’s business as currently contemplated are correct in all material respects and no other such regulations
are required to be disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus which are not so
disclosed.
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(j)
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No Material Adverse Change
. Since the respective dates as of which information is given
in the Registration Statement, the Pricing Disclosure Package and the Prospectus, except as otherwise specifically stated therein:
(i) there has been no material adverse change in the financial position or results of operations of the Company or its subsidiary,
nor any change or development that, singularly or in the aggregate, would involve a material adverse change or a prospective material
adverse change, in or affecting the condition (financial or otherwise), results of operations, business, assets or prospects of
the Company or its subsidiary (a “
Material Adverse Change
”); (ii) there have been no material transactions
entered into by the Company or its subsidiary, other than as contemplated pursuant to this Agreement; and (iii) no officer
or director of the Company or its subsidiary has resigned from any position with the Company or its subsidiary.
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(k)
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Recent Securities Transactions, etc
. Subsequent to the respective dates as of which information
is given in the Registration Statement, the Pricing Disclosure Package and the Prospectus, and except as may otherwise be indicated
or contemplated herein or disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company
has not: (i) issued any securities or incurred any liability or obligation, direct or contingent, for borrowed money; or (ii) declared
or paid any dividend or made any other distribution on or in respect to its capital stock.
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(l)
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Disclosures in Commission Filings
. Since the date of the filing with the Commission of the
Company’s Annual Report on Form 10-K for the year ended December 31, 2015: (i) none of the Company’s filings with
the Commission contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not misleading; and (ii) the Company
has made all filings with the Commission required under the Exchange Act and the rules and regulations of the Commission promulgated
thereunder (the “
Exchange Act Regulations
”).
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(m)
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Independent Accountants of the Company and IMT
. To the knowledge of the Company, Friedman
LLP (the “
Former Auditor
”), and Marcum LLP (the “
Current Auditor
” and together with the “
Former
Auditor
,” the “
Auditors
”), whose reports are filed with the Commission as part of the Registration
Statement, the Pricing Disclosure Package and the Prospectus, is each an independent registered public accounting firm as required
by the Securities Act and the Securities Act Regulations and the Public Company Accounting Oversight Board. Additionally, the Current
Auditor whose reports are filed with the Commission as part of the Registration Statement, the Pricing Disclosure Package and the
Prospectus, is an independent registered public accounting firm with respect to Integrated Microwave Technologies, LLC (“
IMT
”).
Each of the Auditors has not, during the periods covered by the financial statements included or incorporated by reference in the
Registration Statement, the Pricing Disclosure Package and the Prospectus, provided to the Company any non-audit services, as such
term is used in Section 10A(g) of the Exchange Act.
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(n)
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Independent Accountants of Vislink
. To the knowledge of the Company, PriceWaterhouseCoopers,
LLP (the “
Vislink Auditor
”) whose reports are filed with the Commission as part of the Registration Statement,
the Pricing Disclosure Package and the Prospectus, is an independent registered public accounting firm with respect to Vislink,
PLC (“
Vislink
”) as required by the Securities Act and the Securities Act Regulations and the Public Company
Accounting Oversight Board. The Vislink Auditor has not, during the periods covered by the financial statements included or incorporated
by reference in the Registration Statement, the Pricing Disclosure Package and the Prospectus, provided to the Company any non-audit
services, as such term is used in Section 10A(g) of the Exchange Act.
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(o)
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Financial Statements, etc of the Company
. The financial statements, including the notes
thereto and supporting schedules incorporated by reference in the Registration Statement, the Pricing Disclosure Package and the
Prospectus, comply in all material respects with the requirements of the Act and the Securities Act Regulations and fairly present
the financial position and the results of operations of the Company and its subsidiary at the dates and for the periods to which
they apply, as applicable; and such financial statements have been prepared in conformity with U.S. generally accepted accounting
principles (“
GAAP
”), consistently applied throughout the periods involved (provided that unaudited interim financial
statements are subject to year-end audit adjustments that are not expected to be material in the aggregate and do not contain all
footnotes required by GAAP); and the supporting schedules incorporated by reference in the Registration Statement present fairly
the information required to be stated therein. Except as included or incorporated by reference therein, no historical or pro forma
financial statements are required to be included in the Registration Statement, the Pricing Disclosure Package or the Prospectus
under the Act or the Securities Act Regulations. The pro forma and pro forma as adjusted financial information and the related
notes, if any, included or incorporated by reference in the Registration Statement, the Pricing Disclosure Package and the Prospectus
have been properly compiled and prepared in accordance with the applicable requirements of the Act and the Securities Act Regulations
and present fairly the information shown therein, and the assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions and circumstances referred to therein. All disclosures contained
in or incorporated by reference in the Registration Statement, the Pricing Disclosure Package or the Prospectus regarding “non-GAAP
financial measures” (as such term is defined by the rules and regulations of the Commission), if any, comply with Regulation G
of the Exchange Act and Item 10 of Regulation S-K of the Act, to the extent applicable. Each of the Registration Statement,
the Pricing Disclosure Package and the Prospectus discloses all material off-balance sheet transactions, arrangements, obligations
(including contingent obligations), and other relationships of the Company with unconsolidated entities or other persons that may
have a material current or future effect on the Company’s or its subsidiary’s financial condition, changes in financial
condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenues or
expenses. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, (i) the Company
has not incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions other
than in the ordinary course of business, (ii) the Company has not declared or paid any dividends or made any distribution
of any kind with respect to its capital stock, (iii) there has not been any change in the capital stock of the Company, or,
other than in the course of business, any grants under any stock compensation plan, and (iv) there has not been any material
adverse change in the Company’s long-term or short-term debt. The interactive data in eXtensible Business Reporting Language
included or incorporated by reference in the Registration Statement, the Pricing Disclosure Package and the Prospectus truly, accurately
and 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.
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(p)
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Financial Statements, etc. of IMT
. The financial statements, including the notes thereto
and supporting schedules incorporated by reference in the Registration Statement, the Pricing Disclosure Package and the Prospectus,
comply in all material respects with the requirements of the Act and the Securities Act Regulations and fairly present the financial
position and the results of operations of IMT at the dates and for the periods to which they apply, as applicable; and such financial
statements have been prepared in conformity with GAAP, consistently applied throughout the periods involved (provided that unaudited
interim financial statements are subject to year-end audit adjustments that are not expected to be material in the aggregate and
do not contain all footnotes required by GAAP); and the supporting schedules incorporated by reference in the Registration Statement
present fairly the information required to be stated therein. Except as included therein, no historical or pro forma financial
statements are required to be included or incorporated by reference in the Registration Statement, the Pricing Disclosure Package
or the Prospectus under the Act or the Securities Act Regulations. All disclosures contained in the Registration Statement, the
Pricing Disclosure Package or the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the
rules and regulations of the Commission), if any, comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K
of the Act, to the extent applicable. Each of the Registration Statement, the Pricing Disclosure Package and the Prospectus discloses
all material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships
of the Company with unconsolidated entities or other persons that may have a material current or future effect on IMT’s financial
condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant
components of revenues or expenses.
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(q)
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Financial Statements, etc. of Vislink
. The financial statements, including the notes thereto
and supporting schedules incorporated by reference in the Registration Statement, the Pricing Disclosure Package and the Prospectus,
comply in all material respects with the requirements of the Act and the Securities Act Regulations and fairly present the financial
position and the results of operations of Vislink at the dates and for the periods to which they apply, as applicable; and such
financial statements have been prepared in accordance with IFRS, consistently applied throughout the periods involved (provided
that unaudited interim financial statements are subject to year-end audit adjustments that are not expected to be material in the
aggregate); and the supporting schedules incorporated by reference in the Registration Statement present fairly the information
required to be stated therein. Except as included or incorporated by reference therein, no historical or pro forma financial statements
are required to be included in the Registration Statement, the Pricing Disclosure Package or the Prospectus under the Act or the
Securities Act Regulations. All disclosures contained in the Registration Statement, the Pricing Disclosure Package or the Prospectus
regarding “non GAAP financial measures” (as such term is defined by the rules and regulations of the Commission), if
any, comply with Regulation G of the Exchange Act and Item 10 of Regulation S K of the Act, to the extent applicable. Each of the
Registration Statement, the Pricing Disclosure Package and the Prospectus discloses all material off balance sheet transactions,
arrangements, obligations (including contingent obligations), and other relationships of the Company with unconsolidated entities
or other persons that may have a material current or future effect on Vislink’s financial condition, changes in financial
condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenues or
expenses. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, (i) Vislink
has not incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions other
than in the ordinary course of business, and (ii) there has not been any material adverse change in Vislink’s long-term
or short-term debt.
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(r)
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Pro Forma Financial Information
. The unaudited pro forma and pro forma as adjusted
financial information and the related notes thereto incorporated by reference into the Registration Statement, the Pricing Disclosure
Package and the Prospectus present fairly the information contained therein, have been prepared in accordance with the Commission’s
rules and guidelines with respect to pro forma financial statements and have been properly presented on the bases described therein,
and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein.
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(s)
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Authorized Capital, Options, etc
. The Company had, at the date or dates indicated in the
Registration Statement, the Pricing Disclosure Package and the Prospectus, the duly authorized, issued and outstanding capitalization
as set forth therein. Based on the assumptions stated in the Registration Statement, the Pricing Disclosure Package and the Prospectus,
the Company will have on the Closing Date the adjusted stock capitalization set forth therein. Except as set forth in, or contemplated
by, the Registration Statement, the Pricing Disclosure Package and the Prospectus, on the Effective Date, as of the Applicable
Time and on the Closing Date, there will be no stock options, warrants, or other rights to purchase or otherwise acquire any authorized,
but unissued shares of Common Stock of the Company or any security convertible or exercisable into shares of Common Stock of the
Company, or any contracts or commitments to issue or sell shares of Common Stock or any such options, warrants, rights or convertible
securities.
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(t)
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Valid Issuance of Securities, etc
.
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(i)
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Outstanding Securities
. All issued and outstanding securities of the Company issued prior
to the transactions contemplated by this Agreement have been duly authorized and validly issued and are fully paid and non-assessable;
the holders thereof have no rights of rescission with respect thereto, and are not subject to personal liability by reason of being
such holders; and none of such securities were issued in violation of the preemptive rights of any holders of any security of the
Company or similar contractual rights granted by the Company. The outstanding shares of Common Stock and all other issued securities
of the Company conform in all material respects to all statements relating thereto contained in the Registration Statement, the
Pricing Disclosure Package and the Prospectus. The offers and sales of the outstanding shares of Common Stock and such issued securities
were at all relevant times either registered under the Act and the applicable state securities or “blue sky” laws or,
based in part on the representations and warranties of the purchasers of such securities, exempt from such registration requirements.
All of the membership interests of the
subsidiary
of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable, except as provided by applicable law, and, except
as set forth in the Pricing Disclosure Package and the Prospectus, are owned directly or indirectly by the Company, free and clear
of all liens, encumbrances, equities or claims.
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(ii)
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Securities Sold Pursuant to this Agreement
. The Securities have been duly authorized. The
Shares, when issued and delivered against payment therefore as provided herein, the Warrant Shares, when issued and delivered upon
the due exercise of the Warrants, and the shares of Common Stock issuable upon the exercise of the Underwriter Warrants (the “
Underwriter
Warrant Shares
”), when issued and delivered upon the due exercise of the Underwriter Warrants will be validly issued,
fully paid and non-assessable and free of any preemptive or similar rights and will conform to the description thereof contained
in the Registration Statement, the Pricing Disclosure Package and the Prospectus. Each Security conforms to the description thereof
contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus. All corporate action required to be
taken for the authorization, issuance and sale of the Securities has been duly and validly taken.
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(iii)
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Underlying Shares
. The shares of Common Stock underlying (i) the Warrants, (ii) the Underwriter
Warrants and (iii) all existing warrants, options and other convertible securities of the Company, have been duly authorized for
issuance, will conform to the description thereof in the Registration Statement, the Pricing Disclosure and the Prospectus, have
been validly reserved for future issuance and will, upon the exercise of such existing securities, the Warrants and the Underwriter
Warrants, and payment of the exercise price thereof, as applicable, be duly and validly issued, fully paid and non-assessable and
will not have been issued in violation of or subject to preemptive or similar rights to subscribe for or purchase securities of
the Company. The issuance of such securities is not subject to any statutory preemptive rights under the laws of the State of Delaware
or the Company’s certificate of incorporation or bylaws as in effect at the time of issuance, rights of first refusal or
other similar rights of any security holder of the Company.
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(u)
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Registration Rights of Third Parties
. Except as set forth in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, or in any SEC Filings, no holders of any securities of the Company or any rights
exercisable for or convertible or exchangeable into securities of the Company have the right to require the Company to register
any such securities of the Company under the Act or to include any such securities in a registration statement to be filed by the
Company.
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(v)
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Validity and Binding Effect of Agreements
. This Agreement, the Warrant Agreement, the Warrants
and the Underwriter Warrants have been duly and validly authorized by the Company, and, when executed and delivered, will constitute,
a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except: (i) as
such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights
generally; (ii) as enforceability of any indemnification or contribution provision may be limited under the federal and state
securities laws; and (iii) that the remedy of specific performance and injunctive and other forms of equitable relief may
be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
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(w)
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No Conflicts, etc
. The execution, delivery and performance by the Company of this Agreement,
the Warrant Agreement and the Warrants and all respective ancillary documents thereunder, the consummation by the Company of the
transactions herein and therein contemplated and the compliance by the Company with the terms hereof and thereof do not and will
not, with or without the giving of notice or the lapse of time or both: (i) result in a material breach of, or conflict with
any of the terms and provisions of, or constitute a material default under, or result in the creation, modification, termination
or imposition of any lien, charge or encumbrance upon any property or assets of the Company or its subsidiary pursuant to the terms
of any agreement or instrument to which the Company or its subsidiary is a party; (ii) result in any violation of the provisions
of the Company’s Amended and Restated Certificate of Incorporation (as the same may be amended or restated from time to time,
the “
Charter
”) or the by-laws of the Company; or (iii) violate any existing applicable law, rule, regulation,
judgment, order or decree of any governmental authority as of the date hereof except in the case of (i) or (ii), such as would
not result in a Material Adverse Change.
|
|
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(x)
|
No Defaults; Violations
. No material default exists in the due performance and observance
of any term, covenant or condition of any material license, contract, indenture, mortgage, deed of trust, note, loan or credit
agreement, or any other agreement or instrument evidencing an obligation for borrowed money, or any other material agreement or
instrument to which the Company or its subsidiary is a party or by which the Company or its subsidiary may be bound or to which
any of the properties or assets of the Company or its subsidiary is subject. The Company is not in violation of any term or provision
of its Charter or by-laws, and neither the Company nor its subsidiary is in violation of any franchise, license, permit, applicable
law, rule, regulation, judgment or decree of any governmental authority, except such as would not result in a Material Adverse
Change.
|
|
|
(y)
|
Corporate Power; Licenses; Consents
.
|
|
|
(i)
|
Conduct of Business
. Except as described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus or such as would not result in a Material Adverse Change, each of the Company and its subsidiary has
all requisite corporate power and authority, and has all necessary authorizations, approvals, orders, licenses, certificates and
permits of and from all governmental regulatory officials and bodies that it needs as of the date hereof to conduct its business
purpose as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
|
|
|
(ii)
|
Transactions Contemplated Herein
. The Company has all corporate power and authority to enter
into this Agreement, the Warrant Agreement, the Warrants and the Underwriter Warrants, and to carry out the provisions and conditions
hereof, and all consents, authorizations, approvals and orders required in connection therewith have been obtained. No consent,
authorization or order of, and no filing with, any court, government agency or other body is required for the valid issuance, sale
and delivery of the Securities and the consummation of the transactions and agreements contemplated by this Agreement, the Warrant
Agreement, the Warrants and the Underwriter Warrant and as contemplated by the Registration Statement, the Pricing Disclosure Package
and the Prospectus, except with respect to applicable federal and state securities laws and the rules and regulations of the Financial
Industry Regulatory Authority, Inc. (“
FINRA
”).
|
|
|
(z)
|
D&O Information
. To the Company’s knowledge, all information concerning the Company’s
and its subsidiary’s directors, officers and principal shareholders described in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, as well as in the Lock-Up Agreement (as defined below) provided to the Underwriters, is
true and correct in all material respects and the Company has not become aware of any information which would cause such information
to become materially inaccurate or incorrect.
|
|
|
(aa)
|
Litigation; Governmental Proceedings
. There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding pending or, to the Company’s knowledge, threatened against, or involving
the Company and/or its subsidiary or, to the Company’s knowledge, any executive officer or director which has not been disclosed
in the Registration Statement, the Pricing Disclosure Package and the Prospectus or in connection with the Company’s listing
application for the listing of the Shares on the Exchange, which, if determined adversely to the Company and its subsidiary, would
have a Material Adverse Effect.
|
|
|
(bb)
|
Good Standing
. Each of the Company and its subsidiary has been duly organized and is validly
existing as a corporation or other entity in good standing under the laws of its jurisdiction of organization as of the date hereof,
and is duly qualified to do business and is in good standing in each other jurisdiction in which its ownership or lease of property
or the conduct of business requires such qualification, except where the failure to qualify, singularly or in the aggregate, would
not have or reasonably be expected to result in a Material Adverse Change.
|
|
|
(cc)
|
Insurance
. Each of the Company and its subsidiary carries or is entitled to the benefits
of insurance, with reputable insurers, in such amounts and covering such risks which the Company believes are adequate, and all
such insurance is in full force and effect. The Company has no reason to believe that it will not be able (i) to renew its
existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse
Change.
|
|
|
(dd)
|
Transactions Affecting Disclosure to FINRA
.
|
|
|
(i)
|
Finder’s Fees
. Except as described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, there are no claims, payments, arrangements, agreements or understandings relating to the payment of
a finder’s, consulting or origination fee by the Company or any Insider with respect to the sale of the Securities hereunder
or any other arrangements, agreements or understandings of the Company or, to the Company’s knowledge, any of its shareholders
that may affect the Underwriters’ compensation, as determined by FINRA.
|
|
|
(ii)
|
Payments Within Twelve (12) Months
. Except as described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, the Company has not made any direct or indirect payments (in cash, securities or
otherwise) to: (i) any person, as a finder’s fee, consulting fee or otherwise, in consideration of such person raising
capital for the Company or introducing to the Company persons who raised or provided capital to the Company; (ii) any FINRA
member; or (iii) any person or entity that has any direct or indirect affiliation or association with any FINRA member, within
the twelve (12) months prior to the Effective Date, other than the payment to the Underwriters as provided hereunder in connection
with the Offering.
|
|
|
(iii)
|
Use of Proceeds
. None of the net proceeds of the Offering will be paid by the Company to
any participating FINRA member or its affiliates, except as specifically authorized herein.
|
|
|
(iv)
|
FINRA Affiliation
. Other than as disclosed to the Representative in writing, there is no:
(x) officer or director of the Company, (y) beneficial owner of 5% or more of any class of the Company’s securities
or (z) beneficial owner of the Company’s unregistered equity securities which were acquired during the 180-day period
immediately preceding the filing of the Registration Statement that is an affiliate or associated person of a FINRA member participating
in the Offering (as determined in accordance with the rules and regulations of FINRA).
|
|
|
(v)
|
Information
. All information provided by the Company in its FINRA questionnaire to the Underwriters’
counsel specifically for use by the Underwriters’ counsel in connection with its Public Offering System filings (and related
disclosure) with FINRA is true, correct and complete in all material respects.
|
|
|
(ee)
|
Foreign Corrupt Practices Act
. Neither the Company nor its subsidiary, nor to the Company’s
knowledge, any director, officer, agent, employee or affiliate of the Company or its subsidiary, or any other person acting on
behalf of the Company or its subsidiary, has, directly or indirectly, given or agreed to give any money, gift or similar benefit
(other than legal price concessions to customers in the ordinary course of business) to any customer, supplier, employee or agent
of a customer or supplier, or official or employee of any governmental agency or instrumentality of any government (domestic or
foreign) or any political party or candidate for office (domestic or foreign) or other person who was, is, or may be in a position
to help or hinder the business of the Company (or assist it in connection with any actual or proposed transaction) that: (i) might
subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (ii) if not
given in the past, might have had a Material Adverse Change or (iii) if not continued in the future, might adversely affect
the assets, business, operations or prospects of the Company or its subsidiary. The Company has taken reasonable steps to ensure
that its accounting controls and procedures are sufficient to cause the Company to comply in all material respects with the Foreign
Corrupt Practices Act of 1977, as amended.
|
|
|
(ff)
|
Compliance with OFAC
. Neither the Company nor its subsidiary, nor to the Company’s
knowledge, any director, officer, agent, employee or affiliate of the Company or its subsidiary, or any other person acting on
behalf of the Company or its subsidiary, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Department of the Treasury (“
OFAC
”), and neither the Company nor its subsidiary will, directly
or indirectly, use the proceeds of the Offering hereunder, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
|
|
|
(gg)
|
Money Laundering Laws
. The operations of the Company and its subsidiary are and have been
conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder
and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental authority (collectively,
the “
Money Laundering Laws
”); and no action, suit or proceeding by or before any governmental authority involving
the Company and/or its subsidiary with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company,
threatened.
|
|
|
(hh)
|
Lock-Up Agreements
.
Schedule II
hereto contains a complete and accurate list
of the Company’s officers, directors and each beneficial owner of at least 5% of the Company’s outstanding shares of
Common Stock (or securities convertible or exercisable into shares of Common Stock) (collectively, the “
Lock-Up Parties
”).
The Company has caused each of the Lock-Up Parties to deliver to the Representative an executed Lock-Up Agreement, in the form
attached hereto as
Exhibit A
(the “
Lock-Up Agreement
”), prior to the execution of this Agreement.
|
|
|
(ii)
|
Related Party Transactions
. There are no business relationships or related party transactions
involving the Company, its subsidiary or any other person required to be described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus that have not been described as required.
|
|
|
(jj)
|
Board of Directors
. The Board of Directors of the Company is comprised of the persons set
forth under the heading of the Pricing Prospectus and the Prospectus captioned “Management.” The qualifications of
the persons serving as board members and the overall composition of the board comply with the Exchange Act, the Exchange Act Regulations,
the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder (the “
Sarbanes-Oxley Act
”) applicable to
the Company and the listing rules of the Exchange. At least one member of the Audit Committee of the Board of Directors of the
Company qualifies as an “audit committee financial expert,” as such term is defined under Regulation S-K and the
listing rules of the Exchange. In addition, at least a majority of the persons serving on the Board of Directors of the Company
qualify as “independent,” as defined under the listing rules of the Exchange.
|
|
|
(kk)
|
Sarbanes-Oxley Compliance
.
|
|
|
(i)
|
Disclosure Controls
. Other than as disclosed in the SEC Filings, the Company has developed
and currently maintains disclosure controls and procedures that will comply with Rule 13a-15 or 15d-15 under the Exchange
Act Regulations, and such controls and procedures are effective to ensure that all material information concerning the Company
will be made known on a timely basis to the individuals responsible for the preparation of the Company’s Exchange Act filings
and other public disclosure documents.
|
|
|
(ii)
|
Compliance
. The Company is, or at the Applicable Time and on the Closing Date will be, in
material compliance with the provisions of the Sarbanes-Oxley Act applicable to it, and has implemented or will implement such
programs and taken reasonable steps to ensure the Company’s future compliance (not later than the relevant statutory and
regulatory deadlines therefor) with all of the material provisions of the Sarbanes-Oxley Act.
|
|
|
(iii)
|
Accounting Controls
. Each of the Company and its subsidiary maintains systems of “internal
control over financial reporting” (as defined under Rules 13a-15 and 15d-15 under the Exchange Act Regulations) that
comply with the requirements of the Exchange Act and have been designed by, or under the supervision of, its principal executive
and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including, but
not limited to, internal accounting controls sufficient to provide reasonable assurance that: (a) transactions are executed
in accordance with management’s general or specific authorizations; (b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain asset accountability; (c) access to assets is
permitted only in accordance with management’s general or specific authorization; and (d) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company is not aware
of any material weaknesses in its internal controls. The Auditors and the Audit Committee of the Board of Directors of the Company
have been advised of: (x) all significant deficiencies and material weaknesses in the design or operation of internal controls
over financial reporting which are known to the Company’s management; and (y) any fraud known to the Company’s
management, whether or not material, that involves management or other employees who have a significant role in the Company’s
internal controls over financial reporting.
|
|
|
(ll)
|
No Investment Company Status
. The Company is not and, after giving effect to the Offering
and the application of the proceeds thereof as described in the Registration Statement, the Pricing Disclosure Package and the
Prospectus, will not be, required to register as an “investment company,” as defined in the Investment Company Act
of 1940, as amended.
|
|
|
(mm)
|
No Labor Disputes
. No labor dispute with the employees of the Company or its subsidiary
exists or, to the knowledge of the Company, is imminent.
|
|
|
(nn)
|
Intellectual Property Rights
. The Company and its subsidiary owns or possesses or has valid
rights to use all patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations,
copyrights, licenses, inventions, trade secrets and similar rights (“
Intellectual Property Rights
”) necessary
for the conduct of its business as currently carried on and as described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus. To the knowledge of the Company, no action or use by the Company or its subsidiary necessary for the
conduct of its business as currently carried on and as described in the Registration Statement and the Prospectus will involve
or give rise to any infringement of, or license or similar fees for, any Intellectual Property Rights of others. Neither the Company
nor its subsidiary has received any notice alleging any such infringement, fee or conflict with asserted Intellectual Property
Rights of others. Except as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse
Change (A) to the knowledge of the Company, there is no infringement, misappropriation or violation by third parties of any
of the Intellectual Property Rights owned by the Company or its subsidiary; (B) there is no pending or, to the knowledge of
the Company or its subsidiary, threatened action, suit, proceeding or claim by others challenging the rights of the Company or
its subsidiary in or to any such Intellectual Property Rights, and neither the Company nor its subsidiary is aware of any facts
which would form a reasonable basis for any such claim, that would, individually or in the aggregate, together with any other claims
in this Section 1(nn), reasonably be expected to result in a Material Adverse Change; (C) the Intellectual Property Rights
owned by the Company and, to the knowledge of the Company, the Intellectual Property Rights licensed to the Company or its subsidiary
have not been adjudged by a court of competent jurisdiction invalid or unenforceable, in whole or in part, and there is no pending
or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity or scope
of any such Intellectual Property Rights, and neither the Company nor its subsidiary is aware of any facts which would form a reasonable
basis for any such claim that would, individually or in the aggregate, together with any other claims in this Section 1(nn),
reasonably be expected to result in a Material Adverse Change; (D) there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others that the Company or its subsidiary infringes, misappropriates or otherwise
violates any Intellectual Property Rights or other proprietary rights of others, neither the Company nor its subsidiary has received
any written notice of such claim and the Company is unaware of any other facts which would form a reasonable basis for any such
claim that would, individually or in the aggregate, together with any other claims in this Section 1(nn), reasonably be expected
to result in a Material Adverse Change; and (E) to the Company’s knowledge, no employee of the Company or its subsidiary
is in or has ever been in violation in any material respect of any term of any employment contract, patent disclosure agreement,
invention assignment agreement, non-competition agreement, non-solicitation agreement, nondisclosure agreement or any restrictive
covenant to or with a former employer where the basis of such violation relates to such employee’s employment with the Company
or its subsidiary, or actions undertaken by the employee while employed with the Company or its subsidiary and could reasonably
be expected to result, individually or in the aggregate, in a Material Adverse Change. To the Company’s knowledge, all material
technical information developed by and belonging to the Company or its subsidiary which has not been patented has been kept confidential.
Neither the Company nor its subsidiary is a party to or bound by any options, licenses or agreements with respect to the Intellectual
Property Rights of any other person or entity that are required to be set forth in the Registration Statement, the Pricing Disclosure
Package and the Prospectus and are not described therein. The Registration Statement, the Pricing Disclosure Package and the Prospectus
contain in all material respects the same description of the matters set forth in the preceding sentence. None of the technology
employed by the Company or its subsidiary has been obtained or is being used by the Company or its subsidiary in violation of any
contractual obligation binding on the Company, its subsidiary or, to the Company’s knowledge, any of its officers, directors
or employees, or otherwise in violation of the rights of any persons.
|
|
|
(oo)
|
Taxes
. Each of the Company and its subsidiary has filed all returns (as hereinafter defined)
required to be filed with taxing authorities prior to the date hereof or has duly obtained extensions of time for the filing thereof.
Each of the Company and its subsidiary has paid all taxes (as hereinafter defined) shown as due on such returns that were filed
and has paid all taxes imposed on or assessed against the Company or its subsidiary, as applicable. The provisions for taxes payable,
if any, shown on the financial statements filed with or as part of the Registration Statement are sufficient for all accrued and
unpaid taxes, whether or not disputed, and for all periods to and including the dates of such consolidated financial statements.
Except as disclosed in writing to the Representative, (i) no issues have been raised (and are currently pending) by any taxing
authority in connection with any of the returns or taxes asserted as due from the Company or its subsidiary and (ii) no waivers
of statutes of limitation with respect to the returns or collection of taxes have been given by or requested from the Company or
its subsidiary. The term “
taxes
” means all federal, state, local, foreign and other net income, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments
or charges of any kind whatever, together with any interest and any penalties, additions to tax or additional amounts with respect
thereto. The term “
returns
” means all returns, declarations, reports, statements and other documents required
to be filed in respect to taxes.
|
|
|
(pp)
|
ERISA Compliance
. The Company and any “employee benefit plan” (as defined under
the Employee Retirement Income Security Act of 1974, as amended, and the regulations and published interpretations thereunder (collectively,
“
ERISA
”)) established or maintained by the Company or its “ERISA Affiliates” (as defined below)
are in compliance in all material respects with ERISA. “
ERISA Affiliate
” means, with respect to the Company,
any member of any group of organizations described in Sections 414(b),(c),(m) or (o) of the Internal Revenue Code of 1986,
as amended, and the regulations and published interpretations thereunder (the “
Code
”) of which the Company is
a member. No “reportable event” (as defined under ERISA) has occurred or is reasonably expected to occur with respect
to any “employee benefit plan” established or maintained by the Company or any of its ERISA Affiliates. No “employee
benefit plan” established or maintained by the Company or any of its ERISA Affiliates, if such “employee benefit plan”
were terminated, would have any “amount of unfunded benefit liabilities” (as defined under ERISA). Neither the Company
nor any of its ERISA Affiliates has incurred or reasonably expects to incur any material liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any “employee benefit plan” or (ii) Sections 412, 4971,
4975 or 4980B of the Code. Each “employee benefit plan” established or maintained by the Company or any of its ERISA
Affiliates that is intended to be qualified under Section 401(a) of the Code is so qualified and, to the knowledge of the
Company, nothing has occurred, whether by action or failure to act, which would cause the loss of such qualification.
|
|
|
(qq)
|
Compliance with Laws
. Each of the Company and its subsidiary: (A) is and at all times
has been in compliance with all statutes, rules or regulations applicable to the ownership, testing, development, manufacture,
packaging, processing, use, distribution, marketing, labeling, promotion, sale, offer for sale, storage, import, export or disposal
of any product manufactured or distributed by the Company or its subsidiary (“
Applicable Laws
”), except as could
not, individually or in the aggregate, reasonably be expected to have a Material Adverse Change; (B) has not received any
notice of adverse finding, warning letter, untitled letter or other correspondence or notice from any governmental authority alleging
or asserting noncompliance with any Applicable Laws or any licenses, certificates, approvals, clearances, authorizations, permits
and supplements or amendments thereto required by any such Applicable Laws (“
Authorizations
”); (C) possesses
all material Authorizations and such Authorizations are valid and in full force and effect and are not in material violation of
any term of any such Authorizations; (D) has not received notice of any claim, action, suit, proceeding, hearing, enforcement,
investigation, arbitration or other action from any governmental authority or third party alleging that any product, service or
activity is in violation of any Applicable Laws or Authorizations and has no knowledge that any such governmental authority or
third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding; (E) has not
received notice that any governmental authority has taken, is taking or intends to take action to limit, suspend, modify or revoke
any Authorizations and has no knowledge that any such governmental authority is considering such action; (F) has filed, obtained,
maintained or submitted all material reports, documents, forms, notices, applications, records, claims, submissions and supplements
or amendments as required by any Applicable Laws or Authorizations and that all such reports, documents, forms, notices, applications,
records, claims, submissions and supplements or amendments were complete and correct on the date filed (or were corrected or supplemented
by a subsequent submission); and (G) has not, either voluntarily or involuntarily, initiated, conducted, or issued or caused to
be initiated, conducted or issued, any recall, market withdrawal or replacement, safety alert, post-sale warning or other notice
or action relating to any product or any alleged product defect or violation and, to the Company’s knowledge, no third party
has initiated, conducted or intends to initiate any such notice or action.
|
|
|
(rr)
|
Ineligible Issuer
. At the time of filing the Registration Statement and any post-effective
amendment thereto, at the time of effectiveness of the Registration Statement and any amendment thereto, at the earliest time thereafter
that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the Securities
Act Regulations) of any of the Securities and at the date hereof, the Company was not and is not an “ineligible issuer,”
as defined in Rule 405, without taking account of any determination by the Commission pursuant to Rule 405 that it is
not necessary that the Company be considered an ineligible issuer.
|
|
|
(ss)
|
Smaller Reporting Company
. As of the time of filing of the Registration Statement, the Company
was a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act Regulations.
|
|
|
(tt)
|
Industry Data
. The statistical and market-related data included or incorporated by reference
in each of the Registration Statement, the Pricing Disclosure Package and the Prospectus are based on or derived from sources that
the Company reasonably and in good faith believes are reliable and accurate or represent the Company’s good faith estimates
that are made on the basis of data derived from such sources.
|
|
|
(uu)
|
Emerging Growth Company
. Since the effectiveness of its Registration Statement on Form S-1
on July 18, 2013, the Company has remained and currently is considered an “emerging growth company,” as defined in
Section 2(a) of the Act (an “
Emerging Growth Company
”).
|
|
|
(vv)
|
Testing-the-Waters Communications
. The Company has not (i) alone engaged in any Testing-the-Waters
Communications, other than Testing-the-Waters Communications with the written consent of the Representative and with entities that
are qualified institutional buyers within the meaning of Rule 144A under the Act or institutions that are accredited investors
within the meaning of Rule 501 under the Act and (ii) authorized anyone other than the Representative to engage in Testing-the-Waters
Communications. The Company confirms that the Representative has been authorized to act on its behalf in undertaking Testing-the-Waters
Communications. The Company has not distributed any Written Testing-the-Waters Communications other than those listed on
Schedule III
hereto. “
Testing-the-Waters Communication
” means any oral or written communication with potential investors
undertaken in reliance on Section 5(d) of the Act. “
Written Testing-the-Waters Communication
” means any
Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Act.
|
|
|
(ww)
|
Margin Securities
. The Company owns no “margin securities” as that term is defined
in Regulation U of the Board of Governors of the Federal Reserve System (the “
Federal Reserve Board
”),
and none of the proceeds of the Offering will be used, directly or indirectly, for the purpose of purchasing or carrying any margin
security, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might cause any of the shares of Common Stock to be considered a “purpose credit”
within the meanings of Regulation T, U or X of the Federal Reserve Board.
|
Any certificate signed
by any duly authorized officer of the Company and delivered to you or to the Underwriters’ counsel shall be deemed a representation
and warranty by the Company to the Underwriters as to the matters covered thereby.
|
|
2.
|
Purchase and Sale
. Subject to the terms and conditions and in reliance upon the representations
and warranties herein set forth:
|
|
|
(a)
|
The Company agrees to issue and sell the Shares and Warrants to the several Underwriters, and each
of the Underwriters, severally and not jointly, agree to purchase from the Company the number of Shares and Warrants set forth
opposite their respective names on
Schedule I
attached hereto and incorporated by reference herein. The purchase price
for the Shares and the Warrants shall be $1.86 per Share and related Warrant.
|
|
|
(b)
|
The Shares and the Warrants will be delivered by the Company to the Representative, for the respective
accounts of the several Underwriters, against payment of the purchase price therefor by wire transfer of same day funds payable
to the order of the Company at the offices of Aegis Capital Corp., 810 Seventh Avenue, 18
th
Floor, 18
th
Floor,
New York, NY 10019, or such other location as may be mutually acceptable, at 6:00 a.m. Pacific Time, on the third (or if the Shares
and the Warrants are priced, as contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30 p.m. Eastern time, the fourth)
full business day following the date hereof, or at such other time and date as the Representative and the Company determine pursuant
to Rule 15c6-1(a) under the Exchange Act. The time and date of delivery of the Shares and the Warrants is referred to herein as
the “
Closing Date
.” On the Closing Date, the Company shall deliver the Shares and the Warrants, which shall
be registered in the name or names and shall be in such denominations as the Representative may request on behalf of the Underwriters
at least one (1) business day before the Closing Date, to the respective accounts of the several Underwriters, which delivery shall
be made through the facilities of the Depository Trust Company’s DWAC system.
|
|
|
(c)
|
Upon Company’s authorization of the release of the Shares and the Warrants, the Underwriters
propose to offer the Shares and the Warrants for sale upon the terms and conditions set forth in the Prospectus.
|
|
|
(d)
|
The documents to be delivered at each Closing Date by or on behalf of the parties hereto pursuant
to Section 4 of this Agreement, including the cross receipt for the Securities and any additional documents requested by the
Representative pursuant to Section 4 hereof, will be delivered at the offices of Lowenstein Sandler LLP, 1251 Avenue of the
Americas, New York, NY 10020 (the “
Closing Location
”). By noon EST on the business day in New York that is next
preceding each Closing Date, the final drafts of the documents to be delivered pursuant to the preceding sentence shall be available
for review by the parties hereto.
|
|
|
(e)
|
On the Closing Date, the Company shall issue to the Representative (and/or its designees) warrants
(the “
Underwriter Warrants
”), in form and substance acceptable to the Representative, for the purchase of an
aggregate of 52,500 shares of Common Stock, which shall be registered in the name or names and shall be in such denominations as
the Representative may request on behalf of the Underwriters at least one (1) business day before the Closing Date.
|
The Company agrees with the Underwriters
that:
|
|
(a)
|
Prior to the later of the last date on which a “settlement date,” if any, may occur,
and the termination of the Offering, the Company will not file any amendment or supplement to the Registration Statement (including
the Prospectus) unless the Company has furnished the Representative a copy for its review prior to filing and will not file any
such proposed amendment or supplement to which the Representative reasonably objects, unless otherwise required by the Act or the
Exchange Act. Subject to the foregoing sentence, the Company will cause the Prospectus, properly completed, and any supplement
thereto to be filed in a form approved by the Representative with the Commission pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence satisfactory to the Representative of such timely filing. The Company
will promptly advise the Underwriters (1) when the Prospectus, and any supplement thereto, shall have been filed (if required)
with the Commission pursuant to Rule 424(b), (2) when, prior to termination of the Offering, any amendment to the Registration
Statement shall have been filed or become effective, (3) of any request by the Commission or its staff for any amendment of
the Registration Statement, or for any supplement to the Prospectus or for any additional information, (4) of the Company’s
intention to file, or prepare any supplement or amendment to, the Registration Statement, the Prospectus or any Issuer Free Writing
Prospectus, (5) of the issuance by the Commission of any stop order or cease trade order suspending the effectiveness of the
Registration Statement or of any notice objecting to its use or the institution or threatening of any proceeding for that purpose,
(6) of the receipt of any comments or communications from the Commission or any other regulatory authority relating to the
Prospectus or the Registration Statement, and (7) of the receipt by the Company of any notification with respect to the suspension
of the qualification of the Securities for sale in any jurisdiction or the institution or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of any such stop order or cease trade order or the occurrence
of any such suspension or objection to the use of the Registration Statement and, upon such issuance, occurrence or notice of objection,
to obtain as soon as possible the withdrawal of such stop order or cease trade order or relief from such occurrence or objection,
including, if necessary, by filing an amendment to the Registration Statement or a new registration statement and using its best
efforts to have such amendment or new registration statement declared effective as soon as practicable.
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(b)
|
The Company will prepare and file the Prospectus with the Commission, promptly after the date of
this Agreement in compliance with Rule 424(b) under the Act.
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(c)
|
If, at any time prior to the filing of the Prospectus pursuant to Rule 424(b), any event occurs
as a result of which the Pricing Disclosure Package, as of the Applicable Time, would include any untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which
they were made or the circumstances then prevailing not misleading, the Company will (1) notify promptly the Underwriters
so that any use of the Pricing Disclosure Package may cease until it is amended or supplemented, (2) subject to the first
sentence of paragraph (a) of this Section 3, amend or supplement the Pricing Disclosure Package to correct such statement
or omission, and (3) supply any amendment or supplement to the Underwriters in such quantities as they may reasonably request.
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(d)
|
If, at any time when a prospectus relating to the Securities is required to be delivered under
the Act (including in circumstances where such requirement may be satisfied pursuant to Rule 172), any event occurs as a result
of which the Prospectus as then supplemented would include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the circumstances under which they were made at such time not misleading,
or if it shall be necessary to amend the Registration Statement, file a new registration statement or supplement the Prospectus
to comply with the Act or the Exchange Act or the respective rules thereunder, including in connection with the use or delivery
of the Prospectus, the Company promptly will (i) notify the Underwriters of any such event, (ii) prepare and file with
the Commission, subject to the first sentence of paragraph (a) of this Section 3, an amendment or supplement to the Registration
Statement or Prospectus or a new registration statement which will correct such statement or omission or effect such compliance,
(iii) use its best efforts to have any amendment to the Registration Statement or new registration statement declared effective
as soon as practicable in order to avoid any disruption in use of the Prospectus and (iv) supply any supplemented Prospectus
to you in such quantities as you may reasonably request.
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(e)
|
As soon as practicable, but not later than the Availability Date (as defined below), the Company
will make generally available to its security holders an earnings statement covering a period of at least 12 months beginning
after the Effective Time of the Registration Statement (or, if later, the Effective Time of the any registration statement pursuant
to Rule 462(b)) which will satisfy the provisions of Section 11(a) of the Act and Rule 158 under the Act. For the
purpose of the preceding sentence, “
Availability Date
” means the day after the Company is required to file its
Form 10-Q for the fourth fiscal quarter following the fiscal quarter that includes such Effective Time except that, if such
fourth fiscal quarter is the last quarter of the Company’s fiscal year, “
Availability Date
” means the
day after the Company is required to file its Form 10-K for the end of such fourth fiscal quarter.
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(f)
|
The Company will use the net proceeds received by it from the sale of the Securities pursuant to
this Agreement in the manner specified in the Pricing Disclosure Package and the Prospectus under the caption “Use of Proceeds”.
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(g)
|
The Company will use its best efforts to maintain the listing of the Shares, the Warrant Shares
and the Underwriter Warrant Shares on the Exchange.
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(h)
|
The Company will furnish to the Underwriters and counsel for the Underwriters signed copies of
the Registration Statement and, so long as delivery of a prospectus by an Underwriter or dealer may be required by the Act (including
in such circumstances where such requirement may be satisfied pursuant to Rule 172), as many copies of the Preliminary Prospectus,
the Prospectus, each Issuer Free Writing Prospectus and any supplement thereto as any Underwriter may reasonably request.
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(i)
|
The Company will arrange, if necessary, for the qualification of the Securities for sale under
the laws of such jurisdictions as the Underwriters may designate and will maintain such qualifications in effect so long as required
for the distribution of the Securities; provided that in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that would subject it to service of process in suits, other
than those arising out of the offering or sale of the Securities, in any jurisdiction where it is not now so subject.
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(j)
|
The Company will not, without the prior written consent of the Representative, issue, offer, sell,
contract to sell, pledge, or otherwise dispose of or enter into any transaction which is designed to, or might reasonably be expected
to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise)
by the Company or any affiliate of the Company, directly or indirectly, including the filing (or participation in the filing) of
a registration statement or prospectus with the Commission in respect of, or establish or increase a put equivalent position or
liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, with respect to any
other shares of Common Stock or any securities convertible into, or exercisable or exchangeable for, Common Stock, or publicly
announce an intention to effect any such transaction, for a period of 90 days after the date of this Agreement (the “
Lock-Up
Period
”), except that the Company may: (i) file a registration statement or prospectus with the Commission in respect
of the Securities and sell the Securities to the Underwriters pursuant to this Agreement, (ii) issue and sell Common Stock
or grant performance shares, stock appreciation rights, options or other equity-based awards pursuant to any employee stock option
plan, stock ownership plan or dividend reinvestment plan of the Company in effect at the Execution Time or as proposed to be amended
by the Company’s shareholders at the next annual meeting of shareholders, and (iii) issue Common Stock required to be
issued during the Lock-Up Period pursuant to agreements in effect as of the Execution Time and issue Common Stock issuable upon
the conversion of securities or the exercise of warrants or options outstanding at the Execution Time. Notwithstanding anything
to the contrary in this paragraph, the Company shall be allowed to issue (i) Common Stock to employees pursuant to a shareholder
approved stock option plan, incentive compensation plan, or employee stock purchase plan (each a “
Plan
” and
collectively the “
Plans
”), (ii) issue shares of Series D Convertible Preferred Stock pursuant to any agreements
in effect prior to the date hereof and (iii) issue Common Stock that it has previously agreed to issue as disclosed in any of the
Registration Statement, the Pricing Disclosure Package and the Prospectus. Additionally, during the Lock-up Period, the Company
may register (i) on Form S-8, any shares underlying any Plan, and (ii) on Form S-1 or Form S-3, for resale, (x) any shares underlying
the Series D Convertible Preferred Stock or (y) any shares that the Company has agreed to register pursuant to a Registration Rights
Agreement that has been disclosed in any of the Registration Statement, the Pricing Disclosure Package and the Prospectus.
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(k)
|
The Company has, and will, comply with all applicable securities and other applicable laws, rules
and regulations, including, without limitation, the Sarbanes Oxley Act, and will use its best efforts to cause the Company’s
directors and officers, in their capacities as such, to comply with such laws, rules and regulations, including, without limitation,
the provisions of the Sarbanes Oxley Act.
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(l)
|
The Company will not take, directly or indirectly, any action designed to or that would constitute
or that might reasonably be expected to cause or result in, under the Exchange Act or otherwise, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of the Securities.
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(m)
|
The Company hereby agrees to pay on the Closing Date all expenses incident to the performance of
the obligations of the Company under this Agreement, including, but not limited to: (a) all filing fees and communication expenses
relating to the registration of the Securities to be sold in the Offering with the Commission; (b) all filing fees associated with
the review of the Offering by FINRA; (c) all fees and expenses relating to the listing of the Securities on the Exchange (to the
extent relevant) and on such other stock exchanges as the Company and the Representative together determine; (d) all fees, expenses
and disbursements relating to background checks of the Company’s officers and directors in an amount not to exceed $15,000
in the aggregate; (e) all fees, expenses and disbursements relating to the registration or qualification of the Securities as the
Representative may reasonably designate; (f) all fees, expenses and disbursements relating to the registration, qualification or
exemption of the Securities under the securities laws of such foreign jurisdictions as the Representative may reasonably designate;
(g) the costs of all mailing and printing of the underwriting documents (including, without limitation, the Underwriting Agreement,
and, as appropriate, any Agreement Among Underwriters, Selected Dealers’ Agreement, Underwriters’ Questionnaire and
Power of Attorney), Registration Statements, Prospectuses and all amendments, supplements and exhibits thereto and as many preliminary
and final Prospectuses as the Underwriters may reasonably deem necessary; (h) the costs and expenses of the public relations firm
referred to in the engagement letter between the Company and the Representative; (i) the costs of preparing, printing and delivering
certificates representing the Securities; (j) fees and expenses of the transfer agent for the shares of Common Stock and the warrant
agent for the Warrants; (k) stock transfer and/or stamp taxes, if any, payable upon the transfer of securities from the Company
to the Underwriters; (l) the costs associated with post-Closing advertising the Offering in the national editions of the Wall Street
Journal and New York Times; (m) the costs, not to exceed $3,500 in the aggregate, associated with bound volumes of the public offering
materials as well as commemorative mementos and Lucite tombstones, each of which the Company or its designee will provide within
a reasonable time after the Closing in such quantities as the Representative may reasonably request; (n) the fees and expenses
of the Company’s accountants; (o) the fees and expenses of the Company’s legal counsel and other agents and representatives;
(p) the fees and expenses of the Underwriters’ counsel not to exceed $75,000; (q) the $29,500 cost associated with the Underwriters’
use of Ipreo’s book-building, prospectus tracking and compliance software for the Offering; (r) up to $20,000 of the Representative’s
actual accountable “road show” expenses for the Offering; and (s) the Representative’s non-accountable expense
allowance of 1% of the gross proceeds from the sale of the Shares and the Warrants. The Representative may deduct from the net
proceeds of the Offering payable to the Company on the Closing Date the expenses set forth herein to be paid by the Company to
the Underwriters. Except as provided for in this Agreement, the Underwriters shall bear the costs and expenses incurred by them
in connection with the sale of the Securities and the transactions contemplated thereby.
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(n)
|
The Company agrees that, unless it has or shall have obtained the prior written consent of the
Representative, and the Underwriters agree with the Company that, unless they have or shall have obtained the prior written consent
of the Company, they have not made and will not make an offer relating to the Securities that would constitute an Issuer Free Writing
Prospectus or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405) required to
be filed by the Company with the Commission or retained by the Company under Rule 433; provided that the prior written consent
of the parties hereto shall be deemed to have been given in respect of the free writing prospectuses included in
Schedule IV
hereto. Any such free writing prospectus consented to by the Representative or the Company is hereinafter referred to as a “
Permitted
Free Writing Prospectus
.” The Company agrees that (1) it has treated and will treat, as the case may be, each Permitted
Free Writing Prospectus as an Issuer Free Writing Prospectus and (2) it has complied and will comply, as the case may be,
with the requirements of Rules 164 and 433 applicable to any Permitted Free Writing Prospectus, including in respect of timely
filing with the Commission, legending and record keeping.
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(o)
|
The Company shall provide the Representative with a draft of any press release to be issued in
connection with the Offering, and will provide the Representative and its counsel sufficient time to comment thereon and will issue
such press release in a form reasonably acceptable to the Representative and its counsel.
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4.
|
Conditions to the Obligations of the Underwriters
. The obligations of the Underwriters hereunder
shall be subject to the accuracy of the representations and warranties on the part of the Company contained herein as of the Execution
Time and the Closing Date, the accuracy of the statements of the Company made in any certificates pursuant to the provisions hereof,
the performance by the Company of its obligations hereunder and the following additional conditions:
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(a)
|
If filing the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus,
is required under the Act or the Securities Act Regulations, the Company shall have filed the Prospectus (or such amendment or
supplement) or such Issuer Free Writing Prospectus with the Commission in the manner and within the time period so required (without
reliance on Rule 424(b)(8) or 164(b) under the Act); the Registration Statement shall remain effective; no stop order suspending
the effectiveness of the Registration Statement or any part thereof, any Rule 462 Registration Statement, or any amendment
thereof, nor suspending or preventing the use of the Pricing Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus
shall have been issued; no proceedings for the issuance of such an order shall have been initiated or threatened; and any request
of the Commission or the Underwriters for additional information (to be included in the Registration Statement, the Pricing Disclosure
Package, the Prospectus, any Issuer Free Writing Prospectus or otherwise) shall have been complied with to the Underwriters’
satisfaction.
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(b)
|
The Representative shall have received confirmation from Robinson Brog Leinwand Greene Genovese
& Gluck P.C. that there are no claims to which its representation has been sought and that are outstanding in respect of the
Company.
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(c)
|
The Company shall have requested and caused Robinson Brog Leinwand Greene Genovese & Gluck
P.C., securities counsel for the Company, to have furnished to the Representative their written opinion and Rule 10b-5 negative
assurance letter, dated the Closing Date, in form and substance reasonably satisfactory to the Representative and its counsel.
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(d)
|
The Representative shall have received the Rule 10b-5 negative assurance letter of Lowenstein
Sandler LLP, the Underwriters’ counsel, dated the Closing Date, and addressed to the Representative, with respect to such
matters as the Underwriters may require, and the Company shall have furnished to Lowenstein Sandler LLP such documents as they
may reasonably request for the purpose of enabling them to pass upon such matters.
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(e)
|
The Representative shall have received the opinion of Law Offices of Dennis L. Cook, PLLC, special
intellectual property counsel for the Company, dated the Closing Date, in form and substance reasonably satisfactory to the Representative
and its counsel.
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(f)
|
The Representative shall have received the opinion of Blooston, Mordkofsky, Dickens, Duffy &
Prendergast, LLP, general counsel for the Company, dated the Closing Date, in form and substance reasonably satisfactory to the
Representative and its counsel.
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(g)
|
The Company shall have furnished to the Representative a certificate of the Company, signed by
the Chief Executive Officer and the Chief Financial Officer of the Company or any other officers of the Company acceptable to the
Representative in its discretion, dated the Closing Date, to the effect that the signers of such certificate have carefully examined
the Registration Statement, the Pricing Disclosure Package and the Prospectus and any supplements or amendments thereto and this
Agreement and that:
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(i)
|
the representations and warranties of the Company in this Agreement are true and correct on and
as of the Closing Date with the same effect as if made on the Closing Date and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date;
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(ii)
|
no stop order or other order (A) suspending the effectiveness of the Registration Statement
or any part thereof or any amendment thereof, or (B) suspending or preventing the use of the Pricing Disclosure Package, the
Prospectus or any Issuer Free Writing Prospectus, has been issued, and no proceeding for that purpose has been instituted or, to
their knowledge, is contemplated by the Commission or any state or regulatory body;
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(iii)
|
since the date of the most recent financial statements included in the Pricing Disclosure Package
and the Prospectus, there has been no Material Adverse Change; and
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(iv)
|
the Company has complied with the terms and conditions of this Agreement on its part to be complied
with up to the time of closing on the Closing Date.
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(h)
|
The Representative shall have received on and as of the Closing Date satisfactory evidence of the
good standing of the Company and its subsidiary in writing from the applicable Secretary of State of its jurisdiction of organization.
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(i)
|
The Company shall have requested and caused the Auditors to have furnished to the Representative,
at the Closing Date, a letter, dated as of the Closing Date, in form and substance satisfactory to the Representative, confirming
that each is an independent registered public accounting firm within the meaning of the Securities Act and the Exchange Act and
covering, without limitation, in the case of the Former Auditor, the Company’s audited financial statements as of and for
the year ended December 31, 2014, and in the case of the Current Auditor, the Company’s audited financial statements as of
and the year ended December 31, 2015, and the various financial disclosures related thereto contained in the Registration Statement,
the Preliminary Prospectus, the Prospectus and the Issuer Free Writing Prospectuses, if any.
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(j)
|
The Company shall have requested and caused the Current Auditor to have furnished to the Representative,
at the Closing Date, a letter, dated as of the Closing Date, in form and substance satisfactory to the Representative, confirming
that it is an independent registered public accounting firm within the meaning of the Securities Act and the Exchange Act and covering,
without limitation, IMT’s financial statements and certain financial information contained in the Registration Statement,
the Preliminary Prospectus, the Prospectus and the Issuer Free Writing Prospectuses, if any.
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(k)
|
The Company shall have requested and caused the Vislink Auditor to have furnished to the Representative,
at the Closing Date, a letter, dated as of the Closing Date, in form and substance satisfactory to the Representative, confirming
that it is an independent registered public accounting firm within the meaning of the Securities Act and the Exchange Act and covering,
without limitation, Vislink’s financial statements and certain financial information contained in the Registration Statement,
the Preliminary Prospectus, the Prospectus and the Issuer Free Writing Prospectuses, if any.
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(l)
|
Subsequent to the Execution Time or, if earlier, the dates as of which information is given in
the Registration Statement and the Prospectus, there shall not have been (A) any change or decrease specified in the letters
referred to in paragraph (h) of this Section 4 or (B) any Material Adverse Change, the effect of which, in any case
referred to in clause (A) or (B) above, is, in the sole judgment of the Representative, so material and adverse as to make
it impractical or inadvisable to proceed with the offering or delivery of the Securities as contemplated by the Registration Statement
(exclusive of any amendment thereof), the Pricing Disclosure Package and the Prospectus (exclusive of any amendment or supplement
thereto).
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(m)
|
FINRA shall have raised no objection to the fairness and reasonableness of the underwriting terms
and arrangements.
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(n)
|
Prior to the Closing Date, the Company shall have furnished to the Representative such further
information, certificates and documents as the Underwriters may reasonably request.
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(o)
|
The Company shall have filed a Listing of Additional Shares form with NASDAQ covering the Shares,
the Warrant Shares and the Underwriter Warrant Shares.
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(p)
|
At the Execution Time, the Company shall have furnished to the Representative Lock-Up Agreements
executed by the Lock-Up Parties.
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(q)
|
On the Closing Date, the Company shall have delivered to the Representative executed copies of
the Warrant Agreement.
|
If any of the conditions
specified in this Section 4 shall not have been fulfilled when and as provided in this Agreement, or if any of the opinions
and certificates mentioned above or elsewhere in this Agreement shall not be reasonably satisfactory in form and substance to the
Representative and counsel for the Underwriters, this Agreement and all obligations of the Underwriters hereunder may be canceled
at, or at any time prior to, the Closing Date by the Representative. Notice of such cancellation shall be given to the Company
in writing or by telephone confirmed in writing.
The documents required
to be delivered by this Section 4 shall be delivered at the office of Lowenstein Sandler LLP, counsel for the Underwriters,
at the Closing Location, on the Closing Date.
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5.
|
Indemnification and Contribution
.
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(a)
|
The Company agrees to indemnify, defend and hold harmless each Underwriter, its affiliates, directors
and officers and employees, and each person, if any, who controls an Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act (each, an “
Indemnified Party
”), from and against any losses, claims,
damages or liabilities (including in settlement of any litigation if such settlement is effected with the prior written consent
of the Company) arising out of: (i) an untrue statement or alleged untrue statement of a material fact contained in the Registration
Statement, including the information deemed to be a part of the Registration Statement at the time of effectiveness and at any
subsequent time pursuant to Rules 430A and 430B of the Securities Act Regulations, or arise out of or are based upon the omission
from the Registration Statement, or alleged omission to state therein, a material fact required to be stated therein or necessary
to make the statements therein not misleading; (ii) an untrue statement or alleged untrue statement of a material fact contained
in the Pricing Disclosure Package, the Prospectus, or any amendment or supplement thereto (including any documents filed under
the Exchange Act and deemed to be incorporated by reference into the Registration Statement or the Prospectus), any Issuer Free
Writing Prospectus or the Marketing Materials or in any other materials used in connection with the Offering, or arise out of or
are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were made, not misleading, and will reimburse such
Indemnified Party for any legal or other expenses reasonably incurred by it in connection with evaluating, investigating or defending
against such loss, claim, damage, liability 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 action arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration Statement, the Pricing Disclosure Package, the Prospectus,
or any amendment or supplement thereto, any Marketing Materials or any Issuer Free Writing Prospectus, in reliance upon and in
conformity with the Underwriters’ Information.
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(b)
|
Each Underwriter, severally and not jointly, will indemnify, defend and hold harmless the Company,
its affiliates, directors, officers and employees, and each person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act (each, an “
Underwriter Indemnified Party
”), from and against
any losses, claims, damages or liabilities to which such Underwriter Indemnified Party may become subject, under the Act or otherwise
(including in settlement of any litigation, if such settlement is effected with the written consent of such Underwriter), insofar
as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in the Registration Statement, the Pricing Disclosure Package, the Prospectus,
or any amendment or supplement thereto, any Marketing Materials or any Issuer Free Writing Prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in the Registration Statement, the Pricing Disclosure Package, the Prospectus, or any
amendment or supplement thereto, any Marketing Materials or any Issuer Free Writing Prospectus in reliance upon and in conformity
with the Underwriters’ Information, and will reimburse such Underwriter Indemnified Party for any legal or other expenses
reasonably incurred by it in connection with defending against any such loss, claim, damage, liability or action.
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(c)
|
Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the
commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the failure to notify the
indemnifying party shall not relieve the indemnifying party from any liability that it may have to any indemnified party except
to the extent such indemnifying party has been materially prejudiced by such failure. In case any such action shall be brought
against any indemnified party, and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of the indemnifying party’s election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party under such subsection for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof; provided, however, that if (i) the indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (ii) a conflict or potential conflict exists (based on advice
of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party
will not have the right to direct the defense of such action on behalf of the indemnified party), or (iii) the indemnifying
party has not in fact employed counsel reasonably satisfactory to the indemnified party to assume the defense of such action within
a reasonable time after receiving notice of the commencement of the action, the indemnified party shall have the right to employ
a single counsel to represent it in any claim in respect of which indemnity may be sought under subsection (a) or (b) of this
Section 5, in which event the reasonable fees and expenses of such separate counsel shall be borne by the indemnifying party
or parties and reimbursed to the indemnified party as incurred.
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(d)
|
The indemnifying party under this Section 5 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 against any loss, claim, damage, liability or expense by reason
of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party, effect
any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect
of which any indemnified party is a party or could be named and indemnity was or would be sought hereunder by such indemnified
party, unless such settlement, compromise or consent (a) includes an unconditional release of such indemnified party from
all liability for claims that are the subject matter of such action, suit or proceeding and (b) does not include a statement
as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.
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(e)
|
If the indemnification provided for in this Section 5 is unavailable or insufficient to hold
harmless an indemnified party under subsection (a) or (b) above, then the indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection
(a) or (b) above, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the
one hand and each of the Underwriters on the other hand from the offering and sale of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and each
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 each of the Underwriter on the other hand shall be deemed to be in the same proportion as the total net proceeds from
the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received
by each of the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties’
relevant intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The
Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this subsection (e)
were to be determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations
referred to in the first sentence of this subsection (e). The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this subsection (e) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection with investigating or defending against any action
or claim that is the subject of this subsection (e). Notwithstanding the provisions of this subsection (e), no Underwriter
shall be required to contribute any amount in excess of the amount of such Underwriter’s commissions actually received by
such Underwriter pursuant to this Agreement. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
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(f)
|
For purposes of this Agreement, each of the Underwriters confirms, and the Company acknowledges,
that there is no information concerning any of the Underwriters furnished in writing to the Company by any of the Underwriters
specifically for preparation of or inclusion in the Registration Statement, the Pricing Disclosure Package, the Prospectus or any
Issuer Free Writing Prospectus, other than the Underwriters’ Information.
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|
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6.
|
Default by the Underwriter
.
|
|
|
(a)
|
If any Underwriter or Underwriters shall default in its or their obligations to purchase any Security
on the Closing Date and the aggregate number of the Security which such defaulting Underwriter or Underwriters agreed but failed
to purchase does not exceed ten percent (10%) of the total number of such Security to be purchased by all Underwriters on such
Closing Date, the other Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to
purchase such Security which such defaulting Underwriter or Underwriters agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters shall so default and the aggregate number of the Security with respect to which such default or
defaults occur is more than ten percent (10%) of the total number of such Security to be purchased by all Underwriters on such
Closing Date and arrangements satisfactory to the remaining Underwriters and the Company for the purchase of such Security by other
persons are not made within forty-eight (48) hours after such default, this Agreement shall terminate.
|
|
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(b)
|
If the remaining Underwriters or substituted Underwriters are required hereby or agree to take
up all or part of the Securities of a defaulting Underwriter or Underwriters on such Closing Date as provided in this Section 6,
(i) the Company shall have the right to postpone such Closing Date for a period of not more than five (5) full business days in
order to permit the Company to effect whatever changes in the Registration Statement, the Prospectus, or in any other documents
or arrangements, which may thereby be made necessary, and the Company agrees to promptly file any amendments to the Registration
Statement or the Prospectus which may thereby be made necessary, and (ii) the respective numbers of the Securities to be purchased
by the remaining Underwriters or substituted Underwriters shall be taken as the basis of their underwriting obligation for all
purposes of this Agreement. Nothing herein contained shall relieve any defaulting Underwriter of its liability to the Company or
any other Underwriter for damages occasioned by its default hereunder. Any termination of this Agreement pursuant to this Section
6 shall be without liability on the part of any non-defaulting Underwriters or the Company, (except in each case as provided in
Sections 3(m), 5, 8 and 9), but nothing in this Agreement shall relieve a defaulting Underwriter of its liability, if any,
to the Company for damages occasioned by its default hereunder).
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|
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(a)
|
This agreement shall be subject to termination in the absolute discretion of the Representative,
by notice given to the Company prior to delivery of and payment for the Shares and the Warrants, if at any time prior to such time
(a) trading in the Company’s Common Stock or the Securities shall have been suspended by the Commission or the Exchange
or trading in securities generally on the NYSE or the NASDAQ shall have been suspended or limited or minimum prices shall have
been established on such exchange, or (b) a general banking moratorium shall have been declared by U.S. federal or New York
State authorities or (c) there shall have occurred any outbreak or escalation of hostilities, or a declaration by the United
States of a national emergency or war, major terrorist attack in a world commercial financial center, or other calamity or crisis,
including a health epidemic, the effect of which on financial markets is such as to make it, in the sole judgment of the Representative,
impracticable or inadvisable to proceed with the offering or delivery of the Securities as contemplated by the Prospectus (exclusive
of any amendment or supplement thereto).
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(b)
|
The rights of termination contained in Section 7 may be exercised by the Representative and
are in addition to any other rights or remedies the Underwriters may have in respect of any default, act or failure to act or non-compliance
by the Company in respect of any of the matters contemplated by this Agreement or otherwise. In the event of any such termination,
there shall be no further liability on the part of the Underwriters to the Company or on the part of the Company to the Underwriters
except in respect of any liability which may have arisen prior to or arise after such termination under Sections 3(m), 5,
6, 8 and 9.
|
|
|
(c)
|
In the event the Offering is terminated, the Underwriters will only be entitled to the reimbursement
of out-of-pocket accountable expenses actually incurred in accordance with FINRA Rule 5110(f)(2)(D).
|
|
|
8.
|
Representations and Indemnities to Survive
. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers and of the Underwriters set forth in or made pursuant
to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Underwriters
or the Company or any of the officers, directors, employees, agents or controlling persons referred to in Section 5 hereof,
and will survive delivery of and payment for the Securities. The provisions of Sections 3(m), 5, 6, 8 and 9 hereof shall survive
the termination or cancellation of this Agreement.
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|
|
9.
|
Reimbursement of Expenses
. The Underwriters will be reimbursed for reasonable out-of-pocket
expenses incurred in connection with the Offering, including the fees and disbursements of Underwriters’ counsel, in an aggregate
amount not to exceed US$75,000; provided, however that the foregoing limitation on expenses will not limit in any respect the indemnification
contemplated by Section 5 hereof.
|
|
|
10.
|
[Intentionally Omitted]
.
|
|
|
11.
|
Notices
. All communications hereunder will be in writing and effective only on receipt,
and, if sent to the Underwriters, mailed, delivered or telefaxed to:
|
Aegis Capital Corp.
810 Seventh Avenue, 18
th
Floor
New York, New York 10019
Attn: David Bocchi, Managing Director of Investment Banking
Facsimile: (212) 813-1047
with a copy to:
Lowenstein Sandler LLP
1251 Avenue of the Americas
New York, NY 10020
Attention: John D. Hogoboom, Esq.
Facsimile: 646-414-6846
Or, if sent to the Company, mailed, delivered or telefaxed
to:
xG Technology, Inc.
240 S. Pineapple Avenue, Suite
701
Sarasota, FL 34236
Attention: Roger G. Branton
Facsimile: 941-954-8595
with a copy to:
Robinson Brog Leiwand Greene Genovese & Gluck P.C.
875 Third Avenue – 9
th
Floor
New York, NY 10022
Attention: David E. Danovitch, Esq.
Facsimile: 212-956-2164
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|
12.
|
Successors
. This Agreement will inure to the benefit of and be binding upon the parties
to this Agreement and their respective successors and the officers, directors, employees, agents and controlling persons referred
to in Section 5 hereof, to the extent set forth in Section 5 hereof, and no other person will have any right or obligation
hereunder.
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|
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13.
|
Severability
. If any provision of this Agreement is determined to be void or unenforceable
in whole or in part, it shall be deemed not to affect or impair the validity of any other provision of this Agreement and such
void or unenforceable provision shall be severable from this Agreement.
|
|
|
14.
|
Applicable Law
. This Agreement will be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed within the State of New York.
|
|
|
15.
|
Counterparts
. This Agreement may be signed in one or more counterparts, each of which shall
constitute an original and all of which together shall constitute one and the same agreement.
|
|
|
16.
|
Headings
. The Section headings used herein are for convenience only and shall not affect
the construction hereof.
|
|
|
17.
|
Definitions
. The terms that follow, when used in this Agreement, shall have the meanings
indicated.
|
“
Act
”
means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.
“
Applicable
Time
” means 6:30 p.m., Eastern Time, on February 8, 2017.
“
Business
Day
” means any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust
companies are authorized or obligated by law to close in New York City.
“
Commission
”
means the U.S. Securities and Exchange Commission.
“
Effective
Date
” means each date and time that the Registration Statement, any post-effective amendment or amendments thereto became
or becomes effective.
“
Execution
Time
” means the date and time that this Agreement is executed and delivered by the parties to this Agreement.
“
Issuer Free
Writing Prospectus
” means any “issuer free writing prospectus,” as defined in Rule 433 of the Securities
Act Regulations (“
Rule 433
”), including without limitation any “free writing prospectus” (as
defined in Rule 405 of the Securities Act Regulations) relating to the Securities that is (i) required to be filed with
the Commission by the Company, (ii) a “road show that is a written communication” within the meaning of Rule 433(d)(8)(i),
whether or not required to be filed with the Commission, or (iii) exempt from filing with the Commission pursuant to Rule 433(d)(5)(i)
because it contains a description of the Securities or of the Offering that does not reflect the final terms, in each case in the
form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s
records pursuant to Rule 433(g).
“
Marketing
Materials
” means written roadshow materials prepared by or on behalf of the Company and used or referred to by the Company
or with the Company’s express consent.
“
Offering
”
means the offering and sale of the Shares and the Warrants.
“
Pricing Disclosure
Package
” means any Issuer Free Writing Prospectus issued at or prior to the Applicable Time, the Pricing Prospectus and
the information included on
Schedule I-A
hereto, all considered together.
“
Registration
Statement
” means the registration statement referred to in Section 1(a) hereof including exhibits and financial
statements and any prospectus supplement relating to the Securities that is filed with the Commission pursuant to Rule 424(b)
and deemed part of such registration statement pursuant to Rule 430B, as amended, on each Effective Date and, in the event
any post-effective amendment thereto becomes effective prior to the Closing Date, shall also mean such registration statement as
so amended.
“
Rule 158
,”
“
Rule 163
,” “
Rule 164
,” “
Rule 172
,” “
Rule 405
,”
“
Rule 415
,” “
Rule 424
,” “
Rule 430A
,” “
Rule 430B
”
and “
Rule 433
” refer to such rules under the Act.
“
SEC Filings
” means any
filings made by the Company with the Commission.
“
Trading Day
” means any
day on which the Exchange is open for trading.
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|
18.
|
Arm’s Length Transaction
. The Company acknowledges and agrees that the Underwriters
are acting solely in the capacity of arm’s length contractual counterparties to the Company with respect to the Offering
contemplated hereby (including in connection with determining the terms of the offering) and not as a financial advisor or a fiduciary
to, or an agent of, the Company or any other person. Additionally, the Underwriters are not advising the Company as to any legal,
tax, investment, accounting or regulatory matters in any jurisdiction. The Company shall consult with its own advisors concerning
such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated
hereby, and the Underwriters shall have no responsibility or liability to the Company with respect thereto. Any review by the Underwriters
of the Company, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for
the benefit of the Underwriters and shall not be on behalf of the Company.
|
|
|
19.
|
Authority of Representative
. In connection with this Agreement, the Representative will
act for and on behalf of the several Underwriters, and any action taken under this Agreement by the Representative, will be binding
on all the Underwriters.
|
|
|
20.
|
Integration
. This Agreement supersedes all prior agreements and understandings (whether
written or oral) between the Company and the Underwriters, or any of them with respect to the subject matter hereof.
|
[
Signature Page to follow
]
If the foregoing is
in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement between the Company and the Underwriters.
|
|
Very truly yours,
|
|
|
|
|
|
|
|
|
|
|
|
|
xG TECHNOLOGY
, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Roger G. Branton
|
|
|
|
Name
|
Roger G. Branton
|
|
|
|
Title:
|
Chief Financial Officer
|
|
AEGIS CAPITAL CORP.
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ David A. Bocchi
|
|
|
|
Name:
|
David A. Bocchi
|
|
|
|
Title:
|
Head of Investment Banking
|
|
Acting on its own behalf and as Representative of the several
Underwriters referred to in the foregoing Agreement
[Signature Page – Underwriting Agreement]
SCHEDULE I
|
Underwriter
|
|
Total Number of
Shares to be
Purchased
|
|
|
Total Number of
Warrants to be
Purchased
|
|
|
Aegis Capital Corp.
|
|
|
1,750,000
|
|
|
|
1,312,500
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
1,750,000
|
|
|
|
1,312,500
|
|
SCHEDULE I-A
PRICING
INFORMATION
|
Symbol:
|
XGTI
|
|
|
|
|
Securities:
|
(i) 1,750,000 shares of Common Stock
and
(ii) 1,312,500 Warrants to purchase one Share of Common Stock at an exercise price of $2.00 per Share (subject to adjustment).
Each share of Common Stock will be sold together with 0.75 of a Warrant.
|
|
|
|
|
Exercisability of Warrants:
|
The Warrants will be exercisable upon issuance and will expire five (5) years from the original issuance date.
|
|
|
|
|
Public Offering Price:
|
$2.00 per share and related Warrant
|
|
|
|
|
Underwriting Discount per Unit:
|
$0.14 per share and related Warrant
|
|
|
|
|
Expected net proceeds to the Company
|
Approximately $3.0 million (after deducting the underwriting discount and estimated offering expenses payable by the Company)
|
|
|
|
|
Trade date:
|
February 9, 2017
|
|
|
|
|
Settlement date:
|
February 14, 2017
|
|
|
|
|
Underwriter:
|
Aegis Capital Corp.
|
SCHEDULE II
Lock-up
Agreement Parties
George F. Schmitt
Roger G. Branton
John C. Coleman
John Payne IV
Belinda Marino
Gary Cuccio
Kenneth Hoffman
Richard L. Mooers
Raymond M. Sidney
General James T. Conway
SCHEDULE III
TESTING-THE-WATERS COMMUNICATIONS
SCHEDULE IV
PERMITTED FREE WRITING PROSPECTUSES
|
·
|
Press release, dated February 2, 2017, filed with the Commission on February 9, 2017.
|
|
·
|
Press release, dated February 8, 2017, filed with the Commission on February 9, 2017.
|
EXHIBIT A
Form
of Lock-Up Agreement
Lock-Up Agreement
[ ], 2017
Aegis Capital Corp.
810 Seventh Avenue, 18th Floor
New York, NY 10019
Ladies and Gentlemen:
This agreement (“Lock-Up
Agreement”) is being delivered to you in connection with
the underwriting
agreement (the “Underwriting Agreement”) to be entered into by xG Technology, Inc., a corporation organized under the
laws of the State of Delaware (the “Company”), and you with respect to the proposed
public
offering of securities of the Company (the “Offering”) including
shares
of Common Stock and Warrants (the “Securities”). Capitalized terms used and not otherwise defined herein shall have
the meanings given them in the Underwriting Agreement.
The execution and delivery
by you of this Lock-Up Agreement is a condition to the closing of the Offering. In consideration of the closing of the Offering
and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees
that, for a period (the “Lock-Up Period”) beginning on the date hereof and ending on, and including, the date that
is ninety (90) days after the date of the final prospectus relating to the Offering, the undersigned will not, without the prior
written consent of Aegis Capital Corp.
, (i) offer, sell, contract to sell,
pledge, transfer, assign or otherwise dispose of (including, without limitation, by making any short sale, engage in any hedging,
monetization or derivative transaction) or file (or participate in the filing of) a registration statement or prospectus with the
U.S. Securities and Exchange Commission (the “Commission”) in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the U.S. Securities Exchange Act
of 1934, as amended (the “Exchange Act”), and the rules and regulations of the Commission promulgated thereunder with
respect to, any Securities or any securities of the Company that are substantially similar to the Securities, or any securities
convertible into or exchangeable or exercisable for, or any warrants or other rights to purchase, the foregoing, (ii) 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 Securities or any other securities of the Company that are substantially similar to the Securities or any securities convertible
into or exchangeable or exercisable for, or any warrants or other rights to purchase, the foregoing, whether any such transaction
is to be settled by delivery of Securities or such other securities, in cash or otherwise, or (iii) publicly announce an intention
to effect any transaction specified in clause (i) or (ii). The foregoing sentence shall not apply to (a) transfers of Securities
or any security convertible into or exercisable or exchangeable for Securities disposed of as
bona fide
gifts, (b) transactions
by the undersigned relating to Securities or other securities of the Company acquired in open market transactions after the completion
of the Offering, (c) entry into written trading plans for the sale or other disposition by the undersigned of Securities for purposes
of complying with Rule 10b5-1 of the Exchange Act (“10b5-1 Plans”), provided that no sales or other distributions pursuant
to a 10b5- 1 Plan may occur until the expiration of the Lock-Up Period, (d) transfers by the undersigned of Securities or any security
convertible into or exercisable or exchangeable for Securities as a result of testate or intestate succession or bona fide estate
planning, (e) transfers of Securities by the undersigned to a trust, partnership, limited liability company or other entity, the
majority of the beneficial interests of which are held, directly or indirectly, by the undersigned, (f) distributions by the undersigned
of Securities or any security convertible into or exercisable or exchangeable for Securities to limited partners or stockholders
of the undersigned, (g) the exercise of an option or warrant or the conversion of a security outstanding on the date of this Lock-Up
Agreement by the undersigned pursuant to the Company’s stock option and stock purchase plans; or (h) transactions by the
undersigned relating to securities received as salary compensation from the Company in lieu of receiving such salary compensation
in cash;
provided
that in the case of any such permitted transfer or distribution pursuant to clause (a), (d), (e), (f)
or (g), each transferee, distributee or pledgee shall sign and deliver a lock-up letter substantially in the form of this Lock-Up
Agreement.
The
undersigned further agrees that, during the Lock-Up Period, the undersigned will not, without the prior written consent of
Aegis
Capital Corp.
, make any demand for, or exercise any right with respect
to, the registration (or equivalent) of any Securities or any securities convertible into or exercisable or exchangeable for any
Securities, or warrants or other rights to purchase any Securities.
The undersigned hereby
confirms that the undersigned has not, directly or indirectly, taken, and hereby covenants that the undersigned will not, directly
or indirectly, take, any action designed, or which has constituted or will constitute or to cause or result in the stabilization
or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities. The undersigned
hereby authorizes the Company and its transfer agent, during the Lock-Up Period, to decline the transfer of or to note stop transfer
restrictions on the stock register and other records relating to the Securities or other securities subject to this Lock-Up Agreement
of which the undersigned is the record holder, and, with respect to Securities or other securities subject to this Lock-Up Agreement
of which the undersigned is the beneficial owner but not the record holder, the undersigned hereby agrees to cause such record
holder to authorize the Company and its transfer agent, during the Lock-Up Period, to decline the transfer of or to note stop transfer
restrictions on the stock register and other records relating to such Securities or other securities.
The undersigned hereby
represents and warrants that it has full power and authority to enter into this Lock-Up Agreement and that such agreement is enforceable
against it in accordance with its terms.
This Lock-Up Agreement
constitutes the entire agreement and understanding between and among the parties with respect to the subject matter of this Lock-Up
Agreement and supersedes any prior agreement, representation or understanding with respect to such subject matter.
This Lock-Up Agreement
shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and performed
within the State of New York.
If (a) the Company
notifies you in writing that it does not intend to proceed with the Offering, (b) the registration statement filed with the Commission
with respect to the Offering is withdrawn or (c) for any reason the Underwriting Agreement shall be terminated prior to the Closing
Date, this Lock-Up Agreement shall be terminated and the undersigned shall be released from its obligations hereunder.
[
Signature Page Follows
]
|
|
Very truly yours,
|
|
|
|
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|
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|
|
Signature:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
EXHIBIT B
FORM OF WARRANT
Exhibit 4.1
[FORM OF WARRANT]
xG TECHNOLOGY, INC.
Warrant
To Purchase Common Stock
Warrant No: __________________________
Date of Issuance: February 14, 2017 (“
Issuance Date
”)
xG Technology, Inc.,
a Delaware corporation (the “
Company
”), hereby certifies that, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, [Investor], the registered holder hereof or its permitted assigns (the “
Holder
”),
is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then
in effect, upon exercise of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange,
transfer or replacement hereof, the “
Warrant
”), at any time or times on or after the Issuance Date, but not
after 5:30 p.m., New York time, on the Expiration Date (as defined below), (subject to adjustment as provided herein) __________
fully paid and non-assessable shares of Common Stock (as defined below) (the “
Warrant Shares
”). Except as otherwise
defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 17.
The Company has filed
with the U.S. Securities and Exchange Commission (the “
Commission
”) a Registration Statement on
Form
S-3 (File No. 333-197820)
(as the same may be amended from time to time, the “
Registration Statement
”)
for the registration, under the Securities Act of 1933, as amended (the “
1933 Act
”) of, among other securities,
the Warrants and the Warrant Shares, and such Registration Statement was declared effective on August 21, 2014, and subsequently
filed a related prospectus, including the related prospectus supplement, filed with the Securities and Exchange Commission on February
9, 2017. This Warrant is one of the Warrants to Purchase Common Stock issued pursuant to Section 2 of that certain Underwriting
Agreement, dated as of February 8, 2017 (the “
UA
”), by and among the Company and Aegis Capital Corp.
1.
EXERCISE OF WARRANT
.
(a)
Mechanics of Exercise
. Subject to the terms and conditions hereof (including, without limitation,
the limitations set forth in Section 1(f)), this Warrant may be exercised by the Holder on any day, in whole or in part, by delivery
(whether via facsimile or otherwise) of a written notice, in the form attached hereto as
Exhibit A
(the “
Exercise
Notice
”), of the Holder’s election to exercise this Warrant. Within one (1) Trading Day following an exercise of
this Warrant as aforesaid, the Holder shall deliver payment to the Company of an amount equal to the Exercise Price in effect on
the date of such exercise multiplied by the number of Warrant Shares as to which this Warrant was so exercised (the “
Aggregate
Exercise Price
”) in cash or via wire transfer of immediately available funds if, subject to the provisions of Section
1(d), the Holder did not notify the Company in such Exercise Notice that such exercise was made pursuant to a Cashless Exercise
(as defined in Section 1(d)) at a time and under circumstances which permit a Cashless Exercise. The Holder shall not be required
to deliver the original of this Warrant in order to effect an exercise hereunder. Execution and delivery of an Exercise Notice
with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original of this Warrant
and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. Execution and delivery of
an Exercise Notice for all of the then-remaining Warrant Shares shall have the same effect as cancellation of the original of this
Warrant after delivery of the Warrant Shares in accordance with the terms hereof. On or before the first (1st) Trading Day following
the date on which the Company has received an Exercise Notice, the Company shall transmit by facsimile an acknowledgment of confirmation
of receipt of such Exercise Notice, in the form attached hereto as
Exhibit B
, to the Holder and the Company’s
transfer agent (the “
Transfer Agent
”). On or before the third (3rd) Trading Day following the date on which
the Company has received such Exercise Notice (or such earlier date as required pursuant to the Exchange Act), or other applicable
law, rule or regulation for the settlement of a trade of such Warrant Shares initiated on the applicable Exercise Date) (the “
Share
Delivery Deadline
”), the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust
Company (“
DTC”
) Fast Automated Securities Transfer Program, upon the request of the Holder, credit such aggregate
number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s
balance account with DTC through its Deposit/ Withdrawal at Custodian system, or (Y) if the Transfer Agent is not participating
in the DTC Fast Automated Securities Transfer Program, issue and deliver to the Holder or, at the Holder’s instruction pursuant
to the Exercise Notice, the Holder’s agent or designee, in each case, sent by reputable overnight courier to the address
as specified in the applicable Exercise Notice, a certificate, registered in the Company’s share register in the name of
the Holder or its designee (as indicated in the applicable Exercise Notice), for the number of shares of Common Stock to which
the Holder is entitled pursuant to such exercise. Upon delivery of an Exercise Notice and payment to the Company of the Exercise
Price, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect
to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account
or the date of delivery of the certificates evidencing such Warrant Shares (as the case may be). If this Warrant is submitted in
connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted
for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then, at the request of the Holder and
upon surrender of this Warrant, the Company shall as soon as practicable and in no event later than three (3) Business Days after
any exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant (in accordance with Section
7(d)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this
Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional shares of Common Stock
are to be issued upon the exercise of this Warrant. In lieu, of fractional shares we shall pay the Holder an amount in cash equal
to the fractional amount multiplied by the Exercise Price. The Company shall pay any and all taxes and fees which may be payable
with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.
(b)
Exercise Price
. For purposes of this Warrant, “
Exercise Price
” means $2.00, subject to adjustment as
provided herein.
(c)
Company’s Failure to Timely Deliver Securities
. If the Company shall fail, for any reason or for no reason, to issue
to the Holder on or prior to the applicable Share Delivery Deadline a certificate for the number of shares of Common Stock to which
the Holder is entitled and register such shares of Common Stock on the Company’s share register or to credit the Holder’s
balance account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise
of this Warrant (as the case may be) (a “
Delivery Failure
”), then, in addition to all other remedies available
to the Holder, the Company shall pay in cash to the Holder on each day after such Share Delivery Deadline that the issuance of
such shares of Common Stock is not timely effected an amount equal to 2% per month of the product of (A) the aggregate number of
shares of Common Stock not issued to the Holder on a timely basis and to which the Holder is entitled and (B) the Closing Sale
Price of the Common Stock on the Trading Day immediately preceding the last possible date on which the Company could have issued
such shares of Common Stock to the Holder without violating Section 1(a). In addition to the foregoing, if on or prior to
the Share Delivery Deadline, the Company shall fail to issue and deliver a certificate to the Holder and register such shares of
Common Stock on the Company’s share register or credit the Holder’s balance account with DTC for the number of shares
of Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be), and if on or after
such Share Delivery Deadline the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of all or any portion of the number of shares of Common Stock, or a sale of a number of
shares of Common Stock equal to all or any portion of the number of shares of Common Stock, issuable upon such exercise that the
Holder so anticipated receiving from the Company, then, in addition to all other remedies available to the Holder, the Company
shall, within three (3) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash
to the Holder in an amount equal to the Holder’s total purchase price (including reasonable brokerage commissions and other
reasonable out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other
Person in respect, or on behalf, of the Holder) (the “
Buy-In Price
”), at which point the Company’s obligation
to so issue and deliver such certificate or credit the Holder’s balance account with DTC for the number of shares of Common
Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) (and to issue such shares
of Common Stock) shall terminate, or (ii) promptly honor its obligation to so issue and deliver to the Holder a certificate or
certificates representing such shares of Common Stock or credit the Holder’s balance account with DTC for the number of shares
of Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) and pay cash to
the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common
Stock multiplied by (B) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the
date of the applicable Exercise Notice and ending on the date of such issuance and payment under this clause (ii). Nothing shall
limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without
limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) upon the exercise of
this Warrant as required pursuant to the terms hereof.
(d)
Cashless Exercise
. Notwithstanding anything contained herein to the contrary (other than Section 1(f) below), if, at the
time of exercise hereof, the Registration Statement (as defined in the UA) is not effective (or the prospectus contained therein
is not available for use) for the issuance by the Company to the Holder of all of the Warrant Shares, then the Holder may, in its
sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be
made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise
the “Net Number” of shares of Common Stock determined according to the following formula (a “
Cashless Exercise
”):
Net Number
=
(A x B) - (A x C)
B
For purposes
of the foregoing formula:
A= the total number of shares with
respect to which this Warrant is then being exercised.
B= as applicable: (i) the Closing
Sale Price of the Common Stock on the Trading Day immediately preceding the date of the applicable Exercise Notice if such Exercise
Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day that is not a Trading Day or (2) both executed
and delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as
defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) the Bid Price
of the Common Stock as of the time of the Holder’s execution of the applicable Exercise Notice if such Exercise Notice is
executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter pursuant
to Section 1(a) hereof or (iii) the Closing Sale Price of the Common Stock on the date of the applicable Exercise Notice if the
date of such Exercise Notice is a Trading Day and such Exercise Notice is both executed and delivered pursuant to Section 1(a)
hereof after the close of “regular trading hours” on such Trading Day.
C= the
Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.
(e)
Disputes
. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number
of Warrant Shares to be issued pursuant to the terms hereof, the Company shall promptly issue to the Holder the number of Warrant
Shares that are not disputed and resolve such dispute in accordance with Section 14.
(f)
Limitations on Exercises
.
(i)
Beneficial
Ownership
. Notwithstanding anything to the contrary contained in this Warrant, this Warrant shall not be exercisable by the
Holder hereof to the extent (but only to the extent) that the Holder together with any of its affiliates would beneficially own
in excess of 4.99% (the “
Maximum Percentage
”) of the Common Stock after giving effect to such exercise.
To the extent the above limitation applies, the determination of whether this Warrant shall be exercisable (vis-à-vis other
convertible, exercisable or exchangeable securities owned by the Holder or any of its affiliates) and of which such securities
shall be exercisable (as among all such securities owned by the Holder) shall, subject to such Maximum Percentage limitation, be
determined on the basis of the first submission to the Company for conversion, exercise or exchange (as the case may be). No prior
inability to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions of this
paragraph with respect to any subsequent determination of exercisability. For the purposes of this paragraph, beneficial ownership
and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall
be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. The provisions
of this paragraph shall be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct
this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership
limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage
limitation. The limitations contained in this paragraph shall apply to a successor Holder of this Warrant. The holders of Common
Stock shall be third party beneficiaries of this paragraph and the Company may not waive this paragraph without the consent of
holders of a majority of its Common Stock. For any reason at any time, upon the written or oral request of the Holder, the Company
shall within one (1) Business Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding,
including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Stock, including,
without limitation, pursuant to this Warrant or securities issued pursuant to the UA. By not less than 61 days’ written notice
to the Company, any Holder may increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified
in such notice; provided that (x) any such increase will not be effective until the 61st day after such notice is delivered to
the Company, and (y) any such increase or decrease will apply only to the Holder sending such notice and not to any other holder
of Warrants.
(g)
Insufficient Authorized Shares
. The Company shall at all times keep reserved for issuance under this Warrant a number of
shares of Common Stock at least equal to 100% of the maximum number of shares of Common Stock as shall be necessary to satisfy
the Company’s obligation to issue shares of Common Stock hereunder (without regard to any limitation otherwise contained
herein with respect to the number of shares of Common Stock that may be acquirable upon exercise of this Warrant) (the “
Required
Reserve Amount
”). If, notwithstanding the foregoing, and not in limitation thereof, at any time while any of the Warrants
remain outstanding, the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy
its obligation to reserve the Required Reserve Amount (an “
Authorized Share Failure
”), then the Company shall
immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient
to allow the Company to reserve the Required Reserve Amount for all the Warrants then outstanding. Without limiting the generality
of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event
later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders
for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company
shall provide each stockholder with a proxy statement and shall use its reasonable best efforts to solicit its stockholders’
approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders
that they approve such proposal. In the event that the Company is prohibited from issuing shares of Common Stock upon an exercise
of this Warrant due to the failure by the Company to have sufficient shares of Common Stock available out of the authorized but
unissued shares of Common Stock (such unavailable number of shares of Common Stock, the “
Authorization Failure Shares
”),
in lieu of delivering such Authorization Failure Shares to the Holder, the Company shall pay cash in exchange for the cancellation
of such portion of this Warrant exercisable into such Authorized Failure Shares at a price equal to the sum of (i) the product
of (x) such number of Authorization Failure Shares and (y) the greatest Closing Sale Price of the Common Stock on any Trading Day
during the period commencing on the date the Holder delivers the applicable Exercise Notice with respect to such Authorization
Failure Shares to the Company and ending on the date of such issuance and payment under this Section 1(g); and (ii) to the extent
the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by
the Holder of Authorization Failure Shares, brokerage commissions, if any, of the Holder incurred in connection therewith.
2.
ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES
. The Exercise Price and number of Warrant Shares issuable upon
exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 2.
(a)
Stock Dividends and Splits
. Without limiting any provision of Section 4, if the Company, at any time on or after the Issuance
Date, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock or otherwise makes a distribution
on any class of capital stock that is payable in shares of Common Stock (which, for the avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its then outstanding shares of Common Stock into a larger number of shares
or (iii) combines (by combination, reverse stock split or otherwise) one or more classes of its then outstanding shares of Common
Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator
shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause
(i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to
receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective
immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this paragraph
occurs during the period that an Exercise Price is calculated hereunder, then the calculation of such Exercise Price shall be adjusted
appropriately to reflect such event.
(b)
Number of Warrant Shares
. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 2(b), the
number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so
that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the
same as the aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise
contained herein).
(c)
Rights
Upon Distribution of Assets
. In the event the Company shall fix a record date for the making of a dividend or distribution
to all holders of Common Stock of any evidences of indebtedness or assets or subscription rights or warrants, then in each such
case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed
for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP
determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then
per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable
to one outstanding share of the Common Stock as determined by the board of directors of the Company in good faith. In either case
the adjustments shall be described in a statement provided to each Holder of the portion of assets or evidences of indebtedness
so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any
such distribution is made and shall become effective immediately after the record date mentioned above.
3.
[Intentionally Omitted]
.
4.
PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS
.
(a)
Purchase Rights
. In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues
or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the
record holders of any class of Common Stock (the “
Purchase Rights
”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations
or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage) immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights
(
provided
,
however
, that to the extent that the Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase
Right to such extent (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase
Right (and beneficial ownership) to such extent) and such Purchase Right to such extent shall be held in abeyance for the benefit
of the Holder until such time or times, if ever, as its right thereto would not result in the Holder exceeding the Maximum Percentage,
at which time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase
Right or on any subsequent Purchase Right held similarly in abeyance) to the same extent as if there had been no such limitation).
(b)
Fundamental Transactions
. The Company shall use its commercially reasonable best efforts to not enter into or be party to
a Fundamental Transaction unless (i) the Successor Entity assumes in writing all of the obligations of the Company under
this Warrant in accordance with the provisions of this Section 4(b) pursuant to written agreements in form and substance satisfactory
to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to the Holder in
exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and
substance to this Warrant, including, without limitation, which is exercisable for a corresponding number of shares of capital
stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations
on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price
hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to
such Fundamental Transaction and the value of such shares of capital stock, such adjustments to the number of shares of capital
stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation
of such Fundamental Transaction) and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation
whose common stock is quoted on or listed for trading on an Eligible Market. Upon the consummation of each Fundamental Transaction,
the Successor Entity shall succeed to, and be substituted for (so that from and after the date of the applicable Fundamental Transaction,
the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to
the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company
under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company
herein. Upon consummation of each Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there
shall be issued upon exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction, in
lieu of the shares of Common Stock (or other securities, cash, assets or other property) issuable upon the exercise of this Warrant
prior to the applicable Fundamental Transaction, such shares of publicly traded common stock (or its equivalent) of the Successor
Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of the applicable
Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard
to any limitations on the exercise of this Warrant), as adjusted in accordance with the provisions of this Warrant. Notwithstanding
the foregoing, and without limiting Section 1(f) hereof, the Holder may elect, at its sole option, by delivery of written notice
to the Company to waive this Section 4(b) to permit the Fundamental Transaction without the assumption of this Warrant. In addition
to and not in substitution for any other rights hereunder, prior to the consummation of each Fundamental Transaction pursuant to
which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares
of Common Stock (a “
Corporate Event
”), the Company shall make appropriate provision to insure that the Holder
will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the applicable
Fundamental Transaction but prior to the Expiration Date, in lieu of the shares of the Common Stock (or other securities, cash,
assets or other property (except such items still issuable under Sections 2(b) and 4(a) above, which shall continue to be receivable
thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of stock, securities,
cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would
have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately
prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant). Provision
made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Holder.
(c)
[Intentionally
Omitted]
.
(d)
Application
. The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and
Corporate Events and shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without
regard to any limitations on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit
of the Maximum Percentage, applied however with respect to shares of capital stock registered under the Exchange Act and thereafter
receivable upon exercise of this Warrant (or any such other warrant)).
5.
NONCIRCUMVENTION
. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of
Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution,
issuance or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as
may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (a) shall
not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price
then in effect, (b) shall take all such actions as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant, and (c) shall, in accordance
with Section 1(g) above, so long as any of the Warrants are outstanding, take all action necessary to reserve and keep available
out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of the Warrants, the
maximum number of shares of Common Stock as shall from time to time be necessary to effect the exercise of the Warrants then outstanding
(without regard to any limitations on exercise).
6.
WARRANT HOLDER NOT DEEMED A STOCKHOLDER
. Except as otherwise specifically provided herein, the Holder, solely in its capacity
as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the
Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its capacity
as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent
to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance
or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the
Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained
in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this
Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors
of the Company.
7.
REISSUANCE OF WARRANTS
.
(a)
Transfer of Warrant
. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon
the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered
as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and,
if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance
with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.
(b)
Lost, Stolen or Mutilated Warrant
. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant (as to which a written certification and the indemnification contemplated
below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this
Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing the right
to purchase the Warrant Shares then underlying this Warrant.
(c)
Exchangeable for Multiple Warrants
. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right
to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, no warrants
for fractional shares of Common Stock shall be given.
(d)
Issuance of New Warrants
. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant,
such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant,
the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to
Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock
underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying
this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance
Date, and (iv) shall have the same rights and conditions as this Warrant.
8.
NOTICES; CURRENCY; PAYMENTS
.
(a) Whenever
notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance,
such notice shall be given at its last address as it shall appear upon the warrant register of the Company. The Company shall provide
the Holder with prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description
of such action and the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice
to the Holder (i) immediately upon each adjustment of the Exercise Price and the number of Warrant Shares, setting forth in reasonable
detail, and certifying, the calculation of such adjustment(s) and (ii) at least fifteen (15) days prior to the date on which the
Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B)
with respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities
or other property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction
with such notice being provided to the Holder and (iii) at least ten (10) Trading Days prior to the consummation of any Fundamental
Transaction. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding
the Company or any of its Subsidiaries, the Company shall simultaneously file such notice with the Securities and Exchange Commission
pursuant to a Current Report on Form 8-K.
(b)
Currency
. All amounts owing under this Warrant that, in accordance with their terms, are paid in cash shall be paid in United
States dollars (“
U.S. Dollars
”). All amounts denominated in other currencies (if any) shall be converted into
the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “
Exchange Rate
”
means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Warrant, the U.S. Dollar exchange
rate as published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an
amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period
of time).
(c)
Payments
. Whenever any payment is to be made by the Company to any Person pursuant to this Warrant, such payment shall be
made in lawful money of the United States of America via wire transfer of U.S. Dollars in immediately available funds in accordance
with the Holder’s wire transfer instructions delivered to the Company on or prior to such payment date or, in the absence
of such instructions, by a certified check drawn on the account of the Company and sent via overnight courier service to such Person
at such address as previously provided to the Company in writing (which address, in the case of each of the Investors, shall be
as it shall appear upon the warrant register of the Company.
9.
AMENDMENT AND WAIVER
. Except as otherwise provided herein, the provisions of this Warrant (other than Section 1(f)) may
be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Holder. No consideration shall be offered or paid to the Holder
to amend or consent to a waiver or modification of any provision of this Warrant unless the same consideration is also offered
to all of the holders of the other Warrants. No waiver shall be effective unless it is in writing and signed by an authorized representative
of the waiving party.
10.
SEVERABILITY
. If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues
to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations
or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the
parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).
11.
GOVERNING LAW
. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning
the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State
of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York
or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.
The Company hereby irrevocably waives personal service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to the Company at the address set forth as it shall appear upon the warrant register of
the Company and agrees that such service shall constitute good and sufficient service of process and notice thereof. The Company
hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough
of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper.
THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING
OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.
12.
JUDGMENT CURRENCY
.
(a) If
for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes necessary to
convert into any other currency (such other currency being hereinafter in this Section 12 referred to as the “
Judgment
Currency
”) an amount due in U.S. Dollars under this Warrant, the conversion shall be made at the Exchange Rate prevailing
on the Trading Day immediately preceding:
(i) the
date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or
(ii) the
date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as
of which such conversion is made pursuant to this Section 12(a)(ii) being hereinafter referred to as the “
Judgment Conversion
Date
”).
(b) If
in the case of any proceeding in the court of any jurisdiction referred to in Section 12(a)(ii) above, there is a change in the
Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable
party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted
at the Exchange Rate prevailing on the date of payment, will produce the amount of U.S. Dollars which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment
Conversion Date.
(c) Any
amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Warrant.
13.
CONSTRUCTION; HEADINGS
. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be
construed against any Person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not
form part of, or affect the interpretation of, this Warrant. Terms used in this Warrant but defined in the other Transaction Documents
shall have the meanings ascribed to such terms on the Closing Date (as defined in the UA) in such other Transaction Documents unless
otherwise consented to in writing by the Holder.
14.
DISPUTE RESOLUTION
.
(a)
Submission to Dispute Resolution.
(i) In
the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Bid Price, fair market value or the arithmetic
calculation of the number of Warrant Shares (as the case may be) (including, without limitation, a dispute relating to the determination
of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute to the other party via facsimile
(A) if by the Company, within two (2) Business Days after the occurrence of the circumstances giving rise to such dispute or (B)
if by the Holder, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the
Company are unable to promptly resolve such dispute relating to such Exercise Price, such Closing Sale Price, such Bid Price, such
fair market value or such arithmetic calculation of the number of Warrant Shares (as the case may be), at any time after the second
(2nd ) Business Day following such initial notice by the Company or the Holder (as the case may be) of such dispute to the Company
or the Holder (as the case may be), then the Holder may, at its sole option, select an independent, reputable investment bank to
resolve such dispute.
(ii) The
Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in
accordance with the first sentence of this Section 14 and (B) written documentation supporting its position with respect to such
dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th ) Business Day immediately following the date
on which the Holder selected such investment bank (the “
Dispute Submission Deadline
”) (the documents referred
to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “
Required Dispute Documentation
”)
(it being understood and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation
by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer
be entitled to (and hereby waives its right to) deliver or submit any written documentation or other support to such investment
bank with respect to such dispute and such investment bank shall resolve such dispute based solely on the Required Dispute Documentation
that was delivered to such investment bank prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by
both the Company and the Holder or otherwise requested by such investment bank, neither the Company nor the Holder shall be entitled
to deliver or submit any written documentation or other support to such investment bank in connection with such dispute (other
than the Required Dispute Documentation).
(iii) The
Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and
the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees
and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such
dispute shall be final and binding upon all parties absent manifest error.
(b)
Miscellaneous
. The Company expressly acknowledges and agrees that (i) this Section 14 constitutes an agreement to arbitrate
between the Company and the Holder (and constitutes an arbitration agreement) under the rules then in effect under §7501,
et seq. of the New York Civil Practice Law and Rules (“
CPLR
”) and that the Holder is authorized to apply for
an order to compel arbitration pursuant to CPLR § 7503(a) in order to compel compliance with this Section 14, (ii) the terms
of this Warrant and each other applicable Transaction Document shall serve as the basis for the selected investment bank’s
resolution of the applicable dispute, such investment bank shall be entitled (and is hereby expressly authorized) to make all findings,
determinations and the like that such investment bank determines are required to be made by such investment bank in connection
with its resolution of such dispute and in resolving such dispute such investment bank shall apply such findings, determinations
and the like to the terms of this Warrant and any other applicable Transaction Documents, (iii) the Holder (and only the Holder),
in its sole discretion, shall have the right to submit any dispute described in this Section 14 to any state or federal court sitting
in the City of New York, Borough of Manhattan in lieu of utilizing the procedures set forth in this Section 14 and (iv) nothing
in this Section 14 shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including, without
limitation, with respect to any matters described in this Section 14).
15.
REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF
. The remedies provided in this Warrant shall
be cumulative and in addition to all other remedies available under this Warrant and the other Transaction Documents, at law or
in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right
of the Holder to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Warrant.
The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly
provided herein. Amounts set forth or provided for herein with respect to payments, exercises and the like (and the computation
thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any
other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without
any bond or other security being required. The Company shall provide all information and documentation to the Holder that is reasonably
requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Warrant
(including, without limitation, compliance with Section 2 hereof). The issuance of shares and certificates for shares as contemplated
hereby upon the exercise of this Warrant shall be made without charge to the Holder or such shares for any issuance tax or other
costs in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate in a name other than the Holder or its agent on its behalf.
16.
TRANSFER
. This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.
17.
CERTAIN DEFINITIONS
. For purposes of this Warrant, the following terms shall have the following meanings:
(a) “
1933
Act
” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b) “
Bid
Price
” means, for any security as of the particular time of determination, the bid price for such security on the Principal
Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the bid price of such security on the principal securities exchange or trading market where
such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply,
the bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination,
the average of the bid prices of any market makers for such security as reported in the “pink sheets” by OTC Markets
Group Inc. (formerly Pink Sheets LLC) as of such time of determination. If the Bid Price cannot be calculated for a security as
of the particular time of determination on any of the foregoing bases, the Bid Price of such security as of such time of determination
shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to
agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 14.
All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar
transaction during such period.
(c) [Intentionally
Omitted].
(d)
“
Bloomberg
” means Bloomberg, L.P.
(e) “
Business
Day
” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.
(f) “
Closing
Sale Price
” means, for any security as of any date, the last closing trade price for such security on the Principal Market,
as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing
trade price, then the last trade price of such security prior to 4:00 p.m., New York time, as reported by Bloomberg, or, if the
Principal Market is not the principal securities exchange or trading market for such security, the last trade price of such security
on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if
the foregoing does not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average
of the ask prices of any market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc.
(formerly Pink Sheets LLC). If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing
bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company
and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute
shall be resolved in accordance with the procedures in Section 14. All such determinations shall be appropriately adjusted
for any stock dividend, stock split, stock combination or other similar transaction during such period.
(g) “
Common
Stock
” means (i) the Company’s shares of common stock, $0.00001 par value per share, and (ii) any capital
stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common
stock.
(h) “
Convertible
Securities
” means any stock or other security (other than Options) that is at any time and under any circumstances, directly
or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any
shares of Common Stock.
(i) “
Eligible
Market
” means The New York Stock Exchange, the NYSE MKT, the NASDAQ Global Select Market, the NASDAQ Global Market or
the Principal Market.
(j) “
Exchange
Act
” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(k) “
Expiration
Date
” means the date that is the fifth (5th ) anniversary of the Issuance Date or, if such date falls on a day other
than a Business Day or on which trading does not take place on the Principal Market (a “
Holiday
”), the next
date that is not a Holiday.
(l) “
Fundamental
Transaction
” means that (i) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related
transactions, (A) consolidate or merge with or into (except where the Company or any of its Subsidiaries is the surviving corporation)
any other Person, or (B) sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its
respective properties or assets to any other Person, or (C) allow any other Person to make a purchase, tender or exchange offer
that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares
of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated with the Persons making
or party to, such purchase, tender or exchange offer), or (D) consummate a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other
Person whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company (not including
any shares of Voting Stock of the Company held by the other Person or other Persons making or party to, or associated or affiliated
with the other Persons making or party to, such stock or share purchase agreement or other business combination), or (E) (1) reorganize,
recapitalize or reclassify the Common Stock, (2) effect or consummate a stock combination, reverse stock split or other similar
transaction involving the Common Stock or (3) make any public announcement or disclosure with respect to any stock combination,
reverse stock split or other similar transaction involving the Common Stock (including, without limitation, any public announcement
or disclosure of (a) any potential, possible or actual stock combination, reverse stock split or other similar transaction involving
the Common Stock or (b) board or stockholder approval thereof, or the intention of the Company to seek board or stockholder approval
of any stock combination, reverse stock split or other similar transaction involving the Common Stock), or (ii) any “person”
or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act and the rules and
regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Voting Stock
of the Company.
(m)
“
Options
” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible
Securities.
(n) “
Parent
Entity
” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock
or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity,
the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(o) “
Person
”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity or a government or any department or agency thereof.
(p) “
Principal
Market
” means the NASDAQ Capital Market.
(q) “
Successor
Entity
” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving
any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction
shall have been entered into.
(r) “
Trading
Day
” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common
Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time
of trading on such exchange or market, then during the hour ending at 4:00 p.m., New York time) unless such day is otherwise designated
as a Trading Day in writing by the Holder.
(s) “
Warrants
”
means the aggregate warrants issued pursuant to the UA, individually, each a Warrant.
(t) “
Voting
Stock
” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have
the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers or
trustees of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might
have voting power by reason of the happening of any contingency).
(u) “
VWAP
”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or,
if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities
market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00
p.m., New York time, as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not
apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board
for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average
of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in
the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If VWAP cannot be calculated for such security
on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved in accordance with the procedures in Section 14. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.
[
signature page follows
]
IN WITNESS WHEREOF,
the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.
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x
G TECHNOLOGY, INC.
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By:
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Name: Roger G. Branton
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Title: Chief Financial Officer
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EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
x
G
TECHNOLOGY, INC.
The undersigned holder
hereby exercises the right to purchase _________________ of the shares of Common Stock (“
Warrant Shares
”) of
xG Technology, Inc., a Delaware corporation (the “
Company
”), evidenced by Warrant to Purchase Common Stock No.
_______ (the “
Warrant
”). Capitalized terms used herein and not otherwise defined shall have the respective meanings
set forth in the Warrant.
1.
Form
of Exercise Price
. The Holder intends that payment of the Aggregate Exercise Price shall be made as:
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____________
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a “
Cash Exercise
” with respect to _________________ Warrant Shares; and/or
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____________
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a “
Cashless Exercise
” with respect to _______________ Warrant Shares.
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In the event that the
Holder has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder
hereby represents and warrants that (i) this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.] on the date
set forth below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice was $________.
2.
Payment
of Exercise Price
. In the event that the Holder has elected a Cash Exercise with respect to some or all of the Warrant Shares
to be issued pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company
in accordance with the terms of the Warrant.
3.
Delivery
of Warrant Shares
. The Company shall deliver to Holder, or its designee or agent as specified below, __________ Warrant Shares
in accordance with the terms of the Warrant. Delivery shall be made to Holder, or for its benefit, as follows:
Check here if requesting
delivery as a certificate to the following name and to the following address:
Check here if requesting delivery
by Deposit/Withdrawal at Custodian as follows:
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DTC Number:
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Account Number:
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Date:_____________ __, ________
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Name of Registered Holder
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By:
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Name:
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Title:
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Tax ID: ________________________
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Facsimile: ______________________
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EXHIBIT B
ACKNOWLEDGMENT
The Company hereby
acknowledges this Exercise Notice and hereby directs ______________ to issue the above indicated number of shares of Common Stock
in accordance with the Transfer Agent Instructions dated _________, 20__, from the Company and acknowledged and agreed to by _______________.
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xG TECHNOLOGY, INC.
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By:
_____________________________________
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Name:
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Title:
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